Home>Health Insurance> Bush Rejects Caps On Worker Health Insurance Deductions Recommended By Tax Panel
Bush Rejects Caps On Worker Health Insurance Deductions Recommended By Tax Panel
President Bush has decided not to support a plan recommended by the nine-member President's Advisory Panel on Federal Tax Reform that would cap income tax deductions for workers receiving employer-sponsored health insurance, according to Al Hubbard, director of the White House's National Economic Council, Bloomberg reports (Murray/Donmoyer, Bloomberg, 1/12). Under the current tax code, employers can take a deduction for health insurance provided to employees, and workers pay no tax on the value of the coverage. Under the panel's recommendations, employees would have to pay income tax on employer-sponsored health insurance premiums higher than specified amounts (Kaiser Daily Health Policy Report, 10/19/05). Hubbard said, "I know the president's not interested in pursuing that," adding that Bush would instead focus on expanding untaxed health savings accounts and greater deductibility of medical expenses. Proponents of the deduction say that failure to implement it would cost the federal government $6 billion to $28 billion in lost revenue. Karen Ignagni, president of America's Health Insurance Plans, said of the proposal's rejection, "That is very good news because the discussion in '06 should be about ways to expand, not contract coverage." Kaiser Family Foundation Vice President Larry Levitt said, "In the last few years, we have seen fewer employers offering coverage and fewer workers getting coverage through employment. Removing deductibility would have only exacerbated that trend" (Bloomberg, 1/12). Bush To Focus on Health Care in 2006
President Bush plans to focus on health care as the "centerpiece of his 2006 domestic agenda," in part in response to employer and consumer concerns about increased costs, the Wall Street Journal reports. According to the Journal, Bush likely will propose expansions of previous health care plans, rather than new federal spending, and the proposals likely will focus on market forces, tax credits, competition among providers and individual health insurance, rather than employer-sponsored coverage. Bush might propose plans to provide larger tax breaks for U.S. residents who purchase individual health insurance, encourage broader use of health savings accounts and help consumers obtain more information about providers, the Journal reports. According to the Journal, the focus on health care "is intended to give Republicans an election-year answer to many of the worries that voters have about the fast-changing economy." Bush on Wednesday called health care an "unmanageable cost" for employers, adding that the health care system should have "a direct connect between provider and consumer" and "transparency in the pricing system." CMS Administrator Mark McClellan said increased information about providers would help individuals with HSAs who "don't feel like they've got enough useful information to make the best decisions about their care." However, the Bush proposals likely will receive criticism from conservative Republicans for "not going far enough" and from Democrats and unions over concerns that the plans would "undermine" the employer-sponsored health insurance system and prompt individuals not to seek preventive care, the Journal reports. Jared Bernstein of the Economic Policy Institute said, "I think this is a classic risk shift onto individuals that is both unpalatable to people and bad policy" (McKinnon/Lueck, Wall Street Journal, 1/12)
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