Adding to the Health Care Crisis: Bush’s Catch-22

The Bush administration recently blocked efforts by Ohio, Louisiana, and Oklahoma to expand health coverage for working families and sent a clear message that other states should not try to expand their health coverage programs either (see Robert Pear, “U.S. Curtailing Bids to Expand Medicaid Rolls,” New York Times, Jan. 4, 2008). Ohio, Louisiana, and Oklahoma sought to make publicly supported insurance available to working families that have been unable to access employer-sponsored or private insurance. The Bush administration’s preferred policy is for these families to rely on employer-sponsored or private insurance for their health care needs. This is a classic and cruel catch-22: a family needs publicly supported insurance because it cannot access private coverage, but that same family is denied publicly supported insurance on the grounds that it should rely instead on private coverage (which it cannot access).

Long-standing federal law has always granted states the freedom to set eligibility levels for Medicaid. However, on December 20, 2007, the Bush administration rejected Ohio’s proposal that would have expanded its Medicaid program. The state proposed increasing the eligibility limit from twice the federal poverty level, or about $41,000 a year for a family of four, to three times the poverty level, or about $62,000 a year.

Officials from both Louisiana and Oklahoma described similar experiences. In May the Oklahoma legislature voted to increase the income eligibility limit to 300 percent of the poverty level, but, according to Mike Fogarty, chief executive of the Oklahoma Health Care Authority, “we got a very clear signal from federal officials that we would not be allowed to go beyond 250 percent.” As Louisiana set out to make a similar expansion, it met the same fate as Ohio. “We found that we have much less flexibility to make changes in Medicaid than we thought,” said J. Ruth Kennedy, deputy director of Louisiana’s Medicaid program.

States are trying to expand choices for families because, for many consumers, the employer-based and private insurance markets are drying up or becoming far too expensive. According to a recent Commonwealth Fund–supported study in the new issue of Health Affairs, researchers found that in 2004 one in six Americans lived in families that spent more than 10 percent of their after-tax income on health care—approximately 18 percent of the nonelderly population, up from 16 percent in 2001. The study also found that, as costs began to rise, employers began either to shift their expenses to workers through higher premiums, deductibles, and copayments or to drop insurance altogether.

Also affected by the rising health care costs are people covered by private policies purchased in the individual market. People with private policies were more likely to bear high financial burdens than those covered by any other type of insurance. Of people with private insurance, 53 percent reported an increase in out-of-pocket health care costs in 2004, up from 39 percent in 2001. The study also showed that one out of every five privately insured middle-income consumers spent more than 10 percent of income on health care.

Interestingly enough, people enrolled in public medical assistance programs face high health care costs compared to their income, but those costs did not increase appreciably between 2001 and 2004. One-sixth of individuals with public coverage, or 6.4 million people, faced high-cost burdens, but that number for the most part did not fluctuate.

Consumers are caught between a federal system for which they do not qualify and a private market they cannot afford. As long as there is no comprehensive health care reform and no change in the Bush administration’s catch-22 position on expanding the publicly supported system, working-class American families will continue to have no viable option for quality, affordable health care.

For more information, contact Melissa Cubria at melissacubria@povertylaw.org or 312.368.1168