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MONDAY, DECEMBER 19, 2005
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EDITORIAL

Innovative thinking needed on paying for health care

Your employer may be paying for your health insurance, but the federal government is contributing in an indirect way: by forgoing $130 billion a year in personal income taxes that it could charge you on the value of that coverage.

New York Times writer Eduardo Porter suggests there's a more efficient way for the government to spend $130 billion that would provide health coverage to more Americans. Right now, 45 million remain uninsured, but the nation has the highest per-capita spending on health in the world — about $5,400 in 2002.

"If you had $150 billion to play with, you could come very close to universal coverage," David Cutler, a Harvard economics professor, told Mr. Porter.

This could be accomplished, Mr. Porter writes, by reducing health-related tax breaks for wealthier Americans and using the money to help the less wealthy whose jobs don't provide coverage under the present system. Health care would not necessarily be run by the government: Funds could be channeled to private companies, which have a "superior track record on innovation."

Such a plan would be controversial, but it's an example of the kinds of innovative solutions that need to be considered because the present health-care system leaves some people out and, when they receive critical care that can't be denied them, haphazardly spreads costs around to others.

The very idea of tying health insurance to employment needs review. Everybody needs health coverage, but not everybody is able to find a job that provides it. The current system is so costly that it distorts decisions both employers and employees make on such topics as hiring, quitting, whether to create or eliminate jobs, and whether to locate jobs in the United States or offshore.

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