Tax Code and Health Insurance Coverage: Before the House Committee on the Budget

Publication Date: October 2007

Publisher: Tax Policy Center

Author(s): Leonard E. Burman

Research Area: Banking and finance

Keywords: Elderly; Health Insurance; Economy; Federal Budgets & Fiscal Policy

Type: Report

Abstract:

In this testimony Burman argues that there are limitations to using tax credits to expand health insurance coverage. A program of health insurance tax credits combined with reforms of the market for nongroup health insurance could significantly expand coverage, but at a very high cost. The testimony summarizes the current tax treatment of health insurance, the effects of tax subsidies on coverage and health care costs, and discusses ways that tax credits might affect health coverage. Burman offers recommendations and adds that the most cost-effective approach to expanding health insurance coverage may not be a tax subsidy at all, but an expansion of an existing public program, such as Medicaid, S-CHIP, or Medicare.