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Health insurance gets lip service during State of the Union
Analysis by Steven Mendoza
President Bush used his State of the Union address on Jan. 23, 2007 to deflect growing discontent with his "troop surge" strategy and focus debate on national health care reform. However, this deft political move failed because the President once again returned to tax cuts as a fix-all solution.
If adopted, the President's proposal would create a tax cut that would allow for $15,000 of income to be received tax free for families and $7,500 for individuals. These allowances would give people larger refunds to help offset health insurance expenses.
For example, if you make $50,000 a year, and receive insurance from your employer worth $12,000, then your total claim would be $62,000. Let's set a hypothetical tax rate of 20 percent, including payroll and income tax. Originally claiming the $50,000, a person would owe $10,000 in taxes. Now, when claiming $62,000, with a $15,000 pre-tax deduction, a person would pay 20 percent on $47,000, with a tax bill of $9,400, saving him $600.
The tax cuts would especially help families of four who don't have the option of purchasing their coverage from the employer. For this hypothetical scenario, the White House estimates these families would save between $3,000 and $4,000.
But what is the meaning of the word "affordable" and in what sense is the White House trying to use it?
The etymology Merriam Webster gives is that the word is derived from the Middle English term aforthen, descended from the Old English word geforthian, meaning to carry out. Merriam Webster lists two acceptable meanings of the word. The first "to manage to bear without serious detriment, to be able to bear the cost of," and secondly "to make available, give forth, or provide naturally or inevitably."
The logic seems lacking. A $600 tax break to help pay for a health care plan that may cost over $10,000 will not make health insurance more affordable for many in the American working class. Bush's use of the phrase "more affordable" seems the latest attempt to shape peoples' understanding of the President's rhetoric.
Nevertheless, there is no doubt that "affordable" is the intended message of this proposal - the word appears 28 times in the White House's online fact sheet "Affordable, Accessible, and Flexible Health Coverage."
But is Bush's proposal truly more affordable? The plan assumes Americans already have enough disposable income to purchase coverage upfront and then wait around for the tax check to come in the mail. If that were true, wouldn't people already be taking advantage of it?
The insurance companies aren't going to deduct the tax refund that a customer might receive from the government at some future date. This requires Americans to rely on their wages to cover monthly health insurance premiums until tax returns are filed and refunds received.
A check once a year wouldn't help most people pay their bills for the other 11 months.
Possibly a simpler solution is to create a program in which any employed individual qualifies for a government sponsored plan, but that's pretty close to how they do things in France, and it may be political suicide to endorse a French idea here in the United States. But then again, how much lower can the President's approval rating really go? Nearly 80 percent of the population of France describe themselves as satisfied with their health care. And yes it is expensive, but then so is war.
The elderly and those with pre-existing medical conditions should be calling all of their state representatives, sending mass emails and engaging in letter campaigns against this plan. More often than not they are forced to take out very expensive coverage plans, not because they prefer what the president would call "gold-plated" plans but because the insurance companies deem them as high risks and will only approve these Americans for plans with large price tags.
The President's new tax system would force these people to pay taxes on high-priced coverage that insurance companies require them to register for.
The only portion of America this plan would benefit are those that already receive insurance coverage, either privately or through their employer that falls under the deduction caps. They would be able to take advantage of this tax code shuffle and receive money back from the government after filing for the deduction. It is even possible to increase the return by decreasing the value of coverage, but that might be too risky of a gamble for families. But wasn't this policy supposed to make health insurance "more affordable" and "more accessible" for those 47 million people in our country that have no coverage?
The President's proposal has no vision for the future of health care or the needs of Americans in 40 years. Bush's plan doesn't care for our health, only the health of the free market. This is no far-reaching attempt to fix our nation's health care situation. Bush made no enlightened comparison to other nation's systems to show he'd done his homework. This proposal attempts to address the future by linking the tax exemptions to the rate of inflation, but unfortunately health care costs are presently rising at about three times the rate of inflation.
But don't worry. Remember, President Bush didn't propose this thinking it would actually be enacted into law. He brought up healthcare only to shift national debate away from the Iraq war, if only for a little while.
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