NCPA - National Center for Policy Analysis

MOBILE WORKERS, IMMOBILE HEALTH PLANS

February 1, 2007

Tax law is far less generous to people who must purchase health insurance on their own.  For this reason, more than 90 percent of people who have private insurance get it though an employer, which creates several problems within our health care system, says John C. Goodman, president of the National Center for Policy Analysis.

For example: 

  • Virtually all employer health insurance contracts last only 12 months; at the end of the year, the employer -- in search of ways to reduce costs -- may choose a different health plan or cease providing health insurance altogether.
  • Employees who switch jobs must also switch health plans; all too often that means changing doctors as well, since each health plan tends to have its own network.   
  • Some individuals have a family member who has very high health care costs; when these workers compare job opportunities, they are primarily comparing health plans and to protect themselves from such potential hires, employers are increasingly altering their plans to attract the healthy and avoid the sick.
  • When a husband retires and enrolls in Medicare, a younger wife may be left without coverage because underage spouses cannot enroll in Medicare; until the wife qualifies for Medicare, the couple will have to purchase her insurance with after-tax dollars.
  • Under the current system, employers cannot buy individually-owned insurance for their employees; the only employee health insurance employers can purchase with pretax dollars is group insurance.

Fortunately, there is a solution, says Goodman.  Health Savings Accounts (HSAs):

  • Unlike third-party insurance, HSAs are fully portable, traveling with the employee through the labor market. 
  • Moreover, they are a model of how the rest of the insurance arrangement may also become portable. 
  • If given the same tax relief, HSAs could provide more affordable and available insurance to those who need it, regardless of employment. 

Source: John C. Goodman, Testimony before the Committee on Ways and Means, U.S. House of Representatives, "Statement on Modern Families; Outdated Laws," National Center for Policy Analysis, January 31, 2007.

For text:

http://www.ncpa.org/pub/speech/2007/20070131-sp.html

 

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