Last week, the US House of Representatives passed a massive (2000+ pages) bill to increase regulation of health insurance, change parts of Medicare and Medicaid, authorize funds for the study of further changes in health care delivery, and increase support for certain favored parts of the current health care system. Collectively, these elements are being termed “health care reform”, and the legislation is named “The Affordable Health Care for America Act”.
While I haven’t read the whole bill (my computer freezes when I try to download it!), I have reviewed several summaries of its contents, and feel confident I know about the MAJOR changes it intends. I’m sure there are many hidden “gems” (like Easter Eggs in a video game) which are in there just to roll a little pork to favored constituents.
Insurance regulation means rules which companies selling health insurance must comply by. For instance, carriers will no longer be allowed to alter rates based on health status or pre-existing conditions. And while they can still adjust rates based on age, the highest age rate can be no more than 2 times the lowest. They will not be allowed to place limits on annual or lifetime spending for a covered person or family.
States will be able to decide if they will allow “out of state” carriers to sell insurance. For example, North Dakota may decide, since one company covers more than 90% of the population, that carriers from Minnesota will be allowed to enter the health insurance market in ND, to provide competition.
Everyone will be required to purchase health insurance, except for those whose annual income is below the filing threshold for federal income tax (about $9,500 for individuals, twice that for couples). Those who don’t purchase insurance will be “required to pay a fee” (synonyms: tax, or fine) equal to 2.5% of their income above the filing threshold. Veterans and Native American tribal members are exempt, if covered by the VA or Indian health services.
The government will cover part of the cost of insurance for those who earn less than 400% of the Federal Poverty level. For a family of four, this amounts to (get ready for it) $88,000. The assistance is on a sliding scale, based on both cost of the insurance as a percent of income, and amount of health care costs paid by the individual vs the insurance carrier (“cost-sharing”, like a co-pay or a deductible). At the top end of the scale, 400%, a family of four would have to pay no more than 12% of their income for insurance, and would have an out of pocket limit of no more than $10,000. (I think these two are separate; in other words, they’d have to pay the 12% for the insurance, and they would also have to pay up to $10,000 additional costs before any assistance kicks in, but I can’t find the right answer to that yet.)
Most employers will have to provide health insurance for their employees, or pay a fee/tax/fine equal to 8% of their payroll. Employers who provide health insurance must pay at least 72.5% of the cost (65% for families). Small businesses with payroll less than $500,000 are exempt from this rule. If they choose to provide coverage, they would probably qualify for a tax credit to cover at least part of their cost, for the first two years.
Health Insurance “Exchanges” will be created. In the previous go-around on health “care” reform, these were call HIPCs – Health Insurance Purchasing Cooperatives. Basically this is a virtual marketplace, where insurance plans can be compared and purchased by individuals or businesses (starting with the smallest businesses first). Presumably, it will be modeled on what already exists for federal employees, the FEHBP. It seems to primarily be a way to allow the government to ensure that insurance carries are following the rules for benefits, coverage, and pricing. If a plan is marketed through the Exchange, than it has been vetted by the gov’t as meeting all the standards of this law. It is also the only means by which those who receive assistance from the government can purchase insurance plans. When you hear people complaining about another layer of big government bureaucracy being added, this is what they are talking about.
There are several other “minor” insurance related reforms. First, the act authorizes the creation of a government run health insurance plan (the public option), which must be self supporting, just like the Post Office. Also, start-up loans are authorized to assist states in creating health insurance cooperatives (I have worked for one of these for thirty years – Group Health Co-op of Puget Sound, which covers over 500,000 people in Washington and Idaho). Insurers are no longer exempt from various aspects of anti-trust. Employers who proved medical insurance for retirees age 55-64 will get some help from a $10,000,000,000 (!!!) fund. And retirees of any age can not have their benefits cut, unless the employer also cuts benefits for active workers.
And how to pay for this? Families earning over $1,000,000 ($500,000 for an individual) will see a tax surcharge of 5.4%. What this means is the highest tax rate will go up by 5.4%, and will kick in for income over $500,000/$1,000,000. In addition, an excise tax of 2.5% will be levied on medical devices sold for use in the US. Finally, there will be changes to Medicare and Medicaid which, while not actually cutting payments, are expected to reduce the rate of rise of health costs covered by the government in these programs. I will examine some of these in my next post, and finish in a third with my assessment of what it actually all means for health care in the Untied States.
If you just can’t wait for my summary, here is a link to the House Committee on Education and Labor, which provides several staff-written summaries of the bill (4 pages, 10 pages, 60 pages, and the entire 2000 pages) along with a whole series of “talking points” memos designed for supporters of the bill as explanatory background. remember, this is a Democrat controlled committee, which supports the bill (as do I, from a political point of view). While the summaries are not blatant propaganda, I wonder what elements they leave out or gloss over within those 2000 pages I have not yet fully read.
Here’s an example of why I have such a hard time reading the bill – just some text I took at random about closing down a health insurance exchange:
(c) CEASINGOPERATION.—
(1) INGENERAL.—A State-based Health Insur-
ance Exchange may, at the option of each State in-
volved, and only after providing timely and reason-
able notice to the Commissioner, cease operation as
such an Exchange, in which case the Health Insur-
ance Exchange shall operate, instead of such State-
based Health Insurance Exchange, with respect to
such State (or States).
Huh? Seriously, I just took a page at random, and took the first section which started on that page, and copied it. It says, after I read it twice, that if a state starts up its own insurance exchange, and then shuts it down, the federal exchange will take over for that state. (Are there no English majors working in Congress?) I’m sure the whole bill is like this, and while each page has only 25 double spaced lines in this half-column format, I still fear slogging through even the parts I want to read based on the summaries, assuming I could find the right spot amongst the 2000 PDF pages.