Friday, January 26, 2007

Simple Health Insurance Plan needs better explanation (Does it even have a Name yet?)

How many people know that employer funded health insurance was the market’s not so great response to FDR’s wage freeze (itself obviously grossly anti-market)? Amity Schlaes has a pretty good article today at explaining how this would work but this project is going to take a LOT of selling. I mentioned it to a medical technician about to give me an MRI a year and a half ago and he was dumbfounded, having assumed that this was the way things HAVE ALWAYS BEEN DONE.

Ms. Schlaes:

Back in the 1930s, Congress and President Franklin Roosevelt created Social Security over corporate protests. A national system of payment for health care seemed next. (In 1945 Harry Truman would go around talking about "the right to adequate medical care.'')

Terrified employer raced to preempt FDR and Truman by proving they could handle health themselves. They contracted with Blue Cross and Blue Shield to provide benefits for employee pools. The tax treatment came last -- in fact no one knew for a while whether companies really could claim the insurance deduction.

But World War II made the new arrangement seem doubly logical. Congress imposed an "excess'' profits tax of as much as 90 percent and froze wages. Paying for health insurance was a way to reduce tax bills and keep workers, who were suddenly scarce. Unions were pleased. By 1945, 32 million Americans were in health-insurance programs, many sponsored by companies, up from 12 million to 13 million just five years before.

Bush has been awful at marketing his domestic agenda except for the early tax breaks, No Child Left Behind (and that was as much Kennedy’s doing as the POTU) and Medicare Part whatever.
I fear that she’s right and that these reforms will only begin to take root now while we most scratch our heads and try to think things through. For those of us who have decent employer provided coverage, we will be hard-pressed to allow any monkeying with it.

She concludes:

But if the Democratic leadership is already rejecting the Bush idea, is it still worth thinking about? The answer is yes. Parties come up with some of their best ideas when they are down -- ideas that tend to become law five or 10 years later.

Several other Bush proposals have been fakes -- programs that called themselves free market but actually extend the role of government, such as the Medicare Part D prescription-drug plan.
The standard-deduction plan, by contrast, truly is free market and anti-Washington. Though it may have come at the wrong time, this increase is one all can endorse -- even the tax warriors.

This is going to be a hard but necessary sell. First they need a great acronym.

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