ALEXANDRIA, VA – Today, First Focus released a report by health care expert Stan Dorn that finds that the tax proposals put forth by the president would place at risk employer-based health coverage for children and families, because it significantly underfunds family coverage in comparison to individual coverage.

The report says that if enacted, the proposals could place dependent children and families at risk of coverage loses and reduced benefits.

“The President claims he can cover all uninsured children without increasing federal spending. Common sense says that’s too good to be true – and today’s report confirms that ideological health reform, done on the cheap, helps hardly any insured while endangering coverage for millions of American families,” said Bruce Lesley, President First Focus, a bipartisan children’s advocacy organization. “It is ironic that, in a debate that is supposed to be about children’s health insurance, the president has proposed an alternative that would take away subsidies from one group above all others: children.”

“The Bush Administration’s tax proposals would put dependent children and families at risk, potentially facing coverage losses and reduced benefits,” said The Urban Institute’s Stan Dorn, who researched and wrote the report. “While less than three percent of the uninsured would use the proposed tax subsidies to purchase health coverage, the proposal, which the Administration rightly calls ‘revolutionary,’ would erode the employer-sponsored insurance system on which 60 percent of all Americans depend.”

The paper provides a detailed analysis of the current proposal, and finds:

  • The Administration’s proposed tax subsidies would be too small to make coverage affordable for low-wage workers and their families. The report finds that no more than 3 percent of uninsured Americans would use such subsidies to buy health coverage.
  • The Bush tax credit would pay only 33 percent of premiums for average family coverage, but 49 percent for average worker-only employer-sponsored insurance (ESI). As a result, enrollment would likely be lower for dependent (i.e., children) coverage than for individuals, resulting in a disproportionately large share of the uninsured being children and adult dependents. The near-elderly and the chronically ill would likewise be overrepresented among the uninsured, because the Administration’s proposals use the kind of health plans that can charge substantially more and deny benefits to people with health problems.
  • In 2009, the Administration’s proposed deduction would exceed average family premiums by only 9 percent, which indicates that the deduction will not cover the cost of numerous family policies that have premiums modestly above the national average. By contrast, the deduction will exceed average coverage for single adults by 48 percent, so very little worker-only coverage will have premiums higher than the deduction. By 2013, average family coverage will be more costly than the deduction, but this will not happen to worker-only insurance for the foreseeable future.