NCPA - National Center for Policy Analysis

Tax Cuts Could Boost Health Coverage

December 28, 2000

Some observers believe George W. Bush will have a difficult time passing his proposed $1.3 trillion tax cut, and will ruin any chances for bipartisan cooperation in the process. Others, however, envision a scenario in which he gets the tax cut and even pulls along liberal Democrats in its wake: put a much bigger chunk of his tax cut - perhaps $50 billion a year - into health coverage.

Here's the thinking. Democrats are desperate to extend coverage to the uninsured, whose numbers could hit 50 million if the economy stalls. But even liberals say they're open to such traditionally Republican approaches as tax subsidies for individuals for the purchase of private insurance. Bush has offered a plan of $2,000 per family, but critics note decent family health policies cost closer to $5,000 yearly.

  • Under this plan, Bush would make his subsidies much bigger, and target them to low-income Americans.
  • He would offer a refundable tax credit for the purchase of private health insurance to those with incomes too low to pay taxes.
  • Democrats win politically by appearing to solve the uninsured problem without vast government expenditures.
  • Bush wins politically by passing a tax cut of Reaganesque proportions and appearing to make "compassionate conservatism" a reality.

Bush's father proposed a similar plan in 1992, but Democrats shot it down, despite the fact that it was slightly larger than Bill Bradley's primary campaign proposal this year. Now, however, observers point out, liberal representative Jim McDermott (D-Wash.) and conservative Jim McCrery (R-La.) are preparing a bill along these lines - just in time for George W. Bush to take advantage of it.

Source: Matthew Miller (Annenberg Public Policy Center), "What Tax Cuts Can Buy For Health," New York Times, December 28, 2000.


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