January 21, 2000

President's 2001 Budget to Extend Health Coverage to 5 Million

The White House announced Jan. 19 that President Clinton's FY 2001 budget, expected early next month, will include a 10-year, $110 billion initiative aimed at improving the affordability and accessibility of health insurance for at least 5 million people who are currently uninsured. The president's proposal expands current public and private programs to accommodate the enrollment of families with incomes of at least 100 percent of poverty ($16,700 for a family of 4) and other uninsured populations who fall in the gap between Medicaid and Medicare.

According to a White House press release, the president's "initiative will: (1) provide a new, affordable health insurance option for families; (2) accelerate enrollment of uninsured children eligible for Medicaid and SCHIP; (3) expand health insurance options for Americans facing unique barriers to coverage; and (4) strengthen programs that provide health care directly to the uninsured."

To address the "inadequate compensation" providers receive for services delivered to the uninsured, the president proposes to increase funding that is used, in part, to offset spending on care delivered to the uninsured. After an initial appropriation of $25 million last year to better coordinate systems of care, the administration is proposing a $100 million increase that approaches the president's goal of investing $1 billion over 5 years towards improving coordinated systems of care. In addition, the budget proposes an increase of $50 million to "support and enhance the network of community health centers that serve millions of low-income and uninsured Americans."

The president's budget proposes to create a "Family Care" program to extend insurance coverage to parents of children who are currently eligible for coverage under Medicaid or the State Children's Health Insurance Program (SCHIP). Parents would receive the same coverage as their children and the states would rely on their existing programs to provide services to low-income parents who lack health insurance coverage. State spending for Family Care would be matched at the same higher matching rate as SCHIP which in some areas can differ by as much as 15 percent. But in order to receive the higher matching rate states would have to cover children to 200 percent of poverty. To cover the additional spending, which is expected to insure 4 million uninsured parents at a cost of $76 billion over 10 years, appropriations to the state SCHIP program would increase by $50 billion over 10 years.

Another provision of the president's budget aims to accelerate the enrollment of uninsured children eligible for Medicaid and SCHIP. Under the president's plan, states would be required to simplify Medicaid and SCHIP enrollment by eliminating assets tests and using mail-in applications as a means to eliminate barriers to enrollment. Furthermore, the administration proposes to allow states to share information from their school lunch programs with Medicaid to help identify uninsured yet eligible children. In an effort to beef up enrollment additional sites such as schools and child care resource and referral centers would be authorized to enroll children in SCHIP and Medicaid. The cost of providing these additional incentives that are expected to increase enrollment by 400,000 will cost $5.5 billion over 10 years.

Another aspect of the president's proposal seeks to expand the health insurance options for Americans facing unique barriers to coverage. At a cost of $28.7 billion over 10 years, the administration would establish a Medicare buy-in option and make the program more affordable by providing a tax credit. People ages 62 through 65 and displaced workers ages 55 to 65 would become eligible for Medicare while employers who drop previously-promised retiree coverage would be required to allow early retirees with "limited alternatives" to have access to COBRA continuation coverage until they reach age 65 and qualify for Medicare.

For workers employed in firms with fewer than 25 employees and who do not receive a health insurance benefit, the president proposes a tax credit equal to 20 percent of their contribution towards health insurance obtained through purchasing coalitions. To facilitate and help off-set the start-up costs of these coalitions, tax incentives would be provided and the Federal Employees' Health Benefits Program would make available technical assistance to new purchasing coalitions.

Information: Paul Bonta or Lynne L. Davis, AAMC Office of Governmental Relations, 202-828-0526.