Bush health plan would gut current coverage: critics

"It penalizes workers with good health care -- many of whom are middle or lower income -- and creates a disincentive for employers to provide comprehensive coverage, particularly those whose employees are older or sicker."

Trade unions also lined up against the plan.

"It not only erodes employer coverage, where two out of three Americans now receive their health benefits, it's a back-door attempt to saddle union workers with a tax for the health-care benefits they negotiate through collective bargaining," said Leo Gerard, president of the United Steelworkers union.

Analyst Joseph Paduda of Health Strategy Associates said he doubted insurance companies would come up with plans for individuals to buy.

"They are out to make a profit, not provide health coverage to people who need it," Paduda said.

"A health-insurance company still won't cover a 47-year-old male who has had a heart attack or 55-year-old woman who has had breast cancer."

The National Association of Health Underwriters and America's Health Insurance Plans welcomed Bush's ideas.

"We strongly support a level playing field in which individuals can purchase health care coverage with pretax dollars," said America's Health Insurance Plans President and Chief Executive Officer Karen Ignagni.