Overview

A health insurance tax credit could help many people who cannot afford to purchase coverage. However, even with these subsidies, many of the uninsured would probably still find non-group private insurance too expensive. Many would also find the complexities of the individual market and its myriad insurance products bewildering. Private purchasing pools for tax-credit recipients could address these problems by providing individual purchasers with many of the advantages of a group market, such as relatively low administrative costs, no health rating and professional purchasing expertise.

Insurance purchased through pools should cost 5 percent to 10 percent less than private, non-group insurance. Unlike many employer plans, however, purchasing pools will allow individuals to choose among several health plans. All tax-credit recipients would be required to purchase coverage through private purchasing pools. This requirement is necessary to ensure that the pools become large enough to operate efficiently and offer their members the advantages of group purchasing. Individual purchasers who were not eligible for tax credits, and firms with 50 or fewer employees could also join the pools. Income-eligible workers in small firms with a majority of low-wage workers would be eligible for the full amount of the tax credit for coverage purchased through a pool, whether or not their employer paid any part of their premium.

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