A quick review of some of the changes put forward by Senate Majority Leader Reid's manager's amendment to the health care reform bill.
- Section 2711 (ANNUAL LIMITS FIXED) - Annual limits are now banned after 2014, and before then, shall be set at a limit that doesn't impair "essential" health care services. This is a huge improvement over Reid's original draft of the bill, that only banned "unreasonable" annual limits (without defining such term). By the time the exchanges are set up, there won't be any annual limits on qualified health care plans.
SEC. 2711. NO LIFETIME OR ANNUAL LIMITS.
(a) PROHIBITION.—
(1) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish—
(A) lifetime limits on the dollar value of benefits for any participant or beneficiary; or
(B) except as provided in paragraph (2) [describing pre-2014 annual limits], annual limits on the dollar value of benefits for any participant or beneficiary.
- Section 2718 (80%/85% MEDICAL LOSS RATIOS) - Medical loss ratios are set at 85% in the large group market and 80% in the small group/individual market (down from 90% initially floated by Rockefeller), with consumers refunded the difference from any health insurance provider that doesn't spend the required amount on medical coverage.
- Section 2719 (MEDICAL DENIALS) - Stronger appeals process provided for medical denials, with the Secretary of HHS authorized to review such processes.
- Section 1303 (STATE OPT-OUT OF ABORTION COVERAGE!!) - States may prohibit abortion coverage on plans offered through the exchange!
- Section 1334 (PUBLIC OPTION... WE HARDLY KNEW YOU) - The public option is scrapped and replaced with OPM-negotiated private, non-profit (read: Blue Cross/Blue Shield) "multi-state" plans, which are also subject to state regulation? OPM's role is limited to negotiating and certifying plans that meet its qualifications with respect to: (1) medical-loss ratios, (2) profit margins, (3) premiums charged, and (4) all other terms and conditions.
In theory, the OPM director could establish greater consumer protections than are required elsewhere on the exchange. That's in theory, though. In reality, he'll probably just negotiate a standard-issue plan with similar protections provided elsewhere on the exchanges. People in this plan are NOT in the FEHBP risk pool, so there goes those cost savings. Apparently if insurers declined to participate, there's no fallback?
This is the most interesting provision of this section, dealing with state regulation of these multi-state OPM plans:
(b) ELIGIBILITY.—A health insurance issuer shall be eligible to enter into a contract under subsection (a)(1) if such issuer—
(1) agrees to offer a multi-State qualified health plan that meets the requirements of subsection (c) in each Exchange in each State;
(2) is licensed in each State and is subject to all requirements of State law not inconsistent with this section, including the standards and requirements that a State imposes that do not prevent the application of a requirement of part A of title XXVII of the Public Health Service Act or a requirement of this title;
Since the referenced section only refers to OPM standards with respect to these plans, these "multi-state" plans are NOT the same as the nationwide "race to the bottom" plans that were contained in the underlying Senate bill. Jon Walker at FireDogLake is reporting that this provision replaces the "nationwide plans" that would've gutted state insurance regulations.
My reading is the OPM public option replacement will still be licensed and subject to BOTH state and federal regulation (whichever is more stringent).
So although this provision seems fairly weak as a replacement for the public option, it's not worse than nothing - it will depend on how strongly OPM chooses to regulate. Note that OPM's standards must be at least as generous as those on the rest of the exchange (the bronze, silver, gold, and platinum actuarial standards) and it must cover all the essential health services required under the Act (ambulatory, hospitalization, prescription drugs, etc.).
- Section 10108 (LIMITED FREE CHOICE... JUST NOT FOR ABORTION) - Free choice vouchers: It would seem Reid has accepted a very limited version of the Wyden amendment. Employees can receive a voucher in the amount of the employer's contribution to their health care plan. But there are very strict income and employee contribution requirements:
Applies to employees whose employer pays for any portion of qualifying coverage AND whose contribution is between 8 to 9.8% of household income, with household income below 400% FPL. This seems to be aimed at people who would be in the top tier of income for receiving subsidies on the exchange, but would be better off than under their employer-provided plan. This seems like a very narrow "free choice" provision, no?
