A National Plan for Affordable Insurance

(Ed. note: This column by Anne Dunkelberg ran in last week's issue of Texas Weekly, which asked four policy and legislative experts the same question: What version of health care reform would be best for Texas?)

 

The best health care reform for Texas will ensure affordable coverage for Texans of all incomes while improving quality and controlling costs.

As the state with the biggest share of uninsured (25 percent of Texans—6.1 million people), Texas stands to gain more from reform than any other state. Under proposals in Congress, Texas would receive billions of federal dollars every year in Medicaid and family premium assistance. Texas may net as much as ten federal dollars for every dollar in new state costs.

The best health reform must help everyone: low-income, middle-class, and well-to-do Texans, insured and uninsured. Premiums for insured Texans doubled over the last decade, and right now insurers can price Texans out of or deny coverage based on age, health status, or occupation. Reform must outlaw these practices, moving the industry to a new business model where money is made by improving care rather than cherry-picking the healthiest customers.

To insure most Texans, two big changes are needed: a guarantee of affordable insurance pricing for everyone, and a strong subsidy system for those who can't pay without help.

All Texans must be able to buy insurance at an average-cost price, so individuals and small business can get insurance on the same terms as big employers. In 2008, the average family premium was $12,000, but Texas Department of Insurance (TDI) data show that in 2006 some small businesses in Texas paid annual premiums well exceeding $20,000 per person, and maximum rates paid were nearly six times more than average small-group premiums. Texans at every income level need to be protected from wild price variations and guaranteed access to health coverage at a standard price, especially those who won't qualify for any income-based premium help.

Next, a strong subsidy system is essential for the large number of Texans who cannot afford coverage even at the average cost.

• About 59 percent of uninsured Texans have incomes under twice the poverty level, or under $44,000 for a family of four.

• Another 30 percent of uninsured Texans have incomes from 200 to 400 percent of poverty (up to $88,000 for a family of four), the proposed upper income in reform bills for premium help.

The market simply cannot provide decent coverage at an affordable price for these families.

Half of Texas households today earn less than $59,000 a year. Affordable health care would leave these families with more money to buy a home or help send their children to college, strengthening our middle class. But even then families would still be making a major contribution to paying for health care. House and Senate bills now have working families spending up to 12 percent of income on premiums, and after out-of-pocket costs are added, families may be spending up to 25 percent of their income on health care.

A public subsidy is a bedrock component of any reform system; even in wealthy Massachusetts two-thirds of newly-covered residents under the state system are Medicaid or premium assistance beneficiaries. If reform bill price tags are trimmed back any more, families will have to pay an even higher share of income. The smaller the subsidies for coverage, the greater the number who will remain uninsured.

We must have national reform. Texas is unwilling to address the problem. For example, in spite of all the talk of the market providing coverage, under current law, the Texas Department of Insurance has very little power to regulate health insurance rates and isn't even charged with helping health insurance consumers. As another example, the Texas enrollment system for Medicaid and CHIP has been in crisis for several years and is constantly in the news and in court because it keeps qualified Texans—mostly children—waiting months to get signed up for care.

The bills moving in Congress are not perfect, but they will cover most of our uninsured, increase security and stability of coverage for those now insured, and help us get health care costs under control. Our representatives in Washington need to pass meaningful health reform this year to help Texas families and to ensure Texas a more prosperous future.

Anne Dunkelberg is associate director of the Center for Public Policy Priorities.

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