CAHI Policy Brief: Achieving Tax Equity through Health Insurance Tax Credits 1

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1 CAHI Policy Brief: Achieving Tax Equity through Health Insurance Tax Credits 1 Volume 3, Number 5 April 20, S. West Street Suite 400 Alexandria, VA Phone: (703) Fax: (703) mail@cahi.org Introduction The inability of the American health care system to resolve the problems of health care costs, quality and access represents one of the most urgent problems facing our country. Federal tax policy has played a pivotal, if not intended, role in creating this cost, quality and access problem. Following Word War II, both tax and social policy encouraged employers to provide health benefits to their employees. At the time government viewed such benefits as non-inflationary. With a tax policy which made expenditures on health insurance deductible for the employer and tax-free to the employee, the United States experienced a growth of an employer-based health care financing system which resulted in most of the working population of the country covered by employer-provided plans. Since these plans typically provided full coverage with little or no employee participation in the cost (either through the premium or in deductibles), over time employees came to view health care as a right of employment and relatively cost free to them. As one would expect the demand for health services skyrocketed since neither the consumer or the provider worried about cost and simply sent the bill to the third-party payer. At the same time, another group of citizens who did not receive health benefits as a result ofemployment developed. These people had to purchase their health insurance with their after-tax income. While those in this group who itemize their deductions received some tax offset 2 for the premium they paid, over time that benefit has eroded making health insurance less affordable and thereby contributing to the growing population of the uninsured. 3 At least two problems clearly exist in tax policy as it relates to health insurance benefits: Published by the Council for Affordable Health Insurance (CAHI). All rights reserved. Duplication by any means without the express written consent of CAHI is prohibited. The current tax policy treats citizens unequally. Those who work for an employer that provides health benefits receive a substantial economic benefit from the government by having the amount their employer spends on providing their health benefit treated as untaxed income. Correspondingly, those people working for employers that do not provide health benefits must buy health insurance with their own after-tax income. Providing an unlimited tax exclusion for employer-provided health benefits has encouraged coverage beyond true insurance. These generous benefit plans have insulated employees from the consequences

2 April 20, 1999 Achieving Tax Equity through Health Insurance Tax Credits of their own health care decisions. This unlimited tax exclusion has encouraged over utilization of health care benefits and an indifference to cost by the employee since they typically pay a very small portion of the true cost making the United States the health care wastrel of the world. Since 1992, the Council for Affordable Health Insurance (CAHI) has researched the issue of tax equity. CAHI is an organization of companies and individuals who are involved with, and concerned about, our health care financing system and its ability to serve all segments of our population. CAHI is committed to the delivery of high quality, innovative health care and bringing it within reach of all citizens. CAHI s membership includes experts in the economies of the health care delivery and financing systems. After years of research, CAHI is convinced that the best approach to the problems in our health care system is to maximize the individual s freedom of choice and to promote a robust competitive market. CAHI was organized on the principle that when a public policy intended to solve a particular problem causes prices to exceed their natural or acceptable level, then that policy is flawed and alternative solutions are required. CAHI s suggestions and recommendations adhere to this principle. Tax equity is one approach that addresses an individual s freedom of choice and promotes a competitive marketplace. We examined the American health care system and believe that tax equity can be best achieved through a tax credit system. 4 However, a change in the tax law by itself is insufficient to maintain a viable health care system over the long-term. Other components of the health care system need to be addressed along with tax equity. Later in this paper, we explore the other health care system components that need addressing. How a Health Insurance Tax Credit Would Work Congress and various organizations are payiong a great deal of attention to tax credit proposals. Some appear to be political in nature and do not address the tax inequity of the health care system. Many proposals address only a portion of the population in order to expedite passage by the Congress. Certainly the political process is important, and we recognize the intent of such proposals, but it is even more important to look beyond what is politically expedient to find a more far-reaching soluton. CAHI belives the