AMA meeting: AMA clarifies plan on tax credits for insurance

Delegates rejected an attempt to keep tax-free HSA contributions along with tax credits.

By Doug Trapp, AMNews staff. July 7, 2008.

Chicago -- At a time when the presidential election has again put health system reform in the national spotlight, the AMA House of Delegates in June refined the Association's policy on increasing health insurance access.

Existing AMA policy, first approved a decade ago, calls for ending employees' federal income tax exemption for work-based coverage. That should happen, however, only after establishing a system of tax credits to help people buy health insurance. Related AMA policy also calls for expansion of health plan choices, more consistent health insurance regulation, guaranteed policy renewals, an individual insurance mandate for those earning more than 500% of the federal poverty level, and subsidies for medically high-risk people.

AMA policy adopted at the meeting further specifies that once tax credits are in place, employee exemptions for health insurance spending should end only for federal income taxes -- not for state or federal payroll taxes, which include Medicare, Social Security and unemployment taxes. Although ending the exemption for payroll taxes would simplify administrative work for businesses -- including physician practices -- and increase Social Security and Medicare Part A revenues, it would disproportionately affect lower-income people and raise employers' payroll taxes, and would not provide additional revenue for health insurance tax credits.