Enrollment Low in Health Insurance Tax Credit Program for Displaced Workers, GAO Finds
A program included in the 2002 Trade Adjustment Assistance Act (PL 107-210) under which U.S. workers displaced by international trade can receive tax credits that cover 65% of the cost of health insurance premiums has enrolled less than 6% of the more than 230,000 eligible workers as of July, according to a report released on Monday by the Government Accountability Office, CQ HealthBeat reports (Carey, CQ HealthBeat, 10/4).
The law includes a 10-year, $12 billion provision to provide trade-displaced workers with health and other benefits. Eligible workers can use the tax credits to purchase health insurance through COBRA, which allows unemployed workers to retain employer-sponsored coverage provided that they pay 102% of the premiums, or through state-sponsored health insurance pools and high-risk pools. Secondary workers -- those who lose their jobs because they provide services for U.S. industries affected by international trade -- also can receive the tax credits. Under the law, workers who qualify for the tax credits can receive them in advance or as a refund in their federal tax returns (California Healthline, 10/10/03).
According to the GAO report, some workers eligible for the program might have obtained health insurance from other sources. In addition, the report said that the program has a "fragmented and complex" enrollment process under which workers must meet tax, labor and health insurance criteria to obtain eligibility. The report also said that "health coverage may not be affordable" under the program because participants must cover 100% of the cost of health insurance premiums for three to six months between enrollment and the time when they begin to receive the tax credits from the Internal Revenue Service.
Some participants also cannot afford to cover 35% of the cost of health insurance premiums after they begin to receive the tax credits, the report said. The report recommended that IRS "take steps to improve the quality and clarity of enrollment information and the timeliness of enrollment and payment processing" to increase enrollment in the program (GAO report highlights, September 2004).
Sen. Max Baucus (D-Mont.), who helped develop the program, said that the GAO report "confirms what I hear from displaced workers back home. The program is complicated and the timelines for enrollment are fragmented and unnecessarily complex, leading potential participants to lose consumer protections or discouraging them from enrolling altogether." Baucus also said the report indicates that the tax credits do not provide affordable health insurance. According to CQ HealthBeat, the report "raises doubts on whether tax credits are a good way to help provide health care coverage for low-income individuals -- an approach favored by President Bush and Republicans."
However, Senate Finance Committee Chair Chuck Grassley (R-Iowa), who also helped develop the program, said the report indicates that the tax credits were "implemented at record speed" and have helped provide health insurance to thousands of eligible workers. He added that the number of eligible workers enrolled in the program does not include their dependents, some of whom also receive health insurance through the tax credits. According to Grassley, the agencies that administer the program "clearly need to work on ... better coordination" and shorten the three- to six-month period between enrollment and the time when participants begin to receive the tax credits (CQ HealthBeat, 10/4). The report is available online. Note: You must have Adobe Acrobat Reader to view the report.