By KEVIN FREKING, Associated Press Writer
2 hours, 33 minutes ago



WASHINGTON - President Bush's proposed tax deduction for health insurance appears to be shaping up as a tough sell in the Democratic Congress.

ADVERTISEMENT

Rep. Pete Stark, D-Calif., said Monday that the tax changes, which Bush is expected to promote in Tuesday night's State of the Union address, would encourage employers to stop providing health insurance.

"Under the guise of tax breaks, the president is pursuing a policy designed to destroy the employer-based health care system through which 160 million people receive coverage," the lawmaker said.

Stark, who oversees a key House Ways and Means subcommittee, said he would not consider holding hearings on the proposal, which includes a trade-off. Contributions from employers toward health insurance would begin to be treated as taxable income. At the same time, a standard deduction for taxpayers with health insurance would be set at $15,000 for families and $7,500 for individuals.

The White House says that 80 percent of workers with health insurance through their jobs would see a tax cut as a result of the change. But about 20 percent would see a tax increase — those workers whose health insurance cost more than the standard deduction.

The change in tax policy is one of two major health proposals announced by Bush last weekend. The other would take some federal money now going to hospitals and other facilities and give it to states for programs to reduce the number of uninsured.

Insurers said the tax proposal would mostly help the nearly 17 million people who buy coverage through the individual or small group market. Their ranks include real estate agents, consultants and employees of small businesses that don't offer health coverage. Also benefiting would be those in newer industries where the workers tend to be younger and the health coverage is more basic, such as technology.

Meanwhile, many state employees, teachers, and older workers in such established industries as automobile and steel manufacturing could see their expenses go up, said Karen Ignagni, president of America's Health Insurance Plans, the insurers' trade group.

The trade group has not yet taken a position on the president's proposal. However, the insurers like the president's focus on health care going into the year.

"With the president coming forward and making health care such a major issue on his priority list, I think progress is definitely possible," Ignagni said. "We're going to see views and positions from all sides. We see that as a very promising thing. More and more people will come to the view that we've reached a tipping point."

http://news.yahoo.com/s/ap/20070122/...h_health_taxes