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Commentary

The Health Care Opportunity
Wall Street Journal, 2-1-06

The Wall Street Journal lauds the Presidentís proposals for expanding access to Health Savings Accounts as a good idea with a low price tag. The Journal rightfully points out that the first step towards fixing our dysfunctional health-care system is to chip away at the tax advantages that accrue to employer-provided health insurance.

So the first principle of reform must be to equalize the tax treatment of individually purchased and employer-provided insurance. Health Savings Accounts, which were part of the 2003 Medicare bill, are already a step in the right direction, since they mate a high-deductible insurance policy with a tax-free savings account to help pay pre-deductible expenses. Mr. Bush is usefully going further by asking for the premiums on the HSA insurance policy to be tax-free as well.
Equally important is creating a national market for individual insurance. Right now employers large enough to "self insure" can do so mostly as they see fit. But individuals and small businesses who want to buy insurance are at the mercy of state regulators where they live or operate. In over-regulated states like New York and New Jersey, residents can pay 10 times as much for insurance as they would in neighboring states, and might not even be able to buy the high-deductible insurance necessary for an HSA. Individually purchased insurance also isn't portable across state lines, contributing needless anxiety to normal life decisions like moving or switching jobs.


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