Contributed by Sen. Chuck Grassley
HEALTHCARE REFORM has been elusive over the past two decades. Neither Congress nor the sitting president has been able to agree on ways to improve our healthcare system.
It is imperative that Congress gets serious, puts partisan politics aside and reforms our healthcare system today, not tomorrow. But unfortunately, it’s the same old song – that song is that the status quo is working and that Congress doesn’t need to act until there is a crisis.
We hear this when we talk about reforming Social Security and Medicare. However, the numbers associated with healthcare coverage speak for themselves.
The Census Bureau recently reported that 47 million Americans are uninsured, up from 45 million in 2005 and approximately 38 million in 2000. The percentage of employers offering health coverage to their employees has declined to about 60 percent today, from about 68 percent in 2000. Health insurance premiums continue to grow at a rate that is approximately two times the rate of inflation and the growth of workers’ earnings.
Health insurance is becoming more expensive and less affordable. Employers are dropping coverage. And as a consequence, a total of 9 million more Americans are uninsured now than were without coverage in 2000.
The problem of the uninsured is most acute among small businesses. On average, about two in five small businesses do not offer health insurance. Thus, a substantial percentage of small business employees are without employer-provided health coverage.
Those small business employees are forced to purchase insurance on the individual market, which is expensive, and as a result they often can’t afford it. In the end, it’s the small business employee – and often his or her spouse and dependents – who don’t have health insurance.
One way to improve our current healthcare system is by changing the tax treatment of health insurance. There is consensus among Republicans and Democrats that Congress should level the playing field. This can be done by addressing the tax inequities between taxpayers who receive health coverage through their employers and those who do not receive employer-provided coverage or are not employed.
For taxpayers who receive employer-provided coverage, the current exclusion for such health coverage is regressive. That is, low-income workers with no tax liability get no benefit from the exclusion, and the exclusion is more valuable to taxpayers in higher income tax brackets.
There are sound policy reasons for change. Congress also could use the revenue to pay for tax preferences for health insurance that may be targeted at low-income workers.
However, Congress must tread lightly – changes in the tax treatment of health insurance must be done in a way that does not disrupt the current employer-based system.
Another way to make coverage more accessible is to create a competitive marketplace through which employees and individuals can buy affordable healthcare coverage. Such a competitive marketplace could be created through the establishment of what some states call an exchange and what Massachusetts calls a connector.
Senate Finance Committee Chairman Max Baucus and I like to call such a mechanism a “gateway.” This gateway could serve as a clearinghouse through which insurance companies would offer health insurance policies to employees and individuals. The gateway could take the form of a Web site or a structured organization that offers one-stop shopping that would enable employees and individuals to easily compare various health insurance options.
The Massachusetts Health Connector performs some of these functions. It enables one-stop shopping for employers offering coverage, and individuals can get their coverage through the Connector as well.
As time goes on and Massachusetts gains experience with this model, I hope to hear evidence on its usefulness. I’d appreciate hearing about other efforts states have made to improve access to health insurance for small employers and their employees.
Broader, more systematic healthcare reform could dramatically change our healthcare system. I support broader healthcare reform and have recently joined Sen. Ron Wyden to work toward innovative solutions that can work.
But substantial reforms may take years to negotiate and years to implement. Therefore, incremental healthcare reform is a logical and realistic first step that could be made while a broader healthcare reform package is debated.
Such an incremental approach can begin in the small business context. There is a way to apply healthcare reform principles to small businesses.
These incremental reforms could be implemented without disrupting the current employer-based system. Congress can learn from incremental changes and then build on them in the future. But most importantly, Congress can provide much-needed relief to small businesses by expanding access to affordable health insurance for employees of small businesses.
Sen. Chuck Grassley (R-Iowa) is ranking member of the Senate Finance Committee.