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No lack of solutions for problem of uninsured
"The barriers to solving the problem of the uninsured do not include a lack of viable solutions. There are a number of reform strategies that would solve the problem, but deciding on a particular one is difficult because all viable solutions require making difficult trade-offs.
"However, the fact that there are no easy solutions to the problem of the uninsured should not deter us from making a commitment to find a lasting solution." That’s the assessment of the Economic and Social Research Institute (ESRI) in Washington, DC. In less than two years, ESRI has published 13 different potential solutions to the problem of the uninsured in the United States.
The institute went to expert health analysts and researchers with a request that they rethink the present approach to providing health insurance and provide new, fresh ideas. "Although political feasibility is obviously important," ESRI says, "we wanted authors to consider approaches that involve fundamental reform and perhaps even a complete overhaul of many current structures. We asked authors to acknowledge the political difficulties and barriers that would need to be overcome to implement their proposals, but we said that they should not assume that current views cannot be changed."
In publishing its commissioned solutions, it hopes that policy makers will be able to draw upon the proposals to formulate a set of comprehensive reforms, ESRI says. Here is a brief summary of each proposal and information on how to obtain much more material from ESRI.
1. Reforming the tax treatment of health care to achieve universal coverage, Stuart Butler, Heritage Foundation. The cornerstone of Mr. Butler’s proposal is a fully refundable tax credit for working Americans that would
be based on household income and medical costs, including premiums and out-of-pocket expenses. A major source of funding would be the repeal of the federal income tax provision that makes employer contributions to employees’ health insurance a nontaxable form of income. Tax credits would be funded from general tax revenues and states would receive grants to supplement credits for low-income families for whom the credits might be insufficient to make coverage affordable. Mr. Butler says his plan is politically attractive because it works through the private market rather than creating a new federal entitlement program. It also preserves the link between health care and employment that many people take for granted.
2. Assessing the combination of public programs and tax credits, Judith Feder, Larry Levitt, Eileen O’Brien, and Diane Rowland, Georgetown University and the Kaiser Family Foundation. These four argue that in the absence of comprehensive reform, it is most appropriate to target expansions to the population least able to afford coverage, and to avoid disrupting either the public insurance system that works quite well for low income people or the employer-sponsored system that provides coverage for many Americans. They focus on ensuring that the low-income population has access to publicly subsidized insurance, and then explore the use of a tax credit to encourage higher-income people to obtain private insurance. They say different policy strategies will be more or less effective in reaching different segments of the uninsured population and suggest Medicaid/SCHIP (State Children’s Health Insurance Program) expansion for those with incomes below 200% of the poverty level and tax credits targeted to people above that level.
3. A private/public partnership for national health insurance, Jonathan Gruber, National Bureau of Economic Research. Mr. Gruber finds fault with the employer-sponsored system because it leaves people who are unemployed, self-employed, or in small businesses without an efficient pooling mechanism through which to buy affordable coverage. And he sees major holes in the public program safety net. To address these problems, Mr. Gruber, a professor at the Massachusetts Institute of Technology, proposes to build on the voluntary, private system while "rationalizing" public safety-net programs to ensure broader coverage. He proposes a significant redistribution of federal health outlays, seeks to level the playing field on which individuals purchase insurance, and tries to harness the powers of competition to address rising health care premiums for nearly all Americans. The foundation of his plan is voluntary state-based purchasing pools that would offer a menu of health plan choices to all individuals and employers.
4. Medicare Plus: Increasing health insurance coverage by expanding Medicare, Jacob Hacker, Harvard University Society of Fellows. Mr. Hacker would replace the current scattered patchwork of voluntary private coverage and residual public programs with an employer mandate and enrollment of much of the population in an expanded Medicare program he calls Medicare Plus. Mr. Hacker’s proposal is a variation on the "play or pay" employer mandate model with this twist — for many employers, the pay option would be far less costly than the play option, so most firms would pay the payroll tax and automatically enroll their employees in Medicare Plus. In addition to the standard Medicare package, Medicare Plus would cover outpatient prescription drugs, preventive services, mental health services, and maternal and child health services. It would have a single deductible and coinsurance rate and an out-of-pocket spending cap.
