Groups Seek Tax Breaks in Push to Boost Health Coverage

Several powerful business lobbying groups allied with Aetna-US Healthcare, the nation’s biggest health insurer, today will announce a campaign seeking tax breaks to help extend health coverage to the 43 million uninsured Americans.

Aetna has devised a limited policy aimed at small businesses that would cost as little as $46 a month for a single worker and $156 a month for a family. Even at those comparatively low rates, the coverage may be costly for some small firms, and the business groups will endorse government action to help subsidize the plan.

The possibilities include a tax deduction or, for low-income people, a tax credit. For those who do not pay taxes because their income is too low, the credit would be a refundable grant of money to be applied toward the purchase of a health insurance policy.

Three influential groups, the U.S. Chamber of Commerce, the National Federation of Independent Business, and the National Assn. of Wholesaler-Distributors, will join top Aetna officials at a news conference today to promote the idea of expanding coverage.

Some key members of Congress will attend the news conference, including Rep. William M. Thomas (R-Bakersfield), head of the health subcommittee of the House Ways and Means Committee, and Sen. John B. Breaux (D-La.), a member of the Senate Finance Committee. The two co-chaired the recent national bipartisan commission on the future of Medicare.

Although they have not offered specific legislation, Thomas and Breaux are anxious to explore new ways to deal with the growing numbers of uninsured Americans. Their backing would be vital to any legislative action.

The number of uninsured is likely to rise from 43 million to 53 million in the next five to seven years, said Bruce Josten, vice president of policy at the U.S. Chamber of Commerce. “It is more than a crisis; it becomes a national disgrace,” he said. Workers who do not have health insurance coverage should be able to pay for it and get the same tax breaks as businesses, Josten said.

Businesses can deduct the full cost of workers’ health insurance as an expense and the self-employed can deduct 40% of insurance premiums. However, a worker at a company without health insurance does not enjoy these tax breaks. Medical expenses can be deducted only when they exceed 7.5% of income.

The business lobbyists are promoting a free-market approach. They are not endorsing the specific Aetna policy but welcoming Aetna as the source of new ideas.

Aetna’s approach is welcome because it offers “a basic health-care package,” said Dirk Van Dongen, president of the National Assn. of Wholesaler-Distributors.