Kennedy HELP Committee Health Reform Bill
The remaining two sections, describing the public plan option and employer contributions, were released on July 2. See summaries and links below.
Senate HELP: Public Plan Needs Improvement – Center for Policy Analysis July 2, 2009
The public plan proposed by the Senate Committee on Health, Education, Labor and Pensions (HELP) misses the chance to expand coverage and control costs. The Center for Policy Analysis has set two minimum benchmarks for an effective public plan: 1) broad eligibility, to assure a large and stable risk pool; and 2) use the government’s ability to set reasonable reimbursement rates, in order to control costs and offer affordable premiums.
A letter from Senators Kennedy and Dodd on July 1 promised a strong public option that can keep costs down, expand coverage, and offer affordable options for coverage. The portion of the chairman’s mark, released on July 2, describes a public plan referred to as a Community Health Insurance option (Title XXXI, Subtitle A – Affordable Choices, Sec. 3106).
Eligibility. Employees with access to coverage from work are excluded from enrolling in the Community Health Insurance option (Subtitle B, Sec. 3111,(b)(C); and Sec. 3116 (4)(a)(4)(v)IV), pp. 132-133). An individual who is eligible for employer-sponsored coverage can join the public plan only if the workplace plan’s coverage doesn’t meet the standard for minimum qualifying coverage, or if it is not affordable ((4)(v)(IV) and (4)(B)pp.132-4). A plan is unaffordable if the premium is greater than 12.5% of the indivuduals’s adjusted gross income (AGI) (Sec. 3103, p. 70) An employee with an AGI of $50,000 a year, who pays $500 a month for insurance, would not qualify to join the Community option. $50,000 times 12.5% equals $6.250, more than the annual premium of $6,000. An individual with an AGI of $100,000, paying $12,000 a year for family coverage, also just misses the 12.5% mark, which is $12,500. If the same person had to pay $13,000 a year for employment-based coverage, she would qualify to select the public plan.
Reimbursement Rates. The Community option cannot reimburse health care providers for a rate higher in aggregate than the average reimbursement rates paid by health insurers through the Gateway (Sec, 3106. (6) p. 80). While this is some limitation, it does not stanch inflation in health spending. It means the public plan premiums would not be lower, or more affordable, than private plans, according to the CBO (see below). Pegging reimbursement to a fixed rate set by the public sector, as Medicare does, would be more effective.
Affordability. Employers are required to pay at least 60% of the premium for workplace insurance. But if they choose not to buy insurance, they are required to pay only $750 a year per worker to a state fund. Since this is far less than the average annual cost of most premiums, the incentive is for employers to drop coverage. This would pave the way for more people enrolling in the public plan – if that plan were affordable.
Individuals are required to pay from 1% of 12.5% of their annual income, on a sliding scale, for health insurance premiums.
The Committee chairs should improve their proposals to make the public plan widely and immediately available, as well as affordable. If they do not, hopefully there will be constructive amendments from other Senators on the Committee when debate resumes on July 7.
Click here to download Senate HELP part 2
Congressional Budget Office Scores New Senate HELP Bill, Public Plan, July 2, 2009
CBO found the new version of the Senate HELP bill will reduce the number of uninsured by only 20 million. Most of the remaining 25 million uninsured would be below 150% of the poverty level. Many could be covered by expanding Medicaid, but the bill does not propose this. Because this version covers fewer people, it costs less for the federal government.
The proposed public plan also misses the chance to control costs and to offer more affordable premiums, as it does not limit reimbursement rates to health care providers, according to CBO. The Center for Policy Analysis/EQUAL has proposed that the public plan should tie reimbursement rates to Medicare’s:
“The new draft also includes provisions regarding a “public plan,” but those provisions did not have a substantial effect on the cost or enrollment projections, largely because the public plan would pay providers of health care at rates comparable to privately negotiated rates—and thus was not projected to have premiums lower than those charged by private insurance plans in the exchanges.” (CBO letter, p.3)
Click here to download CBO letter July 2, 2009
Summary of Senate HELP Bill Features, Part I – Committee Press Release June 9, 2009
The Affordable Health Choices Act includes the following five major elements:
CHOICE: An important foundation of The Affordable Health Choices Act is the following principle: If you like the coverage you have now, you keep it. But if you don’t have health insurance or don’t like the insurance you have, our bill will give you new, more affordable options.
COST REDUCTION: The Affordable Health Choices Act will reduce health care costs through stronger prevention, better quality of care and use of information technology. It will also root out fraud and abuse and reduce unnecessary procedures.
PREVENTION: The best way to treat a disease is to prevent it from ever striking, which is exactly why The Affordable Health Choices Act will give citizens the information they need to take charge of their own health. The bill will make information widely available in medical settings, schools and communities. It will also promote early screening for heart disease, cancer and depression and give citizens more information on healthy nutrition and the dangers of smoking.
HEALTH SYSTEM MODERNIZATION: The Affordable Health Choices Act will take strong steps to see that America has a 21st-century workforce for a modern and responsive healthcare system. America must make sound investments in training the doctors, nurses, and other health professionals who will serve the needs of patients in the years to come. It will make sure that patients’ care is better coordinated so they see the right doctors, nurses and other health practitioners to address their individual health needs.
LONG TERM CARE AND SERVICES: The Affordable Health Choices Act will also make it possible for the elderly and disabled to live at home and function independently. It will help them afford to put ramps in their homes, pay someone to check in on them regularly, or any of an array of supports that will enable them to stay in their communities instead of in nursing homes.