FROM THE OFFICE OF PUBLIC AFFAIRS

Today the Commerce Department痴 Census Bureau reported that the number of people with health insurance rose by 1.2 million between 2000 and 2001, to 240.9 million, but at the same time the number of uninsured rose by 1.4 million to 41.2 million.  Treasury Secretary Paul O誰eill made the following statement:

的t is encouraging news that the number of people with health insurance rose by 1.2 million, but far too many people still lack access to health insurance. The Administration has been working to make sure that all Americans have access to health care coverage, and employers help to provide affordable health insurance to their employees. The President has included in his budget a proposal for a refundable tax credit for the cost of health insurance that is widely available to assist those who do not have good employer coverage options. We are currently working to implement a similar tax credit for displaced workers that will help them get health insurance, and we hope this is a basis for further expansion. Along with other initiatives to increase access to health insurance, the Administration has also been working on ways to make health care more affordable by dramatically reducing medical errors and improving the quality of care. We will continue to be tireless in our efforts," stated Treasury secretary Paul O誰eill.

Recent actions to increase access to health insurance, help employers provide affordable health care and improve medical savings include:

TAA Health Credit

The President recently signed into law the Trade Act of 2002. This legislation includes a provision that allows displaced workers eligible for trade adjustment assistance to qualify for a 65% refundable, advanceable health insurance tax credit. The credit is also available to workers between 55-64 if their pension plans are being administered by the Pension Benefit Guaranty Corporation. Treasury is currently working to implement this program.

Health Reimbursement Arrangement Guidance

In June, we issued guidance that clarifies the tax treatment of health reimbursement arrangements (HRAs) in which the employee痴 health benefit arrangement provides for employee-controlled reimbursement of medical costs. This guidance clears the way for employers to adopt health plans with patient-directed features so that employees have more choice and greater control over their health care coverage.

Archer Medical Savings Accounts (MSA) Pilot Program Extended

The Job Creation and Worker Assistance Act, which the President signed into law last March, included a provision to extend the Archer Medical Savings Account program for another year, until December 31, 2003. An MSA is an account that is established in connection with a high deductible health insurance plan sponsored by a small employer to help pay for medical expenses.

Proposed  Health Insurance Tax Credit

This Budget proposal would create a refundable and advanceable income tax credit for the cost of health insurance purchased by individuals under age 65. The credit would provide a subsidy for a percentage of the health insurance premium, up to a maximum credit of $1,000 per adult and $500 per child, up to two children. A two-parent family with two children would be eligible for a maximum credit of $3,000. The maximum subsidy percentage would be 90 percent for low-income taxpayers and would phase down with income. Individuals participating in public or employer-provided health plans would not be eligible for the tax credit. The credit could also be used in state sponsored private purchasing pools. In addition, individuals would not be allowed to claim the credit and make a contribution to an MSA for the same taxable year.

Reducing Medical Errors

At least 100,000 Americans every year die because of medical errors and mistakes. Mistakes and errors cost money and cost lives. The President has called for liability reform to protect health care quality information.  Properly constructed health care quality and safety initiatives should be protected from liability. They are not now.  The Administration supports passage of the bipartisan Patient Safety and Quality Improvement Act as a key step towards addressing this problem.