HEALTH INSURANCE: CAHI Calls For Free-Market Reforms
Health insurance premiums would drop by as much as 63% for individuals if "free-market" principles were enacted, according to the Council for Affordable Health Insurance. The Washington Timesreports that the eight-point plan released yesterday by CAHI "calls for a series of tax and regulatory changes designed to shift decisions on health care and coverage from employers to individuals in an effort to curb spending." CAHI said "the only way to solve the problem of expanding insurance coverage is to make individuals more responsible for health spending." Critics of the free-market plan, the Times reports, charge that CAHI's plan "would enable employers to shift more costs to workers without any improvement in access to quality health care" (Goldreich, 8/26).
But CAHI President David Lack said the proposals would "maintain high quality and availability of health care while reducing health insurance premiums and underlying costs." CAHI's eight "Building Blocks to Affordable Health Insurance" are:
- Increasing personal responsibility to give individuals a stake in the cost of his or her health care. CAHI recommends increasing "cost sharing" and decreasing the individual's "over-reliance on a third-party payer," and estimates this could reduce premiums by as much as 32%.
- Providing guaranteed access/continuous coverage to encourage people to purchase and maintain coverage. CAHI says this would save 6% on premiums.
- Allowing appropriate pricing according to an individual's level of risk. CAHI estimates this would save 30% in premium costs.
- Modifying medical malpractice liability laws so they would provide adequate compensation for the injured party, but prevent frivolous lawsuits and extraordinary damage awards. The potential premium reduction of this proposal is 5% to 10%.
- Increasing disclosure -- such as information about provider reimbursement arrangements, prices charged by providers to patients and premiums paid by third parties -- so consumers can make informed decisions about their health care. This could reduce premiums between 7% and 12%.
- Allowing consumers to buy coverage without mandated benefits. In some states, this drives up premiums by 25%, according to CAHI.
- Providing all Americans with the same tax treatment for health benefits. While CAHI notes that changing the tax code to make individual insurance fully deductible would not decrease premiums, it would make policies more affordable by increasing available after-tax income for those who buy their own policies.
- Increasing consumer education about benefits, the cost of health care and the health care system, because well-informed consumers make better health care decisions (CAHI release, 8/25).
Make An Adjustment
In related news, the Alpha Center has released a special summer issue of its health care organization journal INQUIRY. The special issue features articles from a conference discussing risk adjustment sponsored by the Robert Wood Johnson Foundation and conducted by the Alpha Center earlier this year. According to the Alpha Center, risk adjustment is a "corrective tool" that could potentially "reduce negative consequences of attracting high-risk enrollees" to the market by "compensating insurance plans according to the health risk of their enrollees." Deborah Rogal, senior project manager for the Alpha Center and deputy director of the Robert Wood Johnson Foundation's Changes in Health Care Financing and Organization program, said, "When health plans market their products, they know that the health or sickness of the people they sell to will have a greater impact on their profits than any changes the plans can make to improve efficiency in health care delivery." INQUIRY is a "peer-reviewed, scholarly" journal published by the Blue Cross and Blue Shield Association. To receive information about the articles contained in this issue, call 202/296-1818 or visit Alpha Center's website at www.ac.org (release, 8/25).