Bush Touts Health-Care Plan as Cost Control
January 26, 2007
Michael A. Fletcher and Christopher Lee, Washington Post Staff Writers
The President Says He Thinks Market Forces Will Help Hold Down Prices
LEE'S SUMMIT, Mo. Jan. 25 -- With his new health-care proposals receiving a frosty reception from Democrats on Capitol Hill, President Bush ventured here Thursday to make the case that his ideas offer the best remedy for the nation's health insurance crisis.
Speaking at a roundtable before an audience made up largely of journalists, Bush promoted his plan to offer new tax incentives for people to get modestly priced health insurance through their employers or on their own.
Bush, who announced the initiative Tuesday in his State of the Union address, said it is part of a larger strategy to use private-sector forces, new technology and changes in existing government programs to hold down health-care costs and improve access to medical coverage.
"The best way to do that is through private health insurance," Bush said. "Therein lies part of the debate we have in Washington. We believe the private sector is the best delivery of health care. We know there's a role for the federal government, but it's not to dictate, it's not to be the decision-maker."
The president wants to offer tax breaks for families who buy health insurance that costs less than $15,000 a year, and impose a new tax on those with more expensive plans. For individuals, the tax break would go to those with plans costing $7,500 or less.
Bush said his proposal would help some of the 47 million uninsured buy coverage, while giving everyone a financial incentive to seek reasonably priced health plans, which he said would slow spiraling health costs in the long run. He also promised to redirect some federal health money to state efforts to help low-income people and those whose chronic health conditions make it hard to get health insurance.
"There is no question in my mind that a proper role for the federal government is to help the poor and the elderly and the diseased get health care," Bush said. "We'll do that."
After touring facilities run by the high-tech St. Luke's East medical center here, Bush spoke in a session that included small-business owners and uninsured workers who would probably benefit from his plan.
The plan would end the tax code's longtime bias in favor of employer-sponsored insurance, allowing millions of people who buy policies in the individual market to enjoy a tax deduction on their premiums for the first time. The self-employed can deduct premium costs, but many others cannot.
Essentially, Bush would use the new tax on people with high-priced health plans to subsidize the cost of insurance for those with lower-priced coverage, a progressive feature that administration officials thought would draw interest from Democrats who now run Congress.
But so far Democrats have given the idea the cold shoulder, characterizing it as a tax on the middle class that would do little for the uninsured.
"I find the plan troubling because it does nothing to help people get insurance, hurts those who already have it and provides a tax break that benefits the wealthiest Americans," Sen. Edward M. Kennedy (D-Mass.) said.
The administration, however, contends that the plan would eliminate the blatant disparity favoring employer-sponsored coverage, which has been a feature of the tax code since the middle of the last century. Currently employer contributions to their workers' health benefits do not count as taxable income for the employee, which administration officials say encourages workers to get more expensive plans and use more health care than they otherwise would. Buyers of insurance on the individual market do not enjoy the same tax advantages.
The idea of altering that balance dates at least to the early 1980s, when President Reagan proposed limiting the amount of employer health contributions that could be excluded from an employee's taxable income and diverting the resulting tax revenue to reducing the federal deficit.
Thomas A. Scully, a Republican congressional staffer at the time who later became a top health policy adviser to President George H.W. Bush, said the plan went nowhere: Republicans panned it as a tax increase, and Democrats feared it would penalize some unionized workers with generous health benefits.
In 1992, under the first President Bush, the White House considered scaling back the unlimited tax break on employer coverage and using the new revenue to pay for refundable tax credits to help low-income people get coverage, Scully said. House Republicans, still smarting from Bush's decision to raise taxes as part of the 1990 budget deal, objected, and Bush's advisers stripped the plan out of the budget at the last minute.
"The political timing was terrible," Scully said.
A proposal similar to the current one was recommended two years ago by a presidential advisory panel studying the federal tax system. The panel recommended capping the exclusion from taxable income of employment-based health benefits at $11,500 for family coverage and $5,000 for individuals, starting in 2006. The key difference was that the panel's proposal would have limited the new deduction to the cost of premiums, while Bush's plan would allow even those with cheaper policies to claim the full $15,000 amount.
"The truth is that policy wonks have been talking about this for well more than 20 years, but politicians generally look at it and say, 'This doesn't look like a good deal for me,' " said Joseph Antos, a health economist at the American Enterprise Institute who supports the new Bush plan. "As we've joked around here for years, it's an idea that only a policy wonk could love."
Not so, said Bush.
"If people in Washington are serious about dealing with the uninsured, here is a serious idea for them to consider," he said. "They're just dismissing things because of pure politics; we have put forth ideas that are worthy of debate, and we believe will work."
AR20070125019531169787600000
