Bob Riley has proposed to give a tax break to small businesses that offer health care coverage.

Riley’s plan would allow companies with 25 or fewer workers to deduct twice the amount they pay for health insurance premiums from their state income taxes. Also, small business employees with incomes of up to $50,000 would be able to deduct twice the amount they pay for health insurance from their individual income taxes.

The proposal has been introduced in the Alabama House’s Education Appropriations Committee, said Alabama Rep. Jay Love, R-Montgomery, the sponsor of the measure. It could be considered in a couple of weeks, he said.

Would Riley’s plan help small businesses?  Of course!  But, the plan would further exacerbate one of the primary problems with our health care system: employer provided health insurance.

Employer provided health insurance makes us all bad consumers.  Decoupling health insurance from employers - just like auto or homeowners insurance - would impress upon people the true cost of health care and encourage people to make wiser choices.  Many people pay only a small portion of their health insurance premiums.  The balance of the plan that is paid for by the employer essentially depresses the worker’s wages by an equal amount, but that is a hard concept for some to grasp.  When people get something for nothing (or very little) they don’t truly appreciate the cost.  If workers could take home that additional pay and shop around for a health plan that fit their needs they might think twice about what they buy and how they use it.

Businesses only offer health insurance as a fringe benefit because of the tax deduction.  Some might have started offering the benefit without the deduction, but I seriously doubt the practice would be widespread.  Riley would only further ingrain the practice with his new tax plan.  One of the smarter domestic policies Bush has mentioned was to take the tax deduction away from businesses and give it to citizens.

I’m going to think this through while I type, so indulge me.  I would hazard a guess that the universal socialized health care fans (mainly Dems) have a vested interest in keeping the current employer provided insurance system.  They want to change health insurance from a fringe benefit that rewards people whose contributions to their company (and the economy in general) merit such compensation to a birth right.  My reasoning is that it is much easier for the federal government to impose requirements on companies under the broadly interpreted interstate commerce clause than it is for them to impose requirements on individuals.  Bush’s plan fell on deaf ears in the Democratic controlled legislature.  It doesn’t fit their long term plans of lording over our health care decisions.  Maybe he should have floated the idea during his first six years when he could have just told the GOP to vote yes.

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This entry was posted by Brian on Monday, April 2nd, 2007 at 4:34 am and is filed under Alabama, Health Care. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.