New York City, June 7, 2005—Some states could reduce their uninsured rate 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. Other states' uninsured 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 in each state would vary under five different policy proposals, based on the income of the uninsured, existing state coverage policies and insured rates, and the insurance market in the state.
Uninsured rates could decline by over 15 percent in Kansas, Oregon, and Utah under a tax credit for individuals with low incomes. 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 uninsured 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 " said Sherry Glied, 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, ranging from a 4.4 percent decline to a 20.5 percent decline in the uninsured rate. Arkansas, California, Georgia, Kansas, Missouri, Montana, North Carolina, Oklahoma, Oregon, South Carolina, Utah, and Washington would see the largest decline in their uninsured rate under this policy because in these states non-group premiums are low, and a large proportion of the uninsured earn less than 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 uninsured rate. Another tax credit proposal, to help employees in small firms pay for health insurance, would decrease uninsured rates from between 2 percent in Washington D.C. to over 4 percent in Idaho, Maine, and Montana. Other states that would experience relatively large declines in their uninsured rates under a small firm tax credit—because large shares of their uninsured are employed by small firms—include Alaska, Indiana, Mississippi, Nebraska, North Dakota, Utah, Vermont, and Wyoming. Expanding Public Coverage Could Reduce Uninsured Rates in Many States
Expanding Medicaid coverage to low-income adults earning less than 133 percent of the federal poverty level would have the greatest impact on uninsured rates in Alabama, Arkansas, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Mexico, South Carolina, and West Virginia. States that already cover some low-income adults—Arizona, D.C., Delaware, Massachusetts, New York, Oregon, Utah, and Vermont—would see little or no decrease in their rate of insured adults under this policy. However, these states would experience budget relief if the federal government shares the cost of this coverage expansion. Expanding the Children's Health Insurance Program (CHIP) eligibility for children in families below 300 percent of the federal poverty level would have the greatest effect in states with very low existing levels of CHIP eligibility, 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 CHIP would reduce the uninsured 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 decline in their uninsured rates because they have the largest populations of uninsured low-income families. Uninsured rates in states such as Arizona, Massachusetts, and Vermont would change little under this policy because some parents of CHIP-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.