THE BLOG

The Bush Health Proposal Isn't a "Tax Break." It's Not Even a "Plan."

01/24/2007 12:37 pm ET | Updated May 25, 2011

The President's new health proposal isn't a plan - and it isn't a tax break, either (despite what some credulous journalists have reported). It's more like a shell game, reallocating the same dollars for ideologically-driven purposes while creating the illusion of activity. That's important now that healthcare is "hot" in DC.

I've gone through the plan in some detail on my healthcare blog, The Sentinel Effect, but here are the highlights: It provides a flat tax break for people who purchase health coverage, whether independently or through an employee health plan. It also reallocates some money that's currently going to hospitals to cover caring for the uninsured. (They'll just raise rates to make up for the shortfall, and it'll wind up coming out of your pockets anyway.)

The net result of the plan will be short-term savings for many, followed by long-term increases for most. And people with pre-existing conditions could suffer immediately under the plan, which led one critic to label the proposal a "cancer tax."

The plan's designed to encourage "free market competition" among buyers and sellers in the individual coverage marketplace. It's more likely to result in the erosion of the employer-centered health insurance system. That system's highly flawed and I understand the desire to replace it. The problem is that, without a more comprehensive plan to replace it, ideas like this one could leave buyers at the victim of a predatory marketplace.

(In his State of the Union, the President had some kind words for the highly controversial "association health plan" concept, too. That set off alarm bells with some consumer advocates.)

This idea's a non-starter among Democrats and progressives. As for conservatives, even Ramesh Ponnoru in the National Review couldn't muster more than this limp endorsement. Grover Norquist likes it, but even he must recognize that it doesn't cut revenues to the Federal tax coffers. It's not a tax hike - yet - but it's not going to excite your favorite right-winger very much.

My guess? This proposal, which actually just tinkers with the tax code, is already "code blue."

The Sentinel Effect: Healthcare Blog