New Mexicans and their elected officials are still waiting for the word from Gov. Richardson on an expected special session to push his government-managed “Health Solutions” plan. In the meantime and heading in the opposite direction (toward free markets and individual control), Georgia’s Legislature has passed and the governor has signed innovative health care legislation that New Mexicans might want to consider before they give the state additional power to manage and regulate health care.
Specifically, the new law makes high-deductible health plans (HDHP) paired with Health Savings Accounts more affordable for Georgians. HDHP’s are health insurance plans that offer consumers lower premiums and higher deductibles than a traditional health plan. HSAs are accounts that consumers set up to set aside tax-free money for future health expenses.
The tools outlined above are helping to change the way in which health care is delivered toward something called “consumer-driven health care.” This phrase simply means that rather than making health care decisions in a vacuum, with little information on how much various procedures actually cost, consumers can buy these less-costly policies, thus increasing coverage in the state while ensuring that consumers can at last use price information as a component in their decision-making process on health care issues.
New Mexico, with the second-highest rate of uninsured in the nation, is a prime candidate for increased penetration of consumer-driven health plans. That’s because the premiums for such plans are, on average, 10 to 20 percent less than those for traditional HMOs and PPOs.
First and foremost, the Georgia legislation exempts insurers from state premium taxes on the sale of high-deductible health plans when combined with a Health Savings Account. Most health care consumers are oblivious to the fact that health insurance itself is taxed, but it is. In fact, New Mexicans face the highest tax on health insurance premiums – over 4 percent – in the nation. Unfortunately, consumers and even their employers who often purchase the plans are not given this information on their policy statements.
While Georgia’s new law exempting consumer-driven health plans from the premiums tax is by itself an important step, consumers in that state will also be allowed to deduct from state income taxes an amount equal to premiums paid to those accounts. Lastly, the new law gives employers a $250 tax credit per employee for small employers who offer HSAs to their employees.
Georgia’s new law makes it the national leader in increasing coverage without burdening businesses and citizens with higher taxes and onerous regulations. The law also begins the important process of returning control over health care decisions back to patients and their families.
An estimated 500,000 uninsured will be able to attain coverage. While Georgia has a much bigger population than New Mexico, this new law will give more Georgians access to health insurance than there are New Mexicans who lack coverage. Certainly, encouraging the use of inexpensive, market-based health care coverage would have a similar, positive impact on New Mexico’s uninsured rate.
Unlike some of the so-called “universal coverage” plans under consideration in New Mexico, Georgia’s push toward consumer-driven health care will not result in doctors leaving the state or allow government bureaucrats to micromanage our health care. Rather, more New Mexicans will have access not only to health insurance, but to high-quality health care when they need it. Better still, because it is their money, they’ll have direct financial incentives to reduce costs and improve their health.
Ronald Reagan once said, “Government is not the solution; government is the problem.” Nowhere is this truer than in health care. New Mexico policymakers should consider following Georgia’s lead by enabling New Mexicans to find the solution.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.