Health care financing reform legislation has been approved by five separate congressional committees – three in the House and two in the Senate. Next week the President and leaders in Congress are likely to merge the various proposals into one bill that will go forward in the House and the Senate. The Commonwealth Fund has released a report comparing the bills that are pending in Congress, and from which the ultimate bill will be forged. In this post I summarize the principal findings contained in this report. In addition, I invite you to visit a website I have created with information and links to other sources regarding health care financing reform.
According to the Commonwealth Fund, there are eleven areas where the various health care bills are in broad agreement, and five areas where there are substantial differences among the bills. In each case the quoted language is from the report, and the remainder constitutes my own words summarizing the report:
1. "Individual mandate" – All of the bills would require individuals to have health insurance coverage. The Senate bills impose a penalty of $750 on individuals who refuse to purchase health insurance, while the penalty under the House bill would be "2.5% of the difference between the tax filing threshold and MAGI up to the average national premium." Forgive me for not knowing what that means, but the report indicates that this amount would be higher than $750.
2. "Insurance exchange" – Each of the bills would create a regulated marketplace through which individuals and small businesses could purchase coverage. Under the House bill the exchange would be a single national market regulated by the federal government, while under the Senate bills there would be separate exhanges in each state regulated by state agencies following federal guidelines.
3. "Premium and cost-sharing subsidies" – Under each bill persons earning above 133% and below 400% of the federal poverty level would receive subsidies to purchase health insurance. The amount of the subsidies varies slightly among the bills, principally on a sliding scale from 100% for the poorest persons in this group to no more than 12% of income for those at 400% of the federal poverty level.
4. "Insurance market regulations" – Insurance ratings for health and gender would be prohibited, and insurance ratings for age would be limited. Lifetime limits would be abolished. Annual out-of-pocket expenses for medical care (co-pays and deductibles) would be limited to various amounts; a typical maximum level for out-of-pocket fees is $5000 for individuals and $10,000 for families. Insurance policies would have to meet minimum standards as to coverage and "loss ratio," that is, the percent of the policyholders' medical expenses that would be covered by insurance.
5. "Essential standard benefit package standard" – Health insurance policies sold through the exchange would have to offer comprehensive coverage including medical, prescription drugs, pediatric dental and vision, and preventive care.
6. "Medicaid / CHIP expansion" – Persons earning below 133% (or, under the Senate HELP bill, 150%) of Federal Poverty Level would qualify for Medicaid and CHIP.
7. "Pilot programs for rapid cycle testing of innovative payment methods" – Under Medicare the government intends to experiment with creating managed care programs and "medical homes" that would coordinate care through a single clinic or physician.
8. "Creating a national quality improvement strategy" – Each of the bills seeks to improve and coordinate quality improvement efforts. The House bill would create a new agency, the Center for Quality Improvement, which would "identify, develop, evaluate, disseminate, and implement best practices; develop national priorities for performance improvement and quality measures." The Senate Finance Committee bill would authorize the Department of Health and Human Services to undertake this responsibility, and the Senate HELP Committee bill provides grants for improving the efficiency of the health system.
9. "Improving primary care reimbursement" – The Senate Finance Committee bill would increase primary care reimbursement rates by 10%. The House bill would increase primary care reimbursement by 5% generally and 10% in underserved areas.
10. "Center for Comparative Effectiveness Research" – A government agency will identify best medical practices and propose protocols and standards both for medical care and for improvements in sharing medical information.
11. "Create and expand wellness and prevention programs" – Under each of the bills, health insurance policies would be required to cover preventive health care, and would forbid insurance companies from requiring co-pays or deductibles for preventive care. Each of the bills would also provide for grants in various formats for wellness programs or wellness incentives.
The report also identifies five areas where there are significant differences among the bills:
1. "Choice of public plan in exchange" – The House bill and the Senate HELP Committee bill would create a "public option," a government run health insurance company similar to Medicare, except that people would have to purchase coverage from the government agency. Under the House bill doctors and hospitals would be paid Medicare rates plus 5%. Under the Senate HELP bill the government would negotiate reimbursement rates with medical care providers. The Senate Finance Committee bill would allow individuals and small employers to create "co-ops" to purchase health insurance, but it does not provide for a government-run health insurance program.
2. "Employer shared responsibility" – The House bill and the Senate HELP Committee bill require large employers to either offer a specified level of health insurance coverage or to pay a portion of their employees' health insurance premiums if the employer does not offer health insurance. The Senate Finance Committee bill does not set standards for employer-sponsored health insurance plans, but it does require large employers to pay a percentage of the cost for their uninsured workers to purchase health insurance on the exchange. Small businesses (defined variously as businesses with less than 25 employees or with payrolls lower than $500,000) are exempt from having these requirements.
3. "Changing the Sustainable Growth Rate formula for Medicare physician fee update" - This is a big ticket item. Doctors and hospitals want predictable rules for the annual adjustment to reimbursement rates under Medicare. The House bill includes this provision which has a cost of $229 billion over ten years, but the Senate Finance Committee bill does not address this subject. This is the principal reason that the House bill is evaluated as "more expensive" than the Senate Finance Committee bill. The House bill would provide larger increases in payment for primary care physicians than for specialists.
4. "Medicare Commission to extend Medicare solvency, slow Medicare cost growth and increase quality of care" - The Senate Finance Committee bill would establish an independent commission to provide recommendations to Congress on achieving cost savings under Medicare.
5. "Sources of revenue: surcharges on higher income vs. excise tax on high cost health plans" – The House bill imposes a surtax on high income earners, defined as individuals earning over $280,000 or families earning over $350,000 annually. This will generate an additional $50 billion annually. The Senate Finance Committee bill imposes a 40% excise tax on expensive health insurance policies; those costing over $8,000 for an individual or over $21,000 for a family of four. This tax would generate an additional $20 billion annually.
Finally, the Commonwealth Fund report states that the House bill will offer health insurance coverage to an additional 35 million people, while the Senate Finance Committee bill will cover somewhat fewer people – 29 million people who are currently uninsured.
It will be fascinating to watch as President Obama and Democratic leaders in Congress decide which elements of health care financing reform to include in the bills that will go forward in the House and Senate, and how rank and file members of Congress will respond.
I have created a website containing links to agencies and organizations with information about health care financing reform, as well as to the most significant studies and reports that have been issued on the subject. Please visit the website and return here to offer your comments and suggestions for improving the site.
