Bush health care plan

In a sign that the Bush administration recognizes the burgeoning problem of uninsured Americans, they have proposed a new taxation system to make health insurance more affordable. It is not clear, though, whether the 20-30% discount on health insurance premiums will be enough to reduce the number of uninsured.

All sides have seen the problem of health care insurance grow in the US. Despite the clarity of the looming problem, the administration had not addressed the issue until this week, when the President announced a new plan in his State of the Union address.

The administration came up with the plan after feeling the squeeze of the Democratic-controlled Congress on the left and the business community on the right. But the plan doesn't really address either group's concerns.

Rather than constructing a new federal program, the administration proposed a change in the tax law that would make any health insurance, whether paid for by an employer or self-paid, tax deductable.

From the perspective of the self-employed, such a rule is long overdue. Unlike most working Americans who get health care benefits subsidized by an employer, the self-employed pick up the full brunt of their insurance costs.

From the perspective of public policy, however, the rule is unlikely to make a substantial difference. Making health premiums tax deductable is effectively reducing premium costs by 20-35%. This is a real savings for those with reasonable health care coverage, but it doesn't do much for the 46 million uninsured Americans (statistic from the National Coalition on Health Care) who can't afford a policy even at 70% of sticker price. Nor does it reduce the costs to employers, for whom these rules will have little effect.

The plan, promoted by the President on a tour of the country following his 2007 State of the Union Address, met with a luke-warm reception. From California (San Jose Mercury News) to Florida (Sun Sentinel) the plan has been discounted as an unrealistic approach to the health care problems of the US.

Despite its lackluster start, the President's stance highlights the changing political climate. As was the case for his new policy on climate change, the business world is starting to pressure both Republicans and Democrats to deal with the fundamental issues facing are domestic security. Healthcare reform is no longer just "liberal" or "grassroot" politics, its now a centrist issue.

Finally, it has escaped no one's attention that Democratic Senator Hillary Clinton is running what looks to be a tight Presidential campaign. Given her history and interests, No one should be surprised if health care reform once again rises to forefront in the next two years. 

Topics #bush health care #health care plan #health insurance deduction