The EITC Health Care Voucher

Many people who don't have health care insurance would be promoted to get and maintain uninterupted Health Insurance if the Earned Income Tax Credit (EITC) were issued as a Health Care Voucher that is redeemable for cash if uninterrupted coverage is available from other sources. One might consider providing all tax refunds in such a format for an even broader effect, but that is perhaps best left for future development. A sample two-sided voucher is provided below.

Sample EITC Voucher

Front Side

EITC Health Care Voucher

March 4, 1998

Pay to the order of Mary Doe for Health Care Coverage $2000.00

Two thousand Dollars and 00 cents

Please correct your address below Mary Doe 123 Maple Anytown, WA 98XXX US Treasury

Back Side

The Earned Income Tax Credit is being offered as a Voucher for affordable Health Care coverage for you and your family. Mail this voucher to your health care insurance carrier to set up your Health Care Savings Account (HCSA). If you don't have health care insurance, you should contact a health care insurance agent in your area. Call 1-800-COVERAGE for information about carriers in your area or the program in general. Please check one box below about how excess funds in your Health Care Savings Account (HCSA) should be handled.

___ Refund any excess funds in my HCSA on a month to month basis.

___
Refund unused funds in my HCSA at the end of the year. You can use excess funds for copays and other essential covered health care costs.

___
At the end of the year, transfer any remaining funds in my HCSA into a Health Care IRA. I understand that I can use my HCIRA for long term care insurance, copayments, premiums, and other essential health care costs such as dental care, eye wear, dependent health care, etc. The carrier will pay me tax free interest on income earned by my HCIRA.

There are many potential benefits for an EITC voucher system. Some are listed below:

An EITC health care voucher could lower everyone's premiums as more healthy people would be covered. This is because many people receiving the EITC are young and healthy, but without health care coverage. An EITC voucher would promote them to get coverage before they get sick or need treatment.
The cost of coverage for the young and healthy who receive the bulk of the EITC payments would be quite modest so much of the EITC would still be available for use for basic living expenses.
The burden on Medicaid would be reduced as fewer people would be falling back on Medicaid for health care treatment. It might be possible to provide Medicaid as a voucher for private insurance.
The EITC voucher could promote the development of sliding scale coverages (with subsidies by the States) to help low income people obtain affordable health care according to their income. Such as system is in operation in Washington State with its Basic Health Plan.
The EITC voucher could be used for virtually any form of coverage (HMO, PPOs and MSAs).
What individuals don't spend on Health Care Insurance or care, they could redeem for cash for rent, food, etc. The reimbursement could be made on a monthly basis so that the benefits of the EITC are spread over the year for those who wish to receive excess payments that way.
A EITC voucher is of particular advantage to people who may have part time jobs with one or more employers, none of whom offer coverage. Such people may have full time hours through all of their activities, but don't have the incentive or ability to find affordable coverage in the individual market. With the EITC offered as a voucher, there would be a huge market for cost effective individual health care coverage, even for those who don't qualify for the EITC.

What follows is a development of the EITC voucher concept from the perspective of maximizing the ability of the private sector to provide uninterrupted health care coverage with a minimum of new government tax dollars. The concept is quite flexible and can be modified fit political considerations without compromising the overall goals.

The Basics of the EITC Voucher program

The EITC voucher is provided to the recipient by existing means for distribution of the EITC with IRS tax refunds. The individual goes to the carrier of their choice (or their employer-based carrier) and sets up a Health Care Savings Account (HCSA). If they have no insurance, a system would be set up to direct them to local carriers accept the EITC voucher. (Ex. 1-800-COVERAGE).

The private sector carriers would offer and operate the program according to a commonly agreed format. This allows for transfers of individual's HCSAs between carriers with a minimum of problems. There are three options for the voucher funded HCSA.

Any excess funds in the HCSA are refunded to the enrollee on a month to month basis.
Excess funds are defined as those funds which are not necessary to provide contiguous coverage until the end of the covered year (March to March?). If there is enough in the HCSA in July to fund premiums through next March, the excess funds are refunded each month. If the individual has employer-based coverage and had enough reserves to cover the rest of the year without employer contributions, each month the employer paid the premium, the individual would receive a check from the carrier in the amount of the premium. If the individual becomes unemployed, coverage is maintained without interruption by the HCSA.

All Unused funds in the HCSA are refunded at the end of the covered year. (Default).
There are several advantages to making this the 'default' option for the voucher for those who don't check any box. The primary advantage for EITC individuals with their limited resources would be the ability to use their HSCA for treatment copays. The carriers might provide debit cards to automate this process. Carrier's might also find less administrative costs over the month to month option.

At the end of the year, the remaining funds in the HCSA are transferred into a carrier operated Health Care IRA.
The individual can use this IRA for long term care insurance, copayments, premiums, and other essential health care costs such as dental care, eye wear, dependent health care, etc. The carrier will pay me tax free interest on income earned by the IRA, which shall not be less than the investment income earned by the carrier's own reserve investments. Carrier's may optionally charge a modest load for handling the HCIRA. Any funds in the HCIRA at retirement can be used for Medicare or other retirement uses. For most respects, the HCIRA could be considered similar to regular IRAs and could perhaps be made identical.

The system defined above provides a modest and reasonable set of policies to deal with the wide variety of economic and social situations faced by those eligible for the EITC. The process includes significant private sector involvement, while also allowing for States to independently develop or use existing policies to their citizens get affordable coverage, such as the Basic Health Plan offered in Washington State. There is room for further federal, state, or private sector initiative to include larger segments of the population if desired. Many of the 40 million without coverage would get and maintain coverage under an EITC voucher program.

As a final comment, the EITC voucher program could be voluntary. In other words, individuals could cash the EITC or use it is as a health care voucher as defined above. While I am a great believer in the freedom of choice, one can make a good case that those who don't have coverage through responsible voluntary actions shouldn't be allowed the frivolous freedom to become a burden upon society should they develop a need for health care. Taxpayers don't have the frivolous freedom of choice not to pay taxes to pay for health care for those people who choose not to have health care coverage when the opportunity is provided for them. It is time that our nation adopt policies that promote the general welfare of the nation through increased personal responsibility, not increased government programs.

In my opinion, an EITC voucher program for health care would move our nation forward with reasonable effectiveness by promoting the general welfare of the nation at the individual level through effective policies aimed at helping individuals take control of their own lives through development of responsible habits.

EITC Health Care Voucher	March 4, 1998
Pay to the order of Mary Doe for Health Care Coverage	$2000.00
Two thousand Dollars and 00 cents
Please correct your address below Mary Doe 123 Maple Anytown, WA 98XXX US Treasury

The Earned Income Tax Credit is being offered as a Voucher for affordable Health Care coverage for you and your family. Mail this voucher to your health care insurance carrier to set up your Health Care Savings Account (HCSA). If you don't have health care insurance, you should contact a health care insurance agent in your area. Call 1-800-COVERAGE for information about carriers in your area or the program in general. Please check one box below about how excess funds in your Health Care Savings Account (HCSA) should be handled.
___	Refund any excess funds in my HCSA on a month to month basis.
___	Refund unused funds in my HCSA at the end of the year. You can use excess funds for copays and other essential covered health care costs.
___	At the end of the year, transfer any remaining funds in my HCSA into a Health Care IRA. I understand that I can use my HCIRA for long term care insurance, copayments, premiums, and other essential health care costs such as dental care, eye wear, dependent health care, etc. The carrier will pay me tax free interest on income earned by my HCIRA.