following criteria are necessary to achieve a sound health insurance tax credit system for the longterm: It must include the Medicaid population; It should be budget neutral; It should retain the employer-based health benefit system (i.e.; employer deductibility and exemption from payroll taxes); and It should provide the maximum benefit for the most people. Under a tax credit system, everyone would receive a tax credit based on income. Middle- and highincome individuals could purchase health insurance and receive a tax credit for the policy purchase. Low-income individuals could receive a voucher from the federal government based on their previous year s tax return. This voucher would enable individuals to purchase health insurance directly from an insurance company of the individual s choosing or through a state guaranteed access program. For employees who receive employer-provided health benefits, the value would be reported as taxable income to the employee and offset by the tax credit. Alternatively, employees could receive employer contributions to purchase health insurance, with the contribution reported and offset in the same manner. In neither case would the employer contributions be subject to payroll taxes. This additional taxable income most likely would be offset by the tax credit (see table 3). Page 2 Council for Affordable Health Insurance

3 Achieving Tax Equity through Health Insurance Tax Credits April 20, 1999 The health insurance individual tax credit values for the year 2000 are: Table 1: Tax Credit Values Income Per Person Tax Credit 5 Less than $6,500 $1,900 $6,500 to $14,500 $1,250 $14,500+ $750 These values for the year 2000 health insurance tax credit are conservative in our estimation and reflect the first full year after implementation of the law. We believe a new health insurance tax credit system would produce lower trends in future years than currently exist due to: Additional responsibility: individuals will now have more interaction with the purchase of their health benefits under a tax credit system; Removal of price controls under Medicaid will reduce cost shifting; and Removal of excess cost for people moving between uninsured and insured status, who are now continuously insured (we project that 50% of the currently uninsured will become insured under a health insurance tax credit system) 6. The tax credit values reflect those individuals that are healthy or are able to obtain private insurance. For those who are unable to qualify for private health insurance coverage, a state would set up a safety net called the Guaranteed Access Program. This safety net will assure that everyone will have access to quality, affordable health insurance. Such a safety net program would be similar to state run high-risk pools that are available in many states today. We expect the premium for an individual to be 150% of private market premiums or $3,150 per person on average. Therefore, those individuals who did not qualify for private health insurance coverage would receive an increase in the amount of 150% of the insurable individuals tax credit necessary to purchase coverage. 7 If a state chooses not to establish a Guaranteed Access Program, the federal government will enact enabling legislation to allow the insurance industry to implement a guaranteed access pool in that state. If the insurance industry chooses not to do it, the federal government will set up the Guaranteed Access Program for that state. The pool would be open to everyone, including selffunded employer plans. The funding for the statebased pools or a national guaranteed access pool should be broad-based. All insurance carriers that do business in the state, including stop-loss carriers, would be assessed the amount necessary to cover the costs in excess of premiums. Coverage in the pool would be guaranteed to new entrants and cannot be limited to current enrollees. The cost can be spread even further to include provider and bed taxes. It is important to note that we recognize that there could be increased costs associated with the guaranteed access program pools due to the increase in the amount of insure individuals in the pools. The long-term benefit of increasing the amount of insured people far outweighs the one to two percent increase in costs to the pool program and the insurance industry recognizes the social benefit of such a cost increase. We assume the following percentages of people in the three income categories are uninsurable and thus would be eligible for the guaranteed access program (if they purchased such insurance): Table 2: Estimated Uninsurable Population Income Level Population by Income Category Estimated to be Uninsurable (%) Less than $6, % $6,500 to $14, % $14, % SOURCE: SimuCare Although a percentage of the population would be considered uninsurable by today s health insurance industry standards, CAHI did not reflect Council for Affordable Health Insurance Page 3

