During his State of the Union Address, President Obama declared that “there will be many different opinions and ideas about how to achieve reform, and that is why I’m bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.” One public servant providing practical solutions is Rep. Paul Ryan (R-WI), who recently introduced his Roadmap for America’s Future Act of 2010. The Ryan bill outlines clear, sound principles to reform entitlement spending and health care. The Roadmap’s health care provisions would bend the cost curve in health spending, make insurance more affordable and accessible, and create a consumer-driven, highly-competitive system. This is how it is done:
1. Changing the Tax Treatment of Health Coverage
Current tax treatment of health insurance gives preference to employer-based coverage by making benefits tax free to the employee and the employer alike. Obviously, this tax policy only benefits those who receive coverage through their employer. It benefits those who also have the biggest benefit packages, usually, but not always, the wealthy. Ryan’s “Roadmap”replaces this inequitable system through creating a system of refundable tax credits of $2,300 for individuals and $5,700 for families for the purchase of health coverage. As Heritage experts have pointed out this will transform the market to respond to patients’ needs, allow portability of insurance between jobs, and further the goal of universal access.
Replacing the tax exclusion with a health care tax credit would not only help the middle class buy insurance and extend coverage to the uninsured; it would also set in place powerful incentives to reduce the rapid growth in health care expenditures…individuals and families will have the ability to choose the health plan they want, own it, and take it with them from job to job. This tax credit would also have the added benefit of allowing individuals and families to decide how much of their compensation comes to them in the form of health insurance
2. Promoting State- Based Reform and Exchanges
The Ryan “Roadmap” would create a Federal-State partnership to help states that wanted to do so create State Health Insurance Exchanges, featuring high-risk pools combined with guaranteed access to care with affordable premiums. A state health insurance exchange can be designed many different ways. The key question is what is the objective of such an exchange. For consumers who want to own and control their health insurance, and take it with them from job to job, a properly designed state exchange, as Heritage’s Robert Moffit argues, can make it easy for employees , especially those in small businesses to compare and buy affordable health plans. It can unleash the free market forces of choice and competition. An exchange designed to restrict health options, as is now being promoted by the Left, is just another regulatory roadblock to personal freedom.
3. Allow Interstate Purchasing of Health Coverage
Congressman Ryan’s proposal would also allow individuals to use their refundable tax credits towards the purchase of health insurance policies in any state. As Moffit explains, interstate competition would lead to broader and more intense competition, greater personal choice and more affordable coverage, and would secure value for consumers’ dollars.
The nonpartisan Congressional Budget Office evaluated Congressman Ryan’s Roadmap favorably, finding that “[The health insurance tax credit] could impose significant downward pressure on… the growth of overall spending on health care.” The Roadmap would also reform Medicare, putting it on more solid fiscal ground and molding it into a more consumer-driven system.
Even the President has kind words to say about the Rep. Ryan’s Roadmap, calling it a “detailed” and “legitimate” plan to tackle our fiscal crisis. The question before the taxpayers is whether the president and the congressional leadership are really serious about pursuing bipartisan reform, or whether they want to continue to push the massive and unpopular House and Senate bills that are so unpopular with the American people.
