An absurd health care proposal

The Bush health care proposals are even more ridiculous than I originally thought. He's proposing a standard deduction rather than deductibility, as Ezra Klein tells us.

What the early reports either didn't make clear or didn't know was that the plan's changes to health care deductibility don't set limits, they're creating, instead, a standard deduction of $7,500 for individuals and $15,000 for families. My initial understanding was that those were caps: Above them, you couldn't deduct anything further. Below them, you simply deducted what you spent. That was incorrect. Instead, everyone will get precisely those deductions no matter what they spend. If you're 23 and your health care costs $2,000 a year, you still deduct $7,500, pocketing the difference. It would, in that situation, be economically foolish of you to purchase high quality, comprehensive coverage. And that goes all the way up the line. The intent here is clear: To incentivize the purchase of low-quality, high-deductible care, particularly among the healthy, young, and/or rich. To degrade the risk pool, and encourage HSAs. To reduce coverage, costs, and health security.

Now, not only is this absurd for the reasons Klein tells us, it is also patently unfair. Individual health insurance premiums in New Jersey, for example, exceed $10,000 for a single individual with a $3,000 deductible and 30% co-pay up to $5,000. The cost is more than double that for a family plan. So, nobody here would be pocketing any differences. It just plain isn't close to meeting the cost. Even the plan I'm on now, with $10,000 deductible costs over $4,500 a year.

But, more to the point, tax deductions are not the way to make health insurance more widely available. Those who can't afford insurance are not likely to benefit much, if anything, from the tax deductions. Those who chose not to buy insurance now are not likely to do so just because of a tax deduction. Further, the Bush plan sounds as though you get the $7,500 deduction even if you don't buy insurance.