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Thursday, March 26, 2009

Should Obama tax employee healthcare benefits?

The past review of President Barack Obama's flip-flop on taxing employer health-care benefits is on the mark. Health-care spending in this country topped $2 trillion in 2005, which was about 17% of GDP.

Mr. Obama is looking for new funding to pay for an expansion of government-run health care and is hinting at taxing corporate-provided health insurance. If he does, he'll miss a large slice of the work force. Government employees (federal, state and local) receive more than twice the health-care benefits of the average American, and no one is talking about taxing their health benefits.

The best answer to America's health-care crisis is to open more medical schools, have patients pay doctors directly, and have patients bid for their own health-insurance programs. The managed health-care approach adds no value, though it does mask the true cost of care.

The government needs to create better incentives. A good start would be to create a tax credit (say, $5,000 per person) for everyone to use to buy health insurance. Pay for the credit with a tax on corporate and government health insurance.

This system would benefit average Americans, businesses, and the American health-care system as a whole. Under this plan, our economy would come out ahead.

Burr LeChevet Wilton, N.Y.

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