|
WORD COUNT
706
MARCH 16, 2005
THE ELEPHANT IN THE
PARLOR: HEALTH CARE COSTS – by Heather Boushey
As part of his budget
proposal to Congress, President Bush called for cuts in Medicaid, $45
billion over the next ten years. These are part of a larger agenda to
broadly cut domestic spending on things like health care, the
environment, and education, in order to fund tax cuts for the wealthiest
Americans.
Cutting domestic
programs significantly hurts families. The proposed Medicaid cuts
translate into an average of 1.2 million fewer children accessing the
Medicaid system each year between 2006 and 2010.
Further, the
president’s plan is potentially a step toward capping Medicaid
expenditures in future years. This might sound like a good idea: putting
a limit on Medicaid expenses would keep program spending from rising
along with health care costs over time, it might be thought.
However, the problem
has been misidentified. Medicaid spending is not out of control. In
fact, Medicaid costs less per beneficiary than private health insurance
plans. The problem is that health care costs have been outstripping
inflation for years. Over the past three years, health insurance
premiums have risen over 10 percent per year and medical care costs have
risen twice as fast as inflation.
Plus the proposed
budget fails to address the largest issue facing millions of American
families: rising health care costs in the midst of falling
employer-based health insurance. The real crisis is that our private
health care system, based on employer-sponsored health insurance, is
failing the over 40 percent of Americans under the age of 65 who do not
have consistent access to the system.
Over the most recent
recession, the share of Americans with employer-provided health
insurance-from either their own employer or a family member’s-fell by
5.9 percentage points, down to 58.1 percent.
But this overall
decline masks the increased hardships for children. The share of adults
with employer-provided health insurance who included a child on their
plan fell by 4.1 percentage points from 1999 to 2003, down to 32.1
percent. Now, only about half of all children-53.0 percent-are on an
employer-based health insurance plan for the full year.
Luckily, between 1999
and 2003, Medicaid spending increased by over 26 percent. Much of the
increase was to due to expansions under the State Children’s Health
Insurance Program, which was implemented in 1997 to encourage states to
cover the children of working parents up to 200 percent of poverty. This
program, however, was not an entitlement. When budgets got tight in the
early 2000s due to the fiscal crises, many states cut back on their
spending.
Thus, the president’s
proposed federal budget would cut Medicaid spending just when low-income
working families need it most. As employers are passing more health care
costs on to workers and as more workers are unable to afford coverage
for their families, cutting programs that help fill in the gaps is a bad
idea.
Further, working
mothers need Medicaid to help them stay in the labor market. Women
continue to be less likely than men to get health insurance from their
employers, and low-wage working mothers often find that Medicaid is
their children’s only potential source of health insurance coverage.
Mothers who begin working with Medicaid, but then lose it before they
are able to acquire employer-provided health insurance are nine times
more likely to drop out of the labor market, compared to moms with an
employer-based health plan.
Families are trapped
by rising health care costs. On the one hand, as costs have risen,
employers have pushed more costs onto them, through higher premiums,
co-pays, and deductibles, or through making it more expensive to include
coverage for their children. On the other hand, this budget will make it
even more difficult to access the public insurance systems because of
funding cuts.
This year’s budget
does, however, include increased tax cuts for the wealthiest Americans.
The tax cuts that have been implemented since 2001 make up the largest
share of the increase in the deficit, yet rescinding these tax cuts is
not on the agenda. It should be.
The reality is that
as health care costs rise, we cannot pretend that there isn’t an
elephant in the parlor. A fiscally responsible budget would address how
American families can access health care, rather than pretend that the
problem with health care is government.
--
Heather Boushey is
economist at the Center for Economic and Policy Research (CEPR) in
Washington, D.C. CEPR was established to promote democratic debate on
the most important economic and social issues that affect people’s
lives. CEPR works to ensure that the citizenry has the information and
analysis that allows it to act effectively in the public interest.
www.cepr.net
# # # # # |
