Georgia lawmakers couldn’t agree on cuts to property or incomes taxes this legislative session. But they did manage to usher through legislation to provide $146 million to insurance companies over five years.
The insurance lobby pushed hard for the bill, which would eliminate the state and local insurance premium tax for high-deductible health plans. They argue the savings will be passed along to consumers.
But critics say there will be no way to know if that ever happens since insurance bills aren’t itemized.
“This is nothing more than a sweetheart deal for the insurance industry,” Sen. Nan Orrock, an Atlanta Democrat, said as the measure came up for a vote.
“Why else would they be out in the hall pushing for it?”
The Senate gave the bill final approval on the session’s final day. Gov. Sonny Perdue has until mid-May to the sign the bill into law.
High-deductible health plans are a favorite of Republican health policy. Participants typically put money in tax-free health savings to pay medical expenses out-of-pocket until they meet a high yearly deductible, which can be several thousand dollars. Some preventive care – like annual pap smears and “well baby” visits – are covered by the plans before the deductible is reached.
Such plans are attractive to people in their 20s and upper-income residents. Participants are likely healthy and don’t expect big medical costs but are worried about catastrophic coverage for something like an accident or cancer.
But should the state be giving the plans favorable treatment over health plans that offer more comprehensive coverage?
Those in the insurance industry say it’s one part of the puzzle.
Kirk McGhee, executive director of the Georgia Health Plans Association, acknowledged the plans are probably not the best fit for the poor and the sick. They are geared more toward “younger people who’d rather buy the Mustang” than health insurance, he said.
Still, he said those people may choose no insurance without an affordable option.
“Getting more people insured helps everybody,” he said.
“The reason that these plans are attractive to us it that it is another opportunity to get to another segment of the marketplace.”
The bill also gives employers a tax credit for enrollment in the high-deductible and participating individuals would receive a tax deduction worth $6.7 million over five years.
The bill’s sponsor, state Sen. Judson Hill, a Marietta Republican, said it will help insure 500,000 more Georgians by creating incentives for high-deductible plans.
But critics question if the plans will do much to reduce the number of uninsured in the state, which currently stands at 1.7 million.
Most have modest incomes, consumer health advocate Linda Smith Lowe said, and are unlikely to be able to pay thousands of dollars in out-of-pocket health expenses.
Lowe said it is more likely that the bill will encourage employers to switch their current health care coverage to riskier high-deductible plans.
A study by the nonpartisan Commonwealth Fund found that the plans discourage the use of prescription drugs and primary care visits because of the high out-of pocket expenses. The group also determined that while participation in the high-deductible plans grew in 2007 it is still just a tiny part of the market.
Hill is hoping the legislation he passed will change that in Georgia.
The high-deductible plans are already being sold in Georgia. But the office of Insurance Commissioner John Oxendine said the state has no statistics on how many are in effect and if they have drawn consumer complaints.
To Hill, the high-deductible plans are part of a broader shift toward more personal responsibility in health care.
“You have people who would buy cigarettes, buy a hamburger, but they don’t think they have only responsibility to pay for the health care cost that is the result of that behavior,” he said.
Hill said such health plans will give consumers a look at the real cost of health services, allowing them to shop around for the best bargain.
He and McGhee both argued it was wrong to portray that bill as a tax windfall to insurers. McGhee said if they don’t pass along the tax savings along, consumers people won’t but them.
“Our object is to sell the product,” he said.
But Tim Sweeney, health policy analyst with the Georgia Budget and Policy Institute, said he’s skeptical costs will go down.
“Insurance companies make a whole lot of money,” Sweeney said. “I hope the consumers see some benefit.”
On The Net:
H.B. 977: www.legis.ga.gov
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