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The 2007 State of the Union Address: The President's Health Insurance Proposal Is Not a Solution |
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From The Commonwealth Fund: While it is encouraging that President Bush made health care a theme of last night's State of the Union address---an issue of great importance to the new Congress and to the public---his proposal to offer tax deductions to those who buy health insurance would do little to cover the nation's nearly 47 million uninsured. Under the president's proposal, Americans with employer-provided health insurance would have the employer contribution counted as taxable income. But anyone with health coverage---whether provided by an employer or purchased individually---would have the first $7,500 of income excluded from income and payroll taxes or, in the case of families, the first $15,000 of income. Those purchasing coverage in the individual market would in effect be getting a new tax break, as would those whose employer contribution currently is less than the new standard deduction for health insurance. The administration estimates this change in policy would translate into a tax increase for about 20 percent of employees; however, this could rise to more than half of employees by 2013, if increases in health insurance premiums continue to outpace general inflation. In addition, the president proposes diverting federal funds from public hospitals to state programs for the uninsured. Although the Bush administration's plan would offer subsidies to people looking to buy insurance on the private market, it would fail to assist most of the uninsured. The Commonwealth Fund 2005 Biennial Health Insurance Survey found that one-fifth of people who had sought coverage in the individual health insurance market in the last three years were denied coverage because of health problems or were charged a higher premium.
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