Cindy Zeldin

Ensuring Health Coverage for California's Immigrant Children

Health Policy — Thu, 10 Nov 2005 00:00:00 -0500

The New America Foundation is committed to achieving universal health insurance coverage for all people in America. The most promising route to universal coverage is a system that relies on shared responsibility among individuals, employers, and the government. To that end, the New America Foundation has released a series of three papers outlining how to cover all children in California as a first step towards universal coverage. This paper is a component of that series.

For the complete document, please see the attached PDF version.

Ensuring Seamless Insurance Coverage for California's Children

Health Policy — Thu, 10 Nov 2005 00:00:00 -0500

Recent national research has shown that 85 million people lacked health insurance at some point over a four-year period.1 While some Americans are consistently uninsured, substantial numbers have intermittent coverage. Consider, for example, a family that is currently covered through a parent’s employment-based health insurance. A subsequent job loss could leave that family uninsured until another job with health insurance is secured, the family purchases a non-group health insurance policy, or the family is determined to be eligible for and enrolls in public coverage. Another family with low to moderate income may have children enrolled in the State Children’s Health Insurance Program (SCHIP), and an increase in family income could result in these children losing eligibility for public coverage. There may then be a period of uninsurance before affordable new private coverage can be secured. Because health insurance is often tied to factors such as employment status or family income, changes in these areas can affect the continuity of health insurance coverage and, consequently, the quality of care received.

The New America Foundation has proposed an approach to comprehensive health reform in California that would build on the system that is already in place, relying upon the concept of shared responsibility among households, employers, and taxpayers.

For the complete document, please see the attached PDF version.

Shared Responsibility to Cover California's Children

Health Policy — Thu, 10 Nov 2005 00:00:00 -0500

Health insurance is the gateway to health and to our health care system, yet over five million Californians are uninsured, about 800,000 of whom are children. Having health insurance facilitates access to affordable care from a network of health care providers and shields families from financial ruin in the case of a catastrophic medical emergency.

While most Californians have access to employment-based coverage, a growing number of people either work for firms that do not offer health insurance or cannot afford its rapidly increasing cost. Public programs such as Medi-Cal and Healthy Families play a crucial role by offering health insurance to low-income children and some parents. However, many uninsured Californians do not meet the eligibility criteria for these programs and cannot afford or are ineligible for private insurance.

For the complete document, please see the attached PDF version.

Reverse Incentive

Cecille Isidro — Wed, 20 Oct 2004 00:00:00 -0400

In response to a question about the cause of rising health care costs in last week's domestic policy debate, President Bush blamed the rise on a lack of consumer involvement and then declared his support for Health Savings Accounts. On the stump, he frequently trumpets these acounts, known as HSAs, as a way to "own your own health care." Yet under the pretext of restraining health care costs by empowering consumers, HSAs could have precisely the reverse effect. Rather than causing patients to be more judicious with their medical spending, they could facilitate the growing crisis of medical debt.

The new Health Savings Account legislation that was enacted as part of last year's Medicare prescription drug bill allows individuals and families to combine a high deductible, or catastrophic, health insurance policy with a tax-favored savings account. Long a favorite in conservative health policy circles, the theory behind HSAs is that traditional health insurance shields consumers from the actual cost of their health care consumption. If forced to pay out of their own wallet, consumers might think twice about getting unnecessary medical procedures. They may even try to negotiate lower prices with their physicians. Throw in the incentive of a tax-favored health spending account that can be rolled over from year to year, and individuals and families could be rewarded for reining in health spending while taking charge of their own health.

This theory suffers from a number of flaws. First, even if health care consumers were to become shrewder spenders, this would have little effect on overall health care costs. This is because the vast majority of health care costs are concentrated among people who suffer from chronic diseases or sustain severe trauma. People in these groups would immediately exhaust any funds in their spending account and continue to incur expenses past a $1000 or $2000 deductible.

Second, the incentives for HSAs tilt heavily toward higher-income people because they derive their advantage from their tax treatment. Neither contributions to nor withdrawals from HSAs are counted toward taxable income. Financial services firms have even marketed them as a tax shelter since distributions after age 65 -- even for expenses that are not health-related -- are not penalized. Indeed, a headline in the Memphis Business Journal this spring declared, "Health Savings Accounts may be best tax shelter." For working Americans whose income is too low to owe any income taxes, however, there is virtually no greater tax benefit to putting money into an HSA than there is to putting it into a checking account.

Third, because one of the goals of HSAs is to encourage people to use fewer health services, they are particularly appealing to healthier Americans who already know that they are unlikely to use much health care. When younger and healthier Americans leave their traditional insurance plan to opt for an HSA-eligible plan, the group they leave behind is necessarily older and sicker, making insurance more expensive for those who remain in the traditional plan. Known as adverse selection, this phenomenon erodes an underlying tenet of insurance -- that grouping people of varying ages and health statuses spreads risk more evenly.

While proponents of HSAs contend that catastrophic policies could cost less, establishing a tax benefit that largely benefits higher income Americans seems an inefficient way to achieve affordability. In fact, a closer look reveals that this policy is not only inefficient, but that it could have the effect of making health care consumption more expensive for lower-income Americans while at the same time making it less expensive for higher-income people. When lower income families purchase a high deductible policy but cannot afford to put aside significant amounts of money into their HSA, they become vulnerable to health expenses that they incur below the amount of their deductible. Faced with the dubious choice of forgoing needed care for a sick child or paying for it with a credit card (with an average interest rate of 13.4%), which would you choose?

In fact, families are already struggling to afford health care. A recent study by the Center for Studying Health System Change found that 15 million families with annual out-of-pocket costs of $2000 or less reported problems paying their medical bills, and, contrary to conventional wisdom, two-thirds of families with problems paying medical bills have health insurance. It is rare not to see a "Payment Due at Time of Service" sign in physician offices today. If you need care and cannot pay for it, your doctor will happily accept your credit card. It's no wonder why credit card debt has skyrocketed in recent years. Nearly half of all personal bankruptcies result in part from medical expenses, according to research by Elizabeth Warren, a Harvard Law Professor.

There is an affordability crisis in health care -- even for those who already have health insurance. Given this crisis, it seems unwise to use federal dollars to reward higher income people who don't get sick while asking American families of modest income to make interest payments on their health expenses.

America's Fragmented Health Care System

Health Policy — Sat, 31 Jul 2004 00:00:00 -0400

The American health system is rapidly approaching crisis. For those fortunate enough to have health insurance, health care costs are escalating — health insurance premiums rose almost 14 percent in 2003, the biggest increase in over a decade. For the 43 million people who went without health insurance last year, the system has already collapsed. As more and more people feel the strain of spiraling costs and face the fear of losing coverage entirely, the public increasingly cites these dual predicaments — rising health care costs and the growing number of people without health coverage — as the biggest health care problems America faces. In fact, recent polls show that Americans are as concerned about health care costs as they are about the war in Iraq and terrorism. The consequences of the instability and high cost of health insurance coverage for our nation’s health are tremendous.

For the complete document, please see the attached PDF version.