New Possible Strategy for Georgia Health Insurance Reform

By Mike Klein

Mike Klein, Forum Editor

A behind-the-scenes coalition that believes the U.S. Supreme Court will overturn the federal health care reform law is working on a new health insurance strategy for Georgia.

Almost certainly, this summer’s biggest headline will be the Supreme Court decision to uphold or overturn the Patient Protection and Affordable Care Act which President Barack Obama’s administration counts as one of its finest achievements.  Two federal appellate courts upheld the law and one rejected it.  Supreme Court arguments are scheduled for the final week of March.

Federal law trumps state law, so nothing in the evolving state strategy could be implemented in Georgia if the Supreme Court upholds the federal health care reform law.  The Georgia Public Policy Foundation has hosted meetings of interested parties working on state health insurance reform options, but the Foundation has not assisted with drafting legislation nor has it taken a position on possible legislation.

A staggering 1.8 million Georgians have no health insurance.  They are not in group plans.  They do not have individual plans.   One-in-five men, women and children living in Georgia have no health insurance.

Coalition principles include restructuring the private market to increase competition and improve portability, protection against loss of coverage, and improved affordability for people and small businesses.  A core strategy is the expansion of defined contribution plans administered by employers.

Employers who cannot afford to offer health insurance will be able to make a defined contribution to a tax-free Health Reimbursement Account or HRA.  Employees may use these pre-tax dollars to pay insurance premiums.  Pre-tax dollars in health savings accounts, another type of tax free account, could be used for deductible co-pay charges and a wide variety of wellness programs.

Consumers who do not have access to employer health plans would be allowed to deduct 100 percent of health insurance premium expense from their state income tax.  Current law does not allow for that deduction.   In addition, the proposal would allow small businesses to take advantage of “list billing” that would allow employees to pay for their individual health policy premiums with pre-tax dollars.

All of these efforts address the tax inequity of the current system that critics contend needlessly places the cost of health insurance beyond the reach of many families.

Small firm employers often find it almost impossible to offer comprehensive major medical insurance benefits.  The strategy proposes several ideas.  Companies with 10 or fewer employees could receive state tax credits for each employee who is enrolled 12 consecutive months in a major medical program.  Credits would be available for three years.  The entire program would end after ten years.

The strategy includes a focus on keeping currently insured Georgians insured.  Small businesses and their employees would have the same access and protections available to large firms and their employees. People who lose jobs after age 55 would have better access to COBRA extended coverage.  They could purchase extended coverage until Medicare eligibility at age 65.

Another idea addresses health insurance access for employees who leave small firms.  Currently small firm employees are eligible for just three months while large firm employees can extend and pay for insurance coverage for 18 months.  The proposal would equalize both groups at 18 months.

Another effort would focus on providing access to primary care for the uninsured.  A new “Georgia Charity Care Network Tax Credit” would be similar to the existing private school tax credit.  The credit could be taken by an individual or corporation that makes a cash contribution to an approved charity health care network.  There would be maximum annual contribution levels and the program would be capped at $2 million maximum per year for three years.

Federal health care reform requires that Georgia must create an insurance marketplace or the federal government will impose one in 2014.  A state health insurance advisory committee report published in December said the state should opt for its own program, but it stopped short of saying the General Assembly should begin to plan for that program now.  Georgia is waiting on the Supreme Court ruling.

The coalition believes a private, free market health exchange would provide all the benefits of a government-run model, but without the drawbacks. Georgia, which leads the nation in health information technology, is home to several companies already providing similar services.

A regional health insurance idea would enable Georgia to partner with four or more states to create a large private marketplace.  Major medical and group insurance carriers whose policies are approved in any member state would be able to offer those policies in other member states.  Georgia’s insurance commissioner would be authorized to explore major medical partnerships with other states.  Any plan approved by a partner state would be available to consumers in the other partner states.

One feature of federal health care reform enables children to remain on their parents’ health insurance policies until age 26.   The Georgia twist would revise that to “tax dependent” children.  The distinction is that insurance eligible young adults must be dependents, not just grown children who have begun their independent lives, except where they are riding on parents’ health insurance policies.

Several other strategies are being considered.  One would create a high risk pool for people with pre-existing conditions, which would help stabilize the individual and small group market.  Pre-existing conditions restrictions would be standardized to not more than 12 months in group and individual plans.  Expanded physician choice options would benefit health care consumers.

Overall, the emerging Georgia health insurance strategy is not an attempt at medical care reform – who gets medical treatment, how much they get and who decides their treatment.  All of the ideas currently being discussed pertain only to insurance factors.   By one estimate, it might be possible to reduce the number of uninsured, non-Medicaid eligible Georgians from 1.8 million to 600,000.

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