Insurance: No Simple Fix

The number of uninsured Americans--which rose to 43 million from 37 million in the prosperous ‘90s--could shoot up even more dramatically if the economy continues to slow and health care premiums keep soaring. Health care experts describe the implications of such growth in ominous terms. In addition to the suffering of those who go untreated, an expanding uninsured population would send already precarious hospitals into bankruptcy and force counties to risk insolvency to keep their emergency rooms open.

Congress appears to be hearing the alarm. As Senate leaders struggle to pass a budget resolution this week to set Congress’ spending priorities for the coming year, they have put two health care goals front and center.

Few insiders expect legislators to achieve their first goal, designing a new Medicare prescription drug benefit for seniors, because virtually no one agrees on how Medicare should be restructured to allow such a benefit. But the second goal, providing health insurance to at least some of those now without it, is excruciatingly close.

President Bush has proposed spending about $70 billion over 10 years to give low-income families a tax credit of up to $2,000 a year to buy health insurance on the private market. A credit in itself would do little to help the uninsured. The $2,000 would not be enough to persuade most low-income families to buy an average policy, which now runs about $6,000 a year. At best, private insurers would offer affordable rates only to healthy individuals who least need insurance.

A more sensible plan, in addition to having a tax credit, would allow for expansion of the federal children’s health insurance program to cover low-income working parents as well.

A bill to be introduced this week by Sens. Gordon Smith (R-Ore.) and Ron Wyden (D-Ore.) would give states a fixed sum and let them use it for either tax credits or expansion of public health insurance. Another proposal would also carry incentives for employers to offer insurance, addressing the GOP concern that public health insurance expansion might erode private employer coverage.

Giving states the ability to expand the federal children’s health insurance program is key to any successful reform. The program, which has enrolled 3.3 million children since 1997, costs about half as much per person as private plans because of lower administrative costs and an ability to negotiate cheaper rates by buying in bulk. The benefits of spending billions on a tax credit alone are at best highly uncertain--a recent MIT study said this would provide coverage to no more than 2 million Americans--but extending the existing low-cost program would stretch the money further.

The political danger is that any hybrid insurance expansion would be derailed by obstinate partisans: Republicans who staunchly defend Bush’s $1.6-trillion-plus tax cut and Democrats who insist that at least $80 billion go to an expansion of public health insurance, without tax credits.

Democrats should realize that an expansion of health insurance that does not include tax credits is politically doomed. GOP leaders should agree with moderates in their own party who call for reducing the overall tax cut to free up funding for the nation’s most urgent health care needs.