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43–756 2008

IMPACT OF GAPS IN HEALTH COVERAGE 

ON INCOME SECURITY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INCOME SECURITY AND FAMILY SUPPORT 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

NOVEMBER 14, 2007 

Serial No. 110–65 

Printed for the use of the Committee on Ways and Means 

( 

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COMMITTEE ON WAYS AND MEANS 

CHARLES B. RANGEL, New York, Chairman 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL JR., New Jersey 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

CHRIS VAN HOLLEN, Maryland 

KENDRICK MEEK, Florida 

ALLYSON Y. SCHWARTZ, Pennsylvania 

ARTUR DAVIS, Alabama 

JIM MCCRERY, Louisiana 

WALLY HERGER, California 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

DEVIN NUNES, California 

PAT TIBERI, Ohio 

JON PORTER, Nevada 

JANICE MAYS, Chief Counsel and Staff Director 

BRETT LOPER, Minority Staff Director 

SUBCOMMITTEE ON INCOME SECURITY AND FAMILY SUPPORT 

JIM MCDERMOTT, Washington, Chairman 

FORTNEY PETE STARK, California 

ARTUR DAVIS, Alabama 

JOHN LEWIS, Georgia 

MICHAEL R. MCNULTY, New York 

SHELLEY BERKLEY, Nevada 

CHRIS VAN HOLLEN, Maryland 

KENDRICK MEEK, Florida 

JERRY WELLER, Illinois 

WALLY HERGER, California 

DAVE CAMP, Michigan 

JON PORTER, Nevada 

PHIL ENGLISH, Pennsylvania 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

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C O N T E N T S 

Page 

Advisory of November 7, 2007, announcing the hearing ...................................... 2 

WITNESSES 

Sherena Johnson, former foster youth from Morrow, Georgia ............................ 60 

Sara R. Collins, Ph.D., Assistant Vice President, Program on the Future 

of Health Insurance, The Commonwealth Fund, New York, NY ..................... 79 

Ron Pollack, Founding Executive Director, Families USA, Washington, DC ..... 114 

Bruce Lesley, President, First Focus, Alexandria, VA ......................................... 63 

Brian J. Gottlob, Senior Fellow, Milton and Rose D. Friedman Foundation, 

Indianapolis, IN ................................................................................................... 158 

SUBMISSIONS FOR THE RECORD 

Business Coalition for Benefits Tax Equity, statement ....................................... 192 

Child Welfare League of America, Arlington, Virginia, statement ..................... 195 

Human Rights Campaign, statement .................................................................... 199 

National Association of Disability Examiners, statement .................................... 200 

Zero to Three, Matthew Melmed, statement ......................................................... 202 

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IMPACT OF GAPS IN HEALTH COVERAGE 

ON INCOME SECURITY 

WEDNESDAY, NOVEMBER 14, 2007 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON INCOME SECURITY AND FAMILY SUPPORT, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:02 a.m., in 

room B–318, Rayburn House Office Building, Hon. Jim McDermott 

(Chairman of the Subcommittee), presiding. 

[The advisory announcing the hearing follows:] 

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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON 

INCOME SECURITY AND FAMILY SUPPORT 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1025 

November 07, 2007 

McDermott Announces Hearing on Impact of 

Gaps in Health Coverage on Income Security 

Congressman Jim McDermott (D–WA), Chairman of the Subcommittee on Income 

Security and Family Support, today announced a hearing on the impact of gaps in 

health coverage on income security. The hearing will take place on Wednesday, 

November 14, 2007, at 10:00 a.m. in room B–318 Rayburn House Office 

Building. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

The Census Bureau has found that, in 2006 (the most recent year in which data 

is available) roughly 47 million people did not have health insurance in this nation, 

an increase of nearly 2.2 million over the previous year. After falling modestly in 

the late 1990s, the number of people without health insurance has increased by approximately 8.6 million since 2000. 

Research suggests that the combination of declining share of employees being covered by employers and rising health costs have placed more moderate- and middleincome families at risk of becoming uninsured. Between 2000 and 2004, the share 

of non-elderly working-age adults covered by employer-sponsored insurance declined 

by five percentage points, from 66 percent to 61 percent, according to the Kaiser 

Family Foundation. While government programs, such as Medicaid, provide health 

coverage to certain low-income individuals, many other low- and middle-income individuals and families do not have a health safety-net available to them. As a result, 

many are completely without health insurance or experience gaps in coverage. 

Studies have found that those who are uninsured face difficulty managing chronic 

conditions, are much less likely to get preventative care, and experience an overall 

decline in their health. The uninsured are three times more likely than those with 

coverage to cut back on basic needs to pay for care and, among low-income uninsured parents, are more likely to report a loss of time at work because of an illness. 

The absence of health insurance and gaps in coverage undermine the ability of these 

families to increase their overall economic well-being. 

In announcing the hearing, Chairman McDermott stated, ‘‘We know it’s increasingly difficult for the middle class to obtain quality, affordable health 

care. The Subcommittee will explore the growing challenges facing the 

American people, especially the unemployed, the disabled, and vulnerable 

youth. There is much we can learn by examining the leadership role the 

federal government currently plays in the provision of health care to find 

ways to fill the widening gaps in our health care system.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on how gaps in health care coverage affect the income security of Americans. 

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DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘110th Congress’’ from the menu entitled, 

‘‘Hearing Archives’’ (http://waysandmeans.house.gov/Hearings.asp?congress=18). Select the hearing for which you would like to submit, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business November 28, 

2007. Finally, please note that due to the change in House mail policy, the U.S. 

Capitol Police will refuse sealed-package deliveries to all House Office Buildings. 

For questions, or if you encounter technical problems, please call (202) 225–1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

Chairman MCDERMOTT. The Subcommittee will come to order. 

You want me to put my microphone on? 

Mr. Herger is here and we will begin. Unfortunately, family 

problems for Mr. Weller have kept him away today, so we will 

start. The number of Americans that go without health insurance 

is growing. We all know it. I am not giving you any big news here. 

It is now up to 47 million who are without health insurance. Presumably, these numbers are by the Census Bureau, this reflects 

the people who are uninsured for an entire year. It comes as no 

surprise that medical bills are also the leading cause of bankruptcy. 

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People, when they get a big medical bill that tips them over very 

often in this society, because everybody is so stretched out financially anyway. We’re involved because the gaps in the provision of 

affordable health care impact populations that concern this Subcommittee. I am really not looking at the whole thing, but I am 

looking at this thing because we have some very specific groups 

that are affected. I will talk both about them and about the larger 

issue. 

The disabled, the unemployed, the low and moderate-income 

families, and youth who are aging out of foster care are groups that 

are affected by this lack of health insurance. 

A recent CBO report found that after becoming unemployed, 

nearly 40 percent of workers lacked health insurance. Applicants 

for SSI could wait as long as two and a half years for a final determination by the Social Security Administration that they qualify 

for SSI. What happens to them in that two and a half years? 

What do the disabled people do to obtain health care during this 

period, how did they pay for it, and what impact does any delay 

have on their mental status, and their health status and long-term 

medical costs? Forty percent of uninsured Americans with medical 

burdens are unable to pay for necessities such as food, heat and 

rent. 

How does the living standard of these families with these challenges compare with families who receive TANF, food stamps or 

housing assistance? When a foster child becomes 18, he or she loses 

their entitlement to Medicaid. 

How does an 18-year-old obtain health insurance in today’s economy, and what impact does that have on their long-term health 

status? This spring, this Subcommittee learned about the disproportionate number of homeless youth that were coming from the 

child welfare system. We then passed a resolution declaring November as National Homeless Youth Awareness month. But we 

really need to do more to raise consciousness in this society. 

Why should we make an 18-year-old choose between housing, 

continuing education and health care? It really is an unfortunate 

set of questions to be asking. The problems confronting our health 

care system reach beyond this Subcommittee’s jurisdiction. There 

is a slide which shows something I think we need to talk about. 

Why does the Federal Government impose an income tax on 

health benefits received by a domestic partner, is a question for the 

full Committee. Another one concerns globalization. We have a system where almost 65 percent of non-elderly individuals obtained 

health insurance through employment, but this Subcommittee 

learned in a March hearing that globalization means that workers 

should expect to change jobs and careers more often than in the 

past. Without health care reform, we can expect globalization to 

translate into larger gaps in health care and more vulnerable families. 

As we consider ways to fill the gaps of our current health care 

system, it is important to understand what we have today and the 

role the government already plays in the purchase of health care. 

We have heard recently around the debates on ‘‘SCHIP’’, the term 

‘‘if we do any more for children in this country, we will somehow 

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boleth that we couldn’t deal with. Now, I put that chart up for you. 

The government already spends—50 percent of the dollars on 

health care come from the Federal Government, when you talk 

about spending and the tax breaks involved. 

This vital role may impact the price and quality of health care 

purchased privately. Most private insurance plans operate off of 

what the government pays, some relationship to what is paid by 

Medicare or Medicaid. 

I thank today’s witnesses for being with us and sharing their 

knowledge. They bring a commitment to this issue that is very important in the coming months. I know some of you from the past, 

and I know where you have been and what you have been doing. 

Some of you are new, but nevertheless you all have a long-term 

stake in what happens in this issue. I expect this issue will be the 

number one domestic issue in the 2009 session of the U.S. Congress. I think we are going to have to do something about it. 

Whether we get it done or not, and how we get it done remains to 

be seen. I will now yield to Mr. Herger, who will make an opening 

statement. 

Mr. HERGER. Thank you Mr. Chairman. Unfortunately, ranking 

member Jerry Weller is not able to attend the hearing today. On 

his behalf, I would like to thank all the witnesses for being here 

today, and I ask that Mr. Weller’s opening statement be inserted 

in the record. The goal of ensuring that all Americans have adequate health care is one that we all share. Just how we reach that 

goal has been an issue in hearings before many Committees for 

quite some time here in Congress. 

Today’s hearing will add to that list. Mr. Weller’s statement explores how dropping out of high school leads to low wages, or unemployment for too many young adults. For purposes of today’s 

hearing, dropping out of high school leads to far higher chances 

that adults, and their families, will lack health insurance coverage. 

That is despite the fact that many are covered under Medicaid, and 

other public programs. 

I certainly agree with Mr. Weller that this is one of many reasons why this Congress, and the nation, should be doing everything 

we can to improve the chances that young people finish at least 

high school. That is the only way they can obtain the skills needed 

to hold down good jobs that either offer workers health coverage, 

or that pay enough for them to purchase coverage on their own. 

I look forward to the hearing, and the witness testimony today, 

and I yield back the balance of my time. 

[The prepared statements of Mr. Herger and Mr. Weller follow:] 

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Chairman MCDERMOTT. Thank you very much. We have before 

us today—— 

Mr. CAMP. Mr. Chairman, if I could just for the record. 

Chairman MCDERMOTT. Sure. 

Mr. CAMP. I wanted to put in that this hearing covers issues 

normally not under the jurisdiction of this Committee. I am ranking member of the Health Subcommittee, and there are a couple of 

non-partisan reports that I wanted to put in the record with unanimous consent. 

One is the Congressional Budget Office report called, ‘‘The LongTerm Outlook for Health Care Spending Sources of Growth and 

Projected Federal Spending on Medicare and Medicaid.’’ The second 

one is one of a series of reports from the Congressional Research 

Service on health insurance coverage, on health insurance coverage 

of children and spending by employers on health insurance. 

With unanimous consent, if these reports could become part of 

the hearing record. 

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[The information follows:] 

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Chairman MCDERMOTT. I appreciate your comments. The fact 

is that I talked with Pete Stark about this and when you look at 

the health care issue, one of the problems we have in dealing with 

it as a Congress, is it is fractured into a thousand pieces. I think 

part of our effort in Congress, to deal with this ultimately, is we 

are going to have to bring some of these pieces together. 

The Subcommittee on Social Security has part of this issue. The 

health Subcommittee has part of this issue. We have part of this 

issue. The Commerce and Energy Committee has part of the issue. 

So, it really is very hard to talk about it. I appreciate your being 

here, and being on both Subcommittees will help us in the long 

run. Our witnesses today, the first witness is Sherena Johnson. 

She is from Georgia. Mr. Lewis, would you like to introduce her? 

Mr. LEWIS. Thank you very much, Mr. Chairman and good 

morning. Mr. Chairman, thank you so much for holding this important hearing, I am so proud to introduce an extraordinary young 

woman from the State of Georgia, who is testifying before our Subcommittee today. Ms. Sherena Johnson lives in Morrow, Georgia, 

and has an associate’s degree in social work. 

She is currently attending Clayton State University, majoring in 

psychology and human services, and is an intern at the State Department on Human Resources in downtown Atlanta. She plans to 

become a licensed clinical social worker, and to work with organizations that help young people transition from foster care after graduation. She is a member of the Georgia Empowerment Group, a 

statewide youth leadership and advocacy group, for current and 

former foster youth. She was a member of the 2006 Jim Casey 

Youth Opportunities Initiative Leadership Institute Class. 

Most recently, Sherena completed a 12-week internship with the 

National All Star Foster Club, making her the youngest person 

from Georgia to earn this honor. She is highly sought after as a 

youth speaker, and is an active member of the Metropolitan Atlanta Youth Opportunity Initiative. Ms. Johnson has bravely come 

before us today to share her difficult story, and I commend her for 

being here as a voice for other children in foster care, and those 

aging out of foster care. Ms. Johnson, thank you for being here, and 

we all look forward to your testimony, welcome. 

Chairman MCDERMOTT. We welcome you to the Subcommittee, 

and I would say to you and to all the members of the panel, we 

have received your testimony and it will all be entered in the 

record in its completeness. So, we would like you to try and stay 

within 5 minutes of the presentation that you make here today. 

So, Ms. Johnson. 

STATEMENT OF SHERENA JOHNSON, 

FORMER FOSTER YOUTH FROM MORROW, GEORGIA 

Ms. JOHNSON. Good morning Chairman McDermott, ranking 

member Weller and members of your Subcommittee, I would first 

like to thank you for giving me this opportunity to appear before 

you on behalf of my brothers and sisters that are currently aging 

out of the foster care system today. 

Mr. Lewis just gave a great introduction of myself, and I would 

like to start off by saying that a lot of people would consider my 

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story to be a success story, given my background and where I came 

from. 

To add on to what Mr. Lewis said, my mother deceased when I 

was 5 months old, and she was 21 at the time. I went on to live 

with my grandmother, and I was taken away from her and put in 

foster care, because she didn’t have the necessary resources to care 

for me at the time. I spent about 8 years in foster care, only to age 

out at age 18, with limited to no resources. The most significant resource that I lost was my health care insurance. I didn’t know at 

the time, how important it would be to lose health care, because 

I was currently an athlete and hardly ever sick. So, I didn’t know 

the impact that it would make on my life. 

In my sophomore year of college, I was diagnosed with an illness 

that could cause infertility if it continued to be undetected or fixed. 

As a young woman, it is very significant to be able to get yearly 

exams. Because I didn’t have health care insurance, I couldn’t go 

to the doctor regularly to receive those exams. 

So, the condition continued and I didn’t really have anybody to 

go to, or talk about it to, and I just got really depressed. As the 

illness began to grow, I began to be very nauseated, depressed. I 

would get sick to my stomach. It got to the point where I didn’t 

even want to get out of bed at times. 

Because I didn’t go to class, because I was depressed and really 

sick, I ended up getting suspended because my GPA dropped. As 

you can imagine, it just started this ripple effect. When my GPA 

dropped, I was suspended from school and I had to sit out for two 

semesters. I was originally supposed to graduate this semester, but 

because I was suspended back in last spring, I would be graduating 

in spring 2008. 

It was hard for me, because living in the Atlanta Metro area, it 

is a very busy area, and the health clinics there were difficult to 

treat me at the time, because they would have a limited number 

that they could see, due to them not having the appropriate number of staff. 

So, I would get up at 6 a.m. in the morning to try to beat the 

line and get there at 8. When I would get there, because they didn’t 

have enough nurses on staff, they would tell me that they could 

only see the first five people with my condition. 

Of course, with the line being so long even though I arrived there 

at 6:15 a.m., I was not one of the five people. I had to drive an hour 

and a half outside of the area that I was residing to finally seek 

medical attention at a health clinic that I attended when I was getting my associate’s degree. Even though I went to that health clinic, because it is a health clinic, there is only certain procedures 

that they can do. So, they would still continue to send me on to 

other places for lab work. 

As you can see, this just was an ongoing condition. It was a lot 

for me to have to deal with, aging out of foster care at 18 with no 

parents, nowhere to live. I was struggling during school, because 

staying at the dormitories you had to leave around the Thanksgiving and Christmas holidays. So, I was already dealing with 

enough, and on top of that to not be able to get my medical condition treated, I sort of lost hope. 

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To be honest, I stopped going to class, because the medical condition was so bad that I thought it was going to end up being cancerous. I just really thought I wasn’t going to be able to make it 

through the semester anyway. So, I though why continue to go to 

class. 

To this day I still do not have health care, and I am 22 years 

old. With me being 22, I am not standing here for myself, because 

despite the odds I was still able to make it. But there is a lot of 

youth in foster care right now today that are aging out of foster 

care with no insurance. I thought this was just an issue in the 

State of Georgia, but this is a national issue for youth and foster 

care. 

For one thing, we are considered to suffer post-traumatic stress 

disorder at twice the rate of U.S. war veterans. If you think about 

it, they are getting shot at and everything else, and if you don’t 

have medical insurance, you can’t even go see a counselor or a licensed psychologist to get those problems taken care of. 

My recommendation to this Committee would be for Congress to 

mandate States to exercise the Medicaid option of the Chafee Act, 

to allow you to have medical coverage until age 21 as we transition 

from foster care. The State of Georgia was my parent for many 

years. Consequently, it would help youth transition from foster care 

so much if my parents, the State of Georgia, stepped up to the 

plate and assumed its parental role. 

Medicaid until age 21 will be the first step to helping former 

youth and foster care, young people like me become healthy, selfsufficient, productive individuals as we receive help we need for 

physical and emotional problems. Still, a more comprehensive approach is also needed to address the health care needs of young 

adults who remain uninsured. 

So, with that being said, I would just like to thank you guys once 

again, for allowing me to be able to share my story with you. 

[The prepared statement of Ms. Johnson follows:] 

Prepared Statement of Sherena Johnson, 

Former Foster Youth From Morrow, Georgia 

Chairman McDermott, Ranking Member Weller, and members of this Subcommittee, thank you for allowing me to appear before you today on behalf of my 

brothers and sisters in foster care who need your help to make health care available 

for youth in foster care so they can make a successful transition to adulthood. 

My name is Sherena Johnson. I am 22 years old and live in Morrow, Georgia, a 

suburb of Atlanta. I am a senior at Clayton State University, majoring in Psychology and Human Services. I’ve been very involved with the Metropolitan Atlanta 

Youth Opportunities Initiative, which is a site of the Jim Casey Youth Opportunities 

Initiative, a national foundation that helps States and communities assist youth in 

foster care make successful transitions to adulthood. I’ve served on the youth advisory board, and I’m an Opportunity Passport? participant. After my mother died and 

my grandmother no longer could care for me, I spent eight years in the Georgia Foster Care system only to be emancipated at age 18 with limited to no resources. The 

most significant resource that I lost was Medicaid. 

When I left foster care, I did not realize the impact that not having health insurance would have on my life. During my sophomore year of college, I was diagnosed 

with a serious medical condition that left untreated could have caused infertility. 

As a young woman, it is critical that you receive yearly physical exams. In my case, 

because I had no medical insurance coverage, I was not able to afford the cost of 

yearly exams. During the time that my condition went undetected, I experienced 

nausea, pain in my stomach, and high fevers often due to my undetected medical 

condition. I became so depressed because of my condition and not knowing who to 

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more because I was very much preoccupied with my medical condition. I imagined 

that the condition would ultimately be diagnosed as cancerous or worse. If this was 

the case, I concluded (in my fearful state of mind) that I might not be around at 

the end of the semester. 

As expected, my negative state of mind started a ripple effect. My GPA dropped 

below a 2.0. I was suspended for a semester and placed on academic probation. It 

was not until I finally broke down and told some very special people at the Georgia 

Department of Human Resources (where I worked as an intern at the time) that 

I finally had the courage to divulge exactly what was going on. The journey to find 

help was difficult. Some of the members of this team of dedicated social workers 

drove me across numerous different counties in an attempt to find a doctor’s office 

that would see me at an affordable rate. But all attempts proved to be unsuccessful. 

We tried the local health department but were unsuccessful in obtaining an immediate appointment and were told that I would have to be placed on a waiting list. 

We attempted to be seen at another health department in a surrounding county. In 

order to be seen there, I would need to arrive at the clinic no later than 7:00 a.m. 

due to limited availability of appointments. This clinic had a limited number of staff 

and because of this could only take the first five people in line. There were so many 

people in line when I arrived at 6:15 a.m. that I immediately became discouraged. 

I was not one of the five. 

I finally received medical attention from a health clinic that was an hour and thirty minutes outside of the county where I resided. Even still there was only so much 

that could be done for me because I had waited so long to get medical attention for 

my condition. I had to yet again be referred to another clinic for lab work. Though 

I was still frustrated, I did schedule an appointment for the lab work. After numerous clinic visits, help from many concerned, supportive adults in my corner, to this 

day I continue to have a medical condition that needs to be treated. There is a possibility that this condition may indeed require surgery. So, here I am back at the beginning, right where I started from two years ago. I have no health insurance, no 

means of affording insurance, no parent’s insurance that will cover me. 

My recommendation to this Subcommittee would be for Congress to mandate 

States to exercise the Medicaid option of the Chafee Act to allow youth to have medical coverage to age 21 as we transition from foster care. 

The State of Georgia was my parent for many years. Consequently, it would help 

youth transitioning from foster care so much if my parent—the State of Georgia— 

stepped up to the plate and assume its parental role. Medicaid until age 21 would 

be a first step to helping former youth in foster care, young people like me, become 

healthy, self-sufficient, productive individuals as we receive the help we need for 

physical and emotional problems. Still, a more comprehensive approach is also needed to address the health care needs of young adults who remain uninsured. 

Thank you. 

f 

Chairman MCDERMOTT. Thank you very much for coming and 

telling us your story. Your giving of details really made it live, so 

thank you very much. 

Mr. Lesley is the president of First Focus from Alexandria, VA. 

First Focus is an organization, as I understand it, that focuses on 

children and families, which try to be our first focus. Mr. Lesley. 

STATEMENT OF BRUCE LESLEY, PRESIDENT, 

FIRST FOCUS, ALEXANDRIA, VIRGINIA 

Mr. LESLEY. Thank you, Mr. Chairman. Good morning Mr. 

