COMMENTARY |
The Brave New Bipartisan World of Health Care Reform: How Will Low-Income Families With Children With Special Health Care Needs Fare?
Department of Pediatrics,
University of Colorado School of Medicine,
Denver, CO 80218
Abbreviations: CSHCN, children with special health care needs
"Insurance for Children With Special Health Care Needs: Patterns of Coverage and Burden on Families to Provide Adequate Insurance," published in this issue of Pediatrics,1 sheds some light on an important question: how would low-income families with children with special health care needs (CSHCN) fare if their children were privately insured rather than enrolled in Medicaid? Amy Davidoff from the Health Policy Center of the Urban Institute provides us with information that has special child health policy relevance given an emerging bipartisan approach to health care reform. In this approach, tax credits, possibly combined with a mandate, would be used to purchase private health insurance. Our current employer-based insurance system would transition to one in which individuals select their health plan in a competitive private market. Tax credits would function as an income-adjusted premium subsidy with qualifying low-income individuals and families receiving a refundable tax credit or transfer payment. Families would probably not receive money; instead, the transfer payment would be like a health insurance voucher redeemable for enrollment in a "reasonable" qualifying health plan. These health plans would be required to offer affordable group rates with community rating. Advocates of this approach would like the initial phase to include children who are enrolled in Medicaid and state children’s health insurance programs as well as people who are not covered in private employer-based plans.
In this "brave new bipartisan world of reform," liberals would embrace the use of tax credits and competition in the private sector, as well as support the phasing out of employer health care costs as a deductible business expense. Conservatives would embrace universal coverage (probably with an individual mandate) with income-adjusted premium subsidies and vouchers as well as regulation of insurance companies to require access to group rates with community rating. Interesting, the Institute of Medicine report on reforming the financing of vaccines for the 21st century mirrors this compromise and recommends the use of federally financed vouchers to purchase vaccines in a competitive private market with increased government regulation of health plans.2 Economic reality and social justice both are driving this compromise. Miller, in his book The Two Percent Solution: Fixing America’s Problems in Ways Liberals and Conservatives Can Love, points out 2 factors.3 First, health care now costs American employers $300 billion a year, and these costs are contributing to the alarming loss of American jobs to other countries as a consequence of globalization. Second, our current tax policy that makes business health care expenses tax deductible results in a $125 billion federal subsidy that disproportionately benefits high-income at the expense of low-income Americans.
Despite evidence presented in Miller’s book that some liberal and conservative congressman may agree on this approach, "the fat lady has not sung," and there are many unresolved, contentious issues that could become deal breakers. Should legislation define a basic benefits package, or is it good enough simply to refer to an existing plan such as the federal employee health plan as the model? How can we guarantee that the tax credit or transfer payment will be enough to purchase a good health plan without excessive cost-sharing requirements now and in the future given medical inflation? Will insurance plans accept community rating based only on age and gender? Is an individual mandate politically feasible even with a generous tax credit? How will people with chronic illness and high medial care needs fare in this new system, especially low-income families who are now enrolled in Medicaid?
The article by Davidoff sheds some light on this last question. Among low-income families with CSHCN (defined as those with total family income <200% of the federal poverty level), 13.2% of children were uninsured, 33.5% had private health insurance, and 54.9% had public insurance. Some (6.3%) children had multiple coverage with either >1 private plan or both private and public plans. Davidoff states (but does not provide the actual data) that reported unmet needs of low-income CSHCN who are enrolled in commercial health insurance plans and Medicaid were similar except for unmet dental need, which was twice as high in privately insured children. Although it is reassuring that low-income families in commercial plans do not report higher levels of unmet need, it is disturbing that almost 20% of low-income CSHCN had some type of unmet need compared with 9.9% of high-income CSHCN and 9.1% of low-income non-CSHCN. This suggests that low-income families, regardless of public or private insurance, face financial access barriers. The financial burden related to the distribution of family out-of-pocket spending was substantially higher for families with CSHCN enrolled in private compared with public plans. The average low-income family contribution to the premium for an employer-sponsored insurance plan was $1939, or 10.5% of the family total income, whereas the contribution for a nongroup plan was $4141, or 15.9% of income. This premium contribution does not include out-of-pocket spending related to copayments and deductible payments, which can be considerable in private plans. Unfortunately, Davidoff did not separate out-of-pocket spending by premiums, copayments/deductibles, and noncovered services. The out-of-pocket spending for higher income families with CSHCN with private insurance was >$2000 for 27.1% of families, >$3000 in 13.6% of families, and >$5000 in 6.3% of families.
If Medicaid is replaced by a tax credit/voucher system, then it will be important to protect low-income families with CSHCN from burdensome family cost sharing related to premiums, copayments and/or deductibles, and needed noncovered services. Consideration should be given to ensuring that these families can "purchase" insurance plans with decreased cost-sharing requirements and/or obtain supplemental insurance plans for CSHCN that increase access to needed services and decrease cost sharing. Another approach might be to provide these families with supplemental refundable tax credits for medical savings accounts that can offset increased family out-of-pocket spending and cover types of services not normally included in commercial plans, such as transportation, respite care, or specific types of durable medical equipment.
Health insurance for every child in America remains an elusive goal. We should not be seduced into giving up what we now have with Medicaid, especially for CSHCN, unless we are certain that these politically and medically vulnerable children will not become losers in any "brave new bipartisan world of health care reform" that actually gets enacted. Rather than start this health care reform approach with Medicaid, it would be better to maintain this program intact until the benefits of this alternative approach are clear.
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FOOTNOTES |
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Received for publication Jan 27, 2004; Accepted Feb 2, 2004.
Reprint requests to (S.B.) Children’s Hospital, 1056 E 19th Ave, B032, Denver, CO 80218. E-mail: berman.stephen{at}tchden.org
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REFERENCES |
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 TOP REFERENCES |
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- Davidoff AJ. Insurance for children with special health care needs: patterns of coverage and burden on families to provide adequate insurance.
Pediatrics.2004; 114
:394
–403
[Abstract/Free Full Text] - Miller M. The Two Percent Solution: Fixing America’s Problems in Ways Liberals and Conservatives Can Love. New York, NY: Public Affairs, Perseus Books Group; 2003
- Institute of Medicine. Assuring Access and Availability: Financing Vaccines in the 21st Century. Committee Report. Washington, DC: National Academies Press; 2003
PEDIATRICS (ISSN 1098-4275). ©2004 by the American Academy of Pediatrics
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