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New Health Affairs Study: Federal Health Coverage Expansion Proposals Have Disparate Impact Across States

Expanding Public Programs To Cover Low-Income Adults
Would Reduce Uninsurance Rates In More States Than Other Proposals

Bethesda, MD – Some states could reduce their uninsurance rates by as much as 20 percent under federal policy proposals such as tax credits or public coverage expansions, according to a new study by Columbia University researchers, published June 7 on the Health Affairs Web site. Other states’ uninsurance rates would be unaffected because they have already expanded coverage to low-income populations, or premiums may be too high for the uninsured with low incomes to afford coverage even with a tax credit.

In “Variations in the Impact of Health Coverage Expansion Proposals across States,” published today as a Health Affairs Web Exclusive with support from the Commonwealth Fund, authors Sherry Glied and Douglas Gould find that the numbers of newly insured people in each state would vary under five different policy proposals, based on the income of the uninsured, existing state coverage policies and uninsurance rates, and the insurance market in the state.

You can read the study at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.259

Uninsurance rates could decline by more than 15 percent in Kansas, Oregon, and Utah under a tax credit for low-income people. A federal expansion of Medicaid coverage to adults with incomes below 133 percent of the federal poverty level would have the greatest impact in states such as Arkansas, Kentucky, Louisiana, and Mississippi, reducing uninsurance rates by up to 18 percent in those states.

“The message is that there is no single solution that will work for all the uninsured, so we need a variety of solutions. In some states the problem of the uninsured is related to the high cost of health insurance, and in other states it is more closely linked to high rates of poverty among the uninsured,” said Sherry Glied, a professor in the Department of Health Policy and Management of Columbia’s Mailman School of Public Health. “Federal policies to increase health insurance coverage would be more effective if they took into account the variety of economic structures, insurance markets, and the situations of uninsured individuals across states.”

Effects Of Tax Credits Vary Widely Among States

Glied and Gould estimate that a policy to provide tax credits for health insurance (up to $1,000 for low-income adults, or up to $3,000 for low-income families) would have quite varied effects on the rate of uninsurance, with declines ranging from a 4.4 percent to 20.5 percent.

Arkansas, California, Georgia, Kansas, Missouri, Montana, North Carolina, Oklahoma, Oregon, South Carolina, Utah, and Washington would see the largest declines in their uninsurance rates under this policy because in these states nongroup premiums are low, and a large proportion of the uninsured have incomes below the federal poverty level, making them eligible for the full tax credit.

In states where premiums are high, such as Maine, New Hampshire, New Jersey, and New York, a tax credit would have little effect on the uninsurance rate.

Another tax credit proposal, to help employees in small firms pay for health insurance, would decrease uninsurance rates from 2 percent in Washington, D.C., to more than 4 percent in Idaho, Maine, and Montana. Other states that would experience relatively large declines in uninsurance rates under a small-firm tax credit – because large shares of their uninsured citizens are employed by small firms – include Alaska, Indiana, Mississippi, Nebraska, North Dakota, Utah, Vermont, and Wyoming.

Expanding Public Coverage Could Reduce Uninsurance Rates In Many States

Expanding Medicaid coverage to low-income adults earning less than 133 percent of poverty would have the greatest impact on uninsurance rates in Alabama, Arkansas, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Mexico, South Carolina, and West Virginia. States that already cover some low-income adults – such as Arizona; Washington, D.C.; Delaware; Massachusetts; New York; Oregon; Utah; and Vermont – would see little or no decrease in their rates of uninsured adults under this policy. However, these states might experience budget relief if the federal government shares the cost of this coverage expansion.

Expanding State Children’s Health Insurance Program (SCHIP) eligibility for children in families below 300 percent of poverty would have the greatest effect in states with very low SCHIP eligibility levels, such as Alaska, Colorado, Delaware, Idaho, Montana, North Dakota, Oregon, South Carolina, Tennessee, Utah, and Virginia. In contrast, Connecticut; Washington, D.C.; Maryland; Minnesota; Missouri; New Hampshire; New Jersey; Rhode Island; and Vermont would see little change because they have already expanded eligibility.

A proposal to cover parents of children who are eligible for SCHIP would reduce the uninsurance rate between 1 percent and 10 percent. Under this policy, Alabama, Arkansas, Idaho, Kentucky, Louisiana, Mississippi, New Mexico, Oklahoma, Texas, and West Virginia would experience the greatest declines in their uninsurance rates because they have the largest populations of low-income uninsured families. Uninsurance rates in states such as Arizona, Massachusetts, and Vermont would change little under this policy because some parents of SCHIP-eligible children are already covered by the state.

“Solving the crisis of growing numbers of uninsured Americans will take a coordinated effort by health leaders and policymakers, targeting solutions where they will have the greatest impact,” said Commonwealth Fund President Karen Davis.

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Health Affairs, published by Project HOPE, is the leading journal of health policy. Peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of this Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will revert to pay-per-view for nonsubscribers. The abstracts of all articles are free in perpetuity. Support for the publication of this Web Exclusive was provided by the California HealthCare Foundation; Web Exclusives are also supported in part by a grant from the Commonwealth Fund.

 

©2005 Project HOPE–The People-to-People Health Foundation, Inc.