Improving health insurance without inflating premiums – InsuranceNewsNet

NEW YORK, 22nd of July (TNSres) — The Manhattan Institute issued the following press release:

Congress Democrats are racing against time to extend Covid-era Obamacare subsidies before premium price hikes take effect ahead of the November election. During this time, the Biden Administration works with the Internal Revenue Service to increase the number of Americans covered by the plan the president’s former boss signed into law in 2010. But with inflation soaring, lawmakers may need to rethink their approach to health care in general.

A new report from Manhattan Institute Senior Fellow Chris Pope proposes to restructure tax subsidies so that the most profitable insurance schemes can compete, thereby improving insurance offers without inflating premiums. While the Employee Sponsored Insurance (ESI) tax exclusion and Affordable Care Act (ACA) subsidies should remain safety nets to ensure broad coverage, those who purchase coverage before getting sick should be allowed to receive 70% of the ESI or ACA. tax subsidies to purchase plans priced in proportion to their health risks.

The goal of health insurance tax subsidies should be to achieve the greatest increase in coverage, while imposing the lowest additional tax burden on labor, writes Pope. The ESI coverage tax exemption has been successful in incentivizing companies to cover most workers and their dependents, and the ACA’s exchange insurance tax credits provide a safety net for those who do not have an ISE. But none of these sources adequately meet policyholders’ needs for cost-effective care. ESI costs are inflated by the need to simultaneously satisfy all employees with loose networks and broad benefits, while the cost of ACA plans is inflated by the requirement that all enrollees pay the same premiums as those who do not. register only after falling ill.

After letting America’s Covid-era bailout expire, Congress should establish a new Continuous Renewable Insurance market, where Americans could purchase guaranteed renewable insurance at a price commensurate with their medical risks. Congress should support this market with tax advantages that would allow it to compete with the ESI and ACA regimes.

Additionally, to support those who do not receive ACA subsidies, legislators should give individuals of all income levels the ability to deduct 70% of the cost of health insurance purchases (in the ACA or CRI markets ) of their taxable income. This would address the inequity towards those who fall on the wrong side of the subsidy cliff and revive the incentives for price competition among insurers, while avoiding the inflationary and fiscally costly consequences of a open-ended commitment to automatically absorb one dollar of premium increase for high earners. with an additional grant dollar.

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Report link: https://media4.manhattan-institute.org/sites/default/files/Aiding-Insurance-Without-Inflating-Premiums-Chris-Pope.pdf

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Original text here: https://www.manhattan-institute.org/press/release-improving-health-insurance-without-inflating-premiums