Chairman, and Congressman Herger, Camp and Lewis. I am Bruce 

Lesley, as the Chairman noted, president of First Focus, a bipartisan organization dedicated to making children and families a priority in Federal policy and budget decisions. I would like to thank 

the Subcommittee, and its members, for bringing the important 

voice of children and foster care youth to this discussion and also 

for your recent hearings on the health care needs of children in the 

foster care system, and child welfare system. 

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I appreciate the opportunity to testify today about the financial 

problems confronting children and families in the health care system and to suggest possible policy solutions to help these families. 

Nowhere are families more vulnerable, than when it comes to access to health care. Unfortunately, the trends are alarming on this 

front. 

First, the number of uninsured children in this country is on the 

rise, after almost a decade-long reduction in the number of uninsured children due to the passage of SCHIP. The Census Bureau 

found that in 2006, the number of uninsured has risen to 8.7 million, or 11.7 percent of the nation’s children are now without health 

insurance. 

The number of uninsured children had declined by a third since 

the creation of SCHIP a decade ago, but has in the past 2 years 

reversed course and has increased by one million children. While 

the national trend is certainly alarming, a State by State look at 

the insurance status of children reveals trends that are, perhaps 

even of more concern. 

In 39 States and the District of Columbia, the percentage of children without insurance was higher in 2006 than it was in 2004, 

and in 29 States the rate increased by a full percentage point or 

more. 

Second, middle class families are not able to afford the rising cost 

of health care. The drop in employer-sponsored insurance for children suggest that dependent coverage is declining more rapidly 

than the individual employee coverage. According to data from the 

Kaiser Family Foundation Health Research and Education Trust 

survey of employer sponsored health benefits, the average annual 

cost for single and family coverage in 2007, is $4,479 for the individual and $12,106 for a family. 

Thus, the average cost for family coverage is 2.7 times the cost 

for individual coverage. However, employers subsidize individual 

workers for coverage to a much greater extent than they subsidize 

family coverage. As a result, the average premium cost paid by 

workers for family coverage is 4.7 times the cost of individual coverage. 

Thus, family coverage is far more expensive, and it is becoming 

harder for families to absorb. Rising health care costs lead to financial instability, and the underinsured account for the majority of 

bankruptcy filings. Between 2001 and 2007, health care premiums 

have increased 78 percent, while inflation increased by 17 percent 

and worker wages increased by 19 percent. 

Health care premiums have therefore, increased at four times the 

rate of worker wages. Consequently, families are increasingly faced 

with a triple threat to their financial security in the form of a limited family budget confronted with large annual increases in premiums, increases in other forms of cost sharing such as copayments, deductibles and health benefit limitations. 

With fewer employers offering coverage, families are facing the 

ultimate threat to financial security, having no insurance at all, or 

being forced to pay out of pocket for exorbitant health care costs. 

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cent of American families are contacted by collection agencies about 

their medical bills on an annual basis. 

Of the 3.9 million people involved in personal bankruptcy filings 

in 2001, it is estimated that 1.3 million, or one-third of them were 

children. 

To assess the impact of rising health care costs to middle-class 

families across America, First Focus analyzed the 12 communities 

that are closest to the districts represented by members of this 

Subcommittee. Analysis is in Appendix B of my testimony, and 

shows that families who are in the median income in 11 of the 12 

communities are left with no money, after taking into account the 

average cost of housing, food, child care, transportation, other necessities, taxes and health care cost. 

Health care, which is unaffordable for families with special needs 

children and unavailable for mental health services. I would like to 

highlight the particular problems facing families with children with 

special health care needs. These children, by definition, have 

health care costs that are three times greater than the costs of children without special health care needs. These children face problems including discontinuity of coverage, inadequate coverage of 

needed services, inability to obtain referrals through appropriate 

specialists because of insurance plan limitations and inadequate 

provider payment levels and thereby, access to care. 

Doctor’s Alex Chen and Paul Newacheck have found that the proportion of families with children with special health care needs who 

reported parents needing to stop work, or cut back on work, in 

order to care for their children was 30 percent. The overall proportion of families who reported having financial problems due to their 

child’s care was 21 percent. A large percentage of families in this 

country are having huge financial difficulties with respect to health 

care costs. 

With respect to mental health, I think that issue is highlighted 

by the very fact that the National Alliance for Mental Health did 

a survey, and found that 23 percent of parents with children exhibiting behavioral disorders reported being instructed to relinquish 

custody of their children, in order to ensure they receive appropriate mental health care treatment. No family should face such a 

decision. 

I know I am out of time, so I will quickly say that I also think 

that issues that have been raised by the previous panel member 

really speak to the need to pass legislation like H.R. 2188, the Kinship Care giver Support Act. Sherena was in the care of her grandmother, and her grandmother could not take care of her financially. 

The Kinship Care giver Support Act would help families of kinship 

care be provided in this country, so that is not a situation that occurs. 

In conclusion, First Focus would like to make the following recommendations. We believe that the solution to health care is going 

to require a lot of different efforts, including expansion of public 

programs like Medicaid and SCHIP, premium support, tax credits 

and personal responsibility; it is going to take all those things to 

really tackle this problem. 

Congress should take no action that would limit or restrict the 

ability of States to address their uninsured or under-insurance 

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problems, and if nothing else, we hope that Congress will not take 

negative actions to roll back that coverage. Congress should also 

take leadership in a variety of areas involving children, particularly children with special health care needs, by passing mental 

health parity laws that I know the Chairman has been very strongly supportive of, and legislation such as the Keeping Families Together. 

In addition, since 62 percent of all children in this country who 

are uninsured are eligible but un-enrolled for Medicaid or SCHIP, 

Congress should take up the President’s challenge when he ran for 

reelection to cover millions of these children by working with 

States to conduct extensive outreach and enrollment efforts, 

streamlining application and enrollment procedures and making 

more extensive use of other needs-based public programs to enroll 

children. This is legislation called ‘‘Express Lane Eligibility.’’ 

Finally, Congress should focus on the most disadvantaged youth 

in our Nation and address gaps in coverage, health care coverage 

for foster care children including access to care, the needs of youth 

aging out of the child welfare system and kinship care issues. 

Thank you very much. 

[The prepared statement of Mr. Lesley follows:] 

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Chairman MCDERMOTT. Thank you very much. 

Sara Collins is here with the Commonwealth Fund. As vice president in charge of future health insurance, Commonwealth Fund 

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has been at the table here, and in many places in the 20 years that 

I have been in Congress. We welcome your testimony. 

STATEMENT OF SARA COLLINS, ASSISTANT VICE PRESIDENT, 

PROGRAM ON THE FUTURE OF HEALTH INSURANCE, THE 

COMMONWEALTH FUND 

Ms. COLLINS. Thank you Mr. Chairman, and Members of the 

Committee, for this invitation to testify on the impact of gaps in 

health coverage on income security. As rising health care costs and 

premiums are making it more difficult for employers, particularly 

small firms, to provide affordable health insurance to their workers, increasing numbers of people under age 65 are finding themselves without access to employer-based coverage, and ineligible for 

enrollment in public insurance programs like Medicaid, and the 

State Children’s Health Insurance Program. Or Medicare, in the 

case of those too disabled to work. With its high premiums and underwriting, the individual insurance market, which covers just 6 

percent of the under 65 population, has proven to be an inadequate 

substitute for employer or public coverage. 

Who is most at risk for lacking coverage? Low and moderate income families. More than 60 percent of uninsured people under age 

65 are in families with incomes of under 200 percent of poverty. 

The majority of people without coverage are families where someone works full-time, but the likelihood of low and moderate-income 

families having coverage through an employer has always been 

lower than that of higher-income families, and has declined over 

the past 6 years. Small firm and low wage workers, workers who 

are employed in firms with fewer than 15 employees are less likely 

to have coverage through an employer. 

Lower wage workers in small firms are at a particularly high 

risk for not having benefits. Non-standard workers, those who are 

self-employed, or in temporary part-time or contract positions, are 

at high risk of not having coverage, about 24 percent are uninsured. More than 13 million young adults, ages 19 to 29 are uninsured. Employer health plans often do not cover young adults as 

dependents after 18 or 19 if they don’t go on to college. 

Medicaid and the State Children’s Health Insurance Program, as 

we’ve just heard, we classify all teenagers as adults on their 19th 

birthday. Consequently, there is a dramatic increase, an actual 

doubling of uninsured rates after age 19, children turning 18 to 19, 

particularly among young adults and low-income families. 

Minorities are also at very high risk of lacking health insurance, 

as are people who are unemployed. Despite the availability of 

COBRA coverage, over half of unemployed adults under age 65 are 

uninsured. Lower wage workers are far less likely to be eligible for 

COBRA than higher wage workers. Even COBRA eligible low-income workers who leave their jobs are much more likely to be uninsured than our higher wage workers who are COBRA eligible. 

There are an estimated 1.7 million people with disabilities in the 

waiting period for Medicare. In a Commonwealth Fund survey of 

older adults, more than two of five disabled Medicare beneficiaries 

between the ages of 50 and 64, said that they had been uninsured 

just prior to entering Medicare. 

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What are the consequences of gaps of health insurance coverage? 

Significantly higher rates of cost related problems getting needed 

health care, and problems paying medical bills. People without coverage confront profound spending tradeoffs in their budgets, as 

Chairman McDermott pointed out. A Commonwealth Fund survey 

found that 40 percent of uninsured adults with medical bill problems were unable to pay for basic necessities, and nearly 50 percent had used up all their savings to pay their bills. 

The Institute of Medicine estimates that uninsured people collectively lose between $65 billion to $130 billion each year, in lost capital and earnings from poor health and shorter lifespans. It is essential on both moral and economic grounds that the United States 

move forward to guarantee affordable, comprehensive and continuous health insurance coverage for everyone. 

In the absence of universal coverage, there are several policies 

that would help fill the gaps in the existing system, by building on 

existing public and private group insurance, and also create an essential foundation for universal coverage as we move forward. 

We should build on, for example public and private group insurance, to extend coverage to vulnerable age groups and the disabled. 

For example, we should allow States to extend eligibility for Medicaid and SCHIP coverage beyond age 18. The Foster Care and Dependence Act, which allows States to extend Medicaid to children 

in foster care up to age 21, should be taken up by all States and 

could be expanded to all children in the Medicaid program. 

Seventeen states have already redefined the age at which a 

young adult is no longer a dependent for purposes of insurance. 

Other states should follow their lead. We should allow older adults 

to buy into the Medicare Program, and Medicare’s 2-year waiting 

period for coverage of the disabled. 

We should also build on public and private group to extend coverage to low income workers and families, expand Medicaid to 

cover everyone under 150 percent of poverty and consider providing 

Federal matching funds for sliding scale premiums at higher income levels. We could require employers to finance COBRA coverage for up to 2 months or longer, for employees who lose their 

jobs, and the Federal Government could provide COBRA premium 

assistance for COBRA premiums. 

Finally, we could connect public and private group insurance to 

realize efficiencies from pooling large groups of people, create a national health insurance connector, as Massachusetts has led the 

way on. Based on the Federal employees health benefits program, 

or Medicare with sliding scale premium subsidies, restrictions 

against risk selection on the part of carriers, and Federal reinsurance. Thank you. 

[The prepared statement of Ms. Collins follows:] 

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Chairman MCDERMOTT. Thank you very much for your testimony. 

Mr. Pollack, since 1993 at least. It is good to have you here 

again. He is the founding executive director of Families USA. 

STATEMENT OF RON POLLACK, 

FOUNDING EXECUTIVE DIRECTOR, FAMILIES USA 

Mr. POLLACK Thank you Mr. Chairman, and thank you members of the panel for inviting me here today, I appreciate it. I want 

to just start with a contextual comment. You started, Mr. Chairman, by talking about a number of people who are uninsured in 

the latest Census Bureau numbers from the Current Population 

Survey, and it tells us that 47 million were uninsured in 2006. 

Now, there is a dispute among policy analysts as to what this 

means. The literal question asked was, ‘‘were you uninsured 

throughout the course of the year.’’ 

Some policy analysts, many policy analysts actually, interpret 

the data as telling you how many people were uninsured at the 

time the survey was undertaken. But under either interpretation, 

it doesn’t tell you how many people were affected by being uninsured at some point over the course of a year. 

By the way, 47 million sounds like an unascertainable number, 

and people can’t put their hands around it. The way I like to talk 

about it is 47 million is more than the aggregate, underscore the 

word ‘‘aggregate,’’ population of 24 States plus the District of Columbia; that is extraordinary. The number of people who are uninsured almost exceeds the population of half the States in the 

United States. But, as bad as that is, it doesn’t reflect how many 

people go in and out of being uninsured. 

For that reason, we have submitted to the Committee a recent 

report that Families USA released, that is based on other Census 

Bureau data, to look at how many people were uninsured at some 

point over the last 2 years. The number is astounding. The number 

of people who were uninsured at some point over the last 2 years 

was 89.6 million people. This is not double counting people who 

were uninsured 1 year and then a second year these are separate, 

people who were uninsured at some point over the course of the 

last 2 years. 

Mind you, most of these people were uninsured for periods that 

you can’t consider trivial. Over half were uninsured for more than 

9 months in the 2-year period. Almost two-thirds were uninsured 

for at least 6 months in that 2-year period. So, this is rather substantial, and obviously it is likely to get worse because the cost of 

insurance premiums is rising faster than wages. 

There are a variety of impacts that this created, and I guess this 

is the heart of what you wanted me to talk about. There are health 

care impacts for the persons who are uninsured, which reflects 

their limited incomes. Then there are other impacts, even for people who are insured. So, let me just talk about some of the health 

impacts for people who are uninsured. 

The uninsured are far less likely to have a usual source of care 

outside the emergency room. Uninsured adults are almost seven 

times more likely than insured adults to consider the emergency 

room as their usual source of care. The uninsured are more likely 

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to go without screenings and preventive care. Uninsured adults are 

30 percent less likely than insured adults to have had a check-up 

in the past year. They are more likely to be diagnosed with a disease in an advanced stage. 

The uninsured are likely to delay, or forgo, needed care. Fifty 

percent of insured adults, in fair or poor health, reported that they 

needed care in the last year, but were unable to see a physician 

because of cost. One in three uninsured adults did not fill a drug 

prescription in the past year because they couldn’t afford the cost. 

Uninsured Americans are more likely to be sicker and to die earlier. Of course you know the Institute of Medicine statistic that 

18,000 people are estimated to die annually because of their uninsured status. Uninsured children admitted to a hospital due to injuries were twice as likely to die while in the hospital as their insured counterparts. 

Now, all of this has some very significant economic impacts, even 

for those people who are insured. We issued a report, not too long 

ago, that looked at what the impact is on those of us who purchase 

insurance to pay for the uncompensated care of those who are uninsured. In 2005, the premium add-on to pay for the uncompensated cost of the uninsured for family health coverage was $922. 

Today, I suspect, when we do an update on this, we are likely to 

find that people are paying $1,000 or more as an add-on to their 

insurance premiums to pay for the uncompensated care of the uninsured. 

More than one out of three who were uninsured were contacted 

by a collection agency in the past year, and 3 out of 5 uninsured 

have reported problems with their medical bills. Let me end by saying that clearly, dealing with this growing problem, of people who 

are uninsured, deserves top priority attention. Rather than going 

through a list of things that we believe should be done, let me just 

close by saying that I think for us to finally address this problem, 

we are going to have to do business differently than we have ever 

done before. 

It means we are going to have to address this in a bipartisan 

fashion. We are going to have to transcend ideology. There are 

groups of what, I guess, some people generally call ‘‘strange bedfellow organizations’’ that have been working together. They transcend ideology, they transcend partisanship, and my hope is that, 

come 2009, if this Congress truly wishes to address this problem 

in a serious way, that we will be able to come here with a proposal 

that can earn the support of people on both sides of the aisle. So, 

I thank you, Mr. Chairman. 

[The prepared statement of Mr. Pollack follows:] 

Prepared Statement of Ron Pollack, 

Founding Executive Director, Families USA, Washington, DC 

Families USA thanks the Subcommittee on Income Security and Family Support 

of the House Committee on Ways and Means for the opportunity to present testimony on the impact of gaps in health coverage on income security. This testimony 

focuses on the issue of the uninsured more broadly, as well as the effects of the crisis of the uninsured on the uninsured themselves, people with insurance, and the 

U.S. economy. 

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I. Magnitude of the Problem 

Every year, the U.S. Census Bureau—in its Current Population Survey (CPS)— 

reports the number of people who are uninsured. This widely quoted number is intended to offer an estimate of how many people did not have any type of health insurance for the entire previous calendar year. In August 2007, the CPS reported 

that there were 47.0 million uninsured people in the United States in 2006. This 

represents an increase of nearly 2.2 million people over 2005. The number of uninsured is also now larger than the combined population of 24 States plus the District 

of Columbia. 

There are many people, however, who are uninsured for a portion of a year but 

not for the entire year. These individuals are not reflected in the widely quoted Census Bureau number, but they may be profoundly affected by their uninsured status—in terms of both their physical and their economic well-being. To understand 

the scope of the problem—to know how many Americans are directly affected by a 

lack of health insurance—we need to broaden our sights and include those who are 

uninsured for a portion of the year. 

A recent analysis by Families USA reveals that 89.6 million people under the age 

of 65—more than one out of every three non-elderly Americans—went without 

health insurance for all or part of 2006–2007. In addition, we found that the number 

of uninsured people increased dramatically over our study period: Between 1999– 

2000 and 2006–2007, more than 17.0 million Americans under the age of 65 joined 

the ranks of the uninsured. 

Our findings demonstrate that the crisis of the uninsured affects a diverse array 

of people. Americans from every income group, every racial and ethnic group, and 

nearly every age group are uninsured. In addition, as previous research has demonstrated, the vast majority of the uninsured are from working families. Four out 

of five individuals who were uninsured during 2006–2007 were from working families, and 70.6 percent of the uninsured were from families with one or more people 

employed full-time. Moreover, the majority of people who are uninsured remain uninsured for substantial periods of time: Over one-half (50.2 percent) were uninsured 

for more than nine months, and almost two-thirds (63.9 percent) were uninsured for 

more than six months. The effects of being uninsured—even for a period of a few 

months—can be devastating, both financially and physically. Furthermore, as the 

duration of time without health insurance increases, so do the chances of facing catastrophic financial and health problems. 

II. What the Crisis of the Uninsured Means for the Uninsured 

Being uninsured—even for a period of a few months—can have profound effects 

on an individual’s physical and economic well-being. Without insurance to cover the 

costs of routine health care, the uninsured often go without screenings or preventive 

services. Uninsured adults are more than 30 percent less likely than insured adults 

to have had a checkup in the past year. Even when uninsured adults do receive preventive care and know they have a chronic condition, they are less likely to receive 

proper follow-up care. For example, uninsured patients with high blood pressure are 

less likely to have their blood pressure monitored and controlled, and they are less 

likely to receive disease management services. 

In addition, people without insurance are more likely to delay or forgo necessary 

medical care. When sick, uninsured adults are more than three times as likely as 

insured adults to delay seeking medical care. And uninsured children are nearly five 

times more likely than insured children to have at least one delayed or unmet 

health care need. 

The consequences of going without necessary care can be dire. Uninsured Americans are sicker and die earlier than those who have insurance, and consistently report that they are in poorer health than people with private insurance. Lower levels 

of self-reported health status, in turn, are a powerful predictor of future illness and 

premature death. In fact, uninsured adults are 25 percent more likely to die prematurely than adults with private health insurance coverage, and the deaths of 

18,000 people between the ages of 25 and 64 each year can be attributed to a lack 

of health insurance. 

Without the protection of insurance, uninsured Americans are also at financial 

risk when faced with the need for health services. Three out of five uninsured adults 

under the age of 65 reported problems with medical bills. And, over the course of 

a year, more than one out of three uninsured people are contacted by a collection 

agency about outstanding medical bills. When the burden of health care costs becomes too great, the consequences can be catastrophic. Faced with medical debt, 

families often have no choice but to consider drastic changes in lifestyle and, eventually, bankruptcy. Since 2000 alone, 5 million American families have filed for bankwwoods2 on PROD1PC60 with HEARING

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ruptcy following a serious medical problem. In all, approximately half of bankruptcies are due, at least in part, to medical expenses. 

III. What the Crisis of the Uninsured Means for the Insured 

What happens when the uninsured are sick and need health care? Certainly, the 

uninsured are much less likely to receive health care, and many never do. Those 

who seek care, however, struggle to pay as much as they can. Even after making 

tremendous personal sacrifices, the contributions made by the uninsured toward 

their medical bills cover an estimated 35 percent of the cost of care they receive 

from doctors and hospitals. The remaining amount is primarily paid by two sources: 

Roughly one-third is reimbursed by a number of government programs, including 

Medicaid and Medicare Disproportionate Share Hospital (DSH) payments from the 

federal government and state and local programs, and two-thirds is paid through 

higher premiums for people with health insurance. Families USA estimates that almost $29 billion worth of unpaid care received by 

the uninsured in 2005 was financed by higher premiums for privately insured patients. As a result, the cost of private insurance was, on average, 8.4 percent higher 

in 2005 than it would have been if everyone in the United States had health insurance. This translates into $341 more a year for the average individual premium and 

$922 more a year for the average family premium. 

How does the cost of care for the uninsured end up being passed on in the form 

of higher private health insurance premiums? The cost of care not directly paid for 

by the uninsured or by government programs or philanthropy is built into the cost 

base of physician and hospital revenue. Providers attempt to recover these ‘‘uncompensated care’’ dollars through various strategies. One key strategy is to negotiate 

higher rates for health care services paid for by private insurance. The extent to 

which providers can do this varies from State to State; nonetheless, the rates always 

reflect a significant amount of uncompensated care. Given that most health care 

providers are not driven to bankruptcy and our health care system survives from 

year to year, we can say with certainty that those with health insurance finance 

the residual two-thirds cost of care for the uninsured provided by hospitals and doctors. Ironically, this increases the cost of health insurance and results in fewer people who can afford insurance—a vicious circle. 

IV. What the Crisis of the Uninsured Means for the U.S. Economy 

The crisis of the uninsured also has consequences for the nation’s economy as a 

whole. While the microeconomic effect of going without health insurance on the individual has been studied extensively and is cited frequently, the macroeconomic effect of so many Americans going without health insurance is less frequently discussed. Economists estimate that between $65 and $130 billion of productivity is 

lost each year due to people going without health insurance in America. 

Access to health insurance at every age is vital to the productivity of a nation’s 

workforce. Ensuring that children have a healthy start sets the foundation for future productivity and helps kids reach their full potential. Insured children are less 

likely to have developmental delays that may affect their ability to learn. In addition, improving health increases educational attainment and raises earnings potential by 10 to 30 percent. 

