1. What alternative can you propose to assist in health insurance reform? 2. How would you test out a proposal for health insurance reform before putting it in place? 3. What would you predict as the outcomes of both the proposal in the article and your own proposal? 4. What are the strengths and weaknesses of this proposal and your own proposal?
While completing the first question on the exam, be sure to pay close attention to these questions. Use the strengths and weaknesses of the proposal in the article to help create your own ideal health care system.
Focus on the three main reforms in the article listed on page 675 in the first paragraph. Tie these into your own ideal healthcare system if you find them to be valid proposals. If you believe that health care is not a right, look at this article to see how you could make it more affordable for all people while not necessarily giving it away.
The health care reform proposed by the American Medical Association (AMA) includes reform in three main areas. Palmisano et al, the authors of the article (found in a 2004 edition of the Journal of the American Medical Association or JAMA) that explains the proposal in great detail, present the reform as a way to create more incentives for insurers to provide easily accessible, high quality, cost efficient benefit packages while maintaining healthy physician-patient relationships and decreasing the amount of uninsured Americans. The first area of reform includes a tax credit system that is inversely related to income as a means to create incentives for individuals to purchase insurance and to remain covered. This system, as opposed to the current tax exclusion system that seems to mainly benefit the wealthier employed Americans, involves the government offering of income related tax credits to those who purchase health insurance for their entire family. These tax credits would inversely vary with income, meaning that people with lower income would receive higher tax credits, and would be refundable based on their status of health coverage. The tax credits would be large enough to ensure affordability of health coverage for most Americans. Larger tax credits being offered to individuals of lower income would enable insurers to target people who would otherwise not be insured and in turn, reduce the amount of uncompensated care (care that is not paid for) in the current system. The tax credit would be refundable for those who buy health insurance regardless of their tax liability. In our current tax exclusion system, 26.2% of the health benefit tax subsidies go to families of income greater than $100,000 (compared to 9.8% going to families of income lower than $30,000). The goal of the tax credit system is to make health coverage more affordable by giving higher credits to those of lower income (those who would typically be uninsured).
The second area of reform involves expanding the coverage options beyond the limitations of the employer’s offering. The current employer-based system limits the choice of an insured employee to usually only one or two plans by the same insurance company. With this system, employees are unable to simply switch plans or companies based on experience, preferences, or bad service with regards to company representatives. The AMA proposes that employers offer more health coverage choices to the employees. This would include the choice of more than just one company and more than just one plan. The expanded coverage options would result in greater incentive for policy makers to provide better quality, easier access, reduced costs, and more response to individual preferences. A switch from a system where the benefits are defined to a system where the contributions are defined would result in an increase in individually selected and owned health coverage. This means that the individual would know what is being put into his or her health coverage and not the guaranteed benefit instead of knowing the guaranteed benefit and not the amount of money that is being put towards the health insurance. This makes the individual a little more price conscious when selecting health insurance plans therefore providing a cost control mechanism. The third area of reform involves an increase in the amount of health insurance markets; therefore increasing competition resulting in new, affordable, and permanent insurance options. Guaranteed renewability in these plans would result in more incentive for people to purchase coverage before they become ill as the illness would drive premiums up. Individuals would be more likely to stay with the same insurance company because switching costs would outweigh the gains of potentially lower premiums. This would increase the risk pool of individuals and drive price down. I don’t fully understand the part of the article that talks about the additional subsidies for higher risk individuals because it seems out of place. It talks about giving higher subsidies to higher risk individuals when the article was talking about incentives to insure higher risk individuals. Insurers are provided with incentives to cover high-risk individuals in two different ways. One way is to offer high-risk subsidies to insurers for having above average risk enrollees in their pool. Another way is to give insurers a reinsurance pool to protect against the known high spenders. The idea is to eventually base the insurance premiums on age and sex as opposed to health status and to offer guaranteed renewability of enrollment so that people do not lose their health insurance as their health diminishes. The AMA also includes a small section explaining how internet based and small group arrangements would increase access to affordable plans and cost efficiency (with the reduction of administrative costs).
