Tax Credits for the Uninsured Should Be Targeted to Most Needy
April 8, 1999
Many Current Congressional Proposals Fail to Meet Key Criteria
(Washington, DC): A tax credit for people lacking health insurance should minimize "substitution," be targeted to those most in need, and provide a big enough subsidy to be effective, declared American College of Physicians - American Society of Internal Medicine President-elect Whitney Addington, MD, FACP, at a Capitol Hill briefing April 7.
Dr. Addington described several current congressional proposals for a health insurance tax credit as positive starting points, but noted that most fall short on meeting three main criteria for success:
- Any tax credit should contribute enough to make affordable coverage available to low-wage/low-income uninsured people, typically those at 150% of the federal poverty level.
- The credit should minimize incentives for insured persons to substitute the tax credits for existing coverage.
- The tax credit proposal should clearly define the administrative structure to implement the tax credits, explain what they will cost, and suggest sources of financing.
The ACP-ASIM noted that a plan it unveiled in February was designed to address these concerns based on past governmental experience with tax credits.
For example, by limiting the credit to adults with incomes between 100-150 percent of the federal poverty level, the problem of substitution is largely eliminated since this group represents people most likely to have no other source of insurance.
The amount of the credit is important too, since participation for low-income people falls off rapidly as cost sharing increases. The ACP-ASIM plan calls for a tax credit at the amount of $2,800 at 100 percent of poverty and $2,400 at 150 percent. This is sufficient to buy a health insurance policy equivalent to a standard Blue Cross/Blue Shield plan.
An advance payment option also must be provided, since low income people can rarely afford to wait until tax time to receive the necessary funds.
The ACP-ASIM plan suggests using the state infrastructure currently used for administering the Child Health Insurance Program (CHIPs) to administer its tax credit plan. By contrast, some of the other current proposals before Congress suggest relying on the Internal Revenue Service.
The CHIPs' administrative structure , the ACP-ASIM notes, is already in place and is conducting outreach to the same basic group, i.e., children in families at 150 percent of poverty. The outreach for the adult tax credit could simply be "piggy-backed" on the current CHIPS program, as could the eligibility verification requirements.
In addition to the tax credit proposal, the ACP-ASIM plan also suggests expanding Medicaid, increasing funding for Medicaid enrollment outreach efforts, and providing insurance subsidies to temporarily unemployed and uninsured workers phased out at 250 percent of poverty. The plan would be paid for by funds equivalent to 12.6 percent of the projected federal budget surplus.
"The ACP-ASIM welcomes the opportunity to work with others who are interested in tax credits for the uninsured to develop the most effective plan possible," said Dr. Addington. "Incremental expansions, however, should only be viewed as a "down payment" toward universal coverage, not as an end in themselves. We can only really rest when all of our fellow citizens are covered by a decent health insurance policy"
ACP-ASIM is the nation's largest medical specialty organization and the second largest physician group. Membership comprises more than 115,000 internal medicine physicians and medical students. Internists are the major providers of medical care to adults in America and treat more Medicare patients than any other medical specialist.
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Jack Pope, ACP-ASIM Washington Office, 202-261-4556