A bipartisan consensus favors public policy initiatives to expand health insurance coverage. This paper summarizes new CPS data on health insurance coverage for the nonelderly and discusses the issues involved in subsidizing health insurance. We outline a tax credit option designed to diminish many health insurance market flaws. A simple model illustrates that the Administrations recent proposal for tax credits for nongroup insurance alone is equivalent to a general insurance tax credit (our preferred option) with a tax on ESI. Thus, it runs the risk of doing harm - undermining the insurance that currently covers most nonelderly Americans.
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