Georgia State Senator Proposes Market-Based Health Insurance Reform

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Reforming Health Insurance

On January 11, Georgia state Sen. Judson Hill (R-Marietta) introduced the Insuring Georgia's Families Act (S.B. 28), a bill that aims to use market-based incentives to insure at least 500,000 of the state's 1.7 million uninsured residents.

The legislation, designed by Hill with assistance from former U.S. House Speaker Newt Gingrich and his Georgia-based think tank, the Center for Health Transformation, is unlike reforms being implemented and debated in other states, such as Massachusetts and California. Hill's measure contains no individual or employer mandates, and it imposes no non-participation penalties.

Instead, the Georgia initiative "focuses on the individual over the employer, offers financial rewards for choosing healthy behavior, and strips taxes from insurance premiums," Hill said.

Tax Equity

Other market-based reforms in the bill include an effort to reduce premiums by encouraging the use of health savings accounts (HSAs) over other health plans, and "providing tax deductions for all medical expenses and health insurance premiums, removing the state premium tax from HSAs, and giving consumers easy access to information on price and quality of certain services and prescription drugs," Hill said.

"Access to quality information without a financial incentive or a financial stake gives people little reason to care," Hill explained. "Access to quality and price information coupled with financial rewards injects principles of supply and demand into any market, including health care."

At press time the bill had not received any action, but Hill said he hoped it would get a vote during the current legislative session.

Market Alternatives

"Health care consumerism can only work in a free, competitive market with access to comparative information," Gingrich said. "If the Georgia Legislature wants a market-based solution to health care, and not a national universal insurance system, it is imperative that it utilize existing law, encourage current market trends, and supplement the federal HSA legislation.

"Georgia has an opportunity to lead the nation in the HSA movement," Gingrich continued. "Legislators can save lives, improve health, and lower costs by supporting the concept of health care consumerism."

When the Georgia Senate established the Georgia Healthcare Transformation Senate Study Committee, which held its first meeting last September in Atlanta, Hill asked Gingrich and several members of the Center for Health Transformation team to testify.

"We offered several possible solutions which were aimed at empowering individuals to make educated, informed decisions about their health and health care," Gingrich said.

"The bill addresses a wide array of issues facing Georgians, including providing consumers with health cost and quality information, offering incentives for wellness and prevention programs, encouraging providers to implement electronic systems such as electronic medical records and e-prescribing, and preferential tax treatment for health savings accounts," Gingrich continued.

Different Approach

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Gingrich sees the Massachusetts plan as "a good first step" toward ensuring universal coverage, but he and Hill feel individuals should be encouraged to get health coverage--not ordered by the state to do so and punished for failing to comply.

"S.B. 28 differs from the Massachusetts law because it is based on providing incentives rather than being punitive," Ginrich said.

"Sen. Hill's bill does not mandate that all Georgia employers provide coverage," Gingrich continued. "It suggests that individual Georgians should have access to affordable health insurance coverage. It provides incentives to individuals to obtain that coverage and sets out a mechanism which allows preferential tax treatment for individuals and families to secure health insurance coverage."

Additionally, S.B. 28 relies on marketing and the efforts of individual insurance companies, not a state agency, to encourage participation. Legislators have worked closely with providers to design "more consumer-driven and competitively priced HSA plans," Hill said.

"Studies already reveal the increasing popularity of HSAs, which offer financial incentives and the ability to save money for medical expenses with certain tax savings," Hill explained.

Market Competition

Both Hill and Gingrich say market competition is a key aspect of the plan.

"All providers will seek to become Number 1, with the health care consumer winning," Hill said. "When competition is injected into any market, providers have an incentive to become more efficient and even better at what they do.

"Also, the private market will be impacted by the principles of market demand for health insurance products to incentivize the creation of better consumer-driven insurance products," Hill continued. "The results? Premiums stabilize, costs decline, people understand how they can save money without sacrificing quality of care, and insurance and health care become more affordable."

Other than requiring they be licensed through the state, the bill does not outline provider participation criteria.

"We are in the process of reviewing Sen. Hill's comprehensive proposal and look forward to working closely with him over the coming months," said Cindy Sanders, a spokesperson for Blue Cross Blue Shield of Georgia. "We applaud and share his desire to address many of the important health care issues facing the state of Georgia."

Economic Benefits

Hill said public support for the program is "overwhelming," though he admitted "some special-interest groups with a vested financial interest in the status quo oppose it or are cautious.

"The current cost to our state for the uninsured is estimated at $4.3 billion. By reaching about 30 percent of Georgia's uninsured, costs on the health care system, business productivity, etc., the state's taxpayers may save about $1.3 billion [annually]," Hill said, adding taxpayers pay about $1,000 apiece each year, through higher taxes and insurance premiums, to cover the costs of the uninsured.

"With a healthier population, the state's health care costs stabilize and employers save money and have more productive workers," Hill concluded. "The cost through the years of an economically dysfunctional health care system is too difficult to actually score." - www.heartland.org

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