Media Center
Healthmarkets in the News
Date: January 23, 2007
Reaction to proposal mixed
By MARIA M. PEROTIN
STAR-TELEGRAM STAFF WRITER
With a pitch to make basic health insurance more affordable by overhauling tax rules, President Bush has brought healthcare back to the political forefront.
Bush, who is expected to explain his proposal during his State of the Union address tonight, wants to make health insurance more widely available by creating a tax break for people who buy it on their own. On the flip side, he would impose a tax on some workers who get health coverage from their employers.
The idea drew mixed reactions Monday, as advocates for employers, employees, insurers and healthcare providers considered the potential consequences.
David Pinkus, president of Small Business United of Texas, praised Bush's proposal.
The changes would help ensure that all Americans get "pretty comparable access and comparable benefits," he said.
People with standard employer-sponsored health coverage and those shopping for their own insurance would get similar tax breaks. Only workers with unusually generous benefits, such as employer-paid health-club memberships, would likely face a tax, Pinkus said.
"I think it would be great if they gave people a tax incentive to get individual insurance," Pinkus said. "Why should it be deductible to an employer but not to an individual?"
David Tesmer, a senior vice president at the Arlington-based Texas Health Resources hospital chain, agreed that financial incentives are essential to expanding coverage. Still, he questioned whether a tax on employer-sponsored benefits could achieve that goal.
"Is that really incentivizing folks?" Tesmer said. "I think we need to be very careful."
Rising healthcare costs and the availability of affordable insurance are especially significant issues in Texas, where roughly 25 percent of residents are uninsured.
From Tesmer's perspective, a successful strategy would include inducements for consumers to buy health insurance, incentives for employers to continue providing benefits and plenty of government money for programs such as Medicaid that cover low-income beneficiaries.
His prediction: The debate will continue.
William Gedwed, chief executive of the specialty insurer HealthMarkets, said any solution has to address the causes that drive up healthcare costs.
Gedwed's North Richland Hills-based company mostly sells low-cost health plans with limited benefits to self-employed people and their families. So Bush's tax plan could give HealthMarkets' clients more money to spend on coverage.
"At the end of the day, it's not about an ability for somebody to get coverage," Gedwed said. "It's about an ability for somebody to afford coverage."
This report includes material from wire services.
WHAT THE PLAN WOULD DO
President Bush's proposal would end the taxpayer subsidy for what some in the health industry call "Cadillac health insurance" policies and use the savings to subsidize insurance for those who do not have it.
Basics of the plan:
Incentive to buy insurance: Families who buy low-cost policies would have their taxable income reduced by $15,000, regardless of the plan's cost and whether they itemize deductions. The deduction would be $7,500 for individuals. The deduction would be indexed to account for inflation and would be extended to those with employer-provided plans but offset by the cost of their coverage.
Tax on insurance above cap: Families receiving health insurance beyond a $15,000 cap ($7,500 for single workers) would have to pay a tax on the cost of their benefit above the cap. For instance, if a family's health insurance costs $16,000, they would pay a tax on the $1,000 difference.
Shifting the burden: The Bush administration estimates that 80 percent of people with employer-provided plans would see their tax liability fall because the deduction would be larger than the value of their insurance plans.
SOURCE: The Washington Post
