Todays Dose: Private Health Insurance Market Reform
As a follow up to yesterdays Detailed Analysis, I read the Congressional Research Service's (CRS) 16 page report which CONFIRMS much of what was stated here:
http://www.dailykos.com/...
The following diary includes some much needed information regarding all those Reforms the Health Insurance Industry will have to swallow. What a windfall they will get under the mandate! What will we get? Read on.
Again, another brain twisting effort to help you better understand Health Care Reform we are hoping will become law.
I want to begin by thanking all those who rec'd and left comments on yesterdays diary.
It is truly my hope that, by working together, we can bridle our talents and continue to work together to get to know the details of the Public Option.
I specifically want to thank marleycat, who spent the better part of yesterday reading the House Bill and sharing other important sections not included in the diary. And also "Thank You" to neroden, SarahLee, Ministry of Truth, Kovie for the Mike Taibbi article link, and to GN1927 who hung in and commented most of the day.
Can we affect the final product by studying this out here? Well, only if we ask Congress to answer our questions and then demand that changes be made to the law.
But, first, we must know what the heck we are talking about.
The following adds more light to the presentation and discussion we had yesterday. Some may be redundant but necessary for context of the new information offered below.
I will copy/paste directly from both the CRS Report and the House Bill from these two websites, which you can visit and read for yourselves if you have some time to do so:
The Bill:
http://edlabor.house.gov/...
The Congressional Research Service Report:
http://fpc.state.gov/...
Both cover all aspects of Health Care Reform being considered by Congress.
Today will focus on the PRIVATE HEALTH INSURANCE MARKET REPORTS
I really liked the CRS Report EXCEPT for not cross-referencing its overview of HR 3200 with specifics. Otherwise, it is concise, to the point, and includes some really good information regarding the much touted COST-SHARING CREDITS.
Also, I crunched some numbers for you that will help you understand what the Public Option and other Health Exchange Private Insurer policies will cost you and/or your family if your "modified adjusted gross income (MAGI)" is less than $80,000/year.
I will start by defining MAGI so wondering what that means won't be a distraction from reading forward:
For this purpose, MAGI is defined as adjusted gross income (AGI) without the exclusions for U.S. citizens or residents living abroad, plus tax-exempt interest.
CRS, page 14, paragraph 5
To begin, I will copy/paste the CRS Summary page from their report here:
Summary
This report summarizes key provisions affecting private health insurance in H.R. 3200, America’s Affordable Health Choices Act of 2009, as ordered reported by House Committees on Education and Labor and on Ways and Means. Specifically, this report focuses on Division A (or I) of H.R. 3200 from those committees.
Division A of H.R. 3200 focuses on reducing the number of uninsured, restructuring the private health insurance market, setting minimum standards for health benefits, and providing financial assistance to certain individuals and, in some cases, small employers. In general, H.R. 3200 would require individuals to maintain health insurance and employers to either provide insurance or pay into a fund, with penalties/taxes for non-compliance. Several insurance market reforms would be made, such as modified community rating and guaranteed issue and renewal. Both the individual and employer mandates would be linked to acceptable health insurance coverage, which would meet required minimum standards and incorporate the market reforms included in the bill. Acceptable coverage would include
(1) coverage under a qualified health benefits plan (QHBP), which could be offered either through the newly created Health Insurance Exchange (the Exchange) or outside the Exchange through new employer plans;
(2) grandfathered employment based plans;
(3) grandfathered nongroup plans; and
(4) other coverage, such as Medicare and Medicaid. The Exchange would offer private plans alongside a public option.
Based on income, certain individuals could qualify for subsidies toward their premium costs and cost-sharing (deductibles and copayments); these subsidies would be available only through the Exchange. In the individual market (the nongroup market), a plan could be grandfathered indefinitely, but only if no changes were made to the terms and conditions of that plan, including benefits and cost-sharing, and premiums were only increased as allowed by statute. Most of these provisions would be effective beginning in 2013.
The Exchange would not be an insurer; it would provide eligible individuals and small businesses with access to insurers’ plans in a comparable way. The Exchange would consist of a selection of private plans as well as a public option.
Individuals wanting to purchase the public option or a private health insurance not through an employer or a grandfathered nongroup plan could only obtain such coverage through the Exchange. They would only be eligible to enroll in an Exchange plan if they were not enrolled in other acceptable coverage (e.g., from an employer, Medicare, and generally Medicaid). The public option would be established by the Secretary of Health and Human Services (HHS), would offer three different cost-sharing options, would vary premiums geographically, and would have payments to health care providers set by the Secretary based on Medicare payment rates, with adjustments.