Once a worker is in the labor force, consistent access to quality health coverage 

is critical. Studies have shown that insured employees are healthier, and better 

health, in turn, is related to increased productivity. In fact, one study showed that 

providing health insurance alleviates one in 10 days missed for illness. Three in four 

employers believe that health benefits are extremely, very, or somewhat important 

for improving employee productivity. In addition, providing health insurance ensures that employees have access to primary and preventive care that keeps them 

healthy and productive in the long-run. 

Moreover, health insurance reduces turnover. The cost of hiring and training new 

employees drains business productivity. Many studies show that workers with 

health insurance change jobs less frequently. Nearly three-quarters of workers said 

that health insurance was a very important factor in their decision to take or keep 

a job. While the importance of health insurance to the individual is clear, these data 

demonstrate the significance of health insurance in ensuring a healthy, productive 

labor force. The current epidemic of the uninsured places not only American families, but also businesses, and our nation’s economic vitality at risk. 

V. Why is the Number of Uninsured on the Rise? 

Millions of people are currently uninsured, and this problem has grown substantially over the last few years. One of the primary factors driving the increase in the 

uninsured is health insurance premium increases. Between 1999 and today, premiums have risen rapidly, increasing by double-digit amounts every year between 

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2001 and 2004. Moreover, these rising premiums have far outstripped increases in 

worker earnings. Between 2000 and 2006, premiums for job-based health insurance 

increased by 73.8 percent, while median worker earnings rose by only 11.6 percent. 

As premium costs outpace wages, more people end up without health insurance: For 

each percentage point increase in health care costs relative to income, the number 

of uninsured people increases by 246,000. 

Faced with the rising cost of health insurance premiums, employers must make 

difficult decisions. Some employers, particularly small businesses, have concluded 

that they can no longer afford to offer health insurance to their workers and have 

dropped coverage, further increasing the number of uninsured Americans. Other 

employers continue to offer health insurance, but they now ask their employees to 

pay a greater share of the premiums. In addition, a growing number of employers 

seek to hold down costs by offering ‘‘thinner coverage’’—coverage that offers fewer 

benefits and/or charges higher deductibles, copayments, and co-insurance. 

Working families must contend with a set of difficult decisions. Even if someone 

in the family has an offer of coverage, he or she is likely to be required to pay more 

for fewer benefits than in the past. Between 2000 and 2006, the employee share of 

family insurance premiums increased by 78.2 percent. As a result, more and more 

working families are being priced out of job-based insurance. 

Workers without an offer of job-based coverage—and those who cannot afford to 

purchase their employer’s plan—may seek coverage on their own. Finding an individual insurance plan that meets their needs and their budget is likely to be extremely challenging. One recent survey found that nine out of 10 people who sought 

individual coverage never purchased a plan—either because they couldn’t find an affordable plan, they were rejected for coverage, or they were offered a plan that excluded coverage for the very care they were most likely to need. Without the availability of affordable, quality coverage, more American families are at risk of becoming uninsured and suffering the economic and physical consequences that are likely 

to follow. 

VI. Conclusion 

As this testimony demonstrates, the current crisis of the uninsured detrimentally 

affects not only the uninsured themselves, but also people with health insurance 

and the economy as a whole. Ensuring that all Americans have access to quality, 

affordable health insurance coverage is imperative to protecting the economic and 

physical well-being of all Americans. Moreover, popular support for reforming health 

care is evidenced by the fact that health care has become the top domestic issue 

in recent polls and public option surveys. Families USA is glad to see that presidential and other candidates are making health care a central issue of their campaigns. The challenge for the upcoming months and years will be for our nation’s 

leaders to move from debate to action—making health care a top budget and issue 

priority, and ensuring that every American has reliable and continuous access to 

high-quality, affordable health coverage. 

f 

[The Families USA report follows:] 

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f 

Chairman MCDERMOTT. Thank you very much for your testimony. 

Mr. Gottlob, who is a senior fellow at the Milton and Rose Friedman Institute Foundation. 

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STATEMENT OF BRIAN J. GOTTLOB, SENIOR FELLOW, 

MILTON AND ROSE D. FRIEDMAN FOUNDATION 

Mr. GOTTLOB. Thank you, Mr. Chairman. I have not been here 

before so it is indeed an honor and a privilege for me to be able 

to testify today. 

The Friedman Foundation encourages greater economic opportunity and security by supporting research activities and increased 

educational opportunities for children from all socio-economic backgrounds. 

Among my research activities for the Friedman Foundation is I 

have attempted to monetize or place some dollar values on some 

of the public or social costs that are associated with dropping out 

of high school. For too long the costs of dropping out of high school 

have been assumed to be primarily fall on an individual and primarily in terms of the earnings impact on an individual over their 

lifetime. 

But there are significant costs to society, and among those and 

among the most significant are the problem that you’re here today 

to address, and that is the lack of health insurance coverage and 

also increases in Medicaid enrollment and Medicaid caseloads. 

There’s been a lot of reforms that have proposed to fundamentally change the way we provide health care, the way we ration it 

or the way we pay for it. What I would like to do today is argue 

for policies that focus on increasing educational attainment and reducing high school dropout rates across the country as an effective 

means for dealing with these issues. 

There is no doubt that increasing high school graduation rates 

will increase health insurance coverage, and at the same time provide powerful other benefits to society while at the same time presenting no fundamental risks to our health care system. 

I do want to talk a little bit about the number that you’ve been 

presented with today: 47 million uninsured individuals. While that 

is troubling and it demands your best efforts to address, before concluding that we need to make basic, fundamental changes to our 

health care system, I think we ought to understand a little bit 

more about that population of 47 million. 

Included in that group is 10.2 million individuals who are not 

U.S. citizens. It includes about 11 million who chose not to participate in employer-sponsored health plans that were available to 

them. A lot of those are young workers who, thinking as I did once 

that I was immortal, don’t opt to participate in those plans. Almost 

half, 49 percent or 23 million, are of African-American or Hispanic 

origin. I didn’t include this in my testimony, but there’s also a 

large number, probably several million who would qualify for Medicaid and have insurance, but they haven’t applied for it. 

Looking at the most recent year, because that number is also 

troubling, or the most recent 6 years: an 8 million increase and 

about a third, 2.57 million, are not U.S. citizens. More recently, in 

the last year of the 2.1 million increase in uninsured population, 

38 percent are not U.S. citizens. 4.5 million are of Hispanic origin, 

both citizens and non-citizens, 1 million African-Americans, about 

45 percent or 3.7 million have family incomes above 75,000. That 

truly is a problem with the fundamental nature of our health care 

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system. There’s been virtually no increase in the uninsured among 

individuals and households making less than $25,000. 

I don’t cite those figures to stereotype the population and I certainly don’t want to engage in the already overheated debate on 

immigration, but what I think the data suggests is that there’s a 

tremendous heterogeneity among the population of the uninsured. 

That does not lend itself to blanket prescriptions to address the 

problem. 

I see in the data an overrepresentation of individuals from demographic groups that are characterized by lower levels of educational 

attainment and higher levels of high school dropout rates. Others 

can see different things in the trends, but we can’t escape the notion that the data suggests that there are a variety of factors, including many outside of the health care system, that are characterizing the lack of health insurance among our population. 

Lower levels of educational attainment and higher dropout rates 

reduce health insurance. About 40 percent of the working age high 

school dropout population are not in the labor force, so they can’t 

get health insurance from their employer. Dropouts comprise 12 

percent of the working age, 20 to 64 population, but make up 30 

percent of the working age uninsured. Dropouts are twice as likely 

to be receiving or having someone in their family receive Medicaid 

benefits. 

Employer provided health insurance is still the dominant source 

of coverage, but when someone drops out, they cannot avail themselves of that. If all working age dropouts in this country, and 

there’s about 20 million of them, if all of them had been high school 

graduates and we applied those same percentages, about 4 million 

would be covered by private insurance. If you add independents, it 

would be at least 10 million who would be covered, an additional 

10 million. The cost of dropouts to the Medicaid program is about 

an additional 3.5 million Medicaid beneficiaries every year and a 

cost of about $7 billion. 

If everyone graduated, no one dropped out, we wouldn’t eliminate 

that, but we would reduce it. We would reduce it by that 3.5 million and $7 billion in costs. Attacking the problem of high school 

graduation rates with the same figure that we want to attack, the 

health care issue, I think will yield not only benefits in the health 

care side, but also substantial other public benefits and societal 

benefits. Just because you are on the Committee on Ways and 

Means, I have to point out that the lost earnings impact of high 

school dropouts in this country is almost $200 billion and a tax cost 

of about $31 billion. 

What can be done to address the problem? Well, there is no one, 

single solution. I believe there’s a lot of innovative practices that 

are being attempted and more will follow. I personally believe that 

the educational system in the country contains far too much segregation of students and families according to income and educational attainment of parents. This segregation has profound impacts on the differential, educational opportunities of children. No 

matter how much we increase funding for education, there maintains a separate tacit but equal structure to educational opportunities in this country. The result is a lot more separation and a lot 

less equality. 

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In conclusion, some of the most effective means of reducing the 

number of uninsured individuals in this country do not involve fundamental changes to our health care system. In addition, they confer benefits outside of the health care and health insurance arena. 

I suggest that some of the factors that are contributing to the lack 

of health insurance are not simply fundamental flaws of the health 

care system to maximize public benefits while addressing declines 

in health insurance. We ought to look to opportunities to create 

those synergies; and, increasing high school graduation is one way 

to dramatically reduce the future incidence of individuals without 

health insurance. 

Thank you. 

[The prepared statement of Mr. Gottlob follows:] 

Prepared Statement of Brian J. Gottlob, Senior Fellow, 

Milton and Rose D. Friedman Foundation, Indianapolis, IN 

Mr. Chairman and Members of the Committee: 

Thank you for inviting me to testify on the important issue of health insurance 

coverage and income security in the United States. The Friedman Foundation encourages greater economic opportunity and security by supporting research and activities that increase the educational opportunities and achievement of children 

from all socioeconomic backgrounds. 

In addition to my work with the Friedman Foundation, I am a principal in an 

economic research and consulting firm. My testimony today is based on my work 

for the Friedman Foundation, but some of my comments may also reflect personal 

views rather than the views of the Foundation. 

Among my research activities for the Friedman Foundation I have attempted to 

place dollar values or ‘‘monetize’’ several of the public or social costs associated with 

the low high school graduation rates that are characteristic of many school districts 

across the country. The impact of dropouts is especially apparent in the low rates 

of private health insurance and in the higher Medicaid enrollments among dropouts. 

In addition, the higher percentage of uninsured among dropouts can raise the cost 

of private health insurance when the cost of health services for the uninsured is not 

paid and must be recovered by raising prices on all other payers. 

For too long the costs of failing to obtain a high school diploma have been expressed primarily in terms of the cost to individual dropouts. These private costs, 

typically expressed in terms of lost annual earnings and over a lifetime, are large. 

My research indicates, however, that the cost to the public in terms of higher government expenditures and lower revenues are no less dramatic. 

Many reforms have been proposed to the way we provide, ration, or pay for health 

care in this country. To increase the percentage of the population that is covered 

by health insurance I want to instead argue for policies that focus on increasing 

educational attainment and reducing high school dropout rates across the country. 

The benefit of this approach is that we know that the failure to obtain a high school 

diploma is strongly related to the lack of health insurance as well as with higher 

utilization of government provided health insurance and associated health care expenditures. There should be no debating that higher graduation rates will increase 

health insurance coverage with no risk of unintended consequences to the health 

care system. 

The benefit to individuals and to society of focusing on policies that reduce high 

school dropouts extend well beyond health insurance coverage. Even modest increases in graduation rates will have a clear and dramatic impact on future rates 

of health insurance coverage at the same time it increases government revenues and 

reduces government expenditures. 

Overview 

The uninsured population in this country has risen by more than 8 million since 

the year 2000, to a total of just under 47 million in 2006. That number is troubling 

and demanding of our best efforts to reduce it, but before concluding that the basic 

structure of our nation’s health care system must be revamped it is prudent to look 

more closely at trends in the incidence of health insurance coverage and more 

broadly at the factors that have contributed to them. 

Using the same U.S. Census Bureau data on trends in the population without 

health insurance that, in part, have prompted this hearing, I will highlight some 

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1Data on health insurance coverage and trends are from the U.S. Census Bureau analyses 

available at http://pubdb3.census.gov/macro/032007/health/h09_000.htm and http:// 

www.census.gov/hhes/www/hlthins/hlthin00/hi00ta.html 

of the more significant trends in insurance coverage that can be overlooked with a 

focus on the aggregate numbers. 

The 47 million estimated by the Census Bureau to be uninsured include: 1

• 10.2 million who are not U.S. Citizens. 

• About 11 million who chose not to participate in an employer sponsored health 

plan that was available to them. Young adult workers are especially prone to 

decline participation in employer-sponsored health plans. 

• Almost one-half (49% or 23 million) who are African-American or of Hispanic 

origin. 

The troubling increase of over 8 million uninsured in the United States between 

2000 and 2006 includes the following trends: 

• Almost one-third (2.57 million) are not U.S. Citizens. More recently, among the 

2.1 million increase in the uninsured population between 2005 and 2006, 38 

percent are not U.S. Citizens. 

• Almost 4.5 million are of Hispanic origin (both citizens and non-citizens.) 

• Just over 1 million are African-American. 

• About 2.3 million (or 27%) are Non-Hispanic white individuals. 

• About 45% or 3.7 million have family incomes of $75,000 or more. 

• Virtually no increase in the number of uninsured (44,000) among individuals in 

households making less than $25,000. 

Highlighting the above data and trends from the Census Bureau in no way minimizes the very real concerns over the decline in health insurance coverage or to 

stereotype the population or characteristics of the uninsured, or discount or minimize their plight. Finally, neither I nor the Friedman Foundation has any interest 

in fanning the flames of an overheated heated debate on immigration policy. 

If anything, these data highlight heterogeneity among the population of the uninsured that does not lend itself to blanket policy prescriptions to increase the number 

of those with health insurance coverage. Rather, I believe the data suggest that a 

broader set of policies should be considered to increase health insurance coverage 

in our country. 

At the risk of being accused of ‘‘seeing what I know’’ rather than seeing what the 

data are revealing, I see in the data an overrepresentation of individuals in demographic groups that are characterized by lower overall levels of educational attainment and elevated levels of high school dropout rates. Others may see the trends 

differently but we cannot escape the fact that the data suggest that a variety of factors, including many outside of the characteristics of our health care system, appear 

to greatly influence the size of the population without health insurance. Thus efforts 

to increase health insurance should examine policies outside the sphere of our 

health care system that may exert a large or a larger influence on the size of the 

uninsured population. 

Aside from the impact of educational attainment, the rise in the number of uninsured individuals among households with annual income of $75,000 is perhaps the 

most revealing trend in health insurance coverage. The trend likely reflects a decline in the number of employers providing health insurance, changes in cost sharing arrangements between employers and employees that results in fewer employees 

opting to participate in employer provided plans, or some combination of the two. 

An increase in the self-employed who have traditionally had lower rates of health 

insurance coverage is also a contributor. 

The decline in employer provided health insurance is a complex phenomenon that 

is affected by many variables such as cost shifting to private payers, the impacts 

of coverage mandates and regulations, medical service cost inflation, demographics 

and many other factors. As a result, reversing the declining trend of employer provided insurance will be among the most challenging avenues for increasing insurance coverage. 

The Impact of Dropouts on Health Insurance Coverage 

Lower levels of educational attainment and higher dropout rates reduce health insurance coverage and increase government expenditures. 

• Almost 40% of working-age high school dropout ages 20–64 are not in the labor 

force. Less than one-quarter of dropouts receive employer-provided health insurance coverage. 

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2These data are from my analysis of the 2006 and 2007 March Supplement of the U.S. Census 

Bureau’s ‘‘Current Population Survey’’. 

• Dropouts comprise about 12% of the working age (20–64) population but make 

up almost 30% of the working-age uninsured. 

• Dropouts are nearly twice as likely as high school graduates (38.5% to 21.1%) 2

to be receiving Medicaid benefits or to have someone in their household (dependent children) receiving benefits. 

Figure 1—Dropouts Represent About 12% of the Working-Age (20–64) 

Population but 27% of Medicaid Recipients 

Data from the 2006 and 2007 March Supplement of the Census Bureau’s Current 

Population Survey indicate that there are approximately 20 million high school 

dropouts ages 20–64 in this country. The low rate of private insurance coverage 

among the population of dropouts increases the demand for government provided insurance such as Medicaid (Figure 1). 

Employer provision of health insurance is still the dominate source of coverage 

for Americans and the higher rates of employment of high school graduates compared to dropouts mean that reductions in dropout rates would dramatically reduce 

the number of uninsured. If all working age high school dropouts somehow were 

transformed into high school graduates, with the same patterns of insurance coverage as exist among current high school graduates, then the number of uninsured 

working age adults would drop by almost 4 million. In addition, an increase of 4 

million insured would result in additional coverage of many dependents and would 

likely mean that at least 8 million, and quite possible more, individuals would have 

health private insurance coverage. 

Similarly, increasing high school graduation rates will lower government expenditures for health care by reducing Medicaid beneficiaries by an estimated 3.5 million. 

At an average annual beneficiary cost of $2,000 (not including the elderly and disabled who have much higher annual costs) Medicaid expenditures would be reduced 

by $7 billion annually (Table 1). 

Even if the dropout rate were reduced to zero, however, a large number of individuals would still be without health insurance coverage and the number receiving 

Medicaid benefits would not decline by the entire number of Medicaid beneficiaries 

among the dropout population. Nevertheless the problem would be more manageable and it would be more directly attributable to problems in the health care system rather than artifacts of other economic, demographic, and social factors. 

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Table 1: Annual Medicaid Expenditures Attributable to Dropouts 3

(Note: Does Not Include Elderly and Disabled) 

# 20–64 

% On or W/ 

Child on 

Medicaid 

# On or W/ 

Child on 

Medicaid 

Total Cost = # μ Avg. 

Cost 

# On Medicaid if All 

Graduated 

Total Cost = # μ Avg. 

Cost 

Dropouts 20,201,421 38.5% 7,777,547 $15,555,094,170 0 $0 HS Grads 51,136,662 21.1% 10,789,836 $21,579,671,364 15,052,336 $30,104,671,026 Some Coll. No Degree 33,116,954 15.5% 5,133,128 $10,266,255,740 5,133,128 $10,266,255,740 AA. Degree 15,289,612 12.6% 1,926,491 $3,852,982,224 1,926,491 $3,852,982,224 Bachelor’s 30,805,745 6.8% 2,094,791 $4,189,581,320 2,094,791 $4,189,581,320 Master’s 10,413,640 4.9% 510,268 $1,020,536,720 510,268 $1,020,536,720 Prof/Ph.D 3,957,896 3.9% 154,358 $308,715,888 154,358 $308,715,888 Total 164,921,930 17.2% 28,386,419 $56,772,837,426 24,871,371 $49,742,742,918 

Difference (Annual Medicaid Cost of Dropouts): 3,515,047 $7,030,094,508 

3 Ibid. 

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4This estimate is appropriate to illustrate the earnings impact of educational attainment, but 

it does not consider the ‘‘equilibrium effects’’ that would occur in the labor market if all dropouts 

actually did graduate—that is, the ways in which the larger economy, employment, and wage 

rates might be affected in response to such a increase in high school graduation rates. 6We had to make some simplifying assumptions in calculating tax liabilities. Most important, 

because we had no data on spousal income for the population of high school dropout taxpayers, 

we treated all taxpayers as if they were filing as single taxpayers, We calculated tax liabilities 

for taxpayers with zero to three dependent child exemptions and weighted the number of returns according to the percentage of dropouts with and without dependent children, as gleaned 

from the CPS. Because there are a number of additional tax deductions, exemptions or credits 

that can apply to taxpayers age 65 and older, we limited our tax analysis to residents under 

the age of 65. The complexities of individual tax filings could not be captured when trying to 

model more than 20 million tax returns of working-age dropouts, but our results provide a reaPursuing policies that increase high school graduation rates as a strategy for increasing health insurance coverage will allow state and local governments to partner with the federal government and to play a prominent role in addressing this 

important issue. 

Attacking the problem of low high school graduation rates with the same vigor 

and attention we give to low health insurance coverage rates will yield large benefits outside of the health care system. One reason why health care and health insurance command so much of our efforts and attention is that we understand the significance these issues have to each of us. In contrast, the dropout problem that so 

significantly impacts health insurance coverage, commands far less public and policy 

maker attention because it is incorrectly assumed to have only a limited impact on 

a majority of the population. 

By documenting some of the public as well as private costs of dropouts, my research seeks to bring the same public concern for the problem of high school graduation rates that is evident in concerns over health insurance. Public costs such as 

higher rates of crime and incarceration, poorer health, higher unemployment rates, 

lower productivity, economic growth, and government revenues, as well as higher 

government expenditures for health care and public assistance are all consequences 

of low high school completion rates. 

Impact of Dropouts on Government Revenues 

It is well documented that high school graduates have much higher earnings than 

do high school dropouts. The impact of the lower earnings of dropouts on government revenues is less well documented. Table 2 shows that the lower average annual earnings of 20 million working-age dropouts implies wage and salary earnings 

in the U.S. that are $194 billion lower than if all dropouts had obtained a high 

school diploma. 4

Table 2: Earnings Impact of Dropouts Age 20–64 5

# 

Avg. 

Wages & 

Salary 

Total Earnings If Dropouts Were HS 

Grads 

Dropouts 20,201,421 $13,078 $264,186,103,270 $0 

HS Grads 51,136,662 $22,682 $1,159,866,426,485 $1,618,068,997,181 

Some Coll. No Degree 33,116,954 $24,954 $826,393,846,725 $826,393,846,725 

AA Degree 15,289,612 $31,449 $480,841,478,827 $480,841,478,827 

Bachelor’s 30,805,745 $46,331 $1,427,245,568,723 $1,427,245,568,723 

Master’s/Prof./Ph.D 14,371,536 $69,578 $999,944,168,962 $999,944,168,962 

Total 164,921,930 $31,278 $5,158,477,592,991 $5,352,494,060,417 

Difference $194,016,467,426 

5 Analysis of 2006 and 2007 ‘‘Current Population Survey’’ March Supplement data 

In addition to the increase in the annual earnings of residents and a reduction 

in Medicaid and other government expenditures, increasing graduation rates would 

yield large increases in tax revenue. We used the tax simulation model (TAXSIM) 

of the National Bureau of Economic Research to model the income tax impacts attributable to the population of working age dropouts in the U.S. 6

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sonable estimate that is likely to be within a few percentage points of the true income-tax cost 

associated with the earnings differential between high school graduates and dropouts 

In combination, the lower earnings and decreased tax payments of high school 

dropouts, along with the higher cost of tax credits attributable to dropouts, results 

in an income tax cost of $31 billion attributable to dropouts (Table 3). The secondary 

revenue impacts that would result from increased earnings and expenditures from 

a reduction or elimination of dropouts are not documented here but would yield additional federal and state revenues equal to or greater than those highlighted here. 