4 April 20, 1999 Achieving Tax Equity through Health Insurance Tax Credits the health insurance tax credit by health status except as noted. When researching the different ways to achieve an equitable health insurance tax credit system, we examined various flat tax, income-graded tax, and also health status-graded tax credit proposals. We ran the information through SimuCare, the National Health Care Model developed by Milliman & Robertson, Inc., for the Council for Affordable Health Insurance. After careful examination, we concluded it was more equitable to link the tax credit with an individual s income status and enhance it by 150% for those individuals that could not qualify for private health insurance coverage. Today, this percentage amount is considered the average amount differential between a current state guaranteed access program or high-risk pool program and that of the private health insurance market. Table 3 is a comparison of value of the current health benefit tax exclusion and CAHI s proposed health care tax credit. This comparison examines both individual and family coverage. The purpose of the table is to express the tax benefits of current law in terms of a tax credit and to express the proposed tax credit in terms of current law. Below s an explanation of each column and what it represents: Current Tax Law Column One, Amount of Income Excluded From Taxes, is the amount of income excluded from taxation under current tax law. Column Two, Equivalent Tax Credit, is the value of the income exclusion from Column One expressed as a tax credit. Proposed Tax Credit Column Three, CAHI's Proposed Tax Credit, is the proposed tax credit. Column Four, Equivalent Amount of Income Excluded From Taxes, is the amount of income that would have to be excluded from taxation in order for the value of taxes saved (amount of income that would be included in income) to equal the proposed tax credit in Column Three. How the Health Insurance Tax Credit Could Work for both Individuals and Employers Although the tax credit would belong to the individual, in many cases it would be managed by the employer through the payroll-withholding system, as the employer currently does with other federal tax programs like Social Security and Medicare taxes. The employer would continue to deduct the employer plan premium as a normal business expense and offer the health insurance benefit to his employees. The employee, as long as he or she had health insurance, would continue to receive a payroll report reflecting the tax credit. With a health insurance tax credit in place, and everyone eligible to receive it, the value of employer-paid health benefits would be taxable income to the employee and reported on an employee s W-2 at the end of the year. This additional taxable income would most likely be offset by the tax credit, which would also be applied to the tax withholding formula. People without employer-provided health insurance would be able to obtain a tax credit on their own and would not have to wait until the end of the year to file their tax return to receive their tax credit. The tax credit could be provided automatically through either reduced withholding or estimated tax payments. For the unemployed person, who most likely would not file estimated taxes, perhaps monthly or quarterly refunds could enable them to continue their health insurance coverage. Additionally, the credit will be available to help those between jobs keep their coverage in force. No tax credit would be available to people covered by government programs such as Medicare, military health care, prisoners or Indian health care programs. Such a credit would be available if someone dropped out of one of these programs, or were no longer eligible. However, these programs could potentially use the same type of system. Page 4 Council for Affordable Health Insurance

5 Achieving Tax Equity through Health Insurance Tax Credits April 20, 1999 Table 3: Comparison of Current Tax Exclusion with Tax Credit Values Taxpayer Income Under Current Tax Law Amount of Income Excluded from Taxes Equivalent Tax Credit Individual Coverage (Annual premium value = $2,635) Under CAHI s Proposed Tax Credit CAHI s Equivalent Proposed Tax Amount of Credit Income Excluded from Taxes $0 to $6,500 $2,635 $202 $1,900 $24,837 $6,500 to $10,000 $2,635 $202 $1,250 $16,340 $10,000 to $14,500 $2,635 $383 $1,250 $8,591 $14,500 to $20,000 $2,635 $383 $750 $5,155 $20,000 to $30,000 $2,635 $581 $750 $3,401 $30,000 to $40,000 $2,635 $628 $750 $3,145 $40,000 to $50,000 $2,635 $676 $750 $2,924 $50,000 to $75,000 $2,635 $715 $750 $2,762 $75,000 to $100,000 $2,635 $750 $750 $2,636 $100,000 to $200,000 $2,635 $816 $750 $2,423 $200,000 and over $2,635 $997 $750 $1,982 Family Coverage (Annual premium value = $6,585. Family coverage is based on 3.2 people.) $0 to $6,500 $6,585 $504 $6,080 $79,477 $6,500 to $10,000 $6,585 $504 $4,000 $52,288 $10,000 to $14,500 $6,585 $958 $4,000 $27,491 $14,500 to $20,000 $6,585 $958 $2,400 $16,495 $20,000 to $30,000 $6,585 $1,452 $2,400 $10,884 $30,000 to $40,000 $6,585 $1,571 $2,400 $10,063 $40,000 to $50,000 $6,585 $1,689 $2,400 $9,357 $50,000 to $75,000 $6,585 $1,788 $2,400 $8,840 $75,000 to $100,000 $6,585 $1,873 $2,400 $8,436 $100,000 to $200,000 $6,585 $2,038 $2,400 $7,754 $200,000 and over $6,585 $2,492 $2,400 $6,341 Source: Based on projected national averages for the eyar 2000, and present law and analysis relating to individual effective marginal tax rates prepared by the staff of the Joint Committee on Taxation, February 3, Council for Affordable Health Insurance Page 5

