Idea of the Day: Tax Credits and Health Care Reform

Tax credits are one of the mechanisms that cut across the political spectrum. Progressives and conservatives both have talked about their use. From the progressive point of view, tax credits are used in conjunction with strengthening both public and private health insurance through expansion of Medicaid and the State Children’s Health Insurance Program, two very effective programs. The tax credits are also designed as subsidies that would limit premiums to a given percentage of income to truly help ensure that health care is affordable.

In contrast, conservatives focus on tax credits to the exclusion of other types of expansion. Also, instead of focusing on limiting the cost of the premium to individuals, the tax credit is typically fixed and unrelated to the cost of insurance—leaving individuals to cover the cost left over by the credit. Tax credits must be a sufficient size to make insurance affordable for them to even be considered as an approach.

For more information on this topic, please see:

• America's Need for Health Reform by Elizabeth Edwards