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M A R K E T W A T C H : 
H E A L T H  T R A C K I N G
W E B  E X C L U S I V E  

18 September 2002

Joint Custody: Bipartisan Interest Expands
Scope Of Tax-Credit Proposals

Tax credits for health insurance purchase are no longer the sole
protégé of conservatives, but the custody battles are not yet over.

by Robert Cunningham



ABSTRACT:

The Bush administration’s proposal to use tax credits to cover the uninsured has not attracted enough bipartisan support to make headway in a divided Congress. Democratic objections have centered on the administration’s insistence that the credits be used primarily in the individual market. But bipartisan exploration of alternative credit designs has continued on Capitol Hill. Democratic proposals to include health coverage for laid-off workers in debate over the post–September 11 economic stimulus package and more recently in the Trade Adjustment Assistance Act have resulted in increased awareness that tax credits might be used for employer groups as well as in the nongroup market.

If the question is whether major action on the uninsured is likely in the near future, the answer is no. Health insurance tax credits were left out of the 2001 tax-cut bill, which drained the federal budget of surpluses to fund major expansions—whether with tax-based subsidies or with public program expansions—anytime soon.

But if the question is whether policymakers have made progress in the past two years in forging a viable plan for increased coverage if the money were available, the answer is different. The conceptual stalemate that dominated debate about the uninsured during the 2000 presidential election has been overtaken by events. Recessionary pressures on the states have rendered major expansion of Medicaid or the State Children’s Health Insurance Program (SCHIP) at least temporarily moot. The Bush administration, on the other hand, made a series of modifications to its tax-credit proposal that answer many of its opponents’ criticisms about its usefulness for the low-income households that need it most. It is now not only refundable but advanceable and reconciliation-proof, and use is permitted for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 and in state high-risk pools and some other group-purchasing arrangements.

“This is not the tax credit of three or four years ago,” says independent policy analyst Lynn Etheredge. “We’ve made progress. To my mind, ‘tax credits’ is just another name for cash. If that’s the synonym we have to use, I think a number of analysts have said we can make it work.”¹

A more surprising and potentially synergistic development has been the emergence of increased receptivity to tax-based coverage subsidies among Democrats in the context of proposals to help underwrite COBRA coverage for displaced workers. These proposals evolved first as part of the unsuccessful economic stimulus package debated in the wake of the September 11 attacks and more recently in this year’s reauthorization of the Trade Adjustment Assistance Act.

The Democratic COBRA provisions incorporated in the “fast track” trade bill that was signed in August target only a relatively small number of eligible workers. But they give the opposition party a vehicle for framing the issue that matters most to them if tax credits are to be considered as a primary strategy for covering the uninsured. That issue is whether these subsidies may be applied to employment-based coverage as well as, or instead of, the nongroup market given preference in President George W. Bush’s $89 billion tax-credit proposal made earlier this year. With the White House proposal stalled by Congress’s failure to pass a budget resolution, the Senate trade bill seemed more like a bid by Democrats to co-opt the definition and ownership of the tax-credit concept than acquiescence to Republican coverage strategy.

This essay uses published sources, public proceedings, and interviews to review in greater detail these recent shifts in the debate over covering the uninsured. Assuming that a divided government makes bipartisan support necessary for enactment of major initiatives, it explores the implications of increased Democratic interest in what has previously been a predominantly Republican notion. Its purpose is to shed light on partisan and practical differences over use of tax subsidies in the group and nongroup markets, and what the prospects are for resolution of these differences.

The Bipartisan Politics Of Tax Credits

Although generally regarded as a conservative strategy, tax credits have a history of attracting bipartisan interest. Texas Democrat Lloyd Bentsen was a principal architect of the unsuccessful health insurance tax credits enacted during the first Bush administration in 1991. House majority leader Dick Armey (R-TX) and ranking Ways and Means Democrat Pete Stark (D-CA) jointly endorsed refundable tax credits in June 1999 on the opinion page of the Washington Post, and Armey’s “Fair Care” bill in the 106th Congress had bipartisan sponsorship.² Stuart Butler of the conservative Heritage Foundation and David Kendall of the (Democratic) Progressive Policy Institute made a joint proposal in Health Affairs at the end of 1999.³ Finally, Reps. Jim McCrery (R-LA) and Jim McDermott (D-WA), both of the Ways and Means health subcommittee, made a bipartisan pitch for tax credits in a freewheeling dialogue in the Atlantic Monthly in October 2000.⁴

