From the Denver Post :
John McCain, the presumptive Republican presidential nominee, will hold a town hall meeting on health care Friday in Denver, his campaign says. …
They want government to make the decision,” the Arizona senator was reported as saying, “I want the family to make the decision as to what kind of health care they want for their children.”
McCain has said he favors giving families tax credits to allow them to buy health insurance on the open market and to allow them to seek out health providers outside their state. Critics say such a policy would translate into states dropping protections and regulations to remain competitive.
The Denver event is open to the public and starts at 10 a.m. at the Robert E. Loup Jewish Community Center, 350 S. Dahlia St. Because McCain is protected by the Secret Service, Benton advises attendees to arrive at 8:30 a.m.
My brief analysis of McCain’s plan:
By “health providers outside their state,” the Post is referring to the current prohibition against consumers buying health insurance that meets the regulations of other states. This would give states incentives not load up policies with mandated benefits (which I discuss here ) that add significant cost to insurance plans. This proposal isn’t new. At the federal level it has been proposed several times as the Health Care Choice Act . In Colorado it was proposed via HB 1327 by Representative Cory Gardner.
McCain’s tax credit idea is pretty much an example of “two wrongs don’t make a right.” Or, you don’t undo a tax-distortion in the economy with another one. You get rid of the first one! But perhaps politicians who try that don’t get elected.
A core problem with health care policy is the tax exemption for employer-provided insurance. In short, it locks us to our jobs, restricts our choices of insurance plans, shields insurance companies from competition, and creates the incentive for insurance to be prepaid health care, which encourages thoughtless over-consumption.
Legislators should support a tax code that treats out-of-pocket medical expenses and insurance equally, regardless of who pays insurance premiums. Phasing out the employer tax exemption and lowering taxes commensurately can achieve this.
Making all medical expenses and insurance tax-exempt may be more politically feasible. For example, allow anyone to open a tax-deductible Health Savings Account , regardless of one’s insurance plan. Allowing us to purchase insurance with HSA deposits would free us from our employer’s insurance, empower consumers, and encourage competition.
So this tax-credit idea, while sort of on target, is even more social engineering via tax policy, instead of undoing existing tax policy that has created the problem in the first place.
