There He Goes Again

President Bush used his Saturday radio address to push his proposal to scrap the tax break for health insurance premiums paid by employers in favor of a standard deduction for those who buy their own health insurance plans. Although he touted it as a way to help the uninsured buy their own plans, it would, in fact, add to the ranks of the uninsured. For an analysis, see this GoozNews.

Earlier this week, a coalition of liberal tax policy analysts suggested some changes for the president's proposal that they said would make it more palatable. This is what happens when people who know very little about health care (like most economists) try to tinker with the system. They wind up endorsing solutions that do nothing about the underlying cause of America's collapsing health insurance system, which is skyrocketing costs.

Here's what Linda Blumberg and John Holahan at the Urban Institute had to say about the president's plan, comments that are equally applicable to "liberal" variants that accept the premise that tax tinkering that encourages individual plans can help solve our health insurance mess:

The president's approaches to reform have consistently emphasized moving individuals into coverage with higher deductibles and lower benefits—intending to rein in systemwide spending by making individuals feel the financial bite when using services. If premiums go down because people use less care, the thinking goes, more people can afford coverage and the number of uninsured will fall. But this ignores a key fact at the heart of why our system is so costly.

Most health care spending is on a small percentage of individuals with very high medical costs. That means to dramatically cut costs, we'd have to reduce spending in the range well above even the higher deductibles the president would like to see. These costs are attributable to people with chronic and other serious conditions and are largely driven by the use of advanced medical technologies. The president's assumption that overly insured individuals are the problem behind premium growth and the number of uninsured is just plain wrong.

Liberals who try to tinker with tax subsidies as a way of getting at the problem of the uninsured ultimately have to turn to some kind of individual mandate to ensure that their program actually achieves universality. Leif Wellington Haase of the Century Foundation recently demolished their arguments in this well-reasoned piece.