AMA advocates mandatory insurance and a progressive health insurance tax on “rich” | AAPS News of the Day Blog

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In its new health reform policy, replacing Health Access America, the American Medical Association writes: “We also believe that individuals with high incomes have a responsibility to obtain coverage for themselves and their families.”

Persons with an income greater than 500% of federal poverty ($49,000 for an individual, $100,000 for a family of four) would face tax penalties for not obtaining acceptable coverage. This “responsibility” is distinguished from a mandate in that there would be no criminal penalties, notes the AMA Health Policy Group.

High-income persons, however, should not get an “unfair and inefficient” tax break. Instead of simply eliminating the tax exclusion or providing the same benefit for all, including those who individually own their policies, the AMA proposal would make health insurance purchase a form of progressive taxation, through refundable, advanceable, income-based tax credits.

“The AMA proposal would expand insurance coverage by redirecting the current health insurance subsidy from higher to lower income groups.”

For example, considering a family with income $50,000 and one with income $150,000, the “effective premium” for a $10,000 policy would go from $8,875 now to $4,000 for the first family, and from $7,900 to $10,000 for the second.

This means that if a family earns three times as much, it would have to pay 250% more for insurance.

Apparently, the AMA believes that everyone except the poor should have to spend an approximately equal proportion of income on health insurance. The coverage for the second family is “still a lower proportion of income” than spent by the first (6% vs. 7%).

The Health Policy Group does not comment on the fact that more than 15% of U.S. GDP is spent on medical care—or for the “responsibility,” enforced by criminal penalties, that high earners have for paying taxes to support public programs.

Other features of the AMA proposal: it “allows for the continuation of employment-based insurance in the private sector”; it does not allow the use of tax credits for out-of-pocket expenses, as this could reduce incentives to purchase insurance and encourage “excess” use of health services [emphasis added]. The latter would also help defeat rationing efforts by third parties.

The AMA states that it does favor encouraging individually owned insurance and a reduction in benefit mandates.

According to an Arizona Medical Association delegate, AMA officials are engaged in high-level meetings with Obama, Baucus, Daschle, and Kennedy.

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