Individual Affordable Health Insurance
We could support universal Health Coverage for all citizens if the following were accomplished first.
· Reform the laws that allow for unreasonable settlements of medical malpractice law suits.
· Remove current state by state restrictions that prevent insurance companies from operating in every state. This will allow portability and encourage more competition to bring down cost.
· Remove state mandates on policy coverage. This will allow insurance companies to offer low cost coverage to consumers in every state.
· Increase the number of doctors by increasing the number of federally controlled residency opportunities in each state.
· Remove the disconnect between purchase and consumption of health insurance. Eighty-eight million Americans currently purchase Health insurance with money that would otherwise be paid out to them as wages. These individuals are in no position to shop for the Health Insurance and most do not know the true cost of their health insurance.
· Initiate tax-deductible health savings accounts so individuals can purchase the health insurance policy that best suits their individual needs, monitor the cost of their own health care and take the policy with them when they change jobs or move from state to state.
At the heart of this proposal is the simple notion of personal responsibility. All individuals should have the opportunity and be required to provide for the health care needs for themselves and their families.
Every individual should have health insurance to cover catastrophic medical expenses. Insurance should cover low-probability, high-cost events, not routine maintenance. The minimum health insurance benefit should be a $3,000 deductible plan with maximum out-of-pocket limits of $7,500 per person and $10,000 per family. For the majority of uninsured individuals, such coverage can be purchased today at reasonable cost.
The primary focus should be to free individuals from the shackles of employer provided health insurance. Employers do not buy homeowners, life, or auto insurance for their employees, why should they buy their health insurance? And if you lose your job, you don't lose your car insurance or your homeowner's insurance, why should you lose your health insurance? One reason only—ridiculous federal tax laws that allow employers, but not individuals, to purchase health insurance with pre-tax dollars.
Rather than paying an employee $1,000 more in wages, of which $400 will be taxed away, companies purchase $1,000 in health insurance which is not taxable to the employee. In this way companies funnel more than $140 billion a year in federal tax breaks to their workers. The tax-free status of employer-provided health insurance encourages generous coverage that allows employees to ignore the price of medical services, this in turn encourages providers to offer more benefits charge more. Employees, seeking to take advantage of their coverage, tend to over-utilize the system, which also puts pressure on prices.One more obstacle prevents health insurance from being tied to individuals rather than to jobs—the tax laws require that employers purchase group insurance. The way to fix this problem would be for Congress to pass legislation enabling every individual to buy his or her health insurance with pre-tax dollars. Employers then could hand over the money they've been spending on health insurance to employees who could buy the policies that best suited their needs instead of the policies that best suits their employers' bottom line.
Employers who do not currently offer insurance should be encouraged to set up Section 125 plans. These are IRS-sanctioned plans to which employees can contribute pre-tax dollars that they can use to purchase health insurance. This lowers the real cost of health insurance to individuals by about 40 percent.
What to do about insurance that is already being purchased by employers? There may be a loophole in federal law in which Health Reimbursement Accounts (HRAs) could be used by companies to buy individual health insurance policies for their employees with pre-tax dollars. HRAs are accounts through which employers can reimburse employees with untaxed dollars for health care expenses, including health insurance premiums. The chief problem with this work-around of federal barriers is that if an employee switches jobs to a company which does not offer a similar arrangement, he can't take his current health insurance and premium payments with him. We should encourage more employers to use HRAs in this way, so that employees can more easily take individual responsibility for their health insurance as they follow their careers.
"There is no economic reason that employees can't enroll in health plans that meet their needs and retain them as they travel from job to job," Employers should be able to buy personal and portable insurance for their employees with pre-tax dollars, just as they are able to buy group insurance today.
Removing the obstacles that prevent individuals from switching to less expensive high-deductible individual health insurance policies will encourage smarter comparison shopping. That alone will go a long way toward reining in rising health insurance premiums and enabling a substantial proportion of the uninsured to purchase affordable private health insurance.
But what about those who can't afford to buy even at the lower prices? The government should subsidize the purchase of health insurance for lower income individuals buy providing them with a means-tested health insurance voucher and let them purchase whatever private insurance they choose? If it turns out that they can purchase the minimum required policy for less than the voucher, they could buy additional coverage or deposit the leftover in a Health Savings Account.
We can empower even the poorest individuals with health care vouchers that would allow them to buy private insurance. Where would the money come from to pay for vouchers? Consider this thought experiment, Medi-Cal spends $34 billion/year providing for the health care needs of 10 million Californians—that averages out to about $3400 per person. Assuming all the cash were given to a family of four as a voucher, that conceivably means that the family could purchase a high deductible policy for about $3400 and leaving them more than $10,000 to cover the deductible. This rough calculation suggests that boldly moving to a real individual mandate could dramatically reduce bureaucratic and regulatory hassles while providing affordable health insurance for all
Individual responsibility for health insurance is the right idea.
Beware of what you ask for!
This might have been the best advice we could have given to our younger generation prior to the election. Barack Obama won the presidency with 66 percent of the vote among young adults 18 to 25 years old.
The Presidents health care overhaul now moving through Congress would force all Americans to purchase health insurance (an "individual mandate") and would impose price controls on health insurance ("community rating") that would limit insurers' ability to offer lower premiums to low-risk enrollees ( young working Americans).
Those provisions would drive premiums down for 55-year-olds but would drive them up for 25-year-olds—who are then implicitly subsidizing older adults. According to the Urban Institute, many young people could see their premiums double, whereas premiums for older adults could be cut.
If Congress elects to finance that overhaul through additional deficit spending, this is really just another way of taxing the young to subsidize the old. It’s the younger Americans that will wind up paying off the debt.
The irony is that the proposals offered by the older conservatives to lower the cost of health insurance may be the best choice for young working Americans.