Americans of all political persuasions are understandably concerned about the fact that millions of children lack the protection of health insurance. To be sure, many of these children do have access to a reasonable level of health services when serious illness or injury strikes. But it is nonetheless deeply disturbing that many children and their parents lack the normal range of health care services and the financial security that comes with adequate insurance.
If this problem is to be solved, however, two things are needed. The first is that leading lawmakers should not permit the plight of uninsured children to be reduced to a political weapon, as Medicare was in the last Congress and during the most recent election cycle. Unfortunately, there are signs that some organizations may see it as just that. For example, John Sweeney, President of the AFL-CIO, declared at last year's annual conference of the American Public Health Association, "If they [conservatives] don't come around, we'll use children's health the way we used Medicare, and that's a promise and a commitment."
The second thing that must happen is for lawmakers interested in a genuine solution to understand the root cause of the uninsurance problem, and to propose actions that begin to deal with that root cause rather than apply Band-Aids to the symptoms. In so doing, they also must ponder the long-term effects of proposals they make to deal with uninsured children, lest these proposals produce damaging side effects or eventual results that run counter to their goals. Unfortunately, some of the proposals now being discussed would create new problems without effectively addressing the problem.
Congress must recognize that the phenomenon of uninsured children, and of other uninsured Americans, is the direct result of the fact that the health insurance—if any—of most families with children typically is employment-based. The underlying problem with this situation is that it prevents working families from choosing and owning their health insurance—unlike the way they select the providers of their life insurance, homeowner's insurance, and automobile insurance. With employment-based health care insurance, employers choose and own the plan. To be sure, that part of the employee's compensation earmarked for a health insurance fringe benefit is tax-free to the employee. But there is a stiff price associated with this benefit: families lose control of the benefits. Consequently, the cost-control objectives of the employer often will run counter to the goals of the family. For example, employers experiencing a relatively high turnover of staff have little incentive to "invest" in the health of the children of those employees, which is one reason dependent coverage is less prevalent in the low-skill service sector. Furthermore, because the insurance is employment-based, a job change means a change or interruption in coverage, and possibly the loss of protection. These and other consequences of employer-owned insurance lead directly to high levels of uninsurance among children.
It is deeply troubling that many children in the United States lack access to a dependable, predictable system of health care. But action to deal with the problems must seek to address the underlying cause, not just the symptoms. Fortunately, there are steps Congress can take, mainly by using existing programs and resources, that can begin to deal systematically with the problem. Specifically, Congress should:
- Make it easier for families to own and control their health insurance by reforming the tax treatment of health insurance and spending. Congress should provide immediate help in the form of a tax deduction for children's medical expenses for families without health coverage for children. This deduction should be made available as "above-the-line" so it is available to families that do not itemize their tax return. Congress also should introduce refundable tax credits for health care purchases for lower-income, working families and consider converting the deduction over time into a credit.
- Allow states more flexibility in using existing federal Medicaid funds. Most states already have expanded coverage to uninsured women and children beyond the federal minimum requirements by making use of federal waivers and options. In addition, there are numerous public–private partnerships and solely privately funded programs that provide health coverage to thousands of children in communities across the country and serve as models for community-based solutions. Allowing states more flexibility with existing Medicaid funds could enhance existing programs and allow new ones to develop.
Tax relief and Medicaid flexibility are incremental, targeted responses to the problem of uninsured children that avoid the onerous regulations and expense of new federal grant programs. More important, these limited measures will begin to shift the debate over health care reform in this country away from one that historically has centered around how the government can "fix" what is wrong with the system with new taxes, regulation, and mandates on private business and insurers and toward how the government can create new health care choices for people who lack them today.
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