1. What alternative can you propose to assist in health insurance reform?
ReplyDelete2. How would you test out a proposal for health insurance reform before putting it in place?
3. What would you predict as the outcomes of both the proposal in the article and your own proposal?
4. What are the strengths and weaknesses of this proposal and your own proposal?
While completing the first question on the exam, be sure to pay close attention to these questions. Use the strengths and weaknesses of the proposal in the article to help create your own ideal health care system.
Focus on the three main reforms in the article listed on page 675 in the first paragraph. Tie these into your own ideal healthcare system if you find them to be valid proposals. If you believe that health care is not a right, look at this article to see how you could make it more affordable for all people while not necessarily giving it away.
The health care reform proposed by the American Medical Association (AMA) includes reform in three main areas. Palmisano et al, the authors of the article (found in a 2004 edition of the Journal of the American Medical Association or JAMA) that explains the proposal in great detail, present the reform as a way to create more incentives for insurers to provide easily accessible, high quality, cost efficient benefit packages while maintaining healthy physician-patient relationships and decreasing the amount of uninsured Americans.
ReplyDeleteThe first area of reform includes a tax credit system that is inversely related to income as a means to create incentives for individuals to purchase insurance and to remain covered. This system, as opposed to the current tax exclusion system that seems to mainly benefit the wealthier employed Americans, involves the government offering of income related tax credits to those who purchase health insurance for their entire family. These tax credits would inversely vary with income, meaning that people with lower income would receive higher tax credits, and would be refundable based on their status of health coverage. The tax credits would be large enough to ensure affordability of health coverage for most Americans. Larger tax credits being offered to individuals of lower income would enable insurers to target people who would otherwise not be insured and in turn, reduce the amount of uncompensated care (care that is not paid for) in the current system. The tax credit would be refundable for those who buy health insurance regardless of their tax liability. In our current tax exclusion system, 26.2% of the health benefit tax subsidies go to families of income greater than $100,000 (compared to 9.8% going to families of income lower than $30,000). The goal of the tax credit system is to make health coverage more affordable by giving higher credits to those of lower income (those who would typically be uninsured).
The second area of reform involves expanding the coverage options beyond the limitations of the employer’s offering. The current employer-based system limits the choice of an insured employee to usually only one or two plans by the same insurance company. With this system, employees are unable to simply switch plans or companies based on experience, preferences, or bad service with regards to company representatives. The AMA proposes that employers offer more health coverage choices to the employees. This would include the choice of more than just one company and more than just one plan. The expanded coverage options would result in greater incentive for policy makers to provide better quality, easier access, reduced costs, and more response to individual preferences. A switch from a system where the benefits are defined to a system where the contributions are defined would result in an increase in individually selected and owned health coverage. This means that the individual would know what is being put into his or her health coverage and not the guaranteed benefit instead of knowing the guaranteed benefit and not the amount of money that is being put towards the health insurance. This makes the individual a little more price conscious when selecting health insurance plans therefore providing a cost control mechanism.
ReplyDeleteThe third area of reform involves an increase in the amount of health insurance markets; therefore increasing competition resulting in new, affordable, and permanent insurance options. Guaranteed renewability in these plans would result in more incentive for people to purchase coverage before they become ill as the illness would drive premiums up. Individuals would be more likely to stay with the same insurance company because switching costs would outweigh the gains of potentially lower premiums. This would increase the risk pool of individuals and drive price down. I don’t fully understand the part of the article that talks about the additional subsidies for higher risk individuals because it seems out of place. It talks about giving higher subsidies to higher risk individuals when the article was talking about incentives to insure higher risk individuals. Insurers are provided with incentives to cover high-risk individuals in two different ways. One way is to offer high-risk subsidies to insurers for having above average risk enrollees in their pool. Another way is to give insurers a reinsurance pool to protect against the known high spenders. The idea is to eventually base the insurance premiums on age and sex as opposed to health status and to offer guaranteed renewability of enrollment so that people do not lose their health insurance as their health diminishes. The AMA also includes a small section explaining how internet based and small group arrangements would increase access to affordable plans and cost efficiency (with the reduction of administrative costs).