Overview

For as long as health insurance rates have been measured systematically in the United States, there has been no progress in reducing the number of uninsured. Even after slight improvements in coverage rates at the tail end of arguably the strongest economy in the nation's history, coverage rates are still lower now than they were in. Failure is all too common in health care policy and reform efforts.

Covering the uninsured requires a new approach to health policy. Current policies are based on propagating rules and manipulating behavior, rather than on achieving results. For example, Medicaid provides substantial federal funding in exchange for compliance with federal requirements. Yet, even where federal law requires coverage for certain categories, such as low-income, pregnant women and children, there is no automatic assessment of how effective state efforts are to enroll people. Not surprising, large gaps between eligibility and enrollment rates persist, especially in the case of children.

Rules and incentives are necessary and important tools, but they are more useful in helping to set the conditions for success than as ends in themselves. Health policy needs to include real-time assessment of performance and continuous recalibration of methods to achieve the desired outcome. Describing success so everyone can help to pursue it is more likely to inspire progress than merely prescribing behavior based on an incomplete theory or an inappropriate model.

Our vision of success is that nearly all U.S. residents have health care coverage, which they select for themselves and which provides them with a level of coverage that is appropriate to their health status and income level. Health care would be delivered safely without waste and with the best possible individual and population-based outcomes. People who remain uninsured for whatever reason would be assured access to community-based outpatient and preventive care services rather than having to rely on emergency room and hospital-based care only, often delivered too late in the course of illness to be effective.

In general, the government would ensure that everyone has the opportunity to get coverage, and individuals would be responsible for obtaining it and using resources wisely. We seek broad recognition that as a community, decisions about the use of health care resources affect our common health and our common wealth.

There can be no real progress or success without clearly defined accountability. Our framework for accountability is straightforward: The federal government provides a basic level of subsidy to everyone according to need and supports the research and encourages the information flow necessary for high-quality, cost-effective use of health care services. The states make sure that coverage is affordable and a choice of health plans is available to people in diverse circumstances. Employers act as conduits for enrolling and paying for coverage (even if they choose to make no contribution themselves), and individuals are responsible for securing coverage and paying their fair share.

Here, then, are the key ingredients of our proposal that are necessary for success:

Tax credits for employer-sponsored and individual health insurance to improve affordability. Our tax credits would apply to both employer-sponsored coverage and individually purchased coverage. They would be available to the uninsured as well as people who are struggling to afford coverage they already have. The existing tax exclusion for employer-sponsored coverage would not be repealed. Therefore, the tax credits would not disrupt employer-sponsored coverage. In addition, the credits would be refundable, which means that low-income workers can use them even if they pay no income tax. They would also be advanceable so workers could use the credit at the time they purchase coverage.

Workplace focus to make coverage easy to get. People are accustomed to getting coverage at work, and our proposal would enable all uninsured workers to do so. However, it would not require employers to sponsor or contribute to coverage.

Voluntary purchasing groups or other options to make choices widely available. As a condition for receiving new federal grants, states would ensure that all employers and individuals could choose among competing group insurance plans through at least one, but preferably several, private purchasing groups. Alternatively, a state could issue a menu of options to make choosing coverage convenient. A modified version of the federal employees' system would be made available to individuals and small businesses as a backup if a state did not follow through.

Performance-based grants to assist states in improving coverage and health care for all their citizens, and to reward those that succeed. All states would receive a base amount to help them improve insurance options in the state, disseminate information about obtaining coverage, advertise the importance of coverage, protect people with high health care costs, and help assure basic care for those who lack coverage. To reward states that succeed, the federal government would give additional grants to states that could document increases in coverage rates. These new state grants would not require state spending to receive federal funding as current programs like Medicaid require. Moreover, these grants would not dictate the means for making improvements. Instead, the federal government would reward states that improve coverage rates so that coverage is equally available and affordable to the young and old, sick and healthy, poor and rich. A portion of the base grant would be set aside for states to participate in national collaborative efforts to develop and test measures of health care quality, access, outcomes, and public health. Those measures would become the basis for additional performance-based grants to states when the data become available.

Information networks to assess state performance, improve quality, and inform policy. In order to fully assess the performance of states, much more data about health care processes and outcomes will be needed. This very same kind of data is important to health professionals, hospitals, and patients in order to avoid costly medical mistakes and to improve quality generally. The same data is also important for research on "the benefit of benefits," which is the subject of controversies involving insurance coverage decisions in the private and public sectors. The federal government would catalyze the creation of information networks that can economically produce this data while keeping patients' medical records private.

Individual responsibility to obtain coverage. With State Children's Health Insurance Program (SCHIP), Medicaid, tax credits, purchasing groups, and the new state grants, coverage for children would be universally available and affordable. A few years after enactment, parents would be denied the personal exemption -- a small tax benefit -- for any of their children who remained uninsured. As it becomes clear that coverage is more affordable and easy to obtain, adults remaining uninsured would lose their personal exemption as well.

Our plan is divided into two phases to encourage adjustments in federal policy based on a systematic, objective assessment of experience and to allow for an evolution in the political dynamic surrounding issues related to health care coverage. The focus of Phase One is simply getting people coverage through tax credits and performance grants, because some coverage is better than no coverage. Phase One would set in place the accountability framework, rules, and incentives described above. Focusing on the relationship between work and coverage would help correct the misperception that the uninsured are non-workers (most are not). It also would help bind together the interests of the middle class with those who are trying to enter the middle class by making health care coverage more secure for everyone.

The focus of Phase Two is solving the problem of underinsurance (inadequate benefits for a given health condition or income level) and enforcement of an individual mandate for coverage for all adults -- explicitly shifting the burden of responsibility for having coverage to the individual. Five years after our proposed tax credits and other reforms went into effect, we propose a commission to study the impact of the credits and performance grants, to recommend changes if necessary, and, most important, to recommend whether to deny uninsured adults the personal exemption on their taxes. Because any coverage mandate must decide what level of coverage is sufficient, the commission would also need to examine the prevalence of underinsurance. Ultimately, the remaining uninsured must take responsibility for their own health coverage. But before we take that final step, we must make health insurance considerably more affordable and easier to acquire than it is today.

Blueprint Keywords: Extra Uninsured ý

David Kendall is the senior fellow for Health Policy at the Progressive Policy Institute. Jeff Lemiuex is the senior economist for the PPI. S. Robert Levine, MD is chairman of the Progressive Policy Institute's Health Priorities Project.