Your tedious technical change to US Healthcare was to “…make it possible for people who are on Medicaid to purchase supplemental insurance plans.” How do you feel about eliminating the employer tax deduction for benefits? We could offset the tax increase by lowering the corporate rate if that helped it pass. It seems like this post-WWII era policy is the original sin behind America’s third-party payer system, so my (naive?) gut is repealing it is important.
I’ve been thinking about this idea for 20 years. I had just moved to the Bay Area and attended a panel discussion at UC Berkley. After things broke up, I approached James Fallows and asked him why America had a third-payer system in the first place. It always seemed like a bad framework that combined the worst aspects of both single-payer and private-sector systems. He explained the history: it was a way for employers to increase pay without increasing pay.
Always on the lookout for a straightforward fix to a complex problem,2 I walked away wondering whether the best path forward would be to repeal this distortionary tax deduction and let things find a new equilibrium.
In his answer, after Matt observed that “What you’re proposing here is something that sounds tedious but would actually have sweeping consequences for American society.”, he predicted the outcome would be that some employers would stop offering health insurance and that new businesses would never offer it.
He also agreed it would be a “pretty good change” and that to make it work you’d need to do something popular with the tax revenue.
So turns out fixing American healthcare is
easy straightforward. 😉 What’s next?