During his State of the Union address, January 23rd, President George Bush will propose that people of lower incomes who purchase private health insurance, rather than having a company plan, receive a tax benefit. The benefit will be similar to the what people currently enjoy for the interest paid on mortgages.

The President said “The current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes. We can reform the tax code, so that it provides a similar incentive for you to buy health insurance.”

According to George Bush, the proposed tax reform is aimed at helping make basic private insurance more affordable, regardless of whether you get it on yourself or through your job. He added that this could be a way of helping the nearly 50 million uninsured people get cover – without the need to create another public health care program.

The proposal will include:

— A standard deduction for health insurance
— Singles with health insurance will not pay income or payroll taxes on the first $7,500
— Families with health insurance will not pay income or payroll taxes on the first $15,500
— Health insurance should be considered taxable income, including those who currently have health insurance through their employment

The result, says Bush, will be that 80% of people with health cover will pay less tax.

According to a White House communiqué:

“The president’s proposal levels the playing field for Americans who purchase health insurance individually rather than through their employers, providing a substantial tax benefit for all those who currently have health insurance purchased on the individual market. This proposal lowers taxes for all currently uninsured Americans who decide to purchase health insurance – making insurance more affordable and providing a significant incentive to all working Americans to purchase insurance coverage, thereby reducing the number of uninsured Americans. As we reform the Federal tax code, we will also support the innovative measures that states are taking to address the problem of the uninsured. Governors across the Nation have put forward plans to make basic private health insurance more accessible for their citizens. In his State of the Union Address, the President will announce a new effort – led by Health and Human Services Secretary Michael Leavitt – to help governors reduce the number of people in their states without private health insurance.”

While welcoming Bush’s attempts to tackle health care, Senator Edward Kennedy (D-Mass) wondered whether the current proposal may eventually undermine the quality of existing coverage. He added that the proposal may not do enough to make coverage more affordable for those who are currently struggling. Kennedy quoted the current health plans in California and Massachusetts as examples of what can be achieved when everybody pulls in together.

Transcript of the President’s Radio Address

Written by: Christian Nordqvist
Editor: Medical News Today