White House Officials Back Senate GOP Stimulus Plan

Top Bush administration officials on Oct. 30 urged lawmakers in the Senate to pass a GOP-sponsored economic stimulus package, but Senate Majority Leader Tom Daschle (D-S.D.) said he would not consider legislation that does not provide greater help to the unemployed and those without health insurance, the Washington Post reports (Kessler, Washington Post, 10/31). Senate Republicans yesterday unveiled an $89 billion plan that includes a number of tax cuts recommended by President Bush. However, Daschle said that an economic stimulus bill must include a new health insurance subsidy for unemployed workers and expanded unemployment benefits. "We will not even consider a bill unless it has those components," he said (Schlesinger/Murray, Wall Street Journal, 10/31). But R. Glenn Hubbard, chair of the Council of Economic Advisers, and Lawrence Lindsay, director of the National Economic Council, said that a new health insurance subsidy would increase the level of unemployment and "spark inflation," in part "because workers would lose the incentive to search for new jobs." In addition, Treasury Secretary Paul O'Neill said that a new health insurance subsidy would amount to a "huge reach and change in policy" (Washington Post, 10/31). The House last week approved a $100 billion GOP-sponsored bill (HR 3090), which Bush supports, that includes a number of tax cuts, as well as $3 billion in grants to allow states to expand health coverage for unemployed workers. House Democrats had proposed a rival bill, which the House defeated on a 261-166 vote, that would have offered unemployed workers a 75% subsidy to purchase health insurance through the COBRA program. COBRA, the 1986 Consolidated Omnibus Budget Reconciliation Act, allows unemployed workers to retain health coverage under their former employers' insurance plans by paying 102% of the premiums.

Senate Democrats
Senate Democrats have offered a number of economic stimulus plans with a "much larger health care component" than the legislation proposed by House and Senate Republicans. Senate Finance Committee Chair Max Baucus (D-Mont.) has proposed a $70 billion plan that would establish a 50% subsidy to help unemployed workers purchase health insurance through the COBRA program and allow more unemployed workers to qualify for Medicaid. Sen. Edward Kennedy (D-Mass.) has proposed "more generous" health insurance subsidies for unemployed workers. In addition, Sens. John Breaux (D-La.) and James Jeffords (I-Vt.) have proposed a two-year, $9.4 billion plan that would provide tax credits to help unemployed workers purchase health insurance through their former employers (Kaiser Daily Health Policy Report, 10/29). However, O'Neill said that he would urge the president to veto legislation that includes health insurance subsidies, which he said would place the government in a "position where it's now going to create a new entitlement" (Wall Street Journal, 10/31). Baucus responded, "It's callous to let ideology get in the way of getting financial relief to people as quickly as possible. I do not expect the president to veto a bill we send him which includes significant health care provisions" (Washington Post, 10/31).

Washington Post Editorial
Meanwhile, a Washington Post editorial says that although Democratic proposals to provide health insurance subsidies for unemployed workers "would be a policy shift," that "doesn't make it wrong -- we think it's right." However, the editorial warns that the proposals would likely "miss a lot of families, lower-income ones especially." The editorial points out that even with subsidies, many low-income unemployed workers "would still be unable to afford" health coverage through COBRA. In addition, according to the editorial, COBRA does not cover unemployed workers from small firms or those that do not offer employer-sponsored insurance, which employ 70% of lower-income workers. The editorial concludes, "Critics say that ... health care payments aren't an efficient form of stimulus. But on balance it would be stimulative, and good social policy as well. The danger is that they give the help but strand the households that arguably need it most" (Washington Post, 10/31).