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News Release

BUDGET TO CONTINUE PRESIDENT'S INITIATIVES FOR THE UNINSURED
Efforts Include Health Centers, Tax Credits And Investments To Expand Access To Care

President Bush's fiscal year 2004 budget plan includes new initiatives and expands existing programs to improve access to health care and coverage for more than 40 million Americans without health insurance, Secretary Tommy G. Thompson announced today. The budget would expand community health centers that care for the uninsured, strengthen and modernize the Medicaid program, offer health tax credits to help individuals obtain insurance, and extend Medicaid and State Children's Health Insurance Program (SCHIP) coverage to more Americans who otherwise would go without coverage.

"President Bush's budget will give millions more Americans the security of health insurance and improved access to needed health care and preventive services," Secretary Thompson said. "Recognizing that far too many Americans still lack health insurance, we must move forward on many fronts to help low- and moderate-income Americans, especially children, get care and stay healthy."

Key elements of the President's fiscal year 2004 budget plan to help the uninsured include:

Expanding health centers. The budget plan would increase funding for health centers by $169 million under the third year of the President's five-year initiative to add or expand 1,200 new health center sites and provide health care to more than 6 million additional Americans, including many without health insurance. Health centers deliver preventive and primary care to patients regardless of their ability to pay. About 40 percent of the patients treated at health centers have no insurance coverage, and many others have inadequate coverage. With the proposed increase, HHS would fund health centers at a record level of $1.6 billion. The increase would support the creation of about 120 new centers and expand another 110 existing sites for a total of nearly 3,700 health center sites, up from 3,317 in fiscal year 2001 before the initiative began. These centers would provide health care and preventive services for almost 14 million people, up from 10.3 million Americans in 2001. "For millions of Americans without health insurance, community health centers provide reliable access to quality health care and preventive services," Secretary Thompson said. "The President's budget will continue our five-year initiative to expand and strengthen these centers to serve millions of Americans living in underserved rural and urban communities."

Recruiting clinicians in underserved rural and urban areas. To meet the demands for physicians and other clinicians in health centers and other underserved areas, the HHS budget also will propose a $24 million increase for the National Health Service Corps. This program offers scholarships and loan repayment plans to doctors and other clinicians who agree to serve in health centers or in other locations serving underserved communities. The increase would help support a total of nearly 4,300 doctors, dentists and other clinicians in the field -- nearly 2,000 more clinicians than in fiscal year 2001.

Strengthening and modernizing Medicaid. The President's budget proposes significant new flexibility for states in serving non-mandatory Medicaid populations. The proposal would retain current coverage for all those legally entitled to Medicaid, while proposing flexibility for states to tailor coverage for additional low-income people whom states opt to cover. The proposal would help states avoid cutting off benefits to these individuals during difficult economic times, and would make possible wider coverage in the future. "The states' budget crises are threatening the progress we've made in expanding health insurance, and the old Medicaid rules have stifled creative new approaches," Secretary Thompson said. "We need to stop tying our own hands in the Medicaid program and instead pursue a new approach that could preserve coverage and expand it to more Americans."

Offering health credits. The President's budget also proposes $89 billion in new health credits to make private health insurance more affordable for Americans who do not have employer-subsidized insurance. As part of the Department of Treasury budget proposal, eligible families with two or more children and incomes under $25,000 could receive up to $3,000 in credits to cover as much as 90 percent of the costs of purchasing health insurance. The credit phases out at $60,000 for families. Eligible individuals earning up to $15,000 annually would receive up to a $1,000 tax credit. For individuals, the credit phases out at $30,000. The credits are refundable, so their value does not depend on taxes owed. Beginning in July 2005, advance credits will be available allowing individuals to directly reduce their monthly premium payments. Starting in 2005, for certain individuals, states could provide the power of group purchasing for the health credits through state-sponsored purchasing pools, for example, through state employee purchasing pools or SCHIP purchasing pools for private insurance. The health credits could also be used in privately sponsored health insurance purchasing groups. This proposal is expected to provide coverage for Americans who would otherwise be uninsured for one or more months, and will help many more working low- and moderate-income families who currently purchase private health insurance with little or no government help.

Extending availability of SCHIP funds. The President's budget plan for HHS would strengthen SCHIP by making available to states an estimated $830 million in unused SCHIP funds that otherwise would return to the federal treasury at the end of fiscal year 2003. The SCHIP law originally required states that did not use their full SCHIP allotment during the previous three years to return the unused funds. By giving states more time to take advantage of these matching funds, the budget creates the opportunity for states to expand coverage to the uninsured.

Extending transitional medical assistance. The President's budget plan provides $400 million in fiscal year 2004 and $2.4 billion over five years to continue funding Medicaid for families in transition from welfare to work. This coverage helps to ensure that work pays for families by preventing them from losing their health coverage when they start jobs.

Helping displaced workers retain health insurance. The Bush Administration is implementing a tax credit to help workers who lose their jobs due to international trade so that they can obtain health insurance coverage. Eligible individuals -- displaced workers and certain recipients of benefits from the Pension Benefit Guaranty Corporation -- will be able to receive a tax credit of 65 percent toward their cost of health insurance. More than 500,000 people, including dependents, may obtain health coverage using this credit this year. The program is overseen by the Department of Treasury.

Encouraging qualified high-risk insurance pools. The President's fiscal year 2004 budget continues a HHS program to help states create qualified high-risk pools that will provide health coverage to individuals who otherwise would have difficulty obtaining coverage because of their health status. This program began in fiscal year 2003 and HHS is already providing up to $20 million to support state efforts to create high-risk pools to help residents obtain coverage. During fiscal years 2003 and 2004, HHS would make an additional $80 million in grants available to help cover losses incurred by states with existing qualified high-risk pools.

Expanding and extending Medical Savings Accounts. The President's budget plan would make Medical Savings Accounts (MSAs) a permanent option for Americans who have high-deductible, "catastrophic" health coverage. Under current law, no more than 750,000 Americans can establish tax-free MSAs to cover routine medical bills and related extensions, and no such accounts can be established after Dec. 31, 2003. The Department of Treasury's budget would eliminate those limitations to allow more Americans to purchase relatively low-premium, high-deductible plans and to use tax-free MSA contributions to cover their routine medical expenses.

Helping small businesses through Association Health Plans. The President's budget plan for the Department of Labor would create Association Health Plans (AHPs) that would provide millions of small business owners and their employees access to quality, affordable health care. AHPs would achieve savings for small businesses through greater bargaining power, economies of scale, and administrative efficiencies. Sixty percent of employees employed by a small business do not have health insurance for themselves and their families. According to the non-partisan Congressional Budget Office, AHPs will lower health insurance premiums by 13 percent and provide health insurance to as many as two million Americans who are currently uninsured.

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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.

Last Revised: February 11, 2003