Washington, D.C. – The U.S. Senate failed to advance small business health plan legislation last month, but other bills are brewing on Capitol Hill that aim to expand choice and affordability in the health insurance marketplace.
Various proposals have been introduced to expand and improve access to Health Savings Accounts (HSAs), for example. And, a bevy of bipartisan bills focusing on tax credits to help people purchase insurance have been dissected and debated at congressional hearings but await the right legislative vehicle for advancement.
The next big vote in the U.S. House, however, is on a bill that would allow individuals and the self-employed to shop for and purchase health plans on a nationwide basis. The Health Care Choice Act, H.R. 2355, offers an alternative approach to government-managed and mandated insurance. Instead, consumers are offered the freedom to shop nationwide for their health insurance plans. Despite charges leveled by opponents about how the bill will dismantle consumer protections, H.R. 2355 maintains important state and federal regulatory features that work to maintain the quality and financial integrity of plans purchased in a nationwide marketplace.
“We need to help people, not by setting up a massive new government bureaucracy, but by empowering individuals to make the best choice for themselves and their families,” says Health Care Choice Act sponsor Rep. John Shadegg, R-Ariz., about the approach of his bill.
No doubt, H.R. 2355’s approach runs counter to initiatives in some states that are setting up government-directed health plans, or mandating coverage.
State-Based Reforms Getting Traction
The passage of “universal insurance” in Massachusetts, which requires every citizen to purchase coverage or face financial penalties for not doing so, has triggered a wave of state-based activity nationwide. North Carolina is considering a similar plan. Vermont recently enacted “pay or play” for employers, meaning businesses must provide insurance or face a $365 annual tax per full-time employee.
According to the Council for Affordable Health Insurance (CAHI), about 30 states have introduced some version of the infamous “Wal-Mart bill.” The approach is modeled after a Maryland bill that requires large employers to provide their workforce with insurance, or pay a tax penalty.
But not all states are advancing mandates, or new penalties on employers and individuals for not providing or purchasing coverage. In Wisconsin, the state legislature passed legislation that would provide HSA consumers with a 6.5 percent credit for the amount claimed on federal taxes. Governor Jim Doyle, however, said he would veto the bill as he did an earlier version in 2004. In Colorado, Governor Bill Owens vetoed legislation that would have required employers to report the number of employees who receive government-sponsored health insurance.
In all, while some states review the “universal coverage” approach, CAHI reports that state legislatures could be getting more cautious about “blindly supporting each and every proposed mandate.” In fact, at least 10 states understand that mandates carry high costs and are allowing for “mandate-lite” policies. These plans have fewer mandates and allow for flexibility regarding the financial or personal needs of an individual or family.
In a sense, H.R. 2355 implements a similarly scaled national approach to mandates by allowing individuals and families with average or modest financial means to choose the type of coverage they need and can afford. Some say this is a “race to the bottom.” Others contend that allowing 44 million uninsured people access to affordable coverage is merely humane.
The Nationwide Marketplace Solution
It is expected that Shadegg’s Health Care Choice Act will come up for a full House vote sometime next week, or shortly thereafter. The legislation allows individuals to “cross state borders” and shop for a health care plan that they can afford, or one that better suits their personal circumstance. It would particularly help individuals and the self-employed who are locked in high-cost states.
“Rather than creating policies tailored individually to each state, this will allow an insurance company to qualify a policy in one state and sell it to people across the country,” Shadegg said. “It allows consumers to purchase the health insurance policy that is right for them.”
Currently, individual consumers can only purchase health insurance policies offered within their state borders. The regulations and mandates in certain states are costly, which prices many individuals, families and small businesses out of the health insurance market altogether. According to Shadegg, the Health Care Choice Act would lower the cost of insurance by 12 percent on average. In high-cost states such as New Jersey, consumers can save as much as 77 percent on their health plans.
As straightforward and simple as the Health Care Choice Act may seem, the bill will face fierce opposition by the same groups opposing pooling arrangements for small firms (small business health plans). Upsetting the regulatory applecart is a threat to some large insurance companies that enjoy near monopoly status at the state level. The “disease groups” and specialists fear that they will be on the losing end of an insurance market driven by consumer choice and price sensitivity.
Individuals and families with no insurance live under steady fear and uncertainty about the state of their health, or tenuous finances if something catastrophic were to occur. The Health Care Choice Act will not dismantle health coverage. It simply does what the bill aims to do — it provides individuals and families with expanded options to find health insurance they can afford and need.
Sen. Jim DeMint, R-S.C., has introduced the companion bill to the Health Care Choice Act in the U.S. Senate.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc., an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at firstname.lastname@example.org.