President Bush made bold health policy proposals in his State of the Union message: 

• First, he would level the playing field between individual and employer purchase of health insurance.
• Second, he would eliminate provisions in the tax law that reward waste and penalize economy in the purchase of health insurance.
• Third, he would allow the states to redirect federal funds used for charity care and use them to subsidize private insurance instead. Continue reading »

President Bush will make two bold proposals in his State of the Union message tonight. First, he would cap the tax benefits available to people who get insurance through employers and use the savings to give tax relief to those who buy their own insurance. Second he would redirect federal funds that currently pay for free health services for the uninsured and use them to subsidize private insurance instead. Here is one way to think about this and other Bush health initiatives. Many of our problems in health care stem from four distortions cause by government policies:

1. Tax law favors third-party insurance over individual self insurance (through savings accounts).
2. Tax law favors employer-provided insurance over individually-purchased insurance.
3. Spending on free health care makes being uninsured more attractive than being insured.
4. Spending on Medicaid, S-CHIP, etc. makes government insurance more attractive than private insurance. Continue reading »

The latest issue of National Review has my analysis of the President's new health policy proposals. In addition to a stronger-than-ever push for Health Savings Accounts, the President is calling for tax fairness (giving individually purchased insurance the same tax break as insurance obtained at work), portable health insurance, special HSAs for the chronically ill and allowing consumers to shop for insurance in a national marketplace.

An interesting feature of the President’s health plan is that HSA plans would receive preferential treatment over other health plans.  Specifically:

1. Only HSA plans would qualify for the low-income family refundable tax credit. 
2. Only HSA plans purchased by individuals would be tax deductible.
3. Only HSA plans would be personal and portable.

On Tuesday night, President Bush devoted only a few sentences to health policy. At the same time, the administration released a five-page document describing the President's health policy proposals. The reforms described therein are so sweeping and so bold that I would compare them to Hillary Clinton's proposals of a decade ago.

I don't know if the White House will devote the energy and political capital necessary to see this through. But if they do, these reforms will leave a lasting mark on social policy in this country.

Here are the four ideas I find most remarkable. Continue reading »