Insurers offer plan to cover uninsured - Industry group calls it America's No. 1 policy priority

Insurers offer plan to cover uninsured - Industry group calls it America's No. 1 policy priority
By Judith Graham
Copyright © 2006, Chicago Tribune
Published November 14, 2006


The insurance industry proposed an ambitious plan Monday to cover as many as 45 million uninsured Americans, adopting a pro-health reform posture that would have been unthinkable a decade ago.

"We think covering the uninsured should be the nation's No. 1 domestic policy priority," said Karen Ignagni, president of America's Health Insurance Plans, the nation's leading health insurance trade group.

The organization called on the federal government to spend an additional $300 billion over 10 years to expand public health programs for poor Americans, offer subsidies to working families to buy medical coverage, and support state health reform efforts. But there are no specifics on how the proposals would be financed or provisions for taming rapidly escalating costs.

The first priority should be providing insurance protection to almost all of the nation's children in three years, Ignagni said. Then the focus should turn to programs that will aid adults, including new tax-advantaged accounts for people who purchase insurance on their own.

With the Democrats taking charge of Congress after last week's elections, the industry plan helps set the stage for action on health reform. Democrats have long considered health care a priority and signaled a keen interest in expanding medical coverage.

"This reinvigorates the discussion of how we can achieve universal health care in America," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, a non-partisan think tank.

Health reform has been off the table nationally for a dozen years because of political volatility. But recently, consumers and businesses have become convinced that soaring medical costs and growing numbers of people without any coverage have to be addressed.

Now, the insurance industry is putting its enormous clout behind the concept. Kaiser Permanente CEO George Halvorson, chairman-elect of the insurance trade group, said that "by ensuring that everyone has access to coverage, we can make families more secure, workers more productive and, ultimately, make this a healthier nation."

That's an enormous shift from the insurance industry's stance a dozen years ago, when President Bill Clinton tried to enact universal health care coverage and the industry responded with the scathing "Harry and Louise" television ads that helped deliver a stinging defeat to the Clinton White House.

"You've got to remember how fiercely the insurance industry fought health reform back in 1993 and 1994 to appreciate how encouraging it is to see them make these new proposals," said Ron Pollack, executive director of Families USA, a consumer group and advocate of universal health care. "This indicates the industry is now prepared to move on a positive track." In a statement, the American Medical Association said it "welcomed" the insurance industry's proposal.

Two principles underlie the plan, Rowland suggested: the importance of the public and private sector working together to solve the crisis, and the inevitability that significant government spending will be required.

The crisis involves a set of knotty problems. As health-care costs rise sharply, health insurance becomes more expensive. This causes employers to stop offering coverage. Employees also decide to turn down coverage because of the cost.

As more people go without health insurance, they delay getting medical care and end up acutely ill at public clinics or in hospital emergency rooms. The unreimbursed cost of their care then is then shifted onto those who can pay--taxpayers who pay for public health programs, employers and consumers who purchase care on their own. And the cost spiral continues.

Last year the ranks of the uninsured swelled by 1.3 million to reach a record 46.6 million Americans, or 16 percent of the population. The vast majority of people newly without medical coverage were full-time workers and their dependents.

The insurance industry plan would cover most, but not all, of these people through three initiatives that would cover needy children and needy adults and offer subsidies and tax incentives for the purchase of health insurance.

The insurance industry plan also calls for the federal government to spend $50 billion supporting state health reforms, such as the groundbreaking universal coverage plan passed by Massachusetts this year. Illinois has spent a year considering various health reform options, and a task force is due to present its recommendations to the legislature later this year.

Meanwhile, a loose coalition of about two dozen national organizations representing doctors, hospitals, consumers, the insurance industry and business is likely to issue its own recommendations on national health reform in early 2007, said Pollack of Families USA. Like the insurance industry plan, the proposal will combine public and private program initiatives to fill gaps in coverage.

"Interest groups that weren't willing to compromise 5 or 10 years ago are talking and working together. There really seems to be movement on this issue," Pollack said.

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Who would be eligible under the plan

Key elements of the health insurance industry proposal:

- Covering needy kids. All children from families with incomes below 200 percent of the federal poverty level would become eligible for Medicaid or another public program known as the State Children's Health Insurance Program. A family of four earning $40,000 or less a year would qualify. Also, families would get a health-care tax credit of $200 per child, up to a total of $500 a year, for buying health coverage for children.

- Covering needy adults. All uninsured adults with incomes below 100 percent of the federal poverty level (or an annual income of $9,800 or less) would be eligible for Medicaid, including single men and women.

- Offering subsidies and tax incentives to buy insurance. Individuals or families could establish a "universal health account" with pretax dollars and use it to buy health insurance. A family could give up to $4,000 a year; an individual would be capped at $2,000. The government would offer subsidies of up to half of that amount--$2,000 for a family, $1,000 for a person--depending on household income. The full subsidy would be available to families making up to $60,000 a year. People who get insurance from employers also could create an account.

-- Judith Graham

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jegraham@tribune.com