Insurance fills a useful social role, over-insurance or pre-paid medical care distorts the marketplace, encouraging over consumption and causing disproportionate price increases. Tax policy should not encourage over-insurance. A strong case can be made for repealing all tax preferences for health insurance, with an accompanying cut in the total tax rate. An alternative would be to end tax discrimination that favors employer-owned, low deductible policies, and disfavors personal ownership of insurance and self-payment of bills. Medical expenditures should have equivalent tax treatment, regardless of the mode of payment. HSAs are a step in the right direction.

Reprinted with Permission from www.aapsonline.org and www.jpands.org

Journal of American Physicians and Surgeons Volume 11 Number 3 Fall 2006