These congressional odd couples played primarily as novelty acts. Armey and Stark achieved agreement by avoiding details. McCrery and McDermott were united by disenchantment with the employment-based system but fundamentally divided about long- term solutions. McCrery favored a universal private system based on mandatory, community-rated individual coverage. McDermott, a confirmed single-payer advocate, said that the reality of divided government made an individual mandate and “cashing out” of employer contributions to individuals seem like the only path to universal coverage that lay open. Their idiosyncratic rapport generated no plausible plan of action.

Meanwhile, though, a pragmatic cohort of Senate centrists continued to tinker with variants of the tax-credit idea that were bipartisan in substance as well as packaging. Democratic senators John Breaux (LA) and Blanche Lincoln (AR) joined Republicans Jim Jeffords (VT), Bill Frist (TN), Olympia Snowe (ME), and Lincoln Chafee (RI) in sponsoring a bill very similar to Armey’s in March 2000.⁵ One key distinction was that the Senate bill allowed use of credits to purchase job-based COBRA coverage as well as individual policies, while the House credits could be used only in the individual market. But this nuance attracted little notice at the time.

Traditional partisan differences over the relative merits of public program expansions versus tax-based strategies for the uninsured dominated the political landscape during the 2000 election season. However, widening interest in tax-credits was evident. Bill Bradley’s sweeping, expensive plan for universal coverage had a McCrery-McDermott flavor. Families USA, the Health Insurance Association of America (HIAA), and several blue-chip collaborators proposed a mutual-support pact between backers of credits and program expansions. Democratic standard-bearer Al Gore included a modest, ancillary credit scheme in his presidential campaign’s health platform, to complement program expansions.

Analyzing The Operational Issues

Attuned to the political trends, policy analysts began to focus their attention on operational issues related to tax credits long before the election was finally decided. The central role of the individual market in most proposals opened a Pandora’s box of difficulties. The high overhead costs and risks of adverse selection in the nongroup market were well known to insurers. Congress had a glimpse of the price effects of medical underwriting and the excruciating complexity of regulatory intervention insurance markets in its struggles with the Health Insurance Portability and Accountability Act (HIPAA) of 1996. Market results spoke for themselves. According to census data tabulations by the Urban Institute, total nonelderly enrollment in private, nongroup coverage fell from 13.1 million in 1994 to 11.6 million in 2000, a 10 percent decline. During that same period, the number of people with employer coverage—the “fatally-flawed” system, as House Ways and Means Committee chair Bill Thomas (R-CA) described it—grew by nearly 16 million to 163 million, a 10 percent increase.⁶ The ultimate complication, from a policy-making standpoint, was that making the individual market work for higher-risk and lower-income populations seemed likely to necessitate rating or underwriting constraints or other new regulatory mechanisms, an innately contradictory proposition for the conservative constituency to whom tax-based subsidies had the greatest appeal.

The health insurance tax credit that the Bush administration included in its maiden budget proposal early in 2001 reflected an earnest effort to respond to the criticisms that previous iterations of the concept had encountered. The administration followed Armey in making the credit both refundable and advanceable, so those without tax liability could receive it and funds would be available when premiums were due. Critics had also warned that fears of owing the Treasury a refund would deter those whose income might change after they claimed the credit—one of the problems that had dampened response to the failed health insurance tax credit of the early 1990s. “We get rid of this by basing eligibility for an upcoming year on income from the previous year,” White House health policy adviser Mark McClellan explained in May 2001, when the credit was still under consideration as part of the president’s tax-cut package. “We think this is a proposal that…won’t be subject to the same kind of criticisms about low take-up that previous proposals have faced.”⁷

The administration held fast to its insistence that the individual market was the appropriate place to target the subsidy. Empowering consumers to choose from a wide range of products offered by the market was an important advantage, tax-credit proponents have always argued. Shopping with their own money, consumers might be especially interested in low-premium, high-deductible options that over time could become market winners and push down on health care cost trends. In the short run, though, the price advantages of group coverage would be a tough competitive challenge for any individual-market product.

