Coverage for All.

Health analysts and scholars propose ways that Congress can help solve the problem of uninsured Americans.

The economic slowdown and rising health-care costs and unemployment rates have all had a hand in forcing millions of Americans to go without health insurance. But although the number of uninsured Americans is near an all-time high, the problem remains a low priority on the political agenda.

Many researchers and health-care analysts were hopeful that former President Clinton's National Health Security Plan would be the solution to insuring more Americans. But these hopes were diminished when the Clinton plan was not adopted, and the issue was no longer a top priority.

Recently, a group of health-care analysts and scholars attempted to develop remedies to this problem. While the U.S. Department of Health and Human Services reports that the number of Americans without health insurance dropped slightly this year, there are still 40 million people--or nearly 16% of the U.S. population--who lack health coverage.

Through a grant from the Robert Wood Johnson Foundation, the Economic and Social Research Institute has published Covering America: Real Remedies for the Uninsured, a compilation of 10 proposals to move the United States toward universal health coverage. The proposals are diverse, but the endpoint remains the same--finding a way to insure millions of uninsured Americans.

Face of the Uninsured

Although the stereotype of the uninsured is poor, unemployed people, statistics prove otherwise. Many Americans with little or no health insurance are elderly, but the majority of uninsured individuals are married with children and are between the ages of 21 and 55.

According to Covering America, about 35% of nonelderly uninsured people have incomes that place them below the federal poverty level, despite the availability of major public programs, such as Medicaid and the State Children's Health Insurance Program. Nearly one-third have incomes between the poverty level and 200% of the poverty level, and people with incomes between 200% and 300% of the poverty level account for more than three-quarters of the uninsured.

While more than 80% of the uninsured hold jobs and work year round, low wages are often to blame for their inability to purchase health insurance. In addition, many uninsured workers earn too much to qualify for Medicaid or aren't offered coverage through their employers. Affordability remains the No. 1 reason many Americans lack health coverage.

Finding a Remedy

The push to make health coverage affordable for all Americans is the common theme in each of the Covering America proposals.

The project originated to find ways to increase public discussion about health-care reform and remove cost as a deterrent in obtaining coverage. Last year, the institute, based in Washington, D.C., invited 40 health-care analysts and researchers to outline ideas to reform the nation's health-care financing and delivery system to ensure coverage for nearly all Americans. While 20 draft papers were submitted, the institute evaluated each proposal and selected 10 to be published.

"Our objective in carrying out this project was to produce 10 thoughtful, contrasting approaches to moving the country toward universal coverage," said Elliot K. Wicks, editor and project manager of the publication. Each proposal offers a unique approach to insuring Americans by expanding on employer-based coverage, government programs or a combination of both.

Solutions Abound

While the proposals take unique approaches to universal health coverage, they generally fall within three broad segments: using federal income tax credits, expanding the Medicaid and S-CHIP programs and implementing insurance-purchasing reforms.

Tax credits/vouchers: Several of the proposals suggest moving to a tax-credit approach that would give people the financial means to buy coverage through the private market. Subsidies in the form of tax credits or publicly funded vouchers could be applied against the cost of purchasing private coverage.

The tax-credit approach, a relatively new concept, has credibility in Congress, particularly among Republicans, Wicks said. "Several authors use this approach, hoping to build on the interest in this approach," he said.

Mark Pauly, economist and chairman of the Wharton School's Health Care Systems Department, agrees. He designed his proposal, which would offer tax credits/vouchers to households with incomes above the poverty line but below the median income, to move the political debate of the issue into something that could be implemented.

Under his proposal, titled "An Adaptive Credit Plan for Covering the Uninsured," those who qualify would be given vouchers equal to between one-half and two-thirds of the premium for comprehensive coverage. "The basic idea of the proposal is for income-related tax credits that would be targeted initially to 'betweeners'"-those with income between the poverty level and the median income, Pauly said. Under the proposal, the credits, in the form of coupons, would provide $1,500 for individual coverage and $3,500 for families.

Wicks and his colleagues at the institute take a similar approach with the availability of refundable tax credits varied by income. The proposal guarantees universal coverage by mandating that individuals buy coverage and "by having Medicare provide fallback coverage for anyone who still remains temporarily uninsured," Wicks said. The tax credits would be available for all households and provide the full cost of coverage for individuals below the poverty level, similar to what Medicaid now provides. The credits would be gradually reduced for those with higher incomes.

"We aren't willing to go so far to say, 'Medicare for all,' because we think there is some virtue in having employer-based coverage," Wicks said. But the proposal attempts to plug all the gaps so that regardless of economic status or geography, individuals are offered coverage at all times in one form or another.

