Health Care Gaps Highlight Divide In Party Priorities

Health care reform - a significant issue in the last Congress - is moving to the top of the American agenda again.

This time around, the changes are coming in smaller packages, but they still point up major differences between the two parties.

The Republicans are pushing help for employees of small businesses. The Democrats want to aid children. How the issues are resolved will help define the direction of the 105th Congress.

"It is unconscionable that a parent could work 40 hours a week, 52 weeks a year, and still not be able to buy basic health coverage for their children," says Senate minority leader Tom Daschle of South Dakota of the Democrats' plan to extend coverage for children.

Indeed, while reforms to the troubled Medicare system will be high on the agenda of both parties, the Democrats have made reducing the number of children without health insurance the "No. 1 priority this year, Mr. Daschle says. He estimates that more than 10.5 million children from families not eligible for Medicaid, the health-insurance program for the poor, have no insurance.

Daschle is sponsoring a bill that would provide a refundable tax credit to cover 90 percent of a private health-insurance premium for children under age 19 in families earning up to twice the official poverty level and not eligible for Medicaid. The credit would decrease on a sliding scale, gradually phasing out for families with incomes higher than $75,000 a year. It would also give states grants to develop programs for uninsured pregnant women who are ineligible for Medicaid.

The Congressional Budget Office has not yet figured the cost of the bill, but Daschle's office estimates it at somewhere between $2 billion and $4 billion, to be paid for by closing "corporate welfare" tax loopholes, "in the context of a balanced budget."

An alternative proposal, supported by Sens. John Kerry and Edward Kennedy of Massachusetts, would create federal-state-private partnerships under which states would contract with private insurers to offer child-only coverage. The federal government, through the states, would give families vouchers to purchase coverage for children through age 18, including an employer-provided plan. Families earning up to 185 percent of the official poverty level (currently $24,000 yearly for a family of three) would get the full premium, with decreasing payments to those earning up to three times the poverty level ($39,000 for a family of three).

THE Kerry-Kennedy plan, estimated to cost $9 billion a year, would also provide assistance to pregnant women. Funding would come from a 75 cents-a-pack increase in the federal cigarette tax.

"Providing health care for children is sound policy and also sound economics," Senator Kennedy says. "It's an investment in the future. Dollars spent immunizing a child or providing prenatal care save hundreds of even thousands of dollars in future medical costs."

But critics call the Democratic proposals "a solution in search of a problem." Citizens for a Sound Economy (CSE), a conservative group that advocates market-based approaches, says 7.5 million children, not 10.5 million, are uninsured, and that states and private insurers are already taking measures to meet their needs.

"The bills will receive consideration, but at a time when we're trying to balance the budget and shrink government, I don't think they will pass in their introduced forms," says a congressional source familiar with issue. "Why create a whole new federal program when we could obtain the same goals in other ways?" Republicans are likely to call for enhancing states' flexibility and encouraging the use of existing Medicaid options. Some 2.3 million children are already eligible for Medicaid, but their parents have not applied for it, he notes.

Republican priorities for children's health care include trying to take better advantage of existing community-based programs; finding ways to increase delivery of public-health services in schools in order to ease burdens on working parents; and increasing emphasis on combating teen-age substance abuse.

The problem of children's access to health care "is a real issue," says Carrie Gavora, an analyst at the conservative Heritage Foundation. But conservatives oppose solutions that mandate which benefits insurers must offer, that force insurers to issue policies to all comers, and that involve tax hikes.

The key issue is tax equity, Ms. Gavora says. Full-time workers get tax-free health benefits, while part-time, seasonal, and some other workers must buy insurance with after-tax dollars. "We're looking at ways of redirecting funding already spent on earned income tax credits and creating a new health credit for individuals to draw on," she says. The EITC program provides refundable tax credits to persons under specified income levels and is aimed particularly at the working poor.

Elsewhere on the Republican side, Rep. W. Harris Fawell of Illinois is set to reintroduce a measure dropped from the Kennedy-Kassebaum bill passed last year, which helps workers keep their health insurance when they change jobs. It would allow small businesses to form "association health plans" or pools that can "self-insure."

"It would give the same advantages to small businesses that large and mid-sized employers have," Mr. Fawell says.

Under this plan, employees would be able to purchase insurance from industry associations or other organizations representing small businesses.

About 85 percent of the 41 million Americans without health-care coverage are employed, Fawell says, with the majority either self-employed or working in small businesses that can't afford to provide insurance benefits. At least 50 percent of uninsured Americans would be able to obtain affordable insurance under his proposal, Fawell says.