Tuesday, January 23, 2007
Administration News
President Bush To Emphasize Four Domestic Policy
Areas During State of the Union Address, Including Expansion of Health
Insurance
Lawmakers and health policy experts on
Monday offered mixed reactions to a Bush administration proposal that
would offer federal tax deductions of $7,500 for individuals and $15,000
for families who acquire health insurance on their own or through an
employer, the AP/San Jose Mercury News reports (Freking,
AP/San Jose Mercury News, 1/22). The proposal, which
President Bush announced on Saturday in his weekly radio address, would
for the first time levy an income tax on the value of employer-sponsored
health insurance in some cases. Currently, 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 income 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 (Kaiser Daily Health Policy Report, 1/22).
Bush is expected to promote the proposal in his State of the Union address
Tuesday evening (AP/San Jose Mercury News, 1/22). The
proposal would pose no net cost to the government over 10 years, Katherine
Baicker of the White House Council of Economic Advisers said Monday (Pender, San Francisco Chronicle, 1/23).
Lawmaker Reaction
According to the AP/Mercury
News, the proposal "appears to be shaping up as a tough sell in the
Democratic Congress." House Ways and Means Health
Subcommittee Chair Pete Stark (D-Calif.) said, "Under the guise of tax
breaks, the president is pursuing a policy designed to destroy the
employer-based health care system through which 160 million people receive
coverage" (AP/San Jose Mercury News, 1/22). Stark said the
proposal "won't help the uninsured, most of whom have limited incomes and
are already in low tax brackets. But it will hurt middle-income Americans,
whose employers will shift even more cost and risk to their employees"
(Pugh, McClatchy/Miami Herald, 1/23). House Energy and
Commerce Committee Chair John Dingell (D-Mich.) said, "The
administration is attempting to drive people into the unregulated
individual insurance market that has been known to deny coverage for
common illnesses such as cancer and diabetes" (Johnson/Vaughan,
CongressDaily, 1/22). Senate Finance Committee Chair Max Baucus (D-Mont.) said
some moderate lawmakers might be willing to consider a variation on the
Bush proposal, CQ HealthBeat reports. "I applaud the
president for putting health care coverage at the fore of his State of the
Union address," Baucus said, adding, "I want to look closely to see
whether his proposal will help cover the uninsured and help to meet the
needs of those with real medical expenses" (Reichard, CQ
HealthBeat, 1/22). Baucus said his top priority is expanding health
insurance for children (AP/San Jose Mercury News, 1/22). Sen.
Ron Wyden (D-Ore.), who has proposed legislation that would require individuals to obtain
health insurance, said, "I want to make it clear that my door is open to
work in a bipartisan way, but it's got to be a comprehensive overhaul,"
adding, "You can't start by hitting the middle class that way and not take
care of the (health insurance) marketplace." Senate Health, Education, Labor
and Pensions Committee Chair Edward Kennedy (D-Mass.) said, "I am
concerned that taxing health benefits may undermine the good coverage that
many Americans already have, while inadequate credits will do little to
make health care more affordable for those who are struggling to pay their
premiums now." Sen. Dianne Feinstein (D-Calif.) said, "It's a good idea.
It's a partial solution." Senate Minority Leader Mitch McConnell (R-Ky.)
said, "Too many people today who don't get health insurance through their
jobs are unfairly priced out of the market because of government
interference," adding, "The president is right. The tax code should be
changed to help them" (CongressDaily, 1/22).
Industry Reaction
Karen Ignagni, president of America's Health Insurance
Plans -- which has not taken a position on the proposal -- said, "With
the president coming forward and making health care such a major issue on
his priority list, I think progress is definitely possible." Ignagni said
the proposal might increase cost for some unionized employees
(AP/San Jose Mercury News, 1/22). Randel Johnson, vice
president of labor and employment benefits at the U.S. Chamber of
Commerce, said, "We're open-minded and looking at it." JoAnn Volk, a
health care lobbyist for AFL-CIO, said the proposal would have an adverse effect on
unionized employees with good health benefits and would not address health
care cost. "It sounds like the same bad policy," Volk said
(CongressDaily, 1/22).
