Contributed by William Angelos| 21 January, 2007 01:58 GMT
A new tax break for people who have private or employer-provided health insurance is among the domestic policy proposals President Bush will be recommending in his State of the Union message on Tuesday.
Under a proposal that President Bush will outline Tuesday in his State of the Union address, people who buy private health insurance, as well as those who get coverage through their employers, would be entitled to tax deductions of $7,500 for individuals and $15,000 for families.
The proposal is designed to provide an incentive for the uninsured to obtain medical coverage. It might also encourage people with costly health coverage to downgrade their insurance plans, since they would have to pay tax on the premiums in excess of the deduction.
If Congress passes legislation enacting the proposal, it would mark the first time that employees who purchase their own insurance would get tax relief. However, it would also be the first time that taxes could be levied on some health insurance benefits provided by employers. Those job benefits currently are exempt both from income and payroll taxes.
Among the critics of the proposal is Rep. Charles Rangel, D-NY, chairman of the House Ways and Means Committee. Calling the president's plan "a dangerous policy," Rangel argued that it would shift the cost and risk of health insurance from employers to workers and might result in more people going without coverage.
Advocates of the measure counter that most people who get health insurance through work would see their taxes fall, since the average cost of a family policy, $11,500, is less than the proposed deduction.
Close to 47 million people in the U.S. are without health insurance at any given time, according to estimates. Many are employed and have incomes too high to qualify for government insurance programs like Medicaid, but too low to afford the cost of private plans.
The president's proposal comes as several states, including California, are considering plans to make health insurance coverage universal. Massachusetts currently is the only state with a requirement that everyone must obtain health insurance.
Sen. Edward Kennedy, D-Mass., said he was pleased the president was finally addressing "the growing crisis in health care." However, he expressed concern that the tax changes might weaken employer-sponsored coverage while having too little impact to help the uninsured. |
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