Now, with many victims' families losing coverage, the problem of
how to reduce this number has assumed greater urgency on Capitol
Hill. Add in the folks who've been fleeced by Enron, and the scope
of the problem becomes clear.
Some members of Congress want to have the uninsured join
Medicaid or some other government program. Others say give them
financial help to keep the coverage they had from their former
employer. Still others say help them without limiting their choice
of coverage -- let them enroll in any plan they want. Which
approach would work best?
The first proposal is a real non-starter. Having the uninsured
join Medicaid effectively means telling them to line up at the
welfare office and sign up for a program that's already in bad
shape. States are trying to cut their Medicaid costs as their
budgets plunge into the red, so adding to the program's rolls
hardly seems advisable. Besides, the states tightly restrict what's
covered and how people get care, making Medicaid increasingly like
a giant, government-run HMO.
Then there's the notion of subsidizing so-called "COBRA"
coverage. COBRA is a law that lets the unemployed remain covered
under their former employer's plan for up to 18 months -- but only
if they pay the premiums (and a small administrative fee)
themselves. There's usually severe sticker shock when a family gets
the full price tag for the premium, since most of it has usually
been paid by an employer. Many families can't afford to continue
their coverage under COBRA, so some in Congress say Washington
should foot much of the bill.
Sounds attractive, but there are some problems. For one thing,
more than 40 million workers are ineligible for COBRA coverage if
they become unemployed. Many in small business don't have an
employer-sponsored plan. They would have nothing to sign up
Second, those who do qualify for COBRA, and would like to shop
around for more affordable coverage, would be out of luck. Say your
former employer's plan costs $600 a month. Many of those who
advocate subsidizing COBRA say the government should cover 75
percent of what you pay, so you would have to come up with $150 a
month. But say you're a young, married non-smoker who could get a
good basic plan for $200. You're stuck shelling out $150 a month
for coverage you may not even want, rather than paying $50 (after
the government's share) for one you do.
Third, you'd be telling people to trust their family's health to
the company that's responsible for them being unemployed. Imagine
telling those fired by Enron, "We'll help you pay for insurance,
but only if you get it from the same people who just destroyed your
retirement and threw you out onto the street." Besides, if you were
laid off, the firm probably isn't in great financial shape and is
looking for savings. Cutbacks in generous health plans are an
attractive option. And most workers would lose their coverage
altogether if their former company goes out of business.
Here's a better approach: Take the same financial help that
would go to extending COBRA and give it to uninsured Americans in
the form of a tax credit. That way, they can buy the coverage they
want from a source they trust. That's what President Bush has
proposed. It was in a stimulus bill that was passed twice by the
House of Representatives. But Sen. Thomas Daschle, the Senate's
majority leader, refuses to let it even come up for a vote.
Under the tax-credit approach, laid-off workers could use the
subsidy to stick with a company plan if they wished. But they
wouldn't have to. They could use the money instead to buy
coverage that was more in line with their needs -- perhaps
something more affordable or a plan from an insurer recommended by
their own doctor.
There are plenty of Enron workers, along with quite a few who have seen their health coverage evaporate post-Sept. 11, who would be very grateful for that option today. And there are plenty of employed workers who would appreciate having such a choice available to them if they ever need it. Otherwise, we risk making a bad situation far worse.
M. Butler, Ph.D. is vice president for domestic and
economic policy studies at The Heritage Foundation
(www.heritage.org), a Washington-based public policy research
This piece originally appeared in the San Francisco Chronicle