Georgia Budget and Policy Institute
For Immediate Release
March 10, 2008
Contact: Alan Essig, Executive Director
404-420-1324, Ext. 101
770-402-4630 (Cell)
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GBPI Analysis of HB 977:
High Deductible Health Plan
Tax Incentives and
Insurance Law Changes
Tax Incentives Primarily Benefit
Insurance Companies, Provide Little
Assistance to Ordinary Georgians
Click here to view the report.
ATLANTA - A new report by the Georgia Budget and Policy Institute concludes
that legislative proposals to increase tax incentives for high deductible
health plans would direct much of the savings to insurance companies, while
providing minimal benefits to uninsured individuals and families in Georgia.
The report, "Analysis of HB 977: High Deductible Health Plan Tax Incentives and
Insurance Law Changes" provides an overview and analysis of the fiscal impact
of the bill. According to the fiscal note of similar legislation it is
estimated that HB 977 would cost the state $24.9 million in FY 2010, increasing
to $40.6 million in FY 2013. Of the $217.7 million in total tax savings
between 2009 and 2013, over 67 percent ($146.2 million) would go to insurance
companies. It is estimated that individuals would receive only 3 percent ($6.7
million) of the tax savings.
"The biggest beneficiaries of HB 977 are Georgia insurance companies that offer
high deductible health plans," said Tim Sweeney, Senior Health Policy Analyst
with the Georgia Budget and Policy Institute. "At the same time, the very
modest incentives to employers and individuals are unlikely to address
Georgia's uninsured population in a meaningful way, and instead will likely
flow to individuals who already have insurance and employers who already offer
coverage," said Sweeney.
High deductible health plans are health insurance products with higher
deductibles than traditional comprehensive health insurance. Under federal
rules, individuals in certain plans with deductibles of at least $1,100 (and
families in plans with deductibles of at least $2,200) are allowed to open a
Health Savings Account (HSA). HB 977 contains several tax incentives for these
products, but directs the bulk of these tax incentives directly to insurance
companies by eliminating the insurance premium tax on these plans.
Georgia is home to more than 1.6 million uninsured individuals. Most uninsured
people in Georgia are working, but their employers do not offer coverage and
they cannot afford it on their own. Proposals such as HB 977, that seek to
decrease the number of uninsured Georgia residents by providing tax incentives
for high deductible health plans have a number of shortcomings.
? The bulk of the tax savings flow directly to insurance companies (67
percent of tax savings), not the individual consumer (3 percent of tax
savings). ? The individual and employer tax incentives would not provide
adequate financial assistance to the vast majority of uninsured Georgians who
have low incomes and need more significant subsidies to afford coverage. ?
High deductible health plans limit access to, and discourage the use of,
preventive care, primary care, prescription drugs, and other valuable medical
services. ? Tax preferences for high deductible health insurance would
create an unequal playing field, effectively limiting consumer choice while
discouraging employers from offering comprehensive coverage. ? Most of the
tax savings from the tax incentives would likely go to individuals who already
have health insurance.
Directing $40.6 million to the Medicaid Program would yield $76.5 million in
federal funds and could cover 31,000 to 69,000 currently uninsured
individuals. Investing in PeachCare could yield $126.6 million in federal
funds and could cover nearly 100,000 uninsured children.
"Although HB 977 is of great benefit to insurance companies, the bill is little
help to decreasing the number of uninsured in Georgia," said Alan Essig,
Executive Director of the Georgia Budget and Policy Institute. "A $40 million
investment in Medicaid or PeachCare is a much more efficient use of healthcare
dollars, allowing Georgia to cover tens of thousands of uninsured Georgians,"
said Essig.
A copy of the report is available on GBPI's website, www.gbpi.org.
# # #
The Georgia Budget and Policy Institute is the state's leading independent,
nonprofit, non-partisan organization engaged in research and education on the
fiscal and economic health of the state of Georgia. The Institute provides
reliable and timely analyses of Georgia's budget and tax policies and promotes
greater state government fiscal accountability, improved services and an
enhanced quality of life for all Georgians.
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