Myth Buster 101, Pt.4 – (2) Will tax credit get it?
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2) “Myth: The federal government should
provide a flat tax credit for all Americans who buy insurance,
with no qualifying restrictions.”
“Truth: A badly designed tax credit plan could actually
cause costs to rise for most families and increase the number
of uninsured by ignoring low-income and high-risk individuals.”
There are several problems with this approach. As Mr.
Kazanjian explains, a flat tax assumes ceteras parabus (all
other things being equal). This is an extreme oversight.
- Just one health insurance annual premium can range
from $2,000 to over $60,000 per year.
- Because extreme income disparities can range from
$0.00 to $300,000,000 per year, 10’s of millions would still
be without health insurance.
- Because of extreme differences in need, some would
not be effected by not having health insurance, while 10’s
of thousands would be dying.
- Because so many low income households would be
without health insurance, ‘free-riding’ (as Mr. Romney calls
it) would be rampant. ‘Free-riding’ happens when people with
no health insurance, little money and nowhere else to go,
show up at the ER for required treatment. The loss to
medical providers is in the ten’s of billions of dollars.
- Those without work or with insufficient wages to owe the
flat amount in taxes may get little, or no credit at all.
As to denying employer-based insurance incentives, the
experts at the ‘Center’ have determined that the numbers of
those without health insurance would, almost certainly,
dramatically increase. Neither will this drive down the cost of
private health insurance, as the demand curve will move up,
fixing the supply curve intersect at a much higher elastic cost
(as do fuel costs now. People will be in greater need for new
policies, with no few good alternatives). Remember, the
low-cost risk-sharing pools are going away. The summary offered
by the ‘Center’ is “Encouraging tax equity over these other
important considerations will do little more than create a
larger uninsured population.”
Continued…
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