Revolutionary Health Proposals
by John Goodman
 In his recent State of the Union, President George W. Bush devoted only a
few sentences to health policy. At the same time, the administration
released a five-page document describing the President's health policy
proposals. The reforms described therein are so sweeping and so bold that I
would compare them to Hillary Clinton's proposals of a decade ago.
I don't know if the White House will devote the energy and political capital
necessary to see this through. But if they do, these reforms will leave a
lasting mark on social policy in this country.
Here are the four ideas I find most remarkable.
Health Saving Account Expansion.
The President proposes to substantially expand HSAs by (1) allowing
contributions to equal all out-of-pocket exposure, (2) by expanding their
uses (early retirees could use them to pay insurance premiums), (3) making
it easier for people to get one and (4) strongly encouraging everyone to
have one (the tax relief, portability, and chronic care features described
below apply only to HSA plans).
Tax Fairness.
For the first time in 60 years of post-World War II tax policy,
individually-purchased insurance and employer-purchased insurance would be
on a completely level playing field under the tax law. (Individuals would
even get a credit against their payroll taxes.) There would literally be no
reason for an employer to offer insurance (instead of wages) unless there
were clear economies or other advantages from group purchase.
Portability.
Some have misinterpreted this idea to mean an extension of existing federal benefits.
But as Roy Ramthun explained at an NCPA Capitol Hill briefing, the
President has something far more radical in mind. Employers would be able
to purchase individually-owned, personal and portable insurance for their
employees - insurance that would travel with them from job to job.
Although few specifics are available, I believe the genesis of this idea is
an NCPA - Blue Cross/Blue Shield proposal for the state of Texas which you
may locate at http://www.ncpa.org/pub/special/20060130-sp.html. The
Administration is proposing to take this idea nationwide - allowing
federally regulated insurers to sell the insurance product.
Chronic Illness.
Equally radical, in my opinion, is the President's proposal to allow
employers to make special deposits to the HSAs of the chronically ill.
Until now, HSAs have not been designed with sick people in mind. But they
could be. Just as employers currently make risk-rated premium payments on
the behalf of employees, the President would allow them to make risk-rated
deposits to HSAs.
Studies show that diabetics, asthma patients, etc., can, with a modest
amount of training, manage their own health care - and achieve results at
least as good and at lower cost than traditional care. If they could also
manage the dollars involved, we could align financial incentives with health
incentives. Pilot programs for the disabled are already showing very
positive results (in Medicaid, of all places!).
Considering that chronic patients spend about 70 percent of all health care
dollars, this is not a minor reform. It is a huge reform. A brief
explanation of the potential is in my brief analysis, "Making HSAs Better" at http://www.ncpa.org/pub/ba/ba518/.
These are exciting times! Keep your fingers crossed.
John C. Goodman, President, National Center for Policy Analysis
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