By Ronald E. Bachman
Georgia Governor Sonny Perdue has announced a noble plan to reach 30,000 of the state’s uninsured; Lieutenant Governor Casey has a good plan to reach others. The challenge, however, is that more than 1.6 million Georgians lack private or government insurance.
The legislative wake up call should be about this unacceptable level of Georgians without Medicare, Medicaid, SCHIP, Tri-care or private health insurance. This is the problem that every American hears about; and is the major argument for a federal takeover of health care. With more than 18 percent of this state’s 9 million citizens uninsured at any point in time, Georgia has the fifth highest uninsured rate, behind Oklahoma, Florida, New Mexico and Texas.
Those involved in the health care system are doing their very best to deliver care and provide coverage. They are not the problem. The system is broken and they are operating (literally and figuratively) to service their patients and clients in a near impossible environment. Where to start?
The governor can lead the 2008 General Assembly to tear down the wall separating the insured and uninsured. The uninsured are trapped behind a wall where their financial security is threatened, lives are at risk, families are destroyed, and full engagement in recovery from their illnesses is inhibited.
Every proposal and piece of health legislation in the 2008 General Assembly should be measured by its investment value in creating a market-based impact on reducing the numbers of uninsured Georgians. Portable, stable and affordable individual coverage are key.
The uninsured do not have a single profile. I suggest legislative action by considering four major categories:
|1. Uninsured Eligible for Government Programs||20%||320,000|
|2. Uninsured Not Needing Financial Assistance||35%||560,000|
|3. Uninsured Needing Some Financial Assistance||35%||560,000|
|4. The Uninsurable||10%||160,000|
1. Uninsured Eligible for Government Programs: An aggressive, extended outreach and education campaign is needed to ensure that the 320,000 Georgians who qualify for Medicaid and SCHIP are signed up. The Legislature should consider supporting outreach through faith-based organizations, community charities and other private social support organizations.
2. Uninsured Not Needing Financial Assistance – More than a half-million Georgians who can afford insurance choose not to buy it. When they are injured, however, we all pay for their care. These Georgians are sending a message that the products available in the market do not meet their needs. They do not see value in buying expensive products that do not reflect their concerns.
Georgia insurance laws need changes to reflect the modern product designs working in other states to lower costs and reach the uninsured. There are great new products available in other states that are illegal under Georgia laws. The Legislature can pass a process for fast-track approval of new products. Georgians deserve the freedom to buy over the Internet products approved in other states that are lower in cost, have greater coverage and are more responsive to their needs. These consumer-oriented products incentivize and reward personal responsibility and good health habits of prevention and compliance.
Humana, for example, offers an individual policy in Florida that provides reward points for healthy behaviors. These points can be exchanged, like frequent flier points, into premium reductions.
United Health Group offers a product in Rhode Island, Pennsylvania, Ohio and Colorado 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. Those who do not meet these standards are encouraged to use the plan benefits to improve their health then qualify for the rewards.
Under these plans individuals get the low cost of a high-deductible insurance policy with the greater coverage provided by a lower deductible.
These new developments in health care consumerism include rewards and incentives that lower premiums, lower the high deductible, or add to a Health Savings Account (HSA). Up to 35 percent of HSA policies sold today are to people who were previously uninsured. These products are 30-40 percent lower in cost than traditional insurance products. As in the products described above, they may be less expensive, but with incentives and rewards they do not necessarily provide lower coverage.
3. Uninsured Needing Some Financial Assistance: Uninsured Georgians need more financial assistance than is necessary because products in the state are too expensive. Georgia has the nation’s third highest level of tax on insurance polices. Hidden in the cost of insurance is a premium tax as high as 7 percent that needlessly hikes the cost of insurance and adds to the uninsured.
One innovative option would be to allow small employers to make tax-advantaged contributions (even small amounts) into a Health Reimbursement Arrangement (HRA) Only plan. The tax-free dollars could then be used by employees along with any additional funds needed to purchase portable individual policies. These federally approved designs are not currently legal in Georgia.
Governor Perdue needs to support new laws so that better products are available to buy with the state and federal monies he has proposed. By making the changes suggested to unleash the power of competitive market-based solutions, he could use his proposed program to reach many more Georgians with lower priced and equally comprehensive health insurance products.
Once real market reforms are in place, a rational discussion can take place on additional state and federal subsidies to some of this population. It makes little sense to spend citizen’s tax dollar in subsidizing an inefficient insurance system.
4. The Uninsurable: This is typically the most expensive category of uninsured. Georgia has argued for years on how to fund a high-risk pool. The historical annual funding debate has been a roadblock over taxing self-insured plans and/or hospitals through an assessment, fee or increased tax. The discussion has never gotten to describing how and what to cover. We have never discussed cost-effective designs and debated the responsibility of patients with chronic and persistent diagnoses to be compliant with treatments and alter lifestyles to stabilize their condition and minimize expensive hospitalizations.
There are new designs and approaches to establishing state high-risk pools. One concept involves redirecting hospital subsidies for uncompensated care to the uninsured. New approaches can encourage personal responsibility and compliance with evidence-based medicine. New ideas incorporate market-based structures in a creative combination of high-risk pools and an assignment process to encourage insurers to accept more lives through their underwriting process.
With better products and services for all Georgians, the State Employee Heath Benefit Plan (SEHP) would be able to implement effective health management and disease management programs that have been shown to lower costs and reduce health care cost trends by at least 2 percent. If the SEHP’s trend over the next five years was 2 percent lower than current projections, the state would save $250 million to $300 million. With expanded consumerism, the savings could reach $1 billion to $1.5 billion over five years.
The biggest savings resulting from a 2 percent lower trend would be in the SEHP’s post-retirement health benefit liability. This is the cost of the promises to cover state employee’s health insurance in their retirement. Georgia’s liability is estimated at $17 billion to $20 billion and must be disclosed publicly starting January 1, 2008. A 2 percent lower trend developed by incorporating the above changes into the broader insurance market and implementing them into the SEHP would lower Georgia’s SEHP liability by $4 billion to $5 billion.
Georgia’s conservative nature and the short 40-day legislative session usually mean that change is slow in coming. In this case, delay is costing time, money, health and lives. Unless the 2008 session brings decisive action with creative impact on the uninsured, a national election in 2008 will generate an aggressive federal movement to do the job in a different way from what Georgians might choose.
Some Georgians may want that to be the outcome. It is true that vacuums are soon filled. This vacuum of dealing with the uninsured has been unattended nationally and in this state for too long. This state’s leaders should show some leadership: Tear down this wall now – or someone else will.
Ronald E. Bachman is President & CEO of Healthcare Visions, Inc. He is also a Senior Fellow at the Georgia Public Policy Foundation and a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich. 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. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or the Center for Health Transformation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (September 7, 2007). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.