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Yesterday the President threw himself into the national debate on healthcare by offering his own initiative on the issue. He essentially offers two changes: one, being a shift of responsibility from the federal to state governments and, two, a shift in the tax burden from private to employee based health insurance.

Free Market News reports:

President Bush is putting together a proposal to tax workers for health insurance payments paid by their employers, according to the Associated Press and Reuters. The Bush administration is hoping that the plan will encourage individuals to buy their own insurance. Under the proposal, health insurance benefits would be considered taxable income subject to a standard deduction of $7,500 for individuals and $15,000 for families. In addition, individuals would be able to deduct their health insurance premium costs if they pay for it themselves. The tax proposal will likely help the 46 million Americans who are uninsured by giving them an incentive to buy private health care.

What I can agree on with the President on is that employee-based healthcare is overemphasized. For very long politicians have been attempting to connect health coverage with employment. This emphasis, however, seems irrational to me. There is no reason for connecting healthcare and employment just like there is no reason for connecting internet service and employment. We have division of labor for a reason–it is more efficient. Needlessly hampering employers with healthcare costs will only inflate the price of labor and reduce the demand for employment.

But although lowering taxes on individual insurance and no longer placing as great an emphasis on employer provided care are good steps it cannot avoid the fact that Bush’s plan still encompasses taxing those who have health care to pay for those who do not. Politicians have led the public to think that, while there are different methods of going about it, the only options we have involve government.

But there is an alternative that has not been presented, and that is deregulating the healthcare system in favor of freedom. What exists in the issue of health care is that people seem to view it as different, even sacred, compared to everything else–people don’t demand universal home ownership or cell phone coverage, but many do medical insurance. The fact remains that health coverage exists within an economic reality like any other commodity–it must obey by economic laws like supply and demand.  By taxing people with coverage to pay for those who do not, you raise the price of insurance and ultimately punish the purchase of healthcare. By using one man’s money to buy another’s health coverage for others, there is no limit on how much money can be wasted. And by ensuring that there will automatically be demand for healthcare government destroys incentive for innovation and production of quality healthcare.

Nearly everyone in politics agrees that healthcare is in an unacceptable state but they still fail to recognize why it is at that point. For over seventy years we have been trying what Bush, Kennedy, Schwarzenegger, et al. are still proposing today–government sponsored coverage–and all the while no one acknowledged the free market alternative. Until and unless we reintroduce freedom to an industry long devoid of it we ask for its destruction. Only by removing the burden of regulation and the costliness of taxation and by restoring the incentive to buy and sell will the health of healthcare be ensured.

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The Bush Proposes More Of The Same On Healthcare by New School Politics, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.