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CCH® BENEFITS — 12/01/08

AHIP Adopts Reform Proposal That Trades Guaranteed Coverage For Individual Mandate

From Spencer's Benefits Reports: In proposing a health care reform plan that includes an individual mandate in exchange for guaranteed individual health insurance, America’s Health Insurance Plans (AHIP) has joined a growing chorus of advocates for universal health care coverage. Before the November 4 presidential election, AHIP had advocated plans for universal access but not universal coverage.

“No one should fall through the cracks of our health care system,” said Karen Ignagni, president and chief executive officer of AHIP in a prepared statement issued by the organization on November 19. “Universal coverage is within reach and can be achieved by building on the current system.”

The new AHIP plan includes the following elements:

Guarantee-issue coverage with no preexisting condition exclusions. According to AHIP, one approach taken by states to address the inability of some individuals to purchase coverage because of health status “has been the enactment of guarantee issue legislation requiring health plans to offer coverage to all applicants. These well-intentioned reforms have often resulted in severe unintended consequences, including significantly higher costs for all policyholders.”

Establish an individual coverage requirement. This would include an insurance coverage verification system, an automatic enrollment process, and effective enforcement of the requirement that all individuals purchase and maintain coverage. President-elect Barack Obama’s health reform plan does not call for a universal individual mandate, but the Massachusetts health reform plan has such a mandate, and Sens. Max Baucus (Mont.) and Hillary Rodham Clinton (N.Y.) have proposed an individual mandate.

Promote affordability by: providing refundable, advance tax credits for moderate-income individuals and working families and promote tax equity whether coverage is obtained through an employer or the individual market. An advance tax credit would allow individuals to claim the credit when insurance premiums are due rather than wait until the end of the year for reimbursement. While Sen. John McCain’s (Ariz.) health care reform proposal suggested elimination of the employer-based tax exemption for health care to achieve equity, AHIP has stated that “to help create a level playing field for individuals purchasing coverage on their own and for those who have employer coverage, full tax-deductibility of premiums purchased in the individual market should be granted.”

Ensure premium stability for those with existing coverage through a broadly funded reimbursement mechanism that spreads costs for the highest-risk individuals. An earlier “guaranteed access plan” proposed by AHIP did not advocate an individual mandate, and suggested that premiums from private insurers for individuals who were not eligible for state health care plans be capped at “one-and-one-half times standard market rates.”

For more information, visit http://www.ahip.org/.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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