5. Expanding health insurance coverage: A new federal/state approach, John F. Holahan, Len M. Nichols, and Linda J. Blumberg, the Urban Institute. The Urban Institute researchers propose a model that, like SCHIP, gives states increased federal funding and considerable flexibility to extend coverage to families with incomes below 250% of poverty and with high health risks at any income level. Foundation of this model is a purchasing pool organized by combining current Medicaid and SCHIP recipients, those newly eligible for subsidies, and others. To receive subsidies, people would have to purchase coverage through the state purchasing pool, but the pool would be open to all. Participants would be assured of paying no more than the statewide community rate. The federal government would establish a minimum set of required benefits and cost-sharing provisions, but states would have flexibility to design their own standard benefit packages. A new higher federal match would go to participating states to help fund coverage for everyone below 250% of poverty, including previous Medicaid enrollees. The authors contend that a purely federal expansion of coverage is politically impossible, but that a federal-state partnership is more acceptable.
6. A state-based proposal for achieving universal coverage, Richard Kronick and Thomas Rice, University of California at San Diego and University of California at Los Angeles. Mr. Kronick and Mr. Rice propose that the country adopt a health care financing system that provides comprehensive health insurance to all nonelderly legal residents and replace most major components of the current system except for Medicare and Medicaid-financed long-term care. While employers and employees would continue to contribute to the health system, employers no longer would be involved with providing insurance. Instead, the federal government would oversee the new system, and states would administer it. All health insurance choices offered by states would have to include services specified in a federally defined benefits package that states could choose to augment. Eligible residents would have at least one health insurance option that does not require premiums. The primary revenue source would be a payroll tax levied on employers and employees, supplemented by general federal revenues, state revenues, and, possibly, individual contributions for certain plans or benefits beyond those included in the standard benefit package. States would receive an annual fixed-dollar contribution from the federal government to urge them to contain costs.
7. An adaptive credit plan for covering the uninsured, Mark V. Pauley, University of Pennsylvania. Mr. Pauley proposes a tax credit/coupon approach to expanding health coverage that emphasizes the advantage of beginning reform with a relatively straightforward, financially feasible, and easily modified intervention. His two-phase plan initially would provide refundable tax credits or vouchers to lower middle income families and individuals between 125% and 300% of poverty to be used to buy health insurance. Minimal restrictions would be placed on the type and comprehensiveness of insurance that could be bought. Very low-income households would be eligible for publicly provided or contracted comprehensive insurance with no premium share required. Households with income above 300% would not be eligible for the new program initially but could retain the tax credit for health insurance. For the second phase, if private markets have worked well and coverage rates have increased, very low-income households would be permitted to use tax credit coupons to purchase private insurance equal in value to the cost of public coverage. Also, households with income above 300% of poverty would be required to buy coverage.
8. Near-universal coverage through health plan competition: An insurance exchange approach, Sara J. Singer, Alan M. Garber, and Alain C. Enthoven, Stanford University. Tax credits and creation of new mechanisms for purchasing private health insurance are key features in this plan. The authors say that viable reform must include incentives for health plans to control medical costs and to offer "high-value" coverage to all who seek it, regardless of income or medical history. One of the key elements in this proposal is creation of insurance exchanges designed to help individuals buy reasonably priced coverage. Offering choice among multiple plans, with incentives for individuals to select high-value plans, the exchanges would have a role comparable to that of the Federal Employees Health Benefits Program or CalPERS. For exchanges to succeed, they have to cover a very large share of the market so they can negotiate effectively with plans. The authors say the major drawing point for the exchanges would be that a new tax credit subsidy could only be used for coverage purchased through a qualified exchange. A risk-adjustment mechanism would be established among exchanges to financially protect those that might attract a disproportionate share of high-risk enrollees.
