By Mary Agnes Carey, CQ HealthBeat Associate Editor
March 2, 2007 -- A financial analysis of President Bush's fiscal 2008 budget gave new ammunition Friday to opponents of the administration's plan to change the current tax treatment of employer-provided health care insurance.
"Very preliminary" estimates prepared by the Joint Committee on Taxation (JCT) found that Bush's plan to treat health care benefits as taxable income and give those who purchased health insurance a tax deduction—$15,000 for families and $7,500 for individuals—would raise $526 billion in taxes over the next decade, rather than be budget neutral as administration officials said when Bush released his plan.
The Office of Management and Budget did not immediately respond Friday to a Congressional Quarterly request for comment on the JCT estimates of Bush's health tax deduction proposal.
Also on Friday the Congressional Budget Office (CBO) said President Bush's fiscal 2008 budget narrowly fails to balance the budget by fiscal 2012 despite increasing taxes on high-cost employer-provided health plans.
Administration officials have said that ending the different tax treatments for people who buy insurance through their employer and for those who buy their own insurance would allow more people to purchase health insurance and reduce the number of the uninsured.
Even though the health proposal was already facing stiff opposition in the Democratic-controlled Congress, critics of the president's budget said the new analysis was further evidence of how Bush's plan would do more harm than good.
"This tax plan would undermine employer-provided health care while doing little to expand coverage to those most in need," Senate Budget Committee Chairman Kent Conrad, D-N.D., said in a statement.
The left-leaning Center on Budget and Policy Priorities, which has been critical of Bush fiscal 2008 budget, said the new CBO analysis confirms president's plan is "fiscally irresponsible.
"CBO's figures include a Joint Tax Committee estimate that the administration's proposal to change the tax treatment of health insurance will produce a tax increase of more than $500 billion in the coming decade, something the administration says it did not intend," said Robert Greenstein, the center's executive director.
Sen. Judd Gregg, R-N.H., the Senate Budget Committee's ranking member, said Bush's budget should be praised for its provisions designed to slow the growth of entitlement spending, especially in Medicare.
"On the spending side of the ledger, the president's budget takes critical steps to slow the growth of entitlement programs that threaten to overwhelm future generations, and even very small modifications will result in significant savings down the road," Gregg said.