So the address is Tuesday and the shit is already flying.  There is a stupid move to start taxing employer/employee health care insurance. 

Plan would tax some benefits

By MICHAEL A. FLETCHER

The Washington Post

WASHINGTON — President Bush will propose deep tax breaks for Americans who purchase their own medical insurance and would finance the plan with an unprecedented tax on a portion of the healthcare plans that workers receive from their employers, according to the White House.

The initiative, which the president briefly previewed in his radio address Saturday, has a dual purpose: It would create a financial incentive for the estimated 46 million to 48 million Americans who lack health insurance to buy it. And it is intended to rein in the soaring cost of health insurance by encouraging workers in high-priced plans to seek more modest coverage.

“Today, the tax code unfairly penalizes people who do not get health insurance through their job,” Bush said. “It unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise and many Americans cannot afford the coverage they need.”

The proposal, which Bush plans to fully unveil in Tuesday’s State of the Union address, marks a sharp departure for a president who has been criticized for advocating tax cuts that disproportionately benefit higher-income Americans.

The basic concept of the plan is that employer-provided health insurance, now treated as a fringe benefit exempt from taxation, would no longer be entirely tax-free. Workers could be taxed if their coverage exceeded limits set by the government. But the government would also offer a new tax deduction for people buying health insurance on their own.

The plan is a startling move for a president who has repeatedly vowed not to raise taxes. And it is certain to run into opposition from business groups, labor unions and, most of all, the Democrats who now run Capitol Hill.

“It’s a bad policy,” Rep. Charles B. Rangel, D-N.Y., the chairman of the House committee that writes tax legislation, said in an interview Friday night. “We are trying to bring tax relief to the middle class. The president is trying to increase their tax liability. This proposal is inconsistent with what the majority is seeking in the House and the Senate.”

White House officials say the health tax plan would neither increase spending nor reduce tax revenue. Supporters say it would expand coverage to some of the 47 million uninsured. But critics say it would, in effect, tax people with insurance to provide coverage to those without it.

That would amount to a tectonic shift in the way people get and pay for their health coverage, and historically it has been all but impossible to win congressional approval for such changes.

The Bush administration estimates that 80 percent of people with employer-provided plans would see their tax liability fall because the deduction would be larger than the value of their insurance plans.

The idea of ending the taxpayer subsidy for what some in the health industry call “Cadillac health insurance” policies and using the savings to subsidize insurance for those who do not have it has been around for at least two decades, experts said. Underlying the idea is the belief that the current tax structure essentially adds to the inflationary pressure on healthcare by subsidizing expensive healthcare plans, making coverage even more unaffordable for those who do not have it.

This report includes material from The New York Times.

IN THE KNOW

How it works

Under the president’s plan, the administration would cap the amount of health benefits that can remain tax-free at $15,000 for a family and $7,500 for an individual. Anyone whose health insurance cost more than that would pay taxes on the difference. For example, a family with coverage costing $16,000 a year would pay taxes on $1,000. The cap would also be used to establish the amount of the new deduction for people who lack coverage. In this example, a family buying insurance on its own could take a $15,000 deduction — even if the insurance cost less.

SOURCE: The New York Times
I don’t receive $16,000 worth of benefits so I would be okay, but why shouldn’t someone get the best healthcare they are willign to pay for.  BTW I am all for national health insurance, or care.  I didn’t have insurance from age 19, until December 2006.