How Bush would tame healthcare costs

When businesses buy employees' health insurance, they receive a tax break, which is essentially a taxpayer subsidy worth about $120 billion annually. Individuals who buy health insurance on their own currently receive no tax break. They must spend more than 7.5 percent of their income on medical expenses before qualifying for an income-tax deduction. Of the 45 million uninsured, 80 percent are estimated to be working at low-wage jobs, many of which don't include health insurance.

Bush is expected to call for individuals to be able to take deductions similar to those taken by businesses.

Pros

• Could create incentives for more uninsured individuals to buy insurance.

• Levels the playing field between businesses and individuals.

"We're throwing a tremendous amount of dollars at people like me. I have a nice job and a nice salary," says Joseph Antos, a healthcare expert with the American Enterprise Institute. "I'm appreciative, but in truth I don't need it nearly as much as someone who is working at the minimum wage who isn't getting that tax break."

Cons

• Might encourage some businesses to cut back on the health insurance they provide.

• Is estimated to cost in the tens of millions of dollars, and with increasing deficits, Congress may balk.

• May not help the working poor, unless the tax advantage is given as a credit.

"Only a refundable tax credit will help people [with little income] who have little or no tax liability," says Mr. Antos.

Currently, no national standard exists by which consumers can judge the quality and cost of varying healthcare services. By creating such a set of standards - which an alliance of healthcare providers is currently attempting to do - and encouraging hospitals and doctors to comply, consumers would have the tools to shop for the best care at the best bargain. Even the staunchest advocates of HSAs agree that without such data, consumer-driven healthcare won't work as advertised.

PROS

• Helps consumers make more informed choices.

• Helps improve quality of care.

"You will get a lot more pressure to understand the comparative effectiveness of technologies and medical procedures," says Gail Wilensky, a health policy expert at Project Hope in Washington. "That can help payers, providers, and even the patient community to understand if there is either not much known or a lot of dispute about how effective a new technology or procedure may be. For some people in some circumstances it can make all of the difference in the world."

CONS

• Is expensive to implement because of the database technology required.

• Could take years to accomplish because medical culture is slow to change.

• Is based on cost, when some consumers don't make medical decisions on that basis.

• Could be difficult for consumers to understand.

"It's right now such a complex pricing mechanism that even experts on the inside have trouble deciphering it. How in the world is an individual consumer going to?" says Dr. Henry Simmons, president of the National Coalition on Health Care in Washington.

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