McClellan also stressed fairness. “For people who have employer-provided coverage, it’s important to remember that they’re already getting an enormous subsidy. The employer tax exclusion costs the government about $120 billion a year,” he noted in a recent interview. “When you talk about adding on to that existing subsidy [by allowing use of tax credits in the workplace], it’s a big problem with what economists call buying out the base,” or replacing premium payments by well-subsidized employers and employees with scarce new subsidy dollars. “In contrast, the federal government provides no assistance for people who are not eligible for Medicaid or SCHIP and who are not enrolled in employer-provided coverage—about 15 million buying on their own and a large proportion of the uninsured: people who are working but are not offered subsidized coverage on their job. It’s that group—because they’re getting no help at all—that we think we can make the most difference with by providing new subsidies.”⁸

A New Political Breath Of Life

After control of the Senate swung to Democrats in May 2001, in the course of House-Senate conference committee negotiations the health insurance tax credit somehow disappeared from the sweeping tax bill signed in June. Democrats claimed that the administration hadn’t tried hard enough. Republicans alleged that the new Senate majority wanted to deny the president victory on an issue they needed for the next election. In any case, the omission meant the uninsured still loomed large as unfinished business for Congress. At the same time, the tax cut and a gathering recession eliminated the necessary precondition of state support for public program expansions. Without liking it much, many Democrats were forced to agree with McDermott that tax-based subsidies might be the only game in town for a while. In a climate of increased asperity—Republicans were testy over loss of the Senate, and Democrats over loss of the surplus—debate intensified among policy analysts, centering on questions about the individual market. Dueling studies analyzed the strengths and weaknesses of state risk pools; the affordability of premiums and adequacy of benefits in the nongroup market; the credit amount that would be needed to ensure widespread participation; the appropriate target population; the pros and cons of rate regulation and underwriting rules; and the practicality of risk-adjustment schemes.

Meanwhile, though, another centrist proposal had been hatched in the Senate that attempted to work around the polarized debate over using credits in the individual market only. With McClellan as a collaborator (before he left Stanford University for the White House), three analysts at the “new” Democratic Progressive Policy Institute (PPI) developed a plan in December 2000 that sought to expand on the earlier Jeffords proposal without becoming as “politically unwieldy” as the Bradley plan had been, as the PPI’s Jeff Lemieux put it. “There’s got to be a middle ground, rather than a tax credit that only goes to individual coverage. It’s not that that isn’t helpful, because some people can only get individual coverage and we want to help them,” Lemieux said in an interview. A tax credit for individuals only might tempt some workers to leave group coverage and thus undermine workplace risk pools. Also, 80 percent of the uninsured live in households with at least one working member. “The idea was to help small employers get into the game,” he said.⁹

In March 2001, two months before he left the Republican Party, Jeffords introduced a new proposal based on the PPI plan, with three other Republicans and five Democratic cosponsors. The REACH Act (Relief, Equity, Access, and Coverage for Health) offered refundable credits of about the same size as those the Bush proposal offered—up to $1,000 for low- to middle-income individuals and $2,500 for families who had no access to employment-based coverage. To help an estimated seven million others with access to workplace coverage who could not afford their share of the premium, however, Jeffords proposed offering credits of up to $400 for individuals and $1,000 for families—a reduction that took the existing tax subsidy for their group coverage into account.¹⁰

The architects of both the Bush and the Jeffords plans realized that many who met the proposals’ income standards ($35,000 for individuals and $55,000 for families in the REACH Act) would already have coverage and that it would be unfair to deny the credit to such persons. The Bush proposal, initially priced at $70 billion over ten years, would be used by an estimated six million people who were previously uninsured and nine million who were already covered.¹¹ The REACH Act was not scored by the Congressional Budget Office, but the PPI estimated a ten-year cost of $300– $400 billion and participation by twenty million previously uninsured persons and nearly eighty million others who were already covered. “The trouble is there’s a lot of low-income people who already have coverage at work. There’s so many millions of them that the cost goes way up,” Lemieux said. “Our feeling is, God bless ’em. Thanks for doing the right thing and taking care of your family, and here’s a tax credit to make sure you keep your insurance.”¹²

