Budget Plan Gives Expanded Health Coverage to Poor

Moving to help the 43 million Americans who lack health coverage, House and Senate budget negotiators Thursday accepted a plan that could lead to the biggest expansion in decades in government funding and tax credits for the uninsured.

The provision, included in the compromise budget resolution the negotiators have been working on this week and which now is headed for congressional approval, reflects bipartisan enthusiasm for trying to significantly reduce the ranks of people without health coverage. Extending coverage has proved a stubbornly persistent problem despite the recent years of strong economic growth.

The House and Senate are expected to approve the budget resolution Tuesday. House leaders had planned to pass the measure early this morning, but postponed action because of a clerical error, they said. The delay came after GOP leaders made last-minute changes in another crucial area of the budget.

Although President Bush and congressional negotiators had agreed earlier this week to a 5% spending increase for government discretionary programs, sources said GOP leaders decided Thursday night to scale back the spending hike to the 4% the White House initially sought. The change would trim back $6 billion that had been included for natural disasters and other emergencies.

The health insurance initiative, which was accepted by House and Senate negotiators Thursday and was unaffected by the squabble concerning discretionary programs, would make available an additional $28 billion over the next decade in federal money to cover the uninsured. Proponents advocate using it to extend health insurance to parents of children already covered by a federal program for low- and moderate-income households.

This aid would be added to Bush’s proposal to give tax credits worth $71 billion over 10 years to low-income families to help them buy health insurance.

If the final legislative process produces the $99 billion in total outlays and credits, it would represent the biggest boost in the government’s effort to help the uninsured since Medicare was created in 1965.

The ultimate fate of the proposals remain uncertain. The budget resolution containing the health insurance initiatives does not actually implement the policies; it simply sets broad parameters for spending and tax legislation that Congress will pass later this year. That means separate legislation will have to be passed to actually accomplish the expansion of health coverage for the uninsured.

The proposal to directly appropriate an additional $28 billion for such coverage is sure to be opposed by some Republican lawmakers who want to keep government spending growth in check. And some Democrats in the closely divided Congress can be expected to question whether Bush’s tax credit plan would go far enough in helping low-income families obtain health insurance.

Still, many lawmakers have indicated strong support for both proposals. And the White House, along with pushing its tax credit plan, has not signaled objections to the $28-billion spending proposal.

A sense of cooperation among unlikely political allies is helping move the issue of the uninsured to a higher prominence than at any time since 1994, when the Clinton administration’s sweeping proposal for universal coverage collapsed. Oregon’s two senators--Gordon Smith, a generally conservative Republican, and Ron Wyden, a generally liberal Democrat--joined forces to include the $28-billion spending proposal in the budget resolution the Senate passed last month. The House, which did not have a similar section in its budget plan, accepted the Senate proposal during Thursday’s final negotiations on a compromise budget resolution.

“Oregon has a long and noble tradition of taking care of those who have been left behind,” Smith said Thursday. “I think that tradition is one the rest of the nation would do well to follow. In a time of surpluses and tax cuts, the U.S. Congress can find a bit extra to help those who work hard, play by the rules, but simply cannot afford health insurance for themselves and their families.”

Several influential lobbying groups, including the insurance industry, will work hard to promote additional government spending to deal with the problems of the uninsured.

The effort joins together a public sector approach--more direct spending--and a private sector approach--the tax credit proposed by Bush, noted Ron Pollack, executive director of Families USA, an advocacy group favoring expanded federal outlays.

“It’s a remarkable situation, with the possibility of spending the largest amount of money in more than three decades,” he said Thursday.

Pollack’s organization has worked closely with the Health Insurance Assn. of America, the insurance industry lobbying group, and the American Hospital Assn. to campaign for more spending to help the uninsured.

The Bush administration’s plan would provide a tax credit of $1,000 to individuals with annual incomes below $15,000, and a $2,000 tax credit to families with annual incomes below $30,000. The money could be used to purchase health insurance policies.

The direct spending plan promoted by Smith and Wyden would expand the Children’s Health Insurance Program, known as CHIP, which has enrolled more than 3 million children from families with annual incomes up to $35,000 for a family of four. They receive health insurance at a deeply discounted price, as low as $9 a month, with most of the cost picked up by taxpayer funds.

But there are 7 million eligible children who have not been enrolled. Experts believe that if they extend eligibility to the parents, they are more likely to enroll their children.

Although the budget compromise does not give Bush everything he wanted, it ratified his core priorities by calling for a $1.35-trillion tax cut over 11 years--far more than Democrats ever dreamed of supporting while Bill Clinton was president--and by slowing the growth of government spending.

“The president’s first budget has weathered the Washington storm and has provided a significant victory for American taxpayers,” said House Majority Leader Dick Armey (R-Texas).

Along with the tax cut, the budget resolution proposes a 4% increase for discretionary spending--the part of the budget that Congress controls through annual appropriations, including the Pentagon and most domestic programs other than Social Security and Medicare.

The budget also allows Congress to spend as much as $300 billion over 10 years to reform Medicare and provide a new prescription drug benefit--about twice as much as Bush requested.

Hard-fought though they may be, the provisions of the budget resolution are nonbinding and are likely to change before the year is out. For example, GOP leaders openly acknowledge that the $667 billion included for discretionary spending will go up later this year: More is expected to be provided for the Pentagon after the department finishes its top-to-bottom review of the nation’s defenses.

Some conservative Republicans are concerned that Congress, as it often does, will go on a year-end spending spree that would make a mockery of the budget’s proposal to cap spending increases at 4%; spending hikes regularly have exceeded that rate in recent years.

They included a provision in the budget compromise that would have made it more difficult to get around spending caps by declaring certain spending “emergency” initiatives. However, leaders of the powerful Appropriations Committees balked at that language. That is why GOP leaders made their last-minute decision to cut $6 billion from the spending levels set in the earlier compromise: Key appropriation leaders agreed to a lower spending level in exchange for dropping proposals to limit their power to make emergency appropriations. Finding that compromise to resolve the turf battle helped delay consideration of the budget Thursday.