Over at The Plank, my friend Jonathan Cohn makes a first pass at a Center for American Progress paper on John McCain’s proposed health insurance tax credit.
The main thrust of the CAP paper is that McCain’s tax credit would raise taxes on some people. I can’t really argue with that. If you replace an unlimited tax break with a limited tax break (especially one whose growth is limited), then some people are going to pay higher taxes. The fact that McCain’s tax credit is “refundable” makes the tax‐hike problem worse: high‐income people must suffer higher tax increases to pay for the new welfare payments. For what it’s worth, I have forwarded a proposal to reform the tax treatment of health insurance that does a much better job of protecting people from tax increases. But that’s not why I’m blogging.
After Cohn finishes with the tax‐hiking aspect of McCain’s tax credits, he writes:
But this is where we run smack into the real problem of the McCain plan… This is an incredibly crude and ineffective way of controlling costs. It puts the entire onus on the consumer–basically, it says to everybody “spend less on health care” without doing anything to make sure that people can actually get decent health care at that price. There’s no guarantee of minimum benefits, in terms of services covered or limits on out‐of‐pocket expenses; nor is there any guarantee of available coverage for people with pre‐existing conditions. (Folks with pre‐existing conditions could still get coverage through employer policies. But, of course, as the tax deduction goes away, employers will have less incentive to give such coverage in the first place.)
The better way to control costs is with a variety of approaches that starts with a guarantee of coverage to everybody.
That is the Left’s approach to cost‐containment — give more health benefits to more people with more ailments, while making everyone pay less — and it is just plain goofy.
More stuff costs more money. Universal coverage equals more stuff. If you’re going to use “universal coverage” and “cost‐containment” in the same breath, you’d better tell me where you’re going to cut.