Table 3: Estimated Income Tax Cost of Dropouts 7

Wage & 

Salary Income 

Estimated 2007 Tax Liability 

0 Child 1 Child 2 Children 3 or More 

Children 

HS Grads $22,682 $1,730 –$358 –$2,990 –$4,027 

Dropouts $13,078 $446 –$2,686 –$4,845 –$4,845 

Difference $1,284 $2,328 $1,855 $818 

× 12,141,799 3,455,105 2,940,309 2,447,059 

20,201,421 $15,590,069,916 $8,043,484,440 $5,454,273,195 $2,001,694,262 

Dropouts 

(Age 20–64) Grand Total: $31,089,521,813 

7 Earnings data from the Current Population Survey. Tax liabilities were estimated using the National Bureau 

of Economic Research ‘‘TAXSIM’’ model. 

What Can be Done to Increase Graduation Rates 

There are a number of initiatives that show promise for increasing high school 

graduation rates and innovations are being tested on a small scale all the time. 

There is no single best solution and I believe that innovation and new initiatives 

should be encouraged. Based on the numbers I have discussed here, even modest 

increases in graduation rates should yield fiscal benefits capable of supporting additional efforts to reduce dropouts by State and local governments while significantly 

reducing the number of uninsured in the process. As importantly, these benefits will 

be realized without risk of unintended consequences to our health care system. 

I believe that the educational system in this country contains far too much segregation of students and families according to income and educational attainment 

of parents. This segregation has profound impacts on the differential educational opportunities available to children. No matter how much we have increased funding, 

education that maintains a tacit ‘‘separate but equal’’ structure to educational opportunities seems to have succeeded only in separation while failing at equality. The 

result is that the long-term economic opportunities for many are greatly limited. Restricting educational opportunities to assigned schools maintains the inherent segregation in education along income and parental education lines and will assure the 

continuation of segregation in our education system and likely maintain existing differences in educational opportunity. 

That said, regardless of what policies to increase graduation rates are instituted, 

it is most important to acknowledge the critical role that increasing educational attainment can play in reducing the percentage of our population that lacks health 

insurance coverage, at the same time increasing graduation rates will yield additional public benefits and reduce public costs. 

Increasing graduation rates is a forward looking policy prescription. We cannot 

retroactively increase graduation rates for the 20 million working-age dropouts in 

our population but by increasing high school completion rates we can increase future revenues and lower future public expenditures in a way that allows for more 

attention and resources to be directed at those for whom the future is now and the 

past cannot be changed. 

Conclusion 

Some of the most effective means of reducing the number of uninsured individuals 

in this country do not involve fundamental changes to our health care system. Other 

than as a citizen I have no stake in maintaining any aspect of our current system 

of health care or health insurance but even a cursory review of the data on health 

insurance coverage suggests that some of the major factors contributing to the lack 

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of health insurance are not simply the result of fundamental flaws in our health 

care system. To maximize public benefits while addressing declines in health insurance we ought to look for opportunities to provide more than insurance to the individuals who lack coverage. 

Increasing high school graduation rates is one way to dramatically reduce the future incidence of individuals without health insurance, at the same time it will increase economic opportunities for individuals, increase public benefits and reduce 

public costs. 

f 

Chairman MCDERMOTT. Thank you very much, Mr. Gottlob. 

Perhaps you’re a good segue into what my real question to this 

panel is. You say let’s increase the number of people who finish 

high school. That will knock off ‘‘x’’ millions of people off the 47 

million, or whatever the number is, that are uninsured. We really, 

I’m sure, don’t know what the number is, but let’s say, some 4.7 

million. Then I look at Ms. Collins’ report here, Dr. Collins. They 

say, well let’s allow States to extend eligibility to Medicaid; and let 

17 States redefine the age at which a young adult is no longer dependent, and they want older people to buy into Medicare and the 

2-year waiting period and other SSI. To me, what I’m hearing is 

bandaids here. 

Now, how many, if you took all those people, and I’ll let you, Dr. 

Collins, be the one to start. If you took all the people that you suggested we do, all the things you suggested we do, these bandaids 

of these various parts of the system, how many people would we 

take out of the 47 million who are uninsured? 

Ms. COLLINS. How many people? I mean, I think the State 

Children’s Health Insurance Program and the Medicaid program 

are good examples of what happens when you just cover certain 

parts of the population. You have a lot of people that drop off, because they don’t re-enroll, that don’t know that they’re eligible. So, 

you really do need more of a universal system where people are 

automatically enrolled through the tax system, for example. So, I 

think the bandaids that we suggest are in absence of a more universal system, but I think the most efficient approach would be to 

put everybody into the system. But I think the bandaid approach 

is an alternative to build in that direction. 

Chairman MCDERMOTT. I mean, if you’re taking these people 

and trying to cover the ones, you would keep the Medicaid system 

separate from Medicare and just keep adding into each of the systems. How do you look at that? Is that the best way to do it? 

Ms. COLLINS. I think the best way to do it is to cover everybody. I think if we’re thinking in terms for budgetary reasons, for 

political reasons of building toward universal coverage, you could 

start on these public insurance programs that work so well: the 

Medicaid program, the Medicare program, the State Children’s 

Health Insurance Program. Bring in the employer system as a 

piece of this and build toward universal coverage over time. 

Alternatively, we could do what others have proposed and expand the Medicare Program to everybody. I think the analysis that 

the Commonwealth Fund has done has really shown that this is 

the most efficient way in terms of saving overall health care costs, 

insuring everyone so they don’t lose coverage, that they have stable 

coverage over their lifetime. But if you’re looking toward building 

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toward universal coverage at an incremental way that moves toward universal coverage, these are suggestions for that. 

Chairman MCDERMOTT. In a public policy way, which one of 

these would you do first? 

Ms. COLLINS. You know, it’s so hard to say, because people are 

so much in need in each of these groups. Young adults, an example 

that Ms. Johnson gave about her life, is just extraordinary to listen 

to. So, how can you decide which vulnerable group you ensure first. 

Chairman MCDERMOTT. You don’t think a 59-year-old auto 

worker who retires and is in the retiree program is more important 

than Ms. Johnson? 

Ms. COLLINS. I think it’s hard to decide that. I think that’s why 

it would be more equitable to ensure everyone at the same time. 

Mr. POLLACK Mr. Chairman, I think there’s a general misunderstanding about the scope of public coverage, and I’m not suggesting that everything be achieved through public coverage 

changes. There is going to have to be some accommodation of both 

public and private sector coverage. 

I want to go over, however, what I think is a mythology about 

public coverage. There’s an assumption that anyone who’s poor is 

going to have health care coverage, because we have a safety net, 

such as Medicaid. It’s just a fallacious assumption. We treat people 

very differently based on their family relationship status. Take 

three different groups as an illustration: children, the parents of 

those children, and non-parental adults. 

For children, we cover children in virtually every state, if their 

family incomes are below 200 percent of the Federal poverty level. 

At least they’re eligible. They may not be enrolled, but they are eligible for coverage in virtually every State, if they are in families 

with incomes below 200 percent of poverty—roughly $34,000 in income for a family of three, $41,000 for a family of four. Some States 

go higher, and, obviously, there is a debate about how high it 

should go. 

With respect to parents, the median income eligibility standard 

for the safety net Medicaid program is today 69 percent of the Federal poverty level. It is one-third of what it is for children. 

For non-parental adults, such as the person you were talking 

about if that person is single or doesn’t have any dependent children right now, the situation is most problematical. In 43 States, 

you literally can be penniless and you are ineligible for public coverage. So for a lot of people and families that are poor and need 

help and need a safety net, they currently do not have alternatives, 

because they’re ineligible for public coverage. 

Then you get to the question of enrolling people who are eligible, 

but you have today a system of eligibility, which actually has its 

roots, believe it or not, in the 16th Century Elizabethan ‘‘poor laws’’ 

of England where they said in order to get welfare you had to be 

poor and to also meet some deserving category. 

We have that today with respect to Medicaid. As a result, people 

who are poor, if they don’t fit one of these deserving categories, are 

ineligible for safety net coverage. That should be changed. That 

should be a high priority. 

Ms. JOHNSON. I just want to say this on behalf of youth and 

foster care, and this is me just pouring out my heart. Your health 

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to become a success is very important to become a successful adult; 

and, there are already so many negative statistics that are placed 

on youth and foster care. 

When I was traveling over the summer as a foster club all star, 

I learned that when they did research last year that 27 percent of 

youth in foster care end up incarcerated. 52 percent end up homeless; 35 percent end up pregnant. Me being a former foster youth, 

knowing why, I committed. A lot of people wouldn’t believe it, but 

I got in a lot of trouble. I wouldn’t call it criminal, because I never 

was arrested. But part of the reason was because I didn’t get to 

seek the counseling that I needed for the traumatic experiences 

that I experienced. 

So, as not giving myself an excuse, but as an outlet, I did things 

that were horrific, or things that weren’t great. But I had no outlet 

and I was told I couldn’t go see a counselor and I couldn’t talk to 

anyone, because you had to pay for it. I didn’t have Medicaid, so 

I couldn’t pay for it. Even some of my peers now are getting pregnant, because when they get pregnant, it’s almost like putting 

themselves back into the system, because they know that even 

after they have their baby for a certain amount of time, they can 

still have medical coverage or medical insurance. That’s one of the 

things that they talk about that I’ve witnessed them talk about 

while being pregnant: ‘‘Well, at least I have medical coverage.’’ So, 

my question to them was, okay. You’re pregnant now as a way for 

you to still continue to keep medical coverage after you had this 

child. 

I feel like all the statistics that are already placed on my population are feeding into each other. Like, if I don’t get the counseling 

that I need for the stress disorder and everything else that I have, 

I am liable to commit a crime. Because I am liable to drop out of 

high school and if I am homeless and I am not in school, of course 

I am not working. I am unemployed. So, there go all those negative 

statistics back on my population again. I feel like for me, I was 

very vulnerable. 

Of course, I was taken away from my grandmother and put into 

foster care. I was young at the time and I didn’t have any choice. 

I feel like now that I’ve aged out of care, I am paying that price. 

I feel like it’s not fair that I can’t qualify for health care and I can’t 

say anything. Youth that do have their biological parents, they are 

allowed to stay on their parents’ health care insurance until age 

24, as long as they’re still in college. I feel like the State became 

my parent, so shouldn’t I be provided with the same equal benefits 

as youth that have their biological parents? 

I’m not 24. I’m 22, and I still can’t get health care. I’m still sick 

to this day from the condition that I stated earlier, because it lingers on for so long as a result of me not having medical insurance. 

You know if you’re sick and it lasts so long, it starts to damage 

other things. That’s why I’m still sick to this day, because it’s a 

long process of healing the condition that I have, because I waited 

so long to get it treated, because I did not have medical insurance. 

I was told, ‘‘why don’t you just be like regular people and go get 

on insurance?’’ Okay. I’m a college student. Nobody is helping me. 

I don’t have any parents. I can’t call home like most people and 

say, I’m sick, or I need this. I have to do it for myself, so do you 

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honestly think I can afford to pay that high deductible? I’ve tried, 

because I don’t want to be the one to bring myself back into the 

system after I have already exited it. 

So, I have tried other means. I work. So, I have tried to go to 

the doctor’s office and pay the amount there is to pay, but I found 

myself having to pay like $250 that I did not have just to go to the 

doctor. So, I found myself doing what most people do, just don’t get 

it treated. Because the bills at the emergency room are just so expensive, and I know that I cannot afford them. So, I just allow this 

illness to linger on, because I had no way to pay for it. I feel like 

we are very deserving of this help, because we have been through 

so much already and there is nobody there to help us once we age 

out of care. There is nobody there. 

Chairman MCDERMOTT. Thank you. 

I am going to move to Mr. Herger. I’ve gone way over my time. 

So, Mr. Herger, you are open. 

Mr. HERGER. Thank you, Mr. Chairman. 

Chairman MCDERMOTT. We won’t turn the clock on just yet. 

Turn the clock off. 

Mr. HERGER. I want to thank each of our witnesses this morning. Ms. Johnson, I particularly want to thank you. 

All of us on this panel that are in this room are very much aware 

of the percentages and what they are against someone in your position that grew up in your circumstances. To see you out there, even 

though you are struggling, obviously you are by every standard definition, you are on your way to being a successful person. You really are right now, and I want to commend you for what you’re doing. 

I also want to commend you for being a role model. I commend you 

for going out and being this all-star and talking to others and doing 

what you’re doing. I want to encourage you to continue on the path 

you are and bringing this to our notice. 

It’s a big challenge we have, as each of you know. It is a big challenge. I think each and every one of you have brought up some 

very important points—47 million Americans without health care. 

What do we do about it? There is a big move to perhaps, we said, 

socialize it completely. Everybody has health care. I mean, this is 

ideal, but in reality, we can’t pay for what we currently have, as 

we are aware. 

Medicare is going broke now, faster than social security; and, so 

how do we get to where all of us agree we need to be? But from 

a practical standpoint in a nation that is in debt, how do we get 

there and get there efficiently, and how do we have a system that 

works? We’ve seen socialized medicine around the world. We see 

the Canadians. We see the long lines they wait in and how they 

come down here. That, I don’t think, is the answer. I don’t have 

the answer here, and Mr. Pollack I appreciate what you said, I 

think that we have to have a combination of both the safety nets 

that would help the individuals like Ms. Johnson and others who 

don’t have it, or the 59-year-old person that the Chairman was 

talking about. 

Yet the private sector can help pay for it where we can. One of 

the ways to do that, I think, is a problem that you pointed out, Mr. 

Gottlob, is if someone doesn’t have the education. You are in the 

process of getting that education Ms. Johnson, and the road you 

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are going down, eventually you will get it. Probably most of us on 

this Committee, if not every one of us, has been somewhat where 

you are going through school, being broke, struggling, working 

hard, investing today for getting something tomorrow, the American dream type of thing that you are in the process of living right 

now. 

You will be getting the dividends down the line and giving an example how to do that. I think the real problem, one of the major 

problems, is getting our young people through high school. Because 

if you don’t get through high school, then you are thrown into the 

system that you were describing where there is virtually no hope. 

People won’t hire you. It’s tough enough to be hired if you have a 

high school education, let alone not a high school education at all. 

If we are looking at first steps or some of the most important first 

steps, I believe this idea of at least getting our young people, and 

those who do not have the blessing that have the parents—it 

sounds like you have a grandmother—how do we help you get 

through high school and how do we make sure that you have the 

health care you need in the process? 

Mr. Gottlob, in your studies, have you seen any programs or suggestions on how we can ensure that others like Ms. Johnson that 

are in that position can make it through the first step of high 

school, and then maybe college, but for sure at least high school? 

Mr. GOTTLOB. I think that there are a number of programs that 

are proving their worth in reducing the dropout problem. I categorize, basically, two broad categories. There’s the very big kind 

of reforms, the broad categorical reforms, which include things like 

early intervention in young people’s lives, even at the preschool 

age. Those programs take a long time to evaluate and study. We 

really haven’t gotten to the point yet that, you know, there’s definitive studies, but I think those are very encouraging. 

There’s other activities providing different kinds of alternative 

education charter schools that open up alternative ways for people 

to obtain an education who might not fit into the very narrow 

structure of many of our public schools. When you look at the population of dropouts, however, one of the things that you see is that 

there are many reasons why people drop out. There’s a tremendous 

variety of reasons, so I think that there’s a lot of tactical programs 

that are proving very successful. 

There are things like, one of the things that is very much associated with dropouts is lack of success in the ninth grade, the very 

first year of high school. A lot of school districts are instituting 

what are called academies that are basically smaller schools within 

a larger school environment, makes it feel like a smaller school. 

Students within that ninth grade are allowed to choose which of 

the academies. It functions in a way that makes kids successful in 

that initial first year. That’s proven very successful. 

You know, vocational education has gotten a bad name in a lot 

of ways. Everybody is striving for a higher education and beyond, 

and that’s a noble goal. So vocational education has seen a decline, 

and one of the things that that’s done is I think it has pushed a 

lot of what I like to call kids at the margin out of our schools who 

in my State, where a lot of our population of dropouts are young 

males who are marginally attached to their school, who because of 

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low unemployment rates in my State, see an $8 an hour job as a 

great opportunity to leave school. Well, $8 at age 16 doesn’t look 

so good when you’re 30 and you’ve got children. 

Those students at the margin, if they had the opportunity to 

maintain some attachment to the labor force within a program of 

vocational education that allowed them to learn some trades, some 

occupations, along with a core academic curriculum I think has 

proven successful in the limited instances where it’s been instituted. 

Those are just a couple of examples. There are many. The key 

message is that I think that the ways in which we will accomplish 

this goal will be as varied as the characteristics of the population 

that is dropping out, but there are real opportunities. 

Chairman MCDERMOTT. Thank you. Mr. Lewis will inquire. 

Mr. LEWIS. Thank you very much, Mr. Chairman. 

Again, I want to thank each of you for being here. Ms. Johnson, 

thank you for your testimony. Thank you for pouring out your 

heart and telling your story. I don’t understand when someone discovers a health condition and you don’t have the money; how do 

you pay for seeing a doctor? What was it like? What do you get the 

resources from? Or you just didn’t go and see a doctor? 

Ms. JOHNSON. Actually, I just go give you a brief note of how 

it happened. Like I said, when I first realized that I was sick was 

my sophomore year of college. You know, it was something that 

was so simple when I finally figured out what it was. If I had been 

going to get the yearly physical exams, then they would have been 

able to detect it a lot earlier. 

What made it stressful was actually figuring out who to reach 

out to and tell them what was going on with me, because like I 

said, I didn’t have an adult or somebody in my life at that time I 

could call it, ‘‘Hey look, this is what’s wrong with me. What do I 

do?’’ Once I reached out to the Georgia Department of Human Resources, there was some ladies that worked with me. Once I 

reached out to them and told them what was going on, ‘‘Okay,’’ 

they said, ‘‘the next step is to figure out how we can get you taken 

care of.’’ 

So, Grady is a well-known hospital in Atlanta. We contacted 

Grady and they told me that they could put me on a waiting list 

to be seen. I was like, okay, so I did sign up for the waiting list 

to receive the appointment. But I never got it, I guess because of 

them just having so many people on the waiting list. 

I contacted some local OB–GYN clinics right there in the county 

which I lived in, and the payment just to come in for that one day 

was so much. That’s where I got the estimate of around $250, because that’s how much they wanted just for that 1 day. At the time 

I was in between transition in school, so I wasn’t working as much. 

So, I didn’t have the money. 

So, the next step was to try to find a local health department. 

The one in Clayton County, which is where I live now, where I’m 

going to school at Clayton State University, was the one where I 

would literally have to get up early in the morning at like six. 

Someone from the Georgia Department of Human Resources would 

come and pick me up, because I didn’t have a car at the time, and 

take me to that facility. There were already, believe it or not, they 

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didn’t believe it when I told them that there were already people 

there waiting at seven, that early in the morning, so they took me 

themselves so that they could see that that was the issue. 

We got there and there were literally already a lot of people 

waiting to get into this particular health department. I went three 

times, and all three times I was not able to be seen. They would 

tell me that they didn’t have enough nurses there that day for 

what I needed. They couldn’t do it. So I was turned away then. 

So, then I realized that when I was getting my associate’s degree, 

there was a health department there. It was an hour and a half 

away from which I lived. So, I finally called them. They were like, 

Ms. Johnson, we know you don’t live in our county, but just go 

ahead and come in. If you’re that sick, just go ahead and come in. 

When I came in, it was the most embarrassing experience of my 

life, because the doctor looked at it. She was like, ‘‘How could a 

person get this sick? How could you let your condition wait this 

long until where you are this sick?‘‘ 

That was the most embarrassing day of my life. They gave me 

almost every antibiotic you could think of, and I still had the problem. I didn’t know how to explain to this lady that I didn’t have 

health insurance and that I didn’t know who to go to. Then I tried 

to contact all the places around me, and nobody was helping me. 

I didn’t have the money, and finally the State of Georgia did pay 

for me to go. But even they were still having problems with getting 

me the medical attention. This was the Georgia defects that I 

reached out to that even they could testify to was that it was still 

difficult getting me treated without their health care insurance. 

I tried to even reapply to see if I was still qualified for Medicaid, 

and I couldn’t. I even tried to reapply at 19, and they said I was 

still ineligible. Right now, the Jim Casey Youth Opportunity Initiative Program called the Metro Atlanta Youth Opportunity Initiative, they have a door opener called Kaiser Permanente where you 

can pay $20 a month for full coverage. When I first came to the 

Atlanta Metro area, they had a freeze on the program because they 

had already accepted so many people into the program, so at that 

time I could not get in. But they have now reopened Kaiser 

Permanente. They offer backup, and I’m now in the process of applying for that. 

The only thing is since I’ve had the reoccurring condition for so 

long, that’s one of their requirements, that you not have a condition 

that you’ve already had long-term before enrolling. So, then, there 

I go again, back into where I started from. 

Mr. LEWIS. Well, thank you, Ms. Johnson. My time is running 

out. Before you leave, we should get your number to one of my staff 

persons and we’ll try to do what we can in Atlanta, and Clayton 

County ought to be of help to assist you. 

Mr. Chairman, could I just ask another question? 

Chairman MCDERMOTT. Yes. 

Mr. LEWIS. Not of Ms. Johnson, but thank you so much. 

Mr. Pollack, thank you so much for this unbelievable data that 

you provided in your testimony and also in your report. It is my 

hope that maybe in 2009, or someplace down the road, that you 

would come back and testify again, and we could maybe get the 

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ball rolling toward some comprehensive health for all of our citizens. 

I happen to believe that health care is a right and not a privilege. It doesn’t matter that you live in this country; you should 

have it. I would like for you to respond to some of the generalization that Mr. Gottlob made concerning Hispanic and African-American that happen to be, maybe, uninsured. I didn’t quite understand where he was going. Maybe he can explain it. But if you 

could, deal with it? 

Mr. POLLACK Let me refer to some numbers that are in the report that you just referred to. I said to you earlier in my testimony 

that, over the course of the last 2 years, 89.6 million people were 

uninsured at some point in that 2-year period. Now, all of these 

people are under 65 years of age, because if you are 65 years of 

age or older, you are eligible for Medicare. This constitutes a little 

more than one out of three non-elderly people, it’s 34.7 percent of 

people under 65 years of age. 

But getting to your question about the effect in terms of racial 

disparities, we broke this down from the Census Bureau data in 

terms of non-Hispanic whites, non-Hispanic blacks, and Hispanics. 

