Revenue Estimate Dropped on Proposed Health Benefits Tax
The Joint Committee on Taxation has reduced an estimate of the amount of tax revenue that a White House health insurance proposal would raise over 10 years by almost $200 billion, CongressDaily reports (Vaughan, CongressDaily, 3/16).
Under the proposal, individuals who purchase health insurance or obtain coverage through their employers would receive a federal tax deduction of $7,500, and families would receive a deduction of $15,000.
The proposal would for the first time tax the value of employer-sponsored health insurance in some cases. Currently, most employees are not taxed for the value of their employer-sponsored health insurance.
Individuals and families with employer-sponsored health insurance valued at more than the proposed allowable deductions would pay taxes on the difference.
President Bush announced the plan in January (California Healthline, 3/1).
According to the Department of the Treasury, the proposal would raise no additional tax revenue over 10 years.
JCT in February estimated that the proposal would increase tax revenue by $526 billion over 10 years. However, JCT has reduced the estimate to $333 billion, according to a memo dated Tuesday, CongressDaily reports.
The memo did not cite reasons for the reduced estimate but said that lawmakers would receive a detailed analysis by the end of the week. JCT Chief of Staff Thomas Barthold did not respond to request for comment.
A House Democratic aide said that the reduced estimate would not change Democratic opposition to the health insurance proposal. "It changes the talking point, but it doesn't make something that is bad health policy any more palatable," the aide said.
Sources from the private sector and Congress said that the differences between JCT and treasury department estimates are "likely a result of a difference in estimating the rate at which health care premiums will increase over a 10-year period," CongressDaily reports. A treasury department spokesperson said, "The president's health care proposal was designed to be revenue-neutral over a 10-year budget window," adding, "Of course, we want to work with Congress to ensure that the policy is revenue-neutral" (CongressDaily, 3/16).
JCT "has breathed new life into the Bush plan by estimating that it would actually save the federal government $333 billion over the next 10 years," a Wall Street Journal editorial states.
"This means that the Bush proposal would not only reduce the inequitable tax treatment of health care and the number of uninsured, but it would do so while saving the government lots of money," the editorial states, adding that the plan "deserves to get more backing, from Democrats and Republicans alike." According to the editorial, the "main unspoken complaint about the plan" likely is "not that it raises or loses revenues but that it moves America away from a government takeover of the health insurance market."
Rep. Pete Stark (D-Calif.) and other critics "want the private health insurance market to fail -- which is why they celebrate when the number of uninsured Americans rises," according to the editorial. The editorial concludes, "Mr. Bush has an attractive, workable and now -- as certified by the Democratic Joint Tax Committee -- affordable health care reform. If Democrats lack the courage to debate it, then the GOP presidential candidates ought to pick it up and run with it in 2008" (Wall Street Journal, 3/19).