A year ago, after Bush first floated an embryonic version of his proposal, economist Jason Furman wrote in the National Tax Journal that “Empirical estimates show that eliminating the tax incentive for employer‐provided insurance, without creating another pooling arrangement, could increase the number of people without insurance–even in a relatively limited proposal like that of President Bush.”
The standard health insurance deduction is a pretty serious departure from the proposals that Furman criticized. And there are more recent estimates of a standard deduction’s likely effect on the uninsured. Cohn cites but one, which he qualifies:
Even the U.S. Department of the Treasury, which is part of the administration, strained to put an attractive gloss on this idea when Bush trotted it officially out this year. Its own evaluation, under favorable assumptions, suggested the proposal would reduce the number of uninsured by 3 to 5 million–meaning around 40 million people still wouldn’t have coverage.
Unfortunately, Cohn does not cite the Congressional Budget Office’s estimate that the standard deduction would reduce the number of uninsured by nearly seven million.
It is fair for Cohn to question whether the Bush administration’s projections were just self‐serving exaggerations. But now that Peter Orszag’s CBO has torpedoed that suggestion — actually, the CBO issued its estimate a day before TNR posted Cohn’s article — why hasn’t TNR taken notice of Cohn’s misleading claim?
Cohn also misrepresents his opposition to a standard deduction. He suggests that he opposes it because it wouldn’t cover all of the uninsured. But if that were his reason, he also would have to oppose the House bill to reauthorize the State Children’s Health Insurance Program, which would cover only 5 million of the 9 million children that (Democrats claim) lack health insurance. I think his real objection lies elsewhere.
If Cohn wants to retain private health insurance at all, it is because he wants to take from some Americans to give to others, and laundering those subsidies through “insurance” markets helps to obscure such redistribution, as does letting employers control workers’ health care dollars. A standard deduction would let workers control their health care dollars by eliminating the tax penalty that currently makes individual ownership impossible. It would give workers the agility to avoid — and an incentive to block — politicians’ efforts to redistribute that portion of their income.
Cohn opposes a standard deduction precisely because it would frustrate his desire to separate the American worker from her money.