The percentages I’m going to give you are all percentages for people 

under 65 years of age. For non-Hispanic whites, 26 percent of the 

population under 65 years of age, a little more than one out of 

every four people, were uninsured at some point over the prior 2 

years. Among non-Hispanic blacks, the percentage of people under 

65 years of age who experienced a lack or loss of health insurance 

was 44.5 percent. Among Hispanics, the percentage was 60.7 percent. In other words, more than three out of five Hispanics were 

uninsured at some point over the last 2 years. 

So, even though as my colleague on this panel indicated, about 

half the uninsured are white, non-Hispanics, the likelihood of being 

uninsured is very different, based on race and ethnicity. 

Mr. LEWIS. Do you subscribe to the idea of the concept that everybody, every person, every human being that lives in America 

should have health care? 

Mr. GOTTLOB. I certainly think everybody should be able to 

avail themselves of the same health care opportunities that are 

available to everyone else. Representative Lewis, I just want to 

make it clear that when I cited those statistics, what I was trying 

to do, and I mentioned this in follow-up, is to note that one of the 

things that characterizes those numbers is a high percentage of demographic groups that have very, very low, or lower rates of high 

school graduations—Hispanic population, African-American population. So, I was trying to draw the connection between insurance 

coverage and graduation. 

So, that was the purpose. Certainly not, and when I talk immigration I certainly didn’t want to, and I mention this, fan the 

flames of the immigration debate. That’s not the purpose. There’s 

tremendous heterogeneity in the data, but there is one kind of common theme, and one of those big themes is a lack of educational 

attainment. That is a very big predictor. 

Mr. LEWIS. Isn’t it in the best interest of the health of all of our 

citizens, of all the people that live in this country, that everybody 

should have health care? 

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Mr. GOTTLOB. Absolutely. Absolutely, and one of the reasons 

why I stress graduation rates so much is that you can provide everyone with health coverage. If you do that, it still won’t put food 

on the table. It still won’t pay the rent. 

Mr. LEWIS. But a lot of the people without health care, they’re 

working people. They work every single day. Every single day they 

get up, they go to work, but they cannot afford health care. 

Mr. GOTTLOB. Absolutely. 

Mr. LEWIS. The working poor. 

Mr. GOTTLOB. By increasing the educational attainment, they 

will be better positioned to meet those other needs in addition to 

health care. That’s really the point, that there are tremendous 

synergies between educational attainment, coverage of health care, 

and the resources, assets that individuals and families have, and 

the resources that ultimately are available to this government to 

address some of the issues in health care that aren’t solved by increasing educational attainment. 

Mr. LEWIS. Thank you, Mr. Chairman. 

Chairman MCDERMOTT. Yes, Mr. Camp. 

Mr. CAMP. Well, thank you. I appreciate all the witnesses for 

being here. 

As many others have said, much of what we are talking about 

is not in the jurisdiction of this Subcommittee, or, frankly, in the 

jurisdiction of the Committee on Ways and Means. If we were the 

Commerce Committee, we might be able to do something about 

some of these issues. 

But I do think that in the CRS report that I had introduced into 

the record there are demographic characteristics in terms of health 

coverage by type. 35.6 percent of the uninsured are Hispanic, according to CRS, the Congressional Research Service; 21.7 percent 

are African-American; 12.5 percent, white. So, this does disproportionately affect certain populations in the United States. I think 

having that information before the Subcommittee can only be helpful in terms of trying to find solutions. 

But, as we talk about this issue, it seems to me that if we were 

to adopt many of the ideas being suggested by several witnesses to 

expand Medicaid, expand SCHIP, we would still not impact the 

high school dropout rate. That number would still stay the same, 

would it not Mr. Gottlob? 

Mr. GOTTLOB. That’s correct. There would not likely be a 

change. There isn’t any research to my knowledge that indicates a 

relationship between health care coverage providing provision of 

health care coverage and a reverse in terms of increasing. 

Mr. CAMP. So, we’d still have elevated rates of poverty and unemployment and far less lifetime annual earnings than individuals 

who have more education. Is that correct? 

Mr. GOTTLOB. There clearly are benefits to families who are not 

insured to receiving when they receive insurance. There can be reduced expenditures on their part, but it doesn’t fundamentally for 

the most part change their earning capacity. 

So, their situation, whether they’re skilled or unskilled, their 

educational attainment isn’t fundamentally changed. Now, are 

there instances where it could be? Yes. But in the aggregate, it 

doesn’t fundamentally change the resources, intellectual and otherwwoods2 on PROD1PC60 with HEARING

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wise that are available to individuals and families to make their 

lives better. 

Mr. CAMP. You mentioned on page 7 of your testimony, there 

are a number of initiatives that show promise for increasing high 

school graduation rates. 

Could you just list several of those initiatives for us? 

Mr. GOTTLOB. Yeah, I think. You know, alternative education 

at the high school level, kids who are at risk of dropping out, there 

are alternative schools that can help graduation rates. I mentioned 

the problem, I think. One of our big problems in the educational 

system is the segregation of our public education according to income and educational attainment of the parents. Mixing and breaking up some of that segregation I think will have profound impacts 

on educational quality and ultimately graduation rates. There are 

some tactical measures that I have talked about in terms of specific 

district-level kinds of initiatives that I think show promise. 

There is a laboratory of school districts out there, and States that 

are doing innovative things and improving, in my State I know, improving graduation rates. When they do that they provide additional benefits to all of us, and that is the point of my testimony. 

Mr. POLLACK Mr. Camp, I share my colleague’s enthusiasm 

about equal educational opportunities. 

Mr. CAMP. By the way, that is not in the jurisdiction of this 

Committee either. If we were on Education and Labor, we could 

talk about that issue. 

Mr. POLLACK I understand that. But I must take issue with the 

notion that the provision of health care is largely irrelevant to educational attainment. That’s just false. 

If a child doesn’t get a check-up and that child has a vision problem, or that child doesn’t get a check-up and that child has a hearing problem, those things are not going to get corrected. How is 

that child going to get a decent education? 

If a child can’t get check-ups and get basic health care provided 

to them and they’re absent from school, how does that not affect 

their educational attainment? There is a real correlation between 

the provision of health care and educational attainment and general development. 

Mr. CAMP. Thank you for that comment. 

My time is about to expire, but in your testimony you mentioned 

that coverage of children was almost universal in this country. 

Mr. POLLACK No. No, wait a minute. 

Mr. CAMP. It is. 

Mr. POLLACK No. 

Mr. CAMP. It’s my time, sir, and thank you for your comment. 

I do have another question I want to ask Dr. Collins. 

You had mentioned expanding Medicare so adults 55 to 64 could 

buy into it. That is in the authority of this Committee. How much 

would something like that cost and would premiums cover the full 

cost to taxpayers for all people covered? Would those premiums be 

means tested in some way? If you could describe in greater detail 

that idea, that thought. 

Ms. COLLINS. Okay. Just one additional comment on this. The 

IOM has estimated that people lose between $65 Billion and $130 

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ance coverage. That includes lost productivity, earnings, and lost 

educational achievement. 

Mr. CAMP. Missing work and missing pay. 

Ms. COLLINS. Well, human capital development, educational attainment was one of the things that the IOM identified. So, there 

really are some costs. 

But anyway, on the issue of the Medicare buy-in, the Commonwealth Fund did an analysis of a bill that was introduced by Congressman Stark about the Medicare buy-in, and we looked at the 

details of that plan with the Lewin Group. I would have to go back 

and look at the data and get back to you. But I believe we were 

thinking it looked like it was on the order of $26.9 billion a year 

in Federal costs, but I’d have to look into that. 

Mr. CAMP. I realize I maybe caught you off-guard on that, but 

if you could supply that later, I certainly would appreciate it. 

Ms. COLLINS. Sure, happy to do that. I think that also we 

would want to think about what that benefit package would look 

like. Would we want to make it look more like the Federal employees health benefits plan, for example, and also to make it affordable, to make the premiums affordable for lower income, older 

adults who really do comprise the majority of uninsured older 

adults as they do the majority of people who are uninsured in the 

United States? 

Mr. CAMP. All right. Thank you. 

Thank you, Mr. Chairman. 

Chairman MCDERMOTT. Thank you. Mr. Davis? 

Mr. DAVIS. Thank you, Mr. Chairman. 

All of us are under tight time constraints, because there are 

votes. 

Mr. Pollack, Mr. Camp did not seem to be terribly understood on 

the answer to his questions. I want to give you a chance to answer 

it now. 

You were talking about the number of uninsured children that 

continue in the United States. Would you just elaborate what those 

numbers are? 

Mr. POLLACK Well, sure. There are approximately nine million 

children in the country who are uninsured, and of that number approximately two-thirds, about six million, are actually eligible 

under the current eligibility standards established by the States for 

SCHIP. 

Mr. DAVIS. That would be typically 200 percent of poverty. 

Mr. POLLACK That’s right. That’s right. 

Mr. DAVIS. Which would be, for example, in my State that 

would be roughly $41,000 for a family of four. 

Mr. POLLACK Correct. $34,000 for a family of three. That’s 

right. The overwhelming majority of States are at approximately 

that income eligibility level. 

Mr. DAVIS. So, just to make sure everyone in the room who’s interested gets that point, two-thirds of the uninsured are eligible for 

the SCHIP program. They just simply haven’t had the opportunity 

or the informational resources to take advantage of it. 

Mr. POLLACK Or the States have not received sufficient funds 

to enroll them. We’re just seeing what’s happening, for example, in 

California. California is telling us that if we essentially keep the 

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same funding level for the SCHIP program as we had in the previous year, they’re going to cut-back children who are currently in 

the program. 

Mr. DAVIS. I would submit that that’s the case in Alabama. It’s 

the case, I think, in the States of virtually every single member of 

this Committee. 

I move to my second observation. One of the problems I think 

that we have, Mr. Pollack, and I think you would agree with me 

on this, as we try to fashion the political will, because frankly it 

is not that we are not smart enough to figure out how to address 

the health care problems, there are a range of things that we can 

do. 

Dr. Collins pointed out some of them. You pointed out a number 

of them. Mr. Gottlob pointed out a number of them. Ms. Johnson 

pointed out a number of them. There are a range of things that we 

can do. This is not beyond our intellectual capacity. It’s not too big 

a problem for us to get our hands around. This is not rocket 

science. The problem has, frankly, been one of political will. 

One of the reasons I think we struggle to garner the political will 

is because of some of the misinformation that lurks on the other 

side of this argument. I am troubled when I hear the President of 

the United States suggest that there’s a significant portion of people who are affluent, who have resources, who just elect to be free 

riders, who elect to essentially be uninsured and let the emergency 

room take care of them. There’s some whiff of that in his rhetoric, 

even when he talks about the SCHIP program. 

When I listen carefully to what he says, I hear something in his 

rhetoric that suggests that, well, the people who really need it get 

it. There’s a group of folks who don’t really need it that the liberal 

democrats are now trying to push into the program. 

Do you hear something of that in his rhetoric, Mr. Pollack? 

Mr. POLLACK Well, of course. The President has said everyone 

gets health care. You know, of course, they can go to an emergency 

room. Well, come to the emergency room and take a look at the 

care that people receive, people having to wait in line. This is the 

most expensive form of care. 

So, there’s a huge disparity in terms of the care people get when 

they’re insured versus when they’re uninsured. I wish frankly that 

the President would adhere to his own message that he gave in 

Madison Square Garden in 2004 when he accepted the Republican 

nomination for President. Then, he said, ‘‘we’ve got millions of children who are eligible who are not currently enrolled. My administration is going to reach out to those folks and get them enrolled 

in public coverage.’’ Now unfortunately the President, who has had 

the opportunity to do this, has turned his shoulder. 

Mr. DAVIS. Just to add to that point, the former Mayor of New 

York, Mr. Giuliani, who I think has some interest in getting the 

job himself, has made some misstatements I’ve heard in debates. 

He during one debate suggested there was a significant number 

of people who just don’t want to get health insurance and that 

they’re basically just careless individuals. I thought he overstated 

that point. 

The last observation I’ll make, Mr. Pollack, is thank you for making the observation that the scope of public coverage is weaker 

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than most Americans believe. In my State of Alabama, the only 

way you are eligible for Medicaid is if you have dependency with 

133 percent of poverty. You can be, as you put it, stone, cold broke. 

You can be penniless and be a 21-year-old woman who is working 

at a convenience store who doesn’t have a dependent, and you are 

ineligible for Medicaid in the State of Alabama and a number of 

other States. 

For some reason, there’s a myth that some on the right take advantage of that. Well, there’s some program out there that will 

reach out and act as a safety net for many of the poor and the uninsured. The actual scope of Medicaid coverage is far weaker than 

many people believe it to be. We need to, I think, begin to look at 

underwriting a much stronger floor for the Medicaid program. 

Thank you, Mr. Chairman. 

Chairman MCDERMOTT. We’ve got about 5 minutes left, and 

Ms. Berkley, if you could maybe lean just a little bit for the gentleman to your right. 

Ms. BERKLEY. Okay. Nudge me, if I go on too long. 

I’m sorry I wasn’t here at the beginning. I had to testify in front 

of another Committee, but what I did here I thought was profoundly moving. Ms. Johnson, one thing that you said is so right. 

If you are a ward of the State, when you age-out of foster care, 

the least the State could do is provide health insurance for you. 

When my kids were 18 they were no sooner ready to age-out of my 

home than the man on the moon. If they didn’t have a home to go 

to and parents to take care of them, I’d hate to think where they’d 

be right now. so I want to applaud you for everything you have 

done. But that’s what we should be doing, making sure that we 

take care of that gap in between aging out and being 24 years old. 

The other thing, and I want to make sure that I do get this in, 

Mr. Chairman, for high growth areas like my State. Everything 

we’ve discussed including SSI, ineligibility, and waiting times, are 

exacerbated because we have a lack of staff, a lack of ability to get 

this done, and far too many people needing the services. 

So, for the two and a half years average, I guarantee in my community and my district, people are waiting three and a half years, 

because of the backlog. Let me mention what is going on very 

quickly, and then I’ll hand it over to Mr. Van Hollen. 

I visit my schools in the underprivileged, if that’s the right word, 

areas in Las Vegas, which is a pretty affluent place, and we’ve got 

high employment rates. But I’ve got a huge dropout rate. I’ll tell 

you this. When these kids go to school in these disadvantaged 

areas, they come with no breakfast. They’ve got a mouthful of cavities. They are sick as dogs. They should be home, but there’s nobody home to take care of them because their parents are working 

at jobs that don’t provide health coverage. Half of them come from 

non-English speaking families, and quite frankly, as a parent I 

don’t want my kid sitting next to that child. That child needs to 

have care, and that’s why that SCHIP program is so terribly important. 

It’s no surprise to me that we have a high dropout rate, because 

once you go through that in your initial years and you never catch 

on, by the time you are in the ninth grade, you want out. As soon 

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as you turn 16, you are going to find an alternative way of spending your time, because school isn’t it. 

You are absolutely right, Mr. Gottlob, that’s a huge problem for 

this country, because we can’t afford in the 21st century to leave 

anybody behind. But I think it starts early, much earlier than high 

school. It starts not only with nutritious meals and a stable family 

environment, if we could make that happen, but good quality 

health care to take care of these kids. 

Chairman MCDERMOTT. Mr. Van Hollen? 

Mr. VAN HOLLEN. Thank you, Mr. Chairman. 

Chairman MCDERMOTT. You can take this as far as you want. 

Mr. VAN HOLLEN. Thank you, Mr. Chairman. 

I will be brief, given the bells that just went off. I just want to 

thank all the witnesses for being here. As our colleague Artur 

Davis said, providing health coverage in the United States, universal comprehensive health coverage, is a matter of mustering the 

political will to do it. I hope that after the next presidential elections we’ll be able to come up with a plan as a country that will 

address all of our people. 

In the meantime until we get to that point, we have to spend our 

time trying to fill the gaps, and that’s obviously what we are focused on today. I want to float one proposal that we have put out 

there in the form of legislation. Mr. Pollack, I want to thank you 

and Families USA for supporting it. I bring it to the attention, 

briefly, of others on the Committee and the panel, if you are not. 

Under the Medicaid program, states can ask for a waiver to include non-Medicaid individuals within a prescription drug program. 

In the State of Maryland under a former Republican Governor, 

former member of this body, Mr. Erlich, and a Democratic legislature, sought a waiver from the Administration to say the State of 

Maryland would like to include individuals up to 300 percent of the 

Federal poverty level in their bargaining pool when they bargain 

for prescription drugs under the Medicaid program. That would 

have the benefit, number one, of covering a lot more people, up to 

300 percent of poverty, which is where we are talking about the 

SCHIPS program being right now. It would cover the kind of people Mr. Davis was talking about, the woman who worked at the 

convenience store who is not eligible for Medicaid and is struggling 

to pay the high costs of lots of health care, including prescription 

drugs. 

It wouldn’t cost the Federal Government a dime, and you’d cover 

a lot more people. I wondered if you could just comment on it, Mr. 

Pollack, and if others are familiar with this particular gap filler. 

Chairman MCDERMOTT. One minute to vote. 

Go ahead. 

Mr. POLLACK As you correctly indicated, we support the legislation. Maine has also tried to do something very similar. I think it 

would help both those currently on Medicaid and those not on Medicaid. It would create a larger bargaining pool, and, as a result, the 

State would be in a stronger position to bargain for cheaper prices. 

So, I think it would be good, not just for current Medicaid beneficiaries, but the particular target of the legislation: those who are 

not eligible, and who really need help. They could get help. So, we 

think it’s a very constructive proposal. 

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Chairman MCDERMOTT. Thank you very much. Thank all the 

members of the panel, particularly Ms. Johnson for coming and 

doing this. But all of you, we stand adjourned. 

[Whereupon, at 11:32 a.m., the hearing was adjourned.] 

[Questions for the Record follow:] 

The Honorable Jim McDermott 

Chairman 

Subcommittee on Income Security and Family Support 

Committee on Ways and Means 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman McDermott: 

I am writing in response to your request for additional information related to the 

testimony I provided before your Subcommittee on November 14 during the hearing, 

‘‘The Impact of Gaps in Health Coverage on Income Security.’’ Once again, I wanted 

to thank you for the opportunity to provide the Committee with information and recommendations regarding promising policy solutions to address the financial problems children and families face as they navigate our health care system. 

As President of First Focus, a bipartisan advocacy organization committed to 

making children and their families a priority in federal policy and budget decisions, 

I am heartened by your leadership on this issue, and would like to thank you and 

mMembers of the Subcommittee for bringing the important voice of children to the 

health care discussion. 

Along with your questions, I am providing below the additional information you 

requested in your letter of November 28th. 

1. States currently have the option of extending Medicaid coverage to 

former foster children up to age 21. Based on Ms. Johnson’s testimony, this 

would be of great help to former foster youth who transition from care into 

adulthood. How many States are currently extending Medicaid coverage to 

former foster youth? What more can Congress do to help these vulnerable 

adolescents receive coverage? 

In 2005, over 24,000 teens left foster care at the age of 18. The range of services 

and supports available to children who age out of the foster care system varies considerably from State to State. Sadly, most teens aging out of care receive minimal 

services, and feel abandoned at a time when they need a great deal of guidance and 

support. 

The outlook for these kids is fairly grim. One in four will be incarcerated within 

the first 2 years after leaving the system, and over one-fifth will become homeless 

at some point. Only 58 percent will obtain a high school degree at age 19—compared 

to 87 percent of non-foster kids. These teens are also more likely to experience serious mental health problems and to be involved in the juvenile justice system. In 

fact, in a recent study of youth aging out of the Illinois foster care system, caseworkers identified one-third of these youth as having one or more significant mental 

health, medical, prenatal, substance abuse or developmental needs. Other studies 

have similarly found that large numbers of youth aging out of care have diagnosable 

mental health disorders. For instance, a recent study by Casey Family Programs 

found that 54 percent of youth have a mental health diagnosis after leaving care. 

Two key pieces of legislation, the Foster Care Independence Act 1999 (P.L. 106– 

169) and the Deficit Reduction Act of 2005 (P.L. 109–171) have created a critical 

opportunities for States to extend Medicaid coverage for youth who have aged out 

of the foster care system. 

The Chafee option, enacted through P.L. 106–169, allows States to extend Medicaid coverage to former foster children ages 18 to 21, but not enough States are 

doing so. A 2007 report by the America Public Human Services Association (APHSA) 

found that since the enactment of the Foster Care Independence Act, 17 States (CA, 

NV, UT, AZ, WY, SD, KS, OK, TX, IA, IN, MS, FL, SC, NJ, RI, MA) have moved 

to extend their Medicaid programs using this provision to provide care for youth 

aging out. In addition, five States (NM, MO, WI, NC, MD) are planning to extend 

their Medicaid coverage using the Chafee option. The report also found that extending Medicaid coverage is in fact affordable using this option. 

While 22 States are (or will soon) extend Medicaid eligibility to foster youth aging 

out of care via the Chafee option, the remaining 28 States and the District of Columbia use several other programs to provide health coverage for youth aging out 

of the foster care system. Several States have utilized section 1115 waivers under 

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the Medicaid program to extend care, while others offer former foster youth the opportunity to qualify for additional benefits if they remain in care or in an education 

setting. 

For instance, in Alabama, a State plan category exists for foster youth who remain in State custody (up to age 21) in order to retain Medicaid eligibility. In Alaska—Denali KidCare—a program designed to ensure that kids and teens in working 

and non-working families have access to health insurance, is available to youth who 

are 19 years old for a 12 month period (youth need to reapply for the program every 

6 months). The State uses an 1115 waiver to extend the program. Alaska also provides Medicaid to Alaskan Native youth who age out of the foster care system 

through the Native Health Care Program. In fact, the majority of Alaska’s youth 

in foster care are Alaskan Natives, and they have access to critical health care via 

this program. In Idaho, foster youth are eligible to receive Medicaid until age 19 

under title XIX whether they exit or stay in continued care. After age 19, they may 

still qualify for Medicaid if they fall under the TANF, SSI or disability criteria. 

Lastly, in Kentucky, youth who age out of foster care at 18 have a reduced benefit 

medical card that is valid until their 19th birthday. These are just a few examples 

of State efforts to piece together a health care system for youth aging out of care. 

Unfortunately, there is considerable variability in access across programs, and restrictions on eligibility. In addition, a number of States only extend coverage for 

youth to age 19. 

We believe that Medicaid coverage should continue for all youth in foster care 

until at least the age of 21. Congress can help by enacting legislation to do just that. 

A number of proposals, including the Medicaid Foster Care Coverage Act (H.R.1376) 

and the Foster Care Continuing Opportunities Act (S. 1521) expand eligibility for 

Medicaid to foster care adolescents through age 21. We support such efforts to expand coverage to youth aging out of foster care and believe that federal policy is 

essential to ensuring continuity in care for vulnerable adolescents. 

