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  • Making Health Insurance More Accessible

    On Tuesday, May 10, 2011, the U.S. Department of Health and Human Services released a report on the uninsured population and their ability to pay their hospital bills.  One of the more interesting takeaways from the report is that if you add up all the savings of the uninsured with incomes over 400 percent of the federal poverty level (or about $88,000 for a family of four), it will cover about 37 percent of their total hospital bills.

    How do the uninsured get away with not having the assets to pay their bills? Well, the average uninsured person only pays for about a quarter of their total health care costs. Taxpayers end up covering about 75 percent of the unpaid tab through direct payment and extra disproportionate share hospital (DSH) payments made by Medicaid and Medicare, while those with private insurance, hospitals, and charities pick up the rest.

    Some analysts will want to use this as an argument for why the individual mandate in Obamacare that requires people to have health insurance is necessary. However, Obamacare will only make the problem worse by loading insurance premiums with mandated coverage and thus driving up the price of insurance. People need the option to buy inexpensive health insurance that is actual insurance against low probability, but high cost medical care.

    In addition, there are steps that can be taken to encourage people to buy insurance:

    • One way to help the uninsured would be to replace the tax exclusion for employer sponsored health care with a tax credit and voucher that can be used to buy health insurance, available to all tax filers, regardless of whether they buy insurance through their workplace or on their own. Many of the uninsured would rethink their decisions to buy insurance, since not doing so would mean leaving a significant refund from the IRS on the table. For those with access to employer-sponsored insurance, this would enable consumer choice. Instead of being stuck with whatever plan their employer chose, workers would now be able to shop around among competing plans – picking one that best suits them and their family.
    • Another way to help the uninsured would be to repeal Obamacare’s mandates on insurance to cover certain medical services. If left intact, these mandates will increase health insurance premiums. The more benefits that a health plan must include, the more costly that plan will be, thereby making it more difficult for people to purchase coverage. According to analysis done by several former members of the President’s Council of Economic Advisors, for each additional mandate, the price of an individual policy increases by 0.4 percent, and for a family policy the price increases by 0.5 percent. Adding ten new mandates would increase the price by around 4 to 5 percent for plans that are in the non-group (individual) market. The example of Maryland shows that having a large number of mandated benefits can have a significant impact on premiums. According to a study by the Maryland Health Care Commission, state mandates account for 18.6 percent of the cost of a premium in the individual market.  The evidence is clear, the more benefits mandated the more difficult it will be to afford health insurance.

    It is clear that Obamacare will only make insurance more unaffordable for those already uninsured. There are steps, however, that Congress can take the help the uninsured by first repealing Obamacare and replacing it with the proposals outlined in Heritage’s plan for “Saving the American Dream.”

    Thomas Capone is currently a member of the Young Leaders Program at the Heritage Foundation. Click here for more information on interning at Heritage.

    Posted in Obamacare [slideshow_deploy]

    14 Responses to Making Health Insurance More Accessible

    1. Vermon Boyett says:

      There may be a viable way and reason for a change in Medicare as we see it, but the public needs to know why we are in the condition we are in now-total neglect. The Medicare/Medicaid program was instituted in 1966. This program is now 45-years old. For 20-years, it was monitored and kept abreast of its needs. For the last 25-years, total neglect. The last tweek to this program was to 1.45% on wage income in 1986. SMI was an added burden to this plan in 2004. No tweeking appeared to fund this addition. There is no way that this program not be sustainable to cover its expense. There is no real reason that the funding level for this fund not be at 1.90/2.00% (the estimated tax level to be sustainable)given the time frame available to implement. What ever you promote, the Public needs the history to be totally informed. Ray Boyett

    2. Mary Jo Webber, Wisc says:

      I am one of the uninsured and have been for many years. I am 55 years old and divorced so I am the sole supporter in the household. I have 2 grown daughters that live with me while going to college. I am an RN and work at a hospital. The hospital gets out of offering health insurance to many of their employees by keeping them at under a .8 position which is where the so called benefits of health insurance are offered. Most of the employees complain about the coverage because there is a 3500.00 deductable where after they have paid 3500.00 in a year the insurance kicks in at I believe 80/20. I am not sure about the amout deducted from their paychecks per month to pay for this insurance although I hear it is very high. Even if this was offered to me I believe that I would decline. I believe it is to the detrement of employees to have to get their health insurance through their employer. There is very little choice for this insurance. You are not paying for health insuance this is only catastrophic coverage. Buying Health insurance privately has always been very expensive. I did check it out years ago and found it very lacking and at that time it was a better deal to get it from your employer.

