2009 will bring tax break for insurers

ATLANTA --- Georgia's budget woes aren't stopping the state from ringing in the new year with a hefty tax break for the insurance industry.

Among the new Georgia laws that will take effect today is one that will eliminate the state and local taxes for insurance carriers that offer high-deductible health plans.

The tax break is expected to save insurers $146 million over five years. They lobbied hard for the measure, which passed on the final day of the 2008 session. It was derided by critics as a "sweetheart deal" for the industry.

Georgia is facing a budget shortfall that could top $2 billion for the current fiscal year and has been slashing programs, furloughing state employees and raising fees for college students.

The tax break will reduce the money flowing into state coffers during tough economic times. Still, Gov. Sonny Perdue isn't pulling his support. The law was part of his legislative agenda last year. A Perdue spokesman said the governor continues to believe it will provide cost savings down the road by covering some of the roughly 1.7 million Georgians who lack health insurance.

"The whole thought behind this is that if we make these plans more affordable and that we get more folks insured," spokesman Bert Brantley said.

High-deductible plans are a favorite of Republican health policy. Participants typically put money in tax-free health savings accounts to pay medical expenses out-of-pocket until they meet a high yearly deductible, which can be several thousand dollars.

Critics question whether the plans will do much to reduce the number of uninsured in the state.

Most have modest incomes and would be unlikely to afford thousands of dollars in out-of-pocket health expenses, said Linda Smith Lowe, a Georgia consumer health advocate.