How Georgia Can Lower the State’s Uninsured by 500,000

By Ronald E. Bachman

Governor Perdue said at the opening of the 2007 session, “Keep the main thing the main thing.” The “main things” for 2007 were listed as jobs, education and health care.

In response to this challenge, legislators are discussing a number of creative approaches to health care during this year’s legislative session. These proposals are important: They could save hundreds of lives, improve the health of thousands of individuals and increase the personal and family security for millions of Georgians.

Healthcare Visions Inc. estimates that these ideas would lower health insurance premiums by 40-56 percent and would provide the opportunity for about 500,000 of the more than 1.6 million uninsured Georgians find and afford health insurance.

Insurance matters. Insurance means better access to care; better access to care means better treatments; better treatments means better health. According to the Institute of Medicine, “Health insurance is associated with better health outcomes for adults and with their receipt of appropriate care across a range of preventive, chronic and acute care services. Adults without health insurance coverage experience greater declines in health status and die sooner than do adults with continuous coverage.”

Saving lives and improving the quality of care should be the first test of any legislation. Based on data from the Institute of Medicine studies in two reports, “To Err is Human” (1999) and “Crossing the Quality Chasm” (1996), lack of insurance and poor quality health care in Georgia  lead to:

• 673 excess deaths from being uninsured

• 904 preventable suicides

• 3,000 hospital deaths from medical errors

• 45,000 prescription drug errors that cause harm

Expanding individually owned, portable health insurance is critical to lowering the numbers of uninsured. Created under federal law only a couple of years ago, Health Savings Account (HSA) eligible insurance plans are increasing dramatically and having an impact on lowering the number of uninsured. According to a January 2006 survey conducted by America’s Health Insurance Plans, HSA-eligible insurance plans have already been purchased by more than 3 million individuals across the country. Data from several insurers indicate that 35-40 percent of the individuals purchasing these plans were previously uninsured.

Georgia can be a national leader in reducing the numbers of uninsured by establishing itself as an “HSA State.” Proposals to support this goal include removing hidden taxes on HSA-eligible insurance; facilitating access for purchasers of such insurance; lifting the secrecy of provider costs and quality; expanding market competition, and rewarding personal responsibility.

Specifically, Georgia should:

1. Increase access to new insurance products by allowing Georgia licensed insurers to receive automatic (or fast track) approval of HSA-eligible insurance approved under the laws and regulations of other states.

2. Promote an open market environment that encourages new insurers to sell HSA-eligible insurance in Georgia.

3. Allow greater regulatory flexibility for HSA-eligible insurance products that could lower costs and increase choices.

4. Encourage the development of an online, educational resource to promote transparency and expand information on HSA products, prices and services provided by health insurance agents and/or brokers.

5. Allow the option of expanded coverage for dependent children up to age 27.

6. Exempt HSA-eligible insurance from state and local premium taxes.

7. Provide a new personal state income tax deduction for HSA-eligible insurance premiums.

8. Support citizens’ right to know the cost and efficacy of prescription drugs.

9. Support citizens’ right to know the quality of care provided by Georgia’s hospitals.

10. Establish the patient as the owner of his or her medical records.

11. Expand outreach to enroll Medicaid-eligible families.

12. Create a HSA-eligible high risk insurance pool employing personal responsibility combined with accepted medical protocols and quality standards to cover those who are currently uninsurable due to existing medical conditions.

A focus on individually owned, portable health insurance with HSAs can make insurance affordable for many uninsured low and middle income families. Approximately 20 percent of Georgians (320,000) without insurance protection are uninsured because their employer drops coverage or because of gaps in coverage while changing jobs. Family security should not be dependent on whether your employer continues to provide health insurance. Seeking another job or starting a new business should not mean losing health insurance coverage.

The ripple effect of the uninsured is felt throughout society. A 2004 Kaiser Family Foundation national study found that the societal cost of the uninsured is $125 billion; the cost to Georgia is more than $4.3 billion.

This cost hits all of us, either through higher taxes or higher health care costs. Privately-insured Georgians pay a premium of more than 20 percent on their hospital bills, on average, in order to offset the uncompensated care expenses resulting primarily from the uninsured. Regardless of how one views the issue, the cost to society is high. Without insurance, the health, lives and financial security of families are at extreme risk.

Based upon the Kaiser Family Foundation study, as of 2005:

1. Georgia ranks 43rd with more than 18 percent uninsured (1,608,000)

2. Georgia is tied at 46th for the percentage of individual policies sold  

3. Georgia ranks 38th in affordability of health insurance based on a 2004 AHIP survey

4. Georgia had only 4 percent of its population covered under individual health policies

Georgia can become the first state in the country to take full advantage of the fastest-growing form of health insurance for reducing the numbers of uninsured – HSAs. HSAs encourage greater involvement and personal empowerment in dealing with health and health care issues. HSA-eligible High Deductible Health Plans (HDHPs) have a preferred status in federal tax law. HSAs have triple tax advantages: Contributions are direct reductions from taxable income; interest earnings are not taxable, and withdrawals for health care expenses are not taxed.

Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich, a Senior Fellow for the Georgia Public Policy Foundation and president of HealthCare Visions, Inc. Nothing written here is to be construed as necessarily reflecting the views of the Center for Health Transformation, the views of the Georgia Public Policy Foundation, or as an attempt to aid or hinder the passage of any bill before the Georgia Legislature.

