Reform #2 - Patient-Centered Tax Policy

If indeed a patient-centered Basic Health Plan combined with a private Health Savings Account can make American healthcare more effective and efficient, the question becomes, "How do we make this happen?" There are two groups of people we must consider:

1. Those with moderate to upper level incomes who need to purchase individual coverage.
2. Those of modest to lower incomes who do not receive employer based health insurance, cannot afford to purchase it, but earn to too much to qualify for other forms of assistance such as Medicaid.

THE PROBLEMS OF TODAY’S TAX POLICY

Problem One: The Current Tax Code Discourages Individual Policies

Currently, employers pay for employee health insurance with pre-tax dollars—dollars as counted before state and federal taxes are taken away. Individuals pay for insurance with a post-tax dollar—whatever money is left after taxes are deducted.

Depending on the amount of state tax and income bracket, employees may only keep 55 to 80 cents of each dollar earned. This makes it far more expensive for individuals to purchase private insurance.

Problem Two: Lower Income Workers Cannot Afford Coverage

Struggling to compete with overseas markets, businesses cut expenses whenever possible. Given the skyrocketing cost of healthcare, this is a key expense to avoid if possible. One way to avoid costly healthcare benefits is to use part time employment. Sadly, part time employees tend to be lower income, hourly workers—those least able to afford individual coverage.

For example, a single mother working 30 hours a week at $15 an hour earns less than $25,000 a year. She simply cannot afford private health insurance. Her choices? Quit work to collect Medicaid and food stamps or go without insurance. There is a better way.