Senate Democrats Question Bush Administration’s 10-Year, $89 Billion Tax Credit Proposal
Senate Democrats raised doubts at a committee hearing yesterday that President Bush's tax credit proposal would allow the nation's uninsured to purchase "affordable" health coverage, the AP/Philadelphia Inquirer reports (Abrams, AP/Philadelphia Inquirer, 2/13). Under the proposal, which is included in Bush's fiscal year 2003 budget and would cost $89 billion over 10 years, families who do not have employer-sponsored health insurance and have annual incomes less than $25,000 would qualify for a $3,000 refundable tax credit to purchase health insurance. Families with annual incomes between $25,000 and $60,000 would qualify for a smaller tax credit based on income. Individuals with annual incomes less than $15,000 would qualify for a $1,000 tax credit. Individuals with annual incomes between $15,000 and $30,000 would qualify for a smaller tax credit based on income. The proposal also would help states establish purchasing pools to reduce the cost of health insurance premiums for low-income residents who use the tax credits to purchase health coverage (California Healthline, 1/31). However, Democrats on the Senate Health, Education, Labor and Pensions Committee said yesterday that the tax credits would not help low-income families to purchase health insurance policies, which can cost up to $7,000. "Their plan does nothing for the millions of Americans who cannot afford the $1,000 deductibles," Sen. Edward Kennedy (D-Mass.) said, adding, "It does nothing for Americans with disabilities or other chronic conditions who cannot buy affordable coverage in the private market at all. And it does nothing for sicker and older Americans who face exorbitant premiums" (AP/Philadelphia Inquirer, 3/13). According to Sen. Hillary Clinton (D-N.Y.), the $89 billion tax credit proposal would only reduce the number of uninsured in New York by 1.6%, while an $89 billion expansion of public health programs could decrease the number by one-third (Rovner, CongressDaily, 3/12).
Mark McClellan, a member of the White House Council of Economic Advisers, at the committee hearing yesterday "defended" Bush's tax credit proposal, which he said would have "rapid and substantial impact on the uninsured." According to a CEA study, the tax credit proposal on average would cover more than half of the cost of health insurance premiums for lower-income individuals and families, McClellan said. He added that the tax credits "were not intended to provide full payment" for health coverage but would help about 17 million individuals -- including those without health insurance or with non-employer-sponsored coverage -- enroll in a "mainstream" health plan. In addition, McClellan said that the tax credit proposal would expand the number of healthy individuals enrolled in health plans, which would "make insurance more affordable" (AP/Philadelphia Inquirer, 3/13). He also said that state purchasing pools would help reduce the cost of health insurance premiums (CongressDaily, 3/12). In a statement, Health Insurance Association of America President Donald Young said, "Lawmakers who want to provide health care coverage to uninsured Americans have only two basic choices: expand government programs or provide subsidies to buy coverage through the private health insurance market. Most working Americans -- and 80% of the uninsured are in working families -- would be better off with tax relief to help defray the cost of health insurance than with public assistance programs" (HIAA release, 3/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.