And now the Senate is off to the races on health care reform. Because some Senate staffers read an post on the Daily Kos, I think it would be helpful if we could come up with our own list of amendments for Senators to offer. This diary is that suggestions diary.
Below are a couple of useful reference links:
I think the Senate, through its financing provisions, has done a much better job than the House on cost control. I think the biggest areas of concern in the Senate bill are its affordability and risk selection provisions -- the two areas that will most determine the bill's long-term political fate. Will people be able to afford the premiums even with the subsidies? Even if people are able to afford the premiums, will people be able to afford the cost-sharing? Will the bill make health insurance affordable for everyone and not just some average person? Will the people who purchase health insurance on the Exchange have a similar risk profile to those in employer-based health insurance? Will there be enough regulations to have insurance companies on the Exchange compete on the quality of their services rather than the people who they select? Below I have begun a list of amendments:
Increase the subsidies for the 100-300 percent FPL level by getting rid of the free-rider provision, and having a real employer-mandate. This, as the cliché goes, kills two birds with one stone. The ability for Americans to be able to afford the premium – particularly with an individual mandate, which is absolutely essential as explained later – will be one of the biggest determinants of the bill’s long-term viability. Sec. 1401 of the Senate bill explains the subsidy levels in that bill. Please excuse this non-lawyer’s inability to read that legislative gobbledygook of that section. Sec. 403 of the House bill contains the subsidy levels in that chamber’s bill. The Center for Budget Policy & Priorties (CBPP) has an excellent comparison of the Senate and House subsidy levels. Clearly, the subsidy levels at low incomes is far too low. One easy way to raise the necessary revenue is to strengthen the pay-or-play requirement, which as CBPP notes, is already very, very wanting. That would save around $100 billion over 10 years. Another way to increase the subsidies at the 100-300 FPL level would be to increase the amount of revenue raised by the excise tax on high-end plans.
Make cost-sharing more affordable by increasing the minimum actuarial value of the Bronze Tier to 70 percent, the Silver Tier to 80 percent, and the Gold Tier to 93 percent. Another very, very important item determining the bill’s long-term political viability is Americans’ ability to afford the cost-sharing. Actuarial value, which can be measured as the portion of the health care expenditures paid by the insurance company for everyone in the plan, gives a rough estimate of the cost-sharing arrangements in a plan. Actuarial value is the metric for a plan's generosity. The Senate bill's Bronze Tier has a minimum actuarial value of 60 percent, its Silver Tier has an 70 percent minimum actuarial value, its Gold Tier has a minimum 80 percent actuarial value, and its Platinum Tier has a minimum actuarial value of 90 percent (Sec. 1302(d)). The House bill's Bronze Tier has a minimum actuarial value of 70 percent, its Silver Tier has an 85 percent minimum actuarial value, its Gold Tier has a minimum 95 percent actuarial value, and its Platinum Tier has a minimum actuarial value of 95 percent plus dental care, eye care, and gym membership are allowed to be offered once the required services to be covered reach the 95 percent actuarial value (Secs. 223(b)5, 223(b)6, and 303).
Make cost-sharing more affordable by ending annual maximum coverage. Sec. 2711 of the current Senate bill prohibits lifetime maximum limits on how much a policyholder can receive but does not prohibit annual limits on how much coverage a policyholder can receive. Instead, the Reid bill, in order to hold down premiums, prohibits unreasonable annual limits in coverage. The House bill, by contrast, prohibits in Sec. 222(a)3 both annual limits on the minimum services to be covered in Sec. 222(b).
Lower -- or better yet, eliminate -- the oldest age which someone can purchase a "young invincible" policy to 26. This amendment deals with whether or not young people will be able to afford the cost-sharing. Sec. 1302(e)1 in the Senate bill specifies the minimum level of coverage required in a "young invincible" policy, and Sec. 1302(e)2 specifies who is eligible for such a plan. According to paragraph (1) of this subsection, these plans are allowed to have an annual limitation on the amount of coverage someone can receive. On the Massachusetts Connector, that amount can be as low as $50,000 per year -- meaning, if a YUPPIE, for example, gets into a really bad skiing accident, well, they could be in real financial trouble. If a central purpose of this bill is to prevent Americans from having large medical expenses, and having to face such consequences, young people should be required to purchase more coverage than is given in a "young invincible" policy.
