IN THIS ISSUE:
? Subscribe to Health Policy Matters
? AHPs Faltering in Congress
? Washington State Business Divided Over AHPs
? Ohio Business Together on State AHP Proposal
? NCPA Study Examines AHPs as Solution to Market Concentration
? NASE Supporting Payroll Tax Deduction for Premiums
? MSA Expansion Debated in Congress
? MSAs Far Better than One-Size-Fits-All Universal Care
? MSAs Far Better Than Gephardt’s Authoritarian Proposal
? MSAs, FSAs, HRAs Might Show the Way out of the Wilderness
Subscribe to Health Policy Matters
If you don’t already, you may want to subscribe to “Health Policy Matters,” the Galen Institute’s weekly newsletter on events in Washington and around the think tanks. It comes out every Friday and includes a commentary by Grace-Marie Turner, Galen’s president. We make a point of not overlapping the material we report on, so while CCM is mostly focused on what is happening in the private market and outside the beltway, HPM concentrates on concerns of the health policy community.
SOURCE: To subscribe to “Health Policy Matters,” send an email to firstname.lastname@example.org. To view past issues, go to http://www.galen.org/happenings/index.html.
AHPs Faltering in Congress
The push for Association Health Plans (AHPs) seems to be faltering. Joel Finkelstein writes in “AMNews,” “The American Academy of Actuaries (AAA) and 38 state attorneys general have joined the ranks of those opposing bills in the House and Senate?” In a letter to committee chairman John Boehner (R-OH) the AAA says, “While the goals of the legislation are laudable, the bills do not address the core problem, which is the high cost of health care.” [Actually, since one of the major drivers of high costs is excessive regulation, the bills do indeed attempt to address this.] Mr. Finkelstein goes on to cite other concerns expressed by opponents such as “fragmenting” the insurance pool, “cherry-picking” healthy employees, and raising premiums for the majority of workers. If these complaints sound familiar, they should. The exact same things have been said about Medical Savings Accounts, defined contribution, and every other approach that puts more power in the hands of consumers.
Washington State Business Divided Over AHPs
Peter Neurath writes in the “Puget Sound Business Journal” that the business community in Washington state is divided over AHPs. The Association of Washington Business and the Greater Seattle Chamber of Commerce wrote to the state senators that AHPs would “destabilize the market and render small employers’ health insurance reforms unworkable.” [Hmmmm. It would seem these “reforms” have proven “unworkable” with or without AHPs. Anyone who thinks the “reformed” small group market is working well needs to stop smoking that stuff.] The article lists other opponents as including the state hospital association, medical society, the local Blues plans, and – surprise! – the insurance commissioner.
Ohio Business Together on State AHP Proposal
On the other hand, business groups in Ohio are supporting a state-based AHP bill that would allow associations to “pool their workers for health insurance rating purposes,” according to Jeff Bell in “Business First” of Columbus. The legislation is supported by the state NFIB, Chamber of Commerce, Business Roundtable, Manufacturers Association, Retail Merchants, and Farm Bureau, known collectively as the “Big Six.” The bill will also relax state regulations and strengthen anti-trust laws, according to the article. Local attorney William Todd expects the bill will encourage the development of “more complex insurance programs that hold out hope for reasonable control of health care costs,” including consumer driven plans like HRAs.
NCPA Study Examines AHPs as Solution to Market Concentration
Meanwhile, the National Center for Policy Analysis has issued a major report on AHPs, authored by economist Donald Westerfield of Webster University. The paper argues that AHPs would increase competition and reduce market concentration in the small group and individual markets. The paper suggests that market concentration has allowed some carriers to engage in restraint of trade, tying arrangements, and price discrimination by, for instance, over-charging the less desirable small groups in order to subsidize premiums of larger groups. The paper also directly answers the critics of AHPs on such issues as risk selection and “destabilizing” the market.
