Kerryís Proposals for Health Care

State Childrenís Health Insurance Program (SCHIP)/Medicaid

Under Kerryís plan, the federal government would take over 100% of the costs for the 20 million children currently enrolled in state Medicaid plans if states agree to:

* Provide SCHIP: to children who are not eligible for Medicaid but whose family income is less than 300 percent of poverty ($55,200 for a family of four).
* Expand SCHIP: to families with incomes less than 200 percent of poverty ($36,800 for a family of four).
* Cover Childless Adults: States must provide health care coverage to adults whose income is under 100 percent of poverty ($8,980 for individuals or $17,960 for a couple).
* Legal Immigrants: Senator Kerry would also repeal the current Congressionally mandated 5-year waiting period for eligibility for legal immigrant pregnant women and children.

Whatís the catch?
o This is a complete departure from the federal-state partnership of the Medicaid program and will free states from any incentive to control costs.
o States must meet these conditions to receive $15 billion in bonus payments during the first three years of the program.
o Research by RAND Health suggests this expansion would result in as many as 18 million Americans losing their employer-sponsored coverage and end up on Medicaid, where many will be forced into HMOs and/or have their choice of doctors limited because many physicians do not accept Medicaid patients. Not only would this result in millions of people losing coverage they like, it would force taxpayers to bear costs that today are borne voluntarily by the private sector.

Pool based upon Federal Employees Health Benefits Program (FEHBP)
This pool would be available to those in firms with 50 or fewer workers and uninsured individuals (including workers between jobs).

* Employers would have to contribute at least half the premium.
* Employers participating would receive a 25% refundable tax credit for all workers under 150% of poverty, phasing out at 300% of poverty.
* Workers between jobs may purchase insurance through their former employer or the pool.
* Workers in poverty would receive a 75% subsidy phasing out at 300% of poverty
* Individuals without access to employer-sponsored insurance (and not eligible for public plans) could purchase insurance through the pool and receive a 25% refundable tax credit.

Whatís the catch?
o The Kerry health plan would draw much of the private health insurance market into a nationwide “health alliance” created and tightly regulated by the federal government.
o Health care costs continue to rise not for lack of government involvement, but because too much government has crippled the normal market processes that allow individuals to have more control over their health care spending.
o Kerryís remedy for rising health care costs is additional regulation and higher tax-supported subsidies. To participate in the Kerry health alliance, large employers would face government requirements on the level of contribution they currently make to employee health premiums. Health plans within and outside the health alliance would be required to offer specific mandated benefits which just increase costs.
o In the past three years, Sen. Susan Collins (R-ME) and Sen. Mary Landrieu (D-LA) have introduced 3 separate bills to provide a tax credit for small business to purchase health insurance: S. 2042 and S.674 in the 107th Congress and S.100 in the 108th Congress. Despite the fact that he now claims to support this idea, John Kerry never cosponsored any of these bills.

Reinsurance of health care costs
Senator Kerry proposes to reduce health care costs for employers and employees by providing federally financed reinsurance for catastrophic costs. The plan would reimburse employee health plans for 75 percent of catastrophic costs incurred over a $50,000 threshold. Although it is unclear whether this benefit would be available to all employers or only businesses of a certain size, eligible employers would have to meet several requirements to participate in the premium rebate pool.

Whatís the catch?
o Firms are only eligible if they contribute toward the cost of insurance for all workers, not just full time or those currently eligible; somehow pass the savings back to employees; and encourage the development of disease management programs.
o Although Kerry claims that his proposal would reduce overall health care spending, Clinton Administration appointee and Emory University Professor Kenneth Thorpe has analyzed the Kerry plan and concluded that it would merely shift existing costs from premium-payers to taxpayers — some $290 billion over nine years. (?An Overview and Analysis of the Democratic Presidential Candidatesí Health Care Reform Proposals,î 9/7/03).

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