Are tax credits the best way to cover the uninsured? No.(Pro & Con)

Tax credits are not the best way to cover the uninsured. The goal of reform should be to provide comprehensive, but affordable, coverage for everyone. Tax credits fall short on these goals.

Tax credit proposals are designed to provide financial assistance for the purchase of private health plans that are becoming less and less affordable. The problem is that private plans are an expensive, inequitable, and administratively inefficient method of funding health care. They waste resources on their own administrative excesses and especially through the tremendous administrative burden that they place on the health care delivery system. And since tax credits do not cover the entire premium, many people still will be left without coverage simply because they cannot fund their portion.

Studies have shown that tax credits for individual plans would have only a very minimal impact on the numbers of the uninsured since uptake of the plans would be mostly offset by the incentives for employers to drop coverage for their employees. As the amount of the credit increases, the rate of termination of employer-sponsored plans also increases. Shifting employees to the individual market is a problem because premiums are higher for comparable coverage, benefits are lower, and cost sharing is greater. Those with the greatest need for coverage may be excluded from the individual market because of preexisting disorders.

Other studies have demonstrated that using tax policies to assist with the purchase of group plans is the most expensive method of expanding coverage Large employers and government pur ...