Some California health care advocates and hospital officials said a Bush administration health care reform proposal would not benefit uninsured and low-income individuals, the Fresno Bee reports. Bush announced the plan on Tuesday during his State of the Union address.
Tax Deductions
The plan would allow individuals who purchase insurance policies to deduct $7,500 from their taxable income and families could deduct $15,000. Individuals with employer-sponsored coverage that costs more than those deductions would be taxed on the amount above $7,500, while families who would pay tax on the value of plans over $15,000. The Bush administration estimates that four out of five people would receive a tax cut because the deduction would exceed the value of their health plan.
John Capitman -- executive director of the Central Valley Health Policy Institute and professor of public health at California State University-Fresno -- said most health plans in California do not fall within the proposed deduction limits. The average employer-sponsored plan costs about $700 to $800 monthly for an individual and $1,500 for a family, he said.
Capitman also said uninsured residents are not likely to benefit from a tax deduction because about 90% have low incomes and do not itemize their deductions.
Medicaid Funding
Hospital officials criticized the second part of Bush's plan that would redirect federal Medicaid funding from hospitals that treat low-income patients to states to subsidize insurance coverage for low-income residents.
Jan Emerson, vice president of external affairs at the California Hospital Association, said the proposal "really could put our safety-net hospitals in serious jeopardy" (Anderson/Schultz, Fresno Bee, 1/24).
Hospital groups estimate the change in policy would result in $700 million in lost funds to California hospitals annually.
Schwarzenegger's Reaction
Adam Mendelsohn, communications director for Gov. Arnold Schwarzenegger (R), said Bush's tax deductions likely would complement the governor's proposal if both plans were enacted. Mendelsohn said the administration is determining how Schwarzenegger's proposal would be affected by Bush's plan to redirect Medicaid funding.
The governor's proposal includes a similar provision, according to the Sacramento Bee (Benson, Sacramento Bee, 1/24).