Georgia's Republican leaders are considering a Newt Gingrich-inspired "solution" to the state's health insurance crisis that critics say will come at the expense of those who most need relief -- the middle class and the poor.
Gingrich's plan, the result of work by a think tank he founded that is paid for partly by health insurance companies, would set up tax breaks for businesses that offer employees a choice of personal, untaxed health savings accounts. Gingrich, the former speaker of the U.S. House of Representatives who represented Georgia, has called the plan "the single most important change in health care policy in 60 years."
Others say it's a potential health care fiasco that will discourage the working class from seeking medical care because of the costs, and drive up the premiums of those who stick with traditional health insurance.
Gingrich -- who resigned from the House seven years ago amid squabbles within his own party after Republicans suffered a midterm loss under his leadership -- argues that personal health savings accounts have triple tax advantages. Contributions to the savings accounts would not be taxed, nor would interest earnings or withdrawals for health care expenses.
Unlike the current federal plan that allows workers to put aside money for health costs, the Gingrich plan would allow people to "rollover" their accounts from year to year.
The plan does nothing specific for 1.7 million uninsured Georgians. It does nothing for the jobless Georgians who are uninsured. It does nothing for children who are uninsured. In fact, critics say, the Gingrich plan might jeopardize the federally subsidized PeachCare program that provides health care to uninsured children. "Health care shouldn't be left to the vagaries of the marketplace," says Linda Lowe, a lobbyist for Familes First.
Though high deductible health plans have lower monthly premiums, the proposal also would require higher out-of-pocket expenditures, which poses trouble for working people scraping by in an economy defined by high inflation rates.
In addition, the individual income tax savings of account enrollees would benefit higher-income participants, according to Tim Sweeney of the Georgia Budget and Policy Institute, a liberal think tank. Sweeney says a family of four with an annual income of $120,000 making an annual personal health savings deposit of $4,000 would save $1,000 each year. A family with an annual income of $40,000 making an annual health savings deposit of $4,000 would save between $400 and $600 yearly.
"From an income equity standpoint, where's the incentive for a low- to moderate-income person?" Sweeney asks.
If Gingrich's plans triumph, what Democrats dread most is the overall weakening of group health insurance. Proponents of group insurance say that reliance on individual health savings accounts to solve the crisis would have a double domino effect: It would dramatically increase the costs of traditional health insurance and increase the numbers of the uninsured by encouraging employers to drop group insurance plans to cut costs.
But Gingrich has key allies in the state Legislature. Two of the chief advocates of his health savings accounts come right out of his back yard in Cobb County and wield powerful positions in their respective governing bodies: Sen. Judson Hill, who chairs the Health Transformation Study Committee, and Rep. Sharon Cooper, chair of the House Health and Human Services Committee. Another Cobb stalwart, Rep. Rich Golick, an assistant floor leader in the General Assembly for Gov. Sonny Perdue, envisions Georgians shopping for health care the way you pick and choose your favorite individual entrees from a Chinese buffet, rather than having to use the same general menu.
Critics such as Lowe say the Gingrich plan would fail the basic premise of insurance, which is spreading risk over the whole population of a community, not individually isolating the supposedly healthy, low-risk members from those who are high-risk. By taking a buffet-style approach to health insurance, she says, "You're legitimating cherry-picking on the basis of health and relegating people to a high risk pool." The principle that should drive health care, in Lowe's view, is that "We're all in this together."
In the next couple of weeks, the Senate study committee will hand in its report in anticipation of the legislative session, a report that will very likely include a recommendation of state tax incentives for the creation of health savings accounts.
"The Republicans have decided privatization is the way they want to go," says Rep. "Able" Mable Thomas, D-Atlanta, who sits on the House Health and Human Services Committee. "We have this philosophical divide."
But Gingrich and the Republicans have the majority.
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