Understanding health-care legislation

While everyone seems to have an opinion about health-insurance reform, it is likely that a very small percentage of Americans have read the somewhat infamous bill passed by the House of Representatives and now under consideration in the Senate. Most sane people probably wouldn’t want to read the 1,990-page document, but it certainly doesn’t hurt to read a summary of the legislation to develop an informed opinion.

Right now, Democrats in the Senate are deciding whether they will use the so-called “nuclear option� of budget reconciliation to pass this legislation, meaning they will need only 51 votes and there can be no filibuster. The Senate will be required to reconcile its health-care bill with one approved last year by the House of Representatives in order to proceed with a vote. A summary of the originally proposed legislation is as follows:

Public health insurance option

The goal of health-care reform is to provide quality, affordable health care for every American while preserving what works in today’s system, expanding choice and containing costs. The Affordable Health Care for America Act creates a public health insurance option that would compete on a level playing field with private insurers within the Health Insurance Exchange.

Overview

The public health-insurance option is available in the new Health Insurance Exchange (Exchange) along with all of the private health-insurance plans (including health co-ops). The public option will add choice to the health-insurance market; participation will be completely voluntary.

Increasing choice,  competition and accountability

Today, many areas of the country are dominated by only one or two insurance companies. Establishing a public health-insurance option will create a new choice for individuals and families.Competition in consolidated markets, driven by the introduction of a more efficient and transparent plan, will help lower premiums for all plans as the private market is forced to compete on a level playing field for the first time.

By creating an alternative in the market, both public and private plans will be accountable for their actions because people can leave one for the other during enrollment periods. For example, if the public option fails to maintain an adequate provider network, people will not enroll. Likewise, if the private plans inappropriately restrict access to care, people may choose the public option.

Level playing field

The public health-insurance option must meet the same benefit requirements and comply with the same insurance market reforms as private plans.Like private plans, premiums for the public health-insurance option will be established for the local market areas that are designated by the exchange and will vary by region. Individuals in the exchange can choose freely among the private carriers and the public option. Employers who participate in the exchange cannot dictate employees’ participation in a particular plan.

Affordability credits can be used for any plan in the exchange — public or private.

To ensure independence of the exchange, the public health-insurance option will be run by the Department of Health and Human Services, not the exchange.

Self-sufficiency

Like private plans, the public health-insurance option must be financially self-sustaining and maintain its operations using premium revenue.The public health insurance option will be required to build start-up costs and contingency funds into its rates and adjust premiums over time to assure its financial viability. The start-up costs are a loan and must be repaid.

Innovation and cost containment

The public health-insurance option will have lower administrative costs than private plans, and it will be accountable to its enrollees and taxpayers, not shareholders or highly paid executives. The new option institutes new payment structures and incentives to promote primary care, encourage coordinated care and shared accountability and improve quality.

Provider payments and participation

Provider participation is voluntary and providers are permitted to opt out.The Secretary of Health and Human Services will negotiate provider payment rates, which can be no higher than the average private plan rates and no lower than Medicare.

It allows immediate integration of delivery reforms also contained in the bill.

House-senate comparison of key provisions

 The House- and Senate-passed health reform bills are based on the plan set out by President Obama in his campaign and shaped during the legislative process. As a result, they have substantial similarities that will greatly facilitate the final step of developing an agreement on a bill for the president’s signature.  Both bills:

Provide a comprehensive set of “early deliverables,â€� starting in 2010, which include (1) initial insurance reforms and consumer protections, (2) a new insurance pool to make coverage available to individuals with pre-existing conditions or chronic illnesses who can’t get coverage today, and (3) disclosure, review and justification of insurance rate increases.  

Both bills also contain additional early investments in community health centers and the workforce, which are essential both to ensure access when the coverage reforms are implemented and to begin to improve both personal and community health and wellness immediately. Additional Medicare improvements, including beginning to close the donut hole, also begin in 2010.

Improve insurance coverage by implementing major coverage reforms (2013 in House bill, 2014 in Senate) and providing financial assistance to lower- and middle-income families and small businesses. Those provisions include:

Insurance reforms, minimum benefit standards and creation of a new health insurance marketplace called an “exchange� where health plans compete based on price and quality for individual and small employer business. Increases in Medicaid eligibility levels for those with the lowest income, and new funding for critical safety net services through community health centers. Sliding scale financial credits to ensure affordable premiums and cost-sharing assistance for households with income above new Medicaid income levels but below 400 percent of the federal poverty level.

Individual responsibility to purchase insurance within this new framework.

Employer responsibility to offer coverage or provide financial contributions to help pay for coverage.

Improve Medicare coverage for prescription drugs and preventive services, and implement major Medicare delivery system and payment reforms to make Medicare more efficient and restrain future spending growth. Both bills institute numerous long-term reforms that experts have called for to enhance quality and value for Medicare beneficiaries and the entire health-care system.

Provide revenues that, coupled with the program savings above, meet the commitment of the president, the speaker and the leaders of the House and Senate that the bill be fully paid for.  In fact, both bills actually reduce the deficit by more than $100 billion over the first 10 years, and are projected to yield savings in the second 10 years.

These similarities provide a strong platform for discussions to lead to a final agreement. However, especially on a topic as historic and sweeping as health-insurance reform, there are differences between the chambers that will need to be resolved.  

Source: House Committee on Energy and Commerce