Universal Choice Can Fix the Health Care Roof
Mar 26, 2007
A simple change in the antiquated tax code would create an avalanche of universal choice in health care, instead of current proposals that produce universal dependence on government. Namely, the U.S. should eliminate the deductibility discrimination between employers and employees for health insurance premiums.
The ideal solution would be to replace the tax code with the Fair Tax, which essentially replaces the income tax with a consumption tax. But since few politicians with a bully pulpit have shown the moral or political courage to lead the sizeable Fair Tax movement, let's start with the second best approach, universal deductibility.
Universal deductibility of health insurance premiums by employers, employees, the unemployed, individuals and business owners would connect the consumer to health care costs. When people spend their own money, they spend it more wisely. Most people will purchase health plans they can afford, instead of expecting more benefits from their employer or the government.
The flagrant flaw in most of the ideas proposed by the presidential candidates is that they are variations of socialized health care.
Hillary Clinton, Barack Obama and John Edwards have all offered health care plans that eliminate individual choice and increase government mandates on employers, individuals and health care providers.
RomneyCare in Massachusetts is already experiencing a cost explosion. The only Republican to propose a market-based solution is Newt Gingrich, who has not yet declared his candidacy.
The proponents of socialized health care do not believe individuals and doctors possess the ability to make their own health care decisions. They would rather take advantage of what Steve Forbes recently described as "the abysmal ignorance of so many – including boatloads of business executives and entrepreneurs – about what it takes to bring rationality, productivity and lower prices to the U.S. health care market."
The greatest flaw of Health Savings Accounts (HSAs) and President's Bush's new proposal is that they are tied to the disastrously flawed tax code in the form of yet another tax deduction. These plans are improvements on the current discriminatory system, but they further complicate an already incomprehensible tax code.
The president's proposal, which allows deductibility of health insurance premiums, has a hidden "sneak-a-tax." Under the Bush plan, if your employer pays more than $15,000 for your annual health insurance premium, you pay tax on the excess coverage. Below that amount for a typical family, the plan provides only small, non-game-changing savings. Worse, the plan is not indexed to inflation. When inflation eventually catches up to the $15,000 deduction, families will suffer the same tax penalties posed by the Alternative Minimum Tax.
HSAs are another concept that was supposed to "move us in the right direction" of more affordability and accessibility of health insurance. HSAs have worked for many, but way too slowly as health care costs and insurance premiums have increased at annual double digit percentages.
The socialists among us object to universal choice because they fundamentally believe that government can spend people's hard-earned money better than the person who earned it. The bureaucrats object to universal choice because it would force them to cut wasteful spending to "offset" the "lost" revenue from allowing the deduction. That's political speak for "our job is to continue to rearrange the deck chairs on the Titanic."
Even with universal choice, the liberals will still scream about the 47 million people who do not have health care. They will ignore the 63 percent of the uninsured who work for small businesses that cannot afford health insurance coverage because the costs keep rising faster than their profits. Conservatives ought to counter with the 253 million people who have private health insurance that four of the presidential front runners want to take away.
As I stated on an NBC health care special in 1994, if you have a leak in the roof of a building and you know that the roof is leaking, you don’t blow up the building to fix the leak in the roof. That's what total government control would do to our health care system. The system will work if government would get out of the way. We don't have to blow up the system to fix a few leaks.
Universal deductibility would stimulate universal choice, which would fix the leak in our health care system's roof while making the building stronger.
The free market system, in which the consumer has access to information, choices and his own money, has driven down the prices of all goods and services that government has not overregulated or over-controlled. With a simple change in the current tax code to eliminate discriminatory deductibility for health insurance and eventually health care costs, free market dynamics can solve another problem that Clinton, Obama, Edwards and Romney want to make worse.
Universal choice in health care is a choice the public must demand. Otherwise, they will have to live with the disease of socialized health care.
Herman Cain is the National Chairman of the Media Research Center’s Business & Media Institute. He is the former president and CEO of Godfather’s Pizza, Inc., and currently is CEO and president of T.H.E. New Voice, Inc., a business and leadership consulting company.
To fix America, start by solving the right problem
September 18th, 2011
The first step in solving a problem is to make sure you are working on the right problem. I know this observation sounds like common sense but it is void in the White House and Washington, D.C. We have become a nation of crises, and this administration continues to miss the target as to what the problems are, and therefore the crises get worse.
We have an economic crisis followed closely by crises in energy, immigration, foreign policy, national security and the most severe crisis – a deficiency of leadership.
The president’s recent jobs speech was just that, a speech. It was not a plan to stimulate jobs and economic growth, because it did not contain meaningful fuel for the economic engine of our economy, which is the business sector. His speech contained a lot more government spending and a few tax trinkets to businesses.
Stimulus I of nearly $1 trillion did not work. It is totally illogical to expect another package of nearly $450 billion to work. More spending is not the problem. Lack of economic growth is the problem. The economic outlook is dim.
This is why I have proposed my bold 9-9-9 economic growth and jobs plan discussed in previous commentaries, and on my website www.hermancain.com. It significantly reduces taxes on businesses and workers because of an expanded revenue base of corporate, individual and retail sales. It also eliminates the payroll, capital gains and death taxes, and reduces the tax on repatriated profits from a top rate of 35 percent to 9 percent.
The companion problem that’s holding economic growth back is uncertainty. Since the Congress and the president were only able to extend the 2009 tax rates for two years, it left businesses asking, “Then what?” They did not get an answer out of Washington, and now the president is hinting at substantial tax increases to pay for his nearly $450 billion spending speech.
We are nearly 70 percent dependent on foreign oil. Since the Congressional Research Service has documented repeatedly that we have enough natural resources in oil, coal, natural gas and shale oil to become energy independent, it would seem logical to remove barriers that are in the way. In this case, it’s government regulatory agencies such as the EPA, which has gone wild. Just ask any oil and gas businessman or farmer and they will give you an earful.
Illegal immigration is a four-part problem. We must secure the borders for real and stop claiming that the southern border is safe as the administration has said. Ask any of the sheriffs that work along the border, and again they will give you an accurate assessment. Secondly, we must promote the current path to citizenship and clean up the bureaucracy that discourages immigrants from coming through the front door. Thirdly, enforce the immigration laws but make it easier for businesses to obey the law with e-verify and other technologies. Fourthly, empower the states to enforce the federal immigration laws. The federal government has failed repeatedly at enforcing our immigration laws.
My approach to foreign policy is an extension of the Reagan philosophy, “Peace through strength.” In a world that is not safer by any measure, my philosophy is “peace through strength and clarity”. We must clearly identify our friends in the world, and clearly identify our enemies, and stop giving money to our enemies. Our enemies must clearly understand that we will stand with our friends, such as Israel.
This administration has weakened our national security by placing a priority on Defense cuts instead of a priority on enhancing our defense capabilities with advances in technology. The most memorable example was cancellation of the Ballistic Missile Defense system being built in Turkey. That decision made us and our friends more vulnerable in that part of the world.
Where there is no vision, there is no leadership and problems don’t get solved.
And the nation suffers.
Replacing President Obama in 2012 is definitely the right problem to work on.