By February 3, 2006Health Care

I’m not sure where the manufacturing community will be on the President’s proposal (Reps. Chocola and Mark Kennedy are also introducing legislation) for full deductibility of out of pocket medical expenses. There is a compelling equity argument, particularly for those without access to employer-sponsored coverage. In addition, anyone with significant health expenses that have missed the 7.5% AGI threshold can sympathize. But, we also worry about encouraging the wrong kind of consumption.

The theory is that with added consumption, more providers will compete for their “business” and lower costs and higher quality will result. The jury is out on this theory. There is something to be said for the right kinds of consumption (see above); an ala carte health care system that pampers consumer excess could well be a dangerous step in my view.