NCPA - National Center for Policy Analysis


November 20, 2006

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 and their lobby group -- America's Health Insurance Plans (AHIP) -- are thinking about ways to preserve a competitive market for health services.  One good idea is Universal Health Accounts (UHA), says the Wall Street Journal.

Universal Health Accounts would end the tax bias that lets employers deduct health care expenditures but doesn't let individuals do the same.  They would transcend the debate by suggesting that any type of insurance plan -- even first-dollar coverage, if an individual so chooses -- ought to qualify for health savings account-type tax treatment: 

  • UHAs wouldn't merely go a long way toward making insurance more affordable for those who don't get it from their employers, they 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 system would provide more security than the current one, which often keeps sick people tied to jobs for fear of losing coverage.

The bad news:

  • AHIP suggests that the federal government make substantial matching contributions to help lower- and middle-income people buy into the Universal Health Accounts.
  • This isn't necessary to make them affordable and it might contribute to general health care inflation, just as federal subsidies have done for higher education.

The biggest disappointment is that the insurers aren't calling for a national market in health insurance -- which is essential if their Universal Health Accounts are to work as well as they should, says the Journal.

Source: Editorial, "AHIP Hop," Wall Street Journal, November 20, 2006.

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