Bush Offers Compromise on Insurance Plan

President Bush arrives to make remarks on health care, Wednesday, June 27, 2007, in the Roosevelt Room of the White House in Washington. (AP Photo/Gerald Herbert) (Gerald Herbert - AP)

WASHINGTON -- The Bush administration sought Wednesday to turn a coming debate over children's health insurance into one that focuses on helping all of the uninsured.

In his attempt to expand the debate, the president added a new wrinkle to a plan that he unveiled earlier this year. Under that plan, Bush called for making health insurance more affordable for many families through changes in the tax code. Meanwhile, some families with more expensive insurance policies would see their taxes go up.

Bush's proposal would treat health insurance benefits as taxable income. On Wednesday, he said he would be willing to discuss whether taxpayers should get a standard deduction to compensate them, as he originally suggested, or a tax credit.

The latter option would be more helpful to many low-income families because they would get the credit even if they owe little or no income tax. However, Democrats described the president's proposal as a distraction, not a compromise.

"President Bush's proposal was dead on arrival five months ago. Nothing's changed," said Rep. Pete Stark, D-Calif., and chairman of the Ways and Means Health Subcommittee. "Bush is trying to use his proposal to sideline a Democratic effort to provide health coverage to millions more children."

The Democratic lawmakers have focused their efforts this year on expanding the State Children's Health Insurance Program. The program was established in 1997 to help families with incomes too high to qualify for Medicaid but not high enough for private insurance.

Democrats have proposed adding $50 billion in new spending to SCHIP over five years. The president made it clear that he opposes such an expansion. His budget recommended adding $4.9 billion.

Bush and his advisers called the coming fight over how much to expand the program a decisive moment in health care _ a moment that could lead to more government-sponsored coverage or more reliance on the private sector.

"It's clear to us that the conversation needs to be not just about how we insure children with low incomes, but how we assure that every American has access to a basic, affordable plan," said Health and Human Services Secretary Mike Leavitt.

The first action on the children's health program is expected to take place in the Senate Finance Committee. Sen. Max Baucus, D-Mont., the committee's chairman, said the president's tax proposals should remain a separate issue.

"Congress has a solemn responsibility to renew the CHIP program and to find ways for more children to benefit from this proven success," Baucus said. "Replacing this effort with controversial health care tax proposals would not be a responsible path to take."

But Leavitt and Al Hubbard, assistant to the president for economic policy, said that eliminating disparities in the tax code would make it easier for millions of families to afford health insurance. The coming debate presented the most opportune time to make those tax code changes.

Bush said that as many as 20 million people would be able to afford a basic insurance policy through his proposal, which would provide a tax credit of $5,000 per family.

"I'm going to continue to work with members of both parties to look past tired, old proposals that make bigger government programs the solution to every problem," Bush said. "I'm going to continue to push for new and innovative ways to help every American afford basic private health insurance."

Democratic lawmakers took exception to Bush's description of how they would expand the program beyond its original intent. They also noted that most states use private insurance companies to help administer their SCHIP programs.

"Democrats and the American people want the President to focus on our responsibility to cover America's children instead of standing in the way," said Senate Majority Leader Harry Reid, D-Nev.

The Democrats said they're interested in pursuing compromises for the children's program, but the president's initiative on taxes is not their view of a compromise.

"If the president is serious about addressing this enormous national need," said Sen. Jay Rockefeller, D-W.V., "then he will set aside partisan games and work with Congress to quickly pass a new bill that covers millions more uninsured American children."