FEDERALISM AND HEALTH SYSTEM REFORM - PROSPECTS FOR STATE ACTION

Objective.-To assess the prospect that the states, acting independentl y, would undertake health insurance coverage expansions that together would result in meaningful reductions in the extent of uninsurance nat ionally. Design.-We use microsimulation methods to contrast the federa l income tax payments needed to finance a national program covering th e uninsured with the state income tax payments needed to finance a sta te-specific program for the same purpose. The contrast reveals the eff ects on the tax burdens of differences among states in uninsured rates and tax capacity. Setting.-Continental United States. Patients or Oth er Participants.-Observations from the 1990 through 1993 Current Popul ation Survey (N=305 477 families), weighted to represent the populatio n of each state. Intervention.-Illustrative public health insurance pr ogram for families with incomes below 250% of poverty, not covered by current public or employer-sponsored health insurance. Main Outcome Me asures.-Change in percent uninsured, change in per capita total tax pa yments. Results.-The per capita cost of a state-specific program is di rectly related to current uninsured rates, $130 in states with low uni nsured rates (10%) to $230 in states with high uninsured rates (21%). This would represent increases in state total tax effort of 10% to 19% , respectively. In contrast, equal tax effort to finance a national pr ogram would imply per capita yields of about $200 in the low-uninsured states and about $150 in the high-uninsured states. Conclusions.-Subs tantial state tax effort would be necessary to cover the low-income un insured-especially in states with the highest uninsured rates, which a lso have the lowest tax capacity. Targeted federal financial assistanc e may be necessary, if policymakers wish to induce many states to prov ide health insurance coverage for their uninsured.