The Senate Finance Committee narrowly approved a publicly-supported health insurance plan yesterday. The plan would be open to individuals who are not on Medicaid and who earn between 133% and 200% of the Federal Poverty Level. More below.
Ryan Grim of the Huffington Post reports that by a vote of 12-11 the Senate Finance Committee approved an amendment proposed by Senator Maria Cantwell (D-WA) that would create a "federally funded, non-Medicaid state plan which combines the innovation and quality of private sector competition with the purchasing power of the states." This health insurance, which the amendment calls a "Basic Health Plan," would be available to families who are not eligible for Medicaid but who earn less than double the federal poverty level. Using 2009 federal poverty guidelines, persons eligible to purchase coverage under the plan would include individuals whose annual income is between $14,400 and $21,660; for a family of four, gross family income would have to be between $29,326 and $44,100 to qualify. The full eligibility requirements are as follows:
"The Basic Health Plan would be available to … persons who (1) are under the age of 65; (2) do not have access to affordable employer-sponsored coverage that meets minimum creditable coverage standards; (3) are residents of an area served by the plan; (4) have gross family income above 133 percent of FPL [Federal Poverty Level] and below 200 percent of FPL; (5) choose to obtain basic health care coverage from a participating health care plan; and (6) remain current in payment of their share of the premiums."
Under Cantwell's amendment, the states would receive federal funding equivalent to the tax credits that individuals would otherwise have been entitled to for the purchase of health insurance, and the states would contract with insurers to provide coverage for state residents who meet the eligibility guidelines. Basic Health Plans would have to have a medical loss ratio of 85% or higher (that is, at least 85% of total premiums would be paid to medical care providers – no more than 15% of premiums could be spent on administration of the plan or retained as profit). States would be encouraged to enter into contracts with managed care providers and to coordinate their contracting for Basic Health Plans with their contracting for Medicaid. The Cantwell amendment also provides that Basic Health Plans should include the following features:
"States would be encouraged to include innovative features in their health plan contracting, including but not limited to: care coordination and care management for enrollees, especially for those with chronic health conditions, incentives for use of preventive services, and establishment of … patient/doctor relationships that maximize patient involvement in health care decision-making, including awareness of the incentives and disincentives in using the health care plan."
Grim reports that the Cantwell amendment is based upon Washington State's Basic Health Plan, which costs eligible residents about $60 per month. In an update to his article he indicates that, based on reader responses, Washington residents are generally happy with the Basic Health Plan, but that the state is currently not accepting applications for it because of lack of funding.
Senators Baucus and Conrad voted for Cantwell's amendment – they had voted against the public option amendments offered by Senators Schumer and Rockefeller. Senator Lincoln (D-AR) and Senator Snowe (R-ME) voted against the Cantwell amendment, just as they had voted against the Schumer and Rockefeller amendments.
The principal effect of this bill is that it would remove low-income persons from the private market for individual health insurance. In my opinion, this is not only appropriate, it is necessary in light of the fact that the law will require all persons to purchase health insurance. It does not make sense for the government to force poor people to purchase insurance through the highly inefficient market for non-group health insurance – it does make sense for the government to pool the purchasing power of those individuals to create high quality managed care systems within each state.
Cantwell posted this press release on her website, in which she states that her proposal would cover about 75% of the persons who are currently uninsured. She also states:
“We know that the individual insurance market doesn’t work for people making less than $50,000 a year. … This proposal is about giving federal dollars to the states and putting them in the driver's seat. It is a public plan, but negotiated with the private sector. We are going to everything we can to drive down the costs of insurance for the citizens of this country and at least this amendment is a start.”
If the Basic Health Plans work to reduce the cost of medical care, they will no doubt be expanded to include people with higher incomes. If they don't work, we can try something else!
