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Proposal: New Universal Coverage Plan Would Cover Significant Portion of Uninsured

By Leah Nylen, CQ Staff

May 13, 2008 --Forty-four million of the nation's uninsured could receive health care under a new plan that would allow individuals to buy coverage through a new, national health insurance connector program, according to an article released Tuesday by The Commonwealth Fund, a private health care foundation.

The Commonwealth Fund proposal appears in the May/June 2008 issue of the health policy journal Health Affairs.

A national entity known as a "connector" would offer both individuals and small businesses the opportunity to buy into private insurance or "Medicare Extra," health insurance that would build off the existing Medicare system and would be available across the country.

The proposal would require that all individuals enroll in a health care plan, and people without insurance who file taxes would be automatically enrolled.

If adopted, the plan would reduce the number of uninsured people in the United States from 48.3 million in 2008 to less than 4 million in the first year the plan is implemented, according to a news release.

"The case for reform is overwhelming," said Karen Davis, president of the Commonwealth Fund. "We have a historic opportunity with a new administration in 2009."

Under the Commonwealth proposal, individuals would be required to enroll in health insurance, and tax credits would be available to ensure that premiums account for five percent of income for low-income families or 10 percent for higher-income families. Employers would have to either provide coverage or contribute up to seven percent of their payroll into a pool.

The article estimated that as many as 60 million people would choose coverage under the connector program. The new plan would require about $15 billion in new spending, with the rest offset by reduced administrative costs.

"This approach will eliminate wasteful administrative costs, enable people to keep their coverage if jobs or circumstances change, and provide affordable health insurance with good access to health care and financial protection to all," said Cathy Schoen, lead author and Commonwealth Fund senior vice president.

If the plan were implemented in conjunction with other changes to the health system, such as the adoption of health information technology and negotiated prescription drug prices, the proposal could save as much as $1.6 trillion over the next 10 years, Schoen said.

Dallas Salisbury, president of Employee Benefit Research Institute, a research group dedicated to promoting employee benefits, said that business groups would likely support several aspects of the proposal. In particular, the plan would maintain the current tax treatment for health insurance and allow those 60 and over to buy in to Medicare, both policies the business community has long endorsed, he said.

"There's a consensus that an employer-based system should continue to be part of overall approach," Salisbury said. Employers "want to continue to be part of system."

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