Arnold Kling writes:

Ramesh Ponnuru writes,

Ponnuru is correct, as far as I can see. I wonder what Ms. Baicker will say here. Personally, I would make 100 percent of employer-paid health care benefits subject to tax, and then cut tax rates. That is known as tax reform.

Kling's post reminded me of a couple of questions I've been pondering since hearing about the Bush plan:

1. While much attention (e.g., Kling's post) has been paid to people with so-called gold plated insurance policies, how does the Bush plan affect people with less expensive health insurance plans? Under the Bush policy, every family gets a $15,000 tax deduction as long as they have any sort of medical insurance policy. It seems, therefore, that not only does the Bush policy make the marginal tax effect of another dollar of cash/noncash compensation equal for people with policies costing more than $15k, but that it does the same for people having policies costing less than $15k. Hence, all consumers, not just consumers with expensive medical insurance policies, will become more careful shoppers for medical insurance policies.

2. Are flexible spending accounts a loophole that could be exploited to have medical spending be tax preferred (at the margin)? I haven't seen anyone address this question, but I think so. I skimmed a White House briefing with CEA member Katherine Baicker and saw no mention of FSAs.