U.S. House Health Care Reform Update
November 12, 2009
U.S. House Health Care Reform Update
As many of you are aware, late Saturday night the U.S. House of Representatives passed their version of health care reform -- The Affordable Health Care for America Act, H.R. 3962 -- by a vote of 220 - 215. The vote was all Democrats and one Republican voting in favor and 39 Democrats and the balance of Republicans voting no.
They also covered H.R. 3961, the so called “doc fix” legislation, that would keep the 21 percent cut to physicians’ Medicare rates from occurring. It passed with a vote of 242 – 192.
Below is an update on the House version of health care reform.
Please note, under Mandates there are specific requirements broken out for employers and under Highlights note the CLASS Act – which provides a voluntary public paid long term care insurance program.
The Affordable Health Care for America Act, H.R. 3962
The Affordable Health Care for America Act, H.R. 3962 is the final, merged version of the health care reform legislation that the House has been working on for much of 2009. The bill contains a moderate compromise on the “public option” for government-run health insurance by requiring the Secretary of Health and Human Services to negotiate provider reimbursement rates rather than having them tied to Medicare. The bill also would require all individuals to have insurance, establish a new health insurance exchange, require most employers to provide insurance, ban insurance companies from denying coverage because of pre-existing conditions and more.
This bill has been estimated to extend health insurance to roughly 96 percent of the population at a 10 year cost of $894 billion. It contains a number of tax and revenue provisions that result in it being deficit neutral over the 10-year budget period.
Expanding Coverage and Choice
The health care reform bill establishes a new Health Insurance Exchange for individuals and employers to use for comparison shopping between health care plans. The Exchange will carry plans that meet certain minimum coverage standards and will be available to the general public by way of a website and telephone hotline.
It also creates a government-run public health insurance option to compete with the private plans offered on the Exchange. Unlike a previous version of the bill that would tie the public option to Medicare rates, the public option would have reimbursement rates that are negotiated by the Secretary of HHS. (Note: The Congressional Budget Office has estimated that the negotiated-rate public option would have higher premiums, on average, than similar private plans.)
The bill contains a number of consumer protections including a ban on insurance companies denying coverage because of pre-existing medical conditions. It would also prohibit annual and lifetime caps on benefits and would only allow insurance companies to consider age, geographic region and family size when setting rates.
Long-standing exemption from the federal antitrust laws would be ended by the bill.
Making Insurance More Affordable
The bill provides “sliding-scale affordability credits” to help low and medium-income people buy insurance. The credits start and are most generous just above 150% of the Federal Poverty Level (the proposed new cut off for Medicaid) and are phased out completely at 400% of the federal poverty level(FPL). No affordability credits would be given to undocumented immigrants and any that are used to buy insurance plans that cover abortion must be segregated from the individual’s share of the premiums so that the credits don’t go towards the abortion coverage.
It also caps annual out-of-pocket spending for qualifying plans at a maximum of $5,000 per individual.
Medicaid eligibility would be expanded to all individuals and families with incomes below 150% of the poverty level.
Mandates
The health care reform bill requires all employers (besides small ones with payrolls below $500,000 annually) to provide insurance for their employees or pay a fine based on a percentage of their pay roll. The percentage would be phased up from 2% for companies just above the $500,000 payroll floor to the full 8 percent for companies with payrolls above $750,000.
- It establishes a minimum employer contribution for employers electing to offer health coverage of 72.5% of the premium for individual coverage and 65% of the premium for family coverage for full-time employees. Part-time employees would receive a proportional amount.
- For each employee who declines employer coverage and enters the Exchange through the affordability test, the employer must contribute 8% of the average salary of the employer to the Exchange.
- Small employers with payrolls under $500,000 are exempt; contribution phases in from 0-8% up to annual payrolls of $750,000.
- Non-offering employers would be subject to a payroll tax of 8% of the wages that an employer pays to its employees.
- Small employers with payrolls under $500,000 are exempt; contribution phases in from 0-8% up to annual payrolls of $750,000.
- Employers who fail to follow the rules governing the offering of coverage (minimum contributions, etc) would also be subject to an excise tax.
Starting in 2013, once all provisions are implemented, the reform bill would require all individuals to have qualifying health insurance coverage or pay an annual fine capped at 2.5 percent of income.
Other Highlights
It requires all Americans to purchase comprehensive health insurance plans that provide more health benefits than most current health care plans.
It requires the federal government to provide health insurance (public option) and long-term care insurance (CLASS program).
It mandates price controls for health insurance, medical services, medical equipment and prescription drugs.
It provides unlimited funds to 30 grants and programs. It creates 74 new types grants. Each type may be granted multiple times by the Secretary of Health and Human Services at her discretion.
It prevents states from receiving grant money if they enact tort reform.
It creates federal insurance exchanges that are supported by national call centers to guide consumer choice, handle enrollment, process claims and handle complaints. All communications must be supported in every language and culture in each state.
It limits various pre-tax medical savings accounts (FSAs, MSAs, and HSAs) only for use to purchase prescription drugs and insulin. It eliminates the option to make pre-tax purchases of non-prescription drugs, eyeglasses, dental care, etc.
It creates new federal agencies. One is the “Health Choices Administration,” which oversees Health Insurance Exchanges.
It creates several new offices, such as the “Office of the Ombudsman”, “Office on Women’s Health” and “Office of Indian Men’s Health.”
It creates a massive expansion of the Department of Heath and Human Services, which already runs Medicaid and Medicare. It assigns more than 1,000 new responsibilities to the Secretary of Health and Human Services.
It gives the Secretary of HHS discretionary power to set prices, deny coverage and ration health care.
It requires the government to track and cross-link data for every medical claim, transaction, health record, patient survey, medical device and the data it produces.
It requires the government to track personal information such as the hiring of nurses and doctors along with their wages, benefits, turnover and tenure; the tracking of drugs prescribed by doctors, the personal financial transactions of doctors, and the personal investments made by doctors.
It creates a new “Center for Comparative Effectiveness Research,” which is given unlimited access to all information from all federal departments and agencies. This includes information from Medicare, Medicaid, Social Security, the new health exchanges and the new government-run insurance agencies. This includes the new electronic data that will be collected by the government, which tracks all medical records, claims, complaints, financial data, doctors’ fees, doctors’ wages, medical equipment data, etc. The purpose is to enable the center to make recommendations so the new “Center for Quality Improvement” can define “best practices” to be incorporated into the “workflow of health care providers.”