Only within the Exchange, credits would be available to limit the amount of money individuals would pay for premiums.
For example, a family of three at 133% of the federal poverty line ($24,352 in 2009 annual income) would be required to only pay annual premiums of $365 toward a Basic plan in the Exchange. A family of three at 400% of poverty ($73,240), where the premium subsidies end, would be required to pay no more than $8,056 in annual premiums for a Basic Exchange plan. Individuals eligible for premium credits would also be eligible for cost-sharing credits.
(Although Medicaid is beyond the scope of this report, H.R. 3200 would extend Medicaid coverage for most individuals under 1331⁄3% of poverty; individuals would generally be ineligible for Exchange coverage if they were eligible for Medicaid.)
What exactly is 133 1/3% of poverty, you might ask?
Well, here's is what poverty looks like to the Federal Government as of January, 2009's Mike Leavitt report to Congress:
The 2009 Poverty Guidelines for the
48 Contiguous States and the District of Columbia
Persons in family Poverty guideline
1 $10,830
2 14,570
3 18,310
4 22,050
5 25,790
6 29,530
7 33,270
8 37,010
For families with more than 8 persons, add $3,740 for each additional person.
http://aspe.hhs.gov/...
133 1/3% would be equal to the Poverty Guideline $/income x 1.3333.
For example, an individual earning less than $14,439, if this stays in the final bill, will qualify as a "non-eligible" Medicaid recipient. Sadly, an individual earning $7/hr, the minimum wage now, for 40 hours times 52 weeks would earn $14,560/year and wouldn't qualify for Medicaid. They would probably be better off working fewer hours/week.
A burning questions is whether the States will have the additional funding to pay their 1/2 of Medicaid expense as they are presently required to do, I think.
Aren't most states in huge financial trouble? Will thousands of newly qualified Medicaid recipients require States to increase State Taxes?
Can employers limit workers pay/hours to get them shuffled off to Medicaid even more than they do now?
Ok, where were we. If you read the Summary above, you probably have some questions. If you will ask your questions in a comment below, I and others who are also studying will attempt to answer them with direct quotes from the two documents linked above and comment with thoughts and questions, as well.
DAILY DOSE BEGINS HERE
PRIVATE HEALTH INSURANCE MARKET REFORMS, CRS REPORT
H.R. 3200 would establish new federal health insurance standards applicable to new, generally available health plans specified in the bill—“qualified health benefits plans” (QHBPs). Among the market reforms applicable to QHBPs are provisions that would do the following:
ANALYSIS: What is meant by limiting the reform to "NEW" health plans? This may refer only to those plans that will be created and included in the Health Insurance Exchanges, not to existing plans. Or will all plans be considered NEW when the Bill is passed or by the year 2013? Someone needs to clarify this using copy/paste law, not just opinion.
Here are the new, proposed market reforms from CRS:
• Prohibit coverage exclusions of pre-existing health conditions. (A “pre-existing health condition” is a medical condition that was present before the
date of enrollment for health coverage, whether or not any medical advice,
diagnosis, cares, or treatment was recommended or received before such
date.)
ANALYSIS: We have to ask WHY the language bolded is included and WHAT the heck it means. There are two sides of this phrase. One side disallows insurers to call a condition pre-existing if it wasn't detected. Isn't that already the case even if they try to cheat? But, is it possible that the other side is actually DEFINING pre-existing condition as a condition undetected? Until now, a pre-exisiting condition was defined as a condition that had been detected and reported to a medical entity prior to applying for insurance, or so I understand.
Does anyone else see any peril in this phrase?
• Require premiums to be determined using adjusted community rating rules. (“Adjusted, or modified community rating” prohibits issuers from pricing
health insurance policies based on health factors, but allows it for other key
characteristics such as age or gender.)
Under H.R. 3200, premiums would only be allowed to vary based on age—by no more than a 2:1 ratio within age categories specified by the Commissioner, premium rating areas, and family enrollment—for example, for single versus family coverage.
ANALYSIS: Any elderly females here object to this NOT adjusted community rating? Come on, the insurers probably fought hard to insert this TARGETED group. If everyone is forced into this system, there should be NO premium adjustments based on anything, in my opinion. Those least able to pay high premiums, older females, will be paying the highest premiums if this is allowed to stand.
