As Economy Slows, Congress Plans for Increase in the Uninsured

With a slowing economy and rising health care costs "all but certain" to increase the number of uninsured in the near future, Congress has begun looking at ways to increase coverage, but lawmakers remain divided on the best way to achieve this goal, the New York Times reports. In 1999, the number of uninsured dropped to 42.5 million, reversing a decade-long growth of those without coverage. And while most observers believe that the numbers remained mostly static in 2000, a loosening of the labor market combined with double-digit insurance premium increases will likely cause many employers -- especially small businesses -- to reduce or end their coverage. The number of uninsured is particularly responsive to the American economy, as 63% of those insured have employer-sponsored coverage. Dan Danner, senior vice president for public policy at the National Federation of Independent Business, said, "As the market softens and there isn't fierce competition for employees in the marketplace, the result is that more small businesses will drop health care, and the [number of uninsured] will go up substantially."

Will Tax Credits Work?
As Congress turns to this issue, a "popular solution" that has emerged is offering tax credits to allow the uninsured to purchase coverage(Clymer/Pear, New York Times, 3/27). Last week, Sens. James Jeffords (R-Vt.), Bill Frist (R-Tenn.) and Thomas Carper (D-Del.) introduced legislation (S 590) that would provide a $2,500 annual refundable tax credit (Kaiser Daily Health Policy Report, 3/15). President Bush also has called for a tax credit approach. However, some argue that a tax credit in this dollar range will do little to help the uninsured, as a typical family policy costs more than $6,000 annually. Last year, the Congressional Budget Office reported that a tax credit "would have to be fairly large -- approaching the full cost of the premium -- to induce a large proportion of the uninsured population to buy insurance." However, Rep. Nancy Johnson (R-Conn.), chair of the House Ways and Means Subcommittee on Health, said that "adequate family policies" could be found for $3,000 (New York Times, 3/27). She said yesterday that she would introduce a bill this week that would allow "big enough credits for people to buy insurance" (Serafini, CongressDaily, 3/26).

Can the Divide Be Bridged?
On the other hand, Democrats prefer expanding public health programs to help reduce the number of uninsured -- including expanding CHIP to cover low-income parents. The Times reports that a compromise could be reached through both expansion and providing tax credits, a strategy favored by both Johnson and Sen. Charles Grassley (R-Iowa), chair of the Senate Finance Committee (New York Times, 3/27). Yesterday, Johnson defended the president's approach, saying that it has combined a tax credit proposal with an expansion of CHIP and increased funding for community health centers. However, Sen. Kent Conrad (D-N.D.) said that the president has not adequately funded the measures in his budget, adding that he plans to propose spending $80 billion to expand health care programs in the FY 2002 budget. Despite Johnson and Conrad's "optimism," CongressDaily reports that their disagreements on solutions for expanding coverage "highligh[t] the vast partisan divide that continues to plague and threaten Congress' ability to move forward" (CongressDaily, 3/26). In addition, as Grassley and Sen. Orrin Hatch (R-Utah) noted, Congress is now tackling several health issues, including Medicare reform and a patients' bill of rights, and is unclear when the issue of the uninsured will take hold (New York Times, 3/27).