Health Insurance

Ezra Klein posts today about what health care wonks seldom talk about - how all the grand blueprints for overhauling U.S. healthcare don't mean much if they can't gather 60 votes in the U.S. Senate. But if you've been following our work at New America, you know that "60 votes" could be our middle name. Health reform requires bipartisan compromise. (Klein is only joking when he says that his secret health reform plan is to invade France and take their health care. Although the scenario does have some pretty amusing possibilities for bipartisanship on the beaches of Normandy...).

Musing about his imminent appearance at "Take Back America," Klein writes, "What you never hear about are votes. Political strategy. Getting to 60. Because that, fundamentally, is what's at issue here. Getting to 60 in the Senate. Health care is not so much a policy problem as it is a political problem. The policy questions are nearly solved. The political obstacles, however, seem nigh insurmountable. But if you have a plan without a strategy, you have nothing at all. If you can't tell me how you'll get to 60 in the Senate, what you have isn't a plan, it's a position. And no one in this country gets medical care from a position."

President Bush has mentioned providing a tax deduction for health insurance. His 2009 budget proposal has more of the details:

1. Employees would be required to include in income the amount their employer pays to provide health care coverage for them. This amount would be reported on the employee's W-2 so they wuold know how much it is.
2. Employees (and others) could deduct what they spend on health insurance (or what their employer spends on them and they have to report as income). The deduction is limited to $15,000 ($7,500 for single coverage) and appears to be allowed as a deduction even if the individual does not itemize their deductions. It is also called a "standard deduction" and it appears you get that much even if you don't spend that much on your "qualified coverage."

Basically, the rationale is that this change should bring the insured - the patient, back into the health care COST decisions. Today, most employees with employer-provided health benefits probably cannot tell you how much their employer pays and how much they pay. They are also likely not aware that the government is giving them a tax break by not requiring them to pay income or payroll taxes on the benefit they get when their employer pays for their health insurance. And, most states match the tax break. It is very generous.