Uninsured Increase on Horizon, Congress Looks for Answers

With a slowing economy and rising health costs all but ensuring that the number of uninsured will increase in the near future, Congress has begun looking at ways to increase coverage, but lawmakers are divided on the best way to achieve this goal, the New York Times reports. In 1999, the number of uninsured dropped to 42.5 million, reversing a decade-long growth of those without coverage. And while most observers believe that the numbers remained mostly static in 2000, a loosening of the labor market combined with double-digit insurance premium increases will likely cause many employers -- especially small businesses -- to reduce or end their coverage. The number of uninsured is particularly responsive to the American economy, as 63% of those insured have employer-sponsored coverage. Dan Danner, senior vice president for public policy at the National Federation of Independent Business, said, "As the market softens and there isn't fierce competition for employees in the marketplace, the result is that more small businesses will drop health care, and the [number of] uninsured will go up substantially."

As Congress turns to this issue, a "popular solution" that has emerged is offering tax credits for the uninsured to purchase coverage. President Bush has proposed a $2,500 tax credit (Clymer/Pear, New York Times, 3/27). And last week, Sens. James Jeffords (R-Vt.), Bill Frist (R-Tenn.) and Thomas Carper (D-Del.) introduced legislation that would provide the same amount in an annual refundable tax credit. However, some argue that a tax credit in this dollar range will do little to help the uninsured, as a typical family policy costs more than $6,000 annually. Last year, the Congressional Budget Office wrote that a tax credit "would have to be fairly large -- approaching the full cost of the premium -- to induce a large proportion of the uninsured population to buy insurance." However, Rep. Nancy Johnson (R-Conn.), chair of the House Ways and Means Subcommittee on Health, said that "adequate family policies" could be found for $3,000 (New York Times, 3/27). She said yesterday that she would introduce a bill this week that would allow "big enough credits for people to buy insurance" (Serafini, CongressDaily, 3/26).