In the wake of the tax cut and recession, of course, the price tag on the REACH Act was prohibitive—although the total amount was just one-third or one-fourth the size of the tax cut itself and on a similar order of magnitude as the estimated cost of a Medicare drug benefit or permanent repeal of the estate tax. But it had been something of a conceptual breakthrough for a few more Democrats to begin to accept credits at all. “I think people have gotten the basic point that tax credits only for individual coverage can do harm to employment-based coverage,” Lemieux said. “That’s penetrated. The problem we have politically, still—especially on the Democratic side of the aisle—is when they hear tax credits, the only thing they think of is the Bush-style tax credits, which have this problem, and they haven’t used their imagination to see that there could be other kinds of tax credits that aren’t structured like Bush’s that don’t have this problem.”¹³

So while the REACH proposal did not pick up political traction, it succeeded in suggesting an alternative context for considering tax- based coverage subsidies. In the context of a nongroup market–only proposal, bedrock partisan differences over constituencies and target populations rose inescapably to the fore. A modest credit with minimal regulatory baggage would close the affordability gap for uninsured people on the upside of the income and health status distribution, which was a satisfactory goal for Republicans. Democrats who thought coverage expansions should target the sicker and poorer portion of the uninsured population wanted larger subsidies or complicated and intrusive mechanisms such as rating and underwriting restrictions. Most of the technical debates about the individual market boiled down to these kinds of differences.

“The Republicans are trying to stop short of any kind of regulation of the insurance industry—pooling issues or rate-setting issues,” Etheredge said. “The Democrats are saying, ‘Look, if we’re going to put out this money to get everyone covered, we want everyone to have affordable coverage so we want a group product,’ by which they mean some sort of pooling which doesn’t have medical underwriting for individuals,” he continued. “There are probably ways to work that out—to have group benefits, with individual choice, and without a lot of government regulation—like the Federal Employees Health Benefits Program (FEHBP) model.”¹⁴

Renewed Debate In 2002

Without this larger context, it would be difficult to understand why a few relatively modest health provisions for displaced workers became so important in congressional debate over the failed economic stimulus package proposed after September 11 and in the Trade Adjustment Assistance Act taken up in 2002. With the growing recognition that the ranks of the uninsured include many who until recently were employed and covered at work, analysts had assessed the COBRA continuation provisions as a vehicle for subsidized coverage in the 1990s, and the first Jeffords proposal in 2000 had allowed the use of tax credits for purchase of COBRA coverage as well as nongroup policies. Eager to help the many who had lost their jobs amid the economic shocks that followed the September 11 attacks, Congress was ready to include expanded unemployment benefits in the economic stimulus package that was debated extensively in the fall of 2001, and Democrats had proposed a 75 percent subsidy for COBRA coverage. But many provisions of the bill were controversial, and partisan divisions were bitter. The stimulus bill passed by the House in December 2001 included a 60 percent subsidy for purchase of individual coverage. The stimulus package died in the Senate in early February 2002, and differences over the health insurance provisions were widely cited as a major reason for the breakdown.¹⁵

The president’s fiscal year 2003 budget was unveiled just a few days later, again featuring a tax credit for the uninsured priced at $89 billion over ten years. The proposal raised the maximum amount of the subsidy to $3,000 for families and included limited provisions for use in state-sponsored purchasing pools or under COBRA. But Democrats again attacked the primary emphasis on the use of the credits in the individual market, citing an estimate that more than a million people might lose job-based coverage under the Bush plan, as good risks left small employee groups to take advantage of the credit.¹⁶

At the same time, Senate Democrats attached a 75 percent COBRA subsidy for trade-displaced workers to the Finance Committee’s reauthorization of the Trade Adjustment Assistance Act, which also included “fast-track” trade agreement approval powers for the president that the White House badly wanted. Although COBRA coverage is costly for laid-off workers and only a fraction of those eligible purchase it (and only a fraction of the uninsured are even eligible for it), the issue gave Democrats leverage and a forum for highlighting their differences with the president over targeting assistance for the uninsured on workplace settings. By May 2002 they had succeeded in forging a compromise trade bill in the Senate that included an advanceable, refundable tax credit for trade-displaced workers worth 70 percent of the cost of coverage and applicable toward COBRA coverage.¹⁷ The president’s budget proposal, meanwhile, never advanced in Congress, leaving the larger tax credit in limbo while maneuvering over a conference committee deal on the trade bill dragged out over the summer.

