Re-Directing Budgetary Priorities To Help The Uninsured: A Call To Action From America's Internists

February 10, 1999

Introduction

Congress needs to take immediate steps to help the more than 43 million Americans who lack health insurance coverage. The American College of Physicians-American Society of Internal Medicine (ACP-ASIM) recommends that, as a first step, funds equal to no less than 12.6 percent of the projected federal budget surplus be used over the next five years to expand access to coverage. By spending an amount equivalent to one out of eight dollars from the surplus, Congress could provide coverage to up to 10.5 million Americans.

A Call to Action

For the first time in decades, economic prosperity combined with fiscal discipline have resulted in the federal government taking in more money than it spends. Congress and the president are now engaged in a debate over how the budget surplus should be used. Proposals include applying the surplus to building up the Social Security and Medicare trust funds, providing tax relief or funding governmental programs.

The president has proposed that most of the budget surplus be dedicated to Social Security and the Medicare program. Shoring up Social Security and Medicare is appropriate. But ACP-ASIM believes that sufficient funds exist to fund other urgent national priorities today. In our view, there is not a national priority that is more urgent than reducing the number of uninsured Americans.

The president's proposed budget includes some modest proposals to help the uninsured. But his budget, as well as alternative plans being discussed by congressional leaders, simply does not do enough to help the 43 million Americans without health insurance coverage. And the problem is getting worse: the number of uninsured Americans has increased by more than 15 percent in the past five years-at a time when the economy has enjoyed the longest sustained period of economic expansion in history. Clearly, it can no longer be assumed that a growing economy by itself will result in more Americans being insured. Action by the federal government is required.

Today, ACP-ASIM is calling on Congress and the president to devote the resources necessary to reduce the ranks of the uninsured. At a time of unprecedented economic prosperity, it would be tragic if this Congress and the administration missed the opportunity to provide help to millions of working Americans whose health-and livelihood-are at risk because they do not have health insurance.

ACP-ASIM's Proposed Plan of Action

ACP-ASIM specifically calls on Congress and the president to agree to the following plan of action:

1. Dedicate an amount equal to 12.6 percent of the budget surplus over the next five years toward expanding access to health insurance coverage. By committing to this level of funding, Congress would be able to provide coverage to an estimated 10.5 million uninsured Americans.
2. Target the dedicated funds to support the following initiatives to help low-to-moderate income Americans obtain coverage:
   • Enact a refundable tax credit for uninsured Americans whose incomes fall between 100-150 percent of the poverty level. A refundable tax credit provides a tax relief subsidy from the federal government to assist individuals in buying coverage. By administering the program with an advanced payment option, enrollees would be able to receive monthly payments to offset premium costs, rather than having to wait until their taxes are filed to obtain credits. The tax credit would target low-to-moderate income working Americans who now have the greatest difficulty in affording coverage.
   • Expand Medicaid coverage to provide coverage to all Americans with incomes up to 100 percent of poverty. Since many states do not currently cover people with incomes up to 100 percent of poverty, this expansion would target the poorest Americans who now lack coverage.
   • Expand funding for Medicaid enrollment outreach. Outreach programs are designed to make already-eligible individuals aware of their eligibility for coverage under Medicaid. Lack of knowledge concerning Medicaid coverage options is one of the principal reasons that millions of Americans who are eligible for Medicaid coverage remain uninsured. The ability of states to educate potential enrollees about their options has been hampered by inadequate funding for outreach programs. ACP-ASIM also advocates that states and the federal government institute administrative changes to make enrollment in Medicaid a simpler option for potential enrollees.
   • Provide federal subsidies for temporarily unemployed and uninsured persons to obtain coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) program. COBRA requires that unemployed persons who had employer-sponsored insurance prior to their period of unemployment be given the option of making premium payments to continue their group insurance coverage for a maximum of 18 months after they leave their job. Many unemployed persons cannot afford such payments. A full subsidy, limited to 100 percent of the costs of COBRA premiums, would be provided to workers with monthly incomes at or below poverty, phasing out proportionately at 250 percent of poverty. Federal subsidies would be limited to a six-month period.

Why 12.6 Percent of the Surplus?

ACP-ASIM's recommendation that Congress commit funds equal to 12.6 percent of the surplus was based on what it will cost to fund targeted initiatives to reach the most vulnerable group of uninsured Americans: those with incomes up to 150 percent of poverty. Anything less than this level of commitment will be unlikely to substantially reduce the number of uninsured Americans in this population.

We estimate that a combination of: tax credits for individuals with incomes between 100-150 percent of poverty; an expansion of Medicaid eligibility to cover everyone with an income at or below the poverty level; increased funding for Medicaid outreach programs; and subsidies for the temporarily unemployed and uninsured could result in up to 10.5 million more Americans-almost a quarter of the uninsured population-obtaining coverage.