Additional Reaction
Karen Davis, president of the Commonwealth Fund, said,
"Ninety-five percent of the uninsured wouldn't get a significant amount of
money from this deduction because they earn so little" (Luhby, Long Island Newsday, 1/23). Davis said the
proposal would not significantly reduce the number of uninsured U.S.
residents, adding that it is difficult for residents of certain states to
obtain affordable non-group health insurance if they have pre-existing
medical conditions. Paul Fronstin, director of the health research and
education program at the Employee Benefit Research Institute, said the proposal
would mean "the end of employer-based coverage as we know it." Under the
proposal, employees "would get the same tax breaks on their own as their
employers, so employers may view this as a reason to stop offering the
benefit," Fronstin said (Fahy, Pittsburgh Post-Gazette,
1/23). Diane Rowland, executive vice president of the Kaiser Family Foundation, said
some people with health insurance policies worth more than $15,000 do not
necessarily have "gold-plated" plans, a term Bush used in his speech.
Rowland added, "A single cap can mean very different things in different
places of the country" (AP/San Jose Mercury News, 1/22).
Larry Levitt, vice president of the Kaiser Family Foundation, said
employers might reduce benefits to keep the value of the health insurance
policies within the allowable deduction (Long Island Newsday,
1/23). Levitt also said health care "is rising on the public agenda,"
adding, "Our polls consistently show health care affordability as the top
personal worry of the public. Political leaders are tapping into that
worry" (Pittsburgh Post-Gazette, 1/23). Paul Ginsburg,
president of the Center for
Studying Health System Change, said Bush's proposal "is a way for the
president to jump into the discussion of coverage expansion, which he was
completely out of." Ginsburg added, "The entire proposal in its current
form won't fly" (CQ HealthBeat, 1/22). Ginsburg said the
current system gives employers an incentive to offer "Cadillac coverage"
because they can write off all of their employee health care spending,
which "contributes to rapidly rising health care costs." However, Ginsburg
said that older or sicker people could have trouble obtaining non-group
coverage under the Bush proposal (McClatchy/Miami Herald,
1/23).
Second Proposal
In related news, HHS Secretary Mike Leavitt on
Monday released additional details on a Bush administration proposal that
would give states greater flexibility to use federal money to expand
health insurance to their residents, the Los Angeles Times reports. The proposal is a
second component of the administration's health care plan that Bush is
expected to outline in the State of the Union address. It would redirect
as much as $40 billion in Medicaid funds that currently go to hospitals
and other providers for care of uninsured and low-income patients
(Alonso-Zaldivar, Los Angeles Times, 1/23). The New York Times reports that the proposal
would cut Medicaid payments to public hospitals and other safety net
providers by $3.9 billion over the next five years (Rutenberg/Pear, New York Times, 1/23). The proposal is
designed to give states incentives to develop plans to expand health
insurance coverage (Los Angeles Times, 1/23). The state plans
would be required to define which residents need coverage, outline a basic
health insurance policy and establish a subsidy that would help uninsured
residents obtain coverage, Leavitt said (Carey, CQ
HealthBeat, 1/22). Leavitt said Bush "wants to partner with
states," adding that he expects at least 12 states to propose health
insurance reforms this year (Los Angeles Times, 1/23).
Leavitt added, "We want to be able to redirect federal payments away from
institutions and to needy individuals. Rather than perpetually paying
bills for the uninsured, it's better to help them buy health insurance."
Debbie Bachrach, a deputy commissioner in the New York State Health
Department, said the funding cuts would affect hospitals that "serve
some of the lowest-income, most vulnerable patients" (New York
Times, 1/23).
Broadcast Coverage
Several broadcast programs reported on
the Bush administration's proposal:
- APM's "Marketplace": The segment includes comments from Robert
Laszewski, a health policy analyst, and Len Berman, an economist at the
Tax Policy
Center (Wicai, "Marketplace," APM, 1/22).
Audio of the segment is
available online.
- NPR's "All Things Considered": The segment includes comments
from Melissa Block, host of "All Things Considered," and Julie Rovner, a
health policy correspondent for NPR (Block/Rovner, "All Things
Considered," NPR, 1/22).
Audio of the segment is
available online.
- NPR's "Day to Day": The segment includes comments from Luke
Burbank, host of "Day to Day," and Rovner (Burbank/Rovner, "Day to Day,"
NPR, 1/22).
Audio of the segment is available online.
- NPR's "Morning Edition": The segment includes comments from
Rovner; Bush; Fronstin; Chip Kahn, president of the Federation of American
Hospitals; and Thomas Miller, an economist at the American Enterprise Institute
(Rovner, "Morning Edition," NPR, 1/23). In addition, "Morning Edition"
reported on themes, including health care, that Bush is expected to
address in his State of the Union speech (Greene, "Morning Edition,"
NPR, 1/23).
Audio of the first segment is available online. Audio of the second segment also is available online.