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Report: Half of Uninsured in U.S. Ineligible for Public Programs or Cannot Afford Coverage

By Cheyenne Hopkins, CQ Staff

Nov. 30, 2006 -- More than half of the nation's uninsured are ineligible for public programs and do not have enough resources to purchase coverage themselves, a report released Thursday by the Urban Institute found.

The report, released on the journal Health Affairs' Web site, found that of the 46.6 million uninsured Americans, 56 percent are ineligible for public programs, such as Medicaid, and have insufficient incomes to afford coverage on their own. Twenty-five percent of the uninsured are eligible for public programs and the remaining 20 percent have incomes high enough to afford coverage, according to the study, which was funded by the Robert Wood Johnson Foundation.

"Sometimes you hear arguments that all but a small minority of the uninsured could either purchase coverage or are already eligible for assistance," said lead author Lisa Dubay, a research scientist at the Johns Hopkins Bloomberg School of Public Health. "But our study shows that the affordability problem is far more serious than that."

Dubay and the study coauthors used an income level of 300 percent of the federal poverty level to define "affordability." In 2004, that level amounted to $28,935 for a single person and $57,921 for a family of four.

Childless adults consisted of the largest block—69 percent, or 25 million—of those uninsured and ineligible for public assistance, the study found. This group faces the largest barriers because they are generally not covered under Medicaid, the State Children's Health Insurance Program (SCHIP), and other public programs.

The affordability barriers facing uninsured parents are only slightly less severe, according to the report. Of the 11.1 million uninsured parents, 56.9 percent cannot afford coverage and have no access to public assistance.

Children were best off in the study. Only 11.3 percent of the nation's eight million uninsured children cannot afford private coverage and have no public options available.

The study also found that individuals at the "moderate" level of income have fewer opportunities for employer-sponsored coverage, which constitutes less than 5 percent of income for this income level. Overall, employees contribute 16 percent and 26 percent of the cost of health insurance for individuals with employer-sponsored coverage, according to the report.

Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, said the study raises the issue that public programs exclude childless adults. She proposed basing public assistance on income, not on family situation, and expanding the Medicaid matching funds waiver to be regardless of a family situation.

This study shows the uninsured are not a homogenous population and policy should reflect the difference, Rowland said. She advocated a combination of public and private assistance to target the groups.

The report proposes extensive outreach efforts and simplified enrollment and redetermination procedures, including easing requirements for documentation of income, assets, and citizenship and possibly various types of incentives or penalties to reduce the 25 percent of uninsured who are eligible for public programs.

The report criticizes the budget savings law (PL 109-171) for requiring proof of citizenship as part of the eligibility determination process.

The 56 percent of uninsured who need financial assistance present a "more difficult public policy challenge," the Urban Institute argued.

The group proposes some form of partial assistance such as sliding-scale subsidies, income-related tax credits, and expansions in public programs. But in the absence of expansion of public coverage, the report recommends health insurance market changes, purchasing pools, or high-risk pools or some combination. The group supports the possibility of mandating coverage, such as has been enacted in Massachusetts.

William Vaughan, a senior policy analyst at Consumers Union, expressed support for several of the proposals but cautioned moving too quickly.

"The good news is 11 million people, many children, could be covered by using IRS income data to presumptively enroll them in public programs," Vaughan said. "But the data also warns that Congress should be very careful of individual mandates to buy health insurance, unless the mandate is accompanied by substantial financial help. Otherwise, for many lower-income people, mandating health insurance would be like mandating no car to get to work, crummy housing, and poorer diets."

Rowland also cautioned mandating coverage.

"The key is to mandate but to make sure it's affordable to those incomes," Rowland said.

This is not the first proposal for the incoming Congress to cover the uninsured.

On Nov. 13, the insurance industry lobbying group America's Health Insurance Plans unveiled its plan to cover the uninsured. AHIP proposed first pushing SCHIP to cover all uninsured children in the U.S. The next steps in the group's $300 billion, 10-year plan would expand state and federal Medicaid programs and offer tax credits to lower-income Americans who purchase insurance coverage.

Mohit Ghose, spokesman for AHIP, said the Urban Institute study identifies the types of people whom their plan could help. He also said studies such as this should further the health care discussion on the Hill.

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