      I don't want a government program that will offer less choice. I want to be able to purchase affordable health insurance privately, and I believe that "Obamacare" will make this even more difficult.

    3. rickM says:

      We need more than a piece-meal approach.

      Wake up America! It's time… "Join the Revolution"
      Don't expect change when you've done nothing.

      Read “Common Sense 3.1” at "Spread the News"

    4. carolruddy says:

      My dad told me about "Penny Health Insurance" or something which helped him to find a lower priced health insurance (with ALMOST similar benefits) he is recommending this to me. Any suggestion? What do you think of them?

    5. joan new mexico says:

      The health insurers are seeking a new business model and are currently profiting from the chaos of Obamacare legislation by raising premiums and deductibles as well as working overtime to implement the flawed (see NEJM) ACO concept which will effectively end free market Fee For Service in favor of designating a new class of lesser trained and more easily manipulated employee providers(PAs and NPs) as Gatekeepers to your healthcare. Doesn't HF wonder why the Insurance Industry didn't push for these rather obvious reforms under previous administrations?

    6. Bobbie says:

      because the government shows more history of failure and takes no accountability or action to correct, open the market for all government fails. The people are much more dignified and esteemed to make things go right then ANY government entity with agendas of their own.

    7. Joan, New Mexico says:

      Why would HF run ads for "Penny Health Insurance"?

    8. George Colgrove, VA says:

      1. Tort Reform

      2. Cross state insurance

      3. End MC/MC

      4. End company/government supplied benefits – get benefits from Private Sector (P/S) brokers

      5. All out – enhance competition in medicine

      6. Get feds out of healthcare all together

      7. Put oversight at customer/state government level

      8. Close NIH and get the P/S to take over all the research with a more economical and effective workforce

      9. Make profit OK again – like it or not it is a driver that is properly controled by competition.

      10. Move the VA out of the feds and into the P/S. Convert great VA hospitals into P/S hospitals and open the VA programs as competing P/S insurance programs provided by leading health insurance companies.

      11. There should not be any federal doctor, nurse or healthcare administrator once all work is done.

      In short make healthcare in this country 100% FED FREE!

      For the poor, once people get back on their feet, Slavation Army, Good Will and so many other organizations will begin getting significant funding again. State an local governments will always provide limited funding, but beleive it or not, at healthy company who is allowed to profit, will giove back to their communities by providing healthcare services to the poor.

      We have supplied generations of financial resources to public healthcare and where are we. This nation is impoverished, deep in an unpayable debt, stuck in self-serving politics and with no way out. Going FED FREE with healthcare will take courage and trust. Has the government earned trust – no! They have prooven themselves and the results are not good. Under the federal government, healthcare has become the largest cost facing most familites, and the outlook does not look any better. Healthcare has become political and is administered by political hacks.

      Time to return healthcare where it inherently belongs – the private sector.

    9. George Colgrove, VA says:

      BTW – just to let you know where federal workers have laid down some priorities:

      The new NIH building to go up in Silver Springs, MD will cost over $800/sq. ft.

      Typical luxury office space for the private sector can get up to $200/sq. ft.

      From one insider, thought the administration offices will be near studio apartment size, the lab space will be cramped and unworkable.

      This is your federal dollars at work. Nothing but the best for these federal workers.

    10. Jill, California says:

      Obamacare is making insurance unaffordable for those of us who already have it. My premiums have almost doubled since Obama took office, and there's no end in sight for these increases.

    11. Deb, Denton says:

      I understand the Robert Wood Johnson Foundation funded the Institute of Medicine's review of nursing to produce their Future of Nursing report which was released in Oct. of 2010. In my research I found the RWJF funded this project in 2008.

      This report was developed to prepare the nursing profession for the Affordable Health Care act. I find the timing of when this group was put together odd (2008) and when Obamacare was passed (2010). Nursing is nearly 3 million strong and we are following the Future of Nursing report to "transform" nursing education…does that concern anyone?

      We do need to see changes in our system. We need to go back to the drawing board….and involve more doctors, nurses, medical providers, etc. Start with eliminating waste first…and then tort reform. I'm glad to see nurses commenting…we need more to do so. I've been a nurse for 26 years. In my opinion, we are headed down the wrong path with health care.

    12. Elizabeth Farrar says:

      I vote for G. Colgrove's 11 pt comment.

    13. Jo, MA says:

      As long as the medical industry remains for-profit in a predatory-capitalist nation such as ours, this will remain a problem. Everything else is reactionary to the underlying issue.

      Health should not be for sale to the highest bidder.

      Don't expect this to be published here at Heritage, however. ;)

    14. Bobbie says:

      Health should not be for sale to the highest bidder

      nor should individual health be put in governmental control.

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