Uninsured Plan Backs New Account Options For Individuals, Low-Income

A new proposal unveiled to much fanfare yesterday to cover most of the uninsured population features “Universal Health Accounts” or UHAs. The new account type, one of three major features of the new proposal, has already been endorsed by the Galen Institute, and is viewed by supporters of consumer-driven health care as a strong positive.

The plan overall is strongly bi-partisan, a good thing given the situation on Capitol Hill. It features Democratic proposals such as expanding Medicaid eligibility alongside pro-market proposals such as greatly expanding the deductibility of individual health insurance premiums for children. It is so far strongly backed by both sides, although funding will still be difficult.

UHAs are savings accounts for low-income individuals to buy coverage. They could be used to pay health insurance premiums without being tied to an HDHP, meaning employers could fund a UHA instead of a group health plan. For paying medical expenses an HDHP is still required, the same as an HSA.

Contributions to the premium-only UHA can be made by either employee or an employer premium subsidy, so that employers who now provide little or no health insurance can at least contribute something to the new account without having to set up a qualified HDHP. This feature is critical: UHAs must be able to allow low-income employers to pay at least something towards premiums, without providing expensive HDHP coverage.

The new proposal also allows a federal matching credit into the UHA if a state is willing to come up with an appropriation, something that is already occurring in several states and is expected to increase. The federal match into the UHA would be a credit worth 50% of any other contribution from either the employer or the employee. The maximum match is $2,000, a required limit to make the proposal affordable to state and federal budgets.

More in the upcoming issue and available online at http://hsamarkets.com