With elections drawing closer and debate over a Medicare drug benefit dominating the congressional health agenda, the fate of the COBRA provisions in the trade bill—which would help only an estimated 100,000 laid-off workers at best—may never be more than a footnote. But the two COBRA skirmishes changed the environment.“One striking feature of the stimulus debate was the bipartisan agreement to invest tens of billions of dollars providing health coverage to uninsured workers laid off… during the recent economic downturn. Such a broad consensus on domestic priorities does not happen very often,” Stan Dorn and Jack Meyer of the Economic and Social Research Institute wrote recently, in a proposal that suggested making credits available in both the individual and group markets. “Pragmatic approaches to helping laid-off workers obtain affordable health coverage could be made attractive to people with different perspectives and policy perspectives.”¹⁸ A bipartisan proposal for use of credits for both nongroup and employer-sponsored coverage was offered in the House in April 2002 by Reps. Kay Granger (R-TX) and Albert Wynn (D-MD), with an endorsement from the U.S. Chamber of Commerce.¹⁹

On its face, Dorn and Meyer’s proposal to use credits for both individual and group coverage—with variants allowing Medicaid or FEHBP buy-ins—offers the political magic of giving both sides something they want. But the path to agreement would still have to be cleared of the large reservations each side has about the other’s preference. The virtue of choice in the nongroup market is vitiated by the 30–40 percent overhead costs entailed in individual sales, underwriting, and claims administration. HIPAA’s prohibition of medical underwriting in the small-group market sets a standard that any new subsidy might have to meet. But state authority in insurance regulation would limit further federal intrusion into rating rules or pooling arrangements. HIPAA “has set a reasonably workable model, which is to set fairly broad federal standards and allow states some diversity in terms of certifying or choosing options,” said Mark Hall of Wake Forest University, at a Washington symposium on the complicated and delicate interface between the group and nongroup markets. “Proponents of tax credits recognize that there have to be some kind of underwriting restrictions, combined with some way of dealing with the risk-selection issue,” Butler agreed during the same discussion.²⁰ If a subsidy program succeeded in attracting millions of newly insured persons to the nongroup market, with a wholesome distribution of risks, prices within standard age, sex, and geographic groups could be stabilized and moderated.

As the architects of HIPAA discovered, the boundary land between the group and individual markets is treacherous territory, and many difficult issues—both practical and political—would have to be faced. By the same token, though, many options present themselves. Lemieux, for example, suggested that subsidies for COBRA coverage for trade-displaced workers could serve as a stepping-stone toward more comprehensive programs for other workers who have lost coverage—although employers’ liabilities under COBRA would have to be taken into account.²¹ Sen. Edward Kennedy (D-MA) proposed in June 2002 that employers with more than 100 workers should be required to offer coverage, but he left the door open for negotiation on how workers in smaller firms might be covered.²² A recent survey of small employers (2–50 workers) by the National Association of Health Underwriters found that 71 percent “would be likely to take part in a government subsidy or tax incentive program to help low-income employees pay the cost of health insurance.”²³ High-risk pools and purchasing groups are likely to be part of many composite coverage schemes.

The Fate Of The Employment-Based System

The wild card in the debate may be how serious conservatives are about seeking to break down the employment-based system. “There are some Republicans who really seem to have this agenda,” Etheredge explained. “Their reasoning, as I’ve heard it, is that group insurance is the inflation engine for the health insurance sector because people don’t see what the cost is for what they’re buying…I think there are a lot of people around town who are very worried about that agenda, not because the analysis is wrong, but because it’s right. The average working family wouldn’t go out and spend $7,000 to buy insurance if they had to buy it in the individual market. They’d be shocked at that sticker price and they would look for something less expensive,” he said.²⁴

But in Etheredge’s view, it does not necessarily follow that the right remedy is dismantling the existing system—and Thomas himself has hedged on his commitment to this goal. As a practical matter, providers and insurers are dead-set against a major deflation of the health economy, and “there’s very little interest-group support for tax credits that favor individual coverage over group coverage,” Thomas said. Even if tax credits are adopted, he argued, the workplace would be a “very efficient” setting to enroll the uninsured. Indeed, the Bush administration’s insistence on limiting the use of credits primarily to the non-group market has put it at odds with generally conservative tax-credit supporters, including the Healthcare Leadership Council, the National Association of Health Underwriters, and the Heritage Foundation.²⁵

