[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                   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       JIM MCCRERY, Louisiana
SANDER M. LEVIN, Michigan            WALLY HERGER, California
JIM MCDERMOTT, Washington            DAVE CAMP, Michigan
JOHN LEWIS, Georgia                  JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts       SAM JOHNSON, Texas
MICHAEL R. MCNULTY, New York         PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee            JERRY WELLER, Illinois
XAVIER BECERRA, California           KENNY C. HULSHOF, Missouri
LLOYD DOGGETT, Texas                 RON LEWIS, Kentucky
EARL POMEROY, North Dakota           KEVIN BRADY, Texas
STEPHANIE TUBBS JONES, Ohio          THOMAS M. REYNOLDS, New York
MIKE THOMPSON, California            PAUL RYAN, Wisconsin
JOHN B. LARSON, Connecticut          ERIC CANTOR, Virginia
RAHM EMANUEL, Illinois               JOHN LINDER, Georgia
EARL BLUMENAUER, Oregon              DEVIN NUNES, California
RON KIND, Wisconsin                  PAT TIBERI, Ohio
BILL PASCRELL JR., New Jersey        JON PORTER, Nevada
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama

             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       JERRY WELLER, Illinois
ARTUR DAVIS, Alabama                 WALLY HERGER, California
JOHN LEWIS, Georgia                  DAVE CAMP, Michigan
MICHAEL R. MCNULTY, New York         JON PORTER, Nevada
SHELLEY BERKLEY, Nevada              PHIL ENGLISH, Pennsylvania
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida

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.


                            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


                   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:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                            SUBCOMMITTEE ON

                   INCOME SECURITY AND FAMILY SUPPORT

                                                CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
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 middle-income 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.

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 
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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 
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noted above.

                                 

    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.
    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 have socialized medicine'', as though 
that were some kind of shibboleth 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 
Long-Term 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.
    [The information follows:]

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    [The CRS reports follow:]

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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 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.
    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, self-sufficient, 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 ask for help, I stopped going to 
college regularly. I was not focused in school anymore 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.

                                 

    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.
    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. It is estimated that 16 percent of families 
spend more than 5 percent of their income on health care, and 
between eight and 21 percent 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 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 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.
    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 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.
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 bankruptcy 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 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.

                                 

    [The Families USA report follows:]

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    Chairman MCDERMOTT. Thank you very much for your testimony.
    Mr. Gottlob, who is a senior fellow at the Milton and Rose 
Friedman Institute Foundation.

         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 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.
    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 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\
---------------------------------------------------------------------------
    \1\ Data 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

      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.
      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.
---------------------------------------------------------------------------
    \2\ These data are from my analysis of the 2006 and 2007 March 
Supplement of the U.S. Census Bureau's ``Current Population Survey''.
---------------------------------------------------------------------------
   Figure 1--Dropouts Represent About 12% of the Working-Age (20-64) 
               Population but 27% of Medicaid Recipients
[GRAPHIC] [TIFF OMITTED] T3756A.500


    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.

                    Table 1: Annual Medicaid Expenditures Attributable to Dropouts \3\ (Note: Does Not Include Elderly and Disabled)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         # On
                                                                   % On or W/    # On or W/   Total Cost = #  Avg. Cost           All           e> Avg. Cost
                                                                    Medicaid      Medicaid                             Graduated
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.


    Pursuing 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\
---------------------------------------------------------------------------
    \4\ This 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.

                               Table 2: Earnings Impact of Dropouts Age 20-64 \5\
----------------------------------------------------------------------------------------------------------------
                                                              Avg.
                                                  #         Wages &      Total Earnings      If Dropouts Were HS
                                                             Salary                                 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\
---------------------------------------------------------------------------
    \6\ We 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 reasonable 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\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Estimated 2007 Tax Liability
                                                                     Wage &    -------------------------------------------------------------------------
                                                                     Salary                                                                 3 or More
                                                                     Income          0 Child            1 Child          2 Children         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 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.

