Leavitt espouses health plan

During the next three months, Secretary of Health and Human Services Michael O. Leavitt will travel the country to drum up support for the Bush administration’s proposals for health care coverage.

Not since the early days of the Clinton administration has so much attention been paid to the problem of medical insurance.

It has been a dizzying month of calls for reforms, with conservative industry groups and liberal advocacy organizations joining forces on proposals to reduce the legions of the underinsured and uninsured.

While the new attention is necessary, it may not be effective.

“What we have here is a convergence of philosophies between the Democrats in Congress that want to expand the employer system and public programs and Republicans [the Bush administration] who believe the individual system is where we need to go,” said Robert Laszewski, president of Health Policy and Strategy Associates. “You don’t split the difference, we’re stalemated until 2008.”

The president released his proposals to Congress shortly before the State of the Union address. Almost immediately the plan was criticized on Capitol Hill.

“President Bush’s proposal on health care is another step in the wrong direction,” said House Speaker Nancy Pelosi, California Democrat, at the U.S. Conference of Mayors on Wednesday.

“It will actually raise taxes on middle-class families lucky enough to have good health insurance, while providing little assistance to the 47 million uninsured Americans. Quite simply, it’s bad medicine.”

The Democrats do not favor the president’s tax proposals but Mr. Leavitt was adamant that the states alone cannot solve the problem of the uninsured.

The problem, as Mr. Leavitt explained, is that low-income people with no employer insurance must buy individual health insurance after they pay their income taxes. “It’s not fair,” he said.

So the administration is proposing to reform the tax code by giving families a $15,000 deduction and individuals a $7,500 deduction. But Families USA, a nonprofit consumer organization, calls the tax-reform proposal regressive, partly because a tax deduction favors people with higher incomes.

A tax credit provides more tax relief. For a family in a 15 percent tax bracket, a tax deduction reduces their tax liability by only 15 cents for every dollar spent on premiums. The Families USA analysis shows that for a family in a 15 percent bracket, the tax deduction is worth $2,250.

When asked why a deduction rather than a credit, the secretary said that the administration considered a tax credit and that “a tax credit certainly has redeeming features.”

“If exclusion [deduction] is not the solution, let’s talk about what is a solution, but I believe exclusion is the best policy,” he said.

Under the proposal, Mr. Leavitt said 23 million to 28 million people would pay more taxes on their insurance because, for the first time, the government would levy a tax on the value of employer-sponsored health insurance in some cases. Currently, most employees are not taxed on the value of their employer-sponsored health insurance.

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