THE UNINSURED: Tax Credits a Hot Solution

      The problem of the uninsured is suddenly "hot" again, receiving attention unmatched "since the demise of the Clinton administration plan to overhaul the nation's health care system," today's New York Times reports. And while the usual ideological arguments over how to best provide coverage continue, "a bit of a consensus on an approach is developing." A "powerful array of business groups," GOP leaders and "a number of Democrats" are looking to the tax system as the way to solve the problem. In addition to speeding up 100% deductibility of health insurance premiums for the self-employed, moves are afoot in Congress to give the uninsured tax credits.

It's a Plan
      House Majority Leader Dick Armey (R-TX) plans to introduce a bill this spring that would "give uninsured workers and their families an annual tax credit tentatively set at $800 per adult and $400 per child, to a maximum of $2,400, to buy insurance." The poorest workers would be eligible for refundable tax credits. The Times reports that "[e]ven some Democrats who agree with Mr. Armey on little else are prepared to go along with the credits" in the hopes of finding a way to move closer to universal coverage. And while the idea of tax credits still has its skeptics, such as Rep. Pete Stark (D-CA), what may be different now is the impetus provided by the budget surplus and the backing of groups traditionally cool to the idea, including moderate Democrats, the American Medical Association and the U.S. Chamber of Commerce. Clinton health policy adviser Chris Jennings said the White House is open to the idea, but has not settled on a model it could back. In addition to the Armey plan, Rep. Jim McDermott (D-WA), a physician, has a plan to "give tax credits to cover 30% of the insurance premiums of individuals with incomes up to $25,000 and families with incomes up to $40,000." Sen. Barbara Boxer (D-CA) has "drafted a bill that would allow a deduction of up to $2,000 to each working taxpayer who buys health insurance privately."

I Can See Clearly Now
      Agreement is less clear, the Times reports, on the GOP-backed idea of offering tax credits to all Americans -- even those with employer-sponsored coverage -- so they can shop for their own health insurance. House Ways and Means Committee Chair Bill Thomas (R-CA) says he "will offer a bill this year to jettison the entire employer-based insurance system" and replace it with a system of individual tax breaks, a goal "shared by" Armey, who admits "as a political matter, it is unattainable any time soon." The Brookings Institution's Henry Aaron said that "unless Congress created a big regulatory apparatus like the one envisioned in the long-dead Clinton plan, insurers and HMOs would pick and choose among consumers, setting premiums low to attract the young and healthy and prohibitively high for older and sicker workers" (Kilborn, 3/12).