NCPA - National Center for Policy Analysis


August 11, 2005

The House has a new package of health care reform bills to consider, and if enacted, they would significantly improve American's health insurance markets and transform our health care system, says the Heritage Foundation.

The House health care package contains three major proposals: association health plans (AHPs), interstate markets for health insurance, and high-risk pools.

  • AHPs (H.R. 525, the Small Business Health Fairness Act of 2005) will allow small businesses to band together through trade associations to purchase coverage for their employees.
  • These self-insure arrangements will be regulated by the Employee Retirement Income Security Act of 1974; therefore, exempting them from state health insurance mandates and regulations.
  • Under H.R. 2355 (the Health Care Choice Act of 2005), interstate markets for health insurance will allow individuals and families to purchase health insurance from other states; insurance companies will also be allowed to sell their products across state lines without being subject to the mandates and regulations of other states.
  • The State High Risk Pool Funding Extension Act of 2005 (H.R. 3204) will provide federal grants to help states set up health insurance high-risk pools, which are designed to offer affordable coverage to individuals who would otherwise be denied because of the expense.

But if Congress wants to reform the health care system, it must reform health insurance markets, says Heritage. Even though the House bills focus on insurance market changes, it ignores federal tax policy, and their omission of individual health care tax credits is a significant shortcoming.

Nonetheless, these proposals can be easily improved, thus broadening their reach and impact, enabling free-market forces to work more efficiently and improving the current system for millions of Americans, says Heritage.

Source: Edmund F. Haislmaier, "A Good Start: The House Health Care Reform Bills," Heritage Foundation, July 22, 2005.


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