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 Home > News & Policies > September 2004

For Immediate Release
Office of the Press Secretary
September 2, 2004

Making Health Care More Affordable
Fact Sheet: President Bush's Plan to Make Health Care More Affordable

President Bush believes all Americans should have access to affordable, high-quality health care. Rising health care costs impose a burden on families and small businesses and put coverage out of the reach of many Americans. The President's plan will help reduce the rising cost of health care; provide new and affordable health coverage options for all Americans; and provide not just a government program, but a path to greater opportunity, more freedom, and more control over your own health care and your own future.

The President's Plan

  • Reduces the rising cost of health care while improving quality and safety;
  • Provides new and more affordable coverage options - targeted to those who need it most: low-income children and families; employees of small businesses; and the self-employed;
  • Keeps health decisions with patients and doctors - not bureaucrats in Washington, D.C.; and
  • Results in more than 11 million and as many as 17.5 million newly insured Americans.

New Proposals in the President's Plan

  • Cover the Kids campaign. The President will launch an aggressive, billion-dollar effort to enroll children who are eligible but not signed up for the government's health insurance programs. The goal will be to cover millions more SCHIP and Medicaid-eligible children within the next two years.
  • Tax credits to small businesses and their employees to set up Health Savings Accounts (HSAs). More than half of the uninsured are small business employees and their families. President Bush proposes giving small business owners a refundable tax credit for contributions they make to their employees' HSAs (applies to the first $500 per worker with family coverage, first $200 per worker with individual coverage).
  • Direct help for low-income Americans to purchase HSAs. To extend the benefits of HSAs to low-income Americans, the President proposes giving families a $1,000 direct contribution to their HSA, along with a $2,000 refundable tax credit to help purchase a policy to cover major medical expenses. Individuals would receive a $300 HSA contribution and $700 refundable tax credit.
  • State-run insurance pools to help low-income Americans get the most out of their credits. The President proposes $4 billion in grants to encourage states to create purchasing pools that will help reduce the cost of buying insurance and make it easier and faster to shop for coverage.
  • Association Health Plans (AHPs) for civic groups and other community organizations. In addition to supporting AHPs for small businesses, the President proposes allowing local groups to band together through their regional or national organizations to negotiate low-priced coverage for their members.
  • National marketplace to shop for health insurance. Individual consumers can only purchase health insurance in the state where they live and cannot shop around for a better deal in another state. President Bush believes giving people the freedom to shop in a competitive marketplace across state lines can increase the availability of health care coverage and drive down costs.
  • A health center or clinic in every poor county in America. The President's current initiative has increased the number of people served in health centers by almost 30 percent. The goal of the new initiative is to ensure that every poor county in America has a community or rural health center.

Background: A Record of Action on Health Care

The President has already taken important steps to make health care more affordable and accessible:

  • Created a Medicare Prescription Drug Benefit to help seniors pay for their medicines. More than 4 million seniors are already saving with Medicare drug discount cards, including low-income seniors who get a credit of $600 annually added to their cards;
  • Established new, Tax-Free Health Savings Accounts, which give workers the opportunity to save tax free for routine health expenses, the security of insurance against major illness, and the freedom of knowing you control the account and can take your account with you whenever you change jobs;
  • Proposed Medical Liability Reform to limit frivolous lawsuits and excessive jury awards, which are driving good doctors out of practice, driving up health care costs for everyone, and threatening access to needed care;
    • Association Health Plans (AHPs) to help small businesses provide coverage for their employees by joining together to purchase insurance at the same discounts available to big companies;
  • Opened or expanded more than 600 Community Health Center sites delivering care to 3 million additional Americans, including individuals and children who are uninsured, low-income, or homeless, and migrant farm workers. The President is on track to meet his commitment to open or expand 1,200 health center sites by 2006 to serve an additional 6.1 million Americans;
  • Extended eligibility under Medicaid and State Children's Health Insurance Plan (SCHIP) to an estimated 2.6 million low-income Americans by granting waivers and flexibility to states;
  • Launched a Health IT Initiative to reduce errors, cut waste, and lower costs. The President's goal is to make electronic medical records universally available for most Americans in the next ten years;
  • Strengthened competition between generic andbrand-name drugs, which is expected to save American consumers more than $35 billion in drug costs over the next 10 years; and
  • Fought health care fraud and waste by cutting wasteful spending out of the Medicare and Medicaid programs. The Medicare bill that the President signed will cut wasteful spending and save seniors and taxpayers an estimated $20 billion over the next decade.

