President Bush has reached a solid agreement with Senate
"moderates" to provide health care assistance to displaced workers
as part of the stimulus package. The compromise proposal
establishes a tax credit for workers to purchase affordable health
care coverage. This tax credit approach offers displaced workers
the practical assistance they need to help them secure health care
coverage for themselves and their families.
The compromise proposal provides a refundable, advanceable tax
credit for 50 percent of premiums paid for health care coverage, up
to $110 per month for individual coverage or $294 per month for
family coverage, for 12 months. Displaced workers would be
immediately certified for eligibility through their state workforce
agencies, and the credit would be available to them for two
years.
This tax credit proposal allows workers to choose the coverage
option they think best for themselves and their families during
their period of unemployment. Designing the tax credit as a
refundable and advanceable credit also ensures that workers will
get the assistance when they need it, when premiums are due, rather
than having to wait for a reimbursement. It allows workers to
assign the credit directly to the insurer of choice, thus avoiding
additional and burdensome paperwork requirements. In addition, any
National Emergency Grant funds could be used by states to further
supplement the cost of the coverage.
WHY THE COMPROMISE PLAN IS AN
EFFECTIVE PROPOSAL
Most in Congress and the Administration agree that displaced
workers should not be forced to go without health care coverage
during this period of unemployment. Of all the proposals, the
compromise proposal agreed upon by the President and Senate
"moderates" is most effective because of its scope, administration,
and flexibility.
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Scope. The proposal covers all displaced workers regardless of whether they are eligible for COBRA or not. Every American worker, not just those eligible for COBRA, would have the opportunity to obtain private health care coverage using the tax credit.
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Administration. The proposal is administratively simple and quick to implement. With coordination between the U.S. Treasury and state unemployment agencies, displaced workers would get assistance quickly.
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Flexibility. The proposal allows displaced workers, taking into account their own families' personal medical and financial situations, to decide which health care coverage options are most affordable for themselves and their families and best-suited to their needs. The displaced worker would decide whether to purchase COBRA, if eligible; "super-COBRA," a state-run continuous coverage option available in some states; or other types of private, non-employer-based health insurance.
CONCLUSION
Some congressional critics of the tax credit approach have proposed
Medicaid expansion as an alternative during negotiations on the
stimulus package. Some of these critics reportedly proposed a wild
expansion of Medicaid eligibility, covering persons up to 400
percent of the official poverty level. In other words, millions of
these Americans, if they were unemployed, would have no other
practical alternative but to be enrolled in the Medicaid
program.
Medicaid is not only in a financial crisis in many states, but is
also characterized by the delivery of substandard care to many
Medicaid enrollees. Access problems, aggravated by low Medicaid
reimbursement to doctors and other providers, often deny Medicaid
enrollees the care they need when they need it. It is hard to
imagine many private-sector workers who, given the choice, would
voluntarily sign up for a welfare program when they could get
superior private health insurance.
To restore real accountability and patient satisfaction in the
current health care system, individuals and families should have
the ability and the opportunity to make their own health care
decisions. Tax credits offer both of these advantages. Displaced
workers, who have no employer and who do not want to be enrolled in
a government-run welfare program for health insurance, can benefit
from this significant compromise between the President and
reasonable members of the Senate.
The policy choice is simple. Congress can force displaced workers
onto Medicaid--a flawed welfare program--by denying them any
alternatives. Or Congress can level the playing field for workers
and their families and enable them to purchase private health care
coverage on their own.
Nina Owcharenko is Health Care Policy Analyst at The Heritage Foundation.