There are two fundamental approaches that lawmakers are considering to make health care more affordable and to give more persons access to health insurance coverage: (1) regulating the private market for health insurance to expand access and coverage and drive down costs, and (2) allowing people to purchase insurance from a government program similar to Medicare or Medicaid (the so-called "public option"). A key component to the first approach of regulating private health insurance is the "Exchange" or "Gateway." Almost every proposal before Congress contains some variation of this idea. Where the various plans differ is in whether participation in The Exchange would be voluntary or mandatory and the extent of regulation that insurance policies sold on The Exchange would be subject to.
For example, Senators Ron Wyden of Oregon and Robert Bennett of Utah have proposed the Healthy Americans Act, which includes the "Free Choice Proposal." This proposal would create "The Exchange," a state or national market for health insurance. Under the Wyden-Bennett bill, individuals and employers could purchase health insurance on The Exchange. Low-income persons would receive vouchers or subsidies to purchase insurance on The Exchange. The money for these vouchers or subsidies would come from ending favorable tax treatment for employer-based health insurance – that is, by treating health insurance as if it were income for purposes of the income tax, and then granting low-income persons a tax credit for the difference. Essentially, higher income employees would subsidize the purchase of health insurance for other persons. I will provide more information about the Wyden-Bennett bill in tomorrow's posting.
