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Insurance tax cuts draw bi-partisan votes

Friday, April 6, 2007 | 12:00 a.m. CDT; updated 10:52 p.m. CDT, Saturday, July 19, 2008

JEFFERSON CITY — As tax season approaches an end, and with health care a central issue in the General Assembly, many state lawmakers are pushing for legislation that aims to give tax breaks to small businesses and Missourians for purchasing health insurance.

Even while legislators are sharply divided over eligibility standards for Medicaid programs that serve the poor, bi-partisan agreement has emerged on the issue of tax breaks to encourage the purchase of private health insurance.

TAX BREAK BILL

The measure would allow individuals to deduct what they spend on health insurance from their state taxes if they cannot already claim the deduction on federal taxes. The bill’s sponsor, Rep. Doug Ervin, R-Kearney, said the proposed tax deduction would benefit retirees who receive insurance through their former employer, people who buy their own plans and some small business employees. The bill is expected to result in tax breaks totaling between about $2.4 million and $11.2 million.


Sponsored by Rep. Doug Ervin, R-Kearney, the proposal has drawn strong support from Democrats, who have been critical of other tax relief measures and Republican health care initiatives, but have signalled a willingness to accept the tax reductions as a positive step in expanding the availability of medical coverage.

The measure would allow individuals to deduct what they spend on health insurance from their state taxes if they cannot already claim the deduction on federal taxes. The bill passed the House on Thursday in a 156-0 vote, with seven members absent.

Democrats have received the tax breaks positively, but have tempered their praise with concerns over a lack of expansion in Medicaid coverage.

Rep. Jeff Harris, D-Columbia, voiced his approval of the individual deductions, but said they were nonetheless a “small step on the margins” in helping people obtain medical insurance. Harris also called for a broader health care agenda.

“I think that’s not a bad approach, although what we’ve yet to see from the governor is any sort of comprehensive approach that restores health care for the people whose health care he cut two years ago,” Harris said.

In giving initial approval this week to a Medicaid overhaul bill, Senate Republicans defeated amendments that would have brought about 100,000 Missourians back on Medicaid.

Ervin said the proposed tax deduction would especially benefit retirees who still get insurance through their former employer, people who buy their own coverage plans and some small business employees.

“Anybody that is currently not able to take a federal deduction, this will give them some additional savings because they’re doing the right thing and purchasing health insurance on their own,” Ervin said, “and we just don’t have anything out there that really rewards those people for doing the right thing.”

The bill is expected to result in tax breaks totaling between about $2.4 million and $11.2 million.

As the bill moves to the Senate, Sen. Joan Bray, D-St. Louis County, echoed Harris’ sentiment, but also asserted her support for the notion of health care-related tax breaks.

“We need to have a comprehensive, coherent approach to affordability and accessibility for health care,” Bray said. “We need to look at all the elements and figure out which ones are the best, that actually make health care more affordable and make health care more accessible.”


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