Disagreeing with the Experts

Nothing gets the blood flowing like internecine warfare. It is very easy to lob bombs at the left and others who want to “socialize” medicine, but it is quite another thing — a much more difficult one — to disagree with a nationally-recognized advocate for free market health care.

John Goodman of the National Center for Policy Analysis, a health care expert with far more years in the field than I, recently blogged about some of the ideas put forth by Republicans in their health care meeting with President Obama. The idea that Goodman disagrees so vehemently with is to allow all out-of-pocket spending on health care to be deductible. This, proponents (like me) argue, would ultimately undermine the third-party-payer system of health care in this country because employees would no longer have the incentive to rely on their employers for health care and would instead take the additional pay and enter the individual market, more than likely adapting health savings accounts and other consumer-driven health care products in large numbers.

Goodman argues that eliminating taxes health care expenses would create a situation in which “government would be paying almost half the cost…” With this subsidy, health care spending would rise dramatically. He instead argues for equalizing the tax treatment of health care with other goods — an ideal solution that I agree with — but I doubt that Congress or the American people would go along with such a massive tax hike unless tax rates were lowered…and you get the picture. Very complex and not likely to happen.

So, I remain supportive of eliminating taxes on health care. Why? Well, first and foremost, even if you are being subsidized to the tune of 50% for health care, you still control the money and will work to keep costs down. Pricing will become a part of the health care industry in a way that it is not today because of the third-party system. Also, the individual market will grow, thus making that a more viable proposition and keeping costs down and giving millions of Americans greater control of their health care (no more remaining stuck in a job just because of health care). Lastly, consumer-driven health care like HSA’s will take off and flourish. These all seem like good things to me. Besides, do you really trust politicians to not cave into special interests by exempting health insurance from taxation as we did in New Mexico (NM’s gross receipts tax still hits certain health care costs like deductibles and co-pays).

Ending taxation of health care costs seems to have more benefits than drawbacks. Maybe I’m wrong. What do you think?

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