My guess is this is something like a "pilot program" to see how free choice vouchers would impact the employer-provided health care market. It's targeted to a group that would be particularly hard-pressed as to affordability under the current bill. I'd love to hear other thoughts on this provision.
- Section 10201 (THE NEBRASKA PURCHASE?) - Ol' Benny got some more money for Nebraska Medicaid (and perhaps certain other rural states will qualify under other provisions). If you want to see some legislative sausage-making, this is hysterical! Hat tip to tassojunior for spotting this.
(3) Notwithstanding subsection (b) and paragraphs (1) and (2) of this subsection, the Federal medical assistance percentage otherwise determined under subsection (b) with respect to all or any portion of a fiscal year that begins on or after January 1, 2017, for the State of Nebraska, with respect to amounts expended for newly eligible individuals described in subclause (VIII) of section 1902(a)(10)(A)(i), shall be determined as provided for under subsection (y)(1)(A) (notwithstanding the period provided for in such paragraph) [granting additional Nebraska-only funding increases in Medicaid!].
- Section 500A(b)(1) (INCREASED FINES!!) - I missed this at first! The individual mandate penalty is increased from $750 per person (to a max of $2,250) beginning in 2017 to the lesser of: (1) the average bronze-level insurance premium (60% actuarial) for your family; or (2) the greater of either (a) 2% of taxable (gross) household income beginning in 2016, or (b) $495 for each family member not covered, to a maximum of $1,980.
OK, I know that's super-complicated. If I'm translating correctly, households earning more than $37,500 will pay more under this penalty scheme, since they'll be forced to either pay the full price of a bronze-level plan or 2% of their gross income, which is more than they would have paid previously (they can't pay the $495 flat dollar amount for each individual not covered because they must pay the greater amount based on income).
Only households earning less than $37,500 will pay a lower fine under this scheme. If I'm reading this correctly, these fines are much more troubling than the original Senate bill, and they'll grow over time with wage and health care inflation. Since I can't see health care growing slower than wages any time soon, expect the fine to be 2% of household income for the vast majority. Hat tip to J M F for pointing out this provision.
- Section 500B (FROM BOTAX TO BOEHNER-TAX?) - New 10% tax on indoor tanning! Note, this REPLACES the "botax" on elective cosmetic surgery contained in the underlying bill.
- Plenty of provisions on tax credits for adoption, help for pregnant teenagers, etc. to discourage abortion (per compromise).
- Section 10901 (CADILLAC TAX ALIVE - FOR NOW) - The inaptly named 40% "Cadillac tax" is still intact, with some additional exceptions for high risk occupations (longshore workers?). Now, if I were a cynic, I'd suspect a provision in the manager's amendment specifically exempting longshore workers from the tax could be aimed at the lovely Senators from MAINE... or more probably, West Coast liberals.
I have to believe that this will be the first (and quite possibly, only) major change when they go to conference with the House. The unions and representatives from high-cost states are too opposed to this tax. And it violates Obama's campaign pledge against taxing health care benefits. (He got a lot of mileage beating up on McCain's health plan for a much more expansive tax on all health benefits).
- Medicaid expansion still at 133% FPL.
- It goes without saying that there is no expansion of Medicare (although the Department of Justice is given additional authority to crack down on health care fraud in Section 10606).
- Besides the abortion opt-out compromise and dropping both the public option and Medicare expansion, the price of Ben Nelson's vote also included retaining health insurers' antitrust exemption.
- The high-income payroll tax (individuals over $200,000 and families over $250,000) that was set to rise 0.5% is now 0.9% of income.
- I see no changes in the limited ban on preexisting conditions (which does not include age or smoking, which are allowable bases for limited price discrimination in the underlying bill).
UPDATE: Wow first rec'd diary! Such an achievement... thanks for the votes :)
