Strategic Issues and Options:
Expanding Insurance Coverage
Karen Davis
President, The Commonwealth Fund
2003 National Health Policy Conference
January 22, 2002
Problems with Current System
• Falling through the cracks – one-fourth
uninsured at some point during year
• No real progress in reducing numbers of
uninsured – 41 million uninsured
• Instability and churning – 20 million with a
gap in coverage during the year
• Underinsurance – 30 million underinsured
• Double-digit health insurance premium
increases
• Individual and small employer insurance
markets in trouble
• Economic turndowns cause people to lose
jobs, income, and health benefits
• Economic turndowns create fiscal pressures
on states, put Medicaid/CHIP and other state
health insurance programs at risk
One in Four People Under 65 Were
Uninsured During 2000
62 Million with a Time Uninsured
Uninsured all year
13.3%
Uninsured part year
12.6%
Insured all year
74.1%
Total Population Under 65 = 241 Million
Source: MEPS Statistical Brief #6 - The Uninsured in America, 1996-2001. Civilian
Noninstitutionalized Population Under Age 65, Nov. 2002.
Growth in the Number of
Uninsured, 1953 - 2001
Number of uninsured, in millions
80
71
64
63
60
49
40
23
30
32
36
40
39
41
20
Source: 1953-1976, National Health Interview Survey; 1980-1991, EBRI; 1996-2000
March Current Population Survey; 2001-2002 September Current Population Report
20
01
20
00
19
95
19
90
19
87
19
80
19
76
19
70
19
63
19
58
19
53
0
Two Thirds Are Low Income:
Uninsured Population, 2001
Other Children
8%
Other Adults
30%
Low-Income* Children
15%
Low-Income*
Adults with
Children
15%
Low-Income* Adults
without Children
33%
*Low income defined as under 200% poverty, $28,500 for a family of three in 2001.
Source: Commonwealth Fund Task Force and Columbia University analysis of March
2002 Current Population Survey.
Lower Income Workers Are at Risk for Access
and Medical Bill Problems, If Uninsured
Percent of workers who had the following problems in the past year due to cost
Lower-income uninsured*
60%
40%
20%
Lower-income insured**
55%
Higher-income insured
50%
28%
16%
22%
11%
0%
Went without needed care due to
Not Able to Pay Medical Bills
costs***
*”Lower-income” is defined as having annual family income of less than $35,000
** “Insured” is insured all year
***Adult said he or she did not go to the doctor when needed, did not fill a prescription, did
not follow up on recommended tests or treatment, or did not see a specialist due to costs
Source: The Commonwealth Fund 2001 Health Insurance Survey
Reduction in the Number of Uninsured
Over the Course of a Year
Percent reduction in uninsurance if everyone with
coverage retained it during the year
50%
40%
38%
28%
30%
25%
0%
Children <
100%
Children
100%-200%
Adults
<100%
Adults 100%200%
Poverty
Poverty
Poverty
Poverty
Source: Leighton Ku and Donna Cohen Ross, Staying Covered: The
Importance of Retaining Health Insurance for Low-Income Families. The
Commonwealth Fund, December 2002
Employment-Based Insurance
Premiums Are on the Rise Again
Percent change in health insurance premiums and workers’
earnings from previous year
Premiums
18%
Worker's Earnings
12%
11%
13%
9%
9%
5%
3%
4%
3%
4%
4%
4%
1%
0%
1988
1993
1996
1999
2001
Source: Gabel et al., “Job-Based Health Benefits in 2002: Some Important Trends,”
Health Affairs (Sept/Oct 2002): 143-151.
2002
Bush Health Care Proposals
• Refundable tax credits:
– $1000 for individuals earning under $15,000
and $3000 for families under $30,000
– Partial subsidies up to $45,000/$60,000 for
individuals/families
• Used to purchase individual insurance
• Permit small businesses to purchase
health insurance plans from multi-state
trade associations
• Expand and reform Medical Savings
Account
Source: www.whitehouse.gov
Democratic Proposals
• Increase federal Medicaid matching for
every state by 2 percentage points,
plus additional 2.5 points in states
with high unemployment
• Allow uninsured parents to enroll in
CHIP, renamed FamilyCare
• Allow states to cover legal immigrants
• Small business tax credit for firms
with less than 10 employees, worth
50% of cost for group coverage
Source: Democratic Policy Committee <democrats.senate.gov/dpc> 1/7/03
Incremental Options for Expanding
Public Programs
• CHIP/FHIP expanded to cover low-income
uninsured
• Remove asset test for Medicaid,
CHIP/FHIP
• Countercyclical enhanced match tied to
unemployment
• Elimination of two-year waiting period for
disabled
• Buy-in to Medicare for adults 60-64
• Buy-in for Medicare dependents
Incremental Options for Expanding
Employment-based Coverage
• Premium assistance/tax credits for
COBRA for all unemployed
• Young adults covered up to age 23 under
parents’ policy
• Use of Medicaid/CHIP funds to buy-into
employer coverage
• State small business pools
• Incentives for employers to cover parttime workers, shorten waiting periods
for coverage
Combination Approach:
The Congressional Health Plan
• Establish a new private group option for
uninsured individuals and small
businesses
• Tax credits for premiums in excess of 510% of income
• Default enrollment through income tax
system, individual mandate or opt-out
• Medicaid/CHIP/FHIP below 150% of
poverty
• Medicare Part E for older adults and
disabled
• Employer COBRA premium assistance;
“pay or play”
Testing Tax Credit/FHIP
Approaches at State Level
• IOM Committee on Rapid Advance
Demonstrations
• State health insurance demonstrations (3-5)
– Tax credits to purchase private insurance
– Expanded eligibility for public programs, or
– Combination
– 10 year duration with federal funding
• Goals
– Achieve coverage for nearly all residents of
state
– Right care at right time, reduce waste
– Reduce administrative transactions and
improve administrative efficiency
– Establish stronger public/private partnership
• Statewide electronic enrollment clearinghouse
Acknowledgements
• John Sheils and Randy Haugt,
Lewin Group, people and cost
estimates for Congressional Health
Plan Proposal
• Cathy Schoen, VP for Health Policy,
Research, and Evaluation,
Commonwealth Fund
• Katie Tenney – research and
production
• visit the Fund at:
www.cmwf.org