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Jewish World Review Feb. 2, 2007 / 14 Shevat, 5767 Bush scores with his health insurance proposals By Drs. Michael A. Glueck & Robert J. Cihak http://www.JewishWorldReview.com | On a scale of 10, we give President Bush nine points for his State of the Union proposal to equalize health insurance options among Americans. Why such a high score? As Grace-Marie Turner, president of the Galen Institute, puts it in her Jan. 24 Health Policy MattersR publication "the president's plan can be a win." The centerpiece of the president's plan would be a standard tax deduction to people who have qualified health insurance, whether a corporation employs them or not. The deduction would be $15,000 for a family or $7,500 for an individual subtracted from income on the federal income tax return the same way as the current dependent deduction, such as for children. Taxpayers wouldn't pay income, payroll, or Medicare taxes on the income deducted and wouldn't have to itemize to get this deduction. If an employer paid for the insurance, the value of the benefit would be included as income on the employee's annual W-2 earnings and tax statement. Everybody with insurance would benefit equally instead of the current favoritism for employer-provided insurance. As Leonard E. Burman, Jason Furman, and Roberton Williams of the Washington D.C.-based Urban Institute write, the president's plan "would eliminate the current bias in favor of health insurance obtained through employers...." The White House says this change would result in a tax cut for the 80 percent of Americans having health insurance costing less than the $15,000 deduction amount, about 100 million people. The other 20 percent, whose employers spend more than $15,000 on their health plan, would pay more tax. These employees are typically wealthier and earn more than the average worker earns. Let's count some of the wins: People without insurance would be better able to afford coverage. The White House estimates the average family tax bill for these families would go down by $3,350. As a result, several million more people would have health insurance. Employees would actually see how much money their company is spending on their health care. Currently, employers spend almost $12,000 every year for the average family health insurance plan. Employees would have a better chance to buy their own, portable coverage that they could take with them if they change jobs. As they shop for more affordable coverage, insurance buyers would force more competition into the health insurance market. Employers would have a better opportunity to let workers buy their own coverage that would better meet the worker's own needs. Doctors and hospitals would be more responsive to patients and their families as more people choose Health Savings Accounts (HSAs). We doctors would focus more on patients than on their insurance. Most taxpayers would get a tax cut. Bush's proposal is budget neutral and would not require the government to increase total tax revenue. For those favoring progressive taxation, higher-earning and wealthier workers and executives with more expensive health plans would pay more taxes. This is because the proposal would eliminate the unlimited tax break for employer-provided health benefits. The plan would not force anyone to change health plans. Employers could continue to provide health benefits. Individuals and families, instead of governments and employers, would be in greater control of their health-care choices and spending. This would be an opportunity for visionary labor leaders to advance the cause of union members. Unions themselves could develop a wider variety of health plans at attractive prices for their members and other customers. Some unions already do this for federal government employees. Under the Federal Employees Health Benefits Program (FEHBP), the American Postal Workers Union sells an attractive health insurance plan to many government employees who are not members of their union. As usual, some criticize this proposal and just about everything else Bush proposes. For example, The Washington Post quotes Sen. Ted Kennedy as saying "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." In these comments, he's simply wrong, wrong and wrong; or maybe he just hadn't yet digested how the president's plan would actually work. The Post also quotes Kennedy as saying the president's proposals "won't help working families afford the spiraling cost of health care." Yet government mandates and tax policy are key reason why health care spending has risen in the past. We believe individuals and families should ration their own resources and decide how much to spend on health insurance and other goods, not government. Some worry that employers would simply drop health coverage. We're confident that competition for workers' skills would make sure employees get the same or better total compensation, including the value of both health benefits and cash pay. But we don't give Bush the highest 10/10 possible rating for several reasons. For example, he should consider the following concerns when he fine-tunes his plan. Both currently and under Bush's plan, people who don't have any health insurance don't get any tax break when they save money for medical expenses or pay their doctor or hospital directly. In our view, they should also get a tax deduction for such spending. Or, perhaps, health savings account investment should qualify for the deduction up to the $15,000 limit. A refundable tax credit for health spending or insurance instead of a tax deduction would benefit more people, especially the poor not earning enough to pay taxes. They would get cash refunded if they qualified. Last week, Health and Human Services Secretary Mike Leavitt implied that the Bush administration was open to considering this option. Most states and some localities levy income taxes on workers. Bush should exclude this W-2 income from these taxes. Unfortunately, the president's proposals continue to use American's health spending as a pawn in ongoing political and social engineering fights. We'd prefer to have our health spending totally out of the sight of politicians and to have a tax system less prone to social engineering. The FairTax proposal would be a great step in that direction. Although we do have these fine point quibbles, Bush is moving the debate in a very positive direction. We don't want to make the perfect the enemy of the best possible. We strongly agree with the president's reminder, "we must remember that the best health-care decisions are made not by government and insurance companies, but by patients and their doctors." Editor's Note: Robert J. Cihak wrote this week's column Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here. Michael Arnold Glueck, M.D., is a multiple award winning writer who comments on medical-legal issues. Robert J. Cihak, M.D., is a Discovery Institute Senior Fellow and a past president of the Association of American Physicians and Surgeons. Both JWR contributors are Harvard trained diagnostic radiologists. Comment by clicking here. Archives © 2006,

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