Ramesh Ponnuru: Romney Is About to Make Bush’s Health-Care Blunder

Mitt Romney, so long bedeviled by the politics of health care, may be about to make another serious mistake.

 

He is on the verge of spelling out a plan to replace President Barack Obama’s health plan. Romney’s advisers, both inside and outside the formal campaign, want the main component of his alternative to be a change in the tax code’s treatment of health care. But there are two versions on the table, and Romney is leaning toward the one that would offer much less help to the uninsured.

 

For decades, people have paid taxes on their wages but not on their health benefits. This policy gives people an incentive to get health insurance through their employers, rather than cashing out the benefits and buying insurance themselves. This reliance on employers, according to many analysts, is one reason health costs have grown so fast: People are less cost-conscious when they are paying for services indirectly. Those who don’t have access to employer-provided coverage, meanwhile, are left out in the cold by current policy.

 

In 2007, George W. Bush’s administration proposed to start treating individually purchased and employer-provided coverage the same. People who got insurance either way would get a “standard deduction” of $15,000 off their taxable income -- and they would get the same deduction whether they bought cheap or expensive insurance, restoring the incentive to economize. Romney is considering reviving Bush’s idea...