Health Insurance Reform Paves Way for Consumer-Based Care

Missourians have reason to applaud the legislative passage of Rep. Doug Ervin’s health insurance reform. With the signing into law of HB 818, Missouri now leads the nation in free-market health insurance reform. This reform will provide flexibility for consumer-driven health care that will allow the 58 percent of small businesses and organizations that currently don’t offer group coverage to make health plans available to their employees. And as consumers gain greater control over their own health finances, they’ll be able to save money and enjoy individualized health care.

Until a few days ago, Missouri’s health insurance laws were relics of the 1940s, biased toward big businesses with one-size-fits-all health plans. Most small businesses find that these group plans are too expensive, and have strict participation and compensation requirements. As vice president of the Show-Me Institute, I ran into this problem last year when I tried to set up a health savings account (HSA) qualified health plan for our organization. At the Show-Me Institute, we’re dedicated to researching and exploring free-market solutions to Missouri’s policy challenges. I wanted to use that same free-market approach in helping my employees gain access to health insurance by allowing them to select individualized health plans.

Although we could make pretax contributions to the health savings accounts, I found that the Show-Me Institute, as a small employer, was at a disadvantage when it came to the premiums. We couldn’t contribute directly to policy premiums of employees’ HSA health plans, and pretax contributions couldn’t be made either—not for the Institute or for employees. Considering all the red tape we were up against, it’s no wonder that only 42 percent of Missouri’s small businesses offer health coverage.

Because we couldn’t meet those requirements, our only option was to give employees bonuses for them to use toward paying premiums. HB 818 was the bipartisan solution to this health policy dilemma. This law puts employees in charge, freeing them to choose their own insurance policies. Employers can now contribute directly to employees’ plans without the burden of mandated contribution amounts. HSAs and individual health plans are portable, so employees are protected even in case of employment changes. HB 818 also gets rid of burdensome employee participation requirements, and even allows part-time employees to participate. For Missouri, these factors will contribute to reducing the rolls of the uninsured.

Despite the difficulties small organizations such as ours have encountered before now in providing HSAs, consumer-driven health care is a hit with Show-Me Institute employees. Rebecca Bruchhauser, our director of development, says her HSA has made a big difference in her health care decisions.

“Participating in a consumer-driven plan has allowed me to be more involved in my health care,” she says. “I’ve chosen new health care providers in order to benefit from greater affordability and quality. I strongly believe that HSAs are part of the solution to the crisis in health care.”

Tim Lee, until recently the Show-Me Institute’s editor, and now an adjunct scholar at the Cato Institute, points out that HSAs provide incentives for people to manage their health wisely.

“HSAs are important because they put consumers in charge of their health care,” he says. “People spend their own money more wisely than anyone else’s, so HSAs also cut costs. The legislature should be applauded for taking this significant step.”

The new HSA legislation makes the benefits of patient choice in health care available to state employees, small businesses, and many who were previously uninsured. As more Missourians reap the benefits of HSAs, our state’s health care system will become more responsive to consumers’ needs.

Jason Hannasch is vice president of the Show-Me Institute.