2007 is the year for health reform.
At least, it should be, according to the myriad of health advocates, hospitals, insurance industry and presidential proposals that could be considered by the 110th Congress and state legislators across the country.
“We firmly believe there is no excuse not to move forward,” said Mohit Gouse, spokesman for America’s Health Insurance Plans, an industry nonprofit group advancing a proposal for affordable health insurance. “This is the year we need to move this front and center.”
President George W. Bush’s State of the Union address highlighted the concern, Gouse said, even though his group doesn’t fully endorse the president’s proposal to tax health care premiums above $7,500 for individuals and $15,000 for families.
“The industry has long supported a level playing field,” he said. “And the tax incentives are one way to level that playing field, to incentivize individuals to go out and purchase insurance for the tax advantage.”
But Gouse — and other health care analysts — say the president’s proposal doesn’t look at the “bigger scheme,”
“This year, we have a consensus building that this issue is going to be front and center and it’s time to fix the policy,” he said.
Ira Gorman, professor of physical therapy and health policy at Regis University, said that in today’s political climate, Bush’s proposal isn’t likely to get very far.
“Basically, he should be applauded for addressing the problem,” he said. “There’s just a question from a health-economics standpoint about how this program is going to help.”
Gorman said few people realize that the money deducted from their paychecks for employer-based health care is tax-free. He calls it a “hidden, free benefit,” one that doesn’t get passed along to those with individual insurance or the self-employed.
“They’re finally putting that benefit on the table,” he said. “Of course, there are some people who aren’t going to like it. But there’s nothing that helps people who can’t afford insurance. A tax break just isn’t going to be a benefit for those people; they need that money in their pocket now — not as a refund in the future. Those at the lower end just aren’t going to make that choice.”
Plans costing more than $15,000 for a family or $7,500 for an individual will be taxed — and that could hurt some company’s benefit packages.
“For years, unions have used health benefits as a way to get better benefits for their workers, without asking for an increase in salary,” Gorman said. “These so-called ‘gold-plated’ plans are part of the company’s benefit package. People are going to have to start paying for it.”
AHIP, along with several other national players in health care policy, has developed a proposal of its own. The program involves federal incentives to states to develop plans that lead to universal health insurance coverage of children within three years and adults within 10 years. The group also wants the federal government to provide incentives for state coverage through the Medicaid program for adults with incomes less than 100 percent of the federal poverty level, which is $10,210 for an individual and $20,650 for a family of four.
“The federal government should provide subsidies for the purchase of private coverage to individuals and families with incomes under 400 percent of the federal poverty level,” the plan states. “Individuals with incomes under 300 percent of the federal poverty level should receive proportionately greater assistance.”
The plan also calls for Americans with higher incomes to be “encouraged” to purchase insurance coverage and employers should be encouraged to facilitate, provide and maintain coverage for their employees.
“We’re advocating a state and federal partnership, a public and private partnership,” Gouse said. “We think this is a prime year to get all kids covered.”
Gorman said states are watching Massachusetts’ plan for mandatory individual coverage. The state is still working out details: defining “affordable” plans and other options, for example. In Massachusetts, individuals without insurance will face a tax penalty when they file their state taxes; employers who do not offer insurance also will face a penalty.
“They created state pools that allow low-cost plans,” Gorman said. “And the state was willing to put money into it. Massachusetts also has a low rate of uninsured, below 10 percent. It’ll be more difficult in other states. Colorado for example, has 18 percent, above the national average of 15 to 16 percent.”
Cost is the main reason for the Bush proposal, he said.
“He wanted to do something without spending any money,” Gorman said. “That’s the problem with changing the system. Where’s the money going to come from? What program’s going to lose if we do this?”
Another plan — this one from the 1990s — might have just been ahead of its time, he said. The Clinton plan, widely bashed by insurance industry lobbyists, offered tax subsidies much like the plan suggested by AHIP.
“It put more investment in purchasing group insurance, created pools for insurance,” Gorman said. “It certainly had no option to get rid of the insurance industry. The same issues exist today: do you get rid of the present market and go to a single payer system? That makes people very nervous. Or do you create incentives for insurance pools, pricing cooperatives. The Clinton plan is much more likely to be popular in today’s environment.”
Gov. Arnold Schwarzenegger has a proposal to cover all California’s uninsured residents: a 4 percent tax on providers’ revenue. It’s a proposal that Memorial Health Systems’ John Suits said punishes people trying to solve the problem.
“Why not tax the groups who are causing the problem — alcohol companies, tobacco companies, fast food companies?” he asked.
Suits, who is the associate administrator for government and business services, said the hospital spends $72 million for unreimbursed care because of shortfalls in Medicare and Medicaid reimbursements, and for caring for people without insurance.
Part of his job is to monitor health care bills at the state level, and to lobby for the ones Memorial supports. A solution to Colorado’s uninsured — one in five people in El Paso County do not have insurance — is a legislative priority, he said.
“I think every candidate for the 2008 elections is going to take on this issue,” Suits said. “The costs keep rising. And I think the states have decided that the federal government is not going to be helping. They’re trying to find their own system.”
If there is a federal solution, Suits thinks a single-payer system might be the way to go. The insurance industry could still make money from insuring things that aren’t covered in a single-payer system.
“I just think there needs to be a solution — and one needs to come quickly,” he said. “A lot of people in health care think the solution is a single payer system. I don’t think the president’s proposal is going to gain much traction in Congress; and I haven’t heard a plan that will solve the entire problem.”
Suits agrees that all players should work together to develop a solution — because sky-rocketing health care costs are causing a burden to everyone in the system.
“It’s going to take all of us,” he said. “But I don’t know that the solution is going to come from the federal government. A lot of us in the hospital industry really feel that the solution is going to come from the states. I think Gov. Ritter will have a proposal a year from now.”