Bush Rejects Caps on Income Tax Deductions for Health Insurance
President Bush has decided not to support a plan recommended by the nine-member President's Advisory Panel on Federal Tax Reform that would cap income tax deductions for workers receiving employer-sponsored health insurance, according to Al Hubbard, director of the White House's National Economic Council, Bloomberg reports (Murray/Donmoyer, Bloomberg, 1/12).
Under the current tax code, employers can take a deduction for health insurance provided to employees, and workers pay no tax on the value of the coverage. Under the panel's recommendations, employees would have to pay income tax on employer-sponsored health insurance premiums higher than specified amounts (California Healthline, 10/19/05).
Hubbard said, "I know the president's not interested in pursuing that," adding that Bush would instead focus on expanding untaxed health savings accounts and greater deductibility of medical expenses.
Proponents of the deduction say that failure to implement it would cost the federal government $6 billion to $28 billion in lost revenue.
Karen Ignagni, president of America's Health Insurance Plans, said of the proposal's rejection, "That is very good news because the discussion in '06 should be about ways to expand, not contract coverage" (Bloomberg, 1/12).