bush health proposal

Bush Health Proposal

Reuters reports the new heath insurance initiative from the Bush

Administration:

Bush's health-care proposal would use tax breaks to make it easier

for people who do not have employer-provided health insurance to

buy coverage on their own. The tax incentives would be similar to

deductions used by homeowners for the interest on their mortgages,

Bush said.

But the program is intended to have no effect on government

revenues because the cost of the tax breaks would be offset by

changing the way health insurance is treated in the tax code,

according to a senior administration official who described the

proposal to reporters.

The current health system relies primarily on employers to provide

health-care coverage as a fringe benefit. Employees are not taxed

on the benefits but the Bush plan would set a cap on the amount of

coverage that could be offered tax-free.

Anything above that would be taxed as income, the administration

official on condition of anonymity.

Economists have long suggested that tax subsidies lead to excessive

use of employer-provided health insurance. This proposal would help

fix that problem, while giving a helping hand to the uninsured.

Note that some Democratic economists have made similar proposals in

the past, so there is hope that this idea will command bipartisan

support.

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