Limit an insurance company's ability to cherry-pick healthy people by decreasing the age rating from 3:1 to 2:1 and scrapping the smoker rating. Sec. 2701(a)1(A) of the Senate bill lists the factors for which insurance companies can vary premiums in the individual insurance and small group insurance market; Sec. 213(a) of the House bill lists factors for which insurance companies can vary premiums in all markets. Under the Senate bill (Sec. 2701(a)1(A)), insurance companies can vary premiums in the individual insurance and small group insurance market by the following four factors:
- family structure (subparagraph i)
- geographic region (subparagraph ii)
- age, so long as the ratio of the highest premium to the lowest premium does not exceed 3:1 (subparagraph iii)
- smoking status, so long as the ratio of the highest premium to the lowest premium does not exceed 1.5:1 (subparagraph iv)
Under the House bill (Sec. 213(a)), insurance companies can vary premiums by the following three factors:
- age, so so long as the ratio of the highest premium to the lowest premium does not exceed 2:1 (subparagraph 1)
- geographic region (subparagraph 2)
- family structure (subparagraph 3).
The House bill's rating rules are similar to those here in Massachusetts -- no smoker rating allowed and a 2:1 age rating. Even at 2:1 age rating, health insurance is still pricey for an older adult on the Connector. For a 64-year-old adult living in Boston, a policy having 93% actuarial value (very little cost-sharing if you see the Connector) runs between $830/mo. and $1,000/mo. For an empty-nester couple in Boston, a identical policy runs between $1,740/mo. and $2,000/mo. And that's with a 2:1 age rating. It is hard to imagine how a 3:1 age rating -- though a political compromise from HELP's 2:1 age rating and Finance's 4:1 age rating -- will be affordable to older adults. That's why it's vitally important that this age rating be decreased to 2:1 from 3:1.
The smoker rating -- particularly with an individual mandate -- is simply not a good idea. [And I say this as someone who has smoked a grand total of two cigarettes my entire life and no other tobacco product.] For starters, it ends the simplification of being able to apply for health insurance on an online website (such as the Connector) on the Exchange because a blood test will be required of every single family member -- be the member 45 years old or 13 years old -- in order to determine smoking status. And requiring a blood test of every single family member each time a policyholder changes plans is a recipe for political backlash. A much more efficient way to penalize smokers or any lifestyle is through a sin tax rather than the underwriting process.
The next two sections deal with the individual mandate tax penalty. With guaranteed issue underwriting (no evidence of insurability necessary to purchase policy), guaranteed renewability (no evidence of insurability necessary to renew policy), a prohibition on pre-existing conditions clauses, and premiums only being allowed to vary by geographic region, family structure, age by a limited amount and smoking status by a limited amount, the people most likely to go bare are those who are young and healthy. These people, knowing that insurance companies are required to accept them and cannot charge them higher premiums, are likely to wait until they get sick to purchase health insurance. This, of course, drives up the cost of insurance for those who responsibly pay their premiums every year. In order for health insurance to be more affordable, there must be a meaningful penalty for those who do not purchase health insurance. The first amendment deals with who is exempt from the mandate, and the second amendment pertains to the size of the penalty.
Increase the income exemption for the individual mandate penalty from 8% to 15% of income – or better yet – just have a hardship exemption. Sec. 5000A(e)1A of the Senate bill exempts all individuals who are required to spend more than 8% of their income on premiums for the cheapest available policy. The House bill does not allow for such an exemption, and only allows for a hardship exemption. In order to keep health insurance affordable for everyone by drawing more young and healthy people into the market, the income exemption should be increased to at least 15% of income. Otherwise, too many young, healthy 20-somethings will choose to go bare, and drive up the costs for everyone else.
Begin the $750/person, half for a minor, individual mandate penalty when the community rating begins. Sec. 5000A(c) of the Senate bill specifies the tax penalty for not buying an acceptable level of health insurance. The tax penalty is phased in to $750/person, half for a minor, indexed for inflation, by 2017. The House bill’s 2.5 percent of income tax penalty begins in 2014 (Sec. 59B). In order to prevent the young and healthy from going bare, and driving up the costs for everyone else, a meaningful penalty needs to be in effect immediately – not three years from when the rating rules begin.
Set the beginning date of the Exchange to 2013 by increasing the revenue raised from the excise tax on high-end plans. I think this is pretty self-explanatory.
So there is a beginning set of amendments. Please add your suggestions for amendments to the Senate bill. Hopefully, Senate staffs will take notice.