US Health policy experts are divided in their analyses of how President Bush’s health insurance tax proposal would impact the insurance market.
US President Bush last week in his State of the U nion address announced two health care proposals, including one that would offer a federal tax deduction of $7,500 for individuals and $15,000 for families who obtain health insurance on their own or through an employer, regardless of the cost of the coverage. The proposal would for the first time levy a tax on the value of employer-sponsored health insurance in some cases. Currently, most employees are not taxed on the value of their employer-sponsored health insurance. Under the proposal, individuals and families with employer-sponsored health insurance plans worth more than the proposed allowable deductions would pay taxes on the difference.
The deduction would be available to all individuals and families who purchase health insurance, regardless of the value of their policies or whether they itemize deductions on their tax returns.
For U.S. residents who receive employer-based health insurance, the deduction would be offset by the cost of their coverage.
The proposal would pose no net cost to the government over 10 years, according to the administration. Bush also advocated redirecting portions of existing federal funding to create “Affordable Choices” grants that would give states more flexibility to expand health insurance.