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Congressman
Paul Ryan
Rising health care costs have become the most burdensome financial hardship American families face today. The estimated $2.1 trillion spent by the U.S. in 2007 to provide, administer, and finance health care translates to nearly twice the amount per capita that any other industrialized nation in the world spends. Moreover, the rapid growth of health care costs is eroding paychecks for millions of Americans; and skyrocketing insurance costs are overburdening businesses across the U.S., and leaving 47 million individuals without access to affordable coverage. Even with public health programs such as Medicare and Medicaid, families and individuals face increasingly limited access to care. State budgets are unable to keep pace with the financial resources these programs demand while the number of physicians and health care practitioners choosing to participate are steadily declining. Failed Federal policies and inadequate reimbursement levels are threatening the existence of these programs for future generations.
The personal
realities of this crisis also have a distressing effect on
U.S. economic stability. The Federal Government devotes more
than 18 percent of its budget to health programs, which is
second only to national defense (20 percent, including war
costs). Overall health care costs are absorbing 15.9 percent
of national gross domestic product [GDP]. If the status quo
continues, health care costs will consume 20 percent of GDP in
8 years. The current third-party-payer model that serves as a
framework for the financial underpinnings of the U.S. health
care system can no longer meet the needs of patients, doctors,
hospitals, and governments. It has undermined the
doctor-patient relationship and removed the individual patient
from the decision-making process. Transforming America’s
fractured and antiquated health care system demands wholesale
and fundamental reform.
H.R. 6110, A Roadmap for America’s Future.
On May 21, 2008 I introduced legislation that would bring fundamental reform to our nation’s health care system. The primary driver of high health care costs has been a distortion in our tax code that effectively discriminates against workers and families who do not receive coverage through an employer. Compounding the problem, the number of employers providing health insurance has dropped 69 percent since 2000; and this alarming trend is continuing.
My proposal begins by equalizing the tax treatment of health care and gives workers and families much more freedom to acquire a plan that best suits their needs. What’s more, people will no longer live in fear of losing their health care if they lose their job.
In place of the current Federal tax law responsible for this disparity, every American will have the option to receive a refundable tax credit – $2,500 for individuals and $5,000 for families – to pay for health coverage. The tax credit is available solely for the purchase of health insurance. A family or individual may apply the credit to an employer-sponsored plan, if available, or to an alternative plan that better suits their needs. Employers continuing to offer insurance continue to claim contributions as a business expense deduction. The payment will be made directly to the health plan designated by the individual, allowing those who use the health care to choose the insurance product that best suits their needs. Any individual who obtains health coverage that costs less than the credit will receive any leftover amount as a payment from the health plan. Alternatively, those who choose to purchase policies with premiums higher than the credit will assume responsibility for the additional amount themselves.
My proposal also fundamentally changes the way existing health insurance markets work. Currently, individuals and families can only purchase health insurance in the States in which they live, and insurance companies are prohibited from marketing polices outside their respective States. Thus, consumers are prevented from purchasing coverage from another State that might be better suited to their needs, more affordable, or both. My proposal breaks the lock, allowing each individual to use the refundable tax credit toward the purchase of health insurance in any State. This will greatly expand the choices of coverage available to the consumer, and also will encourage broader competition and diversity among insurers, who will be able to sell their policies to individuals and families in every State, as other companies do in other sectors of the economy.
In addition, my proposal also gives more flexibility to small businesses to help their employees purchase health insurance.
The problem of rising health care costs is especially acute for small businesses, who cannot pool risks of thousands of employees, as large companies do – and therefore cannot afford group coverage for their workers. To correct the problem, my proposal allows the establishment of association health plans [AHPs], giving small businesses a means of offering health coverage to their employees. Under this strategy, small businesses will be able to pool together nationally to offer coverage to
their employees.
For individuals and families to shop for their health care, they must have a better sense of what they are expected to pay – and what they are getting for their money. Making data on the pricing and effectiveness of health care services widely available is critical to the success of an effective health care marketplace. So far, however, the market has been unable to develop a process for defining industry-accepted metrics that measure “quality” and define “price.” The result has been a flurry of reports by trade organizations, specialty groups, and government agencies, each using different terminology and definitions. The lack of uniform standards has prevented effective, “apples-to-apples” comparisons.