Medicaid/S-CHIP expansion: Expansion of the current Medicaid and S-CHIP programs is another approach several authors proposed to insure most Americans. By extending eligibility up the income scale and eliminating many eligibility requirements, more people would receive necessary coverage. "In essence, it is going to subsidize the amount people have to pay in premiums...the people who have the lowest incomes get into Medicaid and S-CHIP without having to pay any premiums," Wicks said.

In "Medicare Plus: Increasing Health Coverage by Expanding Medicare," Jacob Hacker attempts to build on the strengths of the employment-based health insurance system and Medicare.

The assumption behind the proposal is that it's going to be difficult to move toward universal coverage in the context of a series of fragmented and scattered efforts to try to reach only a small segment of the uninsured, said Hacker, a junior fellow of the Harvard Society of Fellows. "We need a comprehensive strategy in which Americans don't fall through the cracks." Hacker proposes that this can be achieved either through the workplace or through the creation of a new program that in some ways parallels Medicare.

On the other hand, several authors are fearful that new programs may not fully benefit the uninsured in ways that the current programs' expansion hopefully will. "We are concerned that creating a new program for the current Medicaid population disrupts the existing program by losing administrative mechanisms already in place and creating the possibility of undermining rights that have been institutionalized over a long period of time," said Judith Feder, professor of public policy and dean of policy studies at Georgetown University. Feder and her colleagues propose that expanding eligibility for Medicaid and S-CHIP without cost sharing or premiums for individuals with incomes below 150% of the poverty level will result in more coverage for low-income individuals.

Health care as a right: Just like the right to vote, several authors believe that health coverage is a right that should be granted to all U.S. citizens. Paralleling Medicare's hospital insurance coverage for those over age 65, this social insurance approach would give the responsibility to the states to devise their own plans for providing health coverage.

A proposal by Richard Kronick and Tom Rice, both of the University of California, San Diego, combines several elements of this approach, including maximum flexibility to states, payroll-based financing, elimination of employers' roles in providing health coverage and access to health coverage as a right. With no qualifiers, such as income, citizens would simply enroll for coverage within their state, and those who don't enroll voluntarily would be assigned to a no-cost plan.

In a somewhat different approach, Alan Weil, director of the Assessing the New Federalism Project for the nonpartisan economic and social policy research organization, The Urban Institute, also calls for universal coverage as a right for legal U.S. citizens. His proposal would guarantee that all nonelderly Americans have access to a basic health insurance package at no cost by requiring employers to either provide coverage or pay a payroll tax to finance the purchase of coverage through insurance exchanges. People could buy more comprehensive coverage by using some of their own funds. In addition, the S-CHIP and the low-income and adult components of Medicaid would be eliminated, Weil said. Beneficiaries of Medicaid and S-CHIP would become part of a new Medical Security System, which would waive copayments and provide wraparound coverage for services not included in the basic package.

Despite the differences found in the approaches, the proposals have found some common ground. "When you take a handful of policy-thinkers, send them off to design proposals on their own, and so many come back with similar features, that is an important message," said Sara Singer, executive director and senior research scholar for the center of health policy at Stanford University. Rather than distinguishing the proposals from one another, it's important to get on board with something that combines the best of all of them, she said.

Funding Proposals

While each author suggests different funding sources for the proposals, the majority point to federal budget revenues. Many contend that savings from the elimination of Medicaid, S-CHIP and existing insurance-related tax exclusions would offset the extra expense.

Pauly views his funding approach, which will allow people to use their credit to buy any state-approved policy with a premium at least as large as the credit, as a tax cut or modification of a tax cut already in place, rather than as government spending. Singer and her colleagues propose a phased-in cap on the current federal tax exclusion as an additional funding source. Their tax-credit approach is built around insurance exchanges, or purchasing pools, which would be established in all geographic regions and would provide coverage on a guaranteed-issue and community-rated basis.

There were exceptions, however, to federal funding. "Two exceptions would include requiring all employers to contribute, because they are required to buy coverage or pay payroll taxes," said the institute's Wicks. He acknowledges that getting federal funding will be more difficult with the recent depletion of the federal government's surplus.

The Robert Wood Johnson Foundation recently commissioned the Lewin Group, an international strategic health and human services consulting firm, to make cost estimates for each of the proposals sometime during the next several months. The group will estimate how much each proposal would cost, who would bear the costs and what effects the approaches would have on the number of uninsured. Following the projections, the authors will have the opportunity to revise their proposals to reflect the new cost estimates.