2. I was interested in your testimony regarding the high rates of low income children who are eligible for Medicaid and SCHIP but are not currently enrolled in these programs. You noted in your prepared statement 

that 62% of all uninsured children are eligible for, but not enrolled in, either Medicaid or SCHIP. You reference a study showing that 36% of those 

children were in families with incomes below the poverty line and another 

41% were in families with incomes of 100%–200% of the federal poverty line. 

Obviously, we have some work to do. While we are not here today to discuss SCHIP reauthorization, I would be interested in your thoughts on why 

the SCHIP bill offers a greater opportunity to enroll the poorest children 

first? 

Over the last decade, SCHIP has amassed an impressive record of success in providing cost-effective health insurance coverage for children—increasing the number 

of children enrolled in the program from 660,000 in 1998 to 6.6 million in 2006. At 

a time when the numbers of uninsured adults has been on the rise, SCHIP has reduced the number of uninsured children in our Nation by one-third. 

Unfortunately, as I noted in my testimony, a large portion of those children who 

are eligible for Medicaid or SCHIP remain uninsured. Both of the Children’s Health 

Insurance Program Reauthorization Acts (CHIPRA I and CHIPRA II) (H.R. 976, 

H.R. 3963) passed by Congress this fall included provisions that would provide critical assistance to States to facilitate the enrollment of the very poorest of these children who are eligible but not enrolled in Medicaid or SCHIP. Specifically, the 

CHIPRA bills included two key provisions—to provide States with an Express Lane 

Eligibility option and to provide grants to support State, local, and community-based 

outreach and enrollment campaigns—which are among the only new tools provided 

that would strengthen outreach and enrollment efforts for this hard-to-reach population. 

Express Lane Eligibility 

Both CHIPRA I and CHIPRA II included Express Lane provisions that would 

allow States to adopt simplified enrollment processes to determine a child’s eligibility under Medicaid or SCHIP. Under Express Lane Eligibility, States would be 

able to expedite the enrollment of currently eligible children by targeting outreach 

to those children who are already participating in needs-based programs. It is estimated that more than 70 percent of low-income, uninsured children are in families 

that are already enrolled in the Food Stamp Program, the Women with Infants and 

Children (WIC) program, or the National School Lunch Program (NSLP). The idea 

of Express Lane is to give States the flexibility to find a child income-eligible for 

Medicaid or SCHIP based on the fact that they have already been found eligible for 

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nutrition assistance or other comparable programs that operate under similar financial guidelines. 

Express Lane proposals enjoy long standing bipartisan support in both the House 

and the Senate. It was included in then-Majority Leader Frist’s child health bill 

during the 109th Congress, which the administration supported, and bipartisan legislation (S. 1213) that was introduced earlier this year in the Senate by Senators 

Bingaman (D–NM) and Lugar (R–IN). The Express Lane Eligibility option is designed to target the very poorest uninsured and eligible children who have been the 

hardest to reach through other methods. 

Outreach and Enrollment Grants 

In addition, the reauthorization legislation allocates $100 million for fiscal years 

2008 through 2012 for outreach and enrollment grants, with 10 percent of the funding dedicated to a national enrollment campaign, and 10 percent for outreach grants 

targeting Native American children. 

According to the provision, remaining funds would be distributed by the U.S. Department of Health and Human Services to State and local governments and other 

community-based organizations, including safety net providers, schools, or other entities best positioned to reach low-income children through outreach campaigns. 

Most important, outreach campaigns would be geared to rural areas and racial and 

ethnic populations which are known to be underenrolled in Medicaid or SCHIP. The 

legislation also provides an enhanced matching rate in SCHIP and Medicaid for 

translation and interpretation services for families for whom English is not the primary language. 

The research is conclusive that that community-based organizations are often best 

positioned to help identify families with children who are eligible for coverage. This 

is particularly the case for minority populations who are disproportionately represented among the ranks of the uninsured. 

We believe the enactment of these provisions would provide States important new 

tools to reach eligible, low-income children who are not enrolled in health coverage. 

I hope this information is helpful and, once again, thank you for the opportunity 

to testify before your Subcommittee. We are grateful for your leadership in addressing the health care needs of our most vulnerable children and families and we look 

forward to working with you in the future to ensure better care for all of our nation’s children. 

Sincerely, 

Bruce Lesley 

President 

[Responses to Questions for the Record posed by Chairman McDermott to The 

Commonwealth Fund follow:] 

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f 

[Submissions for the Record follow:] 

Statement of Business Coalition for Benefits Tax Equity 

Mr. Chairman, in conjunction with the Subcommittee’s hearing on the impact of 

gaps in health coverage on income security, the 44 members of the Business Coalition for Benefits Tax Equity salute your leadership in addressing an important 

health coverage challenge through introduction of H.R. 1820, the Tax Equity for 

Health Plan Beneficiaries Act of 2007. Enactment of H.R. 1820 would advance 

Congress’s efforts to eliminate gaps in health coverage. 

Employers across the United States in increasing numbers have made the business decision to provide health benefits to the domestic partners of their employees. 

As of June 2007, 53% of Fortune 500 companies (266) are offering domestic partner 

health coverage, a more than twelve-fold increase since 1995. These employers have 

recognized that the provision of domestic partner health coverage is an essential 

component of a comprehensive benefits package. This coverage helps corporations 

such as those in our coalition attract and retain qualified employees and provides 

employees with health security on an equitable basis. 

Unfortunately, federal tax law has not kept pace with corporate change in this 

area and employers that offer such benefits and the employees who receive them 

are taxed inequitably. This reduces the number of individuals who utilize employerprovided health coverage. 

Issues Under Current Law 

Currently, the Internal Revenue Code (‘‘Code’’) excludes from income the value of 

employer-provided insurance premiums and benefits received by employees for coverage of an employee’s spouse and dependents, but does not extend this treatment 

to coverage of domestic partners or other persons who do not qualify as a ‘‘dependent’’ (such as certain grown children living at home who are covered under a parent’s plan or certain children who receive coverage through a grandparent or parent’s domestic partner). In addition, when calculating payroll tax liability, the value 

of non-spouse, non-dependent coverage is included in the employee’s wages, thereby 

increasing both the employee’s and employer’s payroll tax obligations. An employee 

of median income level who receives employer-provided major medical coverage of 

average cost for himself and a domestic partner faces an annual tax bill of $4,710 

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in income and payroll taxes, $1,555 (or nearly 50%) more than that paid by a similarly situated co-worker with spousal coverage. However, this employee has no additional income to meet this higher tax burden. These higher tax levels can lead employees to decline the domestic partner coverage altogether, contributing to America’s problem of the uninsured and to the gaps in health coverage the Subcommittee 

is considering today. 

The current inequitable tax regime also places significant administrative burdens 

on employers. It requires employers to calculate the portion of their health care contribution attributable to a non-spouse, non-dependent beneficiary and to create and 

maintain a separate system for the income tax withholding and payroll tax obligations for employees using such coverage. 

Employers such as ours that offer domestic partner benefits want to end these tax 

inequities so that the benefits we provide help to cover more Americans and so that 

all our employees are treated equitably under the tax laws. Ending the tax inequities will also eliminate the need for what are often complex communications to employees about how the tax penalties operate. Finally, ending the inequities will 

allow us to jettison the separate and burdensome administrative systems that we 

must currently establish to track the income tax withholding and payroll tax obligations for employees using domestic partner coverage. 

H.R. 1820 Provides a Solution 

H.R. 1820 would end these and other current tax inequities with respect to employer-provided coverage for non-spouse, non-dependent beneficiaries, such as domestic partners. Specifically, the bill would make the following important changes: 

1. The value of employer-provided health insurance for a domestic partner or 

other non-dependent, non-spouse beneficiary would be excludible from the income 

of the employee if such person is an eligible beneficiary under the plan. Employers 

would retain the current flexibility to establish their own criteria for demonstrating 

domestic partner status. In a corresponding change, the cost of health coverage for 

domestic partners or other non-spouse, non-dependent beneficiaries of self-employed 

individuals (e.g., small business owners) would be deductible to the self-employed 

person. 

2. The legislation would make clear that employees paying for health coverage on 

a pre-tax basis through a cafeteria plan would be able to do so with respect to coverage for a domestic partner or other non-spouse, non-dependent beneficiary. 

3. Many employers, particularly in the collectively bargained context, use tax-exempt Voluntary Employees’ Beneficiary Associations (‘‘VEBAs’’) to provide health 

coverage. Today, VEBAs are prohibited from providing more than de minimis benefits to a domestic partner or other non-spouse, non-dependent beneficiary. 

The legislation would permit a VEBA to provide full benefits to non-spouse, nondependent beneficiaries without endangering its tax-exempt status. 

4. In contrast to current law, employees would be permitted to reimburse medical 

expenses of a domestic partner or other non-spouse, non-dependent beneficiary from 

a health reimbursement arrangement (‘‘HRA’’) or health flexible spending arrangement (‘‘Health FSA’’). 

5. The value of employer-provided health coverage for a domestic partner or other 

non-dependent, non-spouse beneficiary would be excluded from the employee’s 

wages for purposes of determining the employee’s and employer’s FICA and FUTA 

payroll tax obligations. 

We look forward to working with you to advance this legislation and applaud your 

inquiry as to how to address gaps in health coverage. 

The Business Coalition for Benefits Tax Equity is a coalition of employers that 

supports eliminating the federal tax inequities that result when corporations voluntarily provide health care coverage to the domestic partners (and other non-spouse, 

non-dependent beneficiaries) of their employees. Coalition members are listed below. 

Aetna 

Hartford, CT 

A.H. Wilder Foundation 

St. Paul, MN 

American Benefits Council 

Washington, DC 

Ameriprise Financial, Inc. 

Minneapolis, MN 

Bausch & Lomb Inc. 

Rochester, NY 

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Best Buy, Co., Inc. 

Richfield, MN 

BlueCross BlueShield of MN 

Eagan, MN 

Capital One Financial Corp. 

Falls Church, VA 

Carlson Companies 

Minneapolis, MN 

Charles Schwab & Co, Inc. 

San Francisco, CA 

The Chubb Corporation 

Warren, NJ 

Citigroup 

New York, NY 

CNA Insurance 

Chicago, IL 

Corning, Inc. 

Corning, NY 

Coors Brewing Co. 

Golden, CO 

Cullen Weston Pines & Bach LLP 

Madison, WI 

The Dow Chemical Co. 

Midland, MI 

Eastman Kodak 

Rochester, NY 

EDS 

Plano, TX 

Ernst & Young 

New York, NY 

General Mills Inc. 

Minneapolis, MN 

Hewlett-Packard Co. 

Palo Alto, CA 

HSBC North America 

Prospect Heights, IL 

IBM Corp. 

Armonk, NY 

ICMA Retirement Corporation 

Washington, DC 

Intel Corporation 

Santa Clara, CA 

JP Morgan Chase & Co. 

New York, NY 

Levi Strauss & Co. 

San Francisco, CA 

Marriott International, Inc. 

Washington, DC 

Medtronic, Inc. 

Minneapolis, MN 

MetLife, Inc. 

New York, NY 

Microsoft Corporation 

Redmond, WA 

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1 Child Welfare League of America. (2007). Special tabulation of the Adoption and Foster Care 

Analysis Reporting System. Washington, DC: Author. 2 U.S. General Accounting Office (GAO) (2003). Child welfare and juvenile justice: Federal 

agencies could play stronger role in helping states reduce the number of children placed solely 

to obtain mental health services (GAO–03–397). Available online at http://www.gao.gov. 

Motorola 

Schaumburg, IL 

Nike Inc. 

Beaverton, OR 

PG&E Corporation 

San Francisco, CA 

PricewaterhouseCoopers 

New York, NY 

Project for Pride in Living 

Minneapolis, MN 

Prudential Financial 

Newark, NJ 

Replacements, Ltd. 

Greensboro, NC 

Russell Investment Group 

Tacoma, WA 

San Fran. Health Svs. Sys. 

San Francisco, CA 

Texas Instruments 

Dallas, TX 

Time Warner Inc. 

New York, NY 

Xerox Corporation 

Rochester, NY 

f 

Statement of Child Welfare League of America, Arlington, Virginia 

The Child Welfare League of America (CWLA), representing public and private 

nonprofit, child-serving member agencies across the country, is pleased to submit 

testimony to the Subcommittee on Income Security and Family Support. CWLA appreciates the opportunity to submit comments to the Subcommittee on the vital 

issue of current gaps in health coverage. We commend Chairman McDermott and 

members of the Subcommittee for your attention to the increasing difficulty in obtaining and accessing quality, affordable health care and the corresponding impact 

on vulnerable populations, including children and youth involved with the child welfare and foster care systems. 

Health Care Needs of Children in the Child Welfare System 

In federal fiscal year 2005, there were 506,483 children in out-of-home care and 

during that same year, approximately 800,000 children spent at least some time in 

a foster care setting. 1 Many children that enter the foster care system are at an 

extremely high risk for both physical and mental health issues as a result of biological factors and/or the maltreatment they were exposed to at home. Some children 

are in out-of-home care for other reasons, such as their parent(s) voluntarily placing 

them or feeling compelled to do so. For example, the Government Accounting Office 

estimates that in 2001, due to limits on public and private health insurance, inadequate supply of services, and difficulty meeting eligibility requirements, parents 

placed over 12,700 children into the child welfare or juvenile justice systems solely 

so that these children would be more likely to receive necessary mental health services. 2 Regardless of why the child has come into the child welfare or foster care systems, removing the child from his/her home, breaking familial ties and the continued instability that often ensues greatly exacerbate any original vulnerability. 

Numerous studies have documented that children in foster care have medical, developmental and mental health needs that far surpass those of other children, even 

those living in poverty. One study found that 60% of children in care have a chronic 

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3Simms, M.D., Dubowitz, H., & Szailagyi, M.A. (2000). Needs of children in the foster care 

system. Pediatrics, 106 (Supplement), 909–918. 4 Halfon, N., Mendonca, A., & Berkowitz, G. (1995). Health status of children in foster care: 

The experience of the Center for the Vulnerable Child. Archives of Pediatric and Adolescent 

Medicine, 149, 386–392. 5Takayama, J.I., Wolfe, E., & Coulter, S. (1998). Relationship between reason for placement 

and medical findings among children in foster care. Pediatrics, 101, 201–207. 6 Clausen, J., Landsverk, J., Ganger, W., Chadwick, D., & Litrownik, A.J. (1998). Mental 

health problems of children in foster care. Journal of Child and Family Studies, 7, 283–296; 

Halfon et al. (1995); Urquiza, A.J., Wirtz, S.J., Peterson, M.S., & Singer, V.A. (1994). Screening 

and evaluating abused and neglected children entering protective custody. Child Welfare, 123, 

155–171. 7 dosReis, S., Zito, J.M., Safer, D.J., & Soeken, K.L. (2001). Mental health services for foster 

care and disabled youth. American Journal of Public Health, 91, 1094–1099. 8 U.S. Department of Health and Human Services (HHS). (1999). Mental health: A report of 

the Surgeon General. Rockville, MD: Author. Available online at http://www.surgeongeneral.gov/ 

library/mentalhealth/home.html. 

medical condition and one-quarter have three or more chronic health problems. 3

Many also experience developmental delays in regards to language and cognition. 4

When compared to the general population, children younger than six in out-of-home 

care have higher rates of respiratory illness (27%), skin problems (21%), anemia 

(10%), and poor vision (9%). 5 In regards to mental health, it is estimated that between 54% and 80% of children in out-of-home care meet clinical criteria for behavioral problems or psychiatric diagnosis. 6 In one study, researchers found that between 40% and 60% of children in out-of-home care had at least one psychiatric disorder and that this population of children used both inpatient and outpatient mental health services at a rate 15 to 20 times higher than the general pediatric population. 7

Medicaid’s Vital Role in Assisting Children in Care 

When children are removed from their home base and placed in State custody due 

to no fault of their own, Medicaid steps in to provide many of these children with 

physical and mental health care that helps them get on the road to recovery. In addition to Medicaid’s Early, Periodic Screening, Diagnostic, and Treatment (EPSDT) 

and the Targeted Case Management Option, Medicaid Rehabilitative Services are 

especially vital, as they offer a realistic opportunity to—in the least restrictive setting possible—reduce the physical and/or mental disabilities that many children in 

foster care have, thereby restoring the child’s functioning level, decreasing lingering 

and long-term negative impacts, and ultimately reducing costs. Rehabilitative services are also community-based and consumer—and family-driven services, in line 

with both the President’s New Freedom Commission on Mental Health and the U.S. 

Surgeon General’s recommendations. 

Many children and youth involved with the child welfare and foster care systems—many of whom have experienced life-altering trauma and have little or no familial support—are already slipping through the cracks and it is essential to bridge 

rather than widen the gaps. Unfortunately, however, CMS recently proposed a regulation (CMS–2261–P/72 Fed. Reg. 45201) that would significantly limit access to 

Medicaid Rehabilitative Services for many vulnerable populations—who are both 

Medicaid-eligible and greatly in need of services, including children involved with 

the child welfare and foster care systems. The regulation would entirely take away 

federal Medicaid dollars for rehabilitative services that are deemed ‘‘intrinsic to’’ 

other programs, including child welfare and foster care. The authority of CMS to 

implement such a provision is questionable, as Congress specifically debated and rejected adopting an ‘‘intrinsic to’’ test in regards to rehabilitative services when enacting the Deficit Reduction Act of 2005. 

Federal Medicaid dollars, for example, would not be available for rehabilitative 

services provided in a therapeutic foster care setting unless they are medically necessary, clearly distinct from packaged therapeutic foster care services, and given by 

a qualified provider. As the Surgeon General indicated in his 1999 report on mental 

health, with care provided in private homes with specially trained foster parents, 

therapeutic foster care is considered ‘‘the least restrictive form of out-of-home therapeutic placement for children with severe emotional disorders.’’ 8 The proposed regulation’s language, while not explicitly prohibiting therapeutic foster care, whittles 

away at its core so much that access will surely be restricted, if not completely shut 

off. As a result, because there is a continuum of care in foster care, children who 

cannot be maintained in regular foster care due to serious emotional or other health 

issues will be forced into more restrictive settings—a result that cannot be justified 

by any amount of federal savings. 

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9Geen, R., Sommers, A., & Cohen, M. (August 2005). Medicaid Spending on Foster Children. 

Available online at http://www.urban.org/UploadedPDF/311221_medicaid_spending.pdf. Washington, DC: The Urban Institute. 10 American Academy of Pediatrics. (2002). Health care of young children in foster care: Committee on Early Childhood, Adoption and Dependent Care. Pediatrics, 109, 536–541. 

As Twila Costigan, Manager of the Adoption & Family Support Program at CWLA 

member agency Intermountain (Helena, MT) testified before the U.S. House of Representatives Oversight and Government Reform Committee on November 1, 2007, 

‘‘rehabilitative services are used to allow program staff to go into therapeutic foster 

homes to model and teach effective interventions to parents and children. Staff also 

work with the child to help them develop personal skills to allow them to identify 

and communicate their feelings to the adults in their lives—rather than acting out 

these feelings of rage, sadness, fear, humiliation, jealousy and anxiousness in destructive ways.’’ Ms. Costigan’s testimony declares sadly that ‘‘the loss of the Medicaid Rehabilitative services has the likely consequence of eliminating Therapeutic 

Foster and Group Home care for the Severely Emotionally Disturbed children in 

Montana.’’ 

CWLA also strongly advocates that rather than requiring a ‘‘clearly distinct’’ billing method, States be afforded the discretion to define therapeutic foster care as a 

single service and pay through a case, daily, or appropriate mechanism. Packaged 

services allow the necessary amount of time and attention to be spent on children 

suffering from intense mental issues. The alternative imposes the significant administrative burden of relegating activities into somewhat arbitrary time blocks, which 

ultimately takes time away from the child and reduces services’ effectiveness and 

the child’s progress. 

CWLA also has concerns about soon-to-be released regulations regarding the use 

of Medicaid Targeted Case Management. TCM allows States to target a select population to receive in-depth case management services—even across child-serving systems—thereby assisting the child in accessing much needed medical and social services. At least thirty-eight States employ the TCM option to provide greater coordination of care for children in foster care and the children who receive TCM services 

fare better in a wide array of areas. Specifically, TCM recipients are more likely to 

receive physician services (68% compared to 44%); prescription drugs (70% compared to 47%); dental services (44% versus 24%); rehabilitative services (23% versus 

11%); inpatient services (8% versus 4%) and clinic services (34% compared to 20%). 9

Medicaid and its components, including EPSDT and the Rehabilitative Services 

and Targeted Case Management options, must remain strong, viable streams of 

care. Aggressive efforts must be made to thwart any contrary actions so that Medicaid may fulfill its purpose of bettering the health of some of our nation’s most vulnerable children. 

Access Concerns 

Many of the challenges associated with the provision of health care for children 

in out-of-home care relate to funding, specifically the constraints posed by the Medicaid program. In many States, providers report very low reimbursement rates and 

long waits for payment. In some communities, providers have declined to continue 

to see patients who have Medicaid as their health care coverage. As the number of 

providers for children in out-of-home care decreases, access and choice diminish, 

waiting lists become commonplace, and services are delayed. At the same time, a 

number of States have mandated that children in out-of-home care shift from feefor-service Medicaid to Medicaid managed care. These changes in the delivery and 

funding of health care services have led to concerns that services for children in outof-home care will be rationed and that services that were already difficult to obtain 

under the fee-for-service model, particularly mental health services, will become 

even more difficult to access. 10

In addition, health care providers often lack experience in treating the physical 

and mental health problems that children in out-of-home care experience. They may 

face serious obstacles in obtaining accurate medical histories for children, including 

information about current and prior medications. On the child welfare workforce 

end, child welfare caseworkers are often young, have limited professional experience, and are managing caseloads that far exceed recommended standards—all of 

which likely contribute negatively to the timely and appropriate provision of health 

care for children in foster care. Final concerns include: distance to providers and 

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11 Child Welfare League of America (CWLA). (2007). Standards of Excellence for Health Care 

Services for Children in Out-of-Home Care. Washington, DC: Author. 12 Children who aged out of foster care are captured by the AFCARS emancipation data element. Children who exit care to emancipation are those who reached the age of majority; CWLA, 

Special tabulation from AFCARS. 13 Adoption and Foster Care Analysis and Reporting System (AFCARS) data submitted for the 

FY 2005, 10/1/04 through 9/30/05. 14Pecora, P.J., Kessler, R.C., Williams, J., O’Brien, K., Downs, A. C., English, D., White, J., 

Hiripi, E., White, C. R., Wiggins, T., & Holmes, K. (2005). Improving family foster care: Findings 

from the Northwest Foster Care Alumni Study. Available online at http://www.casey.org/Resources/Publications/NorthwestAlumniStudy.htm. Seattle, WA: Casey Family Programs. 15Patel, S. & Roherty, M. (2007). Medicaid Access for Youth Aging Out of Foster Care. Washington, DC: American Public Human Services Association. Available online at http:// 

www.aphsa.org/Home/Doc/Medicaid-Access-for-Youth-Aging-Out-of-Foster-Care-Rpt.pdf. 16 Child Welfare League of America (CWLA). (2007). Standards of Excellence for Health Care 

Services for Children in Out-of-Home Care. Washington, DC: Author. 

formation sharing between the health care and child welfare systems, and failures 

to coordinate the child’s health care and child welfare plans. 11

Youths Leaving Foster Care Due To Age 

Certainly there is no group of America’s youth more deserving of Congress’ attention than those in foster care or those who leave foster care after turning age 18. 

