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Home > News & Policies > February 2007

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For Immediate Release
Office of the Press Secretary
February 23, 2007

Fact Sheet: Making Private Health Insurance More Affordable for Low-Income Americans

White House News

      President Bush Participates in a Roundtable on Health Care Initiatives in Tennessee
      In Focus: Health Care

"This plan will help a lot of people afford [health insurance], like the uninsured, the working uninsured. … I want you to understand that the standard deduction can mean a lot to a fellow who's working and trying to be able to afford private health insurance."

In His State Of The Union Address, The President Proposed Two Initiatives That Will Work Together To Help More Americans Afford Basic Private Health Insurance. The President's proposed standard deduction for health insurance will reform the tax code to make private health insurance more affordable and to level the playing field so those who buy health insurance on their own get the same tax advantage as those who get health insurance through their jobs. For those who remain unable to afford coverage, the President's Affordable Choices Initiative will help eligible States assist their low-income and hard-to-insure citizens in purchasing private health insurance.

A Standard Deduction For Health Insurance Will Help Low-Income Workers And Families Afford Coverage

The President Has Proposed Replacing Our Current Health Insurance Tax System With A Standard Deduction For Health Insurance. For the millions of Americans who have no health insurance, the standard deduction would help put a basic private health insurance plan within reach. Under the President's proposal, families purchasing health insurance will pay no income or payroll taxes on $15,000 of income. Single Americans purchasing health insurance will pay no income or payroll taxes on $7,500 of income.

Under The President's Proposal, There Are Significant Tax Benefits At The Lower End Of The Income Distribution. The President's proposal will lower taxes for those who purchase insurance on their own who get no benefit under the current tax code. In general, low-income people are less likely to get insurance through their jobs. The standard deduction for health insurance will level the playing field, giving these individuals the same tax break that people receive if they get insurance through their jobs. This will help individuals who purchase insurance on their own afford that coverage.

The President's Proposal Will Remove The Perverse Incentive To Purchase More Expensive Health Insurance That Is Driving Up Coverage Costs. Under the current tax code, the more expensive the health insurance plan people obtain through their employers, the more tax relief they get. This makes the insurance market less competitive and pushes up prices for everyone by encouraging many workers to choose more expensive health insurance than they would choose if the tax code were not dulling their incentive to determine which policy represents the highest value.

The President's Proposal Will Rein In Health Costs By Promoting High Value Coverage. By replacing the current unfair system with a standard deduction for health insurance, the President's proposal will give working families and individuals an incentive to purchase coverage – and the same tax advantages for purchasing that insurance – and encourage them to evaluate which health insurance policies represent the highest value for quality care.

The Affordable Choices Initiative Will Help Make Health Insurance Affordable For Those Most In Need

The Affordable Choices Initiative Will Support States' Efforts To Help Their Low-Income And Hard-To-Insure Citizens Purchase Basic Private Health Insurance. States that make basic private health insurance available to all their citizens would receive redirected institutional subsidies to help them provide this coverage to the poor and the sick. Under the Affordable Choices Initiative, existing Federal funds will be used to create Affordable Choices grants to assist States in helping provide private health insurance to those most in need without increasing Federal health spending.

• The Affordable Choices Initiative Is An Essential Component Of The President's Plan To Help More Americans Afford Private Health Insurance. President Bush has committed his Administration to working with Governors to make basic private health insurance more accessible to the poor and the sick.
  
  
  • The Federal Government's Current System Of Paying For Health Care Results In Billions Of Dollars Being Spent Inefficiently, Through A Patchwork Of Subsidies And Payments For The Uninsured To Providers. Medicare and Medicaid payments to providers include indirect payments for uncompensated care.
    
    
• The Health Care System Could Operate More Efficiently If Some Portion Of Institutional Payments Instead Were Redirected To Help The Poor And The Sick Afford Health Insurance. The uninsured often use emergency rooms for primary care, which leads to suboptimal care and excessive spending. If this public spending were focused, in a budget-neutral manner, on helping the uninsured purchase private insurance, people would receive the care they need in more appropriate settings and at a more reasonable cost.


• The President Has Asked U.S. Health And Human Services Secretary Mike Leavitt To Work With The Congress And The States On The Affordable Choices Initiative To Reform The Health Care Marketplace. The health care system needs to be transformed to emphasize upfront, affordable private health insurance options for both high-risk and low-income individuals.

• The Affordable Choices Initiative Will Encourage States To Innovate. State participation will be voluntary, and States will design their own programs, subject to Federal approval.
  
  
• States could offer direct premium assistance to low-income or hard-to-insure populations to purchase private health insurance.
• States could establish high-risk pools, or expand existing high-risk pools, for very sick individuals who are deemed uninsurable in the non-group market.
• States could help facilitate pooling of individuals and small businesses and organize their access to private health plans.

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