Legislation gives insurers a break, critics say
28 03 08 - 11:37
Proposal pushes incentives for high-deductible plans and health savings accounts.
By ANDY MILLER
The Atlanta Journal-Constitution
Published on: 03/28/08
Consumer groups say legislation rolling through the Georgia General Assembly, intended to make health insurance more affordable, would also hand insurers an expensive gift: $146 million in tax breaks over the next five years.
That benefit, they say, dwarfs the five-year tax savings to employers ($64.8 million) and individuals ($6.7 million) projected under the bill.
special-interest tax breaks, has been trumpeted by opponents trying to head off HB 977, currently working through the Senate. The proposal, through tax incentives, promotes the sale of high-deductible health plans coupled with special savings accounts. It passed the House 122-39.
"It's an enormous tax break that will add to the hole in the budget" by subtracting millions in revenues, said Linda Lowe, a consumer health advocate.
The insurers' tax breaks could be even bigger if a large number of these policies are sold, Lowe said.
But the bill's supporters counter that passage would spark competition among health insurers, thus making coverage easier to buy for the 1.7 million Georgians currently uninsured. They say it's a misnomer to refer to the insurance companies' incentives as tax breaks.
"There's no money that goes to insurance companies," state Sen. Judson Hill (R-Marietta) said. "Insurers will pass [the savings] along to consumers" with lower premiums.
The bill would exempt insurers from paying taxes on premiums in the sale of the high-deductible savings account plans. Georgia health insurers typically pay a tax of at least 2.5 percent on premiums.
Small employers under the bill would get a $250 tax credit per enrolled worker, and individuals buying them would earn a tax deduction.
The Georgia Association of Health Plans said the tax changes will lead to lower insurance prices.
The state has one of the highest premium taxes in the country, said Georgia Insurance Commissioner John Oxendine, who supports the bill. Gov. Sonny Perdue also has backed the insurance legislation.
Many Republicans have touted the combination of high-deductible policies and health savings accounts (HSAs) as the answer to lowering costs and covering the uninsured — the two monster problems in health care.
HSA proponents in Georgia, aided by Newt Gingrich's Center for Health Transformation, said the legislation's goal is to cover 500,000 of the state's uninsured. Critics call that figure unrealistic.
The savings accounts, similar to a 401(k) account, are funded with pretax dollars. The money in an HSA grows tax-free. And it's tax-free when spent on health care. To be eligible for an HSA, though, an individual must have a high-deductible health plan, which have lower premiums than other policies.
Skeptics say the accounts target generally healthy people who have financial resources to salt away money to pay for later medical expenses. High deductibles are more troublesome for lower-income people, the bill's opponents say.
AARP and the American Cancer Society are among opponents of the legislation. "If we are really going to do something about the uninsured ... look at ways to expand PeachCare," the government insurance program for uninsured children, said Kathy Floyd, advocacy director for AARP.
Few uninsured Georgians would buy the policies, Lowe says. Much of the benefit, she said, would go to already insured consumers who then would switch to the high-deductible, HSA plans. In addition, insurers would pick up tax breaks not just for new policies, but also ones already sold, Lowe said.
Each uninsured resident costs the state about $3,850, including free medical care and lost productivity, Hill said, so Georgia will save with each person gaining coverage.
The Georgia Association of Health Underwriters, which represents insurance agents and brokers, says the bill may prevent the state's uninsured figure from growing still higher.
"Without some kind of relief, millions of Georgians face prospect of losing coverage altogether," says Michael Wardrip of the underwriters association.