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State of the Union health plan will rely on tax breaks, not real fixes

Monday, Jan. 30, 2006

President’s ‘Consumer-Driven’ Healthcare Proposals Fail to Deal with Real-life Problems for Americans, Consumers Union says
Expected State of the Union plan relies on tax breaks rather than solutions

(Washington, D.C.) – While President Bush should be congratulated for recognizing the deepening health-care crisis American families face, his expected call Tuesday night for more tax deductions and “consumer-driven” healthcare fails to address the real need for affordable, quality healthcare for all, Consumers Union said today.
“It’s positive the President wants to make healthcare part of his agenda, but many of his proposals actually hurt consumers and waste precious tax dollars,” said Bill Vaughan, senior policy analyst for Consumers Union, publisher of Consumer Reports.
“We urge Congress to take the President’s State of the Union focus on healthcare and turn it into a comprehensive solution that helps all Americans get affordable, quality healthcare as good as that available to members of Congress.”
The President’s plan for “consumer-driven” healthcare does little to help middle-class Americans struggling with spiraling healthcare costs, considering a record high of nearly 46 million Americans were without health insurance last year.
“Consumers are smart enough to know that they don’t ‘drive’ healthcare when it comes to treating a premature baby, cancer in a spouse, or a child’s broken bones. Families need help with the high costs of these essential health services, they don’t need talk about being better shoppers,” Vaughan said.
The President is expected to propose higher contributions to tax-free savings accounts for high-deductible insurance policies that cover major expenses. But Vaughan said too many middle-class families don’t have enough disposable income to put in these tax-sheltered accounts, leaving them as a benefit for the wealthiest Americans.
“Giving tax breaks only encourages healthier and wealthier people to opt-out of traditional employer-based insurance, leaving behind a fractured insurance pool that hurts the older and sicker,” he said.
Bush also is expected to propose more tax breaks for medical costs.
“Tax deductions do little or nothing for those people who are uninsured and devastated by high healthcare costs,” Vaughan said. “Most uninsured are in the zero or 10 percent tax bracket so tax deductions do little or nothing for them. While tax credits are fairer for the lower income, past proposals have been woefully inadequate. When an individual family policy for decent health coverage costs about $11,000 a year, tax credits of $1,000 to $3,000 to buy insurance are almost meaningless,” Vaughan added.
Consumers Union also urges the President and Congress to acknowledge the problems with the new Medicare prescription drug law and take action to simplify the program and lower its costs. The drug prices private plans are offering seniors are not nearly as low as those obtained by the Department of Veterans Affairs — which negotiates drug prices for veterans. Congress specifically prevented price negotiation in approving the Medicare drug benefit.
“Why are taxpayers and consumers unnecessarily paying extra billions of dollars to the drug companies? Congress should negotiate for lower prices for seniors, and provide a simplified Medicare drug benefit that all seniors can access,” he said.
Consumers also need to have faith in the nation’s drug safety program, which has suffered in recent years due to weak laws that allow the drug industry to game the system, and insufficient funding to ensure drugs are safe and effective.
“A top priority of this Administration should be getting laws passed to ensure the medicines we take each day are safe and actually improve our nation’s health, not harm it,” Vaughan said. “If you want to help consumers with their healthcare, that is a good starting point.”

Contact: Bill Vaughan, 202-462-6262