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Saturday, January 20th 2007

Your Health Insurance Covers Botox?

President Bush will use the State of the Union to at least touch on a new health tax plan.

The plan would, for all intents and purposes, tax those with too much health insurance provided by their employers, and then use that tax revenue to provide a tax deduction for low income individuals and families to buy insurance themselves.

In his radio address on Saturday, Mr. Bush described his proposal as a way to “treat health insurance more like home ownership,” giving people tax deductions for their health insurance in much the same way as they get tax deductions for home mortgage interest. He said the current system “unwisely encourages workers to choose overly expensive, gold-plated plans,” driving up the overall cost of coverage and care.

I suppose this is in line with the administration’s fascination with high deductible, minimalistic consumer driven health plans and HSAs.

While I appreciate the expansion of high deductible plans as a way of lowering costs, it was foolish to imagine they could significantly improve the number of uninsured (remember: this blog will forever use the 26 million figure).

Senator Wyden (D-Oregon) seems to have a deeper understanding of the situation,

He said any tax changes must be coupled with regulations that would encourage private insurance companies to offer affordable coverage to people with pre-existing health conditions.

“The market is broken,” Mr. Wyden said. “Private insurance companies cherry-pick. They’re trying to take just healthy people and send fragile people over to government programs more fragile than they are, and I’m not sure what this does to fix the broken market.”

Very good points. Employer based/group insurance allows those with pre-existing conditions to afford insurance. As an individual in the market it becomes very difficult to afford the same coverage.

I think everyone can appreciate the tax break idea for individuals. For too long those getting insurance through employers have enjoyed a tax break not granted to those who must purchase it for themselves. Of course we can argue over the size of the relief and other reforms and the decrease in federal revenue, but this part of the plan will be generally well recieved.

However, I find fault in the idea that you can tax those who seek high end insurance (“gold plated” as the President called these expensive plans) but not anyone else.

And as Senator Wyden said – although I can’t say I agree that the government should force such measures on the insurance industry – the plan will have a speed bump in the fact that insurers will cherry pick individuals. But this is more of complaint that “there will still be uninsured!” And, despite Senator Wyden’s implied expectations, I don’t think anyone really thinks this plan will provide for universal coverage.

This plan won’t get through Congress without major revisions, and I would be surprised if even a shell of it got through at all.