George W. Bush Health Plan

President Bush made bold health policy proposals in his State of the Union message: 

  • First, he would level the playing field between individual and employer purchase of health insurance.
  • Second, he would eliminate provisions in the tax law that reward waste and penalize economy in the purchase of health insurance.
  • Third, he would allow the states to redirect federal funds used for charity care and use them to subsidize private insurance instead.

Attached is an NCPA brief analysis (BA) analyzing the plan.  A second BA answers these questions in response to the critics:

  • Is the Bush Plan a Sop to the Rich?
  • Would Employer Coverage Erode?
  • Would Employers Drop Their Health Plans?
  • Would the Plan fail to decrease the number of the uninsured?
  • Would the Plan Cripple Safety Net Hospitals?

The short answer to each question: No

Comments (6)

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  1. Steven A Ehlen says:

    John: Great work!! I am insurance for a living. My specialty over the past 11 years has been mid-large group health insurance. I have shifted my focus 18 months ago to having groups dissolve group plan and write individual coverage on all employees and pass the premiums through 125 plan as well as structure HRA or HSA for the employees under HDHP. What I am seeing is average savings to employer/employees combined of 35-50% as well as reduced out of pockets. It has also solved the problem of COBRA by allowing the employees to own their own insurance and if they leave the organization they just take over the premium payments to the insurance carrier. This allows the individuals and families to now be able to afford to continue coverage. Thus reducing number of uninsured. The major change to this approach is a more stable insurance pool. What I have seen over the last 11 years is that an employer will use an insurance carrier for an average of 2-3 years and then change as loss ratios increase and carriers pass on rates. I call this running the circles. Employers in MN will be with BCBS of MN then move to Medica then PreferredOne then Health Partners, ect. This goes on as one carrier "buys" the business for a year then jacks the rates up and then the following year 2-3) the employer moves on for the next "good" deal. This is all eliminated with the use of individual medical coverage because people will be underwritten individually with a carrier and stay there (most likely for good), thus stabilizing the risk pools and allowing the carriers to have a better handle on what their risk is from year to year. It will be interesting to see how this all unfolds. If the contracts, and decisions are placed back on the individuals we will see major changes to the current waste that is occurring in the third party payer system. Respectfully, Steven A Ehlen

  2. Roger Beauchamp says:

    To John Goodman and Devon Herrick: The Bush plan still denies freedom and choice. Your arguments are misleading… The government pays none of the cost of health care. Working men and women (taxpayers) pay all of it. A deduction is taken after filing and paying taxes. An exclusion applies before taxes are taken. Granting all citizens the right to exclude up to a cap seems simpler and provides and more immediate benefit. Instead of treating all of the same income level the same, why not treat all earned health care benefit dollars the same? Cap the exclusion. Allow all who earn up to the exclusion to recover the FICA tax by having it direct deposited into a health savings account. Those who cannot afford to exclude income up to the cap will not be paying FICA tax on those first dollars “earned,” just as those who can afford to tax shelter the maximum. Permit all citizens to avoid paying any income tax by voluntary payroll deduction up to the cap, with all monies being direct deposited into their account by their employer. This way they can decide how much to spend on an insurance product of their choice, that meets their needs, and how much to save for direct payment of needed care. Requiring every tax favored dollar to be spent on insurance will not create the type of market competition that will moderate overall cost. If conservatives do not support policy that restores individual rights and freedom of choice, costs will continue to rise at unacceptable levels, and the single payer crowd will prevail. Roger Beauchamp

  3. Dr.Rick Lippin says:

    John Goodman- I write on heath care at I think you are grossly underestimating how very broken U.S. Health care is and how very little the President's plan will help. Please visit my blog -especially last entry on Nortin Hadler's work Best Wishes, Richard A. Lippin, MD

  4. joslyn says:

    Dr.Rick Lippin Says: February 6th, 2007 at 7:32 pm John Goodman- I write on heath care at I think you are grossly underestimating how very broken U.S. Health care is and how very little the President’s plan will help. Please visit my blog -especially last entry on Nortin Hadler’s work Best Wishes, Richard A. Lippin, MD

  5. fica taxes says:

    fica taxes

    Very interesting post. A little bit confusing, but still ok.

  6. affordable coverage health individual insurance says:

    At this time being, health insurance should not be taxed. Wait till the economic situation gets better – then start to implement tax on it.