CHICAGO – Bolstered by a new study, the American Medical Association (AMA) reaffirmed its support for using tax credits to expand health insurance coverage to more Americans and increase individual choice of health plans. AMA delegates endorsed the move decisively Tuesday at its Annual Meeting.

The study conducted by the AMA’s Center for Health Policy Research shows that tax credits, in combination with increased enrollment of those uninsured who are eligible for Medicaid and the State Children’s Health Insurance Program, could result in insurance coverage of up to 95 percent of the U.S. population. Achieving that goal would require an additional $30 to $60 billion in federal spending, according to the study.

“This level of coverage compares favorably to other industrialized countries that have achieved so-called ‘universal’ coverage,” J. Edward Hill, M.D., AMA trustee said. “Any proposal that gets us close to universal coverage is going to cost money, and the tax credit approach measures up in terms of expanding coverage and choice at a reasonable cost.”

Since 1993, the AMA has advocated replacing the existing tax exclusion for employer-provided health insurance with refundable tax credits to individuals. Individuals would receive tax credits for use toward the purchase of health insurance whether the insurance is bought through an employer or elsewhere. The current tax structure is widely considered unfair because it subsidizes health insurance only for those who obtain insurance through an employer, and because those with higher incomes generally receive larger subsidies.

Health insurance tax credits are gaining bipartisan political support as well as serious attention from policy analysts. In the last year, at least six congressional proposals have called for refundable tax credits.

“We have a window of opportunity to put patients in the driver’s seat, letting them choose health insurance that best meets their needs,” Dr. Hill said. “Tax credits can also improve fairness by channeling more of the subsidies to those with lower incomes.”

The estimated impact of five different tax credit scenarios are presented in “Principles for Structuring Health Insurance Tax Credits,” a report of the AMA Council on Medical Service. The report also includes nine principles for structuring health insurance tax credits.

Find more information about the AMA proposal for health insurance reform.

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