Guest Opinion

Connecting the dots on access to health care
By Andrew Cannon, Research Associate

As published in the Tuesday, May 21, 2011, The Des Moines Register

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At a time when the number of uninsured tops 50 million, some lawmakers are suggesting policies that would only inflate that number and accelerate economic insecurity.

While surely not their intent, this is precisely what two policy prescriptions in particular would do.

The first policy proposal, floated in recent weeks, would let states weaken federal Medicaid protections in the name of "state flexibility." While the new health-reform law prohibits states from restricting Medicaid eligibility, the proposal by Sen. Orrin Hatch, R-Utah, and Rep. Phil Gingrey, R-Ga., would repeal that "Maintenance of Effort" requirement in the Affordable Care Act.

Medicaid allows children to go to the doctor and get their check-ups. As many states face budgetary challenges, however, their leaders are seeking the simplest solution possible: end medical coverage for young children in low-income families, the elderly in long-term care, and people with disabilities. Though Medicaid is typically thought of as a program for the poor, nearly half of all Medicaid enrollees are children; another 25 percent are elderly or persons with disabilities.

States already have considerable flexibility in trimming Medicaid costs. Community Catalyst, a national health policy advocacy group, sent a letter to Department of Health and Human Services Secretary Kathleen Sebelius detailing some of those options, which include recalibrating payment rates, reducing preventable hospital readmissions and complications, and wiser use of prescription drugs.

Hatch and Gingrey's proposal would, according to the non-partisan Congressional Budget Office, increase the number of uninsured children by over 260,000.

Another proposal that could add to the number of uninsured comes from the President's National Commission on Fiscal Responsibility and Reform, which has fresh attention as the budget debate heats up.

The commission proposed capping and gradually eliminating the exclusion of employer contributions to health insurance premiums from the calculation of the employee's taxable income. This means employers' contributions to insurance above the cap - and ultimately all contributions - would be treated as income for tax purposes.

Under the commission's plan, employer contributions to health plans with premiums above $18,752 starting in 2014 would be subject to tax. Because health insurance premiums grow much faster than the general inflation rate, more and more health plans would be subject to this cap. By 2018, the Economic Policy Institute estimates the cap would hit six of 10 family plans.

The most devastating effects would come as health consumers and employers react to the cap. Employers would likely offer less comprehensive plans that would not be subject to the cap, leaving consumers vulnerable to higher cost-sharing. Small businesses and firms with older or less healthy employees would be disproportionately affected by such a cap. They already have higher per-capita health contributions than large firms or those with younger workforces.

Many firms would likely respond by simply dropping coverage altogether. A 2009 study by the business consulting firm Mercer showed that, when faced with a tax on health benefits, up to 7 percent of firms would stop offering health benefits.

Our policy makers must ask themselves whether efforts to reduce the federal deficit or make spending cuts easier for states should come at the expense of children, the elderly, people with disabilities, or working families. That is really the choice they are making.

andrewcannonphoto

ANDREW CANNON
is a research associate for
the nonpartisan
Iowa Policy Project
in Iowa City.

Contact: acannon(at)iowapolicyproject.org.