But the larger argument is that the advantages of the employment-based system need to be weighed against the disadvantages. “It’s really very cheap for government to provide health insurance if the employer’s putting up 80 percent of the cost,” Etheredge said. “If the employer is out of the equation and people are looking at a $7,000 insurance policy, I’ve got a feeling they will want a lot more money from the government,” he continued. “Dumping people out of employer coverage and saying, ‘Go shop on your own in the individual coverage market where you get screened for medical conditions’ is about the fastest route to government medicine.”²⁶

Three myths also dog debate about the shortcomings of employer coverage. The first is that most of the working uninsured are employed in tiny mom-and-pop establishments that are ill suited to the administrative burdens of employers sponsorship. In fact, 43 percent of the uninsured work in businesses that employ more than 100 workers, and 17 percent are in workplace groups of 25–100 persons—meaning that nearly two-thirds are in establishments with at least twenty-five workers.²⁷

The second myth is that the employment-based system is already coming apart at the seams—a premise usually supported with data about declining retiree coverage. The net gain of sixteen million lives in total private group coverage from 1994 to 2000, cited above, has received unaccountably scant attention. Total enrollment in group plans reached 163.4 million in 2000, a gain of more than 10 percent over 1994 coverage levels.²⁸ Reports of the demise of this system have obviously been exaggerated.

Finally, the historical fallacy of the “accidental system” persists despite decisive evidence against it. Critics right, left, and center ritualistically begin treatises on the subject by ascribing the spectacular growth of employer coverage to the tax exclusion for employers’ contributions enacted during World War II. However, employers rarely contributed to premiums during the period when most initial market penetration occurred.²⁹ Employees opted in to coverage individually, and the entire premium was in fact paid by a payroll deduction from the individual’s wages in the great majority of first-generation policies. The tax preference didn’t spawn the group health insurance market any more than federal highway construction gave birth to the automobile. Neither of these immensely popular products was an accident, although both benefited from supportive federal policies.

These misconceptions should serve as a warning about how easily analysis and policy can be skewed by conventional wisdom and ideology. Two years of give-and-take may have cured some Democrats of their bias against tax-based subsidies and some Republicans of their preoccupation with the nongroup market. But prodigious efforts will still be needed to find enough agreement—and enough money—to translate these embryonic gains into notable progress.

The author thanks Lynn Etheredge, Len Nichols, and an anonymous reviewer for their comments.

