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Democrats To Oppose Bush's Health Tax Plans

by Mike Godfrey, Tax-News.com, Washington

26 January 2007


President George W. Bush's plan to expand access to affordable health insurance coverage through reform of the tax code has drawn fire from Democrats in the wake of his State of the Union address, casting doubt on whether it will emerge in the form of new legislation from the Democrat-controlled Congress.

Hinting at the likely wider Democrat response to Bush's proposals, which seek to even the playing field between the self-insured and employer-insured, Rep. Pete Stark (D-CA), Chairman of the Ways and Means Health Subcommittee, argued that the plan would hurt middle-income Americans, because employers will shift even more cost and risk to their employees.

"The President's so-called health care proposal won't help the uninsured, most of whom have limited incomes and are already in low tax brackets," he argued.

"Under the guise of tax breaks, the President is pursuing a policy designed to destroy the employer-based health care system through which 160 million people receive coverage," contended Stark. "But in the individual insurance market, people will be denied coverage because of family history, existing illnesses, or genetic makeup. They’ll also be unable to take advantage of the cost savings that currently result from sharing risk company-wide."

Stark argued that Medicare is better placed to provide low cost and stable healthcare coverage to low income and elderly patients than the private healthcare coverage, and he indicated that he would oppose Bush's plan in committee.

"President Bush's proposal will make a bad problem worse," he said.

"I do not intend to consider this particular health care proposal in the Ways and Means Health Subcommittee, but would be happy to meet with the President to consider alternative ideas, starting with the expansion of Medicare," Stark concluded.

Sen. Ron Wyden (D - Ore), who was consulted by the administration on health tax reform as part of its wider tax reform agenda, also expressed doubts that Bush's proposals would achieve their goals.

"To fix health care, there are four essentials. The test of any health reform proposal should be: does the proposal get affordable coverage to every American; does it hold down health care costs; does it strengthen the health care system over time; and does it encourage wellness and prevention?," Wyden observed, adding that:

"It is not clear that the President’s plan passes any of these tests."

Under Bush's proposals, families with health insurance will not pay income or payroll taxes on the first $15,000 in compensation, while singles will not pay these taxes on the first $7,500 of their income. At the same time, health insurance would be considered taxable income under the proposals. States would also get help to make affordable health insurance more widely available to their residents.


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