published Monday, December 2nd, 2013

Smith: Change the model: A win-win on benefits

By Robin Smith

In the debate over access to Chattanooga city employee insurance benefits, I propose a common-sense solution.

The solution lies in treating health insurance as we do homeowners insurance and auto insurance -- not as income but as a service purchased by the customer, the actual consumer.

Employment-based health insurance and benefit programs reach back to the 1870s as mining and railroad companies provided company doctors to workers as a form of an incentive for employment.

Department store retailer Montgomery Ward offered one of the first group insurance plans to employees in 1910, but the more standard use of health care coverage as a form of compensation did not occur until the National War Labor Board froze wages during World War II with a simultaneous shortage of workers in 1943.

The quick embrace of employment-based health benefits by the business industry offered a specific tax advantage over cash income: Workers' health benefits are not subject to income tax or other payroll taxes such as Social Security and Medicare.

Over time, the customers of the insurance companies have become the employers and not the patients. A third-party payer health care industry has resulted that exists in both the private market and in the public sector of health care with the government being the customer and not the patient in Medicare, Medicaid and the Veterans Administration.

This practice has set up two conflicts -- increased costs of health care as a service and the socially charged decision of awarding an insurance benefit to an individual outside a legal marriage.

Back in 2009, Sen. Bob Corker was advocating the elimination of the 100 percent tax deductibility of health insurance that is most frequently enjoyed by larger companies but not available for individuals purchasing their own insurance. This move would put the patient as the actual purchaser of a health care plan based on his own needs with a demand for competition.

How often do you see the AFLAC duck, the Geico gecko, Allstate's Mayhem Man or the Progressive spokeswoman Flo pitching the savings of their various auto and homeowners' policies with the promise of coverage you need at the best price?

Do you know why the major commercial health insurance plans don't have to advertise and promise a variety of choices of health coverage for competitive and reasonable rates?

It's because, in most cases, the patient is not the customer. In a third-party payer system, large employers and the government determine what coverage you have as an option, what services will be covered in "your plan" and what portion you'll pay as a deductible.

Yep. If individuals purchased their own health care insurance, they could insure their ficus plant if they so desired with no taxpayer money involved, no social implications impacting religious views or activism.

But, as that solution has been offered, those adamantly opposed to personal responsibility and consumer choice have been joined by the commercial payers' lobbyists with loud disdain.

To see the cost of health care reduced, the answer lies in personal ownership of a plan which is portable across state lines and serves the customer, the patient. And, the spat over the other issues goes away.

Win-win-win.

Robin Smith served as chairwoman of the Tennessee Republican Party, 2007 to 2009. She is a partner at the SmithWaterhouse Strategies business development and strategic planning firm and serves on Tennessee's Economic Council on Women.

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nucanuck said...

To market and sell each policy individually would price this silly concept out of sight before it ever got out of the starting blocks.

If an idea can't compete with single payer, why embarrass yourself with something poorly thought through?

December 2, 2013 at 5:41 p.m.
gypsylady said...

Wonder if there's a cure for Partisan's Hack. Brilliant idea there, Robin. Except for those Pesky detail thingys.

December 2, 2013 at 7:34 p.m.
Facts said...

Wonder if you two commenters own a smartphone or a laptop or iPad? That competition and free market sure has placed all of those items out of reach for consumers. Those "detail thingys" get in the way when dealing with the facts.

December 2, 2013 at 7:36 p.m.
gypsylady said...

That swell free market has, however, put real healthcare (as opposed to junk policies) out of reach for many, many consumers. Healthcare costs have bankrupted many more. You wanna go back to a million dollar lifetime cap and no insurance for prexisting conditions? Tell that to a family with a preemie or a child with leukemia. My guess, Facts, is that you have coverage through you employer or the government. I got mine, right?

December 2, 2013 at 8:38 p.m.
Facts said...

Healthcare costs were extremely manageable prior to insurance covereage offered through employers.

I own a company here in Chattanooga and do offer healthcare for our employees. But, it would be easier to pay our employees a higher wage and completely exit the health benefits bureaucracy within our company.

But, some would cry at "big business" for allowing them to buy their own personal plan that wouldn't be attached to their employer. It's a matter of personal responsibility. And costs would be reduced just as the article notes similar to auto and homeowners insurance.

December 3, 2013 at 6:31 a.m.
nucanuck said...

Facts,

Why wouldn't it be better to take the employer completely out of the picture? Then the 100 million+ who are not in the work force would be on even insurance footing with everybody else. Every legal resident of the US would be covered by the same basic coverage. Job changes would not involve insurance changes. Single payer does all that in a simple, straightforward, cost effective way.

It's been proven to work in country after country.

December 4, 2013 at 1:35 a.m.
moon4kat said...

I don't understand why employers are being held responsible for providing health insurance. I've been grateful for that benefit, but don't think it's an ideal model.
The ACA's "solution" to subsidize insurance companies to provide policies to the poor just adds unnecessary administrative costs and headaches. A much better solution would be to expand Medicare to cover all Americans.

December 5, 2013 at 9:14 a.m.
N2work said...

WOW So Robin supports the Affordable Care Act? Go Figure!

December 5, 2013 at 11:29 a.m.
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