Last week, we wrote about how federal and state policies shape almost every aspect of kids’ lives. This week, we are discussing several federal policies that have a major impact on the health of kids in the United States. In particular, we're focusing on kids' access to health insurance because of the demonstrated correlation between insurance and accessing and receiving timely healthcare. It is important to note that the policies we feature have had significant, measurable and positive impact on kids’ health, while also producing significant challenges and unintended consequences. In today’s article, we will focus on how these policies currently benefit America’s kids. In future articles, we will explore how to improve these polices, or enact new policies, to better and more sustainably improve our children's health.
In 2016, American children experienced a historic high of health insurance coverage, with 95.5% of American children having some form of benefit. Achieving this rate of coverage has been decades in the making, driven by a compilation of federal and state policymaking that collectively work to increase affordability, access, and equity to important health care benefits for kids. Here are some of the major policy decisions that contributed to today’s near-universal health coverage for children.
Employer-Sponsored Insurance (ESI)
Nearly half (49%) of American children are insured through a parents’ employer-sponsored health insurance plan. The genesis of this policy begins 75 years ago, while the country was grappling with economic challenges in the midst of fighting in World War II. In 1942, America faced a severe labor shortage with its working-aged men enlisting in the war effort. The government feared that businesses would compete for the small labor pool by offering higher and higher wages, which would inflate market rates for labor and goods, and potentially tip the country into a recession during wartime. The government’s solution was for President Franklin Roosevelt to issue Executive Order 9250, which created the Office of Economic Stabilization and froze wages. With jobs to fill, businesses began competing by offering new employee benefits, like health insurance coverage. One year later, in 1943, the Internal Revenue Service deemed that payments made by employers and workers to fund health insurance policies would be tax-exempt.
This policy decision has created numerous, extraordinary impacts on the American family, the national economy and the overall health of Americans. Prior to the IRS deeming ESI a tax-exempt policy, estimates are that less than 10 percent of Americans purchased some form of private health insurance coverage. By 1950, half of the nation carried private health insurance coverage. By 1960, 68 percent of Americans were insured through the private health insurance market, a rate that continued climbing to an all-time high of 82.9% in 1975. Today, ESI is the single largest tax expenditure of the federal government, and the third-largest federal investment in health coverage, falling just behind Medicare and Medicaid. It represents $235 billion in annual, exempted tax revenues. And while there are many valid concerns and debates about the sustainability and efficiency of this policy, it cannot be ignored that the majority of Americans today continue to access health insurance benefits through their employer, and that ESI has been a major driver of health insurance coverage and access over the latter half of the 20th century.
Public Insurance: Medicaid, CHIP, ACA
The federal government directly insures more children’s health needs than any other entity – public or private – in the nation, covering almost 40 percent of American kids. Collectively, this insurance is authorized and subsidized via three distinct but complementary programs: Medicaid, the Affordable Care Act (ACA), and Children’s Health Insurance Program (CHIP).
The evolution of these insurance safety nets begins with Medicaid in 1965. When studying policy, it is as important to understand why policies were created as it is to understand how they work and what they do. Medicaid was created for a number of reasons – some benevolent, some political, some economic. One reason that is often overlooked is related to the status of the nation’s health leading up to the Vietnam War. Medicaid was created, in part, because America had difficulty drafting a healthy military force. Many young Americans had grown up with minimal health insurance or health care services during their formative, childhood years, and as such, had physical and developmental limitations that made them ineligible for service, and predisposed them to a life of recurrent unemployment. Medicaid was created in part to ensure the safety of America and the health of generations as they grow from children into adults. Today, Medicaid is the largest single health insurer for children in the United States, covering over 30 million children nationally, and unequivocally achieves its goal to help children grow into healthy, functioning adults.
Over time, policymakers recognized that a vulnerable population of kids were falling through the cracks; children whose parents’ incomes were too much to qualify for Medicaid, but too little to purchase health insurance on their own or through their employer. In 1997, policymakers moved to close that gap with the creation of the Children’s Health Insurance Program (CHIP). While CHIP income eligibility levels vary by state, nearly 90 percent of children covered are in families earning 200 percent of poverty or less ($40,480 for a family of three). Today, CHIP provides health benefits to an additional 9 million children.
Thirteen years later, in 2010, policymakers sought to fill in the final gaps in insurance coverage for kids and strengthen the quality of coverage overall through the passage of the Affordable Care Act (ACA). In the years following passage of the ACA, the law directly helped 2.8 million children become insured. Importantly, it also helped to insure 5 million women of child-bearing age, making it more likely that women received important health care services before, during and after pregnancy. The law also helped strengthen insurance coverage by prohibiting coverage denials based on pre-existing conditions or lifetime limits; mandating coverage for preventive care, mental health care and substance abuse treatment; and instituting other “consumer protections” like setting annual out-of-pocket maximums for health expenses.
Genesis Health Consulting has significant experience strategically guiding, developing and analyzing effective health care policy at the state and federal level. Learn more about how policy can help you achieve your business outcomes by contacting us at email@example.com.