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Senior Citizen Politics
Senior Citizens Not Likely to Hear Much on Retiree
Programs in State of Union
Focus of speech will be health care insurance but not
supplemental insurance
January 23, 2007 – The State of the Union address
by President George W. Bush tonight will focus on a health care program
providing tax incentives for Americans to purchase health insurance but
a spokesperson said yesterday that it was not clear if this would
include supplemental health insurance purchased by millions of senior
citizens to fill the health care gaps in Medicare. No advance notice was
provided to indicate the president may address changes in either Social
Security of Medicare.
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Politics for Senior Citizens |
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In the State Of The Union Address, President Bush
will announce his proposals to make basic, private health insurance
"available and affordable for more Americans" says the news release
issued by the White House.
"The President's plan will make private health
insurance more affordable and increase the number of Americans with
health insurance," according to the statement from the White House.
"The plan will also help our Nation move away from
reliance on government-run health care and toward a system in which
Americans have better access to basic, affordable private insurance, and
increased ownership of their medical decisions."
In a White House briefing yesterday by Julie Goon,
Special Assistant to the President for Economic Policy and Katherine
Baicker, Council of Economic Advisors, a reporter asked:
"Can you explain, how does this affect Medicare
recipients, and also people with Medicare but who buy supplemental
policies?"
Goon replied, " If you buy supplemental policies
right now, I don't think you get any tax benefit from that, because
you're doing it all in after-tax dollars."
"This is for purchasers of private health
insurance," added Baicker.
The exchange continued.
Question: "So, in other words, let's say you're a
retiree, but you also have, like -- you're buying AARP insurance – "
Ms. Goon: "So I'm retiree on Medicare?"
Question: "A retiree on Medicare, but you're also
buying AARP. Do you get the deduction, or not?"
Ms. Goon: "I think we have to get back to you on
that, but I don't think this speaks to this supplemental insurance. It's
traditional – "
Question: "Primary health insurance?"
Ms. Goon: "Yes, primary health insurance. And
Medicare is taking care of that for those beneficiaries."
Since the speech to be delivered has been written,
it appears unlikely that supplemental health insurance will be part of
the plan to make insurance more afforadable.
The White House statement on the speech says the
President's plan includes two parts:
● reforming the tax code with a standard
deduction for health insurance so all americans get the same tax breaks
for health insurance and
● helping states make affordable private health
insurance available to their citizens.
"The president's proposal levels the playing field
for Americans who purchase health insurance on their own rather than
through their employers, providing a substantial tax benefit for all
those who now have health insurance purchased on the individual market.
It also lowers taxes for all currently uninsured Americans who decide to
purchase health insurance – making insurance more affordable and
providing a significant incentive to all working Americans to purchase
coverage, thereby reducing the number of uninsured Americans."
Other points made in the White House release:
● Under the president's proposal, families with
health insurance 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.
● At the same time, health insurance would be
considered taxable income. This is a change for those who now have
health insurance through their jobs.
● The President's proposal will result in lower
taxes for about 80 percent of employer-provided policies.
● Those with more generous policies (20 percent)
will have the option to adjust their compensation to have lower premiums
and higher wages to offset the tax change.
● For States that provide their citizens with
access to basic, affordable private health insurance, the President's
Affordable Choices Initiative will direct Federal funding to assist
States in helping their poor and hard-to-insure citizens afford private
insurance. By allocating current Federal health care funding more
effectively, the President's plan accomplishes this goal without
creating a new Federal entitlement or new Federal spending.
● The President's proposed standard deduction for
health insurance will help make basic private health insurance more
affordable for families and individuals – whether they have insurance
through their jobs or purchase insurance on their own. For those who
remain unable to afford coverage, the President's Affordable Choices
Initiative will help eligible States assist their poor and
hard-to-insure citizens in purchasing private health insurance.
The Tax Code Now Penalizes People Who Do Not Get
Health Insurance Through Their Employers.
● Those who buy insurance on their own pay higher
taxes for insurance than those who can get it through their job. The
self-employed pay no income taxes on their premiums, but because they
still owe payroll taxes, they are also disadvantaged compared to those
who get health insurance from their employer. No one should have to pay
higher taxes just because they do not work for an employer that provides
health insurance.
