Government
Plan for uninsured draws mixed reaction
■ President Bush aims to change the tax code to equalize the treatment of individually purchased and group health coverage.
By David Glendinning , Doug Trapp — Posted Feb. 12, 2007
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Washington -- Response to President Bush's plan for tackling the problem of the uninsured ranged from high praise to disdain.
Many medical organizations, including the American Medical Association, applauded him for addressing the issue. But several groups offered advice on how to reform the system.
"The president has raised the nation's awareness of the inequities in the tax treatment of Americans based on individual versus employer-purchased health care," said AMA President William G. Plested III, MD.
"Bottom line: Americans with individually purchased health insurance pay taxes on the entire cost of their insurance, while those with employer-sponsored health coverage don't."
Bush's proposal, unveiled during his Jan. 23 State of the Union address, would change that dynamic.
It calls for a new, standard tax deduction -- similar to the deduction for dependents -- beginning in 2009. Anyone would be eligible to deduct their health insurance spending, with an individual limit of $7,500 and family limit of $15,000. At the same time, it would count employees' health insurance as taxable income.
AMA policy supports the type of tax reform Bush proposes, but it also calls for providing tax credits inversely related to income to buy health insurance.
"Many without coverage lack the means to get regular checkups needed to monitor and control chronic diseases, like heart disease and diabetes," Dr. Plested said.
Business groups, including the U.S. Chamber of Commerce, were particularly supportive of the new tax deductions. "This would, in effect, provide a 'level playing field' for individuals, self-employed, small businesses and large businesses," said R. Bruce Josten, the chamber's executive vice president for government affairs.
But the consumer group Families USA was critical. Tax breaks need to be advanceable, refundable and substantial to be meaningful, said the group's president, Ron Pollack. "This is not a serious proposal," he said.
Families USA and 15 other organizations that make up the Health Coverage Coalition for the Uninsured recently unveiled a plan to cover more than half of the estimated 46.6 million uninsured Americans through an expansion of federal and state programs, as well as tax credits. The AMA is also a coalition member.
In Congress, Democratic leaders of the House and Senate said the president's plan doesn't do enough to address the costs facing the uninsured. "Health care is a crisis in costs and coverage, and the president's plan will make both fronts worse for millions of Americans," said House Speaker Nancy Pelosi (D, Calif.) and Sen. Majority Leader Harry Reid (D, Nev.).
On the other side of the aisle, House Minority Leader John Boehner (R, Ohio) called for bipartisanship. "The proposal unveiled by the president tonight for increasing the number of Americans with health insurance sounds promising, and it deserves a full and fair hearing in Congress." Senate Minority Leader Mitch McConnell (R, Ky.) said Bush's plan is common sense.
The White House estimates that the plan would need no new federal spending over a 10-year span because of the revenue that taxing employee health benefits would generate. When balanced with the new exemption, 80% of Americans would see smaller tax bills -- especially those who buy non-group health insurance.
A family of four with a $60,000 income buying health insurance in the non-group market would get a $4,545 tax reduction. But a similar family of four with employer-sponsored insurance would save only $424 in taxes, according to the Bush administration. The figures assume a $13,600 average cost for a family plan.
The White House estimates that an additional 3 million Americans would buy health insurance under the president's proposal.
National Assn. of Public Hospitals President Larry S. Gage argues that new federal spending will be needed. "This approach is no more than a shell game that would cover at most a small number of uninsured at the cost of undermining services and access for all low-income patients," he said.
Bush also used the address to restate his support for enacting medical liability reform, expanding health savings accounts, allowing association health plans that would let small businesses pool together to buy health insurance, reducing medical errors using health information technology and enabling medical price transparency.
Re-emphasized priorities
The president also renewed his alarm about the rate of spending growth in entitlement programs, including Medicare. Congressional aides said more attention to the growing problem could interfere with physician attempts to prevent reductions in pay and raise reimbursement levels.
"Social Security and Medicare and Medicaid are commitments of conscience, and so it is our duty to keep them permanently sound. Yet we're failing in that duty," Bush said. "And this failure will one day leave our children with three bad options: huge tax increases, huge deficits, or huge and immediate cuts in benefits."
Last year, the White House presented in its budget plan tens of billions of dollars in proposed Medicare cuts that largely were ignored by lawmakers. Aides said they expected a similar sequence of events for the fiscal 2008 budget cycle.
Bush emphasized that patients and doctors should be at the center of health system reform. "In all we do, we must remember that the best health care decisions are made not by government and insurance companies, but by patients and their doctors," Bush said.
Dr. Plested said the AMA "couldn't agree more" and cheered the renewal of a push for medical liability reform.