The President's New Health Care Proposals

  • Affordable Health Care for Children:

    The year before President Bush took office, some 3.3 million low-income children were enrolled in SCHIP. By 2003, that number had risen to 5.8 million, a 75 percent increase. Over that same period, by working cooperatively with state governors, the Department of Health and Human Services increased the number of low-income adults and children on Medicaid by 6.8 million.

    Despite these efforts, millions of children who are eligible for SCHIP or Medicaid coverage are not yet enrolled. Billions in Federal dollars available to the states to insure these children remain unspent because the children haven't been signed up.

    • Cover the Kids campaign. To ensure coverage for uninsured low-income children, the President will launch an aggressive, billion-dollar effort to enroll eligible kids for quality health care coverage. The Cover the Kids campaign will combine the resources of the Federal government, states, and community organizations, including faith-based organizations, with the goal of covering millions more SCHIP and Medicaid-eligible children within the next two years.
  • Affordable Health Care for Low-Income Families and Individuals:

    President Bush signed legislation creating Health Savings Accounts (HSAs), which are a new, affordable option in health care coverage. HSAs are tax-free savings accounts that people can set up when they purchase a low-premium, high-deductible policy to cover major medical expenses. Money from the HSA can be used to pay for routine medical expenses or saved for future health needs, while the major medical policy helps cover big expenses, like hospital stays.

    The President has proposed allowing individuals who set up HSAs to deduct from their income taxes the premiums they pay for their major medical polices, thus reducing the net cost of those policies. Individuals who set up HSAs can save substantial sums on their health insurance and their taxes. Moreover, HSAs give Americans more control over their health care spending. If you own an HSA, you can go to the doctor of your choice and keep the account even if you change jobs.

    To extend the benefits of HSAs to low-income families and individuals, the President proposes giving low-income families a $1,000 contribution made directly to their HSA, along with a $2,000 refundable tax credit to help purchase a policy to cover major medical expenses.

    • A family of four making $25,000 or less will be able to get $1,000 from the Federal government to put into their HSA. These families can use the money to pay for doctor visits, medicines, and other routine medical expenses. What the family does not spend in a year can be saved in the account and carried over into the next year, earning interest tax-free. Each year that the family remains eligible, the government will deposit another $1,000 into their HSA. The family - not the government and not the employer - owns the HSA and keeps it whether a family member changes jobs or increases his or her earnings. Low-income individuals could receive a $300 contribution to their HSAs.
    • In addition to the $1,000 contribution to their HSA, the same low-income family of four will be able to get a $2,000 refundable tax credit to help them buy an insurance policy that covers them for major medical expenses. The $2,000 will cover a significant amount of the premiums on the insurance policy. Average premiums for family major medical coverage cost a little over $3,300 a year, according to the Kaiser Family Foundation based on data collected by eHealthInsurance. Low-income individuals could receive a refundable tax credit of about $700.
    • Families who elect not to set up an HSA may use the refundable $3,000 tax credit to buy standard medical coverage instead. Individuals will be able to claim a $1,000 refundable tax credit.
    • Low-income families will not have to wait until tax time to get their tax credits. The low-income health care credits will be advanceable and available immediately to qualifying families.
    • The President has also proposed $4 billion in grants to encourage states to create state-run insurance pools to make sure low-income Americans get the most out of the credit. These purchasing pools - or HealthPools - will provide people an easier, faster way to shop for coverage. States could make it easier to sign up for coverage through toll-free numbers and websites, and by making applications available at state government offices, motor vehicle administrations, and private workplaces. HealthPools will use the purchasing power of thousands of individual families to help reduce the cost of health insurance premiums for all eligible families.
  • Affordable Health Care for Small Business Employees and the Self-Employed:

