The American Enterprise Institute held a forum today to discuss the specifics in the implementation of the tax credits contained in the Trade Act of 2002. The Trade Act would give trade-related displaced workers and certain Pension Benefit Guarantee Corporation recipients a tax credit worth 65% of the cost of qualified private health insurance.

Ruben King-Shaw of the U.S. Department of Treasury presented an overview of the program and gave an update on the status of the implementation efforts. King-Shaw said the Department of Treasury has created a ?coalition of the willing? with concerned parties including states, employers, organized labor, insurers, and academics to help in the implementation process. He said eight states have already set up qualified purchasing options and that as many as 15 to 19 states will have qualified options in place by the August 1st deadline for advanceable credit payments to begin. In addition to state purchasing options, the roughly 260,000 eligible individuals can use their credits to purchase COBRA continuation coverage, certain spousal coverage, or individual coverage if they had individual coverage for at least 30 days before separation from employment.

Allen Dobson of The Lewin Group discussed some of the more technical aspects of implementation, including the conceptual model for the registration of recipients and monetary transfers. The state workforce agencies will determine trade adjustment assistance status and transmit the names of eligible individuals to the Health Coverage Tax Credit (HCTC) program daily. The Pension Benefit Guarantee Corporation will transmit the names of their eligible recipients to the HCTC program monthly. The HCTC program will send eligible individuals a program kit. Individuals will then submit certain information, including the type of coverage they select, to the HCTC processing center. Upon verification and official registration, the HCTC program will ask the individuals to submit 35% of the premium amount to the U.S. Treasury. The Treasury will then add the 65% tax credit subsidy and submit the full payment to the health plan administrator.

Janet Stokes Trautwein of the National Association of Health Underwriters gave a brief overview of what states are doing to establish qualifying purchasing options. She said it was somewhat surprising to see that most states that have established qualified plans have selected high-risk pools as the preferred option. A majority of states have or are considering high-risk pools, although a few have established qualifying mini-COBRA plans or a choice of Blues plans instead. Trautwein stressed the importance of states taking action immediately to establish qualifying purchasing options. ?If people don?t have purchasing options, it?s difficult to move forward,? said Trautwein. ?Not everyone is eligible for COBRA.?

Maryland is the first state to receive the seed money in the trade bill for establishing a high-risk pool. Richard Popper of the Maryland Health Insurance Plan said his state will be deeming eligibility for the credits in about a week and a half and has applied to receive a waiver to begin payments in July instead of August.

Jeff Lemieux of the Progressive Policy Institute said the TAA tax credits are the best model we have when looking at future coverage expansions. Lemieux suggested extending eligibility to all of the 3.5 million people receiving unemployment benefits.

One questioner asked what improvements could be made if congress were to expand the TAA tax credits. While all panelists were supportive of the tax credit approach, some offered suggestions of ways the legislation could be incrementally improved for future coverage expansions. Ruben King-Shaw said the 65%/35% proportionality of the credits may not be ideal, and that future expansions should build and strengthen the individual health insurance market. Allen Dobson suggested making the coverage options as flexible as possible so that underwriters would know the risks and want to offer coverage. ?I hope we could have less rigidly structured purchasing options in any similar legislation in the future,? concluded Trautwein.

–Joe Moser
Galen Institute

The American Enterprise Institute held a forum today to discuss the specifics in the implementation of the tax credits contained in the Trade Act of 2002. The Trade Act would give trade-related displaced workers and certain Pension Benefit Guarantee Corporation recipients a tax credit worth 65% of the cost of qualified private health insurance.

Ruben King-Shaw of the U.S. Department of Treasury presented an overview of the program and gave an update on the status of the implementation efforts. King-Shaw said the Department of Treasury has created a ?coalition of the willing? with concerned parties including states, employers, organized labor, insurers, and academics to help in the implementation process. He said eight states have already set up qualified purchasing options and that as many as 15 to 19 states will have qualified options in place by the August 1st deadline for advanceable credit payments to begin. In addition to state purchasing options, the roughly 260,000 eligible individuals can use their credits to purchase COBRA continuation coverage, certain spousal coverage, or individual coverage if they had individual coverage for at least 30 days before separation from employment.

Allen Dobson of The Lewin Group discussed some of the more technical aspects of implementation, including the conceptual model for the registration of recipients and monetary transfers. The state workforce agencies will determine trade adjustment assistance status and transmit the names of eligible individuals to the Health Coverage Tax Credit (HCTC) program daily. The Pension Benefit Guarantee Corporation will transmit the names of their eligible recipients to the HCTC program monthly. The HCTC program will send eligible individuals a program kit. Individuals will then submit certain information, including the type of coverage they select, to the HCTC processing center. Upon verification and official registration, the HCTC program will ask the individuals to submit 35% of the premium amount to the U.S. Treasury. The Treasury will then add the 65% tax credit subsidy and submit the full payment to the health plan administrator.

Janet Stokes Trautwein of the National Association of Health Underwriters gave a brief overview of what states are doing to establish qualifying purchasing options. She said it was somewhat surprising to see that most states that have established qualified plans have selected high-risk pools as the preferred option. A majority of states have or are considering high-risk pools, although a few have established qualifying mini-COBRA plans or a choice of Blues plans instead. Trautwein stressed the importance of states taking action immediately to establish qualifying purchasing options. ?If people don?t have purchasing options, it?s difficult to move forward,? said Trautwein. ?Not everyone is eligible for COBRA.?

Maryland is the first state to receive the seed money in the trade bill for establishing a high-risk pool. Richard Popper of the Maryland Health Insurance Plan said his state will be deeming eligibility for the credits in about a week and a half and has applied to receive a waiver to begin payments in July instead of August.

Jeff Lemieux of the Progressive Policy Institute said the TAA tax credits are the best model we have when looking at future coverage expansions. Lemieux suggested extending eligibility to all of the 3.5 million people receiving unemployment benefits.

One questioner asked what improvements could be made if congress were to expand the TAA tax credits. While all panelists were supportive of the tax credit approach, some offered suggestions of ways the legislation could be incrementally improved for future coverage expansions. Ruben King-Shaw said the 65%/35% proportionality of the credits may not be ideal, and that future expansions should build and strengthen the individual health insurance market. Allen Dobson suggested making the coverage options as flexible as possible so that underwriters would know the risks and want to offer coverage. ?I hope we could have less rigidly structured purchasing options in any similar legislation in the future,? concluded Trautwein.

–Joe Moser
Galen Institute