TAXES

Healthy Debate Over Bush Health-Care Plan

Small-business groups and labor advocates clash as opponents say proposed tax breaks will leave more employees without health insurance.
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Small-business and worker-advocacy groups are clashing over health-care reform measures proposed by President Bush in his State of the Union  speech on Tuesday. The president’s plan offers tax breaks to individuals who purchase health insurance on their own, rather than relying on an employer.

Under the proposal, a family of four earning $60,000 a year that bought their own insurance could save as much as $4,500 on their annual tax bill, the president said. As such, the move would "level the playing field" between the costs of personal and employer-based health coverage, Bush said.

Small-business lobbying groups, including the National Federation of Independent Business and the U.S. Chamber of Commerce, hailed the initiative, saying it offers a market-based solution to the rising costs of employer-provided health care, while giving employees greater control of their health-care choices.

Labor unions and policy watchdog groups say the move will simply shift the onus of providing coverage away from employers, leaving more employees without health-care insurance.

As it is, more than 46 million Americans are uninsured, according the Census Bureau.

Since Tuesday's speech, the president has promoted the initiative across the country.

"If you're a stand-alone person, you pay your health care on an after-tax basis. In other words, there's discrimination in the tax code based upon who you work for," Bush said Thursday at a hospital in Lee's Summit, Mo. The tax break, he said, will make it "more likely an individual will be able to afford health care."

Health-care costs  are the top concern among small-business owners, according to the National Federation of Independent Business, the nation's largest small-business lobbying group.

"Small-business owners know first hand the challenge of providing affordable health care for their employees," Todd Stottlemyer, the group's president and CEO, said Wednesday. He praised the move as a significant step in alleviating "unfair burdens small-business owners and their employees contend with every day."

According to a national survey released last week by Women Impacting Public Policy, a Washington-based bi-partisan women's business advocacy group, more than half of the nation's women entrepreneurs said they believe businesses should not be the main provider of health coverage.

Still, that's where most people currently get their health-care insurance, opponents of the proposal say.

"Congress should reject this plan," Leo Gerard, the president of the United Steelworkers, said in a statement. He said the tax deductions will erode employer coverage and amounted to a back-door attempt to saddle employees with a "tax for the health care benefits they negotiate through collective bargaining."

The Center on Budget and Policy Priorities, a liberal policy watchdog group based in Washington, agrees, saying the move will undermine the president's stated goal of covering the uninsured by downplaying employer-based coverage -- the primary means of pooling health coverage and keeping it affordable.

"Getting more people covered by private insurance is something we clearly applaud," said Jerry Ripperger, the director of consumer health at The Principal Financial Group. "But we wouldn't want to see anything that would erode the employer-based system."

His concerns were echoed by Rep. Nydia Velazquez (D-NY), the new chairwoman of the House Small Business Committee. While supporting a move to create greater transparency in health insurance costs and tax breaks, she called for protections to maintain the employer-based system.

"The nation's small business owners were waiting to hear answers from the president on how the administration would help them cope with some of their most pressing problems -- healthcare and energy costs -- but in many cases it left them with more questions than answers," Velazquez said in a statement.

Last updated: Jan 25, 2007




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