Every year 20,000–25,000 young people exit the foster care system. 12 These young 

people leave care simply because there is an age limit on federal funding. While 

some States may extend this support beyond age eighteen and the Chaffee Independent Living Program offers limited funding for transitional services to these 

young people, all too often the end result is that foster children find themselves on 

their own at age eighteen. 

Barriers to a Secure Adulthood 

Adolescents constitute a major segment of the youngsters the child welfare system 

serves. In 2005, 29 percent of children in care were 15 years of age or older. 13 Most 

youth enter out-of-home care as a result of abuse, neglect, and exploitation. Others 

have run away from home or have no homes. Young people transitioning out of the 

foster care system are significantly affected by the instability that accompanies long 

periods of out-of-home placement during childhood and adolescence. These young 

people often find themselves truly ‘‘on their own,’’ with few, if any, financial resources, no place to live, and little or no support from family, friends, and community. The experiences of these youth place them at higher risk for unemployment, 

poor educational outcomes, health issues, early parenthood, long-term dependency 

on public assistance, increased rates of incarceration, and homelessness. The resulting harm to the youth themselves, their communities, and the society at large is 

unacceptably high. 

Health Needs and Lack of Health Coverage 

For the 20,000–25,000 youth who age out of care each year, many times their 

health needs linger into adulthood. Foster care alumni experience a disproportionate 

amount of both physical and mental health issues, including post-traumatic stress 

disorder and major depression. Compounding this problem is the fact that 33% of 

foster care alumni lack health insurance—a rate almost twice as high as the general 

population. 14 The Chafee program allows States to extend Medicaid coverage to 

former foster children between ages 18 and 21. Despite Medicaid’s tremendous advantage for youth in foster care, however, only 17 States had implemented the extension as of December 2006. 15

Legislative Steps 

The Child Welfare League of America desires for all children in foster care to receive coordinated, continuous, comprehensive, and culturally competent health care 

services and supports legislation working toward that goal. 16 Services must be coordinated in terms of providing cross-system training and continuity in service both 

while the child is in State custody and after he or she leaves as a result of reunification, placement with a relative, adoption, or aging out of care. Because children in 

foster care experience a wide array of and disproportionate amount of health needs, 

services must be comprehensive and address children’s medical, mental, dental, 

emotional, and developmental needs. This is not just a goal or desire of CWLA, but 

it is a necessary component to reducing the number of children in foster care. Something we all seek. 

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Proposed Medicaid Regulations that Would Restrict Access to Needed Care 

Rather than making such sweeping changes to vital community-based services 

such as Medicaid Rehabilitative Services and Targeted Case Management through 

rulemaking, CWLA believes that these important decisions should be debated thoroughly and done through the legislative process. CWLA strongly supports long-term 

efforts to ensure that Medicaid and its components remain financially supported, accessible streams of care. In the immediate, CWLA urges Congress to pass a moratorium on the proposed Rehabilitative Services regulation. Such a moratorium—that 

would halt any Administrative action that restricts coverage or payment under Rehabilitative Services until January 1, 2010—was included as Section 616 of the Children’s Health Insurance Program Reauthorization Act of 2007 (H.R. 3963). However, 

because the fate of that reauthorizing legislation is currently uncertain, CWLA 

would strongly support a similar moratorium in another legislative vehicle. 

Health Care for Youth Transitioning Out of Foster Care 

The Medicaid Foster Care Coverage Act of 2007, H.R. 1376, has been introduced 

by Representative Dennis Cardoza (D–CA-18). We support this bill and commend 

Congressman Cardoza for introducing this bill. This legislation which has bipartisan 

support including the support of five members of this Subcommittee, addresses a 

critical issue for young people leaving foster care, the fact that by some surveys 33% 

of foster care alumni lack health insurance. Congressman Cardoza’s legislation 

would make sure that young people leaving the system due to their age be assured 

that they will at least have the safety net of continued Medicaid coverage until their 

twenty-first birthday. For this population we need to do so much more including increasing our efforts to prevent these young men and women from reaching the point 

of ‘‘aging-out’’ of the child welfare system. For now we can take this one basic, minimum step of allowing them continued access to a doctor. 

Conclusion 

CWLA appreciates the opportunity to offer our comments to the Subcommittee in 

regard to gaps in health coverage and the accompanying growing challenges for vulnerable populations, including children and youth in the child welfare and foster 

care systems. As this Subcommittee moves forward, we look forward to a continued 

dialogue with its members and all Members of Congress. We hope this hearing 

serves as a building block for future efforts that work to ensure coordinated, continuous, and comprehensive health care coverage for all children—especially those atrisk of placement, those already in foster care, and those transitioning out of the 

child welfare system into adulthood. 

f 

Statement of Human Rights Campaign 

On behalf of the Human Rights Campaign and our over 700,000 members and 

supporters nationwide, I thank Representative McDermott for calling this hearing 

on the impact of gaps in health coverage. As the nation’s largest civil rights organization advocating for the Gay, Lesbian, Bisexual, and Transgender (‘‘GLBT’’) community, the Human Rights Campaign strongly supports measures that will ensure 

health coverage for all Americans. 

GLBT families are faced with a particular challenge in the area of health insurance. Families rely heavily on employer-provided health insurance, a benefit that 

is increasingly offered to same-sex couples. Recognizing that their lesbian and gay 

employees deserve equal pay for equal work, and that they need a diverse workforce 

to compete in today’s economy, over one half of the Fortune 500 companies now offer 

equal health benefits to their employees’ same-sex domestic partners—up from only 

one in 1992. Unfortunately, our tax system does not reflect this advance toward true 

meritocracy in the workplace. Under current federal law, employer-provided health 

benefits for domestic partners are subject to income tax and payroll tax. As a result, 

a lesbian or gay employee who takes advantage of this benefit takes home less pay 

than the colleague at the next cubicle. Some families have to forego the benefits altogether because of this unfair tax—adding them needlessly to the millions of uninsured Americans in this country. 

Here is an example of the inequity: In 2006 Steve earned $32,000 per year and 

owed $3,155 in federal income and payroll taxes. Steve’s employer also paid the 

monthly premium of $907 for Steve’s family health coverage, of which $572 the 

amount in excess of the premium for self-only coverage. None of this coverage was 

taxable under current law. Steve’s co-worker, Jim, earned the same salary and had 

the same coverage for himself and his partner, Alan. However, the value of the covwwoods2 on PROD1PC60 with HEARING

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1 A similar bill has been introduced in the Senate—the Tax Equity for Domestic Partner and 

Health Plan Beneficiaries Act (S. 1556). 

erage provided to Alan is subject to federal income and payroll taxes. As a result, 

$6,864 of income is imputed to Jim and his federal income and payroll tax liability 

increased from $3,155 to $4,710. This represents nearly a 50% increase over Steve 

and Emily’s tax liability. 

For many families, especially those with modest incomes, the tax hit is more than they can bear. In Steve and Alan’s case, the additional $1,555 in tax liability is beyond their means. Put simply, taxing these benefits can exclude families from employer-provided benefits. With over 40 million Americans uninsured, and Medicaid 

now costing taxpayers $4,072 per individual, we should be working to decrease the 

number of uninsured, not creating hurdles while corporate America is attempting 

to provide equal benefits. 

It is time for the federal government catch up with America’s leading corporations 

and to stop taxing domestic partner benefits. The Tax Equity for Health Plan Beneficiaries Act, H.R. 1820, introduced by Subcommittee Chairman McDermott, would 

eliminate the tax inequity and render health insurance more affordable for gay and 

lesbian families. 1 This is a common-sense bill that brings our tax system up to date 

with corporate best practices. We encourage Congress to support this healthy proposal and work toward its passage. 

f 

Statement of National Association of Disability Examiners 

Mr. Chairman and members of the Subcommittee, thank you for providing this 

opportunity for the National Association of Disability Examiners (NADE) to present 

a statement on the Impact of Gaps in the Health Coverage on Income Security. 

NADE is a professional association whose purpose is to promote the art and 

science of disability evaluation. The majority of our members work in the State Disability Determination Service (DDS) agencies and thus are on the ‘‘front-line’’ of the 

disability evaluation process. 

Our members feel that there is an area of critical importance to the disabled population of our country that should be considered by those involved with this hearing—the 24 month Medicare waiting period for Title II disability claimants. While 

this Subcommittee oversees the Title XVI program, the Medicare Waiting Period 

has an impact on a large cross-section of the population and could serve to fill some 

of the gaps in health coverage discussed at this hearing. 

Most Social Security disability beneficiaries have serious health problems, low incomes and limited access to health insurance. Many cannot afford private health insurance due to the high cost secondary to their pre-existing health conditions. Members of the National Association of Disability Examiners (NADE) are deeply concerned about the hardship the 24 month Medicare waiting period creates for these 

disabled individuals, and their families, at one of the most vulnerable periods of 

their lives. 

In 1972, Congress passed Social Security legislation extending Medicare coverage 

to persons who had been receiving disability cash benefits for 24 consecutive 

months. Congress is to be commended for providing these health care benefits for 

the disabled American population. The original purpose of the Medicare waiting period was to ‘‘help keep program costs within reasonable bounds, avoid overlapping 

private insurance protection and provide assurance that the protection will be available to those whose disabilities have proven to be severe and long lasting.’’ 

In the original 1972 legislation there was one exception to the 24 month Medicare 

waiting period. Individuals with chronic renal disease would only have to wait three 

months before receiving Medicare benefits. In 2000, Congress passed legislation, implemented in 2001, that eliminated the Medicare waiting period for those individuals with amyotrophic lateral sclerosis (ALS), commonly known as Lou Gehrig’s disease. In both of these situations, it was felt that the health of the affected individuals warranted more timely access to Medicare coverage. 

Currently nearly six million disabled individuals receive Medicare benefits, and 

Medicare plays a vital role in ensuring that these individuals have access to appropriate and affordable health care. NADE believes that requiring some disabled individuals to serve a waiting period before receiving health care benefits and not requiring others to do so is fundamentally unfair and causes a tremendous hardship 

for individuals with disabilities at one of the most vulnerable periods of their lives. 

All Title II Social Security disability beneficiaries, except for the two groups mentioned above, are required to serve a 24 month waiting period before becoming eligiwwoods2 on PROD1PC60 with HEARING

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ble for Medicare benefits. The Medicare waiting period begins with the first month 

of receiving Social Security disability cash benefits which is five full months after 

the onset of a disability. This means that the majority of Social Security disability 

beneficiaries actually wait twenty-nine months after the onset of their disability before becoming eligible for Medicare health insurance benefits. 

The majority of Social Security disability beneficiaries have impairments that are 

severe and long lasting. Currently less than one percent of Social Security disability 

beneficiaries have their benefits terminated each year. Another four percent die during the Medicare waiting period. Many beneficiaries suffer irrevocable physical and 

mental deterioration while waiting for Medicare coverage and needed health care 

services. Early intervention and provision of needed health care services as soon as 

possible after the onset of disability, and at a time when the individual needs it 

most, could improve both these statistics and the quality of life for individuals with 

disabilities. NADE supports the elimination or, at the very least a reduction, of the 

24 month waiting period for Medicare benefits for all Title II disability beneficiaries. 

This change is needed to ensure fundamental fairness in the program and equity 

to all Social Security disability beneficiaries. 

Eliminating, or reducing, the 24 month Medicare waiting period for Social Security disability beneficiaries would address the insurance needs of a high-risk, highneed population and provide financial relief and access to health care services at a 

time when health care needs are especially pressing and few alternatives exist. 

Social Security beneficiaries in the Medicare waiting period face enormous problems. Research conducted by the Commonwealth Fund, in conjunction with the 

Henry J. Kaiser Family Foundation and the Christopher Reeve Paralysis Foundation, found that Social Security disability beneficiaries reported ‘‘skipping medications, putting off needed care, feeling depressed and anxious about the future, and 

believing they were not in control of their own lives’’ during the 24 month Medicare 

waiting period. 

Although some Social Security disability beneficiaries may initially be found eligible for SSI (thereby receiving Medicaid benefits), many lose that health care coverage when they complete their five-month waiting period and begin receiving Social 

Security disability cash benefits. Thus many disability beneficiaries are without any 

health insurance for at least some portion of their 24 month Medicare waiting period. Without health care coverage, individuals’ health conditions cannot improve, 

nor can they return to work, participate in their communities or stop depending on 

family members and friends for their basic needs. Beneficiaries need better access 

to health services before they can consider working again. Many individuals with 

disabilities might return to work if afforded access to necessary health care and related services. 

NADE members, who work on the ‘‘front-line’’ of the disability program, have 

first-hand experience with the hardships that the 24 month Medicare waiting period 

places on disabled beneficiaries. During continuing disability reviews NADE members all too often see individuals whose conditions, without proper health care coverage, have markedly deteriorated and who are significantly worse than when they 

were initially awarded disability benefits. The financial and emotional toll this has 

taken on the disabled beneficiary and their families is disheartening. Many individuals who could have been cured and/or found to be no longer disabled continue to 

be disabled due to the lack of access to needed health care services during the early 

stages of their disability. Such medical care could, in many cases, have improved 

both their disabling condition(s) and their overall situation in life. 

The Medicare waiting period is an often insurmountable barrier for individuals 

with disabilities. It offers frustration and emotional distress to people and families 

who are already hurting. Individuals with disabilities perceive the waiting period 

as being ‘‘punitive’’ and inherently unfair. Some individuals feel that the government is ‘‘just waiting for’’ people to die. Moreover, for many individuals, it will cost 

more in the long run for health care and services as individuals’ conditions deteriorate because they are not receiving appropriate treatment. NADE strongly believes 

that Social Security disability beneficiaries and their families who are forced to deal 

with the trauma of disability, should not then be forced to deal with deteriorating 

health, financial pressures and emotional frustration caused by the Medicare waiting period. Medicare coverage at the onset of an individual’s disability would relieve 

not only a significant financial, but also a significant emotional burden for disability 

beneficiaries and their families. 

Most Americans with disabilities wish to lead active, healthy and productive lives 

and believe that employment is an important key to achieving this goal. Improvements in health care and early intervention of needed medical services could increase rehabilitation successes, provide greater employment opportunities and enhance the ability of people with disabilities to be more active and productive. Early 

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interventions and access to needed health care services would provide not only 

greater emotional and economic stability for disabled individuals, it would decrease 

costs to the Social Security disability program as well. 

The Social Security Administration has proposed some new demonstration 

projects under their Work Opportunity Initiative to help overcome the barrier that 

the 24 month Medicare waiting period poses for those disability beneficiaries and 

applicants who wish to work. The demonstration projects provide supports, incentives and work opportunities to people with disabilities at the early stages of the 

disability determination process. Three of these proposed demonstration projects 

provide immediate medical benefits to applicants for disability benefits by offering 

comprehensive, affordable health care coverage. This allows beneficiaries to receive 

needed medical services early on in the onset of disability to enhance their vocational profile to return to work. Such interventions are not only good business practice from a financial standpoint, but from a humane and public relations aspect as 

well. NADE fully supports all initiatives and demonstration projects designed to assist disabled individuals in their efforts to obtain needed health care, promote selfsufficiency and return to work. 

NADE members strongly believe that claimants and their families, who are forced 

to deal with the onset of disability, should not then be forced to deal with the lack 

of health care coverage. For both Social Security and SSI disability, the definition 

of disability is the same, the medical listings are the same, and the adjudicative procedures used to process the claims are the same. However, the health care benefits 

provided to those who are found disabled are not. 

Disabled individuals who receive SSI disability benefits are eligible to receive 

health care coverage under the Medicaid program immediately upon being found eligible for SSI benefits. Because the SSI disability beneficiaries can receive health 

care benefits immediately, the perception clearly exists that the individual who has 

worked and contributed to the nation’s workforce and economy is penalized for having done so! Most Social Security disability beneficiaries face a daunting combination of low income, poor health status, heavy prescription drug use and high medical 

bills. They spend their days trying to survive and get their most basic human and 

health care needs met. Access to the health care services provided by Medicare is 

crucial if individuals with disabilities are to maximize their potential, avoid far 

more costly hospitalizations and long-term institutionalization and lead fuller and 

more productive lives. 

Congress passed the Americans with Disabilities Act in 1990 with the specific 

goals of ensuring equal opportunity, full participation in society, independent living 

and economic self-sufficiency for individuals with disabilities. Eliminating, or at 

least reducing, the 24 month Medicare waiting period would not only be an extremely humane gesture for these disabled workers and their families, it is perfectly 

aligned with the American with Disabilities Act and it is the ‘‘right thing to do!’’ 

NADE recognizes that there are costs involved with eliminating the 24 month 

Medicare waiting period. Thus, our members would also support an incremental approach to reducing this. Some of the costs could be offset by a reduction in federal 

Medicaid expenditures. The Government Accountability Office (GAO) stated in their 

report on transforming government to meet the 21st century challenges that ‘‘policymakers must confront a host of emerging forces and trends shaping the United 

States . . . and . . . accompanying these changes are new expectations about the 

quality of life for Americans and . . . testing the continued relevance and relative 

priority for our changing society’’ of existing federal programs is critical to ensure 

‘‘fiscal responsibility and facilitating national renewal.’’ NADE agrees with GAO and 

feels it is time to change the Medicare waiting period to bring it into the 21st century. 

f 

Statement of Matthew Melmed, Zero to Three 

Chairman McDermott and Members of the Subcommittee: 

My name is Matthew Melmed. For the past 12 years I have been the Executive 

Director of ZERO TO THREE, a national non-profit organization that has worked 

to advance the healthy development of America’s babies and toddlers for 30 years. 

I would like to start by thanking the Subcommittee for its interest in examining the 

impact of gaps in health coverage on income security. I would also like to thank the 

Subcommittee for providing me the opportunity to discuss the interaction between 

poverty, access to health care, and the healthy physical, social-emotional, and cognitive development of our nation’s infants and toddlers. 

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1 Annie E. Casey Foundation analysis of data from the 2007 Current Population Survey. 

2Douglas-Hall, Ayona and Chau, Michelle. 2007. Basic facts about low-income children: Birth 

to age 3. September 2007. http://www.nccp.org/publications/pub_765.html (accessed September 

20, 2007). 3 Ibid. 

4 Annie E. Casey Foundation analysis of data from the 2007 Current Population Survey. 

5March of Dimes. 2006. Newest American baby faces health challenges. http:// 

www.marchofdimes.com/printableArticles/15796_21848.asp, (accessed November 9, 2007). 

For these youngest children, regular health care can spell the difference between 

a strong beginning and a fragile start that leaves them behind. In the battle of 

words and policies over who should receive help in obtaining health insurance, and 

therefore better access to health care, we often forget that there are some groups 

of people who simply can’t wait—and babies are one of them. We hope that thinking 

about their needs can help spur action on behalf of all children and families. 

When we as parents think back to our children’s earliest years, we inevitably 

think of the many visits to the pediatrician. For many of us, it is daunting to imagine having to pay out of pocket for all that care or even worse, to imagine foregoing 

that care because of the trade-offs it would require in other basic necessities of life. 

And to contemplate the staggering medical bills for infants with the complications 

of preterm birth or low birth-weight would be overwhelming. Yet, many parents do 

face these circumstances as more than one in ten infants and toddlers are without 

health insurance. 1

The pool of very young children at-risk is even greater because we know that a 

child’s health and development are intricately related to the conditions in which 

lower-income families live. Two out of every five children under the age of three in 

America live in families considered low-income (at or below 200% of the federal poverty level). 2 Very young children are more likely to be poor than children as a 

whole, spending their critical early years developmentally in an environment that 

impacts them more severely than other age groups. Moreover, it takes only one 

event such as an accident, a baby requiring expensive neonatal care, or the loss of 

a job and the health insurance that may come with it to send a family spiraling 

down into the at-risk population. 

For infants and toddlers, we cannot think of the developmental domains in isolation. Infancy and toddlerhood are times of intense cognitive, social-emotional, and 

physical development, and the development in these areas is inextricably related. 

So poor health in a very young child can lead to developmental problems in other 

areas and vice versa. 

Too often we ignore the early years of a child’s life in making public policy, failing 

to give children and families supports that could make a difference in how their 

lives unfold. Yet, we spend a great deal of time and money on needs identified later 

in life—for example, gaps in cognitive development upon entering preschool or more 

intensive special education services for problems that may have begun as much 

milder developmental delays left undiagnosed and untreated in a young baby. 

Mr. Chairman, my message to you is that policymakers need to be aware of the 

important foundations laid in the early years of life and structure policies in such 

a way that they: 1) promote healthy development of infants and toddlers, 2) prevent 

many of the devastating physical, social-emotional, and cognitive impairments that 

these young children face in the future, and 3) treat acute and chronic illnesses, developmental delays, social-emotional problems, and learning disabilities in a timely 

manner. Simply put, babies and their families can’t wait—we know that early intervention and prevention work best and we know that living in poverty can increase 

parental stress and compromise the healthy development of young children. We 

need policies that support parents and other caregivers in providing young children 

with the strong foundation they need for healthy development. 

The Effects of Health Care Gaps on Infants and Toddlers 

Like other children, infants and toddlers are not immune to the growing health 

insurance gap in our country. Even though 52% of infants and toddlers in low-income families have at least one parent who works full-time, 3 the economic reality 

of the labor force is that employer-sponsored health insurance is becoming more and 

more of a rarity. In fact, nearly 12% of children under the age of three—1.9 million 

infants and toddlers—lack health insurance. 4

The health insurance gap affects babies even before birth when one considers the 

prenatal care to which their mothers may or may not have access. The March of 

Dimes estimates that an American newborn has a ‘‘1-in-5 chance of being born to 

a mother who lacks health insurance.’’ 5 Their mothers are therefore less likely to 

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6 American Academy of Pediatrics and Bright Futures. 2007. Recommendations for preventive 

pediatric health care. http://aappolicy.aappublications.org/cgi/reprint/pediatrics;105/3/645.pdf 

(accessed November 9, 2007). 7 American Academy of Pediatrics. 2007. Children’s health care coverage. http://www.aap.org/ 

advocacy/washing/ ChildrensHealthCareCoverage.pdf (accessed November 9, 2007). 8 American Academy of Pediatrics. 2004. Overcrowding crisis in our nation’s Emergency Departments: Is our safety net unraveling? Pediatrics 114 (3): 878–888. http:// 

aappolicy.aappublications.org/cgi/reprint/ pediatrics;114/3/878.pdf (accessed November 9, 2007). 9 Ibid. 