Political Outcry

The Health Insurance Association of America estimates that if nothing is done to help the uninsured, the numbers will grow to 53 million within the next 10 years, and possibly even 60 million, if the economy continues to slow. While the future of universal health coverage remains questionable, many researchers and scholars believe that the lack of public policy during the next several years will likely move the problem along this staggering path.

"As the economy slows and healthcare expenditures outpace the growth of personal wages, things are going to get worse over the next decade, unless there are policy changes that will help more uninsured people," said Kronick of the University of California. Public policy changes that provide greater levels of subsidy or support to low-income individuals or require contributions toward health insurance would help to remedy this potentially growing problem.

But as the issue remains a low-level priority among legislators, uninsured Americans may continue to be placed on the back burner of political debate.

"I am very concerned that this issue continues to be too low on the political radar screen and that uninsureds lack political clout," said Feder of Georgetown University. But she is optimistic that a new spark of bipartisan interest in universal health coverage may eventually move the issue higher on the political agenda.

10 Proposals for Insuring the Uninsured

Health-care analysts and scholars recently proposed 10 ways to provide health insurance for about 40 million uninsured Americans. The proposals were compiled in a book, Covering America: Real Remedies for the Uninsured, by the nonprofit research organization Economic and Social Research Institute, with a grant from The Robert Wood Johnson Foundation.

Each of the major reform proposals takes a different approach to bringing attention to the problem and finding ways to provide universal health coverage for millions of people. Below are summaries of the proposals.

"Reforming the Tax Treatment of Health Care to Achieve Universal Coverage" by Stuart Butler

* Refundable tax credits for working households.

* Credit amounts based on need determined by family income and amount of health costs.

* Option for lower-income families would be a fixed credit up to $2,500.

* Availability of tax credits would enable gradual repeal of current tax subsidy for working people.

"Assessing the Combination of Public Programs and Tax Credits" by Judith Feder, Larry Levitt, Ellen O'Brien and Diane Rowland

* Expansion of Medicaid and State Children's Health Insurance Program (S-CHIP).

* Comprehensive benefits available at no cost to individuals earning less than 200% of the poverty level.

* Individuals between 150% and 200% of the poverty level would pay some premiums and cost-sharing, up to a maximum of 5% of income.

* Those earning more than 200% of the poverty level would be allowed to "buy in" to public coverage by paying a sliding-scale premium based on income.

"A Private/Public Partnership for National Health Insurance" by Jonathan Gruber

* A premium-reduction approach.

* Establish purchasing pools in states for households with incomes up to three times the poverty level eligible at no-cost or reduced cost.

* Coverage on a sliding-scale basis.

* Financing from general revenues, a cap on the amount of employer-paid premiums that can be excluded from employees' taxable income and the phase-out of S-CHIP and Medicaid.

"Medicare Plus: Increasing Health Coverage by Expanding Medicare" by Jacob Hacker

* A modified "play or pay" approach (employers choose between providing insurance or making a modest contribution toward public coverage of their workers).

* Creates incentives for employers and employees to buy into Medicare Plus.

* Workers pay a premium toward Medicare coverage based on income and family size.

* States provide "wraparound" coverage to ensure that those who would have been in Medicaid still receive similarly comprehensive benefits.

"Expanding Health Insurance Coverage: A New Federal/State Approach" by John Holahan, Len Nichols and Linda Blumberg

* Premium-reduction approach that extends S-CHIP-type coverage.

* Encourages purchasing pools by making subsidies available only if coverage is purchased through pools.

* Individuals below 150% of the poverty level would get full subsidies; between 150% and 250% would get partial subsidies.

* States could mandate that everyone be covered after five years.

"A State-Based Proposal for Achieving Universal Coverage" by Richard Kronick and Thomas Rice 

* Comprehensive health coverage as a "right" to all nonelderly legal residents.

* Insurance through a public insurance approach designed by states.

* States expected to contribute to funding of new program in an amount equal to 90% of their present Medicaid and S-CHIP spending.

* Coverage available to all legal residents under age 65.

"An Adaptive Credit Plan for Covering the Uninsured" by Mark Pauly

* A refundable tax credit/voucher system.

* Very low-income households initially eligible for publicly financed zero-premium comprehensive insurance.

* Would cover families with annual incomes ranging from $21,875 to $52,500.

* Government provides Medicaid-type coverage for people with family incomes below 125% of poverty threshold who didn't use tax credits.

"Near-Universal Coverage Through Health Plan Competition" by Sara Singer, Alan Garber and Alain Enthoven 

* Combines insurance exchanges and refundable tax credits.

* "U.S. Insurance Exchange" would be established for individuals and companies with fewer than 50 employees in areas without private exchanges.

* Low- and moderate-income individuals not eligible for Medicare would qualify.

