AHIP (America’s Health Insurance Plans)
November 19, 2008

From the Summary of AHIP’s Proposal to Guarantee Coverage for Pre-existing Conditions and Promote Affordability in the Individual Insurance Market:

* Promote affordability by providing refundable, advanceable tax credits for moderate-income individuals and working families

http://www.ahip.org/content/pressrelease.aspx?docid=25068

And…

Health Care Reform: An Economic Perspective

Testimony of Uwe Reinhardt, Ph.D.
U.S. Senate Finance Committee
November 19, 2008

Appendix A

A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care. One should always treat these two facets separately when thinking about health care reform, because any financing system for health care could be coupled with any number of alternate disbursement systems. (Journal of American Health Policy, May/June 1993)

http://finance.senate.gov/hearings/testimony/2008test/111908urtest.pdf

This quote from AHIP was buried in another Quote of the Day last week, but it is being repeated here because of its importance in the health reform dialogue.

AHIP has now explicitly acknowledged what single payer supporters have been saying for some time. Private health plans are no longer affordable for “moderate-income individuals and working families.” To maintain the viability of the private insurance market, AHIP is recommending tax subsidies to help purchase the plans.

Assuming that we are serious about including everyone in our health care system, why should we go to such extremes to assign a specific actuarial value for the insurance for each person in the United States, and then collect an individual premium that reflects that actuarial value (whether that premium is collected from the individual or from the employer on behalf of the individual), especially when that premium must now be modified by tax policies tailored to specific individuals?

Uwe Reinhardt states in an appendix to his testimony before the Senate Finance Committee, “A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care.”

In another quote this week, Uwe Reinhardt also stated, “The question is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.”

Although we support an administratively efficient public single payer to disburse the funds, others point out that it can also be done by private health plans functioning as a social insurance model (though at higher costs with some sacrifice in equity, which will not be discussed here). What is most important is that the financing of the universal risk pool be a separate process based on ability to pay rather than based on the actuarial value of the benefits.

If those now planning our health care future behind closed doors were to grasp this concept, it would certainly simplify their process. As Dr. Reinhardt has suggested, the contribution wouldn’t need to be through a tax. It could be through an income-adjusted premium paid in a different section of the tax return.

Okay. Maybe that’s just playing with labels. The point is that a universal risk pool, funded equitably based on ability to pay, would achieve what we all profess to be our goal: affordable health care for each individual. Once we get that right we can move on to defining the most efficient method of disbursing funds.