Bush to Propose Health Insurance Tax Break

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MADELEINE BRAND, host:

This is DAY TO DAY. I'm Madeleine Brand.

LUKE BURBANK, host:

And I'm Luke Burbank.

Tomorrow night, as he gives his State of the Union Address, President Bush will be in uncharted waters. He'll be addressing a Democratically-controlled Congress for the first time. And another first, he's expected to make health care a major theme of the speech, specifically a new plan to provide health coverage for the uninsured.

Here with us is NPR's health policy correspondent Julie Rovner. Hi, Julie.

JULIE ROVNER: Hi, Luke.

BURBANK: So what is the status right now with health care in the U.S.? How many people have and how many people don't?

ROVNER: Well, there's about 47 million people who don't have insurance. And the president has kind of mentioned this on and off, but, as you say, he's going to make it a centerpiece, I think, of this speech.

BURBANK: So what exactly is the president proposing? I understand that he's going to talk about taxing people's health care as a form of income if you have it provided by your company.

ROVNER: That's right. Now, right now, most of people who get their insurance through their jobs don't pay taxes on it. And people who buy their own insurance don't get a deduction for buying that insurance. So basically, you could have a new tax deduction for people who buy insurance on their own, and it would be paid for by people who are currently getting insurance and not paying taxes on that insurance.

BURBANK: And so, of course, you've got a lot of folks lining up on the other side of the president on this saying, look, this is basically robbing Peter to pay Paul. You're taking money away from people who have a health insurance to try to fund it over on the other side. Not everyone is a fan of this, I guess.

ROVNER: Well, yeah. This is an amazing political proposal and that it unites business and labor in opposition to it.

BURBANK: It's not everyday you see that.

ROVNER: It' s not everyday that you see that. The idea that employees don't pay taxes on the health insurance that they get from their employers is something that goes back to World War II. And it's basically the foundation for health insurance at this point in this country. And tinkering with that is something that really strikes fear into just about the hearts of everybody who wants to see the current system go forward, which is I think, at this point, still a majority of the country - not certainly a vast majority, but an awful lot of people.

And this has been called, you know, one of the third rails of politics, although as someone suggested later about the president, it's hard to be electrocuted if you're already dead. So perhaps this is something that the president might be willing to do because he's got no place to go but up at this point.

BURBANK: Well, we'll see what happens when the president trots out this proposal tomorrow before the whole nation. Well, thank you, Julie. NPR's health policy correspondent Julie Rovner.

ROVNER: You're welcome.

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