Many past health coverage expansions experienced low participation levels by the uninsured who qualified for help. To avoid similar pitfalls with national health reform, policymakers need to incorporate 21st-century approaches to eligibility determination, enrollment, and retention. One such approach qualifies individuals for subsidies based on reliable data in government hands rather than consumers' completion of traditional application forms. Federal income tax data could thus establish eligibility for subsidies, since more than 6 out of 7 uninsured—86.3 percent—file such returns. Such data-driven eligibility may also lower administrative costs and error rates.
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National health care reform is likely to leave millions of uninsured Americans without coverage unless policymakers include effective mechanisms for eligibility determination and enrollment. For both health insurance and other benefits, traditional eligibility and enrollment methods greatly limit participation levels, since many eligible people do not apply or fail to complete the enrollment process. For example:
- Despite intensive outreach and streamlined application procedures, the Children’s Health Insurance Program enrolled only 60 percent of eligible, uninsured children five years after the program began;
- More than a decade after their enactment, Medicare Savings Programs, which help pay premiums, deductibles, and coinsurance for low-income Medicare beneficiaries, covered fewer than 33 percent of eligible, low-income seniors; and
- The Food Stamp program, which reached only 31 percent of intended beneficiaries after two years of program operation, recently implemented reforms that have achieved the program’s historic high-water mark—67 percent participation.
By contrast, 21st-century systems that qualify people for benefits based on data matching rather than the completion of application forms can quickly and efficiently reach high levels of participation. Low-income subsidies (LIS) for Medicare Part D, for example, automatically go to beneficiaries when data matches show that they received Medicaid the previous year. As a result,
74 percent of eligible seniors received LIS by mid-June 2006, less than six months after the benefit first became available. By February 2009, 81 percent of eligible beneficiaries were participating.
For national health care reform, the federal income tax system could be a surprisingly useful mechanism for identifying the uninsured, determining their eligibility, and enrolling them into coverage without any need for households to fill out application forms. In 2004, more than six out of seven uninsured people (86.3 percent) filed federal income tax returns. Reform legislation could thus change tax forms to require an identification of household members who lack health coverage. Unless taxpayers asked for their returns to remain confidential, their tax information could be forwarded to the entity determining eligibility for health coverage assistance (through Medicaid, the Children’s Health Insurance Program, and new subsidies). Without any need to wait for uninsured consumers to complete application forms, most Americans without coverage would rapidly be enrolled in insurance, receiving subsidies based on data matches with tax records.
Similar approaches have already achieved positive results with federal programs that use income tax information to qualify people for need-based assistance. Medicare Part B premium subsidies, stimulus rebate checks in 2008, and federally funded grants and loans for college all base annual subsidies on prior-year tax returns. If income has fallen since the previous year, families can seek additional subsidies. If income rose, subsidies are not cut until the following year. This approach substantially increases the number of eligible people who receive benefits. In addition, publicly funded, ongoing administrative costs and eligibility errors are substantially reduced when eligibility is based on data matches rather than the manual presentation, inspection, and verification of paper applications and documentation.
One disadvantage of using prior-year tax data is that subsidies will not be optimally targeted based on current income levels. Remedies are available to address this problem—for example, tax records could be automatically updated using more recent sources of income information—but each such remedy introduces important trade-offs.
Of course, back-up enrollment methods will be needed. Among the one in seven uninsured who do not file income tax forms, 84 percent are poor or near-poor (that is, they have incomes at or below 200 percent of the federal poverty level). To reach these people, policymakers need to go beyond traditional outreach. Health reform legislation can streamline their enrollment by:
- Whenever possible, determining eligibility based on available data, rather than income estimates provided by individuals on application forms;
- Automatically providing a chance to seek subsidized health coverage when uninsured workers start or end a job, when uninsured children start the school year, or when uninsured patients seek care; and.
- Funding community-based organizations to help the uninsured fill out forms, gather documents, and take other steps needed to demonstrate eligibility and enroll into coverage.
Procedures for enrollment and eligibility determination will significantly affect participation rates, whether coverage is voluntary or mandatory. But other factors will also affect take-up, including whether low- and moderate-income adults, who comprise most of the uninsured, receive sufficiently large subsidies to make coverage affordable; whether benefits
are comprehensive enough for consumers to find the coverage valuable; whether consumers are legally required to obtain coverage and, if so, whether that mandate is effectively enforced; and whether a strategically designed, well-resourced outreach campaign informs the public (including hard-to-reach groups) about new health coverage subsidies as well as any obligations to purchase
That said, if federal policymakers want to achieve rapid and substantial progress covering the uninsured, carefully structured, effective mechanisms for eligibility determination and enrollment will be an essential component of effective national health care reform.
(End of excerpt. The entire brief is available in PDF format.)