6 April 20, 1999 Achieving Tax Equity through Health Insurance Tax Credits Impact of the Tax Credit on the Federal Government The tax credit would be relatively the same for everyone, therefore, the credit would be easy for the federal government to administer. There would be no complex formulas to figure out the tax credit. In addition, Medicaid for the noninstitutional population except for the duallyeligible Medicare population would be restructured into the tax credit system. Because the tax credit would be limited to premiums paid for health insurance, people would report the use of the credit on their individual income tax returns. The Internal Revenue Service would process the credit as they would any other tax benefit and treat it as part of its normal auditing process. In addition, the tax credit should be subject to annual cost of living adjustments. The tax credit values for the year 2000 are considered to be revenue neutral to the federal government because we have reallocated the current health benefit structure to a new tax credit system. This program should not add any additional administrative cost to the federal government because money spent to administer the tax credit system should at least be offset by the savings of not having to administer Medicaid for the noninstitutional population as noted above. Impact of the Tax Credit on Individuals and Employers A tax credit equalizes the tax treatment of health insurance across all types of health insurance coverage. Providing a tax credit to all Americans would allow consumers to chose the type of health plan that best meets their family s needs MSAs, indemnity plans, managed care plan arrangements, or guaranteed access pools. In other words, tax credits can help improve the number of health care choices available to people. While most people would gain under a tax credit system, some will not. Under the current health care system, employer-sponsored health insurance favors higher-wage earners over lower-wage earners. Those people with more extensive or Page 6 generous coverage are at an advantage. The uninsured and those who purchase their own coverage are excluded altogether. Under the new tax credit system, by leveling the playing field, some individuals may end up paying a little more under the credit system. The benefit is that all Americans would be included. Even though some people would see a slight reduction in their tax advantage, this new tax credit system would still be attractive to both employers and employees. Employers would still be able to hire and maintain good employees by providing health benefits and employees would still receive a tax credit to offset the taxable health benefit. Employers could continue to offer health insurance and be able to negotiate better deals for their employees. Those employees who are not satisfied with their employer coverage or who can find a better alternative elsewhere do not have to forfeit all tax advantages in order to purchase their own coverage. Tax Equity by Itself is not Enough Tax equity can be achieved most efficiently and fairly through a tax credit system. This system at the same time moves away from the current health care system. Allowing equal tax treatment through health insurance premium deductions will cost the federal government revenue whereas tax credits can be designed to have no revenue impact or decreased costs. A change in the tax law by itself, however, is insufficient to maintain a viable health care system over the long-term. A comprehensive approach to health care reform will address a variety of components of the health care system. Since its inception, CAHI has advocated its eight-point plan for reforming the health care system. We refer to these eight points as building blocks to affordable health insurance. If implemented, these building blocks would bring about a substantial reduction in the cost of health insurance: Increasing Personal Responsibility The lack of a meaningful financial interest on the part of consumers in their health care Council for Affordable Health Insurance

7 Achieving Tax Equity through Health Insurance Tax Credits April 20, 1999 purchasing decisions leads to inappropriate and frequently excessive utilization of services. When the individual has a stake in the cost of his or her care, more responsible use occurs. Mechanisms such as medical savings accounts (MSAs) would facilitate this. 8 Providing Guaranteed Access / Continuous Coverage Everyone should have access to health insurance, along with the opportunity to maintain continuous coverage. Proper incentives can encourage people to purchase and maintain health insurance coverage. Those who choose not to provide for their health care needs should be subject to reasonable consequences. Guaranteed access to health insurance would involve a guaranteed access health insurance pool. Allowing Appropriate Pricing Insurance regulation at the state level restricts premium pricing. Appropriate pricing strikes a balance between the premium charged and the person s level of risk, but still includes significant cross-subsidization. A system of appropriate pricing not only would encourage healthy people to enter and remain in the system, but would also keep costs more constant. Enacting Sensible Liability and Responsibility Laws Medical malpractice liability laws should provide adequate compensation for those who are truly injured while discouraging frivolous lawsuits and