Understanding the House Democrats’ health care bill
9 June
Yesterday I posted and described the draft Kennedy-Dodd health care bill. Today I would like to do the same for an outline produced by House Democrats.
Here is a three-page outline of “Key Features of the Tri-Committee Health Reform Draft Proposal in the House of Representatives,” dated yesterday (June 8, 2009).
The three committees are:
- The House Ways & Means Committee, chaired by Rep. Charlie Rangel (D-NY). The Health Subcommittee is chaired by Rep. Pete Stark (D-CA).
- The House Energy & Commerce Committee, chaired by Rep. Henry Waxman (D-CA). The Health Subcommittee is chaired by Rep. Frank Pallone, Jr. (D-NJ).
- The House Committee on Education & Labor, chaired by Rep. George Miller (D-CA). The Health, Employment, Labor and Pensions Subcommittee is chaired by Rep. Robert Andrews (D-NJ).
The document suggests this is a joint product of the three committees and/or their subcommittees. My sense, however, is that it is Speaker Pelosi who is driving the bus. This is in contrast to the Senate, where the committee chairmen (Kennedy/Dodd and Baucus) appear to have the pen, in less well-coordinated efforts.
Kennedy-Dodd and the House bill outline are remarkably similar. Whether this represents House-Senate coordination or parallel thought processes is unclear.
I think the easiest way for me to present the House bill outline is in comparison with the Kennedy-Dodd bill. So here my description from yesterday of the Kennedy-Dodd bill, with today’s comparison to the House bill outline in red. I hope it’s comprehensible and useful this way. If you read yesterday’s post, you can skim the text in black and focus on the new text in blue.
Here are 15 things to know about the draft Kennedy-Dodd health bill and the House bill outline.
- The Kennedy-Dodd bill would create an individual mandate requiring you to buy a “qualified” health insurance plan, as defined by the government. If you don’t have “qualified” health insurance for a given month, you will pay a new Federal tax. Incredibly, the amount and structure of this new tax is left to the discretion of the Secretaries of Treasury and Health and Human Services (HHS), whose only guidance is “to establish the minimum practicable amount that can accomplish the goal of enhancing participation in qualifying coverage (as so defined).” The new Medical Advisory Council (see #3D) could exempt classes of people from this new tax. To avoid this tax, you would have to report your health insurance information for each month of the prior year to the Secretary of HHS, along with “any such other information as the Secretary may prescribe.”The House bill also contains an individual mandate. The outline is less specific but parallel: “Once market reforms and affordability credits are in effect to ensure access and affordability, individuals are responsible for having health insurance with an exception in cases of hardship.”
- The Kennedy-Dodd bill would also create an employer mandate. Employers would have to offer insurance to their employees. Employers would have to pay at least a certain percentage (TBD) of the premium, and at least a certain dollar amount (TBD). Any employer that did not would pay a new tax. Again, the amount and structure of the tax is left to the discretion of the Secretaries of Treasury and HHS. Small employers (TBD) would be exempt.The House bill outline also contains an employer mandate that appears to parallel that in Kennedy-Dodd: “Employers choose between providing coverage for their workers or contributing funds on behalf of their uncovered workers.”
- In the Kennedy-Dodd bill, the government would define a qualified plan:
- All health insurance would be required to have guaranteed issue and renewal, modified community rating, no exclusions for pre-existing conditions, no lifetime or annual limits on benefits, and family policies would have to cover “children” up to age 26.The House bill outline is consistent with but less specific than the Kennedy-Dodd legislative language. The House bill outline would “prohibit insurers from excluding pre-existing conditions or engaging in other discriminatory practices.” I will keep my eye on what “other discriminatory practices” means in the legislative language. Does that mean that a health plan cannot charge higher premiums to smokers? Like the Kennedy/Dodd bill, the House bill outline would preclude health plans from imposing lifetime or annual limits on benefits: “Caps total out-of-pocket spending in all new policies to prevent bankruptcies from medical expenses.” This would raise premiums for new policies.
The House bill outline “introduces administrative simplification and standardization to reduce administrative costs across all plans and providers.” I don’t know what this means, but suggest keeping an eye on it.
- A qualified plan would have to meet one of three levels of standardized cost-sharing defined by the government, “gold, silver, and bronze.” Details TBD.Same: “… by creating various levels of standardized benefits and cost-sharing arrangements…”. It also contains this addition relative to Kennedy-Dodd: “… with additional benefits available in higher-cost plans.” But note the “various levels of standardized benefits.” This appears to be more expansive government control of health plan design than in the Kennedy-Dodd draft.
