THE UNINSURED: ‘Tax Credits Alone Cannot Solve Problem’
A new study commissioned by the National Coalition on Health Care concludes that using tax credits as a "key mechanism" allows only a "limited number of the 44.3 million uninsured" to purchase insurance. The study, conducted by The Lewin Group, Inc., is the first of its kind to examine closely the measures included in the Congressional GOP's "tax access package," as well as proposals by presidential candidates and other members of Congress. Dr. Henry Simmons, president of the Coalition, summarized the study's findings that credits "are a tempting way to try and expand coverage," but warned that alone they cannot "solve the problem of the uninsured" nor "contain the skyrocketing costs of health care" (National Coalition on Health Care release, 10/18). The study found that a 100% tax deduction "would induce only 3.9 million" of the 44.3 million uninsured to buy policies. Moreover, offering health care with a flat dollar tax credit of $400 per child and $800 per adult, would reduce the ranks of the uninsured by only 4.6 million (CongressDaily/A.M., 10/19). Around 9.8 million currently uninsured persons would be induced to buy insurance under this policy, but 5.2 million insured persons would be induced to drop coverage under this plan, as the tax credit would be substantially less than the current subsidy under employer-based coverage. The study analyzed other tax credit policy measures "similar to those circulating in Congress and being promoted on the campaign trail," including a proposal to allow low-income workers without employer-sponsored coverage to receive a tax credit worth 30% of the cost of health care insurance and a proposal to permit workers with incomes below $35,000, and families with incomes below $50,000, to also receive a tax credit of up to 30% of insurance costs. Both proposals combined would only insure an additional 6 million Americans (NCHC release, 10/18). The study determined, however, that "the most cost effective way to reduce the number of uninsured" is a "universal system of refundable tax credits, a minimum benefits package, mandatory individual coverage and permission for employees to 'cash out' their health insurance" (CongressDaily/A.M., 10/19). The study argues that this strategy may insure almost 43.4 million of the uninsured. The net federal cost of such a program, first proposed by the Heritage Foundation in the early 1990s, would be $55.3 billion in 2000, or $1,274 per newly insured person (NCHC release, 10/18).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.