Bush proposal could help insurance cos

Bush proposal could help insurance cos

	Published : Wed, 24 Jan 2007 15:38 By : Agencies Print this Story

WASHINGTON (AFX) - President Bush's State of the Union proposal aimed at increasing health coverage for uninsured Americans would in theory provide a boost to health care providers such as UnitedHealth, Wellpoint and others looking to increase their enrollment numbers.

The proposal will be met with stiff resistance by the Democrat-controlled Congress, however.

The president's plan would give a $7,500 tax break to individuals and a $15,000 tax break to families who either buy their own health insurance or receive it through their employer. Under current law, people who receive insurance through their job pay less for health benefits because their employers are permitted to write off the expense.

If the tax change went into effect it would encourage early retirees and others who do not receive benefits through an employer to buy coverage, according to Karen Ignagni, president of America's Health Insurance Plans.

Currently 17 million Americans purchase their own insurance, while 175 million receive benefits through their employer, according to the insurance trade group.

The second part of Bush's proposal would try to curb health care spending by taxing any health expenses over the $7,500 and $15,000 marks.

'Such a tax structure clearly provides an incentive for individuals to not only purchase coverage, but choose the leanest plan,' writes Bear Stearns analyst John Rex.

That proposed incentive could drive many Americans to the individual-oriented plans offered by companies like UnitedHealth, Wellpoint and Aetna, according to Citigroup analyst Charles Boorady.

Aetna issued a statement commending the President's plan and spokesmen for UnitedHealth and Wellpoint said their companies generally support the initiative.

There is, however, one major caveat: the idea is expected to face strong opposition in Congress, where several key Democratic lawmakers have already said they will refuse to hold hearings on the proposal.

The US Chamber of Commerce, which lobbies on behalf of business, said the measure would not have a significant impact on employers, if enacted, because companies would still be able to write off insurance costs as a business expense.

In pre-market trading on the New York Stock Exchange, shares of Aetna Inc. fell 4 cents to $42.14 in morning trading while Wellpoint Inc. dropped 88 cents to $76.15.