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Analysis: No consensus on uninsured plans

By ELLEN BECK, United Press International   |   May 12, 2004 at 6:15 PM
WASHINGTON, May 12 (UPI) -- Louder voices clamor for attention, proposals are all over the political and policy maps but there is no consensus during "Cover the Uninsured Week" on what to do about the almost 44 million Americans who lack health insurance.

The American public, Congress and the Bush administration all seem too preoccupied by Iraq and terrorism to put forward any large-scale effort this year, but this beginning of a national discussion has set the stage for more serious debate next year. Being an election year also helps push the issue forward after months of complacency.

The uninsured represent a faceless group. They can be defined by demographics, but it is difficult to tell whether the person on the street does or does not have insurance and why. Until the issue hits home with the middle class and more affluent Americans -- until not taking action has a political consequence -- the uninsured cannot gain a foothold on Capitol Hill.

Dr. James Mongan, president and chief executive officer of Partners HealthCare System and a member of the Kaiser Family Foundation on Medicaid and the Uninsured, told a briefing this week: "So why do the uninsured keep losing? First, they're voiceless politically. Certainly with less of a voice than the wealthy, who cannot seem to get enough tax cuts, and lesser voice than the elderly, who did need and did get some drug coverage."

There are different ways to look at the numbers, for example, as in some statistics bantered about this week:

-- More than 20 million uninsured are working adults.

-- One-third live in households making more than $75,000.

-- About 14 million are eligible for Medicaid and the States Children's Health Insurance Program.

-- Around 30 percent are young adults, ages 18 to 24.

Among the young adults and more affluent uninsured, some can afford coverage but simply choose not to. There also are lower-income workers who do not qualify for public assistance and fall through the cracks.

According to the Kaiser commission, the United States will spend $41 billion caring for the uninsured in 2004. Providing the whole group health insurance for one year would cost $49 billion -- only $8 billion more -- and increase total U.S. healthcare spending -- now at $1.7 trillion -- by less than 3 percent.

Of that $41 billion, the commission estimates 25 percent is paid for by the individuals receiving the care. Another 42 percent is paid for by Americans who have insurance -- in the form of higher premiums. That hits home, making a direct connection with voters and corporate America, both of whom are struggling to keep up with double-digit increases in health insurance premiums.

In this one-week span, GOP senators put forth an overall health reform package -- albeit one based on administration proposals -- which elicited a Democratic response and counterplan based on existing programs. That is the political dividing line: Republicans are relying on the private sector and tax-based incentives, while Democrats are moving toward expansion of government entitlements. It is a question of public priority.

Still, this represents progress. Previously, the only groups consistently talking about the uninsured were policy think tanks.

In the background, meanwhile, some 17 plans exist to deal with the uninsured issue, all being analyzed by the Robert Wood Johnson Foundation experts.

It would be a boon to Bush's re-election campaign if Congress passes his healthcare proposals for tax credits, expanded health savings accounts and association health plans. Bush's Medicare drug law victory of late 2003 has been muted by Democrat complaints over drug reimportation and price negotiation policy, as well claims the new Medicare drug discount cards are too complex and fail to offer substantial savings.

The HSAs combine a health plan with at least a $1,000 deductible and a tax-free savings account for individuals not covered by an employer group insurance plan. Bush wants to make all premiums for these plans deductible. He also wants to make eligible for rollover to the next year or transfer to a personal HSA up to $500 of any money left over at the end of the year in a healthcare flexible spending account.

Bush also has proposed -- and Congress has rejected in the past -- a plan to give low-income families tax credits of up to $3,000 to purchase health insurance. Democrats would like that idea better if the money could be spent on group plan coverage.

Association health plans -- which also face significant opposition in Congress because they would be exempt from state insurance regulations -- are calling for industry associations to sponsor health plans for small and medium business owners to offer to employees. About one-third of small businesses do not offer health benefits to workers.

On Wednesday, the House began debate on bills proposing establishment of association health plans, relaxing rules for flexible savings accounts and HSAs, and capping non-economic damages in medical malpractice cases.

Democrats -- who opposed the creation of HSAs in the Medicare reform law signed last December, on grounds they will be used as tax shelters for the rich and an excuse for businesses to drop more expensive group coverage -- oppose the bill currently under debate.

Bush's HSA proposal has been criticized because early estimates were only about 8 million people would invest in them. The Center on Budget and Policy Priorities in Washington issued a report this week, prepared for the Kaiser Foundation, that found only about 1.1 million of people opting for HSAs previously would have been uninsured. The rest already had coverage and simply would use an HSA for the tax break.

Since the beginning of the year, however, the administration has made a major effort to push HSAs and the insurance industry has responded, so participation estimates could rise.

"The people who sell in small group markets say there's been a huge receptivity to this product and employer surveys show 60-70 percent of employers say they will try it," John C. Goodman, president of the National Center for Policy Analysis, told United Press International. "The interest is huge," he said.

Goodman also has proposed expanding the HSA law to allow state Medicaid and SCHIP programs to use them, initially, as incentives for poor families to improve their management of chronic illnesses such as asthma or diabetes, reducing the need to use hospital emergency rooms as their first choice for care.

On the House floor Wednesday, Rep. Paul Ryan, R-Wis., said his latest data show 37 percent of all HSA purchasers previously were uninsured and the average age was 47. He said criticisms of HSAs are "being proven untrue with the results that are taking place in the marketplace."

Ryan said 73 percent of firms that now offer health insurance report they would offer HSAs by 2006. The question is whether employees will be pushed into such plans to save money for employers.

The Senate's Republican Task Force on Health Care Costs and the Uninsured outlined its proposals for the uninsured on Tuesday. The proposals included creation of association health plans and additional tax credits -- including for HSAs -- that would cost an estimated $180 billion over five years and cover from 17 million to 25 million of the uninsured. Members said cost reductions in other healthcare areas would reduce the overall government price tag.

The Republican senators also supported improving enrollment in Medicaid and SCHIP, creating state or regional-based pooling options for groups and individuals, incentives for young adults and college students to purchase coverage and expansion of the Assets for Independence Act to allow small business owners to claim health insurance as a business expense.

"And the question is: How do you address the magnitude of this problem?" asked Sen. Olympia Snowe, R-Maine, during a news briefing. "You can't just simply increase coverage with one broad brush stroke. And that's why we adopted this multi-pronged approach that includes tax credit subsidies, health savings accounts, embarking on more expansive incentives for that, encouraging young people to purchase health insurance ... also to make programs, such as the State Children's Health Insurance Program, S-CHIP, more accessible to low-income individuals."

The response to the Republican plan came from Sen. Tom Daschle, D-S.D., who told reporters Wednesday: "Unfortunately, the Republican task force has come up with a plan, announced yesterday, to recycle programs that actually do very little to reduce the number of uninsured Americans. We are concerned about some of the provisions already."

Daschle said Democrats support pooling efforts to create better purchasing power, "but if they are used in an

effort to exclude people or in some way denigrate the healthcare quality of those who are already in the system, then they do a real disservice to the healthcare beneficiaries that otherwise would be protected. So we've got to be concerned about that."

He also said the Democrats "also are concerned to a certain extent about the efforts to provide tax shelters that may only benefit the few and not ultimately those who are having to endure the lion's share of the cost here."

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(Part 2 of this analysis will look at the Democratic counter-proposal, along with other ideas and plans for reducing the number of uninsured)

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Ellen Beck is UPI's Healthcare Policy Editor. E-mail ebeck@upi.com

© 2004 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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