Nothing is more complex and difficult for politicians to deal with in this country than health care. Well, President Bush is about to enter the fray with a new proposal.
There are many controversial subjects in our country. From abortion to the death penalty to Iraq, there is plenty for everyone to get worked up regardless of their political affiliation or personal views. One subject that is less glamorous is health care. Frankly, our situation is a disgrace. By most measures, we are the wealthiest country in the world. Despite this fact, a huge number of us don’t have health care coverage.
When it comes to health care, more than a few politicians have crashed and burned. The issue is complex and expensive. There are no clean, clear answers. Throw in issues of political compromise and lobbying by medical groups and the picture gets much murkier. With incredibly low popularity numbers, President Bush apparently feels now is the time to swing for the fences. Yep, he is going to enter the health care fray with his own plan.
In addressing health care coverage, President Bush has decided to take the green carrot approach. What is the green carrot approach? He is trying to offer a financial solution through the tax code. This is a common approach with the government. They can’t make smoking cigarettes illegal, but they tax them to high heaven in an attempt to stop you. This is generally known as conduct modification through your bank account.
In the case of health insurance, the President is playing with the tax deductions. Currently, employers can write off whatever they spend to pay for health coverage for employees. The payments are also not taxable to the employee as income. The problem, however, is this doesn’t cover people who are not employed full time such as self-employed individuals.
President Bush’s answer is to create a tax deduction. Although the details are a bit murky, it appears that individuals will be able to deduct up to $7,500 for payments they make for health insurance. Families would get a bump up to $15,000. If you paid less than these amounts, you would still get to claim the full deduction. If you paid more than the deduction amount, your deduction would be capped at the $7,500 or $15,000 figure. Roughly 35 million Americans pay more than these amounts for health insurance coverage.
Regardless of your politics, the President should be congratulated on taking on the health care answer. Regardless of political affiliations, this is the kind of issue a President would typically only tackle if they were very popular. Trying to address it without such numbers takes a lot of political courage. Will it work our or is it even a good plan? We will have to see, but at least it is a start.
Richard A. Chapo is with BusinessTaxRecovery.com – providing daily tax tips.