9. The medical security system: A proposal to ensure health insurance coverage for all Americans, Alan R. Weil, Urban Institute. His plan combines three elements: making access to a standard free health plan a right; requiring employers to play or pay; and allowing everyone not covered by an employer plan to buy coverage through large purchasing pools called insurance exchanges. Mr. Weil sees the insurance exchange, which he compares with a stock exchange, as the key to organizing insurance markets to insure that affordable coverage is available to all and to promote competition among health plans.
10. A plan for achieving universal health coverage: Combining the new with the best of the past, Elliot K. Wicks, Jack A. Meyer, and Sharon Silow-Carroll, ESRI. The researchers say their plan would achieve universal coverage while reducing the fragmentation and inequities of the present financial system, simplifying administration of health coverage, and maintaining the role of market-based decision making and employer-sponsored private health insurance. Their keys to ensuring universal coverage are generous tax credit subsidies so everyone has the means to buy coverage, a federal requirement that everyone purchase coverage, and a fallback coverage system to guarantee temporary coverage for anyone who would otherwise fall through the cracks.
11. A performance-based approach to universal health care, David B. Kendall, Jeff Lemieux, and S. Robert Levine, Progressive Policy Institute. The authors rely heavily on the basic structure of the current system, but propose to use new federally financed tax credits to make coverage affordable. They also assign state governments major responsibilities for ensuring that people actually get coverage. The federal government would finance tax credits to help low- to middle-
income people buy coverage, with larger amounts available to those who do not have employer-sponsored coverage. Employers would not be required to contribute toward the cost of health insurance, but would have responsibilities for making sure their employees could readily choose from a variety of health plans. States would receive federal grants to provide a menu of reasonably priced health plan choices to everyone who lacks employer-sponsored coverage. The authors foresee a two-step process starting with making coverage affordable and assessing success of those efforts. The second phase would be to move toward making purchase of health coverage mandatory for all individuals.
12. Improving access to health care without comprehensive health insurance coverage: Competition, choice, and priorities, Tom Miller, Cato Institute. Mr. Miller says he puts more emphasis on the end of achieving access to services and improved health status than on the means of covering everyone with insurance. He would leave in place existing subsidy programs such as Medicaid, SCHIP, and Medicare, and favors more funding for tax credits that would be used to purchase high-deductible health coverage, improvements in the safety net to cover people without insurance, and high-risk pools that substitute coverage for the uninsurable. He also would change incentives for consumers, insurers, and state insurance regulators to encourage competition, economy, and efficiency.
13. Medicare for all, James A. Morone, Brown University. Mr. Morone would guarantee that all Americans would be automatically covered under an augmented Medicare program funded solely by a new value-added tax. This single payer system would emphasize delivery of primary care in community-based health centers. States would have some flexibility to develop alternative approaches and employers would have the option of providing coverage that supplements the benefits package available through Medicare. Morone says the time has come to abandon the employment-based system of financing health care, given that few workers stay in a full-time job for long and that the new economy requires that employers be able to quickly adjust the size of their work forces, with consequent disruption of insurance coverage. He argues that a new dedicated tax is needed to finance his system (Medicare payroll taxes would be eliminated) because of the large amount of revenue that would have to be raised. To make the tax less regressive, Morone would exempt food, medicine, and shelter, and would provide relief by expanding the earned-income tax credit to families with income as high as $45,000 a year.
ESRI notes the problem of the uninsured has grown worse in recent years and nothing on the economic horizon suggests that market forces alone will cause more people to get coverage in the near future. "The need for imaginative, far-reaching proposals to reform the way we make health insurance available and affordable for all Americans remains as strong as ever," the group says.
(For more information, go to: www.esresearch.org.)