“The basic structure is to offer all Americans a standard tax deduction, in 2007 set at $15,000 for families and $7,500 for individuals. The deduction would apply to payroll tax both employee and employer contribution as well as to income tax. Importantly, the size of the deduction would be independent of the amount spent on the plan. Any taxpayer who has a plan that includes catastrophic coverage gets the full deduction, irrespective of the plans cost. That is important because it creates the incentives to choose efficiently. A family that wanted to spend less on the plan than the value of the deduction would pocket the difference. A family that wanted to spend more on a plan than the value of the of the deduction would bear the additional cost out of pocket. As a consequence, consumers would reap the full benefit of keeping the cost of their plan low, which prompts them to shop and choose effectively. If the extra coverage offered by a $10,000 plan over an $8,000 one is not worth at least $2,000 to the consumer, he will not purchase it.”