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As of February 1983, 10.2 million jobless Americans
and their dependents lacked any form of health insurance coverage as a
direct result of unemployment. Another 20 million had no coverage for other
reasons. Lack of coverage is known to impede access to health care and
it may lead to diminished health, though confirming data are unavailable.
For these reasons, high and persistant unemployment rates have made lack
of coverage caused by joblessness an important Congressional concern.
THE ALTERNATIVES AVAILABLE
Both the private and public sectors offer an array of health insurance
possibilities for jobless workers, but few are readily available. Ranging
from modified extensions of employer-provided policies to privately purchased
policies, the private-sector alternatives are characterized by relatively
high premium costs that can consume an important share of the incomes of
unemployed workers. Public-sector choices are either very circumscribed
as to whom they can assist (Medicaid, for example) or severely limited
in what costs they will cover--specifically, those of very expensive "catastrophic"
illnesses.
OPTIONS FOR CONGRESSIONAL CONSIDERATION
In recognition of these twin problems--high rates of unemployment-related noncoverage and the inaccessibility of alternative insurance--several legislative proposals have been advanced that would involve the federal government in providing coverage for unemployed persons. These plans, and additional ones analyzed by the Congressional Budget Office, would either use a public program or involve the private sector--that is, employing firms laying off personnel and insurance companies that administer employer-provided insurance. Most of the public options analyzed here would establish entitlements, for which all applicants meeting certain eligibility criteria would qualify. Others would take the form of appropriated grants, either to states or to fiscally distressed hospitals. (These options are outlined in the Summary Table.) The commitment of federal money would vary from virtually none for some of the private-sector options to $6.4 billion in 1984 for the most generous entitlement.
These options can be assessed on several dimensions:
In general, entitlement options would direct aid toward persons believed to need it the most according to the chosen eligibility criteria. To whatever extent entitlements would build on programs already in place--Medicaid and Medicare--they could make assistance available with little delay. Further, if these options included uniform national eligibility standards, they would distribute aid with minimal state-to-state variations. On the other hand, entitlements would have the drawback of giving rise to costs of uncertain magnitude at the outset that could be difficult to control in the longer term.
Costs of grant programs, in contrast, would be far easier to control through the annual Congressional appropriation process, although exercising such control would mean providing less assistance to the unemployed. This approach would also enable states to vary the program's design to meet local needs most effectively. If new program mechanisms were used, however, provision of health coverage would be delayed.
Instead of emphasizing federal fiscal responsibility for providing health coverage for the unemployed, the Congress could mandate several forms of private-sector responsibility. Reliance on the private sector would avoid much of the impact on already-large federal deficits and could be simpler to administer. A problem with this approach, however, is that those industries and firms that account for large numbers of laid-off workers might be in a poor financial position to shoulder the added burden of coverage for the unemployed. This new expense could worsen such firms' condition--in extreme cases, forcing them out of business. While pooling of such risks across firms is a possibility, such a reinsurance mechanism is not available at present.
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