The White House Prescription for Health Care

The debate over how to fix the nation's healthcare system and provide for the 47 million Americans without insurance is heating up, and is sure, along with Iraq, to be the hot-button issue in the 2008 presidential election.

Clearly, candidates from both parties will be dipping their toes in the policy waters — unfortunately, President Bush missed an opportunity to steer the debate in a more constructive direction when he gave his State if the Union address last week.

The president's plan certainly has its merits, but they are not enough to compensate for its flaws — namely, that the White House "fix" would disrupt a private system that is already working in order to put a band-aid on a public system that is not. What's more, the White House plan would seek to punish millions of Americans who have made responsible choices about their family's healthcare.

You don't have to be Dr. Spock to know that one of the worst things a parent can do is punish a child for good behavior. Take away a promised treat or trip too many times from a toddler trying to play by the rules, and you're planting the seeds for an impossible adolescence.

Yet that's exactly the behavior encouraged by President Bush when he laid out his sweeping healthcare initiative. In a nutshell, the Bush plan would impose a new tax on millions of Americans who now have good employer-sponsored coverage, and give tax breaks to the tens of millions of uninsured so they could afford to buy coverage of their own.

Right now, millions of workers insured by their companies would get a small tax break. But if your family is one of the estimated 8 million who have a so-called "gold-plated" plan costing $15,000 or more, your taxes will go up. Essentially, if you have a good job with a generous company and prudently pick a comprehensive plan to protect your family year in and year out, you will be punished for good behavior.

And it's not just the Wall Street fat cats who will get hit. Millions of factory workers would also be disproportionately hurt by the plan. As the president of the United Steelworkers Union pointed out, the plan is "a back-door attempt to saddle union workers with a tax for the health-care benefits they negotiate through collective bargaining."

Sure, runaway healthcare costs have crippled many industries in the rust-belt, but retroactively taxing these benefits after hard-fought negotiations seems unfair at best. What's next -- take away mortgage deductibility to subsidize new homes for renters?

The germ of a good idea in the president's proposal is that making individuals more directly accountable for the cost of their health coverage will increase competition and reduce overall costs — but I suspect the union bosses are right. It's a back-door tax increase no matter how you slice it. Before long the 65 percent of Americans who get their healthcare at work will pay for the 47 million who have no coverage at all.

Would the $15,000 "cap" on insurance be indexed for inflation? No one in Washington is talking — but don't bet on it. With healthcare costs rising at an annual rate of 7.5 percent, that means it only be a few years before the Bush plan morphed into a huge tax hike for tens of millions of American families. Just think of the unintended consequences of the Alternative Minimum Tax.

No doubt, the plight of the uninsured needs to be addressed, and Governors Spitzer, Schwarzenegger and Romney have floated a few good ideas. One of the biggest problems with the Bush proposal is that it discourages personal responsibility rather than promote it. For a nation with a negative personal saving rate that's a dangerous message to send to say the least.

No, this time Senate Majority Leader Harry Reid had it right when he declared: "Punish people because they have good insurance?" Sounds crazy, but such a plan could be well on its way.

Terry Keenan is anchor of Cashin’ In and is a FOX News Channel business correspondent. Tune in to Cashin' In on Saturdays at 11:30am and find out what you need to know to make your money grow and keep what you already have!