DIRECT ASSISTANCE FOR LOWER-INCOME PERSONS TO BUY PRIVATE COVERAGE
July 19, 2006
John C. Goodman, president of the National Center for Policy Analysis, notes that federal and state governments already spend tens of billions of dollars annually on a variety of programs for the uninsured, including Medicare and Medicaid funds for hospitals that serve a disproportionately large number of patients without health insurance.
- Goodman has long argued that current government subsidies and tax incentives for the uninsured should be realigned and redirected to help the uninsured get coverage, primarily through health care tax credits.
- Massachusetts' new comprehensive health care law puts this concept into practice by using existing government funding to help lower-income individuals purchase individually-owned private coverage.
Gov. Romney builds on Goodman's central insight:
- In Massachusetts, the costs of uncompensated care totaled $1.3 billion in 2005, and most of it went to reimburse a few Massachusetts hospital systems for providing services to the uninsured -- an arrangement that has often lacked accountability.
- The Romney Administration proposed turning the massive uncompensated care subsidy structure upside down by using those funds to provide direct assistance to individuals and families rather than paying health care providers for services to the uninsured.
The adoption of this provision of the Massachusetts law amounts to a revolutionary change in health policy, say observers. It mainstreams low-income individuals and families into private health care coverage, without new health care expenditures, by redirecting state health care spending from meeting the needs of providers to meeting the needs of patients and consumers. In sum, it converts the current de facto provider safety net into a consumer safety net.
Source: Nina Owcharenko and Robert E. Moffit, "The Massachusetts Health Plan: Lessons for the States," Heritage Foundation, Backgrounder No. 1953, July 18, 2006.
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