We’re just 26 days into the new year, but already health care costs and the plight of the 47 million uninsured Americans are a major theme of 2007.
For example, at the beginning of January, California Gov. Arnold Schwarzenegger proposed universal health care for all Californians. Earlier this week, President Bush proposed a major tax change to help Americans cover health costs. And on Thursday, presidential hopeful Barak Obama, joining a host of Democratic rivals, called for universal coverage for all Americans by 2013.
Let’s focus on the Bush plan, which is confusing.
The plan in plain English
In a nutshell, the plan changes employee-sponsored health care coverage—heretofore a tax-free benefit—into taxable income above a certain threshold.
Here’s the official language: “Families will not pay income or payroll taxes on the first $15,000 in compensation and singles will not pay income or payroll taxes on the first $7,500.”
Translated what that means is:
1. If you get insurance through your employer, you would pay taxes on any amount they pay on your behalf over $7,500 for individuals or over $15,000 for families. In other words, if your employer pays more than $15,000 to cover your family, your tax bill would go up.
2. If you buy your own health insurance—say you are self-employed—you as an individual could deduct $7,500, or $15,000 as a family, on your taxes.
The big picture
Who does this plan help? Bush says it’s meant to “level the playing field” for people who buy their own insurance with those who get it through employers. Critics say it won’t impact people who really need health insurance because the plan doesn’t change the fact that they can’t afford it or that pre-existing conditions preclude some from coverage at all. And a federal tax cut doesn’t help those who make so little money they are exempt from federal taxes all together. But Bush’s plan does open the conversation on a major issue and important challenge for the United States. Bottom line, stay healthy!
Is the new plan a step in the right direction? What would you change?
