Bush focuses attention on rising costs of health care

WASHINGTON -- President Bush is not giving up on his call to overhaul the tax code for those who buy health insurance.

The president focused his attention again on the topic after a recent government report projected that health care spending would double by the year 2016. Analysts say current tax policy is contributing to the increase in spending through incentives that favor more comprehensive and expensive health benefits.

The president noted that the current policy also discriminates against those who buy their insurance in the individual market. They don't get the same tax advantages as those who get insurance through their employers.

"When it comes to health care, everyone should get the same tax breaks," Bush said Saturday in his weekly radio address.

The president has proposed treating health insurance contributions as income, which would cause workers' taxable wages to shoot up dramatically. But the president then calls for a standard tax deduction for those who buy health insurance -- $15,000 for family coverage and $7,500 for individual coverage.

So the key to getting a tax cut will be to keep the cost of the policy below the size of the new deduction. The prospect of a tax cut would serve as a huge incentive for people to spend less on health insurance.

Democratic leaders were quick to criticize the plan. But more recently, a group of 10 senators -- five Republicans and five Democrats -- wrote the president and told him they agreed that current tax rules for health insurance disproportionately favor the rich while promoting inefficiency.

Bush went to Chattanooga, Tenn., earlier this month to try to generate momentum for his tax proposal. He shared a stage with people who hold full-time jobs but cannot afford to insure their families. For Danny Jennings, a father of two who manages a nursery, the plan would save about $4,500 a year on his tax bill, Bush said.

"These tax savings would put basic coverage within the reach of his family," Bush said.

The president said he also wants to support governors who come up with innovative ways to help their citizens get insurance coverage.

Under his proposal, states that put in place a basic health plan for all of their citizens would get access to what he calls "affordable choice grants." The grant money would come from programs that now reimburse providers when they care for the indigent.

"By taking existing federal funds and turning them into Affordable Choices grants, we will give America's governors more money and more flexibility, so they can help provide private health insurance for those who need it most," Bush said.