Overview

The number of Americans without health insurance is near an all-time high, and various legislative proposals in Congress over the past few years have made little headway in reducing the number or uninsured. Now, congressional Democrats and Republicans, as well as the Bush administration, are sponsoring legislation that would allow individuals to receive tax credits toward buying health insurance. This paper addresses the affordability of individual coverage under such a system of tax credits. First, we compare group and individual insurance premium costs in 16 metropolitan areas and one rural area in the United States for individual plans that are roughly comparable to average benefits in the employer group market. Second, we assess the affordability of individual insurance premiums for two age groups—males and females ages 27 and 55 with no preexisting medical conditions whose annual income is 200 percent of the poverty threshold. We look at premiums relative to incomes assuming these individuals receive a $1,500 tax credit. About two-thirds of those presently uninsured are from families with incomes at less than 200 percent of the poverty level. We drew data for the group market rates from average rates