[July 31, 2007 @ 11:20 pm] David Hogberg

I’ve given Giuliani’s plan a once over, and I must admit I’m a little disappointed. Given the caliber of free-market folks present at his conference call yesterday, I expected a lot more in the direction of moving health care toward free markets. Alas, never underestimate politicians’ ability to come up short.

I will be giving his plan fuller treatment at AmSpec in a few days, so for the time being here are a few thoughts:

1. Tax Treatment. Giuliani states:

Expand Choice Through Tax Code Reform: America’s tax system penalizes millions of citizens without access to employer health care, including 40 percent of employees at small firms. Americans without employer-based insurance should have tax benefits just as the 175 million Americans with employment-based coverage do. Rudy proposes an income exclusion of up to $15,000 for those without employer coverage to make insurance more affordable.

A standard tax deduction will go a long way toward solving the problems in our health insurance system. Good to see it in Giuliani’s plan. What bothers me is the last sentence in that passage. Does that mean the deduction isn’t available for those who have access to employer-based coverage? The employer-based system is a big impediment to bringing truly competitive markets to health insurance. Under it, insurance companies compete only for the business of employers, not employees. Plus, it restricts consumer choice as most employees are offered only one plan by their employers. So, if an employee with access to employer-based coverage decides he’d rather use the deduction to purchase his own health insurance, will he be able to use the deduction? Inquiring minds want to know.

2. EITC For Health Insurance?

If I’m reading this right, it looks like Giuliani is proposing an earned-income tax credit for the poor to buy health insurance:

Help Low-Income Individuals and Families Secure Health Insurance: Rudy proposes a Health Insurance Credit to low-income Americans that can be coupled with other revenue sources such as Medicaid and employer contributions to make coverage more affordable to millions of the uninsured.

Over at CATO, Michael Cannon disses this idea: “a Health Insurance Credit to low-income Americans…would increase government’s influence and make health care markets less free.”

I’m not sure what Michael’s reasoning is here (he gives no detail), but I’m sure he’ll inform me soon enough. To my way of thinking, such a tax credit is far superior to programs like Medicaid. A tax credit turns low-income workers into health insurance consumers, something that does not happen with Medicaid (unless you live in Florida). Given how lousy Medicaid is, I can see a lot of people using the tax credit to purchase private insurance instead. And having a lot of people abandon Medicaid would make health care markets more free.

3. Making Both Government and Kids Fatter

Here is one thing that makes me want to scream, “NOOOOO!!!!!”:

Infuse Incentives in Insurance Markets That Promote Wellness and Better Outcomes for Chronic Diseases: Health insurance must be redefined to cover wellness as well as sickness. In conjunction with recommendations from doctors and nurses, Rudy will propose new initiatives to promote healthy lifestyles and wellness programs, and tie Medicaid payments to a state’s success in promoting preventative care and tracking obesity for children.

Does Giuliani really want to get the government in the business of promoting healthy lifestyles? If government does that as well as it does other things, then it won’t be long before almost all Americans never exercise, eat a full box of twinkies every day, and smoke a pack too. As for obesity in children, take a look at this graph. You’ll notice that a good portion of the increase came in the 1990s and this decade (although, with the exception of those ages 2-5, the 1980s saw slightly larger increases.) Nevertheless, the 1990s were the years of Medicaid expansion and the establishment of SCHIP. Coincidence? At this point, who knows? But it seems clear that great government involvement in health insurance hasn’t helped matters any.

One comment

  1. Health Care BS » Blog Archive » Rudycare: The Great Right Hope Says:

    […] David Hogberg points out, the Giuliani plan isn’t perfect. It does however, emphasize the free market, a feature that will […]

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