NOTES

1. Lynn Etheredge, independent consultant, interview, 24 May 2002.
2. D. Armey and P. Stark, “Medical Coverage for All: The Ultimate Congressional Odd Couple Weighs In,” Washington Post,18 June 1999.
3. S.M. Butler and D.B. Kendall, “Expanding Access and Choice for Health Care Consumers through Tax Reform,” Health Affairs (Nov/Dec 1999): 45–57.
4. M. Miller, “Health Care: A Bolt of Civic Hope,” Atlantic Monthly, October 2000, www.theatlantic.com/issues/2000/10/miller.htm (6 August 2002).
5. Health Coverage, Access, Relief, and Equity (CARE) Act, S. 2320, 106th Congress, 2d sess., 29 March 2000.
6. J. Holahan and M.B. Pohl, “Changes in Insurance Coverage: 1994–2000 and Beyond,” 3 April 2002, www.healthaffairs.org/WebExclusives/Holahan_Web_Excl_040302.htm (6 August 2002), Exhibit 5.
7. McClellan’s comments were made at a “First Tuesdays” forum at the Urban Institute, Washington D.C., 1 May 2001 (Transcript at www.urban.org/Template.cfm?Section=Home&Nav MenuID=39&template=/TaggedContent/ FirstTuesday.cfm&PublicationID=7101).
8. Mark McClellan, adviser to the president on health policy and member of the Council of Economic Advisers, interview, 30 May 2002.
9. Jeff Lemieux, director of economic studies, Progressive Policy Institute, interview, 23 May 2002.
10. Relief, Equity, Access, and Coverage for Health (REACH) Act, S. 590, 107th Congress, 1st sess., 21 March 2001.
11. McClellan’s estimate of coverage numbers is from his testimony to the subcommittee on public health of the Senate Health, Education, Labor, and Pensions Committee, 12 March 2002 (Transcript at www.kaisernetwork.org/health_cast/ hcast_index.cfm?display=detail&hc=502); McClellan’s cost estimate is taken from his remark’s at an Alliance for Health Reform briefing in Washington, 30 May 2001 (Transcript at www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=233).
12. Lemieux interview.
13. Ibid.
14. Etheredge interview.
15. See “Daschle Urges Bush to ‘Compromise More’ on Bill,” American Health Line,2 January 2002; “Daschle, Bush Tout Rival Stimulus Proposals,” American Health Line, 7 January 2002; and “Stimulus Bills Die in Senate,” American Health Line, 7 February 2002.
16. The estimate, by Jonathan Gruber of the Massachusetts Institute of Technology, is in Gruber’s prepared testimony for the House Ways and Means Committee, 13 February 2002, waysandmeans.house.gov/fullcomm/107cong/2-13-02/records/gruber.htm (24 July 2002).
17. “Democrats Propose Health Measure in Trade Bill,” American Health Line,13 February 2002.
18. S. Dorn and J. Meyer, Health Coverage for Laid-off Workers: Searching for Common Ground, Issue Alert no. 3 (Washington: Economic and Social Research Institute, May 2002).
19. Securing Access, Value, and Equality (SAVE) in Health Care Act,H.R. 4604, 107th Cong., 2d sess., 25 April 2002.
20. Comments by Hall and Butler from “How to Make Tax Credits for Health Insurance Work: The Role of Purchasing Pools,” a conference sponsored by the Center for Studying Health System Change, Washington D.C., 10 April 2001 (Transcript at waysandmeans.house.gov/fullcomm/107cong/2-13-02/records/gruber.htm).
21. Lemieux interview; and comments from an anonymous reviewer.
22. Kennedy made his proposal in a speech at the National Press Club, 18 June 2002 (Transcript at kennedy.senate.gov/spotlightnpc061802.html).
23. National Association of Health Underwriters, “Small Employers’ Health Insurance Attitudes and Purchasing Trends” (Arlington, Va.: NAHU, March 2001), 5.
24. Etheredge interview.
25. S. Butler, Time for Bipartisan Action to Help Families without Health Insurance, Backgrounder no. 1528 (Washington: Heritage Foundation, 20 March 2002); Harry Kraemer, Healthcare Leadership Council, prepared testimony for House Education and the Workforce Subcommittee on Employer-Employee Relations, 9 July 2002; and Janet Trautwein, National Association of Health Underwriters, prepared testimony for Senate Finance Committee, 15 March 2001.
26. Etheredge interview.
27. B. Garrett et al., Workers without Health Insurance: Who Are They and How Can Policy Reach Them? (Washington: Urban Institute, 2001), 5, Figure 2.
28. Holahan and Pohl, “Changes in Insurance Coverage,” Exhibit 5.
29. By the end of 1950 only about 12 percent of Blue Cross’s 35.9 million enrollees received any employer contribution toward their insurance coverage. Among the 32.3 million enrolled in commercial plans in 1949, only a few large groups received any employer payment, and these contributions were small. See Health Insurance Plans in the United States, Report of the Committee on Labor and Public Welfare, U.S. Senate (Washington: U.S. Government Printing Office, 1951), 16–17, Appendix A; 58, Appendix C; and 80, Appendix D. See also R. Cunningham and R.M. Cunningham, The Blues: A History of the Blue Cross and Blue Shield System (DeKalb, Ill.: Northern Illinois University Press, 1997), chaps. 3 and 4; and L. Reed, Blue Cross and Medical Service Plans (Washington: U.S. Public Health Service, 1947), 55–56.

Rob Cunningham is a deputy editor of Health Affairs. A journalist, Cunningham is the coauthor of The Blues: A History of the Blue Cross and Blue Shield System (Northern Illinois University Press, 1997), along wilth his late father, R. M. Cunningham.

©2002 Project HOPE–The People-to-People Health Foundation, Inc.