Hank Stern hosted this week’s Health Wonk Review at InsureBlog. Don’t miss this edition – it reads like a Who’s Who in the healthcare blogging world, and there are plenty of excellent articles. My favorite article comes from Greg Scandlen, writing about the individual health insurance market at John Goodman’s Health Policy Blog. This post is a follow up to one he wrote last month, and they’re both worth reading.
The individual health insurance market only covers a small percentage of the total insured population, and it has fewer mandates and regulations than the group market (the primary example being underwriting, since carriers can and do decline or rate up applications in the individual market based on the applicant’s medical history). But – as we’ve pointed out numerous times on this blog – it’s also usually less expensive than group health insurance. We’ve been in the individual health insurance industry in Colorado for more than a decade now, so articles like Greg’s are particularly interesting to us.
Greg’s most recent article deals with the way that our tax code treats health insurance premiums. Medicare and Medicaid premiums are obviously subsidized by tax dollars. But group health insurance premiums are also subsidized, since the premiums that employers pay on behalf of their employees are not included in the employee’s taxable income.
People with individual health insurance usually don’t get such a benefit. The self-employed get to deduct individual health insurance premiums on the 1040, but there are plenty of people who purchase individual health insurance and are not self-employed. Early retirees are a good example, as are people who buy their own health insurance because their employer does not provide it.
Greg’s article goes beyond what we usually see on this topic (ie, pointing out the inherent unfairness of not allowing similar tax treatment for all health insurance premiums, regardless of whether the coverage is group or individual). He delves into what the possible implications could be for the individual health insurance market if the tax code were changed to a more equitable system. His prediction includes millions of additional people entering the individual market (thanks to a switch from group to individual coverage), more lenient underwriting standards in the individual market, more innovative products available to consumers, and more competition in the individual market. Check out his article for all the details – definitely some good food for thought.