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Legislation & Politics | ||
President's Health Care Plan is a Bad PrescriptionPRESIDENT’S HEALTH CARE PROPOSAL
President Bush has proposed a health care plan that would use the tax code to encourage a shift away from the employer-sponsored health insurance system to one in which individuals purchase health coverage on their own. Under the proposal, families with employer-provided insurance would be taxed on the amount of the employer contribution. But, anyone with health coverage would have the first $15,000 of income excluded from income and payroll taxes or, in the case of singles, the first $7,500 in income. While at first blush the President's plan appears to provide tax savings for many families, his plan will lead to higher health insurance costs that far exceed the tax savings. Here's how. The President's Plan will Increase Health Insurance Costs Insurance works by gathering people together in a group and spreading their health care costs across the group. The younger and healthier help subsidize the older and sicker individuals in the group, making coverage more affordable for the entire group. In addition, large groups can use their size to push health costs down, much the same way purchasing in bulk reduces the cost of merchandise. By imposing a tax on families for coverage received through their jobs, the President is giving employers a rationale or excuse for terminating health plans. As a result, many families who once had employer-sponsored coverage would be forced to purchase health insurance on their own. However, when workers buy coverage on their own, they lose the financial benefit of group purchasing and risk sharing. As a result, families pay much more for coverage that they purchase on their own. However, even if employers do not drop coverage, costs will go up for workers. Because the President's plan will not allow the tax deduction to keep up with health care inflation, over time, families will end up paying taxes on a portion of their employer's contribution for coverage. The Plan Does Not Solve the Problem of the Uninsured By using the tax code, the President's plan provides the greatest benefit to the wealthy and fails to help most of the uninsured. More than 55 percent of the uninsured have such low incomes they already pay no income tax. The President's plan is no help to these families. Another 40 percent of the uninsured are in the lower and middle income tax brackets. These families are not able to afford insurance premiums whether or not they receive a tax refund that pays a fraction of the cost. What You Can Do Call or write your Senators and Representative. Let them know that the President's health plan is no solution for the nation's ailing health system. Let them know that the Bush plan undermines employer-based coverage on which working families rely. Department of Legislation
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