opinion

Tax credits are best approach for uninsured

Now is the time to lay the groundwork for passage of such a proposal next year.

Posted June 14, 2004.

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The toll of America's health insurance access problem manifests itself in many ways. The nation's nearly 44 million uninsured residents are less likely to get the medical care they need, more than half don't have a personal doctor, and they routinely forgo preventive services. These people often live sicker and die younger.

When they do get care, it frequently goes unpaid for, putting a strain on the health care system. This year, the financial tally of uncompensated care is estimated at $40.7 billion, according to the Kaiser Family Foundation. About 18% of that care is provided by physicians, many of whom are already struggling with low managed care payments, rising liability insurance premiums and government reimbursement that isn't keeping pace with rising costs.

These problems and their impact both on health and the health care system were the focus last month of "Cover the Uninsured Week," designed to raise awareness of the issue among policy-makers and the public. More than 2,000 events took place nationwide, and the American Medical Association was among the participants. It was the largest mobilization devoted to obtaining affordable health insurance for all Americans, according to the effort's sponsor, the Robert Wood Johnson Foundation.

This level of attention is critical to addressing the problem, but action is ultimately required. The large federal budget deficit and election year politics make passage of any comprehensive reform virtually impossible this legislative session. But that doesn't mean this year should be wasted. Now is the time to lay groundwork for action in the new Congress. The issue should be a major element in the presidential election, and lawmakers should focus on ways to solve the problem.

And that's where the AMA comes in. Since 1998, the Association has advocated a comprehensive solution that merges health insurance tax credits, individual choice and ownership of insurance, and market and regulatory reforms.

The current tax system benefits people who get insurance through their jobs, usually at large companies. Left out in the cold are the working poor, many of whom are employed by small businesses. These people often can't afford coverage, even if they are lucky enough to have it offered. The working poor are the majority of the uninsured. They are all around us -- waitresses and busboys, hair stylists, store clerks.

Tax credits would bring health insurance within their financial reach. But not just any tax credits will do. To make a real impact, they have to be large enough and inversely related to income. The credits must be refundable so that even those who pay little or no taxes would get them, and they have to be advanceable so people don't have to wait to file taxes to get them.

This approach would give consumers, rather than employers, the power to pick the insurance that best meets their needs. Choice would foster competition. Health plans that weren't up to snuff in the products they offered and the quality they provided wouldn't survive. People would become more conscious of insurance costs, and that awareness would act as a cost control as consumers sought coverage with the most value.

Market changes will be necessary for the effort to succeed. People would need easy access to affordable products. Demand would drive the creation of new options. But in some cases, laws would need to be passed, and regulations changed to give the market a nudge. The goal is to give people buying individual insurance an alternative that is just as good as the group market.

The end result would be not only vastly improved access to coverage and, thus, medical care, but also a restoration of the patient-doctor relationship that managed care has eroded. Consumer choice of insurance would give consumers choice of physicians.

As Cover the Uninsured Week has shown, the desire to fix the problem is strong. There are promising signs. Both President Bush and Democratic presidential candidate John Kerry are promoting their versions of tax credits, and legislation has been floated on Capitol Hill.

But action must follow words. Let's take the time to move toward this sensible market-based solution.

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External links

Cover the Uninsured Week (link)

AMA on Cover the Uninsured Week (link)

"Expanding Insurance Coverage Through Tax Credits, Consumer Choice and Market Enhancements," abstract, Journal of the American Medical Association, May 12 (link)

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