AHRQ Press Release

FOR IMMEDIATE RELEASE
Contact: Peggy Rhoades
(202) 638-7151
January 31, 2002

TAX CREDITS NEED TO BE SUFFICIENT TO ENABLE LOWER-INCOME FAMILIES TO BUY HEALTH INSURANCE

Over 40 million Americans – one in six under 65 – have no health insurance coverage. In his State of the Union address, President Bush proposed refundable tax credits for individuals and families to purchase health insurance. Secretary Thompson offered more specifics yesterday, calling for a $1,000 credit for individuals earning up to $15,000 annually and a $3,000 credit for families with incomes under $25,000.

The National Coalition on Health Care applauds the Administration for acknowledging the seriousness of the uninsured problem and would like to work with the Administration and members of Congress to reduce the number of uninsured. We agree that, in order to have national security, all Americans need health security. Research suggests, however, that the size of the tax credit is unlikely to make it possible for many lower-income uninsured families to purchase the health insurance they need to obtain quality health care.

As the proponents of tax credits recognize, the high cost of health insurance is a major reason millions of lower-income Americans lack coverage. The average annual family premium in the individual health insurance market is over $7,300. With a $3,000 credit, eligible families would still have to spend at least 17 percent or more of their gross income to purchase health insurance. This is well beyond what most lower- and moderate-income families can afford. Therefore, the proposed tax credit is too small to enable most uninsured lower-income Americans to purchase coverage.

“Tax credits have a tempting appeal to expand coverage,” says Robert Ray, Co-chairman of the Coalition. “However, tax credits alone cannot solve the problem of the uninsured, nor are they likely to contain the skyrocketing costs of health care – with premiums rising 15 percent a year – or address the problems in the quality of care.”

“We believe that tax credits must be large enough to enable most lower-income uninsured Americans to buy health insurance. Tax credits should be accompanied by reforms in the individual health insurance market and other protections,” Paul Rogers, Co-chairman of the Coalition said.

“For health security, the Coalition believes all Americans need health care coverage, soaring costs need to be contained, and the quality of care needs to be improved. When that happens, we will truly reform the health care system,” Mr. Ray and Mr. Rogers agreed.

The National Coalition on Health Care is the nation’s largest and most broadly representative alliance working to improve America’s health care. It is comprised of 80 member organizations, which include large and small businesses, labor unions, and consumer, physician, hospital, and religious groups. Former Congressman Paul Rogers (D-FL) and former Governor Robert Ray (R-IA) serve as the Coalition’s Co-chairs.

###
Copies of the entire report are available on our web site at www.nchc.org. Copies can also be obtained from the Coalition at (202) 638-7151.