extraordinary damage awards. Today s arrangement leads to a lottery mentality causing many unnecessary lawsuits and inflating the cost of health care for all. Increasing Disclosure Patients should be knowledgeable about the benefits and financing arrangements of their health care plans, so they can make informed decisions. Informed consumers are empowered to seek products that best suit their needs. Allowing Consumers to Purchase Policies Without Mandated Benefits States have imposed over 1,000 mandated benefits requiring people to buy specific types of protection whether or not they want or need it. Mandates, collectively, often can increase premiums by 30% or more. 9 Mandated benefits strictly limit health insurance flexibility and innovation that could lead to policies that better fit peoples needs and finances. These laws exclude those who prefer to practice personal responsibility and insure themselves only against financially ruinous events. Providing All Americans with the Same Tax Treatment for Health Benefits Under a tax credit system, everyone would receive a tax credit based on income. Middleand high-income individuals could purchase health insurance and receive a tax credit for the policy purchase. Low-income individuals could receive a voucher from the federal government based on their previous year s tax return. This voucher would enable individuals to purchase health insurance directly from an insurance company of the individual s choosing or through a state guaranteed access program. For employees who receive employer-provided health benefits, the value would be reported as taxable income to the employee and offset by the tax credit. Alternatively, employees could receive employer contributions to purchase health insurance, with the contribution reported and offset in the same manner. In neither case would the employer contributions be subject to payroll taxes. Increasing Consumer Education Consumers deserve more education about their benefits, the cost of health care and the Council for Affordable Health Insurance Page 7

8 April 20, 1999 Achieving Tax Equity through Health Insurance Tax Credits health care system itself. Well-informed consumers make better health care decisions. Conclusion A health insurance tax credit is fair and simple national health care reform. As Congress moves towards "a flatter, fairer, simpler tax system," the goal is to eliminate many of the loopholes and regulations that besiege this nation s health and tax systems. Furthermore, it is across the board tax equity, easy to calculate and simple to administer for everyone. Federal tax equity along with the above detailed building blocks would strengthen and revitalize the American health care system for all Americans. Bibliography Copeland, Craig. Employee Benefits Research Institute (EBRI). Characteristics of the Nonelderly with Selected Sources of Health Insurance and Lengths of Uninsured Spells. Issue Brief Number 198, June Cumulative Changes in the Internal Revenue Code of 1939 and Regulations under the Code. Section 23, Prentice-Hall, Inc., Cumulative Changes in the Internal Revenue Code of 1954 and Regulations under the Code. Section 213, Prentice-Hall, Inc., Fuchs, Beth, et al. Taxation of Employer-Provided Health Benefits, Congressional Research Service Report for Congress, October 2, Gavora, Carrie, J. The Heritage Foundation. Back to the Drawing Board: Why Tax Reform is the Key to Health Care Reform, Backgrounder Executive Summary No. 1189, June 9, General Explanation of the Revenue Provisions of the Tax Equity and Fiscal Responsibility Act of 1982 Public Law Joint Committee on Taxation, December 31, General Explanation of the Tax Reform Act of 1986 Public Law Joint Committee on Taxation, May 4, Goodman, John C. and Matthews Merrill, Jr. National Center for Policy Analysis. Health Plan for the GOP. Brief Analysis No. 263, April 29, Health Care Financing Administration, Office of the Actuary, National Health Statistics Group. Go to stats/nhe-oact/nhe.htm. Health Care Solutions for America. Federal Tax Policy and the Uninsured, January, Health Care Financing Review, Fall Health Insurance Association of America (HIAA). Source Book of Health Insurance Data, Joint Committee on Taxation. Present Law and Analysis Relating to Individual Effective Marginal Tax Rates prepared by the staff of the Joint Committee on Taxation, February 3, Noto, Nonna. Tax Expenditures for Health Care, Congressional Research Service Report for Congress, January 1, Noto, Nonna. Tax Issues Related to Health Insurance Reform, Congressional Research Service Report for Congress, January 1, Statistical Abstract of the United States Milliman & Robertson, Inc., Health Cost Guidelines. SimuCare, the National Health Care Model Developed by Milliman & Robertson, Inc., for the Council for Affordable Health Insurance. Page 8 Council for Affordable Health Insurance