"The Medical Security System: A Proposal to Ensure Health Insurance Coverage for All Americans" by Alan Weil

* Makes access to standard free health coverage a "right," requires employers to "play or pay," and allows people not covered by employer plans to buy coverage though insurance exchanges.

* All plans in insurance exchanges offered on a community-rated basis.

* Coverage available to all legal U.S. residents under age 65.

* Relies on payroll tax, existing government funding sources, individual premium payments and additional appropriations for financing.

"A Plan for Achieving Universal Health Coverage" by Elliot Wicks, Jack Meyer and Sharon Silow-Carroll

* Refundable tax credits would be given to all households, varied by income.

* Requires that everyone buy coverage at least as comprehensive as Medicare plus drugs and well-child care.

* Minimum credit would be about $700 a year for individuals and $1,500 a year for families.

* Those above 100% of the poverty level up to median income would get gradually reduced subsidies.

Studies Examine the Affordability of Health Insurance

The cost of health insurance remains the primary reason millions of Americans go without health coverage each year. Several organizations recently took a closer look at health insurance purchasing trends and found varying results about the affordability of health coverage for individuals and families.

EHealthInsurance, a Web-based health insurance distributor, studied its customers' purchasing practices after the company determined that more than 40% of individuals and families that purchase insurance through the company had been previously uninsured. The company looked at factors such as cost, accessibility, deductibles and comprehensiveness. EHealthInsurance's findings have attracted a lot of attention from policymakers, because the research looks at "real information from real people who have bought health insurance," said Gary Lauer, chief executive officer of EHealthInsurance.

EHealthInsurance recently analyzed a sample of 20,000 policies it has sold and discovered that individual-and family-purchased health coverage is generally less expensive and more comprehensive than many policyholders believe. Based on the study, the average annual premiums ranged from $1,200 to $1,500 per person per year.

According to the company, 88% of policies bought by individuals and 84% of policies purchased by families were thought to provide "comprehensive" coverage, comparable to Medicare hospital and medical insurance plus some level of supplemental coverage. This means that all the policies included inpatient hospital care, outpatient care including doctors visits, and labs and tests. A prescription drug plan was included in 85% of the policies purchased.

The study also looked at policy deductibles to determine whether deductibility ranges were reasonable. The results found that 75% of all individuals and families had deductibles of $1,000 or less, and 47% had purchased products with deductibles of $500 or less, Lauer said.

But a recent study by The Henry J. Kaiser Family Foundation that looked at seven fictional people who were put through the process of getting health insurance in eight markets, produced different results. According to the Kaiser study, policies offered to individuals, even those with relatively few health problems, often excluded coverage for most-needed care and are not affordable for those just above the poverty line.

"On average, a perfectly healthy consumer in our study would have to pay almost $3,000 a year for health insurance, three times the amount of the $1,000 tax credit for individuals that some have proposed. And people in less. than-perfect health face even higher premiums," Larry Levitt, vice president of the Kaiser Family Foundation, wrote in the study.

The EHealthInsurance study, on the other hand, finds that certain individuals--typically those with pre-existing conditions--near age 65 or in the few states that require insurers to cover people with pre-existing conditions, do pay much higher premiums than the average. The study concludes that tax credits may help by allowing individuals to obtain comprehensive coverage, thereby reducing the number of uninsureds.

During a recent press conference in Washington, D.C., Rep. Nancy Johnson, R-Conn., talked about the EHealthInsurance study's results and said the findings suggest that proposed tax credits for uninsured Americans would enable people in many cases to purchase comprehensive coverage.

Proposals Offer Ways to Offset Health Costs

EHealthInsurance compared its results with three current proposed tax-credit legislation programs:

* President Bush's proposed tax credit of $1,000 for individuals and $2,000 for families;

* the Fair Care for the Uninsured Act that calls for coverage of $1,000 for individuals and $3,000 for families; and

* the bipartisan "Reach" Act that proposes individual coverage of $1,000 and family coverage of $2,500.

Half of the policies purchased through EHealthInsurance carried premiums that fell within proposed tax credit amounts of $1,000 for individuals and $2,500 for families. About three-quarters of the 20,000 individuals who purchased health insurance fell into the range of 75% to 100% of policy payments that would be covered through tax credits, and 81% of families would have 75% to 100% of their policies covered through tax credits as well, Lauer said.

"Many of the 40 million [uninsured] simply can't afford health insurance, and tax credits may not do much for them. However, we believe up to half of the uninsured are in the income bracket that could afford insurance, and with incentives like tax credits, they could very well afford it," Lauer said. Lauer estimates that tax credits may eventually reduce the ranks of the uninsured by 10 million to 20 million.