President Greatly Reduced His Health Proposals For Lower-Income Families While Expanding Health Benefits For The More Affluent
End Notes
[1] All numbers for last year’s budget are adjusted to be comparable to the 2007-16 budget window and the assumption that the proposals are enacted in 2006. Last year’s budget reported that its health tax cuts would cost $125 billion from 2006-15.
[2] This breakout does not include a $23 billion proposal that the President included in last year’s budget, but not in this year’s budget, to provide tax credits to small businesses that contribute to HSAs. That proposal appears to have been neither disproportionately geared to high-income families nor targeted to low- and moderate-income families.
[3] Last year’s budget put the cost of the proposed premium deduction at $28.5 billion from 2006-15.
[4] Last year’s budget put the cost of its proposed tax credit at $74 billion from 2006-15.
[5] Another measure of the benefits of the tax proposals to low- and moderate-income households is the portion of those proposals that would be provided in the form of refundable credits for people with incomes too low to owe income tax. The total amount of tax credits that would be provided in the form of a refund fell from $73 billion in the Administration’s budget of a year ago to $20 billion in this year’s budget. These totals include the refunded portion of all tax credits that the Administration is proposing, including the HSA tax credits. (These figures exclude the portion of the low- and moderate-income tax credits that would not take the form of a refunded credit but instead would reduce regular income taxes.)
[6] In 2001, the President proposed a maximum credit of $1,000 for an individual and $2,000 for a family.
[7] Kaiser Family Foundation, Employer Health Benefits 2005 Annual Survey, 2005.
[8] For an analysis of refundable health insurance tax credit proposals included in previous Administration budgets, see Edwin Park, “Administration’s Proposed Tax Credit for the Purchase of Health Insurance Could Weaken Employer-Based Health Insurance,” Center on Budget and Policy Priorities, revised April 6, 2004.
[9] For more details, see Edwin Park and Jason Furman, “President’s Health Tax Cut Proposals Are Likely to Weaken Employer-based Health Insurance, Primarily Benefit High-income People, And Worsen Deficits,” Center on Budget and Policy Priorities, January 31, 2006 and Jason Furman, “Expansion in HSA Tax Breaks is Larger – and More Problematic – than Generally Understood,” Center on Budget and Policy Priorities, February 4, 2006.