My proposal establishes the Healthcare Services Commission [HSC] and charges it with the mission of enhancing the quality, appropriateness, and effectiveness of health care services through the publication and enforcement of quality and price information. This effort will be guided by a standard-setting Forum for Quality and Effectiveness in Health Care. The forum will consist entirely of private-sector representation, with the authority to establish and promulgate metrics to report price and quality data. Forum members will represent views from medical providers, insurers, researchers, and consumers, and will serve independently of any other employment. The forum, designed to keep pace with innovation, will publish, for public comment, a preliminary analysis on standards for reporting price, quality, and effectiveness of health care services. After the comment period, the group will publish a final report containing guidelines for regulating the publication and dissemination of health care information. The HSC will be authorized to enforce these standards.
Finally, I believe any health care reform proposal must provide protection and access to care for those individuals who need it most. In the current system, uninsured individuals with pre-existing health conditions have the most difficult time finding and affording health care coverage. As a result, many individuals with pre-existing conditions often face bankruptcy to pay for health care expenses or, worse, go without treatment. If these individuals are fortunate enough to have group health insurance, their high costs are spread among their coworkers and employers in the form of ever-higher premiums, making coverage expensive for all. High risk individuals not only face an insurmountable burden in medical expenses themselves, but that burden is often transferred to taxpayers in the form of uncompensated care expenses from hospitals, or due to the likelihood that these individuals end up on Medicaid after having exhausted their financial resources paying for their medical costs.
My plan strengthens the health care safety net for these individuals. States choosing to let their Medicaid populations participate in the tax credit must spend previously allocated Medicaid funds on a Maintenance of Effort [MOE] program. A State’s base MOE amount is equal to the amount the State spent in calendar year 2008 for its State Children’s Health Insurance Program and Medicaid for healthy adults and children. Each State is to apply these funds to the following:
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Establishing High Risk Pools. State health insurance high-risk pools will offer affordable coverage to individuals who would otherwise be denied coverage due to pre-existing medical conditions, making coverage affordable for those currently deemed “uninsurable.” As part of offering affordable coverage to high risk individuals, States may offer direct assistance with health insurance premiums and/or cost-sharing for low-income and/or high-cost families.
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Auto-Enrollment. Each State is to develop auto-enrollment health insurance procedures (similar to those for dual-eligibles under the Medicare Modernization Act) for previously eligible Medicaid recipients. Under this procedure, any uninsured person seeking medical care could be enrolled in an insurance plan, so that he or she no longer continues without coverage.
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Setting Reasonable Limits on Premiums. As part of high-risk pool reform, States will define premium standards such that individuals may be deemed high-risk if their health insurance premiums exceed a certain amount. Covering these individuals in high-risk pools dramatically improves the actuarial health and price of existing group health insurance plans, thereby lowering and stabilizing premiums for the vast majority of Americans with average health profiles.
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Creating Reinsurance Mechanisms. The establishment of State reinsurance mechanisms will ensure that high-risk pools are adequately funded, so individuals receiving coverage are not subject to prohibitively high premiums.
Other Key Health Care Initiatives
Health Savings
Accounts.
The high cost of health insurance is one of the leading problems facing individuals and small business owners. One important step towards giving employers and individuals more opportunities to manage their health care needs was the creation of Health Savings Accounts (HSAs). HSAs allow small business owners and individuals to purchase health coverage to fit their individual needs by allowing participants to set pre-tax dollars aside at their own discretion in order to save and pay for their health care costs. An HSA participant carries a high deductible insurance plan that is used primarily for serious illnesses, while routine medical costs, even Medicare costs, are paid for out of the individual's HSA. Individuals, employers, or even family members can contribute money to an HSA, and these accounts are portable from job to job. HSA-eligible plans can be carried over each year and are comprehensive, including benefits like prescription drug coverage, hospitalization, and doctor benefits. I recently authored several changes to the existing HSA regulations that have made these insurance vehicles more accessible to employers and more flexible for individuals. As a result, the number of HSA polices are expected to grow to 14 million by 2010.
Additional Information.
For more information on the federal budget, please refer to the following
web sites:
A
Roadmap For America's Future: http://www.house.gov/ryan/roadmap
www.americanroadmap.org
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