Reforming the U.S. Health Care System

Policy Backgrounders | Health

No. 149
Monday, April 26, 1999
by John C. Goodman & Merrill Matthews

II. A Health Care Safety Net For The Uninsured

A. Keeping The Decision To Purchase Insurance Voluntary

  1. No one will be forced to purchase private health insurance.
  2. But those who elect to remain uninsured will have to rely on a local Health Care Safety Net if they cannot pay their medical bills from their own resources.

B. Making A Federal Commitment To A Health Safety Net For Every Person Who Elects To Remain Uninsured

  1. A family of four that is uninsured will pay higher taxes ($2,400) because of that fact.
  2. The tax penalty will be rebated to state and local governments for local Health Care Safety Nets.

C. Giving States And Localities Full Discretion Over Safety Nets

  1. Federal money for local Health Care Safety Nets will be like a block grant with one condition: the money must be spent on indigent health care.
  2. However, no uninsured person will have the right to demand a particular health care service from the Safety Net.
  3. Local authorities will be free to charge fees to the uninsured -- especially if it appears that their lack of insurance is willful.

D. Accepting The Reality That Safety Net Services May Not Be As Desirable As Services Provided By Private Insurance

  1. Although the commitment of federal dollars to the two alternatives (private insurance or Safety Nets) is the same, the amount of money per capita available to local Safety Nets is expected to be less than the resources available through private insurance.
  2. Thus, Safety Net doctors may not always be the very best doctors.
  3. Safety Net programs may not be able to meet every health care need, and there may be some waiting.
  4. These features are consistent with the overall goal of creating some form of universal coverage while at the same time encouraging private rather than public provision of health care.

"For those who elect to remain uninsured, the unclaimed tax credit would help fund a local health care safety net."

E. Allowing Local Health Care Safety Nets To Be Partly Or Even Fully Funded With Federal Health Dollars Currently Going To The States

  1. This plan contains a rational mechanism for distributing federal health dollars to the states -- i.e., states will receive more federal money if their uninsured population expands and less money if it contracts.
  2. Under the current system, there is no necessary relationship between the amount of federal funding and any objective measure of need.
  3. Under this plan, the federal government can discharge its commitment to the states by counting against that commitment dollars in current programs that fund indigent health care, provided that states gain full freedom and flexibility to use those funds to meet the needs of the uninsured.

F. Using Safety Net Dollars To Fund High-Risk Pools

  1. Under current law, states must create opportunities for certain uninsurable individuals -- those who were previously insured -- to obtain health insurance; and many have satisfied this obligation by creating high-risk pools.
  2. This plan will encourage the expansion of such risk pools by allowing Safety Net money to fund them.

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