Tax-credit proposal little help to low-income uninsured

The credit amounts would fall far short of covering the cost of standard health insurance policies -- even for those who are healthy, says consumer group Families USA.

By Amy Snow Landa, AMNews staff. Oct. 1, 2001.

Washington -- A $1,000 tax credit wouldn't stretch very far when it comes to buying individual health insurance, according to a new study by the consumer group Families USA.

For example, a healthy, nonsmoking, 55-year-old woman who receives the full credit could still expect to pay over $6,000 each year out of pocket to purchase a standard health insurance policy if she lived in Louisiana.

If she lived in California, she'd pay much less -- just over $2,000 after the credit -- in annual premiums. But if she were a resident of Alaska, she'd have to shell out almost $8,000 to buy a standard health insurance policy, according to the 25-state survey.

For low-income women, such high premiums are far out of the range of affordability, and offering them a $1,000 tax credit for the purchase of health insurance would do little to help, said Ron Pollack, executive director of Families USA.

President Bush has proposed reducing the number of uninsured Americans by offering health insurance tax credits to low-income workers who lack employer-sponsored coverage and are not eligible for Medicaid. An estimated 39 million Americans currently lack health insurance.

Under the president's plan, the refundable tax credits would provide up to $1,000 for individuals and up to $2,000 for families to purchase health coverage.

"The costs of individual health insurance are far more expensive than the cash value of pending tax-credit proposals," Pollack said when he released the report in September. "They are like a 10-foot rope thrown to a person at the bottom of a 40-foot hole." [...]