Oklahoma faces special challenges in trying
to increase access to affordable health insurance for its citizens.
Compared to national averages, fewer of its citizens receive health
insurance at work, and they are more likely to work for smaller firms
that do not offer insurance. The state's low per capita income rate also
means fewer people can afford to purchase coverage on their own.
A special joint task force of the Oklahoma legislature, co-chaired by
Sen. Angela Monson (D-Oklahoma City) and Rep. Bill Mitchell (D-Lindsay),
is conducting a series of hearings to investigate the problem and
explore solutions. It is charged with producing a report early next year
with recommendations for action.
At the invitation of Sen. Grover Campbell (R-Tulsa), I was invited to
testify before the task force recently, and I suggested that a fresh
approach is needed. For decades, state and federal legislators have
created and expanded government entitlement programs and imposed more
and more regulation on the health sector. Yet the number of uninsured
continues to rise, reaching 44 million last year, according to the U.S.
Census Bureau.
Political leaders and the public have been frustrated in learning
more about what doesn't work than what does. For much of the decade,
legislators at both the federal and state levels have tried to help more
citizens gain access to affordable health insurance through regulation.
The U.S. General Accounting Office (GAO) studied the states that were
most active in passing health insurance regulations affecting their
individual and small group markets. These states mandated what insurance
must cover, to whom and when it must be sold, and what the premiums
could be.
The Galen Institute, in a study published by The Heritage Foundation,
looked at the experience in the early 1990s of 16 states that had been
identified by GAO as having been most active in passing regulations.
Unfortunately, the efforts backfired. Regulations to require insurers to
sell policies at politically-determined prices with mandated benefits
and guaranteed access to insurance – even if people wait until they are
sick to buy coverage – had the effect of driving up prices and driving
health insurance out of reach for more and more of their citizens.
Legislators that design Cadillac plans when most people can afford
only a Ford condemn their citizens to going without coverage at all. We
found that the uninsured rates in the 16 states that were the most
aggressive in passing health insurance regulations rose eight
times faster than the other states the year after all the
regulations went into effect. Fortunately, Oklahoma was not one of the
16, and it has a better chance than other states of taking steps that
can bring a fresh approach to improving its health insurance profile. In
order to make real progress, however, a federal/state partnership is
needed, one that gives more people an opportunity to purchase private
health insurance rather than expanding government entitlement programs.
These were my recommendations to the Oklahoma Joint Legislative Task
Force on Expansion of Health Insurance Coverage:
State Children's Health Insurance Program (S-CHIP). This joint
federal-state program provides funds to give children health insurance
coverage. Several states have found that they can cover more children
through private insurance rather than expanding Medicaid, the health
program for the poor. Utah, for example, asked private insurers in the
state to bid on providing coverage to children through the program. Four
private insurers are participating, and the parents of uninsured
children have their choice of plans. Gov. Michael Leavitt (R-UT) says
children on S-CHIP get "health insurance that's just as good as the
governor's children get, and we are covering twice as many kids as if we
had expanded Medicaid."
Oklahoma could create a similar program and also could take advantage
of a provision in the S-CHIP legislation that would allow families to be
covered by private health insurance if it would cost no more than
covering the children in that family.
And the state could submit a request to the administrators of S-CHIP
in Washington that would give lower income working parents a voucher to
add their children to health plans they may receive at work, as
Massachusetts has done.
Tax credits. A number of legislative proposals have been
offered in Congress which would give those without health insurance a
tax credit toward the purchase of insurance. Providing tax credits for
the uninsured has bi-cameral, bi-partisan support in Washington. House
Majority Leader Dick Armey (R-TX) would offer a tax credit of $1,000 per
adult and $500 per child, up to $3,000 for a family. Rep. Pete Stark
(D-CA) would offer tax credit worth 30 percent of the price of a policy
for individuals and families earning up to $40,000 a year.
To get a jump on the federal government, Oklahoma could create its
own tax credit program for the purchase of private health insurance, and
it could make the credit "refundable." If someone owes less in taxes
than the amount of the tax credit for which they are eligible, they
could get the full amount toward the purchase of health insurance. A
state tax credit could be especially valuable for working parents whose
children don't qualify for S-CHIP but could use the money to add their
children to their coverage at work.
Medicaid reform. A big picture change that is gaining
attention in the presidential debate is reform of the troubled and
expensive Medicaid program, the joint-federal health care entitlement
program for the poor. Steve Forbes has suggested giving Medicaid
recipients the dignity of obtaining private health insurance by
providing the value of their Medicaid benefit toward private insurance.
This is not the same as Medicaid managed care, in which insurers have to
provide a very rich package of benefits at set prices. This would allow
insurers to compete on both price and benefits, within a range
established by the legislature.
Oklahoma can be a partner in solving its unique problems by focusing
the dollars where they are most needed…by helping people who are trying
to get off welfare but are fearful if they make too much they will lose
their health benefits…by helping parents to add their children to their
health plans at work…and by giving people in rural areas dispensation
from the regulations and mandates that drive up the cost of insurance
and drive insurers out of the market.
Managed care has hit and passed it peak; a new kind of health plan
could emerge to meet the demand if consumers are more active in forcing
the market to meet their demands for quality, affordable coverage. But
that means loosening regulation and energizing the private market.
Oklahoma could lead the way in encouraging federal action by showing
that it is taking complementary steps toward legislation that empowers
people to obtain private health insurance that is affordable and meets
their needs.
Grace-Marie Arnett is president of the Galen
Institute, a public policy research organization based in Alexandria,
Virginia. She is the editor of Empowering Health Care
Consumers through Tax Reform, published in 1999 by the
University of Michigan Press.