P R O C E E D I N G S
DR. GINSBURG: On behalf of the Center for Studying Health System Change, I want to welcome you to this conference on tax credits and purchasing pools. This conference is focused on new ideas to expand coverage to the uninsured. I’ve long been intrigued with policy proposals such as tax credits to expand coverage to those who do not have a strong link to employer-sponsored coverage, but I’ve always paused, due to the inherent weaknesses of individual insurance markets, their inability to serve those with chronic illness due to risk selection and high administrative costs.
As part of HSC site visit work, we’ve been examining purchasing pools for small employers, and we find that despite enthusiasm for the pools among some leaders in communities, for the most part these organizations have struggled in achieving critical mass, and were quite vulnerable with respect to risk selection. And Mark Hall, one of our panelists, has done extensive research in this area as well. This has led to thoughts about whether these mechanisms could be combined. Purchasing pools might offer superior mechanism through which those eligible for tax credits could obtain coverage, and a prominent place in tax credit policy could be just what purchasing pools might need to realize their potential.
I’m not the first person to have thought of this connection. Perhaps the first person is Rick Curtis, another member of our panel, who’s developed such ideas in detail with support from the Commonwealth Funds. Indeed, Commonwealth has funded others to tackle alternative solutions to the issue of providing effective mechanisms through which eligibles can use tax credits to purchase health insurance, such as allowing buy-ins to public programs or reforming the individual insurance market.
But the focus of today’s conference is whether purchasing pools can make tax credits more effective. Given HSC’s research focus on private markets, this is where we think we can be contribute to the tax credit discussion. So the bottom line for this conference is will more people, including the chronically ill and older workers, obtain coverage through this combined approach than under a stand-alone tax credit? And today’s panel will help us make such an assessment.
I want to proceed to a few words about tax credit proposals for those not as familiar as they’d like to be. And the focus today is on proposals to offer refundable tax credits to low-income families to purchase health insurance, and today we’re seeing bipartisan support for such an approach. A proposal was recently introduced by Senator Jeffords, S. 590, that offer tax credits to individuals and families. And there are two scales in this tax credit. For those without access to employment-sponsored insurance, tax credits are up to $1,000 for individuals and $2,500 for families. For those with access to employment-sponsored coverage, they’re also eligible for tax credits, but smaller, at $400 for an individual and $1,000 for a family. And President Bush described a similar proposal yesterday in his budget.
Many see tax credits as complementary to expansions in public program such as Medicaid and SCHIP, and the latter two would continue to serve those with the lowest incomes, while tax credits would focus on those with somewhat higher incomes. Indeed, the eligibility for families in the Jeffords’ proposal goes up to a family income of $55,000.
Now, let me proceed to how this conference will be organized today. We’ll begin with a presentation by Sally Trude, senior researcher at the Center, to provide context for this discussion by framing the issues. And Sally is going to be drawing on HSC research and other research on purchasing pools, and she’ll outline a score card for us to use in assessing the various approaches to enhancing coverage through tax credits.
At this point I want to thank Mark Hall, another one of our panelists, for his valuable comments on an early draft of the issue brief that’s in your packet, that Sally drafted as the senior author, that’s being released today.
After Sally’s presentation, the panelists will come up, and we’ll begin our panel discussion with a discussion of the experience of existing purchasing pools. And then we’ll cover the key over-arching policy design issues with this combination, as they would relate to combining purchasing pools and tax credits. Then we’ll assess the strengths and weaknesses of the proposal and compare it to a stand-alone tax credit. And if time, we might also hear from panelists, ideas about alternative mechanisms to provide a more effective market through which tax credits can purchase insurance.
Some other details of the conference, there will be two opportunities for questions and answers from the audience, as well as a break in the middle of the conference. We’re going to start the panel discussion and break it about 10:15, and then have questions, and then a break. And when you do your questions, please state your affiliation and use the microphone.
After the conference, we’ll issue a short summary, likely in the form of a press release, and we’ll be putting the full conference transcript on our website, hschange.org, probably by tomorrow.
And at this point, let me introduce my colleague, Sally Trude.