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What the Bush Proposal Means to You and the State of Healthcare

If you manage the health care plan for your employer, or even as a field HR generalist, you are feelingBush the pinch and influence of the overall cost of health care.  While that fact is not news, the recent proposal by President Bush is brand new - to create a standard health insurance tax deduction, which would also act as a cap on the amount of employer-provided health care benefits that are exempt from taxation. 

The goal of the proposal is to provide equity in benefits for those Americans who have to buy their own health care insurance.  Under the proposal, employer-provided health care insurance would be treated as taxable income. The proposal would allow a standard tax deduction for health care insurance of $15,000 for people purchasing a family policy (through an employer or on their own) and $7,500 for those purchasing a single policy (through an employer or on their own).

Bush's primary hope - that the plan would expand health care coverage by offering the uninsured the same tax breaks as those who receive health care insurance through their employers, is debatable.  The uninsured still need the cash flow to purchase a policy.  For employers, if passed the plan is not expected to have a great deal of impact since the cost of family coverage offered by most employers comes in below the 15K cap.  With this in mind, the paycheck might look a little different, but it won't have a lot of impact until the cost of family coverage moves north of 15K annually.

For an educated read on what it means, check out Jeff Jacoby's column in the Boston Globe.  Jacoby believes that the proposal might create some free market dynamics in the rush to cover the non-insured.  While that's not perfect, it's a start to create some price pressure in the system and start leveraging providers to use technology to measure the efficiency of doctors, hospitals and other entities currently driving costs....


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