Time Kaine Healthcare Reform Proposals: One Good, One Bad

Tim Kaine has matched Jerry Kilgore’s health care plan with one of his own. According to the May 27 edition of the Richmond Times-Dispatch, the thrust of his plan is to encourage small businesses to offer medical insurance to their employees and, thus, reduce the huge number of Virginians–one out of seven–lacking healthcare coverage. Strategically, the idea is sound. The best way to increase access to the healthcare system is to encourage more businesses to offer medical insurance. The devil is in the details.

Kaine wants to use tax credits to encourage small businesses to offer the coverage. I’m wary of expanding the use of tax credit when Jerry Kilgore recommends them to advance his healthcare plan, and I’m wary when Tim Kaine recommends them. Kaine admits this his proposal could cost the state as much as $250 million a year if all small businesses signed on. His argument that the state would recoup some of that money through lower Medicaid pay-outs doesn’t hold water. The plan would benefit only working Virginians, and working Virginians don’t qualify for Medicaid.

By relying on tax credits, Kaine avoids confronting the reasons why health insurance are unaffordable to begin with. One reason is that Virginia mandates more medical benefits in a health insurance plan than almost any other state. Insurance companies are restricted by state law from offering an affordable, “bare bones” policy that covers only essential medical needs at a lower price. That leaves working class Virginians with a choice between a gold-plated plan and… nothing. That’s the underlying problem, and Kaine needs to address it directly

Kaine’s second idea is a good one. He would encourage the creation of voluntary insuance pools that would allow small businesses to spread risk and buy insurance more affordably. According to the Times-Dispatch, “He said he will work to overturn legal restraints that keep trade associations from starting their own insurance pools.” Now that’s addressing an underlying problem. As is so often the case, some kind of government rule or regulation is interfering with the workings of the marketplace.

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  1. James Atticus Bowden Avatar
    James Atticus Bowden

    Voluntary insurance pools. I spoke to Del Phil Hamilton over the years and wrote in the Poquoson Post/YT Crier but have failed to either say it rightly or say it to the right person. Dem Kaine may offer this idea, but this (oh how do convey my conservative credentials strongly enough?) Republican Conservative Christian (in ascending order left to right) has advocated ‘communities’ of Virginians for years.

    Your family, your co-religionists, your co-workers, your neighbors should be able to creat legally protected and responsible communities.

    Money pooled in this communities for health care, education, legal services, and ‘rainy day’ for in between work should be tax sheltered. Gifts from one to the another or to the pool should be tax credits.

    If a community is one of the poor in resources – it would be a perfect target for corporate, church, and possibly government investment.

    I’m looking for a Republican sponsor in the GA to support this idea. Thought about this since early 90s.

  2. Jim Bacon Avatar
    Jim Bacon

    Good point. If insurance pools are allowed, why should they be restricted to trade associations? Why not let any group pool their resources? Who knows what innovative ideas might bubble up?

  3. Will Vehrs Avatar
    Will Vehrs

    Lt. Gov. Kaine has led a group studying the health care affordability issue for small business during his term in office. I applaud his interest and no less a Republican than Pat McSweeney has noted Kaine’s interest in this important issue.

    I would just like to know what are the legal impediments to “pooling” and why no one has introduced legislation to knocke down the impediments and championed it in an understandable way. Who opposes removing the barriers and why?

  4. James Atticus Bowden Avatar
    James Atticus Bowden

    Will and Jim: A different way to say it is how, now, to create the institutional legal concrete to set up these communities of concern. The citizen needs to be protected from waste, fraud, abuse. The benefits need to be portable. Some oversight – audits – are in order. That is for the lawyers to work out under adult supervision. The issue is to get sponsors in the GA and for state-wide office to push it. And in order for capital to make capital, we must keep the oversight overhead to a minimum with max efficiency (pareto optimal)and keep the tax man’s hands of the money.

  5. Jim Bacon Avatar
    Jim Bacon

    Jim, good point about the portability of benefits. Portability is increasingly important as we move toward an increasingly “virtual” economy characterized by part-time, temp and contract employees who come together for particular projects rather than remain employed with a single company. Sounds like Health Savings Accounts might be one good way to go — an idea that Kilgore, to his credit, included in his health plan.

  6. James Atticus Bowden Avatar
    James Atticus Bowden

    Jim: I told you when you took me on as ‘reg’lar’ that I had scveral ideas that had been brewing for a time about the future of the Commonwealth. This is one. I was going to hit Tax ‘Principles’ next after my Old Growth idea, but if there is a campaign interest, I may do this one next. I know I could say this in an email, but curious to see if it garners others’ comments.

  7. Ray Hyde Avatar
    Ray Hyde

    I like the idea of insurance pools. I have previously suggested, for example, that if the county wanted to protect farms, then they should create an affordable insurance pool for farmers. People would buy and retain farms, just for the insurance.

    Legal impediments to pooling are akin to leagal impediments against Jitney’s: they are placed there to protect business interests. Same goes for the required benefits in Virginia plans: they benefit primarily the insurors, not the insured because they guarantee higher payments.

    The required benefits package means the insurors have a healthier pool to pick from, because if you have a pre-existing chronic condition that is required to be covered, then you will simply be rejected.

    Without that requirement, you could possibly negotiate a package that still insures your heart and appendix, but waives coverage for arthritis.

    I came away from the insurance commissioners office with the distinct impression it was there for the insurors, not me. Those socialists over in MD were suing an insurance company over the same tactic I was complaining about, which is perfectly legal in VA.

    Portability is critical in todays job market. Furthermore, if you are once accepted as part of a group, you should have the option to remain covered with the group indefinitely, provided you pay some small additional fee for administration, and the cost shared part, if any.

    Those unemployed people on medicare might have jobs if more employers could afford insurance. The Republicans have missed the boat on healthcare, because it is critical to job creation. But if only small businesses are able to enjoy the tax credits, then other businesses are not operating on an equal field.

    Leveling that field means that only one pool size makes any sense: it has to be universal. That does not mean that there cannot be ways for health care customers to be better consumers, but the benefits of universal coverage are huge, as are the costs.

    But consider the externalities. Without coverage, minor afflictions are ignored until they become major problems. A previous thread on forecloseures noted that 40% are directly related to health care costs, and the indirect contribution of inadequate health care to the total of foreclosures is probably much higher. Also, universal coverage does not mean that private coverage and private health care is not available: it just means there is some minimum floor.

    Remember, the association of healthcare with work was entirely accidental and voluntary: it was an invention of business to lure workers. Now the situation has morphed to the point that only workers are worth insuring, which is a lousy way to provide the needed overall coverage. Not only that, but now we see that the lowest paid employees are not worth insuring either.

  8. Blue Cross of California Avatar
    Blue Cross of California

    The health care reform sounds like a great way to improve health insurance for many individuals.

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