Could President Bush's Healthcare Tax Plan Help Individuals In Texas?

The healthcare insurance tax plan proposed by President Bush is designed to reduce the number of people who do not presently have health insurance - reported by the Census Bureau to be 47 million in 2005, or 15.9 percent of the population. According to some healthcare experts, however, it could either increase or decrease the number of uninsured Americans by as much as 10 million, with much of the outcome determined by the proposal's impact on the individual insurance market.

The President's proposal, covered in his January 2007 State of the Union Address, would eliminate tax-free treatment for employer health benefits, but offer a standard tax deduction of $7,500 for individuals and $15,000 for families.

Supporters of the plan say it would be fairer than the current system, which favors people lucky enough to have access to employer-sponsored health insurance, and make insurance affordable for as many as five million uninsured Americans, many of them in the state of Texas. The President's economic advisers state that the plan would level the playing field between employer-sponsored insurance plans and individual health insurance plans.

The tax deduction, which would be given to any individual who purchases health insurance - no matter how basic the coverage - would also remove the current incentive to buy comprehensive coverage with almost no out-of-pocket costs. The President's economic advisers state that this comprehensive coverage shields consumers from the true cost of healthcare, encouraging wasteful spending and driving up costs for everyone. The Bush plan would let consumers decide what kind of coverage is best for them.

Most healthcare experts agree it doesn't make sense to favor employer-based coverage, but opinions are mixed over whether the individual health insurance market throughout Texas and around the country offers enough affordable and appealing options for the inevitable influx of new customers, should the Bush plan or similar legislation become law.

Under the current system, individuals whose employers do not offer insurance, or are self-employed or unemployed, must buy their own coverage. Some individuals with chronic or serious illnesses often find that almost no company is willing to sell them insurance at any price. Each state is free to regulate its own individual insurance market, and consumer protections vary widely.

If the individual health insurance market can rise to the challenge, President Bush's proposal could result in several million fewer uninsured people. Furthermore, it could cause millions of currently insured people through employer-sponsored plans to move into the individual health insurance market.

Encouraged by a new tax structure, individuals may purchase bare-bones coverage and find themselves underinsured. But supporters of the Bush plan state that it's an important step in helping make private health insurance more affordable to more people.

Employers are dropping their healthcare coverage at an accelerating rate anyway, say the President's economic advisers. Helping individuals find alternatives through tax incentives may reverse the trend.

His advisors also state that doing something is better than doing nothing, and the Bush proposal could be an opportunity to refocus the nation on solutions in the individual health insurance market.

The Bush plan is certainly not without controversy. It is not expected that the current Congress will even bring it to a vote. But the debate over how to change the current health insurance mess has been moved forward. Young, healthy individuals will still need an affordable health plan that offers catastrophic coverage.

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