NASE Supporting Payroll Tax Deduction for Premiums
The “Colorado Springs Business Journal” takes a close look at two of the organizations representing micro-businesses, the National Association of Home Based Businesses (NAHBB) and the National Association of the Self-Employed (NASE). The article by Marylou Doehrman cites NASE’s Kristie Darien as saying, “The two biggest concerns expressed by NASE members are health care and the economy.” Although the self-employed may now take a deduction for their premium payments, Ms. Darien says they still have to pay 15.3% self-employment tax (the Social Security and Medicare payroll taxes) on the money spent on coverage. NASE is supporting the Self-Employed Health Care Affordability Act of 2003 to allow health care costs to be taken as a business expense. The average self-employed person pays $1,216 in taxes on top of the $7,954 premium paid, according to the article. The proposal also includes a 50 percent tax credit capped at $2,000 per year for individuals and $5,000 per year for families for employers with 10 or fewer employees.
SOURCE: This article ran on May 9, 2003. There is a charge for accessing it on-line at http://www.csbj.com/.
MSA Expansion Debated in Congress
The “Morning Call” of Allentown, PA reports that the chairman of the Lehigh Valley Chamber of Commerce, Kim Snyder, testified before a U.S. House panel that “(MSAs) are a great vehicle, (but) they could be better,” if the limits were removed and lower deductibles allowed. But Edwin Park of the Center on Budget and Policy Priorities testified that older workers would find it harder to obtain affordable coverage if MSAs were widespread. Cato’s Tom Miller rebutted that “there would be little, if any, adverse effect on traditional insurance pools or premiums,” according to the article. Subcommittee chair Rep. Pat Toomey (R-PA) supports “making patients more responsible for their medical decisions?” to lower costs, and is cosponsoring the bill mentioned above that would allow self-employed workers to deduct premiums from their payroll taxes.
SOURCE: This article ran on May 9, 2003. There is a charge for accessing it on-line at http://www.mcall.com/.
MSAs Far Better than One-Size-Fits-All Universal Care
Writing in the “Telegraph Herald” of Dubuque, IA, businessman and Republican activist Rod Blum argues that expanding MSAs is a far better idea than “one-size-fits-all” proposals for universal health coverage. He says the costs of these ideas are always underestimated and always lead to rationing when the price tag explodes. He cites the “New York Times” in saying, “Britain, France and Germany are all being forced to limit access to care.” He also quotes the “Times” as reporting, “Cancer care is a particularly shocking concern?. Europe’s cancer survival rates are very poor.” He concludes, “What American health care needs are free-market reforms; not more bureaucrats and lawyers meddling in yet another aspect of our private lives.”
SOURCE: This article ran on May 4, 2003. There is a charge for accessing it on-line at http://www.thonline.com/.
MSAs Far Better Than Gephardt’s Authoritarian Proposal
The “Kansas City Star” takes a similar tack in looking at Rep. Dick Gephardt’s (D-MO) health care proposal. Thomas McClanahan writes that the Gephardt proposal “would do nothing about the two biggest problems of today’s system: the link between employment and benefits, and the lack of consumer power over providers.” Instead, “he’s proposing higher taxes, centralized mandates and top-down rules?.” The article says the proposal’s “authoritarian character is profoundly out of step with broad trends in the economy, (in which) power has been ebbing away from large institutions for decades.” Mr. McClanahan says employer-based coverage “is an artifact of World War II.” Today, the tax exclusion should be converted into tax credits and given to consumers to allow them to buy the policies they prefer. “In addition, consumers should have medical savings accounts, and be allowed to form their own purchasing cooperatives to increase buying power.”
SOURCE: This article ran on May 9, 2003. There is a charge for accessing it on-line at http://www.kansascity.com/mld/kansascitystar/.
MSAs, FSAs, HRAs Might Show the Way out of the Wilderness
An article by Spencer Swalm in the “Denver Business Journal” explains the differences between MSAs, FSAs, and HRAs. But first he points out the limits as “the dead hand of government regulation that weighs so heavily on this segment of the economy not only fuels inflationary fires, it also stifles innovation.” So all three models “are flawed to one degree or another,” but still, “they give consumer/patients more control over their own health care decisions.” He points out the limits of each model, but says MSAs get the incentives right. Unfortunately, “because of Colorado’s perverse small-group health insurance laws, a group MSA product is not even available in our state.” He concludes, “If politicians could bring themselves to get out of the way, FSAs, MSAs, and HRAs might show us the way out of the health care cost wilderness.”
Please send all comments/questions directly to me at email@example.com.