President's Budget Proposals
To Improve Affordability and Access to Health Insurance
February 6, 2004 - Within the president's FY 2005
budget request are several new and expanded proposals intended
to increase the number of insured individuals in the American
health system. The proposals focus on improving health plan
affordability, assuring provider reimbursement for certain
types of uncompensated care, and providing tax incentives
to enter high-deductible and long term care plans.
Included in the Administration proposal are several tax-related
proposals including:
- Continuation of the Health Coverage Tax Credit (HCTC)
established by the Trade Adjustment Assistance Reform
Act of 2002 (TAA) to focus on the needs of workers who
lost jobs, and subsequently health coverage, because of
new trade policies;
- A similar refundable tax credit for individuals who
purchase their own healthcare coverage, but do not qualify
for the HCTC;
- Implementation of Health Savings Accounts (HSAs), which
are intended to provide lower-cost health coverage through
the use of high deductible health plans. HSA withdrawals
are tax-free if used to pay for medical expenses such
as prescription drugs, over the counter medications, long-term
care, COBRA coverage, and Medigap premiums;
- An "above the line" tax deduction for all
high-deductible health plan premiums, regardless of a
person's access to employer-sponsored health coverage;
and
- A proposal that any premium for individually purchased
long-term care insurance should qualify for an "above
the line" tax deduction. It also proposes eligibility
for individuals who pay at least 50 percent of their employer-provided
long-term care coverage.
As directed by the "Medicare Prescription Drug, Improvement,
and Modernization Act" (MMA), the President's budget
blueprint includes $250 million in FY 2005 to reimburse providers
for EMTALA-mandated uncompensated care given to undocumented
aliens. Although payments are allotted by state, they will
be made directly from the Department of Health and Human Services
to providers. Under MMA, the same amount will also be available
in each of FY 2006, FY 2007, and FY 2008.
Finally, the president's FY 2005 budget proposal reiterates
the Administration's belief that the medical liability crisis
is a key force behind rising healthcare costs. The Administration
budget blueprint argues that rising malpractice premiums and
excessive defensive medicine are massive obstacles to moderating
the rate of healthcare cost increases, and insists that medical
liability reforms must be implemented to reduce the cost of
care and subsequently make health insurance premiums more
affordable. Further evidence that medical liability reform
remains an Administration priority is the inclusion of general
liability reform as a core strategy of President Bush's new
"Six Point Plan for Economic Growth."
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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