Plans should build on common principles

By Frank Knapp Jr., The Sun News

Published September 9, 2009

Congressional Democrats have health insurance reform bills in the House and Senate. Republicans have an alternative House bill, and Sen. Jim DeMint of South Carolina has proposed his own plan.

There are actually common principles in these plans that are interdependent. While there are disagreements as to how to achieve these common principles, the principles themselves should provide focus for a more rational debate on health insurance reform that all parties, including The S.C. Small Business Chamber of Commerce, agree we must have.

Principle One: Reform insurance regulations. No one supports the following insurance company practices: Denying coverage to people with pre-existing conditions; canceling policies citing technicalities after policyholders start having expensive treatments; putting restrictive caps on benefits, causing tremendous financial burdens to insured families; punishing small businesses with unaffordable high premiums when an employee has a pre-existing condition or has had a serious medical claim.

Republican plans call for addressing pre-existing conditions by having the taxpayers subsidize state high-risk pools. Democratic plans call for, and the health insurance industry supports, regulatory reform outlawing all these practices, which would not require public funding.

Principle Two: Everyone should have health insurance. This is not just good social policy; it is good economic policy for the country. This principle is shared by all parties. Not achieving this principle pulls the rug out from under Principle One because unless everyone, including the young and healthy, is paying for health insurance, we can’t expect insurance companies to ignore pre-existing conditions.

Republicans believe simply lowering the cost of insurance policies for individuals will achieve this principle. Democratic plans guarantee achieving this principle by mandating health insurance for all Americans much like there are mandates for educating children, licensing drivers and even businesses buying workers’ compensation insurance. Democratic plans also mandate that businesses, other than most small businesses, help pay employees’ health insurance premiums.

Principle Three: Subsidize premiums. All plans propose subsidizing health insurance premiums for low- to moderate-income U.S. citizens, albeit at different amounts. All understand that you can’t achieve Principle Two if you don’t.

Democratic and the House Republican plans would phase out subsidies at 300 percent or 400 percent of poverty. DeMint would subsidize premiums for all.

Principle Four: Control premiums through pooling and competition. All plans have a pooling mechanism to bring large numbers of people together for better leverage in negotiating for lower premiums with health insurance companies and to foster competition between companies. Without getting premiums under control, subsidies in Principle Three would quickly become inadequate to achieve Principle Two or would need continuous and unsustainable large increases.

Republican plans prefer to let existing private organizations form Association Health Plans that could solicit members from any state. Each AHP would bear its own costs, presumably charge a fee for joining the group and decide who would be allowed to join.

Democratic plans create a national insurance exchange and allow states to create their own exchanges. Each exchange would have open, no-fee enrollment and include numerous choices of private insurance plans and a public plan to promote competition. Because premium subsidies would only be available by purchasing a private or public insurance policy through these exchanges, they would be exceptionally large pools. Administrative costs for the exchange would be borne by the government.

Principle Five: Reduce medical costs through medical research, emphasizing primary care and improving health. Democratic and House Republican bills agree that comparative effectiveness research is one way to reduce medical costs by providing better information to doctors and patients as to the effectiveness of medical options. Likewise these bills call for more and better-compensated primary health care physicians, and all plans promote better health in one way or another. Controlling medical costs is essential to help achieve Principle Four.

Principle Six: Don’t increase the deficit. All plans aspire to be revenue-neutral and thus not increase the budget deficit. All cite savings from their reform to help pay for the costs. Republicans also advocate using some or all of the Federal stimulus funds and Democrats include some revenue enhancers.

The writer is the president and chief executive of The S.C. Small Business Chamber of Commerce.

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