President to Propose Shifting Health Funds to States

By Christopher Lee and Lori Montgomery
Washington Post Staff Writers
Monday, January 22, 2007; 11:58 PM

The best solutions to the problem of nearly 47 million Americans lacking health insurance are to be found in states across the country, Health and Human Services Secretary Mike Leavitt said Monday.

President Bush will propose in his State of the Union address tonight, Leavitt said, that the federal government redirect some money from programs such as Medicaid and Medicare into a new grant program to help states devise and implement plans ensuring access to affordable health insurance.

Leavitt, who did not specify a funding amount, said the new Affordable Choices Initiative would help fuel efforts already underway in states such as Massachusetts and California to guarantee access to basic health coverage for everyone.

"The aspiration for all Americans to have access to a basic insurance policy at an affordable price is a widely held sentiment," Leavitt said. "There will be two diverging philosophies on how to solve this problem. One will be to have the federal government ensure everybody, and the other will be, 'Let the states lead.' "

Meanwhile, another Bush health care proposal drew a chilly reception from some Democrats. Bush will urge the creation of new tax breaks for the purchase of health insurance, especially by those who do not get coverage through work. Bush advisers acknowledged Monday that the plan initially would cost the federal government millions of dollars in lost revenue, but said that would be offset by more revenue in later years and the plan would pay for itself within the first decade.

Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means subcommittee on health, said he would not consider changing the tax code the way Bush wants to.

"The president's so-called health care proposal won't help the uninsured, most of whom have limited incomes and are already in low tax brackets," Stark said. Later he added, "Under the guise of tax breaks, the president is pursuing a policy designed to destroy the employer-based health care system, through which 160 million people receive coverage."

The new grant program, like the proposed changes in the tax code, would require congressional approval. States would be eligible for money if they defined what an affordable plan would be, established basic benefit requirements and devised a way (through state subsidies, for instance) to ensure that anyone could afford to enroll, Leavitt said.

Details of where the money would come from have not been worked out, he said, but generally federal officials want to redirect payments that now go to hospitals with disproportionately large numbers of low-income and uninsured patients.

"Rather than perpetually pay the bills of uninsured people, it's better to use part of the money to help them get a basic insurance policy," Leavitt said. "They get better care and the money ultimately goes further."

Bush's proposals follow a wave of policy experiments at the state level to deal with the uninsured, most notably a decision last year by Massachusetts to require all residents to obtain health coverage. The Massachusetts plan would provide subsidies to people who could not afford basic insurance and would impose a fee on businesses with more than 10 employees who do not sponsor insurance for their workers. California Gov. Arnold Schwarzenegger (R) proposed a similar plan this month to cover the 6.5 million uninsured people in his state, funding its $12 billion cost partly through fees on employers, hospitals and doctors.

Other states that are expanding coverage or considering doing so include Maine, Vermont, Pennsylvania, Connecticut, Indiana, Iowa, Louisiana, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, North Carolina and Wisconsin, according to the National Conference of State Legislatures.

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