by Mark Luedtke

Created on: October 18, 2008

We all know the problem: at any one time, 47 million Americans are without health insurance. Not the same 47 million over time, but many Americans who want health insurance can't afford it because of skyrocketing costs. One reason is our population is aging. In that sense, our health care system is a victim of its own success at keeping Americans alive longer.

Another major factor is that government, either directly or through subsidies and tax breaks, pays 60 percent of all health care expenditures in the US. 72 percent of Americans have their health care subsidized by government. That's like government subsidizing the cost for 72 percent of Americans to dine at the all you can eat buffet. That may appear compassionate on the surface, but imagine what would happen when Americans stampeded to the buffet. The customers would waste food, and because of increased demand, the price of the buffet would increase almost as fast as the waistlines of Americans, the price of the subsidy would go up, anybody without subsidies couldn't afford to eat there, and Americans' health would deteriorate as fast as they emptied their plates. The owners would get rich, taxpayers would get more poor and more unhealthy, and 47 million Americans wouldn't be able to afford to eat there.

When a third party, whether government or an employer, pays for your health care, health care looks like that buffet. Got a hangnail? Go to the doctor. Did you sneeze? Go to the doctor. Feeling run down? Go to the doctor. And who needs to bother with a good diet and exercise when somebody else is paying for the Lipitor and Norvasc? Third party payer systems make us more unhealthy and wasteful, driving up demand and therefore the price of health care.

John McCain's health care plan addresses the root problems of third party payer systems by shifting incentives from employer provided health insurance to individually owned health insurance plans. McCain's plan would close the income tax loophole for employer provided health care plans, instead providing a $5,000 tax credit for every family or a $2,500 tax credit for individuals who purchase health insurance, with anything left over going into a Health Savings Account (HSA), a tax free savings account for health care expenses.

Right now, if a company provides a $12,000 per year policy to its employees, that $12,000 in income isn't taxed. Recipients of employer provided health care care plans get a tax break compared to Americans who buy their own health insurance.

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