Personal responsibility: New part of health insurance coverage solution

The AMA adopts policy supporting a requirement that people with the means to buy coverage do so.

Posted July 10, 2006.

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At nearly 46 million people and counting, the sheer enormity of the nation's uninsured problem makes the status quo unacceptable.

An innovative, comprehensive strategy is necessary. The American Medical Association has long-standing policy promoting individually owned health insurance combined with tax credits inversely related to income to help pay for coverage, and market reforms to make insurance more affordable.

Building on that foundation, the AMA has adopted a complementary measure centered on personal responsibility to obtain insurance.

Under the new policy, approved at its June Annual Meeting, the AMA will support a requirement that people who earn more than 500% of the federal poverty level obtain a minimum of catastrophic and preventive health coverage. That's $49,000 annually for individuals and $100,000 for families of four. The proposal relies on the federal tax structure to achieve compliance.

The rationale is that an income threshold exists beyond which it is no longer a financial hardship to buy health insurance. This is a truly reasonable proposal.

The targeted group represents just 11% of the uninsured population. These people may assume they don't need much care and can pay for whatever they need out of pocket. But individuals can't always control their health, and these people do get sick or injured, sometimes catastrophically. When they can't pay for care, others must pick up their slack. That is not fair.

But most uninsured Americans fail to buy coverage, not because they feel they're invincible, but because they can't afford it. AMA policy also addresses this group. It calls for giving federal money, in the form of tax credits or vouchers, to those who are financially unable to buy insurance. The new portion of the proposal supports individual responsibility for obtaining coverage for people earning less than 500% of the poverty level. However, it is strictly contingent upon adoption of the Association's insurance affordability reforms.

Failure to pass those changes first would undermine the requirement that people below the 500% of poverty threshold buy their own coverage.

The AMA's policy would transform the health insurance system via the private market, rather than government regulation. It would cause an influx of generally healthy people into the insurance system, making it less cost effective for health plans to individually rate applicants. The result would be less-expensive coverage.

The impact of the insurance problem is both social and economic and cries out for change.

Studies have shown that people who lack coverage forgo needed medical treatment and preventive services, are sicker when they do seek care, and die younger than their insured counterparts.

Meanwhile, uncompensated care provided to the uninsured takes a toll on everyone. Doctors are financially strained by providing an average of $2,000 a week of uncompensated care.

People with private coverage are hit, too. A 2005 study by the consumer group Families USA found the average increase in premiums to pay for the health care of the uninsured was $922 for people with family coverage and $341 for those with individual coverage. These inflated premiums cause a vicious cycle by making it harder for people struggling to afford insurance to buy coverage.

It's true that the problem is enormous, but it's not insurmountable. The AMA plan in its entirety provides the incentive for people to get insurance and makes it affordable. That's an innovative solution worth trying.

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External links

AMA plan for increasing coverage for uninsured Americans (link)

The AMA Council on Medical Service report, "Individual Responsibility to Obtain Health Insurance," June, in pdf (link)

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