Unusual Health Alliance Reaches Deal on Uninsured

From the WebMD Archives

Nov. 20, 2000 (Washington) -- Hoping to bring health insurance coverage to center stage for next year, an unlikely alliance of prominent groups on Monday proposed a framework to extend coverage to more than half of the nation's 43 million uninsured.

Even in the current period of unparalleled economic prosperity, the nation's uninsured population is now at an embarrassingly high -- about one in six Americans. Noting the lessons of previous failures to expand coverage, the groups said they had realized that broad cooperation on step-by-step initiatives would be the only path to progress.

The two groups, Families USA and the Health Insurance Association of America (HIAA), have long been health policy adversaries. Families USA is a left-leaning consumer advocacy group that backed President Clinton's push for a government-controlled, universal health care system, while HIAA is the voice of the private-sector insurance industry.

They battled on opposite sides of the 1993-94 debate over Clinton's plan and continue to clash over a patients' bill of rights.

But joined by the American Hospital Association, these "strange bedfellows" called for a compromise in the form of small steps to improve health care coverage.

The willingness of these two vastly different organizations to agree that they must work together "to pursue legislation that has a realistic chance of enactment is nothing short of a watershed event," said John Iglehart, founding editor of Health Affairs. The journal is publishing the groups' proposal in its upcoming issue.

Ron Pollack, executive director of Families USA, said, "A so-called ideal solution that cannot be enacted cannot be called ideal."

Their plan is three-pronged:

  • Require states to expand their Medicaid programs to cover all individuals under 65 who have annual incomes below 133% of the poverty line ($18,820 for a family of three). States would receive an increased matching contribution from the federal government.
  • Give states the option to expand Medicaid or their Children's Health Insurance Program to cover individuals between 133% and 200% ($28,300 for a family of three) of the poverty line. Again, states would get an enhanced federal funding match.
  • Offer employers a nonrefundable tax credit to help them pay the out-of-pocket premium costs for employees with incomes between 133% and 200% of the poverty line. This would allow more workers to be able to afford coverage, since the government would reward employers for covering more of their employees' costs.

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"It would make a difference," Uwe Reinhardt, PhD, a Princeton health economist, tells WebMD. "It's the way we have to go, although it's not a complete or elegant solution." He notes that the plan appears to hit the middle ground between the coverage measures put forth by presidential rivals Vice President Al Gore and Texas Gov. George W. Bush. Gore's proposal focused on Medicaid expansions, while Bush's centered on tax incentives.

The plan could potentially cover about 23 million currently uninsured Americans -- those at 200% or below of the federal poverty level.

The groups said that they didn't have a cost estimate for their plan, although documents describing the plan anticipated a "significant public investment." HIAA President Chip Kahn noted as a "rule of thumb" that it costs about a billion dollars to cover a million uninsured individuals.

Reinhardt says that a "reasonable" coverage plan would cost at least $30 billion annually.

Next year, the issue of helping those without health insurance will have to fight for air against the question of providing Medicare prescription coverage, which was a far more dominant election issue.

Some are optimistic about the prospects. "The fact that these three respected organizations agree ... is an excellent sign that bipartisan cooperation and progress are possible on this important issue next year," Sen. Edward Kennedy (D-Mass.) said.

All political observers agree that bipartisan compromise will be necessary to break Washington gridlock in the months ahead. Nearly two weeks after Election Day, the presidential race is still too close to call. Meanwhile, both houses of Congress will continue under Republican control, but the party margin is very slim.

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