Barbour unveils health insurance plan, tax study

Published 5:04 pm Friday, January 4, 2008

Gov. Haley Barbour said Thursday he will propose a Mississippi health insurance exchange for small businesses during the upcoming legislative session.

Meeting with reporters, the governor also called for a comprehensive study of Mississippi’s tax system and said Leland Speed, former director of the Mississippi Development Authority, would lead the study group.

Barbour said the insurance exchange is needed because an estimated 500,000 people in Mississippi do not have medical coverage and a fourth of those work at small businesses. He said the money that small businesses spend on the insurance plan wouldn’t be subject to taxation. The same would apply to company employees who have to make a contribution to the insurance plan.

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Creating the voluntary program would require a “small” state investment and a law to authorize it, the governor said. Barbour said the biggest impediment to health care is cost.

“By a number of small businesses coming together and buying their insurance through the health exchange, which would be their plan, they would get the purchasing power that comes from pooling their number of employees so their premiums will be lower,” Barbour said.

Barbour had promised during his re-election campaign to look at Mississippi’s tax structure with a goal of reducing taxes.

Business leaders, legislators, and other experts will begin examining the state’s tax codes in coming weeks, he said.

The public-private commission will provide a report by Aug. 31 to the governor and the Legislature. In the meantime, Barbour indicated he wouldn’t support any attempts by the 2008 Legislature to pass a tax swap proposal. For the past two sessions, legislation to reduce the state’s grocery tax and raise its cigarette excise tax has failed.

Lawmakers have said similar proposals would likely be presented during the session that convenes Tuesday.

“I don’t see any reason we ought to fool with our tax system on a piecemeal basis,” Barbour said Thursday.

The governor said the tax study commission will take federal, state and local tax systems into consideration.

Ed Sivak, director of the Mississippi Economic Policy Center, cautioned that combining a progressive federal tax system with a regressive state system won’t create an equitable structure.

“Federal tax cuts over the last few years haven’t been equitable” to people in lower tax brackets, said Sivak, whose center released a study of Mississippi’s tax system in September.

Sivak said the state’s current system places a disproportionate burden on low-income, working-class families.