But the JCT, in its one page letter to Speaker Hastert, does not say that 26 million Americans would better be able to afford health insurance coverage.  The JCT letter says that 26 million Americans would take advantage of the tax break.  In fact, the JCT reports that almost all of the tax cuts (94%) would go to households that already have health insurance.  The JCT says that about 800,000 households (or 1.6 million individuals under JCT’s assumption that two persons are covered by each health insurance policy) who would benefit from the tax cut would be “new purchasers of health insurance.”

“Democrats agree with the Speaker that, ‘One of the real problems in health care today is access to affordable health insurance.’  But if the goal is to help the uninsured better afford health insurance then surely there is a more efficient way to do that than this tax break,” said Rep. Rangel.  

Under the plan proposed by the Republicans, deductions are taken off the top in figuring taxable income, so the value of a deduction rises as marginal income tax rates rise.  For a typical modest-income family that would become newly insured, the applicable tax rate is normally only 15%.  So on a $12,000 per year family insurance policy, the family might get a $1,800 tax break (or less if they owe less tax now under current law).

“This is another case of the Republicans using the uninsured as an excuse to give tax breaks to other groups, including the affluent who already have health insurance.  In fact, the value of the proposed tax deduction gets bigger the higher the income - even though the higher-income are less likely to need help buying health insurance,”  Congressman Rangel said.

The JCT also has estimated that when first fully phased in, the health insurance deduction would reduce revenues by $9.7 billion.  So the Republican leadership is proposing to use $9.7 billion a year to help 800,000 households without insurance.  

“It costs over $12,000 per newly insured household to deliver $1,800 or less to them in the form of a tax break for health insurance.  No wonder Republicans do not like tax breaks targeted toward America’s working families.  Their idea of a targeted tax cut almost totally misses the target with only a tiny benefit going to the uninsured people it is supposed to help,” said Rep. Rangel.