Health Insurance Reform: The AMA Proposal
Many people feel that there are serious problems with the American health care system, especially from the standpoint of health insurance. While the concept of universal health care in the U.S. is laudable, the reality is that there are millions of Americans who have no health insurance coverage. It's important to note that the uninsured are not just from lower socio-economic brackets. Increasing numbers of middle-class Americans have no health insurance and few prospects for obtaining it due to the skyrocketing costs of coverage.
The American Medical Association (AMA) has attempted to address these problems with a call to action: a sweeping proposal to expand health insurance coverage to the uninsured or under-insured. This article presents a brief description of the proposal and its implications.
The AMA's health insurance reform plan has what it calls three "pillars." The first is to help people buy health insurance coverage via vouchers or tax credits. The second pillar advocates choice, i.e., that people should have the freedom to join a plan of their own choosing. Finally, the AMA plan calls for reform in health care insurance market regulations at both the state and federal level.
The first pillar focuses mainly on enabling American citizens to purchase health insurance in the free market by reducing their income tax bill and freeing up resources. Tax credits, the vehicle for doing so, are direct reductions of the amount of tax owed. For example, if an individual's tax bill is $1000 and he receives a health insurance tax credit of $500, his bill is reduced by 50% to $500. The plan contains provisions for those who owe little or no income tax in that the credit becomes a subsidy for these citizens in the form of vouchers. Vouchers would function more or less like the federal food stamp program, where a recipient uses a debit card that's loaded with an amount equal to his benefit.
The second pillar addresses the issue of choice in the health insurance market. The AMA believes that Americans should be able to select medical insurance in the free market. This has important differences for people who have benefits through their employers. Employers typically offer a limited number of choices. For example, an employer may offer an indemnity plan, an HMO (health maintenance organization) and a PPO (preferred provider organization). Although the HMO offered by the employer may be very good and reputable, the fact remains that the employee must choose that HMO and no other.
The third pillar advocates streamlining the tangle of federal and state regulations that the AMA sees as restricting free choice in the health insurance marketplace. A prime example is the disparity between large employers, small and midsize employers and individuals. Large employers typically enjoy favor or exemption from many regulations that smaller employers do not. And if you've ever been unemployed or self-employed and needed to purchase health insurance as an individual, you know that the costs are prohibitive. There's even a federal law, ERISA (Employee Retirement Income Security Act) that exempts employers who self-insure from mandates and regulations.
The AMA hopes that the outcome will be positive. By subjecting insurers to free-market forces, the AMA argues, there will be a "profound effect on insurer behavior." Multiple coverage choices will accrue to the insured whether they are employed or not. The plan gives people "purchasing power" that will encourage competition and ultimately result in "better, more affordable coverage options that are within reach of more people." The domination of large insurers will be equalized in favor of a more equitable system of distributing benefits.
In the current health insurance market, the tangled web of regulations often functions to drive consumers into the ranks of the uninsured. Excessive regulations also enable insurers to select whom they want to insure. This scenario favors young and healthy individuals and virtually shuts out sick and high-risk people.
The AMA also wants employers to increase the range of health insurance products they offer to their employees. In many cases, if an employee is not happy with his chosen coverage, there may not be adequate alternatives. So, the employee finds himself locked into a plan that doesn't suit his needs. The flexibility built into their plan, argues the AMA, result in allowing employees to shop for a variety health insurance products so that they have a better chance of finding a suitable plan.
The AMA plan attempts to synthesize many of the issues related to health insurance into a coherent plan that addresses them in a way that benefits both consumers and insurance providers.
