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If President George Bush’s proposed health tax credits become law, eligible Americans will see the average cost of individually purchased health insurance drop to $89 a month for singles and $84 a month for families, according to a new study by the Health Insurance Association of America (HIAA), an industry trade group.

“Anyone can buy a substandard health insurance policy.”

The savings would be so dramatic that “for many young Americans and their families, it would make individually purchased health insurance less expensive than cable TV,” says HIAA.

HIAA produced the study in response to opponents of the health insurance tax credit who claim that a tax credit of $1,000 per individual, or $3,000 per family, is not enough to cover the cost of individual health insurance.

HIAA asked 12 of its member health insurers to supply data on policies that were “in force” as of April 2002. The survey states that the average annual premium for a single individual health insurance policy is $2,070 — or $1,070 if the Bush tax credit is applied ($89 per month) — and $4,009 for a family individual health insurance policy — or $1,009 if the Bush tax credit is applied ($84 per month).

“Comprehensive health insurance must be accessible, affordable, and offer adequate coverage. You can’t have one without the others.”

Critics of HIAA’s study contend that these numbers are misleading because they reflect individuals who already have passed medical underwriting or have had their pre-existing medical conditions, such as high blood pressure or diabetes, excluded. Critics also fault the study for not examining the specific benefits covered by these individual policies.

“Anyone can buy a substandard health insurance policy,” says Karen Pollitz, a Georgetown University researcher who co-authored a 2001 study on the individual health insurance market for the Kaiser Family Foundation. “Comprehensive health insurance must be accessible, affordable, and offer adequate coverage. You can’t have one without the others.”

HIAA admits detailed information was not gathered on the benefits provided by these individual policies, including information on deductibles and co-payments. However, it says that more consumers in the individual market “choose to buy less coverage than is typical” in an employer-sponsored health insurance plan because of the “less favorable tax treatment” for individuals.

“We don’t claim this is going to eliminate the uninsured,” says HIAA spokesperson Joe Luchok. “But a health tax credit could help millions afford individual health insurance.”

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Penny Gusner


Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s.