House Democrat Leadership Needs New Architect Help on Healthcare Bill (Part One)

[JimofPennsylvan]

On the House’s Healthcare bill there has been little public talk about how this bill will grow the bureaucracy and thus the costs of government. The bill provides for a Health Choices Administration (HCA) which in part will enforce all the new mandates on insurance companies stemming from the bill which is largely a good idea, but part of the House’s plan requires the Commissioner of this organization to provide for an impartial, independent and de novo review of denied medical claims external to insurance companies’ review processes.§132(c). This sounds like authorization to create a large government bureaucracy to review denied medical claims from insurance companies, an expensive and wasteful enterprise. Why does the country need to set-up an external claim review process? Enrollees who believe they were wronged by their insurance company always have recourse to the court system. Moreover, the HCA has the power to sanction an insurance company and would likely do so for improperly denying claims which provides additional protection for enrollees. With this external claim review process the government will probably see a flood of claim appeals many with little or no merit because it won’t costs enrollees much to appeal, essentially a lot of waste of resources will be the outcome here. If Congress wants to smartly help enrollees wronged by their insurance company, add a provision in the bill mandating that courts order insurance companies to pay enrollees legal fees when courts find insurance companies were not acting responsibly in denying claims.

The House bill provides that a Commissioner set a medical loss ratio on individual health insurance plans §116 and the Secretary of HHS set a medical loss ratio
for group health insurance plans §2714. What this medical loss ratio mandate entails is that insurance companies will be required to spend a minimum percentage of the premiums they take in on paying for medical care for the enrollees in their plan or give rebates to these enrollees for the difference. This “medical loss ratio” mandate is of crucial importance to the whole health care reform initiative if it is done well it can go a long way to bending down that yearly health care cost increase curve that is so often talked about in public discussions of health care reform. One problem with the present design in setting this medical loss ratio is that the planned process will be so political, when a right-wing Republican becomes President his likely appointees will lower the ratio when a liberal Democrat becomes President his likely appointees will make it very high, the process must be changed to make it less political. Members of Congress need to focus on this element of the bill because this element could not only hold the key to significantly reducing the excessive rate of yearly increases in health care costs but also could hold the potential for a compromise solution to solving one of the major problems in the country over health care reform this “public option” problem. Reasonable proponents of the public option want it because they see it as the only means to get affordable health insurance to Americans which one can see as a legitimate point of view if one considers the insurance industry’s history. However, if Private Insurance companies were restricted tightly (fairly & reasonably) in how much profit they could make on premiums from enrollees which this mandate would accomplish this would go a long way to the system to the best possible job for providing affordable health insurance premiums for Americans. Remember on the public option the public insurance provider, as it stands now and from a political standpoint the only way it will stand and make it into law, has to negotiate prices with medical care providers just like private insurance companies, so the medical care claim losses for the public and private providers should be about the same. So Congress gains little with the public option for consumers if the medical loss ratio mandates are set well; in other words, setting this mandate well should offer an avenue for a compromise solution to this “public option” problem. The Congress needs to get some political backbone against the insurance company lobby and utilize its access to experts and to its subpoena power and have generated fair and good medical loss ratio and mandate their use in the bill. It also needs to strip out of the bill the present processes for setting these ratios which are too political and give the authority to the Health Benefits Advisory Committee to change these mandates once a year if they deem it appropriate and if the Commissioner approves the changes, the Congress would have an opportunity to veto the change, a four month opportunity, otherwise the change would become effective; this process should be used for individual, small group and large group insurance plans. The ongoing BAC and Congressional input in this process would make it less political and thus more protectful of the American people’s interests.

This bill contains an initiative which is called the reinsurance program. The way it works is that for retirees (and their dependants) in employer sponsored programs the U.S. government will reimburse these insurance plans for 80% of the costs between 15K and 90K on yearly claims for these retirees (and dependants). The goal here is that the plans are expected to use the money saved from the reimbursements to lower the premiums and cost sharing on active employees and retiree employees in these plans. The fundamental goal is to help enrollees, especially active employees, in employer sponsored plans from the expense burden of retiree enrollees, a good goal. As a practical matter will the issuer of the plans pass on the savings to the enrollees? (Probably not too well!). The bill should put on more conditions to see this fundamental goal is reached like for plans which have 400 or more enrollees at least 4(four) percent of the enrollees will have to be eligible retirees for the plan to be able to participate in the program; otherwise, from a practical standpoint the benefit accruing to the plan’s enrollees from the reimbursements will likely not be that meaningful.

The House bill creates this government run “Health Insurance Exchange” which in essence is a great idea but the specific design in the bill has serious flaws. The great thing about the exchange idea is that it will create large pools of people looking for insurance (the bill mandates individual insurance must be purchased through the exchange § 102(c)(1)) which will lower premium costs because insurance companies can spread the risk of medical claim payouts across a large number of people. One problem with the bill is that it doesn’t guarantee a good number of choices for consumers with respect to insurance issuers on the exchange. The commissioner for the exchange has to approve an insurance company and that company’s plan before it can sell that plan on the exchange; if the government doesn’t guarantee individuals a great level of choice on the exchange it is infringing on their civil rights because everyone has the fundamental right to seek medical care from any licensed provider one so chooses and the specific legal medical treatment one so chooses, if the government unfairly restricts an individual’s ability to pay for these items which it will with limited selection on the exchange than it has restricted that individual’s choices in these areas which is wrong. To remedy this problem the bill should mandate that at least plans from nine different issuers should be offered on the exchange for any location across the nation assuming at least nine qualified insurance issuers are interested in offering insurance for a locale. Another problem with this bill is that if an individual who is eligible for affordability credits doesn’t sign up for an exchange offered health insurance plan, the exchange will sign that person up automatically §205(b)(3) and the bill mandates the same automatic sign-up with respect to employees being automatically signed up by employers for employer sponsored plans unless they opt-out. This is something out of a science fiction movie, health care is too important to someone’s life the government shouldn’t involve itself in such a manner in someone’s personal life; this move on the government’s part is an egregious violation of a person’s right of privacy.

