Let’s just say, for sake of argument, that Bush’s proposed tax plan for healthcare would actually lower premiums. There’s something rather obvious that his plan seems to miss.
If insurers make less money through premiums, they will find other ways to recoup their diminished income.
How would they do this? Here are three ways, all of which are happening now, so they can’t be viewed as far-fetched:
1) People with pre-existing conditions won’t be accepted by private plans.
2) More and more procedures will be defined as ‘non-essential’, so they will not be covered (note: this also includes things like discharging patients earlier, making it even harder to receive psychiatric care, and so on).
3) Co-payments will increase.
This plan will do nothing to contain and lower healthcare costs. It doesn’t improve healthcare quality either. It will, however, shift costs, in many cases to those who can’t afford higher costs.
An aside: There is so much wrong with this plan, but here’s one thing that bothers me: the plan attempts to legislate through the tax code. As it stands right now, the Treasury basically writes you a check covering part of your insurance costs–it’s what tax specialists call a “tax expenditure.” Under Bush’s plan, this subsidy would be decreased for some, and increased for others. However, the needy–those in the lowest tax bracket–are the least effected by tax breaks (simply because their income is taxed at a lower rate). Wouldn’t make sense to help those in the lower tax brackets more? If, of course, that’s your real objective….