● Under the current system, those without
employer-provided health insurance – including the unemployed, retirees
without retiree coverage, and workers at companies that do not offer
health insurance (most of which are small businesses) – may have to pay
substantially more for health insurance than those with
employer-provided plans, a cost which many cannot afford.
The Tax Code Now Penalizes People Who Choose Basic,
Affordable Insurance Policies Over More Expensive Plans.
● The more expensive the health insurance plan
you receive through your employer, the more tax relief you get. This
encourages many workers to choose lower wages and more expensive health
insurance than they would choose if the tax code were not distorting
their decision. One result is that insurance premiums rise, and many
Americans cannot afford the coverage they need. Each family and worker
should choose the balance of wages and health insurance that is right
for them, without the tax code distorting their decisions.
Reforming The Tax Code With A Standard Deduction
For Health Insurance To Make Private Health Insurance More Affordable
● The President proposes a standard tax deduction
for health insurance (from income and payroll taxes) for every family
and individual who has a private health insurance policy, regardless of
the policy's cost or whether the policy was purchased individually or
through an employer.
The President's Proposal Would Replace The Current
Tax System, Which Favors The Most Expensive Employer-Provided Plans.
● All families covered by a private family health
insurance policy, whether purchased on their own or through their
employer, will pay no income or payroll taxes on their first $15,000 of
compensation. All individuals covered by any single private health
insurance policy will pay no income or payroll taxes on their first
$7,500 of compensation.
● At the same time, health insurance would be
considered taxable income. This is a change for those who now have
health insurance through their jobs.
● Under current law, companies deduct health
insurance costs and wages as legitimate business expenses. The
President's proposal would not change this.
Most Americans Who Purchase Health Insurance
Through Their Employers Will See Their Tax Bills Go Down. The
President's proposal will result in lower taxes for about 80 percent of
employer-provided policies. More than 100 million Americans who now get
health insurance through their job will see their tax bills go down, and
their health insurance will therefore be more affordable. Those with
more generous policies (20 percent) will have the option to adjust their
compensation to have lower premiums and higher wages to offset the tax
change.
The President's Proposal Will Lower Taxes For
Millions Of Americans Who Now Purchase Health Insurance On Their Own,
Making Their Insurance More Affordable.
● The President's proposal would level the
playing field by giving all Americans the same standard deduction,
whether they get health insurance through their job, or buy it on their
own. The average tax bill will go down by more than $3,650 when the
policy would be implemented in 2009 for those families who now purchase
health insurance on their own.
● This will make health insurance dramatically
more affordable for the millions of Americans who do not get health
insurance through their job and instead buy it on their own.
● This proposal will lower the average tax bill
of a family without health insurance by $3,350 in 2009 – effectively
reducing the average cost of health insurance by more than half for
uninsured families trying to buy insurance on their own.
● Our current system distorts people's decisions
about how best to spend their income. This leads to higher health
spending and lower-value care. The President's plan would lower the
growth in national health care spending right away, and decrease
spending even more in the long run with increased competition and the
development of new cost-effective technologies.
The Proposal Is Budget Neutral Over Ten Years.
● The amount of the standard deduction will
increase by the Consumer Price Index each year.
The Affordable Choices Initiative – Coverage For
Vulnerable Americans
● Governors across the Nation have put forward
plans to make basic private health insurance more accessible for their
citizens. The President has directed Health and Human Services (HHS)
Secretary Mike Leavitt to work with Governors and the Congress to make
basic private health insurance available, and to help States pay private
health insurance premiums for the poor and the hard to insure.
● States that provide their citizens access to
basic, private insurance at an affordable price would be eligible for
funds under the Affordable Choices Initiative. The Secretary of HHS
would be able to redirect Federal payments away from institutions and to
needy individuals in eligible States. These grants would allow States
to help low-income individuals purchase private health insurance.
● The Federal government now pays many of the
health care bills of the uninsured through a complex mix of subsidies
and payments to health care providers, with the result that billions of
taxpayer dollars are spent inefficiently. The health care system needs
to be transformed in a way that avoids costly and unnecessary medical
visits and emphasizes upfront, affordable private health insurance
options. Americans should "own" their own health plan, and money should
follow the person rather than the institution.
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