Pity the poor Republican Presidential candidates. When it comes to healthcare, they don’t have much to fall back on besides the usual tired rhetoric:
- Feel good ideas with limited or no impact (e.g., focus on wellness, tort reform, competition across state lines)
- Cheap shots and unsupported assertions (e.g., Obamacare is a government takeover, we’ll have waiting lists and rationing)
- Attempts to preserve popular parts of Obamacare while stripping away the foundations that make those aspects work (e.g., forbid discrimination based on pre-existing conditions but let people wait till they get sick to buy insurance)
As expected, Jeb Bush’s new health plan contains these elements. But I commend him for his plan to limit the tax deductibility of employer-sponsored health plans. Under his plan, any employer contributions to premiums over certain thresholds ($12,000 for individuals, $30,000 for families) will be treated as regular wages and subject to taxation. The impact is almost the same as the so-called Cadillac Tax, but the mechanism is more straightforward and efficient.
He’ll probably get a lot of grief for his idea, but it’s a good one that should be supported. It reduces the tax system’s distortion that causes employers and employees to favor health benefits over wages.
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