Trade Act Credits: A Path to Broader Health Coverage?

Finding ways to help the uninsured get coverage has never been easy, but Congress actually enacted one in 2002. Under the Trade Act of 2002, workers who receive payments from the Pension Benefit Guarantee Corporation or lose their jobs due to foreign competition are eligible for fully refundable federal tax credits to pay for health insurance premiums. The credit is equal to 65 percent of the premium, either to continue their previous coverage or to buy coverage in group programs set up by their state of residence. As of August 1, the tax credits can be paid in advance.

How does the program work? Who is eligible? What role do states play in making use of the credits? When can eligible workers use their credits in the individual insurance market? And since the 2004 budget resolution allocates $50 billion over ten years to address the problem of the uninsured, to what extent can the Trade Act mechanism be used as a model to expand coverage?

To help examine these questions, the Alliance for Health Reform sponsored an August 1, 2003 briefing with support from the Robert Wood Johnson Foundation. Panelists were: Janet Trautwein, vice president of government affairs at the National Association of Health Underwriters; Lynn Etheredge, an independent consultant who has authored several studies on using tax credits to assist uninsured workers; JoAnn Volk, legislative representative of the AFL-CIO; and Richard Popper, executive director of the Maryland Health Insurance Program. Ed Howard of the Alliance moderated the discussion.