                                 

    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 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 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 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 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 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 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 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?
    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 otherwise 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 
Billion each year collectively, because they don't have health 
insurance 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 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 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 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.
    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 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 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
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    [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 employer-provided 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 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, non-dependent 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

    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

    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

                                 
   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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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 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\
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    \3\ Simms, 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.
    \5\ Takayama, 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.
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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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
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    \9\ Geen, 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.
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    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 fee-for-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 out-of-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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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 lack of transportation, 
placement changes while in out-of-home care, barriers to information 
sharing between the health care and child welfare systems, and failures 
to coordinate the child's health care and child welfare plans. \11\
---------------------------------------------------------------------------
    \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.
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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.
---------------------------------------------------------------------------
    \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.
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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.
---------------------------------------------------------------------------
    \13\ Adoption and Foster Care Analysis and Reporting System 
(AFCARS) data submitted for the FY 2005, 10/1/04 through 9/30/05.
---------------------------------------------------------------------------
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\
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    \14\ Pecora, 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.
    \15\ Patel, 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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \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.
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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 at-risk of placement, those already in 
foster care, and those transitioning out of the child welfare system 
into adulthood.

                                 
                   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 
coverage 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.
---------------------------------------------------------------------------
    \1\ A similar bill has been introduced in the Senate--the Tax 
Equity for Domestic Partner and Health Plan Beneficiaries Act (S. 
1556).

                                 
       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 eligible 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, high-need 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 
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 self-sufficiency 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.

                                 
               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.
    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\
---------------------------------------------------------------------------
    \1\ Annie E. Casey Foundation analysis of data from the 2007 
Current Population Survey.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \2\ Douglas-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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \3\ Ibid.
    \4\ Annie E. Casey Foundation analysis of data from the 2007 
Current Population Survey.
---------------------------------------------------------------------------
    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 receive prenatal care, 
including screenings and diagnostic tests, which can improve their 
health as well as their babies' health.
---------------------------------------------------------------------------
    \5\ March of Dimes. 2006. Newest American baby faces health 
challenges. http://www.marchofdimes.com/printableArticles/
15796_21848.asp, (accessed November 9, 2007).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \12\ Ku, 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).
---------------------------------------------------------------------------
    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, 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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
    \16\ March 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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
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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.
---------------------------------------------------------------------------
    \19\ Shonkoff, Jack and Phillips, Deborah. From neurons to 
neighborhoods: The science of early childhood development. Washington, 
DC: National Academy Press.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \20\ Douglas-Hall, Ayona and Chau, Michelle. 2007. Basic facts 
about low-income children: Birth to age 3.
    \21\ Ibid.
    \22\ Ibid.
---------------------------------------------------------------------------
    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 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.
---------------------------------------------------------------------------
    \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).
    \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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \25\ Parker, Lynn. 2007. Food insecurity and obesity. ZERO TO THREE 
JOURNAL 28 (1): 24-30.
    \26\ Ibid.
    \27\ Ibid.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \28\ Ibid.
    \29\ Milano, Kim. O. 2007. Prevention: The first line of defense 
against childhood obesity. ZERO TO THREE JOURNAL 28 (1): 6-11.
    \30\ Ibid.
    \31\ Parker, Lynn. 2007. Food insecurity and obesity.
    \32\ Ibid.
    \33\ Ibid.
---------------------------------------------------------------------------
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.
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    \34\ Shonkoff, Jack and Phillips, Deborah. From neurons to 
neighborhoods: The science of early childhood development.
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    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 enrollment 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\
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    \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.
    \36\ O'Hara, Michael W. 1994. Postpartum depression: Causes and 
consequences. New York, NY: Springer-Verlag Inc.
    \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).
    \38\ Mistry, 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.
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    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\
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    \39\ Parker, Lynn. 2007. Food insecurity and obesity.
    \40\ Ibid.
    \41\ Ibid.
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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\
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    \42\ Ibid.
    \43\ Ku, 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.
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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 
coordinate 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.
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    \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).
    \46\ Ibid.
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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\
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    \47\ Ku, Leighton, Lin, Mark, and Broaddus, Matthew. 2007. 
Improving children's health: A chartbook about the roles of Medicaid 
and SCHIP.
    \48\ Ibid.
    \49\ Ibid.
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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.
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    \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.
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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 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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