Bush's New Health Insurance Plan

1 INTRODUCTION 3

2 WHAT PRESIDENT'S NEW HEALTH CARE BILL AIMS AT? 4

3 BUILT-IN HAZARDS IN HAS'S POLICIES: 13

4 CONCLUSIONS 14

5 BIBILIOGRAPHY 15

1. INTRODUCTION:

American employees have been desisted to avail health benefits out of their income there by lessening their tax burden on that income but only as long as that benefits or coverage is being bestowed to them by their employers. Now employer -provided health-care plans is shielding about 160 million Americans and extending an average tax subsidy f $ 2780 on each covered employee. Further, it is estimated that total value of health care benefits was estimated to cross $ 205 billion.

Under the existing scheme, if an employer has not extended any health-care coverage or if any employee does not like the plan offered to him, then he has to buy his own health-care policy from his after -tax earnings. This aspect is being criticized as being unfair.

Companies are being encouraged to spend more on health insurance due to the fact that as it want to keep employees more loyal and this generous policy encourage consumers to avail the medical services in excess than what they need it actually and result in health-care inflation.

The solution offered by Armey and Stark is to employ the tax code to assist increase coverage. They even advocate that congress should approve a proposal of creating a new refundable tax credit to facilitate all Americans to buy moderate health-care plan. Some senators vehemently support sponsored legislation which facilitates tax credit or deductions for consumers to avail health coverage. Currently, Americans who subscribe for private health insurance plan has to do the same with his after tax income and no tax deduction is available. American government existing schemes like Medicare covers most of the costs for medical care for 40 million disabled and aged and Medicaid takes care of another 40 million low-income Americans.

But, one important factor to be borne in mind that an employer provided health-care plan is more beneficial to an employee than that of an additional $ 15,000 in his pay check as the latter will fall under the payroll and subject to income tax whereas health insurance benefit provided by the employer is not subject to income tax.

As per President Bush new plan , tax breaks await Americans who subscribe for their own medical insurance and would finance it with an unmatched tax on a part of high-priced health care plans that is being provided by the employers to their employees.

2. WHAT PRESIDENT'S NEW HEALTH CARE BILL AIMS AT?

The new plan was announced by President Bush in his radio address to the nation on 20 January, 2007. The new health care plan announced by the President Bush would provide a financial encouragement for the 50 million Americans who can not afford to buy a health plan. The new health plan would restrain the escalating cost of health insurance by supporting the employees in high Ð'-priced plans to go for more modest plan.

The current tax saps for health insurance plans is not beneficial to those who are in self employment. Further, to avail the tax exemptions, the employees are forced to subscribe high-priced, gold Ð'-plated health plans. As the result, employees are at the mercy of the health insurance providers as they are pricing it on higher terms and many Americans are left under covered.

Thus, President Bush plan can not be construed as a tax increase as it does not fetch any new revenue to the federal government. In turn, employees who subscribe modestly-priced plans from their own resources will be subsidized as it would add a new tax on employer Ð'-provided health care policies which costs more than $ 15000. Bush's new medical plan would facilitate employees to subscribe modestly priced health care plans as large private operators entering into the market will bring down the policy cost to an affordable range due to competition in the industry.

States which encourages private insurance players to offer health Ð'-care plans to the chronically suffering people or low income people will be rewarded by the increase in the federal assistance. Individuals at low income group will be assisted to buy health-care plans by the State government by redirecting the money from nursing homes and hospital as the federal government is contemplating to provide waivers under Medicaid, a government supported health insurance plan for the downtrodden which is jointly funded by the federal government and states.

Already states like Vermont, Massachusetts, Maine is offering health -care plans to the uninsured. Recently, California government is also contemplating to introduce health care-plans to about 6.5 million people who are uninsured.

Bush attempt can be regarded as an ambitious attempt to resolve the health-care issue. Earlier, he advocated for limited tax breaks to assist people who buy health insurance, but those efforts became fruitless. He also encouraged the health savings plans, consumer Ð'-driven plans with lower premiums and higher deductibles as compared to long-established insurance plans.

The salient feature of Bush medical insurance plan is that it offers equal benefits to those who subscribe for health insurance irrespective of the fact that whether it is being offered to them by their employers or they buy it.

At present nearly 150 million Americans are enjoying the health-care insurance which are provided by their employers and these enjoys tax sobs also regardless of their value. Further it is estimated that average employer provided family health insurance costs about $ 11,550 per annum which is three times higher than that of 20 years ago.

President Bush medical plan fixes ceiling of $ 15,000 for availing any tax breaks on the health insurance premium received by the employee from their employer in the course of their employment .Thus, if an employee receives a health insurance plan for $ 15,500, then he has to pay tax on the balance of $ 500.

Further , employees can avail a flat deduction of $ 15,000 for their family or $ 7500 for an individual from their taxable income even if they availed a low-cost health insurance policies and irrespective of the fact ,whether they itemize deductions on their annual tax return or not . One another facility available as per Bush announcement is that employees can avail indexation which also extended to employer provided