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Cutting the cord on government-subsidized insurance subsidies for employers

President Bush has it right on health care. In his recent “State of the Union,” he made the point as clear as possible.

“A government-run health care system is the wrong prescription,” Bush told Congress.

How would Bush go about securing expanded private health-insurance coverage without further government mandates and other meddling? By allowing individuals to deduct health-insurance premiums – just like employers do. That means employees would find themselves on equal footing with their employers when seeking health insurance.

“I propose that individuals who buy catastrophic health-care coverage, as part of our new health-savings accounts, be allowed to deduct 100 percent of the premiums from their taxes,” Bush said.

The proposal would represent the beginning of the end for the longstanding health-insurance tax benefits employers get … and individuals do not.

“By giving individually purchased and employer-purchased health care identical tax breaks, insurance will be more affordable for millions of Americans who are self-employed, or who can't afford or are not offered insurance through their employer,” said Sean Parnell of the Heartland Institute. “This tax change supports the transformation of our health-care system to a market-oriented system where patients and doctors are in charge, not government, employers and insurance companies.”

Kentucky could spur a revival of its insurance market by adopting policies similar to the Bush plan. The commonwealth suffered badly under the poor reforms of the 1990s that drove away dozens of providers. Thousands of Kentuckians have gone without insurance solely because of the willful decimation of the state’s health-insurance market.

By extending tax benefits of employer-provided health insurance to individuals, Kentuckians could have more than a few insurance carriers fighting for their business.

The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.

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