TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Max Baucus has made some changes to his plan:

Mr. Baucus would also make it more difficult for people to take tax deductions for medical expenses. Under current law, taxpayers can take an itemized deduction for unreimbursed medical expenses, to the extent they exceed 7.5 percent of adjusted gross income. Mr. Baucus would raise the threshold to 10 percent.

The current tax system already heavily favors employer-provided health insurance. Employer-provided health benefits are not taxed at all (meaning it doesn’t contribute to your income, reducing your tax rate), while individual-bought health insurance must be paid for with taxed income, and can only be deducted from their adjusted gross income for the portion of the expenses that exceed 7.5 percent of their income. For example, if an individual made $100,000 a year and paid $10,000 in medical expenses last year, they can only deduct $2,500 dollars.

Baucus’s change in the tax law, which is necessary to pay for the rest of the bill, only makes this worse. This means health insurance will effectively be more expensive for individuals.

Making it more difficult for individuals to hold insurance is the opposite of what we should be doing. The problem with the health care industry, as far as costs are concerned, is individuals are so completely divorced from the cost of their care. Since a nebulous “insurance company” is paying for whatever procedures, drugs or work done, and they bear very little of it, there is no reason for them to decide whether they need it or not, or to find a more affordable provider. This increases costs because the normal market mechanism for reducing cost is hampered.

We should be trying to make it easier for individuals to have their own health insurance, not more difficult. But that’s precisely what Baucus’s bill, and the proposals in the House, do.