Bush healthcare reforms likely?

Manufacturing News, Source : The Manufacturer US
Published : 05 Mar 2007 21:34

insurance: Reforms would ease burden on employers

President Bush in his January State of the Union address proposed a scheme to partially lift the burden of healthcare from employers. Bush advocated a tax incentive for private insurance that would expand coverage to about 5 million of the 47 million uninsured Americans, according to the Treasury Department.

“If it were enacted, my guess is that it would be more” than

5 million newly insured, says Marjorie L. Baldwin. She is director of the School of Health Management and Policy at Arizona State University’s W.P. Carey School of Business. The Carey school is a think tank on policy and healthcare. “Markets aren’t static. As more people opt to purchase health insurance on their own, insurance markets would respond with more options. Different products would be made available at different prices.”

The Institute for Policy Innovation, which calls Bush’s proposal for health insurance tax reform “the simplest and yet most radical proposal to emerge in decades,” gives this practical example: An employee makes $50,000 and his employer provides $5,000 for health insurance. The employee currently pays taxes on $50,000 in income but nothing for the insurance. Under the Bush proposal, that worker would report $55,000 in income but get the full $7,500 deduction for an individual, so he would pay taxes on $47,500. Here, the employee saves, but in perhaps 20 percent of instances the employee would pay more and would likely opt for employer-provided health insurance.

Bradford Kirkman-Liff, professor of health policy and biotechnology in the School of Health Management and Policy, points out that under the president’s proposal, people would have to buy the insurance first, then file their income tax return and claim the deduction a year later. Kirkman-Liff likened it to a bank giving a mortgage to a homeless person because the homeless person has a tax credit from the federal government.

Whatever the benefits or demerits, neither Baldwin nor Kirkman-Liff believes the proposal will pass. Said Kirkman-Liff, “It was put forward with an awareness by the president’s advisers that with a Democratic majority in the House and the Senate, it will not pass.”

“I rate it slight,” says Baldwin, pointing out the president’s meager political capital. “The next presidential election is the most likely scene of debate…. I don’t know that legislators will make a big move on healthcare before that time.”

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