Plan for uninsured draws mixed reaction

President Bush aims to change the tax code to equalize the treatment of individually purchased and group health coverage.

By Doug Trapp and David Glendinning, AMNews staff. Feb. 12, 2007.

Washington -- Response to President Bush's plan for tackling the problem of the uninsured ranged from high praise to disdain.

Many medical organizations, including the American Medical Association, applauded him for addressing the issue. But several groups offered advice on how to reform the system.

"The president has raised the nation's awareness of the inequities in the tax treatment of Americans based on individual versus employer-purchased health care," said AMA President William G. Plested III, MD.

"Bottom line: Americans with individually purchased health insurance pay taxes on the entire cost of their insurance, while those with employer-sponsored health coverage don't."

Bush's proposal, unveiled during his Jan. 23 State of the Union address, would change that dynamic.

It calls for a new, standard tax deduction -- similar to the deduction for dependents -- beginning in 2009. Anyone would be eligible to deduct their health insurance spending, with an individual limit of $7,500 and family limit of $15,000. At the same time, it would count employees' health insurance as taxable income.

AMA policy supports the type of tax reform Bush proposes, but it also calls for providing tax credits inversely related to income to buy health insurance.

"Many without coverage lack the means to get regular checkups needed to monitor and control chronic diseases, like heart disease and diabetes," Dr. Plested said.