Recommendations for Obama's health insurance reform

By Robert Hopper

Hopper Insurance Services


To: President Obama
Re: Recommendations for health insurance reform
From: Robert Hopper, insurance agent from Santa Barbara, CA


Dear President Obama,

I would like to recommend a bipartisan solution that uses the best ideas from both sides of the political spectrum. While the devil is in the details, here are the main concepts that can help our system:

Individual mandate:
  • Insurance reform begins by requiring every American to have health insurance.

  • Currently, if an uninsured person incurs a $100,000+ hospital bill, the hospital cost-shifts that bill to those who have insurance. Research shows the average family pays an extra $1,000 per year in premiums to pay for the uninsured.

  • Insurance 101: everyone needs to be in the insurance pool. Insurance doesn't work when people in the insurance pool pay for people who are outside the pool.

  • For those who persist in not buying health insurance, withhold refunds and provide tax penalties and use proceeds to put into a separate fund to pay for the few who absolutely refuse to get coverage.

  • Having an individual mandate leads to the next step: guaranteed issue.
Guaranteed issue:
  • America's Health Insurance Plans (AHIP), the professional organization for health insurance companies, has stated they will offer individual health insurance on a guaranteed basis if there is an individual mandate. This makes financial sense because the cost of insuring new people with expensive pre-existing conditions will be offset by premiums from the new healthy people who will be required to get health insurance.

  • No employer mandate

  • The individual mandate will remove need for employer mandate and provide options.

  • Option 1: employers can choose to continue offering health insurance benefits as a way to attract and retain the best and brightest employees.

  • Option 2: employers compete for the best and brightest employees by offering higher salaries instead of benefits.
Financial assistance to the working poor and the truly needy:
  • It is unconscionable that people go bankrupt each year due to lack of good medical insurance; it's even worse that thousands die as well.

  • Based upon income levels, people at the lowest level will have health insurance fully subsidized. As income increase, the subsidy decreases until some reasonable level where the subsidies cease.
The public plan:
  • The idea of having a "public plan" to compete with insurance companies has been divisive, and threatens to destroy bipartisan health care reform.

  • The possibility of the public plan helped the stakeholders come to the bargaining table, and in that respect, it has been useful.
Plain and simple -- it will cost money to subsidize the working poor and the truly needy. It's time to forget the campaign rhetoric about no new taxes. It's time to make sure that everyone has affordable health coverage. Here are a couple of sources for money.

Change the tax deductibility for insurance:
  • The employer tax deduction for health insurance is one of the largest tax deductions, with estimates ranging from $200 billion to beyond $250 billion per year and growing. On the other hand, employees who work for employers who don't offer health insurance do not get a tax deduction when they buy health insurance. That's an unlevel playing field.

  • Leveling the playing field so that all health insurance is treated equally, whether a person buys their own coverage or gets coverage through their employer.

  • Consider lowering employer tax deductions in order to create revenue to pay for the working poor and the truly needy.

  • Consider eliminating FICA deduction (Medicare and Social Security):

    • Use new tax revenues to bolster the ailing Medicare

    • Use new tax revenues to bolster ailing Social Security
  • Consider eliminating employer tax deduction and redistribute that money to all Americans in form of refundable tax credit that can be used for health insurance. That will encourage everyone to have health insurance.
My wish list: Put a tax on gasoline to fund health care:
  • According to a June 25, 2009 editorial by Tom Friedman, New York Times columnist in and author of The World is Flat wrote: "Imposing an immediate `Freedom Tax' of $1 a gallon on gasoline -- with rebates to the poor and elderly -- would be a triple positive: It would stimulate more investment in renewable energy now; it would stimulate more consumer demand for the energy-efficient vehicles that the reborn General Motors and Chrysler are supposed to make; and, it would reduce your oil imports in a way that world surely effect the global price and weaken every petro-dictator."

  • I would only amend his ideas slightly: Use the Freedom Tax revenue to help pay for health care reform that will benefit everyone -- including the poor and elderly.
End result:
  • Equal tax treatment for all Americans.

  • Financial assistance for the working poor and the truly needy.

  • Affordable health care for all.
Thanks for reading, Bob

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