NCPA - National Center for Policy Analysis

ANSWERING THE CRITICS OF THE BUSH HEALTH PLAN

January 30, 2007

Critics of the Bush health care plan have been quite vocal in their complaints.  But a closer look finds them unwarranted, says John C. Goodman, president of the National Center for Policy Analysis.

Families USA, Paul Krugman of the New York Times and others claims that the Bush health plan would benefit the rich at the expense of the poor.  But as Steven Pearlstein and Ruth Marcus explain in separate editorials in the Washington Post, the opposite is the case:

  • The Bush proposals would redistribute tax subsidies for health insurance from the haves to the have-nots. 
  • Specifically, the plan would grant everyone a health insurance standard deduction of $15,000 (family) or $7,500 (individual), regardless of the cost of the insurance or how it is purchased. 
  • Families whose insurance costs less than $15,000 would pay less in taxes than they currently pay.  
  • Families whose insurance costs exceed $15,000 would pay taxes on the excess. 

Another criticism is that the plan will not increase the number of people with health insurance.  Again, critics claim that the Bush plan will do little to insure the uninsured.  This, however, is false, says Goodman, because the Bush plan will make health insurance more attractive for millions of families that are currently uninsured.  The White House estimates 3 million to 4 million additional insured -- that estimate is probably too conservative. Consider a family with the opportunity to purchase a $5,000 high-deductible, no-frills health plan:

  • Under the current system, the family would receive a tax subsidy (if purchased through an employer). 
  • Under the Bush plan, the size of that subsidy would triple; the reason: The family gets to exclude $15,000 from income and Social Security taxes, regardless of the premium cost. 
  • Conversely, the penalty (taxes owed on $15,000 instead of $5,000) would also triple if the family failed to insure.

Source: John C. Goodman, "Answering the Critics of the Bush Health Care Plan," Brief Analysis 579, National Center for Policy Analysis, January 30, 2007.

For text:

http://www.ncpa.org/pub/ba579/

 

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