In Tuesday’s SoTU address, Bush will be playing to a tough crowd; the national audience is well and truly ticked off at him. Thus, I’m not particularly surprised to read that he’s planning to talk about issues other than Iraq, like energy, immigration, and health care. Today’s New York Times has a preview of the health care ideas:
WASHINGTON, Jan. 20 — President Bush intends to use his State of the Union address Tuesday to tackle the rising cost of health care with a one-two punch: tax breaks to help low-income people buy health insurance and tax increases for some workers whose health plans cost significantly more than the national average.
The basic concept is that employer-provided health insurance, now treated as a fringe benefit exempt from taxation, would no longer be entirely tax-free. Workers could be taxed if their coverage exceeded limits set by the government. But the government would also offer a new tax deduction for people buying health insurance on their own.
It’s pretty early on a Sunday morning for there to be much reaction yet in the blogosphere (and this is a preview, not the actual speech) — but the feedback online is hostile already. The Democratic Daily, for instance, describes it as “a slap in the face for folks who can barely afford healthcare in the first place”, and at Gun Toting Liberal, Matthew O’Keefe (whose health care benefits are apparently paid by his employer) sees this as a burden on those who share his luck.
Polimom’s reaction is rather different, no doubt because my family tallies into the 27 million Americans buying coverage on their own, and we’re smack dab on the “average” line:
Under Mr. Bush’s proposal, people buying health insurance on their own would receive a tax break similar to the one that has historically been available to people who receive coverage through their jobs. The plan is tied to the average cost of family health coverage, which is currently $11,500 a year.
It would work like this: The administration would cap the amount of benefits that can remain tax free at $15,000 for a family and $7,500 for an individual. Anyone whose health insurance cost more than that would pay taxes on the difference. For example, a family with coverage costing $16,000 a year would pay taxes on $1,000.
The cap would also be used to establish the amount of the new deduction for people who lack coverage. In this example, a family buying insurance on its own could take a $15,000 deduction — even if the insurance cost less. The cap would rise with some measure of overall inflation, but would not necessarily keep pace with the costs of medical care and health insurance.
Unless you’re working for yourself, for a very small company (that doesn’t offer benefits), or for minimum wage, you’re probably not going to understand the benefits of Bush’s tax proposal — but this one’s talking directly to Polimom. We’re lucky in that we can afford to insure ourselves, but it’s eating up a significant percentage of our income. For a family of three, all healthy, we’re paying nearly $900 / month — and it’s the worst plan I’ve ever had.
If this is all there is to Bush’s proposal, it’s not enough, but it doesn’t appear to deserve a sniff, huff, and dismissal, either. Even this little bit would provide help for the many millions of us who are not under that golden employer umbrella, and thus don’t have access to “group plans” — which is, ultimately, the killer on private plan costs.
Before going off half-cocked about how it will suddenly be some burden on those of you who are in the insurance g-zone, check to see how much your employer bennie actually costs. I’d be surprised if there are very many families with employer-offered group plans that cost over $15,000 per year…
It’s a start, if only because it’s a step, and although this administration is absolutely atrocious in many ways, I’m willing to hear this idea out… just as I’m looking forward to other proposals in response. If Bush is willing to have the dialogue, then by all means, let’s have it!
What I’d really like to see is health care insurance de-coupled from employers altogether, with a corresponding restructure of “groups” to the wider population. Do it by state or county or region, but do it.
I am a Benefits Director for a Fortune 500 company. President Bush’s proposal is exactly what is needed. It alone will not solve the health care cost crisis but it is a step in the right direction. Something must be done to transform the health care market from one where most rely on their employer for coverage to an individual market. This looks to me like it first of all will create a level playing field for the first time between individuals who buy their own coverage and those that get coverage through their employer. Second, if you begin to offer people a flat $15,000 dedcution if they buy individual coverage you are going to have lots of people say they would rather buy their own than be covered in an employer plan. Employers will quickly become irrelevant for health care which is the way it should be anyway. I don’t buy my clothing, autos or food through my employer why should I have to buy my health care through them?