    More than half of the uninsured are small business employees and their families. Small businesses face obstacles in providing health benefits including high costs, complicated regulations, and a lack of bargaining power with insurance companies. The President's plan helps them in several ways. President Bush has supported Association Health Plans (AHPs), which allow small businesses to band together to negotiate lower-priced health insurance for their employees. He also is proposing a tax credit to encourage small businesses and their employees to set up HSAs. President Bush proposes to:

    • Provide a tax credit for contributions to the HSAs of small business employees. To help individuals and families who work for small businesses fund their HSAs, President Bush proposes giving small business owners a tax credit on HSA contributions for the first $500 per worker with family coverage and the first $200 per worker with individual coverage.
  • Affordable Health Care for all Americans:

    High health care costs are the underlying reason why many Americans are uninsured. President Bush has proposed Medical Liability Reform and new investments in Health Information Technology to help lower costs. In addition, he is proposing the following new initiatives:

    • Extend Association Health Plans to civic groups and other community organizations. Community, civic, and religious groups may want to offer health plans to their members. President Bush proposes to allow local groups to band together through their regional or national organizations to negotiate low-priced coverage for their members.
    • Allow individuals to buy the best coverage they can find anywhere in the country. Today, it is easy to use the Internet or 800 numbers to shop anywhere for anything. But different rules apply to health insurance. Individual consumers can only purchase health insurance in the state in which they live and can't shop around for a better deal in another state. The President believes that creating a competitive marketplace across state lines can increase the availability of health care coverage and help drive down the costs for everyone. He proposes to give people this freedom to shop for the best buy on the health coverage that best meets their individual needs. This proposal will help individuals save on health insurance, and includes provisions to prevent fraud and abuse.
    • Establish a health center or clinic in every poor county in America. The President believes that access to primary and preventive health care services is critical, especially in poor communities that are medically underserved. For example, many rural communities with higher levels of poverty have little access to basic health care services. The President's current initiative has successfully increased the number of people served in health centers by almost 30 percent. However, there are still poor counties throughout the country that have no community health center at all. The goal of the President's new initiative is to ensure that every poor county in America has a community or rural health center.

Cover the Kids Campaign

  • Under President Bush, enrollment in the State Children's Health Insurance Program (SCHIP) has risen to record levels. During 2000, the year before President Bush took office, some 3.3 million low-income children were enrolled in SCHIP. By 2003, that number had risen to 5.8 million, a 75 percent increase. Over that same period, by working cooperatively with state governors, the Department of Health and Human Services (HHS) increased the number of low-income adults and children on Medicaid by 6.8 million.
  • Despite these efforts, millions of children who are eligible for SCHIP or Medicaid coverage are not yet enrolled. Billions in federal dollars available to the states to insure these children remain unspent because the children haven't been signed up. We must not allow lack of attention, or lack of information, to stand between these children and the health care they need.
  • To expand coverage of children, the President will launch a nationwide Cover the Kids campaign, a two-year, billion-dollar effort to get more low-income children signed up for quality health care coverage. The Cover the Kids campaign will combine the resources of the Federal government, the states, schools, and community organizations, including faith-based organizations, with the goal of covering millions more SCHIP-eligible and Medicaid-eligible children within the next two years. This new campaign will include:
    • More school-based enrollment. Just as schools advise parents of the availability of free and reduced-price lunches, they will also inform parents of the availability of health coverage for their children through Medicaid and SCHIP.
    • National public awareness campaign. HHS will increase support for the 1-877-KIDS-NOW hotline, which helps parents sign their children up for coverage and will ensure that all states participate. HHS also will work with the Departments of Education and Agriculture on a nationwide campaign that links their programs targeting needy children, like school lunches, after-school activities, and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
    • Grants to faith-based and community organizations. HHS will provide grants to faith-based and community-based organizations to join with their state Medicaid and SCHIP agencies to enroll targeted low-income children. Special efforts will be made to target those in underserved populations, including minority children and those in homeless shelters and migrant worker communities.
    • Grants to American Indian and Alaska Native organizations. American Indian and Alaska Native children have some of the highest uninsured rates in the Nation. HHS will provide grants to tribal organizations to enroll eligible children in Medicaid and SCHIP.
    • Grants to states for outreach. Under current law, state efforts to enroll children are counted as administrative expenses, which are capped at 10 percent of the Federal SCHIP grant. The Cover the Kids campaign will be in addition to current state efforts and will make additional money available to states for a variety of enrollment activities, including creating an online application process, hiring community-based eligibility workers, and translating applications into non-English languages. This new money will not count toward the state's 10 percent cap on administrative spending.

