A Washington Post article suggested that President Bush's proposal to "replac[e] a tax break for employer-provided health coverage with a new $15,000 tax deduction for families and $7,500 for individuals, regardless of where they buy insurance" was derailed by "[c]ongressional Democrats" who "were not eager to compromise with a Republican president on a signature Democratic issue." In fact, critics of the president's plan offered substantive reasons for opposing the proposal, none of which were reported in the article.
In a January 28 article, Washington Post staff writer Christopher Lee suggested that President Bush's proposal to "replac[e] a tax break for employer-provided health coverage with a new $15,000 tax deduction for families and $7,500 for individuals, regardless of where they buy insurance" was derailed by "[c]ongressional Democrats" who "were not eager to compromise with a Republican president on a signature Democratic issue." But contrary to Lee's suggestion, congressional critics and other critics of the president's plan offered substantive reasons for rejecting it, including many that the Post has previously reported. Yet at no point did Lee note any of the criticisms of the proposal that have been voiced by Democrats and outside experts. Bush put forth the proposal in his 2007 State of the Union address.
Following Bush's 2007 State of the Union address, Washington Post staff writers Jonathan Weisman and Michael A. Fletcher reported on January 24, 2007, that congressional Democrats viewed Bush's health-care proposal "as a continuation of Republican efforts to drive workers away from employer-provided health insurance and into the free market" and doubted the proposal would benefit the "working poor" to the degree the White House pledged:
But Democrats said they did not see much movement toward them beyond the rhetoric. At particular issue is Bush's proposal to encourage the purchase of individual health insurance policies through tax deductions financed by a new tax on the value of employer-provided health insurance. Under the plan, the government would allow each family to deduct $15,000 a year from its taxable income to offset the cost of health insurance -- and those who file their tax returns as individuals would be allowed $7,500 each. To pay for this tax break, the value of employer-provided health insurance exceeding the deductions would be taxed as income.
White House officials framed the proposal as a progressive plan to help cover the uninsured by taxing those with Cadillac-style health coverage, primarily well-paid workers and executives.
But Democrats did not buy it. Instead, they said they view it as a continuation of Republican efforts to drive workers away from employer-provided health insurance and into the free market. Even some conservatives questioned how it could help the uninsured. The conservative Tax Foundation said 53 percent of Americans without health insurance pay nothing in federal income taxes and would, therefore, get nothing from a tax break on such taxes.
Low-income workers would get a reduction in their Social Security and Medicare taxes, but probably not as large as the White House suggests, Democrats said. Half of those payroll taxes are paid by workers and half by employers. To reach their generous assessment of the proposal for the working poor, White House economists assume that employers would pass on their payroll tax cut to their workers in the form of raises.
"C'mon," scoffed Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means subcommittee on health.
A January 26, 2007, Post report quoted Sen. Edward M. Kennedy (D-MA) as saying of the proposal: "I find the plan troubling because it does nothing to help people get insurance, hurts those who already have it and provides a tax break that benefits the wealthiest Americans." Additionally, a February 22, 2007, Post article reported criticism of Bush's proposal by "health economists" and by Rep. Rahm Emanuel (D-IL), the House Democratic Caucus chair:
Many health economists say they think Bush is overstating the impact of the tax code changes, but they say he might have a bigger bang if he were to give low-income people tax credits to buy insurance, an idea the White House considered and rejected.
The president's plan has also elicited mixed reaction on Capitol Hill. In the House, the idea has been declared a non-starter, and House leaders are moving in another direction, hoping to expand funding for the federal-state children's health program much more ambitiously than the president contemplates. The president's plan is for "every individual on their own," said Rep. Rahm Emanuel (D-Ill.), the chairman of the House Democratic Caucus. "He does nothing to control costs and he does nothing to expand the number of insured. Other than that, it is incredibly helpful."
Other January 2007 news reports also noted reasons cited by congressional Democrats and outside health-policy experts for opposing the president's proposal:
- A January 21, 2007, New York Times article quoted criticism of Bush's proposal by Rep. Charles B. Rangel (D-NY): "We are trying to bring tax relief to the middle class. The president is trying to increase their tax liability. This proposal is inconsistent with what the majority is seeking in the House and the Senate."
- A January 21, 2007, article in the Los Angeles Times quoted Rep. Henry Waxman (D-CA) criticizing Bush's proposal:
"To the extent that the president is now recognizing that all Americans need health coverage, that's positive," said Rep. Henry A. Waxman (D-Los Angeles). "But it clearly cannot come at the cost of undermining comprehensive health coverage for those who do have insurance."
- A January 23, 2007, Associated Press article reported that Rep. Pete Stark (D-CA) said "the tax changes ... would encourage employers to stop providing health insurance," and also noted criticism from several health policy experts:
President Bush's proposed tax deduction for health insurance appears to be shaping up as a tough sell in the Democratic Congress.
Rep. Pete Stark, D-Calif., said Monday that the tax changes, which Bush will promote in Tuesday night's State of the Union address, would encourage employers to stop providing health insurance.
"Under the guise of tax breaks, the president is pursuing a policy designed to destroy the employer-based health care system through which 160 million people receive coverage," the lawmaker said.
But Paul Fronstin, a senior research associate at the Employee Benefit Research Institute, said he has serious concerns about the president's proposal.
"I think we're giving employers the incentive to get out of the business of providing health benefits," Fronstin said.
If that happens, more people would have to get their insurance coverage through the individual market, he said. Landing such coverage can be more difficult for sicker, older workers, he said.
Diane Rowland, executive vice president of the Kaiser Family Foundation, said some of the people with health insurance premiums above $15,000 don't necessarily have "gold-plated insurance," as the Bush administration has called it. She said the cost of insurance varies depending upon the cost of health care in that state. Other factors include the size of the company and the age of its workforce.
"A single cap can mean very different things in different places of the country," she said.