Making Tax Credits Work: How Much Do Individuals Pay for Their Private Health Insurance and What Do They Get For Their Money?
Alliance for Health Reform Briefing
August 10, 2001
Washington, DC
Gary Lauer, President and CEO of eHealthInsurance, an on-line broker for health insurance:
"We are the largest source of health insurance for individuals and families in the country. We're the largest producer of health insurance for many if not most of the largest carriers as well."
"So what we did is we sampled randomly 20,000 active customers." "We found that the average premiums that these 20,000 individuals and families are paying are in the range of $1,200 to $1,500 per person per year."
"... based on this, what it tells us is that tax credits may, in fact, have an important impact for people who bought health insurance."
"If you take the Reach Act for example (one of the tax credit proposals), $1,000 per year for individuals and $2,500 for families, we found... that 75 percent selected policies with annual premiums that are within 75 to 100 percent of the tax credit limit that's proposed."
"Tax credits so far are the best proposal that we've heard to help address a large portion of the uninsured. There are other people who are uninsured who obviously this is not going to help. There are people who have got very, very serious medical conditions either presently or historically, there are some people who are very economically challenged, you know, many of the high risk pools in states, other kinds of things need to be done for those and we feel very strongly about that. But you'll find that we believe close to half of the uninsured today can afford health insurance or may be able to afford health insurance through tax credits."
"You know, what we find is that there are some individuals and families who simply are uninsurable - just the way the system is today, they're uninsurable. And we feel very strongly about high risk pools as a way to really help and support those people."
"We find that about 80 percent or 4 out of 5 of our applicants actually get health insurance coverage. ... one out of five goes uninsured through eHealthInsurance is not able to get coverage."
"It's safe to say that I won't disclose information on income (of those insured) at this point. I've been asked about this previously. We're going to go back and take a look at that and see if there's a way to segment that without compromising anything."
<http://www.kaisernetwork.org/health_cast/uploaded_files/transcript081001.pdf>http://www.kaisernetwork.org/health_cast/uploaded_files/transcript081001.pdf
Comment: What a fantastic opportunity this is for Mr. Lauer's company. His market is composed of a population subset that uses the Internet for making purchases. So he begins with individuals that are Internet sophisticated, mostly financially secure, and generally younger and therefore healthier than average. His insurance products exclude the chronically ill (by underwriting) and lower income individuals (by affordability) anyway. His carriers are elated to have directed to them this highly select segment of the market. He suggests that he is filling a void for the uninsured, although I suspect that more traditional brokers would suggest that he is merely attracting their former clientele. The fact that he refuses to disclose the income levels of his clients makes me suspect that he is not really filling the void for low income, uninsured individuals after all.
We continue to hear strong support for tax credits as an answer to insuring the uninsured. Mr. Lauer's company demonstrates that tax credits would be a great deal for young, healthy, affluent families, and an even better deal for his company. But the problem we need to address is insuring those with more modest incomes and with existing disorders. Tax credits would have very little impact on those with the greatest needs. Mr. Lauer's solution is to shift those costs to the rest of us through taxpayer funded public programs and through high risk pools, while he walks away with the cream of the business which is funded by us through tax credits!
Another attendee of this meeting was quite perceptive:
Bob Griss, Director of the Center on Disability and Health, Washington, DC:
"And I really don't understand why there isn't more attention to a pool that everybody's in, that covers everybody, because to me that is the missing seat on the panel."