President Bush's Health Care Plan Deserves Careful Consideration
President Bush has proposed a health care plan designed to make health care affordable to millions who are not covered at present. Estimates run as high as 10 million that would be newly covered. Congress's Joint Committee On Taxation (JCT) has recently reported that this health care plan would save the government $333 billion dollars over ten years. The function of the JCT is to "score" tax policy changes.
President George W. Bush gestures as he participates in a roundtable discussion on health care initiatives at the Saint Luke’s-Lee’s Summit hospital in Lee’s Summit, Mo., Thursday, Jan 25, 2007. White House photo by Eric Draper.
President Bush has proposed a very interesting health care plan.
Employers now get an unlimited deduction for health care. This would change.
Benefit Becomes Regular Income But New Deduction Reduces The Final Tax
The cost, of an employer plan, would become income to the employee but against that, the employee would get a large deduction.
In about 80% of the cases the deduction allowed, would be larger than the income received.
The excess would be applied to taxable income, thus reducing the tax of the recipient .
Mr. Bush's plan would give every family a "standard deduction" of $15,000 and every individual a "standard deduction" of $7500.
Most Americans who are privately insured, are covered through their employer. The average cost of family plans provided by employers is $11,500. About 80% of employees have plans worth less than the amount of the deduction they would receive.
Those with plans worth more than $15,000 would pay a higher tax under the plan. If a worker has an employer family plan worth, for example, $16,000, he would add $16,000 to income, subtract $15,000 and pay a tax on the $1,000 excess.
Most workers with plans worth more than $15,000 would be higher income workers.
Those with plans worth less than $15,000 would Have Very Nice Options
Some employees with expensive employer sponsored family plans could still benefit as long as the plan was worth less than $15,000.
For example, a family plan worth $14,500, would add the $14,500 to a worker's income, but would offset it with the full $15,000 deduction wiping out the $14,500 of income and leaving $500, which would be applied to and reduce taxable income, by the leftover $500.
President George W. Bush speaks with Esmerelda Wergin, who works as a waitress in Overland Park, Mo., about how hard it is to maintain insurance for her family during a roundtable discussion on health care initiatives at the Saint Luke’s-Lee’s Summit hospital in Lee’s Summit, Mo., Thursday, Jan 25, 2007. Under the new health care initiatives offered in President Bush’s State of the Union address, Wergin would save over two thousand dollars, making insurance for her family more attainable. White House photo by Eric Draper.
Even though this employee had an expensive plan, he is still in the 80% group that would save.
It gets better. If that same employee were to switch from a low deductible plan to a high deductible plan, for example, to a plan costing $10,000, he would then have a deduction of $5,000 instead of $500.
It is further likely he would make more economical health care choices, which is badly needed to bring down health care costs nationally.
An employee with an employer sponsored family plan worth only $5000 would add $5000 to income, deduct $15,000 from taxable income, thus shave $10,000 from taxable income.
Those Who Buy Their Own Insurance
Those 17 million Americans who pay for their own health care insurance would have no insurance income to declare, therefore they would just take the full deduction, for their appropriate filing status.
The deduction could also be taken against payroll taxes.
Middle income families could save thousands under this plan; singles could also do very well.
This plan would increase taxes on upper incomes and decrease taxes on lower incomes.
Congress's Joint Committee On Taxation (JCT) has recently reported that this health care plan would save the government $333 billion dollars over ten years. The function of the JCT is to "score" tax policy changes.
Democrats dismissed and derided this plan when it was proposed. They should look more closely. Estimates run as high as 10 million for lower income individuals who would gain coverage. Finally, benefits to millions of others and the nation seem to be very positive.
Mick McNesby is a former tax advisor, consultant and negotiator. He was a frequent guest on political talk shows in Atlantic City, N.J., discussing the benefits of the lower cost of government. He can be visited at conservative-politics-infofind.com.