9 Achieving Tax Equity through Health Insurance Tax Credits April 20, 1999 Footnotes 1 This paper is the result of the collaborative efforts of the following people: Victoria Craig Bunce; Peter G. Hendee, FSA, MAAA, FLMI; David E. Lack, MA, FLMI; Mark E. Litow, FSA, MAAA; with members of the Research and Policy Committee of the Council for Affordable Health Insurance: Michael S. Abroe, FSA, MAAA; Jeff Burman; Bill Dowden; Lawrence D. Fisher, FSA, MAAA; William H. Odell, FSA, MAAA; Martha Spenny, ASA, MAAA; Kendall Surfass, JD; Rod Turner, FSA, MAAA; and John M. Whelan. 2 Federal Tax Equity: Increasing Health Care Choices And Reducing the Number of Uninsured Through Tax Credits, CAHI Issue Brief, January Current tax law only permits such a deduction if expenses exceed 7.5% of adjusted gross income. 3 According to the 1997 Employee Benefits Research Institute (EBRI) data, there are 41.4 million uninsured. Studies show that this figure is a snapshot of the population with spells of being uninsured, as people move on and off group coverage or have other circumstances that change their insurance status. Approximately 25% or 10 million individuals are chronically uninsured. U.S. Commerce Department s Census Bureau released a report September 28, 1998 that estimated 43.4 million people in the U.S. had no health insurance coverage in Federal Tax Equity: Increasing Health Care Choices And Reducing the Number of Uninsured Through Tax Credits, CAHI Issue Brief, January Cahi proposes a per person tax credit for each adult and each child in a family. 6 Our research shows that people with continuous insurance protection have lower costs over a period of time than do people who go back and forth between periods with and without insurance. The reason costs are lower is that people without insurance generally utilize only 50% to 70% of the average services relative to people with continuous insurance. On the other hand, people who obtain insurance on a guaranteed issue basis after a period without insurance, often utilize services at 180% to 200% of the average. Since many of the uninsured move from uninsured status to insured status as their needs change, the average cost for these people is greater than that of continuously insured people. Based on the assumption that the group of people moving between periods with and without insurance is 25% of the total population, the reduction in cost due to keeping these people continuously covered would be just over 6% (25% of the population has a 25% higher average cost which when spread over the entire populatio, raises costs by 6%).The same could be said for the Medicaid population as well. With the Medicaid population, recipients move in and out of the Medicaid program quite frequently. By allowing Medicaid recipients to become continuously insured through a tax credit program, the inefficiencies and costs of the system would be greatly reduced. For more information please see CAHI s issue brief, Putting People First in Health Care: Building Blocks to Affordable Health Insurance, August Table 4 compares the current health care tax exclusion to CAHI s proposed tax credit for the uninsurable population. Note that the annual premium values are based on projected national averages for the year CAHI has produced numerous publications on MSAs. These include a comprehensive issue brief: Medical Savings Accounts: Questions and Answers (May 1996); and policy briefs: KidCare and MSAs: A Healthy Alternative to Medicaid (Vol. 2 # 4, 5/1/98); What is Section 213d of the Internal Revenue Code and How Does it Relate to Medical Savings Accounts? (Vol. 2 #6, 7/1/98); and Snapshot: What are MSAs? (Vol. 2 #7, 7/1/98). 9 Council for Affordable Health Insurance. Putting People First in Health Care: Building Blocks to Affordable Health Insurance, August Council for Affordable Health Insurance Page 9

10 April 20, 1999 Achieving Tax Equity through Health Insurance Tax Credits Table 4: Comparison of Current Tax Exclusion with Tax Credit Values for Medically Uninsurable Taxpayer Income Under Current Tax Law Amount of Income Excluded from Taxes Equivalent Tax Credit Under CAHI s Proposed Tax Credit CAHI s Proposed Tax Credit with 150% Increase for the Uninsurable Amount of Income Excluded from Taxes Individual Coverage -- Annual premium value = $2, CAHI proposes a 150% increase for those medically uninsurable. $0 to $6,500 $2,635 $202 $2,850 $37,255 $6,500 to $10,000 $2,635 $202 $1,875 $24,510 $10,000 to $14,500 $2,635 $383 $1,875 $12,887 $14,500 to $20,000 $2,635 $383 $1,125 $7,732 $20,000 to $30,000 $2,635 $581 $1,125 $5,102 $30,000 to $40,000 $2,635 $628 $1,125 $4,717 $40,000 to $50,000 $2,635 $676 $1,125 $4,386 $50,000 to $75,000 $2,635 $715 $1,125 $4,144 $75,000 to $100,000 $2,635 $750 $1,125 $3,954 $100,000 to $200,000 $2,635 $816 $1,125 $3,635 $200,000 and over $2,635 $997 $1,125 $2,972 Family Coverage Annual premium value = $6, Family coverage is based on 3.2 people. CAHI would allow a 150% increase for the medically uninsurable. $0 to $6,500 $6,585 $504 $9,120 $119,216 $6,500 to $10,000 $6,585 $504 $6,000 $78,431 $10,000 to $14,500 $6,585 $958 $6,000 $41,237 $14,500 to $20,000 $6,585 $958 $3,600 $24,742 $20,000 to $30,000 $6,585 $1,452 $3,600 $16,327 $30,000 to $40,000 $6,585 $1,571 $3,600 $15,094 $40,000 to $50,000 $6,585 $1,689 $3,600 $14,035 $50,000 to $75,000 $6,585 $1,788 $3,600 $13,260 $75,000 to $100,000 $6,585 $1,873 $3,600 $12,654 $100,000 to $200,000 $6,585 $2,038 $3,600 $11,632 $200,000 and over $6,585 $2,492 $3,600 $9,511 Source: Based on projected national averages for the eyar 2000, and present law and analysis relating to individual effective marginal tax rates prepared by the staff of the Joint Committee on Taxation, February 3, Page 10 Council for Affordable Health Insurance