When it comes to health care, the way policymakers define the problem determines the answer they produce. Democratic presidential candidates tend to focus on the uninsured, Republicans on rising costs. Both are important: The unaffordability of health insurance won't be addressed without tackling health-care costs, but reducing cost growth alone won't solve the insurance problem. In this debate, Sen. John McCain of Arizona has introduced a health-care plan that is the most detailed and thoughtful of the Republican proposals. McCain does not put enough emphasis on dealing with the uninsured, but his suggestions for constraining costs and reforming the irrational tax treatment of health insurance merit serious consideration by whoever is elected.
The centerpiece of McCain's plan is a refundable tax credit of $2,500 per individual and $5,000 per family to purchase health insurance; he would pay for this by eliminating the existing tax preference for employer-sponsored health insurance, in which workers don't have to pay tax on the value of the insurance they receive. The McCain plan represents an important improvement on a dead-on-arrival proposal from President Bush earlier this year. Getting rid of the tax preference would be a good step toward achieving a more rational system, one that does not favor some purchasers of health insurance over others and does not encourage spending on gold-plated health-care plans. In addition, it is fairer to structure the benefit as a credit, of equal value to all taxpayers, rather than as a deduction; a refundable credit would benefit even those who do not owe income taxes.
- Washington Post
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