It's time for the Texas Legislature to think seriously outside its usual box on health insurance, and this year's Sunset review of the Texas Department of Insurance is the perfect opportunity to shift the collective paradigm.

For two decades now, Texas has been the butt of national criticism because of the sorry state of our health coverage. Since at least 1990, Texas has led the nation in the percentage of its citizens who do not have health insurance. That's bad news for uninsured Texans, and it's bad news for insured Texans, too. In 21st century Texas, insurance supports the health care infrastructure we all depend on. When so many Texans are left out of the market, it's not just scary for them — it distorts and destabilizes the entire system.

Legislative efforts to remedy Texas' insurance situation have focused mainly on the state's public programs, Medicaid and CHIP. While there have been sporadic, generally unsuccessful attempts to encourage small employers to cover employees, policymakers and the public have for the most part taken a pass on strengthening the private insurance market. That's ironic, since we claim to want families to support themselves and get what they need in the private sector.

On the regulatory side, Texas has maintained a very relaxed position on key market components like rate setting and exclusions. On the development side, there has been no sustained attempt to engage all the stakeholders (insurers, consumers and providers) in collaborative efforts to bring more Texans into the market.

But Texas can't afford a private health insurance market that serves fewer than half its residents. Consider the following numbers:

• Five and a half million Texans have no health coverage

• 80 percent of them live in households where at least one person is working

• 48 percent of Texans are covered by private health insurance compared to the national average of 54 percent

• If the private health insurance market provided coverage at the national average, over one million more Texans would have health insurance–and without a huge investment of taxpayer dollars

Currently, the private health insurance market in Texas is part of the uninsured problem. Lawmakers should be bringing insurers, consumers and regulators together to make that market a bigger part of the solution.

The Texas Department of Insurance is supposed to maintain a healthy insurance market that meets the needs of consumers and is reasonably profitable for insurers. But TDI has only minimal involvement in the health insurance market, despite the fact that it has a capable and knowledgeable staff with vast expertise and commitment.

Health insurance should be front and center on TDI's agenda—not just advocating for individual consumers on the back end like they do now, but actively working on the front end to ensure that quality products and programs are in place to meet the needs of real Texans. TDI's staff has recommended that lawmakers establish a new center in the agency specifically to encourage market solutions in health insurance, and that seems like a really good first step.

Texas Impact has prepared a new resource to help frame the policy discussion we hope will happen around TDI and private health insurance reform. "A New Diagnosis: Reforming the Private Market to Improve Health Coverage for Texans" analyzes the private health insurance market here and how it under-serves the people of Texas. It examines common policies that other states have used to make private health insurance more accessible and affordable. And it recommends changes to Texas law that would allow more Texans to get the coverage they need.

Among our recommendations are: allow sole proprietors and self-employed people to participate in small-employer group health plans, which are more affordable than individual policies; encourage more pooling arrangements, like health purchasing cooperatives, by giving insurers a discount on the premium tax they pay for coverage provided through the pools; narrow Texas' overly-broad "rate band" pricing system which produces wide disparities in health insurance costs; strengthen TDI's authority to review and approve health insurance rates; and encourage insurers to offer customized, affordable plans to small businesses, but monitor those plans to make sure they don't adversely affect other parts of the market.

Texas' private insurance market is clearly profitable for insurers, but it is failing to serve one out of every four potential customers. That's unacceptable, and it's not necessary — taxpayers permit the market to exist, so we should insist on a market that meets our state's needs.

Bee Moorhead is executive director of Texas Impact, which can be found online at texasimpact.org.

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