What else can be done to improve U.S. health insurance? Major pieces of legislation have already been passed to allow (1) tax-deductible employer-reimbursed individual health insurance and (2) high-deductible health insurance with Health Savings Accounts. Additionally, some experts believe the Affordable Care Act (ACA) makes the most changes to the health insurance industry since World War 2. Here are 4 controversial ways to further ensure better health insurance for every American at less cost.
1. Allow Health Insurance to Be Sold Across State Lines
The largest determinant of the monthly premium for individual health insurance is not the individual’s age or health but the state in which they live. Because of a federal law passed in 1945, it is currently illegal for a carrier to sell health insurance to an out-of-state individual—unless the out-of-state insurer goes through an expensive filing process and meets the unique health insurance requirements of the individual’s state of residence. If this law were repealed, anyone could purchase a health insurance policy from any carrier in any state.
In Michigan in 1908, when Henry Ford produced the Model T costing $825, there were thousands of small auto manufacturers in the United States making cars costing $10,000 or more. To protect their own manufacturers, neighboring states passed laws claiming that the Model T was dangerous and thus not allowed to drive on their roads. Eventually, the federal government stepped in and regulated the automobile industry—mandating that any automobile meeting certain minimum standards could be freely driven in every state.
Allowing consumers to purchase health insurance from carriers in any state might not only increase competition and drive down prices; the increase in competition might also allow millions more individuals with preexisting conditions to get private health insurance without having to rely on more expensive state-guaranteed coverage.
2. Make All Health Insurance Premiums Tax Deductible
Make all health insurance premiums tax deductible for individuals without regard to employment (individual health insurance is already tax deductible via a Section 105 Plan or Section 125 Plan). This extremely simple change would take away the main reason employers are involved in health insurance and level the playing field for all Americans, whether they are employed, self-employed, or unemployed. Overnight, this bill could reduce the after-tax price of individual health insurance for consumers 25 to 50 percent.
Making all health insurance premiums tax deductible for all consumers may be long overdue—this simple change in our tax code could correct an inequity and eventually return responsibility for health insurance to individuals and government instead of employers.
3. Make All Healthcare Providers Disclose Prices
Almost all healthcare providers, from major hospitals to individual doctor’s offices, charge varying prices for the exact same service depending on the network in which the patient is a participant. The same doctor visit might cost a cash-paying un-insured person $110, while a person with an employer-sponsored health plan bargained down the price would pay only $42.
While there is nothing wrong with large customers bargaining for better prices, today there is no longer any true “retail” price in medical care. Providers have inflated their retail prices two to five times just to meet contracts forcing them to give 50 to 80 percent discounts to large purchasers.
In 1934 the Securities Exchange Act created the SEC and mandated that U.S. public companies disclose accurate financial information. This act did not tell businesspeople how to run their business—it merely told them that they must disclose pertinent facts to investors or be subject to criminal prosecution.
Healthcare providers could be required to disclose their prices and all discounts given off these prices. Open disclosure might drive consumerism and lower prices for all. Does a consumer paying a $10,000 hospital bill have a right to know that another person is being charged only $1,000 for the exact same service? Do people standing in line at a pharmacy have a right to know when they are being charged two to three times the price of the person next to them for the exact same drug?
Armed with medical care retail price information, consumers could seek out the best networks and might be able to negotiate with medical providers.
4. End Federal Lifetime Health Benefits for Congressmen, Senators, and Government Officials
When it comes to health insurance, we have created an elite class. This elite class consists of our elected federal and state officials who have voted themselves and their associates unlimited lifetime health benefits paid for by taxpayers. In doing so, they have removed themselves from being participants in solving the current health insurance crisis that affects the rest of American citizens. They do not directly feel the pain of America’s health insurance problems.