Health Savings Accounts

Health Savings Accounts (HSAs) give workers the opportunity to save tax-free for routine expenses, the security of insurance against major illness, and the freedom of knowing you can take your account with you whenever you change jobs. Last year, President Bush signed legislation creating tax-free Health Savings Accounts - a new option in coverage which will give millions of Americans access to affordable health care. These accounts can reduce health insurance premiums for families by thousands of dollars annually.

How HSAs Work

  • You can set up an HSA with the purchase of a low-cost, high-deductible insurance policy to cover major medical expenses. The money you contribute to your HSA is tax-deductible. Contributions can be made each year up to the amount of the major medical policy's annual deductible, with a cap of $2,600 for individuals and $5,150 for families. Individuals over age 55 can make extra contributions to their accounts ($500 in 2004, increasing to $1000 by 2009) and still enjoy the same tax advantages.
  • Money from the HSA can be withdrawn tax-free when used to pay routine medical bills, like doctor visits or medicines. The money can also be saved in the account and carried over into the next year, earning interest tax-free. You own and control the HSA and keep it whether you change jobs or move. You can spend money from your HSA on the doctor or pharmacy of your choice. You and your doctor determine which medical goods and services you need, without interference from an insurance company. With HSAs, less of your money goes to insurance companies and more money stays with you and your family.
  • Money from the Health Savings Account can be used to pay medical bills below the insurance policy's deductible. It can also be used to pay for expenses that insurance does not cover, like contact lenses, over-the-counter medicines, or braces for your children. Most individuals and families have few medical bills during some years and higher expenses in others. During years when your health care spending is low, you can leave the money in your HSA - where it will earn tax-free interest and be available in years when unexpected medical expenses arise.
  • The major medical insurance policy protects you against big medical expenses, like hospital stays, and provides peace of mind by limiting total out-of-pocket medical costs in the event of serious illness. Premiums for these plans are substantially less than for standard health insurance coverage, and once you meet the deductible, the insurance covers most or all of the medical expenses. Families and individuals faced with a significant accident or illness have enough to worry about without the fear of financial devastation. With an HSA and a major medical insurance policy, you can focus completely on fighting the illness, knowing there is a manageable limit to your share of the cost of treatment.
  • The President has also proposed allowing you to deduct the cost of the premiums you pay for a major medical policy, thus reducing the cost of these policies substantially. This above-the-line deduction would be available whether or not you itemize your deductions on your tax return.
  • Your employer also can contribute to these accounts, and their contributions are tax-free. While many small businesses cannot afford to pay $8,000 to $10,000 annually for a standard family policy for each of their employees, they may be able to make a contribution to an employee's HSA which can go a long way to help a family cover routine medical expenses.
  • Tens of thousands of individuals and families already are saving on their health care costs through HSAs. Americans from all income levels are already taking advantage of HSAs, according to eHealthInsurance, an Internet-based insurance brokerage that offers coverage to individuals and small firms throughout the country. It recently published an analysis of people who had purchased HSAs through its Internet portal over the first six months of this year. Key findings include:
    • The majority of HSA purchasers (52 percent) were 40 years of age or older.
    • Nearly half of HSA purchasers (49 percent) were families with children.
    • Two-fifths of HSA purchasers (41 percent) had incomes of $50,000 or less.
    • Three of ten HSA purchasers (30 percent) had previously been uninsured.

The President's Plan to Extend Benefits of HSAs to Low-income Americans
To extend the benefits of HSAs to low-income families and individuals, the President proposes giving low-income families a $1,000 contribution made directly to their HSA, along with a $2,000 refundable tax credit to help purchase a policy to cover major medical expenses.

