[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

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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:

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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)
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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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