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Friday, August 10, 2007
Perdue’s insurance fix shouldn’t become another entitlement
The Atlanta Journal-Constitution
Gov. Sonny Perdue last week proposed the most significant expansion of the state’s role in funding health care since the creation of PeachCare a decade ago.
He would spend up to $50 million in state and federal funding to subsidize a third of the premiums for employees of small businesses — those with 50 or fewer employees — with incomes below 300 percent of the federal poverty level. That’s $30,600 a year for a single adult and about $62,000 for a family of four. The employer and employee would each pay a third, as well.
The numbers will take a while to settle. The governor thinks that 380,000 uninsured Georgians work for small businesses and that his plan would enable 30,000 of them to buy insurance.
Ken Stewart, the commissoner of the Department of Economic Development, testified before a House-Senate committee Thursday that 600,000 businesses exist in Georgia and that 95 percent of them have fewer than 50 employees. The Georgia Department of Labor put the under-50 number at 252,172, with 1.5 million employees. It reports, too, that 36.9 percent of firms with fewer than 50 employees already offer employee coverage.
The numbers now are not so important as the policy. Offering a taxpayer subsidy to private individuals and companies requires compelling public purpose. And once over that hurdle, it requires, too, a carefully drafted law that specifically targets and tightly contains this genie.
It’s contained initially the way PeachCare was when Congress created the State Childrens Health Insurance Program. That is, it was specifically declared not to be an entitlement, with spending capped. The PeachCare target population was the working poor with incomes below 200 percent of the federal poverty level who couldn’t afford health insurance.
Three significant changes have occurred since. One is that pressure immediately built to expand eligibility. In Georgia, that was done with the first onrush of excess tax collections. The second is that this Congress is turning PeachCare into an entitlement, and raising the eligibility level to about $83,000 for a family of four, meaning that taxpayers will foot the bill for what is becoming a middle-class welfare program, no matter the cost. The third change is that parents are dropping private insurance in favor of the cheaper and better taxpayer-funded program. Half or more of the children signed up were switched from private insurance.
Perdue intends to cap Georgia’s contribution at $20 million, which would come from savings achieved through better management of the Medicaid program. Once created, however, the pressure is immediate, persistent and intense to expand, just as was the case with PeachCare.
To be considered, too, are the behaviors we buy. At present, almost 40 percent of small business owners have sacrificed and made the responsible choice to provide medical insurance to their workers. The inevitable result of a program that offers a 33 percent subsidy is that all eligible employees will be shifted into the public program — those with and those without insurance.
It’s possible, too, that individuals will create sole proprietorships and at-home businesses for the sole purpose of qualifying.
Provisions will be made to check abuse with audits and eligibility reviews — necessary, but a workload that will require additional employees.
Clearly there is a problem that needs attention if in fact employers are not providing health insurance and employees are not buying because they can’t afford it. “I don’t know if just waiting and not doing anything is going to help,” said Dr. Rhonda Medows, commissioner of the Department of Community Health. “We are going to end up paying more in uncompensated care.”
The verdict? Depends. Can it be contained? Is it the beginning, as a key House member, State Rep. Earl Ehrhart (R-Power Springs), asserts of a new entitlement? And what behaviors — desirable and not — are we buying?
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