Bush Proposes Annual Tax Credits for Health Savings Accounts, Calls for Association Health Plans

President Bush on Wednesday in a speech at NIH proposed tax credits to encourage the expansion of health savings accounts and reduce the "nation's spiraling health care costs," the Washington Post reports. Under the proposal, families of four with annual incomes of less than $25,000 would receive a $1,000 tax credit annually for HSAs (Fletcher, Washington Post, 1/27).

Under the new Medicare law, HSAs are available to members of health plans that have a deductible higher than $1,000 for individuals and $2,000 for families. Employees, employers or both can contribute as much as a combined $2,600 annually for individuals and $5,150 annually for families for HSAs (California Healthline, 1/12). The proposal also would provide eligible families with as much as $2,000 in refundable tax credits to help purchase health insurance with HSAs or as much as $3,000 in refundable tax credits to help purchase traditional health coverage.

HSAs "aim at empowering people to make decisions for themselves, owning their own health care plan, and at the same time bringing some demand control to the cost of health care," Bush said. In addition, Bush called for legislation to allow small businesses to form association health plans across state lines. He also promised to expand the number of community health centers to provide basic health care to more low-income U.S. residents and called for a $1 billion campaign to enroll more children in public health insurance programs.

According to the Post, the tax credit proposals are part of the "ownership society" that Bush has promoted in recent months to help reduce the cost of federal entitlement programs (Washington Post, 1/27). However, many Democrats have criticized the proposals as "shifting the burdens of an out-of-control health care system onto individuals who cannot afford them," the Baltimore Sun reports.

Sen. Edward Kennedy (D-Mass.) in a statement said that the number of uninsured U.S. residents has increased by one million annually over the past four years under Bush. He added, "The Republican policies of un-benign neglect are no longer sustainable. The price of continued inaction is simply too high" (Hirschfeld Davis, Baltimore Sun, 1/27).

Bush on Wednesday at NIH also called for the implementation of a national electronic health records system to help reduce health care costs and medical errors. "We've got 21st century medical practices but 19th century paperwork system," Bush said. On Thursday, Bush plans to visit the Cleveland Clinic, which has begun to help the federal government develop standards for EHRs.

National Health Information Technology Coordinator David Brailer said that a national EHR system faces many issues, such as technological compatibility, cost, privacy and security. "I think health care is without a doubt the last industry to go through a broad information revolution. It's a big revolutionary change to doctors," he said (Pickler, AP/Las Vegas Sun, 1/27).