January 22, 2007

W Gets an A+

It's not everyday the President gets an A+ from Arnold Kling, but he has today. In Capping a Bad Tax Break Kling applauds the prereleased details of the President's Health Care plan.

I would grade this as "A ". The question is whether he can get any Democratic support. My guess is that some of the most extravagant health insurance plans come from unions. The fact that the President's proposal is much more "progressive" than the status quo (as it stands now, the "rich" benefit the most from not having to declare the cost of gold-plated health plans as income) will not get any support from "progressives."

Hat-tip to Josh at Everyday Economist, who has some kind words for it as well.

I was concerned that the reduced deductibility was a tax increase for the rich, perversely telling employers that they cannot provide too much health care. Yet I am conceding to my economic superiors: Hendrickson, Kling, and Mankiw.

The plan would break the perverse incentive structure which allows employers to provide comprehensive care disguised as insurance as a tax-free benefit, indirectly righting the broken incentive of overusing health care because it's paid for by another.

The President gets his share of abuse on these pages (not from me, don't send the jackbooted thugs to my address Mr. Gonzales) but we do a disservice to ignore the positive features of "compassionate conservatism" where President Bush does seek to repair broken incentives.

Second Bush Administration Posted by John Kranz at January 22, 2007 1:47 PM

The American Spectator also takes a look. Here's something that caught my eye.

Under the plan, individuals purchasing insurance on their own or through their employer would be exempt from paying income or payroll taxes on the first $15,000 of their income. This would translate into $4,500 for a family of four with income of $60,000. In addition, small businesses such as S-corporations would get the same tax incentives for providing healthcare as larger companies.

As an "individual purchasing insurance on my own" and prospective S corp, I like it.

Posted by: AlexC at January 22, 2007 9:45 PM | What do you think? [1]