NCPA - National Center for Policy Analysis


January 26, 2007

President Bush's proposal for easing the nation's health-care woes -- encouraging families to buy insurance on their own instead of relying on employer-provided insurance -- differs from approaches favored by Massachusetts and California as well as many Democrats in Congress, say Jane Zhang and Sarah Lueck in the Wall Street Journal.

Consider the differences:

  • The Massachusetts plan requires all but the smallest employers to offer health insurance, or else pay an assessment to the state.
  • In California, a similar requirement would compel employers that don't offer insurance to pay a 4 percent payroll tax.
  • The Bush plan, in contrast, makes employer-provided health insurance taxable, but creates a tax deduction of $15,000 for families and $7,500 for singles, for everyone who gets insurance, through work or on the open market.

"What you are seeing is indicative of sharp philosophical differences," says Robert Laszewski, a health-policy analyst.  "One is to build on the employer-based system that most Democrats embrace and the other is to develop an entirely new system controlled by the consumer, not the employer."

Nina Owcharenko, a senior policy analyst for health care at the Heritage Foundation, says the Bush plan would complement states' effort to expand coverage.

"The states control the regulatory structure of the individual market, especially for small businesses and individuals.  It's not removing the employer system.  It's not keeping the individual market as it is.  The overall impact is combining the tax code with state innovations.  The end goal will be to increase the number of people who have private insurance," explains Owcharenko.

Source: Jane Zhang and Sarah Lueck, "Bush Health Plan Shifts Onus to the Consumer," Wall Street Journal, January 25, 2007.

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