“SEE PART TWO”

 

[JimofPennsylvan]

“PART TWO”

Another major problem with this bill’s design of the exchange idea is that individuals have to sign up for an exchange offered insurance plan with the government run exchange administration. This means there will be a big government bureaucracy handling this sign-up task for individual insurance plans. This is a needless expense plus a troublesome idea individuals signing-up for insurance plans will often have coverage questions and these government exchange workers because they are not insurance company employees will not be able to answer these questions in a manner that gives confidence to prudent consumers – it is not a consumer friendly framework here. The House bill writers have got it all wrong, the exchange should just be a marketing mechanism for eligible insurance plans. One logs on to the exchange website and sees 18 basic, 18 enhanced and 18 premium insurance plans from nine insurance issuers that are qualified exchange insurance plans, the website has explanations of the plans and each plans identifying code, one determines the plan that one is interested in enrolling in and the website has a portal to that insurance company’s website and once at the insurance company website one enrolls in the qualified plan using the plan’s identifying code and if need be gets his or her questions answered through the insurance company website or one can register over the phone or in person with the insurance company. Prudent consumers aren’t going to want to deal with a middleman especially a government middleman they will want to deal with the insurance company employees so later on if there is any coverage problems they can be in a position to say the insurance company employee said this or that when they signed me up and they know they are signed up for the plan they want to be signed up for they won’t have to worry about a government mix-up where the government exchange administration either didn’t communicate to the insurance company that an individual had registered for one of their plans or the correct plan the individual wanted to be registered for. Keep in mind after this bill becomes law, legally, insurance companies will only be able to sell exchange qualified plans to individuals so there shouldn’t be a problem with the government worrying if we let individuals deal directly with insurance companies they are not going to get an exchange qualified plan, there shouldn’t be any such plans available and I can’t see big insurance companies risking stiff financial penalties, which hopefully the bill will authorize, to sell non-exchange qualified plans to individuals. Of course there should be a mandate on insurance companies to report to the exchange the identity of individuals that sign-up for their plans so the government records are accurate on who currently has insurance so they can implement a universal coverage mandate. The bill should also provide that those individuals approved for affordability credits from the Health Choices Administration be put on a list in an internet accessible data bank with the value of the credits which have been approved for each individual and this data bank be made accessible to exchange qualified insurance issuers so when individuals sign up for insurance plans with insurance issuers they can have it settled how much they will owe in premium costs.

The bill should do away with its ban on people who become eligible for Medicaid from participation in the Health Insurance Exchange (§202(d)(4)(B)(i)(II) and §202(d)(1)(A). Some people become Medicaid eligible because they get sick and can’t work and these people shouldn’t get stuck with second rate medical care where in some localities in the nation people with Medicaid insurance coverage often get that type of care because the medical care provider community is biased against them because of Medicaid’s low provider payment rates. Moreover, the bill should be amended to provide affordability premium credit access to Medicaid eligible individuals if they choose to get off Medicaid and onto a private individual insurance plan because without these credits these people are not given the same rights as other Americans because these credits are so critical from a practical standpoint in being able to get and maintain private health insurance. In computing the affordability credits for these Medicaid eligible individuals such individuals should be treated as if their income is 134% of the Federal Poverty Level (FPL) – just over the income limit for the bill’s expanded definition of Medicaid eligible families, therefore, the public policy is respected to try to reduce government health care expenses because otherwise the government will largely be providing affordability credits for these individuals that pays their entire premium costs for an exchange offered policy and this expense will often be higher than the costs to the government than if that individual went into the Medicaid program which is not fair to the government and collectively all U.S. taxpayers.

The bill should allow insurance issuers to offer more than one basic and one enhanced plan on the exchange §203(b), at least two of each type of plans should be permitted. Congress’s goal with the bill should be to create an exchange which gives individuals great choice with respect to selection of health insurance plans because as stated individuals are required to purchase only an exchange offered insurance plan. Moreover, basic plans will be much more affordable than premium plans from a premium cost’s standpoint because by statute basic plans have an actuarial issuer payout rate for claims of 70% for basic and 95% for premiums so insurance issuers for premium plans have to raise that much more money to pay on claims. Congress needs to keep in mind it is not exactly clear what the essential benefit mandates on insurance plans will be and if insurance companies are only allowed one basic plan they will probably just offer the essential benefits and go after that price conscious consumer looking for the lowest premium deal. Such a one plan mandate would be a lousy arrangement for consumers required to use the exchange, Congress must allow at least two basic plans from an issuer so issuers are free with their second basic plan to offer benefits that would appeal to the consumer that considers more than just price point but also a good quality plan.