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Welcome to "Ask the White House" -- an online interactive forum where you can submit questions to Administration officials and friends of the White House. Visit the "Ask the White House" archives to read other discussions with White House officials.

Al Hubbard
Director of the National Economic Council

January 26, 2007

Al Hubbard
Thank you all so much for joining me today. I am excited to be here to discuss the President’s health care initiatives which he outlined in the State of the Union on Tuesday. The President expressed a vision for expanding access to basic, affordable private health insurance in two ways: a standard tax deduction for health insurance which will level the playing field between insurance you receive from your job and insurance you purchase on your own, making the tax code more fair and slowing the growth in health spending, and the Affordable Choices Initiative which will partner with states to increase access to insurance especially for the poor and chronically-ill. I look forward to working with the President to further his vision for health care reform and anticipate interesting discussion on these reforms in the days to come.

Angeleina, from Akron, Ohio writes:
How does Bush's plan help the uninsured with health issues? I was diagnosed with Lymphoma in March 2005. I had to stop working full time and cannot afford the $360month premium, which has probably gone up to $500 as a result of Cobra running out. I tried Job and Family services to get Medicaid/Medicare and I was turned down because I still work. It seems that the Middle working classed is darned if you do and darned if you don't when it comes to health care. You have to be unemployed or almost dying to get any help --Angeleina

Al Hubbard
Both pieces of the President’s plan will help make insurance more accessible and affordable for people like you who are struggling now. First, the standard deduction for health insurance will give the same tax advantage to people trying to get insurance on their own that people who have insurance through their jobs get now. For example, if you’re in the 10% income tax bracket, the standard deduction will save you about $1,900. That means that your $6,000 annual premium would go down to $4,100. Second, the Affordable Choices Initiative will help States to ensure access to basic, affordable insurance for all of their residents, and will especially focus subsidies on those with lower incomes and chronic illness.

Bob, from Florida writes:
Why doesn't President Bush have any Doctors speaking on health care issues? Health Care is much more than just insurance coverage.

Al Hubbard
I'm glad you asked that question. In fact, just yesterday the President went to Lee’s Summit, Missouri where he met with doctors, nurses, and other healthcare providers along with a group of local residents to discuss his proposals for improving access to basic, affordable health insurance. In addition, the President discussed the great progress these providers have made in expanding health information technology and in ensuring that their patients have the information on prices and quality that they need. He also discussed the need for medical malpractice reform so that doctors won’t be driven out of medicine or have incentives to practice defensive medicine. The President was very encouraged by what he saw in Missouri and will be working to continue the national health care conversation.

Daniel, from Lakeville, CT writes:
How is the White House going to get over Democratic objections to President Bush's new health insurance proposal? Since I am taking Economics, do you have any tips for me?

Al Hubbard
Well, politics is part of life in Washington, but we hope that everyone will give this policy the careful evaluation that it deserves. When they do, we're confident that they'll see that it is both good tax policy and good health policy that will make health insurance more affordable and more fair for everyone. We look forward to a full discussion in the weeks and months to come and hope that all sides of the debate will act in the interest of all Americans. As far as economics tips go, just remember that demand curves slope down and incentives really matter!

Janet, from Vermont writes:
Can you explain the part of the health care initiatives that have to do with Federal money going to the states. Vermont has a plan to provide everyone in the state with health care coverage. Will this Federal money help?

Al Hubbard
The Affordable Choices Initiative is a key component of the President’s health policy. Currently, much of the spending on care for the uninsured goes to pay for inefficient care provided in emergency rooms, when it could be better spent on getting those people access to the insurance that they need. The President’s policy would give states increased flexibility and funding for subsidizing insurance the uninsured that would belong to follow individuals rather than funding just going to institutions. Vermont, and any other state, will be eligible to apply and receive funding from the Affordable Choices Initiative by working with HHS to develop a plan for basic and affordable insurance to be available to all residents.

Anju, from Denver, Colorado writes:
In reviewing President Bush's new Health care plan, I was confused by the statement "Families With Health Insurance Will Not Pay Income Or Payroll Taxes On The First $15,000 In Compensation." What compensation is this referring to that will not be taxed? Is it $15,000 in wages/income or $15,000 in money paid by the insurance company for medical services or $15,000 in money paid for insurance premiums?

Al Hubbard
The President’s policy would replace the current tax-preference for employer-based insurance with a new standard deduction. Families who buy with health insurance will receive a $15,000 standard deduction for health insurance regardless of the premium they currently pay – that’s $15,000 of compensation income- and payroll-tax free.