10 American Academy of Pediatrics. 2001. Care of children in the Emergency Department: 

Guidelines to preparedness. Pediatrics 107 (4): 777–781. http://aappolicy.aappublications.org/cgi/ 

reprint/pediatrics;107/4/777.pdf (accessed November 9, 2007). 11 Ibid. 12Ku, Leighton, Lin, Mark, and Broaddus, Matthew. 2007. Improving children’s health: A 

chartbook about the roles of Medicaid and SCHIP. Center for Budget and Policy Priorities. 

http://www.cbpp.org/schip-chartbook.pdf (accessed November 9, 2007). 13 American Academy of Pediatrics. 2007. Immunizations. http://www.aap.org/advocacy/washing/Immunizations.pdf (accessed November 9, 2007). 14 Ibid. 15 American Academy of Pediatrics. 2007. Statistics. http://www.aap.org/advocacy/washing/Statistics.pdf (accessed November 9, 2007). 

receive prenatal care, including screenings and diagnostic tests, which can improve 

their health as well as their babies’ health. 

What does it mean for a baby or toddler to lack access to health care? One likely 

consequence is missed doctor visits at which preventive care or early screening 

would take place. The Academy of Pediatrics recommends eight well-baby care visits 

with a pediatrician in the first year of life, with five more by the time the child 

reaches the age of three. These visits focus on preventive pediatric health care, including vision, hearing, lead, and developmental screenings; psychosocial/behavioral 

assessments; and promotion of proper oral health care. 6 These screenings and assessments are critical during the birth to three period to detect impairments, developmental delays and disabilities, and life-threatening disorders. If diagnosed early, 

these delays and disorders can be successfully managed or treated to prevent more 

severe and costly consequences later in life. In addition to well-baby visits, those of 

us who are parents know families are likely to find themselves in the pediatrician’s 

office many more times for childhood illnesses. For the family without health insurance, paying for this number of visits can seem daunting indeed. 

The result is not just a matter of conjecture. Research shows that without adequate health insurance, infants and toddlers fall victim to a host of poor health outcomes. In fact, uninsured children are almost five times more likely than insured 

children to have at least one delayed or unmet health care need. 7 Uninsured infants 

and toddlers are also less likely to have a regular pediatrician or medical home. 8

As a result, they are less likely to obtain preventive care or be diagnosed and treated early for illnesses, instead waiting until conditions are no longer manageable before seeking care in the Emergency Room (ER) of their local public hospital. In fact, 

in the last 50 years, the number of visits to ERs has increased more than 600% in 

the United States, 9 with children 0–18 accounting for over 31 million visits to the 

ER every year. 10 Children under the age of three represent the largest proportion 

of medically and injury-related ER visits in the country. 11

Emergency Rooms are the safety net of the United States health care system, but 

they are not a substitute for routine care, nor should they be. ERs are overcrowded 

and overburdened, leaving less staff and resources for those who truly need emergency care. For example, asthma, the leading cause of pediatric hospitalizations and 

missed school days, 12 is a chronic condition, but one that is manageable with proper 

attention and medication. By waiting until an attack is imminent rather than controlling environmental triggers on an ongoing basis, care becomes much more expensive and difficult to obtain. Yet, uninsured families and those living in poverty often 

do not have a choice as access to regular health care is unreachable. 

Infants and toddlers also require 20 doses of vaccines before they are two years 

old to protect them against 12 preventable diseases. 13 Vaccines are cost-effective 

public health measures that have decreased the incidence of several childhood diseases in the United States, including diphtheria, measles, mumps, rubella, and 

meningitis by 99% and completely eradicated polio. 14 Not so long ago, these diseases caused death and paralysis among the most vulnerable youth. While the majority of our nation’s infants and toddlers do receive the full range of recommended 

immunizations, nearly 18% of infants and toddlers do not. 15 Because uninsured 

children and those living in poverty are less likely to have a regular pediatrician, 

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16March of Dimes. 2006. Premature birth: The economic costs. http://marchofdimes.com/ 

printableArticles/ 21198_10734.asp. (accessed November 9, 2007). 17 Rogowski, Jeannette. 1999. Measuring the cost of neonatal and perinatal care. Pediatrics 

103 (1): 329–335. http://pediatrics.aappublications.org/cgi/content/full/103/1/SE1/329 (accessed 

November 9, 2007). 18 Himmelstein, David U., Warren, Elizabeth, Thorne, Deborah, and Woolhandler, Steffie, 

2005. Illness and injury as contributors to bankruptcy. HEALTH AFFAIRS—Web Exclusive 

http://content.healthaffairs.org/cgi/reprint/ hlthaff.w5.63v1?maxtoshow=&HITS=10&hits=10 

&RESULTFORMAT=&author1=Himmelstein&andorexactfulltext=and&searchid=1 

&FIRSTINDEX=0&resourcetype=HWCIT (accessed November 9, 2007). 19Shonkoff, Jack and Phillips, Deborah. From neurons to neighborhoods: The science of early 

childhood development. Washington, DC: National Academy Press. 20Douglas-Hall, Ayona and Chau, Michelle. 2007. Basic facts about low-income children: Birth 

to age 3. 21 Ibid. 22 Ibid. 23 Holzer, Harry J., Schanzenbach, Diane W., Duncan, Greg J., and Ludwig, Jens. 2007. The 

economic costs of poverty in the United States: Subsequent effects of children growing up poor. 

Institute for Research on Poverty Discussion Paper no. 1327–07. http://www.irp.wisc.edu/publications/dps/pdfs/dp132707.pdf (accessed November 9, 2007). 

they are also less likely to receive the full range of recommended immunizations, 

thereby threatening not only their health, but the public’s health as well. 

The Cost of Extraordinary Care 

Even if uninsured families are able to pay for routine visits, a serious health condition can push them over the edge financially. The high costs of hospital care for 

premature or low-birthweight infants, in particular, can be overwhelming for parents without health insurance. One factor leading to these conditions is a lack of 

prenatal care, which as noted above, is more likely to be a factor for women who 

lack health insurance, creating a devastating chain of events for mother and baby. 

The March of Dimes estimates that, in 2005, preterm births ‘‘cost the United States 

at least $26.2 billion, or $51,600 for every infant born preterm.’’ 16 A 1999 study of 

neonatal intensive care found that the median treatment cost for all infants in the 

study was $49,457 (in 1994 constant dollars) while costs at the 90th percentile was 

$130,377. The lowest birthweight infants had a higher median cost at $89,546. 17

For parents who have jobs that do not provide health insurance, such medical 

bills must seem insurmountable. In a study of families that had filed for bankruptcy, caring for premature infants and chronically ill children was a common 

theme. 18 Sometimes it is the loss of a job when the parent must care for the child 

that is the final straw. 

The Impact of Poverty on the Healthy Development of Infants and Toddlers 

I would like to focus in on lower-income children, who are at greater risk for a 

variety of poorer outcomes and vulnerabilities than middle-income infants and toddlers, including health impairments, social-emotional problems and diminished 

school success. 19 The health-related experiences of infants and toddlers on the lowest rungs of the income ladder and their developmental consequences illustrate that 

lacking support for good health care does not just mean missing a few doctor visits. 

These experiences also give us a sense of the trade-offs families must sometimes 

make in choosing among essentials for their families. 

Of the 12 million infants and toddlers living in the United States, 21%—a staggering 2.6 million infants and toddlers—live in poor families (defined as families 

with incomes at or below the federal poverty level or $20,650 for a family of four). 20

When one takes into account those families who are classified as low-income (at or 

below twice the federal poverty level or $41,300 for a family of four), the percentage 

and number of infants and toddlers living in dire economic conditions jumps to 44% 

or 5.4 million. 21 While the number of children of all ages living in poor families has 

increased over the past several years, the number of infants and toddlers living in 

poor families has increased at an even faster rate (16% vs. 11%). 22 What is particularly troubling, in addition to the rise of childhood poverty, is the fact that very 

young children are disproportionately impacted by economic stress—that is, the negative effects of poverty are likely to be more severe when children are very young 

and their bodies and minds are still developing. 

Gaps in health coverage and access to adequate health care are costly, not just 

for the affected infants, toddlers, and families themselves, but to all of society. Poverty, itself, raises direct expenditures on health care by $22 billion per year. 23 It 

is important to keep in mind, however, that it is not just those families living in 

poverty or near poverty who are at-risk, but there are many more families who are 

susceptible to poor health outcomes. In fact, in 2006, almost 23% of the uninsured 

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24 U.S. Census Bureau. 2007. Income, poverty, and health insurance coverage in the United 

States: 2006. http://www.census.gov/prod/2007pubs/p60-233.pdf (accessed November 9, 2007). 25Parker, Lynn. 2007. Food insecurity and obesity. ZERO TO THREE JOURNAL 28 (1): 24– 

30. 26 Ibid. 27 Ibid. 28 Ibid. 29Milano, Kim. O. 2007. Prevention: The first line of defense against childhood obesity. ZERO 

TO THREE JOURNAL 28 (1): 6–11. 30 Ibid. 31Parker, Lynn. 2007. Food insecurity and obesity. 32 Ibid. 33 Ibid. 34Shonkoff, Jack and Phillips, Deborah. From neurons to neighborhoods: The science of early 

childhood development. 35 Cohen, Julie, Onunaku, Ngozi, Clothier, Steffanie, and Poppe, Julie. 2005. Helping young 

children succeed: Strategies to promote early childhood social and emotional development. Washington, DC: National Conference of State Legislatures and ZERO TO THREE. 36O’Hara, Michael W. 1994. Postpartum depression: Causes and consequences. New York, NY: 

Springer-Verlag Inc. 

in the United States reported having household incomes above $50,000 a year, a 2% 

increase from the previous year. 24 All it takes is a terrible accident, the loss of stable employment (and any health coverage which might go along with it), or a mental 

health disturbance to send a family reeling. 

Health Impairments 

One health issue facing low-income children is food insecurity—lacking adequate 

resources to meet basic food needs. 25 In the United States, there are 12.6 million 

households that are considered food insecure, with 12.4 million children affected. 26

Nearly 17 percent of U.S. households with children younger than six are food insecure. 27 Choosing between adequate food and adequate health care may be one of 

the dilemmas facing families without health insurance. 

Not only do food insecure households purchase less food in general, but they are 

also more likely to purchase low quality food or skip meals altogether. Access to 

fresh fruits and vegetables is often limited or priced out of reach, causing low-income parents to purchase higher-calorie, less nutritious, and energy-dense foods in 

order to maximize their caloric intake while they have the resources to buy food at 

that particular moment. 28 Reliance on less nutritious foods and limited physical activity has resulted in an explosion of childhood obesity. In 2000, 10.4% of children 

between the ages of two and five were considered obese. 29 Not surprisingly, children 

from lower socioeconomic families are more at-risk for obesity than more affluent 

children. 30 Of course, this is important because children who are obese and/or live 

in food insecure households face a number of health impairments that can have devastating lifetime effects. Because food insecure and obese children often have compromised immune systems, they are less able to resist illnesses and, therefore, are 

more likely to be hospitalized. 31 In fact, children from food insecure households are 

90% more likely to suffer from poor or fair health and experience 30% higher rates 

of hospitalization. 32 Long-term consequences may include development of juvenile 

diabetes, hypertension, asthma, anemia, sleep apnea, and several social-emotional 

problems and cognitive deficiencies discussed below. 33

Social-Emotional Problems 

Families who struggle to make ends meet are often stressed to the limit, looking 

for any way possible to help mitigate the effects of poverty for their children. Yet, 

the very fact that parents may be spending more time working to earn the money 

to feed their children means they are less available for their children. Early relationships are the active ingredient for healthy social-emotional development in very 

young children. These early relationships form the foundation upon which all subsequent relationships will be formed. Important behavioral, physiological, and emotional regulation systems are being formed during these critical years. 34 Parents or 

caregivers who are absent, physically or mentally, cannot bond as strongly with 

their babies, creating a higher likelihood that parents and very young children will 

face a host of poor social-emotional outcomes. 

The existence of maternal depression and other adult mental health disorders, for 

example, can negatively affect children if parents are not capable of providing consistent sensitive care, emotional nurturance, protection and the stimulation that 

young children need. 35 Maternal depression, anxiety disorders, and other forms of 

chronic depression affect approximately 10 percent of mothers with young children 36—this number is even higher for families in poverty. In fact, findings at enwwoods2 on PROD1PC60 with HEARING

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37 U.S. Department of Health and Human Services, Administration for Children and Families. 

2003. Early Head Start Evaluation and Research Project, Research to practice: Depression in the 

lives of Early Head Start families. Washington, DC. http://www.acf.hhs.gov/programs/opre/ehs/ 

ehs_resrch/reports/dissemination/research_briefs/ research_brief_depression.pdf (accessed May 

10, 2007). 38Mistry, Ritesh, Stevens, Gregory D., Sareen, Harvinder, De Vogli, Roberto, Halfon, Neal, 

2007. Parenting-related stressors and self-reported mental health of mothers with young children. American Journal of Public Health 97(7): 1261–1268. 39Parker, Lynn. 2007. Food insecurity and obesity. 40 Ibid. 41 Ibid. 42 Ibid. 43Ku, Leighton, Lin, Mark, and Broaddus, Matthew. 2007. Improving children’s health: A 

chartbook about the roles of Medicaid and SCHIP. 44 Holzer, Harry J., Schanzenbach, Diane W., Duncan, Greg J., and Ludwig, Jens. 2007. The 

economic costs of poverty in the United States: Subsequent effects of children growing up poor. 45 American Academy of Pediatrics. 2002. The medical home. Pediatrics 110 (1): 184–186. 

http://aappolicy.aappublications.org/cgi/reprint/pediatrics;110/1/184.pdf (accessed November 9, 

2007). 

rollment from the Early Head Start Research and Evaluation Project indicate that 

52 percent of mothers reported enough depressive symptoms to be considered clinically depressed. 37 Not surprisingly, lack of health insurance can add to parental 

stress. An analysis of data from the 2000 National Survey of Early Childhood 

Health found that ‘‘mothers with uninsured children and those with children with 

missed or delayed care were both significantly more likely to be in poor mental 

health.’’ 38

Early and sustained exposure to parental stress and depression can influence the 

physical architecture of the developing brain, preventing babies and toddlers from 

fully developing the neural pathways and connections that facilitate later learning. 

Young children can sense the stresses their parents or caregivers are experiencing, 

which in turn, can affect the behavior and mental health of children themselves. 

Children, particularly those who are from food insecure families, are at higher risk 

of developing aggression, anxiety, depression, and hyperactivity than food secure 

children. 39 According to the Fragile Families and Child Wellbeing Study, food insecure families were much more likely to experience mental health problems in mothers and behavioral problems in their three-year-olds than food secure families. 40 As 

children grow older, these behavioral problems continue to be prevalent. Children 

from food insecure families were not only more likely to receive mental health counseling, but were also more likely to fight with their peers and steal than their more 

affluent peers. 41

Diminished School Success 

Health impairments and social-emotional problems also directly affect later school 

success. Children who are sick or hospitalized miss more days of school and have 

trouble learning, resulting in lower grades and test scores and poorer cognitive development, school readiness, and success. 42 Children who start behind, stay behind. 

When developmental delays and health impairments are detected and treated early, 

however, children have a much better chance of school success. In fact, a study of 

California’s Children’s Health Insurance Program found that after one year of enrollment in the program, children were more attentive in class (57% after vs. 34% 

before) and more likely to keep up with their school activities (61% after vs. 36% 

before). 43 Without early and effective treatment, costs increase to all of society as special education costs are estimated at about $4 billion per year. 44

Shifting the Focus from Treatment to Promotion and Prevention 

As outlined above, the economic costs to society for poor physical, social-emotional, 

and cognitive development of our nation’s infants and toddlers is absolutely staggering. The good news is that we can do a lot to lower those costs by shifting the 

focus from treatment to promotion and prevention. ZERO TO THREE’s recommendations include: 

Ensuring Access to a Medical Home for Every Child in the U.S. 

Every child in the United States should have access to a medical home—a regular 

pediatrician they see for ongoing care and follow-up. The American Academy of Pediatrics calls for ‘‘accessible, continuous, comprehensive, family centered, coordinated, compassionate, and culturally effective care.’’ 45 A regular pediatrician would 

facilitate all aspects of pediatric care, including supervision of care; patient and parent counseling about health, nutrition, safety, and mental health; and the importance of well-child visits, immunizations, and screenings and assessments. He or she 

should also refer a child to early intervention services when appropriate and coordiwwoods2 on PROD1PC60 with HEARING

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46 Ibid. 47Ku, Leighton, Lin, Mark, and Broaddus, Matthew. 2007. Improving children’s health: A 

chartbook about the roles of Medicaid and SCHIP. 48 Ibid. 49 Ibid. 50 U.S. Department of Health and Human Services, Administration for Children and Families. 

2006. Health and health care among Early Head Start children. http://www.acf.hhs.gov/programs/opre/ehs/ehs_resrch/reports/health_care/health care.pdf (accessed November 9, 2007). 51 U.S. Department of Health and Human Services, Administration for Children and Families. 

2002. Making a difference in the lives of infants and toddlers and their families: The impacts 

of Early Head Start. http://www.acf.hhs.gov/programs/opre/ehs/ehs_resrch/reports/impacts_exesum/impacts_execsum.pdf (accessed October 23, 2006). U.S. Department of Health and 

Human Services, Administration for Children and Families. 2006. Research to practice: Preliminary findings from the Early Head Start prekindergarten followup. http://www.acf.hhs.gov/programs/opre/ehs/ehs_resrch/reports/prekindergarten_followup/prekindergarten_followup.pdf 

(accessed October 23, 2006). 52 Ibid. 

nate care with other early childhood programs. 46 By relying on a single consistent 

health care provider, lower-income families can avoid unnecessary and more expensive treatment in ERs, walk-in clinics, and urgent care facilities, thereby reducing 

costs to all of society. 

Providing Adequate SCHIP Coverage for All Eligible Infants and Toddlers 

The State Children’s Health Insurance Program (SCHIP) has also dramatically 

improved the health and well-being of our most vulnerable children. Since SCHIP 

began in 1997, the percentage and number of low-income uninsured children has 

fallen by more than one-third. 47 This is particularly important as publicly-insured 

children (those enrolled in SCHIP and Medicaid) are more likely to have chronic 

conditions requiring ongoing care, such as asthma, learning disabilities, and health 

conditions. 48 By insuring these children, we can safely and effectively manage conditions rather than relying on the nation’s safety net for more expensive urgent 

care. Furthermore, children in SCHIP are more likely to receive well-child visits, 

immunizations, screenings, dental care, and other forms of preventive care, further 

reducing the need for more costly interventions later. 49

Expanding Access to Comprehensive Early Childhood Programs 

Comprehensive high quality early learning programs for infants and toddlers, 

such as Early Head Start, can help to protect against the multiple adverse influences that may hinder their development across all domains. Research from the 

Early Head Start Research and Evaluation Project, and its companion follow-up results, concluded that the program is making a positive difference in areas associated 

with children’s access to health care, children’s success in school, family self-sufficiency, and parental support of child development. For example, 28 months after enrollment in the Early Head Start program, 95% of infants and toddlers had received 

one or more well-child exams, 99% had received immunizations, and 69% had received screenings tests (41% for hearing and 28% for lead). 50 Early Head Start also 

produced statistically significant, positive impacts on standardized measures of children’s cognitive and language development. Early Head Start children demonstrated 

more positive approaches to learning than control group children. 51 Early Head 

Start also had significant impacts for parents, promoting family self-sufficiency and 

parental support of child development. Early Head Start children had more positive 

interactions with their parents than control group children—they engaged their parents more and parents rated their children as lower in aggressive behavior than 

control parents did. Early Head Start parents were also more emotionally supportive and less detached than control group parents and provided significantly 

more support for language and learning than control group parents. 52 By expanding 

access to quality early learning programs, we can reach children early in life when 

we can have the greatest chance to improve future success. 

Increasing Investments in Family Income Supports and Nutritional Programs 

Finally, income supports and nutritional programs help low-income families improve the healthy physical, social-emotional, and cognitive development of their children. Child tax credits, the Earned Income Tax Credit, and a meaningful minimum 

wage are key to helping families obtain self-sufficiency. In addition, federal nutrition 

programs such as the School Breakfast, School Lunch, After School Snacks, and 

Summer Food Service Programs provide nutritionally-balanced foods for low-income 

children. The Food Stamp program helps low-income families purchase more food 

and improve their diets. The Child and Adult Care Food Program provides funds 

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for meals and snacks for children in child care and Head Start/Early Head Start 

programs. And, the Supplemental Nutrition Program for Women, Infants, and Children (WIC) Program provides low-income nutritionally at-risk pregnant, 

breastfeeding and postpartum mothers, infants, and children under the age of five 

with food, nutrition education, and health care referrals. All of these programs provide economic supports to struggling low-income families in an effort to improve outcomes for their children. 

Conclusion 

During the first three years of life, children rapidly develop foundational capabilities—physical, social-emotional, and cognitive—on which subsequent development 

builds. These areas of development are inextricably related. When young children 

do not have access to health care because they are uninsured (or for other reasons), 

every aspect of their development can suffer. These years are even more important 

for infants and toddlers living in poverty. All young children should be given the 

opportunity to succeed in school and in life. We must ensure that infants, toddlers, 

and their families living in poverty have access to quality, accessible, consistent, and 

culturally appropriate health care and insurance. We must also ensure that low-income children have access to developmentally appropriate early learning programs 

such as Early Head Start to help ensure that they are ready for school. And, finally, 

we must ensure that families struggling to make ends meet receive income supports 

and nutrition assistance to ensure that their infants and toddlers grow up healthy, 

happy, and ready to learn. Providing supports to low-income at-risk families will 

have a trickle down effect on our youngest children and thereby have even more 

positive long-term benefits in our efforts to break the intergenerational cycle of poverty. 

I urge the Subcommittee to consider the very unique needs of babies living in poverty as you address the impact of gaps in health coverage on income security. Too 

often, the effect of our overall policy emphasis is to wait until at-risk children are 

already behind physically, emotionally, or cognitively before significant investments 

are made to address their needs. We must change this pattern and invest in at-risk 

infants and toddlers early on, when that investment can have the biggest payoff— 

preventing problems or delays that become more costly to address as the children 

grow older. 

Thank you for your time and for your commitment to our nation’s at-risk infants, 

toddlers and families. 

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