SDHI Could Widen Availability of Affordable Health Insurance
President Bush has outlined his plan for health care reform with the 2009 fiscal budget requests. Currently in America most employees are encouraged to participate in company-sponsored health plans, free of payroll or income tax, and end up getting more coverage than they really need. The President’s plan, called SDHI (standard deduction for health insurance), will push for a standardized deduction for those covered by health insurance up to $7,500 for individuals and $15,000 for families. This deduction’s specifics are still being debated, but it would also be applied to payroll and income tax.
For many American’s, SDHI could be advantageous with tax savings reducing their average health costs to nearly one sixth for a family of four. The tax incentives would benefit those participating in company-sponsored plans because the SDHI amount would be more than their average premiums, plus it would greatly reduce the number of people uninsured because theoretically the tax advantages would spur them to purchase plans.
The proposal is constructed to not increase taxes and not generate revenue (the capped deduction will offset normally occurring tax costs for families not covered under group plans). It also encourages more private insurance companies to offer a wide variety of service to Americans, propelling more competition and driving prices for consumers down.
Under SDHI, individuals will be able to purchase health care plans independently of their employers, lessening the risk of going without coverage should employees lose their jobs or decide to change careers.
Some argue that the new proposal will cause employer-sponsored plans to deteriorate. But there will still be those individuals for whom these plans make sense, such as those wanting convenience of a pre-arranged plan and possible lower costs than private plans, depending on the company’s size.
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