Sunday, January 21, 2007

Bush's New Health Plan

Oh dear, looks like he's making precisely and exactly the wrong decision:

President George W. Bush on Saturday proposed tax breaks to make health insurance more affordable to the nearly 47 million Americans who lack it and suggested removing some tax benefits for the most expensive employer-provided health care plans.

Health care is emerging in opinion polls as a top concern among many Americans as private health insurance costs soar, putting a burden on workers and companies.

The president, looking to gain momentum for his domestic agenda that is at risk of becoming overshadowed by the Iraq war, will include the health proposal in his State of the Union address on Tuesday.

Typically, if you offer a tax subsidy you'll increase demand for that thing. This is known to make such things more expensive. Better would have been to abolish the tax subsidy on employer paid health insurance. When people pay the full cost of something then we get the socially optimal amount of it.

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