NCPA: Federal Policy Causing Rising Number of Uninsured

Think Tank Offers Plan to Insure All Americans

WASHINGTON, D.C. ­– Government policy denies many low-income working Americans and their children the same tax incentives to purchase health insurance that it gives most middle and upper-income workers, according to the National Center for Policy Analysis (NCPA).

"The federal government spends over $100 billion every year in tax subsidies for employer-provided health insurance, but people who are unemployed or who work for small businesses and must buy their own health insurance get no tax relief," said NCPA President John Goodman.

"We get what we subsidize," Goodman said at a Capitol Hill briefing. "Ninety percent of Americans who have private health insurance get it through their employers. People without tax-subsidized health insurance are encouraged to remain uninsured because of federal and state legislation that makes it increasingly easy to buy health insurance once they get sick."

NCPA health policy analysts today offered a tax credit plan that would guarantee all 10 million uninsured children, and possibly all of America's 40 million uninsured, equally subsidized access to health insurance.

"Since working Americans who have employer-provided insurance receive an average tax subsidy of about $500 per year, a reasonable proposal would be to offer a $500 per person tax credit to every uninsured person who purchases insurance, " Goodman said. The tax credit for middle-income families could be funded from the $500 child tax credit proposed by both Congress and President Clinton.

According to the NCPA, the $500 per child insurance tax credit plan for low-income families could be financed by modifying the use of funds already set aside for the Earned Income Tax Credit (EITC) program.

Under the NCPA proposal, people would get full benefits under these programs only if all family members were insured. For example:

  • To qualify for the full EITC refund, low-income families must have health insurance for everyone in the family.
  • If a family receiving EITC tax credits remains uninsured, the government would withhold $500 per person up to a maximum of $2,000 per household.
  • For those uninsured individuals who choose not to purchase health insurance, the government would divert the credit to state or local public health authorities to pay the unpaid medical bills of uninsured patients.

Currently, the Earned Income Tax Credit program spends about $25 billion in cash payments to about 17.2 million low-income families with about 22 million children. One- fourth of these children (about 5.2 million) lack health insurance.

Some recipients would still choose not to buy insurance, and would continue to rely on the emergency room for their primary care. For those uninsured individuals who choose not to use their tax credit to purchase health insurance, the government could divert the credit to state or local public health authorities.

"This proposal imposes a condition, not a mandate," said Merrill Matthews, NCPA Vice President of Domestic Policy. "If people aren't going to look out for themselves, we can't make them. But at least if they choose to be uninsured, they'll still be indirectly subsidizing the cost of their health care."

The Capitol Hill briefing also included GAO Senior Evaluator Sheila Avruch, Blue Cross of Western Pennsylvania Caring Foundation VP Charles Lavalle, Council for Affordable Health Insurance Executive Director David Lack, Heritage Foundation VP Stuart Butler, Eagle Forum President Phyllis Schlafly, Citizens for a Sound Economy VP Lydia Verheggen and CSE President Paul Beckner.