Incremental Improvements to Expand
Insurance Coverage
National Health Policy Conference
January 22, 2003
Stuart M Butler
The Heritage Foundation
www.heritage.org
What is “Incrementalism”?
• A step towards a particular goal.
• A process for continuous experimentation
when the best solution is unclear.
• A compromise step to enable a “policy
market” to develop between different
approaches
Goals of Refundable Credits
• Universal coverage.
• Subsidy to families that allows family to decide
method of coverage.
• Most compatible with existing private coverage
methods.
• Could stimulate new methods of coverage.
• Step towards reform of entire tax treatment.
• Step towards horizontal equity.
• A subsidy even Republicans can love.
Features of Refundable Credits
• Can be designed to focus more funds on lowerincome, key groups etc.
• Can be blended with other subsidies, e.g. from
states.
• Can be assigned to a health plan.
• Compatible with other approaches for certain
groups.
• Can have “taxable tax credits” to ease phase out.
Triggering Creative Federalism
• Federal government enacts menu of
changes, e.g. FEHBP-type coverage,
flexibility in Medicaid/SCHIP etc.
• Federal government sets goals for coverage
and bonus system for states.
• Federal government negotiates state-wide
agreements to test alternative approaches.