State of the Union message: Bush seeks insurance tax deduction

The president also said he supports making job-based health coverage taxable.

By Doug Trapp, AMNews staff. Feb. 11, 2008.

Washington -- President Bush used his last State of the Union speech to restate his existing health care proposals, including tax deductions for health insurance spending, health insurance pools for businesses, medical liability reform and wider use of health information technology. Bush also challenged Congress to address the long-term solvency of entitlement programs, such as Medicare.

Reaction to the president's speech was muted. With Bush offering no significant new proposals for what could be a very partisan election year in Congress, medical organizations took the opportunity to restate their goals and concerns.

American Medical Association proposals align with some of the president's ideas, including passing medical liability reform and limiting the tax break for job-based insurance to fund tax help for those who buy coverage in the individual market. Bush would allow individuals to deduct up to $7,500 of their health insurance spending and families to deduct up to $15,000, while counting employees' health insurance as taxable income. The AMA proposal, however, favors a sliding-scale system of tax credits weighted toward people earning less.

Democrats reacted coldly to the president's tax deduction proposal last year. They held no hearings on it after Bush unveiled the idea during his 2007 State of the Union speech.