Do Tax Credits Equal The Cost Of Health Insurance?
May 3, 2001
To help reduce the number of uninsured Americans, the president and members of Congress have proposed tax credits for the purchase of health insurance. Would refundable tax credits of $1,000 for an individual, $2,000 per married couple and up to $3,000 per family be enough for them to purchase health insurance?
Many good insurance products would be available to families eligible for, say, a $3,000 credit, as demonstrated by the findings of a recent survey by eHealthInsurance Services, Inc., at eHealthInsurance.com, the largest online broker of individual health insurance in America.
The survey looked at the most recent 20,000 approved applications for policies sold through the Web site. Among its findings:
- Of the 20,000 policies examined, 15,000 were within 75 percent to 100 percent of the $1,000 to $3,000 range that has been proposed for annual tax credits.
- Of the 20,000 policies, 93 percent were for a Health Maintenance Organization (HMO) or preferred provider (PPO) product -- 80 percent of the HMO products had no deductible and 71 percent of the PPO products had a deductible of less than $1,000.
- The 20,000 approved policies were from 40 states containing 93 percent of the U.S. population, and the persons covered ranged in age from one to 64 years.
Thus credits of this size would help many families afford coverage -- even more so if they are combined with assistance or tax credits at the state level, such as Colorado's recently enacted $500 credit.
Source: James Frogue, "Recent Survey Points to Affordable Individual Health Insurance," Executive Memorandum No. 740, April 17, 2001, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.
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