A health plan to reduce poverty.

Noting that the failures of the U.S. health care system are compounding the problems faced by low-income Americans, Alan Weil argues that any strategy to reduce poverty must provide access to health care for all low-income families. Although nearly all children in families with incomes under 200 percent of poverty are eligible for either Medicaid or the State Children's Health Insurance Program (SCHIP), the parents of poor children often lack health insurance. Parents who leave welfare normally get a year of coverage but then lose coverage unless their employer provides it, and many employers of low-wage workers do not offer health insurance. Similarly, parents who take low-paying jobs to avoid welfare usually have no coverage at all. This lack of coverage discourages adults from working and may also affect the health of children because adults without health insurance are less likely to take their children for preventive care. Weil proposes creating a federal earned income health credit (EIHC) and redefining the federal floor of coverage through Medicaid and SCHIP. His aim is to make health insurance affordable for low-income families and to make sure enough options are available that individuals and families can get coverage using a combination of their own, their employer's, and public resources. Weil would expand Medicaid eligibility to include all families whose income falls below the poverty line. The EIHC would be a refundable tax credit that would be available to parents during the year in advance of filing a tax return. The credit, which would be based on taxpayer earnings and family structure, would phase in as earnings increase, reach a plateau, and then phase out farther up the income scale. The credit would be larger for families with dependents. The EIHC would function seamlessly with the employee payroll withholding system. It would be available only to adults who demonstrate that they had health insurance coverage during the year and, for adults with children, only if their eligible dependent children were enrolled in either a private or public insurance program. Weil's proposal would cover individuals who receive coverage from their employer and those who do not. The proposal smooths transitions from public to private coverage, and it anticipates a substantial role for states. Weil estimates that his policy would cost about $45 billion a year.