WASHINGTON, D.C. --
The cost of health-care insurance is going up and so is the number of uninsured citizens in the United States. Hundreds of state and federal regulations have been enacted over the past five years with the primary
intention of making insurance coverage more affordable and accessible to Americans. Are these government "fixes" doing more harm than good? Yes, according to the Galen Institute. The nonprofit health
and tax policy organization recently distributed a report demonstrating the relationship between strict regulation at the state level and the dramatic rise in the uninsured in those states enacting sweeping reforms.
In the 16 states where rigid laws were passed between 1990 and 1995, the uninsured rate rose on average eight times faster than the other 34 states. In 1996, the average one-year growth in the uninsured
population in the 16 states was 8.1 percent. In states that have not instituted these regulations, the uninsured grew by 1.2 percent.
Nationally, the U.S. Census Bureau recently reported that the number of
uninsured rose to 1.7 million in 1997. The bureau estimates that 43.4 million people had no coverage last year.
The Council for Affordable Health Insurance (CAHI), a group representing small and mid-sized
insurance companies, says excessive regulation has disrupted the marketplace. Not only does excessive regulation raise the cost of coverage and increase the number of uninsured, it reduces the choice of plans and
the supply of insurers willing to offer coverage.
A report by CAHI, "Building Blocks to Affordable Health Insurance," recommends comprehensive policy changes to reduce the cost of insurance to help
bring more uninsured Americans into the health-insurance system.
CAHI advocates sensible medical mal-practice liability laws (potential premium re-duction: 5 percent to 10 percent); encouraging consumers to have
a more direct financial in-terest in the purchase of health care by, for ex-ample, lifting current restrictions on tax-free medical savings accounts (MSAs) (potential premium reduction: 32 percent); allow con-sumers
to buy policies without mandated benefits (potential premium reduction: up to 25 percent); provide all Amer-icans with the same tax treatment for health benefits (po-tential premium re-ductions: 20 per-cent); and
increase disclosure so that patients know more about the benefits and financing of their plans (potential premium reduction: 7 percent to 12 percent).
According to CAHI, ongoing reform exper-iments in the states
should be showing federal officials what not to do in reforming the nation's health-care system. That means, for example, that the massive regulatory approach favored by the various "patient protection"
bills on Capitol Hill would serve only to make matters worse for consumers and patients, not better.
The actuarial firm of Milliman & Robertson has estimated that the Patient Access to Responsible Care Act
(PARCA), H.R. 1415, would boost health insurance premiums by 24 percent, on average.
Congress will not likely pass health care legislation this year. There remains a slight chance that this year's tax bill will
include a provision to allow small businesses and the self-employed to deduct 100 percent of their health insurance premiums like big businesses currently do. However, President Clinton has threatened to veto tax
legislation and shut the government down if Congress sends him a budget that is too "excessive" on tax cuts.
The 100 percent tax deduction would give many small businesses and their employees some
relief, especially now when they are seeing double-digit premium increases. Many blame these increases on the excessive reg-ulations in the 1996 Kennedy-Kassebaum bill. However, tax-free MSAs that passed as part of
that bill are providing many individuals with an affordable health-care option. MSAs combine high-deductible health insurance with a tax-free personal savings account.
According to an Internal Revenue Service
report, 32 percent of Americans who bought MSAs between January 1997 and June 1998 previously had no insurance. However, the law has limited the availability of MSAs and who can buy them. Supporters, mostly the
small-business community and the self-employed, are asking Congress to lift the artificial restrictions that have been placed on MSAs. For example, a business with more than 50 employees is not eligible to purchase
tax-free MSAs.
Measures to give small businesses 100 percent tax deductibility and the expansion of MSAs are included in the "Patients' Bill of Rights Act," which is being vigorously opposed by Sen. Ted
Kennedy (D-Mass.). With a recent Charlton Research Co. poll finding that 66 percent of Americans believe health care is regulated enough, and that 60 percent say that the biggest problem with the system is high
costs, you would think poll-driven politicians would listen. Let's hope the next Congress does just that by passing common-sense measures to make health insurance more affordable and accessible for all Americans.
Karen Kerrigan is president of the Small Business Survival Committee in Wash-ington, D.C.
© 1998, Tampa Bay Business Journal
