We cannot emphasize enough that President Obama’s aspirations to deliver affordable and universal health care are contingent upon genuine free enterprise rather than more government intervention.
Over and over again we see how true market forces improve the quality of products and services, while bringing prices down for consumers. Here are just a few examples of how that basic concept has played out in other industries:
- The cost of food as a proportion of one’s income is merely a fraction of what it once was.
- Cell phones have advanced from expensive bulky objects to the sleek innovative computers owned by virtually everyone
- Automobiles were once only for the very rich. Today, there are models and price ranges suitable for nearly every American.
One way to let the market perform in health care is to equalize the tax treatment of individuals and businesses. Regina Herzlinger of the Harvard Business School points out that U.S. tax policy for health insurance is fundamentally irrational, regressive and ultimately destructive.
“Current tax policy generally permits employers, but not individuals, to use pre-tax income for buying health insurance,” Herzlinger writes in the National Review. “Therefore, it is much cheaper to buy insurance through an employer than in the individual market.”
The employer-provided insurance is not portable; workers can’t take it with them when they change jobs. Consequently, people hesitate to leave jobs at big firms to work for small companies that might not provide insurance. “This phenomenon, known as ‘job lock,’ robs small firms of talent and slows U.S. job growth, because small entrepreneurial firms have generated 70 percent of new jobs.”
We agree with Herzlinger that Congress should simply extend the present tax exclusion to all employees and allow them to purchase their own insurance.
In addition:
- Consumers should be permitted to shop across state lines for insurance.
- Encourage the use of health savings accounts, so the consumer is in control.
- Remove obstacles that prevent entrepreneurs from setting up new clinics and surgery centers.
True market reforms will do for health care what they have done for other industries. Rather than taking a trillion-dollar gamble on everything at once, Congress should fix what’s broken. By starting with the tax-treatment of health insurance, Congress can ultimately achieve true health-care reform, Herzlinger writes. We agree.