President Bushs Health Care Proposals - Road to the Middle Class

First, I propose a standard tax deduction for health insurance that will be like the standard tax deduction for dependents. Families with health insurance will pay no income on [sic] payroll tax — or payroll taxes on $15,000 of their income. Single Americans with health insurance will pay no income or payroll taxes on $7,500 of their income.

What exactly does this mean? Does it mean that everyone will deduct their health insurance costs from personal income tax? Does it mean that people paying their own health insurance can deduct? People whose insurance is paid by their employers? What, exactly? And is there a cap, so that if an employer pays more than $7,500/$15,000 a year it becomes taxable income to the employee?

According to Sheryl Gay Stolberg and Robert Pear in the New York Times, the idea is that people paying for their own insurance get a tax break and people hitting the limit at work get socked.

The basic concept is that employer-provided health insurance, now treated as a fringe benefit exempt from taxation, would no longer be entirely tax-free. Workers could be taxed if their coverage exceeded limits set by the government. But the government would also offer a new tax deduction for people buying health insurance on their own.

It�s a way of giving money to Republicans and limiting the expansion of before-tax employer-paid health insurance. Anyway, Democrats say No Way. For now.

Then the president continues.

There are many other ways that Congress can help. We need to expand Health Savings Accounts. (Applause.) We need to help small businesses through Association Health Plans. (Applause.) We need to reduce costs and medical errors with better information technology. (Applause.) We will encourage price transparency. And to protect good doctors from junk lawsuits, we passing medical liability reform. (Applause.)

Amen to all that. You wonder how much of it he expects Congress to pass, and how much of it is issue fodder for Republicans down the road, operating on the assumption that the solution to the health care crisis is for more Americans to pay for health care with their own dollars.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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