By Ronald E. Bachman
An unprecedented collaboration of associations representing hospitals, physicians, insurers and sales agents, convened in late 2007 with a goal of developing solutions for the estimated 1.7 million uninsured residents of Georgia. The recommendations of this Georgia Uninsured Work Group, which was facilitated by the Center for Health Care Transformation, combine solutions for the uninsured with the recognition that solving the uninsured problem in Georgia is also an economic development opportunity.
Implementation of the recommendations will generate new jobs and new products with greater affordability that could reduce Georgia’s 1.7 million uninsured by at least 500,000 and bring an annual savings to the Georgia economy of more than $1.9 billion.
Nearly 70 percent of Georgia employers with fewer than 10 employees do not offer health insurance. To make matters worse, their employees must pay for insurance with after-tax dollars. Georgia could lead the nation by exempting health care premiums from personal income tax. In addition, premium taxes add as much as 7 percent to the cost of health insurance. Economics clearly teaches that if you tax something you get less of it. Georgia could immediately encourage more insurance coverage by lowering these taxes.
Uninsured Georgians by Segment
|1. Uninsured Not Needing Financial Assistance||30||510,000|
|2. Uninsured Needing Some Financial Assistance||35||595,000|
|3. Uninsured Eligible for Government Programs||20||340,000|
|4. The Uninsurable||15||255,000|
Today, affordability is no longer only the amount of money one pays in insurance premiums. Insurance policies can now include rewards and incentives that reduce premiums, lower a high deductible or add to a Health Savings Account (HSA). For example, in Florida Humana offers an individual HSA policy that provides reward points for healthy behavior. The points can be exchanged, much like frequent flier points, into premium reductions. In test markets of Rhode Island, Pennsylvania, Ohio and Colorado, United Health Group has a product that offsets up to $2,000 of a high deductible for plan members who maintain acceptable levels of blood pressure, body mass index, cholesterol and nicotine use. People who do not meet these standards are encouraged to use the plan benefits to improve their health and qualify for the rewards. Under these plans individuals get the low cost of a high-deductible insurance plan with the greater coverage provided by a lower deductible.
In Georgia, however, some behavior incentives and rewards for wellness and treatment compliance are considered “rebates” or inducements to buy insurance. As such, they are illegal and not allowed to be sold. State laws need to reflect modern product designs that are working in other states to lower costs and reach the needs of uninsured.
Since HSAs were first offered in 2004, more than 4.5 million HSA-eligible health insurance plans have been sold nationally. Twenty-five percent to 35 percent of HSA policies sold nationally are to people who were previously uninsured. With premiums for HSA-eligible insurance plans typically 30-40 percent less than traditional policies, many who previously thought they could not afford health insurance now find that coverage is available within their budget.
A focus on individually owned, portable health insurance with HSAs can make insurance affordable for many uninsured low- and middle-income working families. Approximately 20 percent of those without insurance protection are uninsured because their employer drops coverage or because of gaps in coverage while changing jobs. Family security should not be dependent on whether your employer continues to provide health insurance. Seeking another job or starting a new business should not mean losing health insurance coverage.
Georgia has an opportunity to develop unique “super-charged” free-market HSA solutions to reach many uninsured residents by adopting the recommendations of the Georgia Uninsured Work Group. The basic recommendations are to
- Remove existing state premium and income taxes on HSA-eligible high-deductible health plans
- Allow flexible high-deductible health plan designs that include rewards and incentives
- Provide tax encouragements for small businesses to offer HSA-eligible plans
- Encourage the use of health information technology
- Create a receptive market for new HSA-eligible plans
- Encourage more carriers to compete for business in Georgia, and
- Support the Georgia Free Clinic Network that coordinates volunteer primary care help to uninsured Georgians.
Insurance companies are ready to invest in Georgia if the state enables them to develop and sell creative HSA-eligible products. Thousands of lives will be saved and health conditions improved. Millions of dollars can create jobs for Georgians. Billions of dollars will benefit Georgia with expanded businesses and increased worker productivity.
These solutions outlined will reach only a piece of the uninsured in Georgia, but reaching 500,000 Georgians with affordable insurance is a good start. This piece is practical, focused and realistic, a framework for a comprehensive approach. This is a foundation for reaching all Georgians without insurance. Let us not delay the good in search of the perfect.
To view a discussion of marketplace solutions for the 16 percent of Americans who are uninsured, go to http://healthtransformation.net/cs/insuring_all_americans_video.
To view the full Working Group Report, go to http://www.gppf.org/pub/HealthCare/uninsuredWG_report.pdf. A slide show is available for viewing athttp://www.gppf.org/pub/HealthCare/uninsuredWG_slides.ppt.
Ronald E. Bachman is president & CEO of Healthcare Visions Inc. and a Senior Fellow at the Georgia Public Policy Foundation and at the Center for Health Transformation. Nothing written here is to be construed as necessarily reflecting the views the Georgia Public Policy Foundation or the Center for Health Transformation, or as an attempt to aid or hinder the passage of any specific bill before the Georgia Legislature. The Georgia Public Policy Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians.
© Georgia Public Policy Foundation (January 25, 2008). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.