Although ACP-ASIM is calling on Congress to commit funds in an amount that is no less than 12.6 percent of the budget surplus, we are not insisting that the funds must come only from the surplus. It may be appropriate for Congress to consider offsetting these costs by raising revenue or reducing unneeded expenditures in other areas. For instance, ACP-ASIM strongly supports an increase in taxes on tobacco products, which could be a source of funding for these initiatives. We also propose reducing disproportionate share payments to hospitals as another source of funding, since hospitals will have fewer uninsured persons to treat. Regardless of the source, it is important that Congress commits to a level of funding that is no less than 12.6 percent of the surplus.

Costs, Financing and Impact of Each Policy Initiative

For each of the proposed initiatives that could be funded by a commitment of an amount equal to 12.6 percent of the surplus, ACP-ASIM asked a noted health economist to:

• develop estimates of what each initiative would cost
• determine how much of the budget surplus would be required
• identify supplemental sources of funding that may be needed
• develop projections on the number of Americans who could obtain coverage under each initiative

A summary of the economist's projections for each initiative is presented below.

Refundable tax credits for individuals with incomes between 100-150 percent of poverty would:

• Provide coverage for up to 2.8 million formerly uninsured adults
• Require an investment of 5.4 percent of the budget surplus over the next five years1

Expansion of Medicaid to all individuals with incomes at or below the federal poverty level would:

• Provide coverage to 3.5 million previously uninsured Americans
• Require an investment of 4.5 percent of the federal budget surplus2

Increased funding for Medicaid outreach would:

• Provide coverage to up to 3.2 million previously eligible but uninsured Americans
• Require an investment of 1.6 percent of the budget surplus3

Provide subsidies to temporarily uninsured workers:

• Provide coverage to 1 million temporarily uninsured and unemployed workers
• Require an investment of 1.1 percent of the budget surplus4

The cumulative impact of ACP-ASIM's proposed plan of action on the uninsured is estimated as follows:

Addendum A provides additional information regarding funding, methods of implementation, the impact on the uninsured, and funding sources for the initiatives that ACP-ASIM advocates be considered.

Questions and Answers about ACP-ASIM's Proposal

We recognize that our proposed plan of action raises numerous questions that will have to be addressed by policymakers before the plan can be implemented. Addendum B provides ACP-ASIM's responses to some of the questions that we expect will be asked of us. We welcome the opportunity to respond or to elaborate on our responses and to address additional questions that may be raised by policymakers, lawmakers, the news media and the public.

Implementation

ACP-ASIM is committed to working with Congress and the president to reach agreement on this plan of action. We call on our colleagues in other medical organizations, consumer and patient advocates, and the public to support this proposed agenda for action.

We also call on the House and Senate budget committees to report budget resolutions that allow for the commitment of funds necessary to support the proposed policy initiatives. We ask that the White House work with Congress to assure a level of funding that exceeds the modest access initiatives that are included in the administration's current budget.

As Congress considers the advisability of enacting a broad tax relief measure, ACP-ASIM will urge the congressional leadership, Senate Finance Committee and House Ways and Means Committee to incorporate tax credits for the uninsured in any tax bill that may be enacted this year.

ACP-ASIM also recognizes that internists have a responsibility to help their patients obtain health insurance coverage. We are calling on our leaders at the state level to take concrete steps to enlist internists in their states to support an effort to help state governments enroll eligible-but-uninsured individuals in Medicaid. Through their daily interaction with patients, internists are in a unique position to inform eligible-but-uninsured Americans about resources that are available within their states on how to enroll in Medicaid. We will also be calling on our membership to advocate that states simplify enrollment procedures that act as a barrier to individuals obtaining coverage.

Finally, ACP-ASIM will also be issuing recommendations on other changes that Congress can enact to make insurance more affordable, including changes in the Health Insurance Portability and Accountability Act to make the law more effective.

Long-Term Reform Is Still Needed

Congress needs to take action now to make insurance more accessible and affordable. Equally as important, ACP-ASIM believes that the time is right for Congress and the president to resume discussion of long-term approaches that will result in all Americans having coverage. The incremental steps recommended in this plan would help reduce the ranks of the uninsured, but more than 30 million Americans will still be without coverage.

As a next step toward expanding coverage, Congress should consider making coverage available to all Americans with incomes within 200 percent of poverty. This could be accomplished by enacting the proposals in this plan and expanding the refundable tax credits to all individuals within 200 percent of poverty-making coverage available to as many as 13 million Americans.

But even as Congress enacts incremental measures to expand coverage, it should not lose sight of the critical importance of developing a consensus on a plan to achieve universal coverage. It has been five years since the last great national debate on universal coverage. Since then, much has been learned about what approaches will likely work and enjoy support from the public and policymakers. Enactment of incremental reforms now to stop the problem of the uninsured from getting worse is imperative. But it is equally important that policymakers commit to the hard work that will be needed to achieve universal coverage within the next five to ten years.

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