Thursday, Feb. 1, 2007 | 7:07 a.m.
WASHINGTON - In the heat of the minimum wage debate continuing on Capitol Hill, Nevada Sen. John Ensign proposed an amendment to give tax breaks to families who shoulder more responsibility for their health insurance.
Ensign, a Republican, believes skyrocketing health care costs come in large part because typical insurance plans don't require patients to bargain shop. People visit the doctor their plan suggests and buy the medications they are prescribed.
But if patients paid for more of these expenses out of pocket, Ensign believes they might shop around for a better deal - bringing health care costs down for everyone.
Democrats did not agree. They said the tax breaks essentially would benefit the well-to-do who can afford to pay a larger share of their care.
Sen. Edward Kennedy, D-Mass., called it a "travesty that we are debating more tax breaks for the wealthy ... when we should be talking about a long overdue pay increase for working families."
Ensign's idea was defeated on a party-line vote, revealing that deep political fault lines remain despite growing public consensus that the nation's health care system is broken and must be fixed.
Democratic presidential candidate John Edwards launched his campaign with a push for universal health care. California Republican Gov. Arnold Schwarzenegger wants coverage for all the state's uninsured.
As more than 40 million Americans go without health insurance, a Gallup Poll in November showed nearly 70 percent of Americans want the federal government to ensure that health care is available to all.
Ensign's amendment would have expanded tax deductions already available for those who set up Health Savings Accounts. Families using those accounts can save tax free up to $5,450 annually if they enroll in health care plans with high deductibles - the money they pay out of pocket for medical care before the insurance kicks in.
Plans must have deductibles of at least $2,100 to qualify, or three times the amount of a typical family deductible of $700.
Ensign's amendment would have extended the reach of the accounts by allowing families to use them also to pay insurance premiums - the monthly payments to buy into the plans.
Health Savings Accounts were a Republican add-on to President Bush's Medicare prescription drug act of 2003, but experts say they have been slow to catch on with consumers. Fewer than 3 million Americans having signed up.
Opponents say they can be a good deal for the wealthy and the healthy, but do little for the working class families who cannot pay the high deductibles or put money away in the tax-sheltered accounts. The poor do not benefit from the tax deduction. The average income of those using the accounts was $133,000 annually.
Democrats said Ensign's tax breaks would have cost $8 billion, doubling the $8 billion already being offered to small businesses in the minimum wage bill to help with the burden of raising hourly wages from $5.15 to $7.25 over the next three years. Republicans put the cost at $50 million.
Ensign said he wanted to tack the amendment onto the wage bill so businesses could benefit by lowering their health care costs. "Why not give them a break?" Ensign said. "It's another way to help them because a lot of them are going to be hit."
But Bill Vaughan, a policy analyst at the nonprofit Consumers Union, said with so many unfunded health care needs "is that where we want to spend our next tax dollar?"
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