National Center for Policy Analysis Making Ideas Change the World

National Center for Policy AnalysisMaking Ideas Change the World

How HIPAA’s Approach to Portability Is Making Genuine

Portability Impossible

Presentation toThe Thirteenth National HIPAA Summit

by

John C. Goodman

September 27, 2006



Next Big Issue

Personal & PortableHealth Insurance


Problems

No Continuity of InsuranceNo Continuity of Insurance


Problems

No Continuity of InsuranceNo Continuity of Insurance No Continuity of CareNo Continuity of Care


Problems

No Continuity of InsuranceNo Continuity of Insurance No Continuity of CareNo Continuity of Care Perverse Incentives for EmployeesPerverse Incentives for Employees


Problems

No Continuity of InsuranceNo Continuity of Insurance No Continuity of CareNo Continuity of Care Perverse Incentives for EmployeesPerverse Incentives for Employees Perverse Incentives for EmployersPerverse Incentives for Employers


Problems

No Continuity of InsuranceNo Continuity of Insurance No Continuity of CareNo Continuity of Care Perverse Incentives for EmployeesPerverse Incentives for Employees Perverse Incentives for EmployersPerverse Incentives for Employers Job LockJob Lock


Problems

No Continuity of InsuranceNo Continuity of Insurance No Continuity of CareNo Continuity of Care Perverse Incentives for EmployeesPerverse Incentives for Employees Perverse Incentives for EmployersPerverse Incentives for Employers Job LockJob Lock Baby Boomer RetirementBaby Boomer Retirement


Source of Problems

Federal Tax LawFederal Tax Law


Source of Problems

Federal Tax LawFederal Tax Law HIPAA/ERISAHIPAA/ERISA


Models for Reform

Swiss Health Care SystemSwiss Health Care System


Models for Reform

Swiss Health Care SystemSwiss Health Care System Use of HRAsUse of HRAs


Models for Reform

Swiss Health Care SystemSwiss Health Care System Use of HRAsUse of HRAs Use of Section 125Use of Section 125


Models for Reform

Swiss Health Care SystemSwiss Health Care System Use of HRAsUse of HRAs Use of Section 125Use of Section 125 MA. Health PlanMA. Health Plan


Models for Reform

Swiss Health Care SystemSwiss Health Care System Use of HRAsUse of HRAs Use of Section 125Use of Section 125 MA. Health PlanMA. Health Plan NCPA/Texas BC/BS PlanNCPA/Texas BC/BS Plan


Models for Reform

Swiss Health Care SystemSwiss Health Care System Use of HRAsUse of HRAs Use of Section 125Use of Section 125 MA. Health PlanMA. Health Plan NCPA/Texas BC/BS PlanNCPA/Texas BC/BS Plan


Group vs. Individual Insurance

Disadvantages Disadvantages of Individualof Individual

1. Premiums Paid with Pretax 1. Premiums Paid with Pretax DollarsDollars

2. Economies of Group 2. Economies of Group Purchase Purchase

3. Avoids cost of3. Avoids cost ofIndividual UnderwritingIndividual Underwriting

1. Premiums Paid with 1. Premiums Paid with Aftertax DollarsAftertax Dollars

2. Diseconomies of 2. Diseconomies of Individual Purchase Individual Purchase

3. Bears Cost of 3. Bears Cost of Individual UnderwritingIndividual Underwriting

Advantages Advantages of Groupof Group


Group vs. Individual Insurance

Advantages Advantages of Individualof Individual

Disadvantages Disadvantages of Group of Group

1. Indefinite Contract 1. Indefinite Contract (Guaranteed Renewable)(Guaranteed Renewable)

2. No Experience Rating 2. No Experience Rating After EntryAfter Entry

3. Personal & Portable3. Personal & Portable

1. 12 Month Contract 1. 12 Month Contract

2. Experience Rating 2. Experience Rating Every 12 MonthsEvery 12 Months

3. Tied to Employment3. Tied to Employment


Hybrid Insurance(New System Plans)

1. Employer’s share of premiums is paid with pretax dollars.

2. Initially, all employees enter the pool as a group.

3. There are individual premiums based on age, etc.

4. No individual underwriting (but the group as a whole is experience rated).

5. Indefinite contracts (guaranteed renewable).

6. No experience rating after entry.

7. Personal & Portable.


DCE Employer

BC/BS AETNA CIGNAGolden

Rule

Mutual of

Omaha

$800 $900 $1,000 $1,100 $1,200

Payment of Monthly Premiums


DCE

Employer

$900 + $100Insurer

Employee

Salary Minus $100

$1,000

Example: Monthly Premium


EmployerInsurer

Employee

Salary

$800

Employee’s IRA

$100

$900

Example


Advantages of Portable Insurance

Continuity of InsuranceContinuity of Insurance



Continuity of InsuranceContinuity of Insurance Continuity of Health CareContinuity of Health Care



Continuity of InsuranceContinuity of Insurance Continuity of Health CareContinuity of Health Care Labor Market MobilityLabor Market Mobility



Continuity of InsuranceContinuity of Insurance Continuity of Health CareContinuity of Health Care Labor Market MobilityLabor Market Mobility Employers as Defined-ContributionsEmployers as Defined-Contributions


An Idea Whose Time Has Come


National Center for Policy Analysis

Making Ideas Change the World

Documents

National Center for Policy Analysis Making Ideas Change the World