[Congressional Record Volume 146, Number 25 (Wednesday, March 8, 2000)]
[Extensions of Remarks]
[Pages E247-E248]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


  TAX CREDITS FOR THE UNINSURED DON'T WORK UNLESS YOU HAVE INSURANCE 
  MARKET REFORMS: CREDITS HELP THE YOUNG, DO LITTLE FOR OLDER WORKERS

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Wednesday, March 8, 2000

  Mr. STARK. Mr. Speaker, a lot of Members are talking about refundable 
and non-refundable tax credits to help the uninsured.
  Their bills don't work, unless they accompany the proposals with 
insurance reforms and make the tax credit adequate to help the 
uninsured who are, overwhelmingly, the nation's poor and near-poor.
  On January 27th, a number of Members announced their intention to 
introduce a bill to provide a refundable tax credit of $1,000 per 
individual and $2,000 per couple for use in the purchase of health 
insurance. It does not appear their bills will include insurance 
reform.
  As the attached tables show, that would be nice for a 25 year old 
individual or couple without children, and might help some 35 year 
olds, but after that, these tax credits mean less and less for people 
who are uninsured and middle aged.
  The credits would also have a tremendously different impact depending 
on where one lived. In the Los Angeles market, they would cover most of 
the cost of a younger person, but a much smaller percentage in Northern 
Virginia.
  The reason most people are uninsured is that they are low-income, 
working poor, who have to choose between keeping the car running so 
they can get to work, versus health insurance which they might need, 
but God willing, won't absolutely need. Unless the subsidy for the 
insurance is very high, individuals facing the need for food, fuel, and 
clothes for themselves and their kids will not buy health insurance. 
That's why these tax credit schemes will not work unless we cover 
almost all of the cost of a decent policy in an area.
  Second, the use of health insurance rises as one ages. That's why 
insurance for older workers is, of course, more costly. If the credit 
doesn't keep pace with that fact, or unless we move to community rated 
insurance reforms, the credits will not help people when they are most 
likely to need help.
  The Jeffords-Breaux proposal fails to do that, except for the very 
youngest in the very safest types of jobs.


                What does private health insurance cost?

  I asked my staff to conduct a brief study using health insurance 
quotes from the Internet. The results prove why tax credits without 
insurance reform are a waste of time. I urge Members interested in the 
tax credit approach to consider the types of reforms included in H.R. 
2185.

              Internet Sampling of Health Insurance Policy

       On average the American family is estimated to pay $5,700 
     for health insurance premiums, a large share of the income 
     that is needed to maintain the family household. In general, 
     a tax credit of only $2,000 will not be able to cover the 
     costs that a poor family will need to provide affordable 
     health care insurance. The survey conducted shows that both 
     of the tax credits, one for individuals and one for families, 
     falls short of eliminating the need for guaranteed health 
     coverage for the poor.
       In more than 90% of the survey, we found that the tax 
     credits would still leave each near poor individual or family 
     with a large balance left to pay. In Fairfax County a 25 year 
     old couple with 2 children after a $2,000 credit is still 
     left with a $1,400 bill to pay, while in Alachua County 
     (Gainesville) Florida the bill is almost $2,000. Even in 
     rural Colfax, Nebraska within the same age bracket, there is 
     still a balance that needs to be met. Couples without 
     children face the same problem in that the range of balances 
     run from full coverage for a 25 year old Nebraska couple to 
     an almost $500 balance for the same 25 year old couple in 
     Alachua County, Florida. For a single, 25 year old male 
     living in either Rural Nebraska or Fairfax, Virginia, the 
     $1,000 credit will cover his health coverage in full. 
     However, for men over the age of 35 and women of all ages (in 
     all four counties examined in this survey) the individual tax 
     credit leaves a range of balances from $32 (25 year old 
     female in California) to $3,570 (60 year old female in 
     Florida).
       As you get older, the price of health coverage steadily 
     increases. For example in Los Angeles, Calif. the yearly 
     premium rates that have been quoted for a 35 year old single 
     man have nearly doubled once the individual has reached the 
     age of 60 ($1,284 versus $2,184 per year). In the three 
     remaining counties, yearly rates have tripled on average from 
     $1,300 to $3,700 from age 35 to 60, respectively.
       In only six out of 120 scenarios mapped out (30 quotes for 
     each state) did this proposed tax credit eliminate the burden 
     of health costs. That means only 5% of the time did the tax 
     credit insure a poor individual or family. Given this data, 
     then these proposed tax credits will only guarantee help to 
     2.2 million of the 44 million uninsured Americans, not the 
     21.9 million that is being estimated by the drafters of this 
     bill.
       This survey was conducted using an Internet access program 
     called Quotesmith.com. Quotesmith generated quotes for health 
     insurance rates based upon the type of individual or family 
     entered. This survey looked at how much standard health 
     coverage would cost for individuals, couples, couples with 
     children, and retired persons around the country. The 
     criterion for the health insurance premium was a $250+nearest 
     deductible and any policy that pays 80% or more after the 
     deductible has been met. Note these are quotes off the 
     Internet. They are not actual purchases of policies, and do 
     not reflect any increases in rates caused by medical 
     underwriting. In many cases we can expect that the final 
     quote will be higher.
       Premiums were studied for individuals who lived in Fairfax 
     County, Virginia; Alachua County, Florida; Los Angeles 
     County, California; and rural Colfax County, Nebraska.

