I have followed our nation’s health care debates with some interest. I was in DC when Mitt Romney announced the Massachusetts plan with the backing of the Heritage Foundation and American Enterprise Institute. You can put me down as a high-income right-winger who KNOWS that our current health care system is not performing optimally.
One problem (among many) is that we are tied to our employers for truly affordable plans. This is thanks to price controls put in place during WWII.
I am on my wife’s plan (her job is more stable than mine). We are well covered, and all insurance costs come out pre-tax from her paycheck. We use my company’s Flexible Spending Plan for co-pays, orthodontics, prescription drugs, etc. However, I have to guess in the Fall of the prior year how much money we will spend out-of-pocket on direct costs. If we over withhold, we lose the money.
If I spend more than I withold, I have to hope that it becomes more than a certain percentage of my income. Specifically, You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income.
So I am rewarded for guessing the amount I will spend, penalized for over-guessing, and making up the difference won’t happen unless there is a catastrophe.
My proposal: Make all health care costs (yes, we need to define this, have receipts, etc.) a deduction from dollar one. If you buy a personal policy, you can deduct all of the cost. Every co-pay is a deduction. Every bottle of pills is a deduction. Income is adjusted downward for every penny of qualifying health care cost.
This would be a tax cut for all classes, would probably benefit the small business and the middle class the most (WAG on my part, I admit - no cite available). Surely this could be embraced by both the Right (its a tax cut!) and the Left (it makes health care more affordable!).
So - why is it bad? Why can’t we do it? Please knock holes in my proposal, so that I can refine and send a note that will be ignored by the new Congress.