Secure, Affordable, And Adequate Coverage Is Possible In A Level Playing Field

“For health care reform to provide all Americans with secure coverage, changes must be
adopted and enforced to ensure that health insurance is always available, affordable, and adequate,” Karen Pollitz, research professor at Georgetown University’s Health Policy Institute, told the House Energy and Commerce Committee a a June 25 hearing on the Three Committee Draft Proposal for Health Care Reform. Ms. Pollitz addressed the first five titles of the draft legislation. Her testimony is useful because she doesn’t really have a horse in this health care reform race and thus can provide relatively unbiased recommendations.

Essential benefit package. A maximum out-of-pocket limit, whether people receive care in or out of network, is essential. For many proposals, the benchmark standard for coverage adequacy is the Federal Employees Health Benefits Program (FEHBP) Blue Cross Blue Shield Standard Option plan that currently covers most federal employees and many members of Congress. However, the essential benefits package outlined in the House three committee draft proposal appears to provide less coverage than the FEHBP standard. Therefore, Ms. Pollitz recommends that additional resources be added to the bill to raise the minimum benefit standard to the level of the FEHBP. In addition, the standards must be monitored and strengthened regularly to ensure benefits adequacy.

Excepted benefit plans. The draft proposal also provides for the sale of certain so-called "excepted benefits" in traditional health insurance markets, including cancer policies and other dread disease and limited benefit policies. “Consumers are vulnerable to abusive
marketing practices when it comes to these policies and state regulators have long warned
they are a poor value,” Ms. Pollitz warned. “At a minimum, such policies should contain warning labels that they do not constitute qualified health benefit plans and that coverage is duplicative of that provided under qualified health benefit plans.”

Subsidies and Medicaid expansion. Instead of setting the qualification for the subsidy for health insurance at a percent of federal poverty level, the Committee might consider a rule that no individual or family will have to pay more than 10% of income on health insurance premiums (with lower limits, say 5% of household income, set for low-income individuals, as the three Committee draft does.) “Cutting subsidies off entirely at an arbitrary income level can leave families vulnerable…A subsidy system that caps people's liability for premiums at no more than 10% of income would be more protective and subsidies would taper off gradually, avoiding a cliff.”

Private health insurance market reforms. The draft legislation requires private insurers to guarantee issue and renewability and bars these insurers from denying coverage or basing premiums on health status or health history. The legislation also provides for network adequacy standards, timely claims payments, and minimum loss ratios of at least 85%. However, the draft proposal allows full rating for age and Ms. Pollitz recommended that legislators consider tighter limits on age adjustments to premiums, or that they eliminate such age-based premium adjustments altogether. Otherwise seniors (especially Baby Boomers) will be unable to afford coverage.

Oversight and enforcement. Furthermore, for market reforms to be meaningful, Congress must authorize and appropriate resources for oversight and enforcement, both at the federal, where resources are particularly inadequate, and state levels. After HIPAA was enacted, a witness for the Department of Labor testified that the Department had resources to review each employer-sponsored health plan under its jurisdiction once every 300 years. And the Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for oversight of HIPAA private health insurance protections, last summer had only four part-time staff dedicated to HIPAA health insurance issues. “In order for new promised consumer protections to be real, strong oversight and enforcement will be essential,” Ms. Pollitz emphasized.

Establishment of a national health insurance Exchange. To protect against risk selection, requirements must be identical, in terms of design and price, for all qualified health benefit plans, whether they are sold in or outside of the Exchange, Ms. Pollitz urged. And sanctions for violations of market rules and of anti-dumping (into the Exchange) rules must be the same as for those in the Exchange for insurers who sell coverage outside of the Exchange.

A public plan option. Offered in the Exchange along with private plans, a public plan is required to meet the requirements of other qualified health benefit plans offered by private insurers. A public plan option “can address failures of competitive health insurance markets today,” Ms. Pollitz noted.

“First, it offers consumers an alternative to private health plans that, for years, have competed on the basis of discriminating against people when they are sick….If consumers are required to buy health insurance, having a public coverage option that does not have to compete on the basis of profits will give many peace of mind.”

“Second, a public plan option will promote cost containment,” Ms. Pollitz continued. “Research shows that health insurance markets today do not compete to hold down costs. Rather, insurers and providers negotiate to pass cost increases through to policyholders while maintaining and even growing corporate profits.” A public plan will initially pay medical providers based on the Medicare fee schedule, but at a higher level than Medicare pays, negotiate prescription drug payments with drug makers, offer bonuses to providers that participate both in Medicare and the public plan, and develop innovative payment methods that contain costs and promote quality. “This will help move the market in the direction of competition based on the efficient delivery of health care services.”

Shared responsibility. The draft proposal would continue the employer role in the provision of health insurance, allow individuals to keep their current coverage if they are happy with it, and add a play-or-pay mandate for employers. These provisions “will help keep employer resources in the financing system,” Mr. Pollitz stated.

“No doubt, others will recommend modifications as I have today,” Ms. Pollitz concluded.. “The legislative process was intended to consider all points of view and then act in the best interests of the public you represent {just a little reminder in case legislators have forgotten, as it too often appears] …I thank you for your courage and commitment to health care reform that secures good, affordable health coverage for all Americans.”

There you have it, briefly. Ms. Pollitz shows how we can still offer a little of everything for everybody--private and public health insurance options, operating in a mainly level playing field; employer provided options; coverage for all--while containing costs and improving quality.