[[Page E248]]

     The occupations were that of a pilot, architect and retired 
     person, while the ages of the individuals ranged from 25 to 
     60 years of age.
       As stated earlier a $1000 tax credit for an older 
     individual is simply not enough. There is no way that such a 
     working poor individual can come close to affording private, 
     individual health insurance, without having to decide whether 
     to forgo basic needs.
       The $2,000 tax credit that this bill is proposing for 
     families is even more unrealistic. In not one instance does 
     this credit eliminate the problem of cost. The lowest rate 
     for a family with two children is $205 per month, while the 
     tax credit offers only $167 per month leaving a gap of about 
     $38 per month.
       What also becomes very apparent is the fact that as one 
     gets older the premium rates are rising. Therefore, a single 
     25 year old male can expect to spend about $100 a month on 
     health insurance, whereas a 60 year old man can expect to pay 
     about $250 a month or $3000 a year for his insurance! Once 
     again how can a tax credit of only $1000 provide any relief 
     for the near poor?


                        MEDICAL INSURANCE RATES

       The following medical insurance rates are based upon: $250 
     plus nearest deductible. After deductible, policy pays 80% or 
     better.
       The lowest rates available:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Architect male   Pilot female
                                                          Architect male   Pilot female       couple        couple w/2     Retired male    Retired male
                           Age                            single (month/  single (month/     (monthly/     kids (month/     non-smoker    smoker (month/
                                                              yearly)         yearly)         yearly)         yearly)     (month/yearly)      yearly)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    FAIRFAX, VIRGINIA
 
25......................................................        $79/$948     $174/$2,088      $95/$1,140     $280/$3,360        $79/$948     $102/$1,224
35......................................................       100/1,200       224/2,688       140/1,680       330/3,960       100/1,200       136/1,632
45......................................................       139/1,668       294/3,528       174/2,088       400/4,800       139/1,668       195/2,340
55......................................................       222/2,664       422/5,064       219/2,628       528/6,336       175/2,100       310/3,720
60......................................................       270/3,240       489/5,868       242/2,904       595/7,140       270/3,240       378/4,536
 
                                                                 LOS ANGELES, CALIFORNIA
 
25......................................................        82/1,032       174/2,088        86/1,104       269/3,228        86/1,104        86/1,104
35......................................................       107/1,284       204/2,448       107/1,284       335/4,020       107/1,284       107/1,284
45......................................................       131/1,572       255/3,060       131/1,572       384/4,608       131/1,572       131/1,572
55......................................................       161/1,932       299/3,588       161/1,932       416/4,992       161/1,932       161/1,932
60......................................................       182/2,184       338/4,056       182/2,184       437/5,244       182/2,184       182/2,184
 
                                                                    COLFAX, NEBRASKA
 
25......................................................          68/816       137/1,644        91/1,092       205/2,460          68/816          78/936
35......................................................        95/1,140       177/2,124       118/1,416       251/3,012        95/1,140       104/1,248
45......................................................       140/1,680       243/2,916       150/1,800       317/3,804       142/1,704       156/1,872
55......................................................       211/2,532       346/4,152       196/2,352       427/5,124       223/2,676       249/2,988
60......................................................       273/3,276       452/5,424       251/3,012       569/6,828       273/3,276       313/3,756
 
                                                                    ALACHUA, FLORIDA
 
25......................................................        97/1,164       207/2,484       130/1,560       331/3,972        97/1,164       105/1,260
35......................................................       130/1,560       276/3,312       162/1,944       408/4,896       130/1,560       131/1,572
45......................................................       192/2,304       390/4,680       214/2,568       521/6,252       192/2,304       192/2,304
55......................................................       307/3,684       597/7,164       299/3,588       701/8,412       307/3,684       307/3,684
60......................................................       381/4,572       697/8,364       346/4,152       829/9,948       381/4,572       388/4,656
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