Wednesday, January 24, 2007
Bush health plan: will it help you?
The news media usually get the text of the State of the Union address about an hour before the president begins the speech. When it hit my inbox last night, I sat up straight. My pulse quickened. I clicked and scanned for any mention of health or medicine. I found them. There were six paragraphs on health care.
President Bush is proposing a new tax deduction for everyone who has health insurance. The goal is to get more people insured who otherwise couldn't afford it. It's a standard tax deduction - $15,000 for families and $7,500 for individuals. My first reaction? Great! I get a tax deduction courtesy of George W. Bush.
But, of course, it's a tax code initiative, so it's complicated. Right now, the money you and your employer pay into your health plan is exempt from income and payroll taxes. The president's plan would turn all employer-provided health insurance into taxable income. Whatever you and your employer pay for your insurance would show up on your W-2 form. Suddenly, health care seems almost as tedious as doing taxes.
So does this plan help or hurt people? For the 160 million Americans with employer-based coverage, there would be slight differences. The White House says 80% of employer plans fall below the $15,000 and $7,500 caps. They estimate an average tax decrease of .3%. So, people like me with a decent employer-based insurance plan would see negligible tax relief. One out of five people with employer plans have insurance coverage costing more than $15,000 and $7,500. For them, taxes would increase an average of .1%, according to the White House. All in all, the Bush plan gives people incentive to get lower-priced plans.
So far, the American Medical Association, the American College of Emergency Physicians and insurance groups have applauded Bush's plan to get more people insured. According to the White House, 3 million people will pick up insurance under this plan. But there are 47 million uninsured Americans, and critics say the president's plan doesn't help enough of them. After all, a tax deduction won't help the 43 percent of the uninsured who are so poor they aren't required to pay income taxes.
Democrats and labor unions say this proposal will encourage employers to stop providing health insurance. One nursing group points out that it provides tax incentives for purchasing cut-rate plans that traditionally have high deductibles and other out-of-pocket expenses.
According to some analysts, the time when your annual health care spending exceeds the $15,000/$7,500 tax deduction may happen sooner than you think. The standard deduction amounts are tied to inflation, not to health care costs, which have increased by double digits in recent years. Also, you may be harder hit if you live in an area where health care costs more, such as the Northeast, or if you work for a company with an older and sicker work force with higher premiums.
It's been almost 60 years since a commander in chief first mentioned health care in a State of the Union address. It was President Harry Truman in 1948. "Our ultimate aim must be a comprehensive insurance system to protect all our people equally against insecurity and ill health." Six decades later we're still struggling with that goal.
What do you think about health care in America? Will the president's plan help you? Is it a step in the right direction? Or will it cause more problems than it solves?
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