Tax Credits Would ‘Do Little’ to Help Young and Healthy Gain Insurance Coverage, Families USA Study Finds

Tax credits, such as those proposed by President Bush, would "do little to help" the uninsured obtain coverage, a study released yesterday by Families USA says (Rovner, CongressDaily/AM, 9/13). Under Bush's proposal, low-income uninsured individuals would receive tax credits of up to $1,000 and low-income uninsured families would receive tax credits of up to $2,000. In the report, Families USA analyzed insurance plans offered in 25 states, using two hypothetical applicants, a 25-year-old woman and a 55-year-old woman who both were healthy and did not smoke. Researchers sought information about two types of plans; one type that cost about $1,000 and the second that was based on the most popular plan offered under the Federal Employees Health Benefits Program and is comparable to health insurance plans provided by many mid- and large-size employers. According to the report, in many states, $1,000 plans were not available and when they were, they "generally provided incomplete coverage, had high deductibles and required high coinsurance or copayments." Although standard plans were "more widely available," they also were more expensive than $1,000 and "would consume a significant portion of annual income for the low-income people eligible for the tax credit." For 25-year-old women, $1,000 plans were not available in six of the 25 states the report studied and coverage under available plans was "substandard." Deductibles for $1,000 plans for 25-year-old women ranged from $500 to $5,000, out-of-pocket costs were "very high" and coverage was "limited." For 55-year-old women, $1,000 plans were not available in 18 of the studied states, and like plans for 25-year-olds, available $1,000 plans for 55-year-olds had "substandard" coverage.

Standard Plan Information
For 25-year-old women, standard plans were not available in four of the studied states; the same is true for 55-year-old women. Standard plan premiums for 25-year-old women averaged $2,395, and premiums were more than $3,000 in six states. For 55-year-old women, premiums averaged $4,734 and were higher than $5,000 in eight of the states (Families USA, "A 10-Foot Rope for a 40-Foot Hole: Tax Credits for the Uninsured," September 2001). Families USA Executive Director Ron Pollack said, "The costs of individual health insurance are far more expensive than the cash value of pending tax-credit proposals. They are like throwing a 10-foot rope to a person at the bottom of a 40-foot hole" (CongressDaily/AM, 9/13).