January 12, 2006

Bush to push for health care cost-cutting in 2006

By Caren Bohan

BAY ST. LOUIS, Mississippi (Reuters) - President George W.
Bush will propose ways to rein in the surging cost of U.S.
health care this year as an important focus of his economic
strategy, a White House spokesman said on Thursday.

Trent Duffy, traveling in the Gulf Coast region with Bush,
said the president's initiative would include new tax breaks
for Americans who buy health insurance on their own.

The goal was to level the playing field between individual
health plans and insurance provided to workers by their
companies, for which employees and firms get tax deductions, he

The administration also wants to expand the use of
health-savings accounts, which allow workers to set aside money
tax free to pay health costs, Duffy said.

Such accounts are designed to be compatible with so-called
high-deductible health insurance plans, in which consumers
assume more out-of-pocket costs for routine medical expenses
while having coverage against catastrophic illnesses.

Duffy was confirming a report in the Wall Street Journal
that Bush would make health care cost reduction a focus in his
economic agenda for 2006.

The president alluded to his plans during a question and
answer session in Louisville, Ky on Wednesday when he said: "We
need a more consumer-driven pricing mechanism in health care in
order to be able to properly deal with the inflation you're
talking about."

Duffy said: "The president talked about health-care
affordability as a major challenge that we have to confront for
a host of reasons."

He said the administration believed encouraging individuals
to buy health insurance would spur more competition than in the
current system, which relies heavily on employer-provided
health benefits.

Duffy said one of the reasons health-insurance costs were
so high was that "third parties" -- meaning employers -- assume
the bulk of the costs so there was little incentive for
consumers to shop around to save money.

Duffy said that as part of the health costs initiative, the
administration would seek to tamp down medical malpractice
lawsuits -- one of Bush's long-sought goals.

Bush's health-care steps are expected to be among the
themes in his State of the Union address later this month.

The president's effort last year to push a broad revamp of
Social Security proved unpopular and ultimately languished in
Congress. The administration had considered putting forth a
broad plan to revise the tax-code as one of its economic
initiatives for this year but officials have decided to delay
that effort amid concerns it could prove controversial too.

Among other economic initiatives Bush will press this year
are his drive to make his tax cuts permanent and an attempt to
garner more support for free trade.