A commentary in the New England Journal of Medicine outlines the Pres. Bush health initiative that would change the tax code to encourage more people to obtain health insurance and help states make basic private health insurance available — especially to those who can't afford insurance or have high medical costs.
The main part of the Bush plan would consider employer-funded health insurance as taxable compensation, but would also provide a tax deduction to families with health insurance — whether purchased by them or their employer.
Such a change would make the system more equitable, but might also reduce the incentive for employers to offer coverage, throwing more families into the more risky non-group market.
In many states, carriers can refuse to insure anyone whom they consider to be high-risk, policies can exclude coverage for preexisting conditions, and premiums vary with enrollee health status, making coverage prohibitively expensive for people in poor health.
No health insurance program will be perfect, and the closer to perfection, the more the costs escalate.
But isn't it telling, even in his less-than-perfect plan, Bush takes care of some better than others. The value of the tax benefit he proposes would be worth more to higher-income taxpayers because the size of the deduction would be based on the taxpayer's tax bracket. For example, once the full plan kicks in "the income-tax break would be worth $5,250 for a family in the 35% tax bracket but only $1,500 for a family in the 10% bracket."
