AHIP Hop
Rising costs, an aging population, and a Democratic Congress mean the coming years are sure to see pressure for a larger government role in health care. So it's encouraging that America's private health insurers are thinking about ways to preserve a competitive market for health services. We only wish the proposals they released this month under the banner of their lobby group -- America's Health Insurance Plans -- did more to promote a genuine free market in health care.</br></br>AHIP's one really good idea is the creation of something called a Universal Health Account, which would end the tax bias that lets employers deduct health care expenditures but doesn't let individuals do the same. The employer-based private health care system has contributed significantly to cost inflation, because individuals generally aren't sensitive to the price of their treatment decisions. It also contributes to the perceived problem of the "uninsured," because a very large number of the 40-some million Americans classed as such every year are merely between jobs.</br></br>Congress took an important step toward equalizing tax treatment and encouraging portable, individually owned polices by creating Health Savings Accounts in the 2003 Medicare bill. HSAs combine a tax-free, high-deductible insurance policy with a tax-free savings account to pay smaller expenses. But while their take-up rate has been impressive, HSAs still represent only a small portion of the market. A Democratic Congress also isn't likely to be friendly to further HSA expansion on the grounds that high-deductible plans are only for the "healthy and wealthy."</br></br>Studies of HSA purchasers provide little support for the "health and wealthy" charge. But AHIP's Universal Accounts proposal transcends that debate by suggesting that any type of insurance plan -- even first-dollar coverage, if an individual so chooses -- ought to qualify for HSA-type tax treatment. This is a genuinely innovative proposal.</br></br>It wouldn't merely go a long way toward making insurance more affordable for those who don't get it from their employers. It would provide incentives to move beyond the employer-based insurance system. Instead, companies would be free to fund portable insurance policies for their employees much like they fund portable 401(k) retirement accounts. Such a Universal Health Account system would provide more security than the current one, which often keeps sick people tied to jobs for fear of losing coverage. We hope the idea gets a fair hearing.