President Bush’s new proposal for broadening access to health coverage by reforming the tax code drew strong responses from both sides of the aisle and from myriad healthcare groups. Under Bush’s plan, health insurance provided by employers would be considered taxable income, and all Americans would receive a standard tax deduction for health insurance. Calling it a “middle-class tax cut,” Bush claims that the deduction would lower taxes for about 80% of people with employer-provided policies that are worth less than the deduction. And Americans who buy health insurance on their own would get an average $3,650 tax break in 2009, while uninsured people who purchase health insurance would get a $3,350 tax cut.
Rep. Pete Stark, D-Calif., chairman of the Ways and Means Health Subcommittee, said the subcommittee would not consider Bush’s proposal. “Under the guise of tax breaks, the President is pursuing a policy designed to destroy the employer-based healthcare system through which 160 million people receive coverage,” said Stark in a statement. “But in the individual insurance market, people will be denied coverage because of family history, existing illnesses, or genetic makeup. They’ll also be unable to take advantage of the cost savings that currently result from sharing risk company-wide.” Instead, the country should “build on what works,” by using Medicare as the “best model for healthcare reform.” Richard L. Clarke, president and CEO of the Healthcare Financial Management Association, said he believed Bush's proposal was a "short-term fix for a long-term problem." "Fixing the tax code in the short term may be a step toward better rationality," commented Clarke, "but it should not distract us from the longer-term issue of providing coverage for the uninsured."
House Republican Leader John Boehner, R-Ohio, however, called the proposal “promising” and said “it deserves a full and fair hearing in Congress.” The American Medical Association also applauded Bush for raising “the nation’s awareness of the inequities in the tax treatment of Americans based on individual versus employer-purchased health care. Bottom line: Americans with individually purchased health insurance pay taxes on the entire cost of their insurance, while those with employer-sponsored health coverage don’t,” said AMA President William G. Plested III, MD. Karen Ignagni, president and CEO of America’s Health Insurance Plans, called Bush’s tax incentives “common sense” and said they will “go a long way toward helping millions secure and maintain the coverage they need.” The Urban Institute worried, however, that the tax cuts would result in small businesses discontinuing health insurance and that they would do little for the “low-income people who most need help paying for insurance.”
Oliver Fein, MD, professor of medicine at Cornell University and director of Physicians for a National Health Program, scoffed at the idea that “fiddling with the tax system and peddling skimpy private health plans” will solve the problem of 47 million without health insurance. “Like other plans that rely on private insurers--e.g., the Massachusetts reform and the Schwarzenegger, AHIP, and Wyden proposals--it would leave millions without coverage and continue to squander $300 billion annually on private insurance marketing, bill collectors, and other useless bureaucratic activities,” he said. Brian Baum, president and COO, U.S. Preventive Medicine, saw a different problem that Bush’s tax proposal doesn’t address: lack of disease prevention. The solution to the country’s healthcare crisis is not to shift the costs of care but to emphasize “protocols and procedures that detect and treat health risks early, preventing them from becoming life-threatening diseases,” Baum said. Read the White House refutation of statements critical of the proposal. Read comments at HFMA Views.
