In Tennessee, Bush Talks Up Tax Breaks for the Uninsured

President Bush toured Erlanger Hospital in Chattanooga yesterday with physicians Tom Devlin, left, and Blaise Baxter before speaking on his health-care plan at the city convention center.
President Bush toured Erlanger Hospital in Chattanooga yesterday with physicians Tom Devlin, left, and Blaise Baxter before speaking on his health-care plan at the city convention center. (By Charles Dharapak -- Associated Press)
By Michael Abramowitz
Washington Post Staff Writer
Thursday, February 22, 2007

CHATTANOOGA, Feb. 21 -- The last time President Bush visited this state, last September, it was to campaign with GOP Senate hopeful Bob Corker against the Democrats. Wednesday afternoon, Sen. Corker was in the audience and the state's Democratic governor was on the stage at the convention center here for a folksy discussion on how to improve the health-care system.

Bush hailed the governor, Phil Bredesen, for his "innovative policies," as he talked up his new plan to increase coverage of the uninsured by tinkering with the tax code and giving states more flexibility to design low-cost benefit plans for those who lack coverage. Bredesen said it was the first time he had been invited to appear with Bush in such a setting.

Democrats in Washington are showing little enthusiasm for the Bush health agenda, but the president is plugging away, insisting he sees hope for compromise before his term ends in less than two years. Indeed, the end seemed on his mind as he bantered with several hundred audience members, arguing for greater transparency in health-care pricing.

"I don't know about you, but I don't remember ever asking how much something was going to cost when it came to health care. I do when it comes to a car -- or I used to," Bush said, quickly remembering that he is driven around in a limousine. "I will soon!" he added to laughter.

While the focus of his administration is the war in Iraq, Bush is pushing an ambitious health-care agenda, the key element of which is a tax plan to make it easier for individuals to purchase health insurance coverage in the private market. He is also proposing to restrain the growth of Medicare and Medicaid by cutting payments to health-care providers and charging higher premiums to wealthier individuals, a plan Democrats have described as dead on arrival.

Under his tax plan, every family would get a standard deduction of $15,000 and individuals would get a deduction of $7,500 if they buy health coverage, whether they obtain it through their employer or individually. Bush says this would help rectify a situation in which people who work for companies that do not offer health coverage do not get any tax break for buying insurance, as workers essentially get through employer-sponsored health plans. He argued that his plan would make insurance more affordable for middle-income workers.

"Right now there's a limited market for the individual; it makes it hard to find a product that either suits your needs or you can afford," Bush told his Chattanooga audience. Bush was joined on stage by several uninsured workers and businesses managers who he claimed would find insurance cheaper under his plan.

Many health economists say they think Bush is overstating the impact of the tax code changes, but they say he might have a bigger bang if he were to give low-income people tax credits to buy insurance, an idea the White House considered and rejected. A study released this week by the Community Research Council of Chattanooga concluded that very few of the uninsured in Hamilton County, which includes Chattanooga and its suburbs, make enough money to benefit under the current Bush plan.

In an interview, Bredesen said he is glad that Bush is starting to tackle health care more seriously but voiced doubts about the tax elements. "I get less excited about the tax deduction stuff because there are a lot of people . . . for whom that's not going to make a difference," he said.

Even as the president arrived in Tennessee, the local news was full of reports that a change in federal reimbursement policy could cost the state as much as $250 million annually for charity care, countering any relief under the president's new plan. "It certainly would be a sore blow to us," Bredesen said.

The president's plan has also elicited mixed reaction on Capitol Hill. In the House, the idea has been declared a non-starter, and House leaders are moving in another direction, hoping to expand funding for the federal-state children's health program much more ambitiously than the president contemplates. The president's plan is for "every individual on their own," said Rep. Rahm Emanuel (D-Ill.), the chairman of the House Democratic Caucus. "He does nothing to control costs and he does nothing to expand the number of insured. Other than that, it is incredibly helpful."

Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, sounded more positive, describing the president's tax plan as "an outside-the-box proposal" that deserves to be part of the debate. "Whether or not it's enacted into law, he's started a discussion," he said.

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