First I'll briefly touch on problems of the individual, like I mentioned, a key issue facing a stand-alone tax credit policy. Next I'll discuss how purchasing pools use large employers as their role model in the hopes of gaining the same advantages. Then I'll discuss some of the issues for linking tax credits to purchasing pools. And finally, I'll wrap up with a score card for you to use when assessing the various approaches and their implications. Although bipartisan support is growing for tax credits for the uninsured, some question whether this would work without reforms to the individual market.
Individuals buying health insurance have little bargaining clout.
Overhead costs are higher, and older and sicker people have trouble obtaining and affording individual policies. On the other hand, a large employer brings together a diverse group of people, including both the sicker and healthier workers, young and old. The large employer pools these risks to workers pay the same amount regardless of their individual risk. In addition, large employers have bargaining clout. They standardize benefits, allowing comparison by price, and they gain efficiencies by coordinating enrollment and providing other administrative functions.