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Massive Health Insurance/Tax Credit Passes House

April 15, 1999
By: David Grebe
State Capital Bureau
Links: HB 718

JEFFERSON CITY - The centerpiece of Columbia Rep. Tim Harlan's legislative agenda passed the House Thursday - without opposition. Harlan's bill changes Missouri's health insurance industry - and provides major tax credits.

The bill is designed to make health insurance more affordable for individuals and small businesses - but at a high cost to the state treasury. Tax credits in the bill total over $150 million.

The 50-page bill represents the culmination of a two-year quest by Harlan, a Democrat, to help make health insurance affordable for small business and the self-employed.

The tax credits include up to $1,000 for individuals - and $2,000 for married couples - for all out-of-pocket medical expenses. These include co-payments, policy premiums, and prescription drugs.

The massive tax credits were not the most contentious issue during earlier debate. The bill includes a provision that restricts insurers from boosting current customers rates except for four reason: age, geography, regular tobacco use, and family composition.

Some lawmakers and insurance companies argued for allowing insurers to rate individuals up based on "health status."

"I'm a healthy 28-year-old, so why should I have to pay extra for someone who doesn't take care of their health?" asked Rep. Jewell Patek, R-Chillicothe. Patek said that this would simply raise rates for younger people and drive them out of insurance.

But Harlan said that even health-conscious people get sick - and retaining coverage while sick was the point of insurance. "No one wants a diabetic in their plan," Harlan said. "The societal question is what do you do with the diabetic?"

People without insurance now may also benefit. Currently, the state has a "high-risk pool" for Missourians now uninsurable due to their health conditions. But some lawmakers say the cost of insurance through the pool is way too high - 200 percent of standard rates. The bill would reduce that to 135 percent.

The high risk pool now has a scant 900 participants - and some Republicans said increasing the subsidy is a good idea. "That's one subsidy Republicans are proud of," said Rep. Jon Dolan, R-St. Charles County.

The bill also sets up a commission to study mandated benefits - laws passed requiring insurers to offer coverage for a particular procedure. Some insurers said they appreciate this aspect of the bill.

"There's an enormous number of mandated benefits out there," said Brent Butler, lobbyist for the Missouri Insurance Coalition. Lawmakers sometimes require benefits without really considering their cost, Butler said.

The bill has yet to go to the Senate. At some point, it will have to face competition from a welter of tax-credit measures.

"I don't think we can cut more than $200 million, total," said Sen. Jim Mathewson, D-Sedalia. Mathewson has proposed a more limited health-expense tax credit this session.

Harlan said he expected his bill to be modified in the Senate. "It won't have a fiscal note of $152 million when it's finished," he said.

Last year, Harlan proposed allowing small businesses to sign on to the state's comprehensive plan for state employees. That idea faltered due to opposition from some insurers and state employees.

Many lawmakers from both parties had nothing but praise for Harlan's tenaciousness and expertise - if not all of his proposals.

"He's obsessed," one lawmaker said. "We make fun of him all the time - but maybe that's why his bills pass and mine don't."