Consumers Union opposes the tax changes that were defeated. If this issue should be considered again in the Senate Finance Committee, we urge you to design changes in a manner that makes health care affordable to consumers, and that targets relief to those families who are most heavily burdened with health care expenditures. We believe that making health insurance affordable to all American consumers is critical. But affordability will not be achieved simply by providing a tax deduction.
Employment based policies serve the function of spreading the costs among the healthy and the sick.
For health insurance to be affordable in the individual market, the risk-spreading function performed by employers is needed. Premiums for the sick should be the same as the premiums for the healthy. We urge you to consider the experience of states such as New Jersey and New York, which have regulated premiums with a view toward affordability of coverage to the sick. Provide individuals with a tax credit instead of a tax deduction so that those most in need, the working poor, can buy coverage. In order to have the biggest impact on affordability of coverage for the working poor, the tax benefit should be structured so that it is higher, not lower, at lower income levels.