Health Insurers Offer Plan to Cover the Uninsured

Health insurance industry lobby group America’s Health Insurance Plans unveiled a plan Monday, November 13, that it says would help the federal government provide health insurance to millions of uninsured Americans without creating a new government agency.

The plan, broadly outlined in a seven-page pamphlet, arrives at a time of growing public concern about the dwindling numbers of Americans who receive employer-sponsored health insurance and the prospect that a new Congress controlled by Democrats will address the issue of the uninsured.

There are now 46.6 million Americans who do not have health insurance. AHIP says its plan, if enacted by Congress, would cover all children within three years and 95 percent of adults within 10 years.

“The board has been working for the past eight months or so to specifically develop a proposal to deal with the No. 1 domestic policy issue in our country, which is to provide access to health insurance coverage to millions of uninsured Americans,” says Monit Ghose, a spokesman for the insurance lobby.

The cost of providing health care to people without health insurance is passed on to employers in the form of higher premiums. As a result, covering more people could reduce premiums for employers, says Gerard Anderson, director of the Center for Hospital Finance and Management at the Johns Hopkins Bloomberg School of Public Health.

“Covering the uninsured has the serious potential to lower employers’ costs because they are the ones paying the higher bill for the uninsured,” Anderson says. “It’s not the Medicaid/Medicare program, it’s the private employers [that are paying the costs of the uninsured with higher premiums].”

Having a larger number of insured individuals and families means that health insurers’ risks are spread across a larger group of people, which could mean lower premiums for employers. Also, when people have health insurance, they are more likely to seek medical attention before ailments become big problems, thus lowering the cost of care.

How to extend coverage to the uninsured, however, is a quandary fraught with ideological conflicts and infighting among special interests.

The plan, which AHIP estimates would cost the federal government $300 billion during a 10-year span, includes:

• Expanding the eligibility of state-run health programs to include children whose families earn less than 200 percent of the federal poverty level. The federal poverty level for a single person under age 65 is currently $9,800.
• A so-called universal health account based on health savings accounts that would allow people to contribute toward health care spending and matches by the federal government.
• Establishing a $500 tax credit for families that purchase health insurance.
• Disbursing federal grants to states whose health care meets certain quality standards and other guidelines.

AHIP’s plan does not include a requirement that all residents must obtain health insurance, unlike the groundbreaking law passed in Massachusetts in April.

Covering more uninsured Americans is of fiscal importance to health insurance companies and their stockholders. Membership in health insurance companies has been shrinking as the cost of health insurance for both individuals and employers has risen. This year, health care costs for employers are expected to increase about 7.7 percent. The percentage of people with employer-based health care benefits dropped to 62 percent in 2005 from 64.4 percent in 1994.

Those with health insurance are generally healthier because they have access to timely medical care and preventive services, all of which reduce the cost insurance companies and employers–the entities paying for health care–bear in the long term.

Anderson says employers pay, on average, 25 percent more than the federal government for similar medical services, a premium that is used by hospitals to offset the cost of paying for medical services for the uninsured.

Observers say the insurers’ proposal is born out of self-preservation.

In a pre-election USA Today/Gallup poll, 79 percent of voters said they would support efforts to insure more Americans and 60 percent expected a Democrat-led Congress to focus on that issue.

Health insurance companies like Aetna and WellPoint–which recently reported quarterly earnings growth of 28 percent and 27 percent, respectively–have opposed moves toward a single-payer system because such a model would make their services obsolete. Covering more of the uninsured without a single-payer system would increase their memberships at a time when those numbers are declining, Anderson says.

Historically, lobbying organizations have come out with their own plans, particularly when there is greater public interest in health care, says Jon Gable, vice president of the Washington, D.C.-based Center for Studying Health System Change. During the early years of the Clinton administration, when health reform was a major policy goal, various health industry lobbies each offered plans.

—Jeremy Smerd