Bush Says Taxes are the Way to a New Health Care System

During his State of the Union Address the president offered a proposal to reform the health care system - by way of the tax code.

Bush said a series of new taxes coupled with new tax breaks would help more Americans afford health insurance.

Daniel Jones went to Washington for the president's speech by invitation of the White House, because he's the kind of person who could benefit from the administration's health care proposal.

"Right now, I have no health coverage," said Jones.

Jones works for a small St.Louis area computer store, whose owner can't afford to offer health insurance. Employees must buy it on their own. Under the Bush plan those employees, in fact anyone who gets health insurance would get a tax deduction. The deduction would be $15, 000 a year for families and $7,500 for individuals. Based on his income, that would save Jones up to $2,400 a year in taxes.

If you get this tax break will you buy yourself health insurance? Absolutely. For people who get their health insurance through their job, it's more complicated. They would get the same deduction, but they would also need to know what their employer pays for their insurance premiums, and they would have to declare that as income. If an employee plan's costs less than the new deduction he or she still saves on taxes. If it costs more they pay taxes on the difference.

Some worry this proposal will encourage businesses to stop offering health insurance.

"Individuals, their workers, will now be able to get the same tax breaks if they buy insurance on their own as they now get through the workplace, and employers will view this and say, 'Why am I bothering to offer health insurance to my workers'," said Paul Fronstin of Employee Benefit Research.

The administration disagrees. It says the tax break will allow three to five million more Americans to buy health insurance, but that would still leave more than 40 million people uninsured.

"This is going to provide very little help for people who can't afford health coverage. It's like throwing a ten foot rope for somebody in a 40 foot hole. It simply will not help them," said Ron Pollak of Families USA.


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