For example, a family of four making $50,000 and purchasing a $10,000 health insurance policy through their employer would be eligible to deduct $15,000 from their taxable income and would save $1,500 in taxes. If that same family were currently uninsured and purchased a health insurance policy at any price, they would reduce their taxes by about $4,500.

Taylor, from Texarkana, Texas writes:
To: Whom it may concern I am currently enrolled in a college U.S. Government class. My teacher gave us a project that included the question "Who was the cabinet member chosen to miss the 2007 State of the Union Address?" I have looked all over the internet. If you would help me with this question I would greatly appreciate it. Thank you.

Al Hubbard
Alberto Gonzales, Attorney General, was not present at the 2007 State of the Union Address.

gary, from NA writes:
in the state of the union proposal, the president said i think that families with health insurance would receive a payroll tax exemption which i believe would be 7500 for single filers and 15000 for joint filers. if a family has nongroup insurance, is the value of the exemption the full 15.3 payroll tax (employer and employee share) or just the employee share (7.65)? thank you

Al Hubbard
The President’s plan would allow anyone who purchases health insurance, whether through their job or on their own, and no matter what the premium, to take the standard deduction for health insurance on both their income and payroll taxes. This means no income or payroll taxes would be paid on that compensation.

People could adjust their withholding, so that they would pay less in taxes each pay period – making their health insurance premiums easier to afford.

Michael, from Charlotte, NC writes:
How will this plan not encourage employers to shed the high cost and paperwork nightmare of healthcare plans? It seems like an incentive for employers to not offer healthcare. Also by adding the employers portion of the healthcare cost as taxable earnings, does this not increase the employee and employers burden of FICA taxes? How will this increase be accounted for?

Al Hubbard
Employers offer insurance to their employees to attract and retain high quality workers, and they will continue to do so. The President’s proposal eliminates the unfair bias in the tax code which penalizes those who buy lower-cost insurance or who purchase insurance on their own instead of through their jobs. Any family covered by private insurance would take home $15,000 of compensation income- and payroll-tax free. This proposal would lower the FICA taxes paid by employers and employees for anyone purchasing insurance on their own, everyone who’s uninsured, and anyone whose’s employer-based plan was below the standard deduction. As far as corporate taxes go, the employers will still be able to deduct all spending on compensation from their earnings and will thus have the same corporate tax liability as before the President’s plan took effect.

A.R., from NEW YORK writes:
Can you explain how the standard deduction in the proposal will interact with the payroll tax and the AMT? thank you.

Al Hubbard
Excellent question. I realize that the Alternative Minimum Tax (AMT) is a huge concern for many out there. The standard deduction for health insurance would be available for anyone who purchases health insurance – whether or not they itemize and whether or not they’re subject to the AMT. Even those subject to the AMT would be eligible to take the full standard deduction for health insurance.

steven, from adrian michigan writes:
I am a full time student who works part time. I am 27 and a non-typical student who can not afford to get health care benefits on my wages. There are many other people who have this same problem, in fact a study has shown that over 10% of the uninsured population are college students. my question is; what kind of policy acts could be implemented to help this problem?

Al Hubbard
The President’s proposal will have a large effect on the cost of health insurance for people such as college students. Low-income workers who don’t owe any income taxes would still benefit from not having to pay payroll taxes. For a single person earning only $10,000, for example, the standard deduction would reduce the cost of buying a health insurance policy by $1,125 – a substantial share of the cost of a basic health insurance policy. The standard deduction for health insurance can make a huge difference in the cost for the purchase of health insurance if you are currently uninsured.

Dee, from Neskowin writes:
Mr. Hubbard, How is extending the health care going to help the many folks who fall outside that low income range making just a little too much to qualify, but not able to afford health care or benefit from the tax break either?

Al Hubbard
Even those workers who owe no income tax still must pay payroll taxes. The standard deduction for health insurance allows these workers to save at least $1,125 if they purchase health insurance – significantly reducing the cost of health insurance for these individuals. In addition, the President’s Affordable Choices Initiative will encourage states to ensure access to basic, affordable health insurance with a special focus on low-income workers who are unable to afford coverage.

Al Hubbard
Thank you all so much for joining me here today. There were many wonderful questions and my only regret is that we don’t have more time to get to even more of them. I realize that all of this may seem complicated – but really, the President’s proposal is simple and fair, and it’s the current system that’s complicated and biased. The President envisions a health insurance market that encourages high-quality care at prices Americans can afford. We believe that the combination of the Affordable Choices Initiative to encourage state innovation and health tax reforms that level the playing field will benefit all Americans. By providing greater access to basic, affordable health insurance, the President believes that we can maintain the best health care in the world while allowing us to have control over our health care dollars to encourage the high-quality, high-value care that Americans deserve.

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