WASHINGTON, Jan. 22 (UPI) -- President Bush is set to make a new health insurance proposal the key part of his State of the Union address on Tuesday night.
The White and Bush Administration officials were busy promoting the plan Monday, even as most key Democrats in control of Congress vowed to either ignore or oppose it.
The plan would for the first time classify medical insurance benefits as taxable income in an effort to resolve what the administration calls an unfair advantage for workers with more expensive coverage.
The tax code does not currently treat medical coverage as compensation. Bush will propose to change that and allow the government to charge income tax on health benefits. At the same time, the plan would install an exemption for the first $15,000 in medical benefits each year for families and the first $7,500 for individuals.
The plan in effect lowers costs for anyone with insurance costs below the caps, while raising taxes for anyone with plans valued above them.
Private health coverage costs approximately $11,500 per year for the average family of four and $5,200 for the average individual. The White House said Monday that the plan would cut health costs for roughly 80% of Americans with private health insurance. Taxes would go up for the other 20%.
A White House "fact sheet" released Monday said the plan would right a distortion in tax code that favors wealthier workers with richer insurance plans, and also encourages people to opt for more costly coverage since it is tax exempt.
"The more expensive the health insurance plan you receive through your employer, the more tax relief you get," the release stated.
In his weekly radio address Saturday, President Bush compared the policy to current law that allows homeowners to deduct mortgage interest from taxes. "We can reform the tax code, so that it provides a similar incentive for you to buy health insurance," he said.
Congress is set this year to reauthorize the State Children's Health insurance Program, which covers some 6 million children, according federal figures. Many analysts expect Democrats to push an expansion in the plan so that it can cover another 9 million children who currently lack coverage.
But many Democrats gave indications Monday that they have little interest in the president's plan for the rest of the population. A release from Senate Majority Leader Harry Reid's office Monday branded the plan a "tax hike" and said it the benefits would be too small to help a significant number of the nation's 47 million uninsured afford coverage.
Meanwhile Rep. Fortney "Pete" Stark, D-Calif., who chairs the Ways and Means health subcommittee, accused President Bush of seeking to dismantle the system of employer-sponsored health coverage used by 160 million people.
Stark also suggested he would ignore the proposal. "I do not intend to consider this particular health care proposal in the Ways and Means Health Subcommittee, but would be happy to meet with the President to consider alternative ideas," Stark said.
Only Sen. Max Baucus, D-Mont., chair of the Finance Committee, which has jurisdiction over taxes, suggested he was open to considering the plan.
"I applaud the President for putting health care at the fore of his State of the Union address. I want to look closely to see whether his proposal will help to cover the uninsured and help to meet the needs of those with real medical expenses," he said.
President Bush said he would pair the proposal with another designed encourage states to pass new proposals for providing basic insurance to their citizens. The plan would give the Secretary of Health and Human Services the power to approve applications for plans from states to form risk pools to lower the cost of coverage and then offer basic plans.
Several states, including Massachusetts and California, have either passed or are considering plans to spread health coverage to more citizens.
"I believe that momentum is only going to grow," HHS Secretary Michael O. Leavitt told reporters in a briefing Monday.
The federal government would also provide money to states to help subsidize coverage for low-income residents, though no new spending is envisioned for the program, Leavitt said. Instead, the White House plan would shift money currently used for charity care at hospitals and other programs to pay for the subsidies, Leavitt said.
There are many places in the federal budget where we support institutions instead of supporting people," he said.
