Improving Health Insurance
September 23, 2002
The tax code provides a generous tax break to workers with employer-provided health insurance coverage because the money employers spend on those policies is excluded from taxable income. In addition, the self-employed get a 70 percent tax deduction if they purchase health insurance on the own -- and that deduction is scheduled to rise to 100 percent next year.
But workers who aren't self-employed and don't get employer-provided coverage don't get a tax break.
- They have to pay taxes first, then buy insurance -- and they tend to be lower-income workers who have difficulty affording a policy.
- As many as 87 percent of the 123 million Americans under age 65 at or above 300 percent of the poverty line get their coverage through an employer.
- Only 18 percent of the 38 million Americans living below the poverty line get health insurance through an employer.
- As a result, 31 percent of the 79 million workers making less than 200 percent of poverty are uninsured, while only 6 percent of those earning more than 300 percent lack coverage.
Under a plan proposed by President Bush, working families with adjusted gross incomes up to $25,000 ($15,000 for individuals) would get a subsidy for up to 90 percent of the cost of a health insurance policy with a maximum of $1,000 per adult and $500 per child, or $3,000 per family.
Some critics claim policies sold in the individual market are too expensive and too many people are refused. However, the facts don't support this:
According to the Council for Affordable Health Insurance:
- 69.3 percent of applicants were able to get coverage at standard rates.
- Only 7 percent were refused coverage for medical reasons.
Source: Merrill Matthews (Council for Affordable Health Insurance), "Health Insurance Tax Credits Would Help On Two Levels," Investor's Business Daily, September 23, 2002
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