© Georgia Public Policy Foundation (February 9, 2007). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.

By Ronald E. Bachman

Governor Perdue said at the opening of the 2007 session, “Keep the main thing the main thing.” The “main things” for 2007 were listed as jobs, education and health care.

In response to this challenge, legislators are discussing a number of creative approaches to health care during this year’s legislative session. These proposals are important: They could save hundreds of lives, improve the health of thousands of individuals and increase the personal and family security for millions of Georgians.

Healthcare Visions Inc. estimates that these ideas would lower health insurance premiums by 40-56 percent and would provide the opportunity for about 500,000 of the more than 1.6 million uninsured Georgians find and afford health insurance.

Insurance matters. Insurance means better access to care; better access to care means better treatments; better treatments means better health. According to the Institute of Medicine, “Health insurance is associated with better health outcomes for adults and with their receipt of appropriate care across a range of preventive, chronic and acute care services. Adults without health insurance coverage experience greater declines in health status and die sooner than do adults with continuous coverage.”

Saving lives and improving the quality of care should be the first test of any legislation. Based on data from the Institute of Medicine studies in two reports, “To Err is Human” (1999) and “Crossing the Quality Chasm” (1996), lack of insurance and poor quality health care in Georgia  lead to:

• 673 excess deaths from being uninsured

• 904 preventable suicides

• 3,000 hospital deaths from medical errors

• 45,000 prescription drug errors that cause harm

Expanding individually owned, portable health insurance is critical to lowering the numbers of uninsured. Created under federal law only a couple of years ago, Health Savings Account (HSA) eligible insurance plans are increasing dramatically and having an impact on lowering the number of uninsured. According to a January 2006 survey conducted by America’s Health Insurance Plans, HSA-eligible insurance plans have already been purchased by more than 3 million individuals across the country. Data from several insurers indicate that 35-40 percent of the individuals purchasing these plans were previously uninsured.

Georgia can be a national leader in reducing the numbers of uninsured by establishing itself as an “HSA State.” Proposals to support this goal include removing hidden taxes on HSA-eligible insurance; facilitating access for purchasers of such insurance; lifting the secrecy of provider costs and quality; expanding market competition, and rewarding personal responsibility.

Specifically, Georgia should:

1. Increase access to new insurance products by allowing Georgia licensed insurers to receive automatic (or fast track) approval of HSA-eligible insurance approved under the laws and regulations of other states.

2. Promote an open market environment that encourages new insurers to sell HSA-eligible insurance in Georgia.

3. Allow greater regulatory flexibility for HSA-eligible insurance products that could lower costs and increase choices.

4. Encourage the development of an online, educational resource to promote transparency and expand information on HSA products, prices and services provided by health insurance agents and/or brokers.

5. Allow the option of expanded coverage for dependent children up to age 27.

6. Exempt HSA-eligible insurance from state and local premium taxes.

7. Provide a new personal state income tax deduction for HSA-eligible insurance premiums.

8. Support citizens’ right to know the cost and efficacy of prescription drugs.

9. Support citizens’ right to know the quality of care provided by Georgia’s hospitals.

10. Establish the patient as the owner of his or her medical records.

11. Expand outreach to enroll Medicaid-eligible families.

12. Create a HSA-eligible high risk insurance pool employing personal responsibility combined with accepted medical protocols and quality standards to cover those who are currently uninsurable due to existing medical conditions.

A focus on individually owned, portable health insurance with HSAs can make insurance affordable for many uninsured low and middle income families. Approximately 20 percent of Georgians (320,000) without insurance protection are uninsured because their employer drops coverage or because of gaps in coverage while changing jobs. Family security should not be dependent on whether your employer continues to provide health insurance. Seeking another job or starting a new business should not mean losing health insurance coverage.

The ripple effect of the uninsured is felt throughout society. A 2004 Kaiser Family Foundation national study found that the societal cost of the uninsured is $125 billion; the cost to Georgia is more than $4.3 billion.

This cost hits all of us, either through higher taxes or higher health care costs. Privately-insured Georgians pay a premium of more than 20 percent on their hospital bills, on average, in order to offset the uncompensated care expenses resulting primarily from the uninsured. Regardless of how one views the issue, the cost to society is high. Without insurance, the health, lives and financial security of families are at extreme risk.

Based upon the Kaiser Family Foundation study, as of 2005:

1. Georgia ranks 43rd with more than 18 percent uninsured (1,608,000)

2. Georgia is tied at 46th for the percentage of individual policies sold  

3. Georgia ranks 38th in affordability of health insurance based on a 2004 AHIP survey

4. Georgia had only 4 percent of its population covered under individual health policies

Georgia can become the first state in the country to take full advantage of the fastest-growing form of health insurance for reducing the numbers of uninsured – HSAs. HSAs encourage greater involvement and personal empowerment in dealing with health and health care issues. HSA-eligible High Deductible Health Plans (HDHPs) have a preferred status in federal tax law. HSAs have triple tax advantages: Contributions are direct reductions from taxable income; interest earnings are not taxable, and withdrawals for health care expenses are not taxed.

© Georgia Public Policy Foundation (February 9, 2007). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.