Health Savings Account Blog

Author Roger Feldman and his colleagues examined the effect of three simulations: a refundable tax credit of up to 90 percent of insurance premiums, a 75 percent HSA subsidy for low-income individuals, and a full subsidy for those unemployed, regardless of income. The results:

- Bush's tax credit proposal would reduce the number of uninsured by 10.7 percent at a cost of about $8.1 billion; it would also increase the number of people who turn down employer-sponsored insurance, but would only affect 1 percent of the employer-offered market.

- The buy-in subsidy would reduce the number of uninsured by 16.5 percent, at a cost of about $10.8 billion for those who are uninsured, and $1.4 billion for those who turn down employer-sponsored health insurance.

- A full subsidy would reduce number of uninsured by 47 percent, however, it would cost an estimated $52.3 billion for those previously uninsured, and $16.9 billion for those who turn down employer-sponsored health insurance.

- A full subsidy for the unemployed would prevent the erosion of the employer-sponsored health insurance market and would reduce the number of uninsured even more than the Bush administration's proposal, but it would cost more -- about $11.2 billion.

In conclusion, the Bush administration's tax credit proposal would double individual Health Savings Account take-up and reduce the number of uninsured by about 2.9 million people, at a cost of about $8.1 billion annually.