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Administration , Democrats Spar Over Group Health

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Michael Leavitt told insurance and reinsurance industry participants Wednesday that implementing the Bush fiscal year 2008 budget proposal as is would make the health insurance playing field more fair.

Leavitt, secretary of the U.S. Department of Health and Human Services, appeared at a Washington member conference organized by the Council of Insurance Agents & Brokers, Washington, and the Reinsurance Association of America, Washington.

Leavitt gave conference a review of general Bush administration efforts to strengthen the health insurance market, and he also talked about provisions in the fiscal year 2008 budget proposal that would replace the current group health tax deduction for employers with a new tax break that would go to anyone who had health coverage.

Fiscal year 2008 starts Oct. 1.

The new tax break would help purchasers of individual coverage get the same tax treatment as purchasers of group coverage, but it would have the effect of limiting deductibility of coverage for employers with the most expensive plans.

Limiting deductions for high-end policies is a way to make the health insurance market more fair for individuals who have to buy their own coverage, Leavitt said, according to a summary of Leavitt’s remarks provided by the CIAB.

Elsewhere in Washington, Treasury Secretary Henry Paulson Jr. was appearing at a House Budget Committee hearing to discuss the health insurance tax break proposal and other budget proposal provisions.

Paulson argued that replacing the current unlimited group health tax break would eliminate a bias “toward more expensive coverage.”

Rep. Thomas Allen, D-Maine, suggested that the proposed would push more sick workers and older workers into the individual health insurance market, and he asked what the federal government would do to help ensure that they have access to affordable individual coverage.

Rep. Allyson Schwartz, D-Pa., said the Bush administration seems to be ignoring the value of pooling of risk in efforts to buy insurance.

If Congress adopts the Bush budget proposal as written, “we’re going to make Americans be more on their own when it comes to purchasing health care,” Schwartz said.