  • A family of four making $25,000 or less will be able to get $1,000 from the Federal government to put into their HSA. These families can use the money to pay for doctor visits, medicines, and other routine medical expenses. What the family doesn't spend in a year can be saved in the account and carried over into the next year, earning interest tax-free. Each year that the family remains eligible, the government will deposit another $1,000 into their HSA. The family - not the government and not the employer - owns the HSA and keeps it whether a family member changes jobs or increases his or her earnings. Low-income individuals could receive a $300 contribution to their HSAs.
  • In addition to the $1,000 contribution to their HSA, the same low-income family of four will be able to get a $2,000 refundable tax credit to help them buy an insurance policy that covers major medical expenses. The $2,000 will cover a significant amount of the premiums on the insurance policy. Average premiums for family major medical coverage cost a little over $3,300 a year, according to a report issued by the Kaiser Family Foundation based on data collected by eHealthInsurance. Low-income individuals could receive a refundable tax credit of about $700.
  • Low-income families who elect not to set up an HSA may use the refundable $3,000 tax credit to buy standard medical coverage instead. Individuals will be able to claim a $1,000 refundable tax credit.
  • Low-income families will not have to wait until tax time to get their tax credits. The low-income health care credits will be advanceable and available immediately to qualifying families.

President Bush's Plan to Extend the Benefits of HSAs to Small Business Employees and the Self-Employed More than half of the uninsured are small business employees and their families. Small businesses face obstacles in providing health benefits including high costs, complicated regulations, and a lack of bargaining power with insurance companies. The President's plan helps them make contributions to their employees' HSAs in a cost-effective way.

  • A refundable tax credit for contributions small business owners make to their employees' HSAs. To help individuals and families who work for small businesses fund their HSAs, President Bush proposes to give small business owners a tax credit on contributions they make to their employees' HSAs. The credit would apply to the first $500 per worker with family coverage and the first $200 per worker with individual coverage.
  • The President's proposal to make tax-free HSAs even more affordable to small businesses, combined with his support for creation of Association Health Plans (AHPs), will help even more small businesses provide coverage to their workers.

Expanded AHPs and a National Marketplace for Health Insurance

To make health care coverage more affordable and accessible to all Americans, we must give Americans more choices in how they buy their health insurance.

Most people get their health insurance through their jobs. Yet more than half of the uninsured are small-business employees and their families.

To ensure that employees of small businesses also get coverage, the President wants small businesses to have the same bargaining power as large companies. He has called on Congress to pass Association Health Plans (AHPs), which allow small businesses to band together through trade and professional associations to purchase more affordable health insurance for workers and their families.

The President also proposes to expand the concept of AHPs to allow private, non-profit, multi-State entities to band together to offer coverage to their members, outside the workplace. In addition, the President envisions transforming the health care marketplace to make it easier for all Americans to shop for affordable coverage.

Expanded Association Health Plans

  • What if your employer doesn't offer coverage, or if you are self-employed, or change jobs frequently? If you try to purchase health insurance on your own, it is more expensive than if you buy into a group plan.
  • The President's proposal would allow you to get health insurance from an organization other than your employer. It would allow civic groups, religious groups, and other types of trusted and established organizations to offer health insurance to their members.
  • Most Americans belong to the types of groups or organizations that could offer health insurance under the President's plan. Expanded AHPs are another solution to getting more Americans affordable coverage.

National Marketplace for Health Insurance

  • Today it is easy to use the Internet or 800 numbers to shop anywhere for just about anything. If you want to buy a car or furniture or other items, you can shop from home for the best deal anywhere in the country.
  • But different rules apply to health insurance. Americans today may only purchase health insurance in the state where they currently live and can't shop around for a better deal in another state. If an individual lives in a state where there are cumbersome and expensive regulations on health insurance, he or she may end up paying more than someone else in another state.
  • The President's proposal would transform the marketplace for health insurance and give people the freedom to shop across state lines to get the best coverage at the most affordable prices.
  • Lowering barriers to affordable and accessible health coverage should not sacrifice strong consumer safeguards, and the President's plan would protect consumer rights and include standards to prevent fraud and abuse.
  • This proposal will help individuals save on health insurance, and competition across state lines can help drive down the cost of health insurance for everyone.

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