Survey finds support for deductible health insurance

January 14, 1992|By Tom Bowman | Tom Bowman,Washington Bureau of The Sun

WASHINGTON -- Nearly one-third of the 35 million Americans without health insurance would buy coverage if they could deduct the costs from their federal taxes, according to a study released yesterday.

The study says 9.8 million Americans -- mostly self-employed or small business workers -- would purchase health insurance if federal tax policy were changed to allow them to deduct the entire amount of the costs, said the non-partisan group, Health Care Solutions for America.

At the same time, the study found that those who lack health insurance are mostly low-income families and minorities, who are much less likely to work for employers who provide health insurance.

"The real issue here is fairness," said Aaron Trippler, executive director of the group. "Current tax policy allows corporations to deduct the entire cost of health insurance for their employees, while individuals purchasing their own insurance are not allowed a deduction at all."

The group is proposing that taxpayers who do not receive coverage from their employers be allowed to deduct 100 percent of their health-insurance costs from their federal taxes.

Under existing law, the country's 12.4 million self-employed workers and their dependents are allowed to deduct 25 percent of the cost of their health insurance, a policy that will expire July 1, Mr. Trippler said. Even with this deduction, a quarter of those Americans are uninsured.

There are 40.2 million low- and middle-income Americans -- part-time workers, students and the unemployed -- who are not receiving employer-provided health insurance, the study said.

Officials with the group estimated that their plan would cost the federal government between $14 billion and $15 billion. But there would be a saving of about $6 billion from reduced costs to the government for uncompensated care -- the $19 billion paid each year by taxpayers and hospitals for care to uninsured Americans.

Therefore, as a result of those savings, the total cost to the federal government for the tax deduction would be between $8 billion and $9 billion.

The study was funded by a family foundation, the Rooney Foundation in Indiana; the Heartland Institute, an Illinois-based public policy group; and the Golden Rule Insurance Co. of Illinois, Mr. Trippler said.

A number of proposals on Capitol Hill would provide tax deductions for the purchase of health care, including a plan by Sen. Lloyd Bentsen, D-Texas, that would increase from 25 percent to 100 percent the tax deductions for the self-employed.

A proposal by Sen. John H. Chafee, R-R.I., would offer tax deductions for those who buy health insurance outside of an employer group or who are self-employed.

But Mr. Trippler said the group's proposal is more encompassing than those in Congress and would serve the "millions of others falling through the cracks," he said.

Still, one congressional aide involved in health care policy questioned the 9.8 million figure used by the group -- which Mr. Trippler said came from economists' projections.

The aide said he doubted that many uninsured would make an up-front purchase of health insurance and then wait for a tax deduction.

"It's not by any means a comprehensive solution," added Diane Rowland, an assistant professor of health care policy and management at Johns Hopkins University, who said that individual insurance plans are expensive and offer less coverage than group packages.

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