Washington

Consumer choice will become a driving force in the health insurance market over the next few years, a White House advisor and members of Congress said last week, provided lawmakers act to give consumers more choice and the tools they need to become knowledgeable about their coverage.

The industry has been a proponent of Health Savings Accounts, which would allow consumers to use a special savings account for their health care along with a high deductible plan. “The president believes people should own their coverage,” said Doug Badger, a senior advisor to President Bush, adding that the president signed himself up for an HSA in 2004.

Speaking at the National Association of Health Underwriters Capital Conference here, Badger said that allowing consumers to establish HSAs and encouraging their use would help to control the rapidly increasing costs of health care. “The president believes the best way to make health care more affordable is consumer choice,” he said.

Other speakers at the conference also supported the goal of consumer choice as a means of making the health care system more affordable and efficient. Rep. Nancy Johnson, R-Conn., who chairs the House Ways and Means Health subcommittee, noted that increasing costs of the system could make the expense of technological advances prohibitive. “We wont be able to afford the advances weve made, if the system isnt reformed,” she said, adding that HSAs are a “first step” on the reform track.

Rep. John Shadegg, R-Ariz., also spoke of the need for consumer choice, especially in comparison to more socialized plans. “The answer isnt a single payer,” he said. “The answer is consumer-driven, market-based health care.”

Although HSAs are still relatively new, Badger said the White House believes they will play an important role in the industry. “We think Health Savings Accounts are going to revolutionize the market,” he said, adding there has been a “real shift in the market,” since the accounts debuted last year and that the administration expects to see significant growth for HSAs in the small group market and among large employers over the next two to three years.

Badger also said that while the administration believes in the HSA proposals, it recognizes that other ideas could also help solve the problem.

“Were open to any ideas and thoughts on how to make health care more affordable,” he said.

One suggestion was made by Sen. Michael Enzi, R-Wyo., at the conference, that the maximum contribution allowed to an HSA be tied to the out-of-pocket expense rather than the health plan premium. Enzi said he hoped to see the change made, adding that he would like to think of the plans as “Health Retirement Accounts” in which the savings account would cover the costs of health care through retirement.

At the conference, Shadegg also promoted legislation that would also increase consumer choice by allowing individuals to cross state lines when shopping for health coverage. His bill, the Healthcare Choice Act, would allow companies to sell their plans in any state after meeting several basic minimum requirements. Under the proposed measure, which Shadegg said will be reintroduced in the new Congress this year, the health plan would be regulated by the rules of the state in which it originated and would not be required to fulfill the mandates of the state in which the consumer lived. However, he noted that the bill also would require that consumers be given full disclosure of what the policy covers and how it differs from their states requirements. Shadegg added that the bill would reduce the costs to bring products to market and increase consumer choices. Should the bill become law, he estimated that the number of plans available to consumers in most states would double, at least.

However, he noted that some major obstacles stood in the way of the bill, most notably state lawmakers and regulators. Shadegg maintained that “the state regulatory system is a better structure,” than a federal regulator, but added that state mandates have become a burden. The unwillingness or inability to eliminate these mandates at the state level, he said, “may be the reason why there is real pressure to create a federal regulatory system.”

State lawmakers, he said, could get a “wake-up call” from their constituents if out-of-state products become major sellers in their market.

Shadegg acknowledged that Congress is also wary of allowing companies to cross state lines, saying the legislation was limited to the individual market because, even though it could be effective for the small group market, including it would make the getting the bill passed “more difficult, if not impossible.”

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 11, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.