Current Events

2008 State of the Union

In President Bush’s 2008 State of the Union address, health care issues were mentioned, but did not play a prominent role. has the full State of the Union transcript.

State of the Union: Summary of Healthcare Issues Addressed

Bush reiterated his earlier reform proposals to end the tax deductibility of employer-provided health insurance and to expand health savings account yet no.

To build a future of quality health care, we must trust patients and doctors to make medical decisions and empower them with better information and better options. We share a common goal: making health care more affordable and accessible for all Americans. (Applause.) The best way to achieve that goal is by expanding consumer choice, not government control. (Applause.) So I have proposed ending the bias in the tax code against those who do not get their health insurance through their employer. This one reform would put private coverage within reach for millions, and I call on the Congress to pass it this year. (Applause.)

The Congress must also expand health savings accounts, create Association Health Plans for small businesses, promote health information technology, and confront the epidemic of junk medical lawsuits. (Applause.) With all these steps, we will help ensure that decisions about your medical care are made in the privacy of your doctor’s office — not in the halls of Congress. (Applause.)

Bush also discussed the need to increase funding for basic research:

On matters of life and science, we must trust in the innovative spirit of medical researchers and empower them to discover new treatments while respecting moral boundaries. In November, we witnessed a landmark achievement when scientists discovered a way to reprogram adult skin cells to act like embryonic stem cells. This breakthrough has the potential to move us beyond the divisive debates of the past by extending the frontiers of medicine without the destruction of human life. (Applause.)

So we’re expanding funding for this type of ethical medical research. And as we explore promising avenues of research, we must also ensure that all life is treated with the dignity it deserves. And so I call on Congress to pass legislation that bans unethical practices such as the buying, selling, patenting, or cloning of human life. (Applause.)

President Bush also perceptively mentioned that entitlement such as Social Security, Medicare and Medicaid will eat up more and more of the federal budget as time passes and will necessitate large tax increases, benefit cuts, or an increase in the deficit, yet no new concrete solutions were proposed in the speech.

The final health care issue mentioned was President Bush’s desire to “double our initial commitment to fighting HIV/AIDS by approving an additional $30 billion over the next five years.”

Healthcare Economist commentary

The Healthcare Policy and Marketplace Review notes that none of Bush’s 2007 healthcare reform proposals (e.g.: standard tax deduction for health insurance, expand Health Savings Accounts, medical liability reform) were enacted so why would this year be any different?  It is likely that none of the 2008 proposals will be enacted as well.  With a new president set to take office in less than a year, there is little chance of wholesale reform.

I do agree that employer-provided and individually purchased insurance should be treated similarly, but offering tax deductions for both is not the answer.  The tax deduction is more beneficial for individuals with a higher marginal tax rate (the rich) and thus the tax deduction will most those who need it least.  Instead, we should end the tax deductibility of health insurance completely.  A flat rate subsidy or voucher for every individual (or possibly a risk-adjusted subsidy based on the indivdidual’s age and sex) would make more sense.

Conceptually, I am in favor of health savings accounts, but not as they currently are used.  HSA are simply a tax deduction mechanism for those with sufficient wealth and liquidity.  Poor individuals who need more liquid asset will not be able to take advantage of the HSA.  Singapore has a mandatory HSA in which funds are automatically are deducted from one’s checking account.  I am generally not in favor of mandatory saving, but this Singaporean example is intriguing and fairly egalitarian.

I do support President Bush’s proposal for more funds for basic science research and HIV/AIDS treatment.

It will be Barak Obama, Hilary Clinton, John McCain, Mitt Romney or some other presidential candidate who will have the opportunity to institute significant health care reform because this will not happen during the final year of the Bush presidency.

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