However, in the House Bill it says in:
SEC. 102. PROTECTING THE CHOICE TO KEEP CURRENT 1
COVERAGE. 2
(3) RESTRICTIONS ON PREMIUM INCREASES.— 1
The issuer cannot vary the percentage increase in 2
the premium for a risk group of enrollees in specific 3
grandfathered health insurance coverage without 4
changing the premium for all enrollees in the same 5
risk group at the same rate, as specified by the 6
Commissioner. 7
pgs. 73-74
Sadly, the price will most likely go up for all enrollees, if history is prologue with the insurance industry.
• Require coverage to be offered on both a guaranteed issue and guaranteed renewal basis. (“Guaranteed issue” in health insurance is the requirement that an issuer accept every applicant for health coverage. “Guaranteed renewal”
in health insurance is the requirement on an issuer to renew group coverage
at the option of the plan sponsor [e.g., employer] or nongroup coverage at the
option of the enrollee. Guaranteed issue and renewal alone would not
guarantee that the insurance offered was affordable; this would be addressed
in the rating rules.)
ANALYSIS: Ok, insurers can't refuse to cover us after the Bill is passed, this is good. Well, no kidding. They can't because we are forced to buy their insurance. Some how, I think the insurers will welcome their upcoming windfall.
Guaranteed Renewal raises some questions. Both are at the option of the insureds; however, if the insurer wants to shake them loose that is quite easy to do via raising premiums, reducing coverage, etc. Could this item be improved by constraining the insurer's behavior towards the renewal date?
• Impose new non-discrimination building on existing non-discrimination rules in group coverage and adequacy standards for insurers’ networks of providers, such as doctors.
This seems to be an admission that the existing non-discrimination and adequacy standards that will remain in effect until 2013 are.....inadequate.
This seems like it could be immediately enforced if the Bill is passed. Some of these reforms could be put into effect within 6 months after the Bill passes.
H.R. 3200 would also require QHBPs to cover certain broad categories of benefits, prohibit cost-sharing on preventive services, limit annual out-of-pocket spending, and meet the standards for the “essential benefits package,” described below. In addition, under the Ways and Means version, QHBPs would comply with a medical loss ratio standard to be determined by the Commissioner. Under the Education and Labor version, QHBPs would be required to meet a medical loss ratio of 85%.
Medical loss ratio is the share (expressed as a percentage) of total premium revenue spent on medical claims, as opposed to administration or profit.
The insurers keep 15% of their Gross Annual Income from premiums for operating expenses, etc. However, these huge companies have many ways of making money other than our premiums. The number of subsidiaries they have has become nearly impossible to pin down. In my area the insurer owns the hospitals.
Here is the Essential Benefits Package:
QHBPs would be required to cover at least an “essential benefit package” but could offer additional benefits. The essential benefits package would cover specified items and services, limit cost-sharing, prohibit annual and lifetime limits on covered services, ensure the adequacy of provider networks, and are equivalent (as certified by the Office of the Actuary of the Centers for Medicare and Medicaid Services) to the average prevailing employer-sponsored coverage.
The essential benefits package would be required to cover the following items and services:
• hospitalization;
• outpatient hospital and clinic services, including emergency department services;
• services of physicians and other health professionals;
• services, equipment, and supplies incident to the services of a physician or health professional in appropriate settings;
• prescription drugs;
• rehabilitative and “habilitative” services (i.e., services to maintain the
physical, intellectual, emotional, and social functioning of developmentally
delayed individuals);
• mental health and substance use disorder services;
• certain preventive services (with no cost-sharing permitted) and vaccines;
• maternity care;
• under the Ways and Means version, well baby and well child care and oral
health, vision, and hearing services, equipment, and supplies for those under
age 21;
• under the Education and Labor version, well baby and well child care and
early and period screening, diagnostic and treatment services (EPSDT, as
available under Medicaid) for those under age 21; and
• under the Education and Labor version, durable medical equipment,
prosthetics, orthotics, and related supplies.
The annual out-of-pocket limit in 2013 would be $5,000 for an individual and $10,000 for a family, adjusted annually for inflation.
To the extent possible, the Commissioner would establish cost-sharing levels using copayments (a flat dollar fee) and not coinsurance (a percentage fee).
Cost-sharing under the essential benefits package would be designed so that the plan covers approximately 70% of the full value of benefits in the essential benefits package; QHBPs could cover a higher percentage.
There is so much covered in the Essential Benefits Package. Please all chime in with your analysis, K?
END OF DAILY DOSE
There is so much covered in the Essential Benefits Package. Please all chime in with your analysis, K? I will drop my concerns in the comments below, as well.
Could I ask you all a favor, for me and for others, please chime in here to add what you know about any item, ask your questions so others can have a stab at answering them, and please share your ideas, suggestions, and opinions.
As a team we can make a difference. YES WE CAN! WE, The Folks!