HEALTH CARE IMPROVEMENTS
May 24, 2002 - WAR REPORT NUMBER 21-2002
This is the first in a series of WAR Reports adapted from a report by the Council for Affordable Health Insurance (CAHI) titled, "Helping the Uninsured Who Need it Most." The report was included in the Council's Issues & Answers publication dated March 2002.

Since September 11, it is estimated that 1 million people will loose their health insurance in 2002. In addition, premiums are increasing by an average of 15 percent, but many individuals and businesses are seeing increases of 30 to 40 percent. This is causing both Congress and state legislatures to look for solutions. According to Mark Litow, an actuary and principle of the actuarial firm Milliman USA, in association with CAHI, has addressed that problem. The team has determined that tax subsidies can be structured to meet the needs of both low-income and the hard-to-insure population.

The United States has an employer-based system for health insurance. About 90 percent of those under 65 years of age obtain their health insurance from their employers. The other 10 percent purchase health insurance on their own in what is referred to as the "individual market," the same way people buy groceries, clothes, automobiles, computers, homes, and other items.

Our employer-based health insurance system evolved over the years from World War II and incorporated our tax code after the war. Employees don't pay taxes on the money spent by employers on health insurance. However, while the self-employed can take a tax deduction for health insurance, those who work for employers who do not provide health coverage must buy their own with after-tax dollars. Unfortunately, these people tend to be lower-income workers who find it difficult to afford health insurance.

Consequently, there is a growing bipartisan consensus for providing a health insurance tax credit -- which is deducted directly from the amount of taxes owed -- as the fairest and most efficient way to provide a tax break to workers who purchase their own policies. Under most proposals, people would get the credit even if they paid no income taxes. More next week.

Stay tuned! Why? Because I tell it like it is and it's your money.

God Bless America.