- Plans would be required to cover a list of preventive services approved by the Federal government.This is unspecified in the House bill outline. We’ll have to wait to see legislative language. The House bill would require plans to “waive cost-sharing for preventive services in benefit packages.”
- A qualified plan would have to cover “essential health benefits,” as defined by a new Medical Advisory Council (MAC), appointed by the Secretary of Health and Human Services. The MAC would determine what items and services are “essential benefits.” The MAC would have to include items and services in at least the following categories: ambulatory patient services, emergency services, hospitalization, maternity and new born care, medical and surgical, mental health, prescription drugs, rehab and lab services, preventive/wellness services, pediatric services, and anything else the MAC thought appropriate.This appears parallel but is less specific for now: “Independent public/private advisory committee recommends benefit packages based on standards set in statute.” I find the “standards set in statute” interesting. It suggests that provider and disease interest groups will have two fora in which to lobby for their benefits to be mandated: Congress, and the advisory committee.
- The MAC would also define what “affordable and available coverage” is for different income levels, affecting who has to pay the tax if they don’t buy health insurance. The MAC’s rules would go into effect unless Congress passed a joint resolution (under a fast-track process) to turn them off.The House bill outline is silent on this.
- All health insurance would be required to have guaranteed issue and renewal, modified community rating, no exclusions for pre-existing conditions, no lifetime or annual limits on benefits, and family policies would have to cover “children” up to age 26.The House bill outline is consistent with but less specific than the Kennedy-Dodd legislative language. The House bill outline would “prohibit insurers from excluding pre-existing conditions or engaging in other discriminatory practices.” I will keep my eye on what “other discriminatory practices” means in the legislative language. Does that mean that a health plan cannot charge higher premiums to smokers? Like the Kennedy/Dodd bill, the House bill outline would preclude health plans from imposing lifetime or annual limits on benefits: “Caps total out-of-pocket spending in all new policies to prevent bankruptcies from medical expenses.” This would raise premiums for new policies.
- Health insurance plans could not charge higher premiums for risky behaviors: “Such rate shall not vary by health status-related factors, … or any other factor not described in paragraph (1).” Smokers, drinkers, drug users, and those in terrible physical shape would all have their premiums subsidized by the healthy.The House bill outline says it would “prohibit plans [from] rating (charging higher premiums) based on gender, health status, or occupation and strictly limits premium variation based on age.” If the bill were to provide nothing more, this would appear to parallel the Senate bill and preclude plans from charging higher premiums for risky behaviors.
- Guaranteed issue and renewal combined with modified community rating would dramatically increase premiums for the overwhelming majority of those Americans who now have private health insurance. New Jersey is the best example of health insurance mandates gone wild. In the name of protecting their citizens, premiums are extremely high to cover the cross-subsidization of those who are uninsurable.The House bill outline is silent on guaranteed issue and renewal. I’m going to make an educated guess that the bill includes these provisions as part of “other discriminatory practices,” and they have just left them out of the outline. Given the philosophy behind this outline (with which I disagree), it would be a striking omission. But for now, the outline says nothing specific on these topics.
- The bill would expand Medicaid to cover everyone up to 150% of poverty, with the Federal government paying all incremental costs (no State share). This means adding childless adults with income below 150% of the poverty line.The House bill outline “expands Medicaid for the most vulnerable, low-income populations,” so we have no specifics other than that there’s an expansion. I cannot tell if this is expanding eligibility or benefits. The outline also “improves payment rates to enhance access to primary care under Medicaid.” I assume this means the bill would expand the Federal share paid of each dollar spent by a State Medicaid program on primary care, rather than the Federal government actually mandating specific payment rates to be implemented by States. Federal micromanagement of specific Medicaid provider payment rates was eliminated in the mid 1990’s.
- People from 150% of poverty up to 500% (!!) would get their health insurance subsidized (on a sliding scale). If this were in effect in 2009, a family of four with income of $110,000 would get a small subsidy. The bill does not indicate the source of funds to finance these subsidies.The House bill outline has a sliding scale up to 400% of poverty. If this were in effect in 2009, a family of four with income of $88,000 would get small subsidy.
- People in high cost areas (e.g., New York City, Boston, South Florida, Chicago, Los Angeles) would get much bigger subsidies than those in low cost areas (e.g., much of the rest of the country, especially in rural areas). The subsidies are calculated as a percentage of the “reference premium,” which is determined based on the cost of plans sold in that particular geographic area.The House bill outline is not specific on this point. I would not expect it to be – this is something you can tell only from legislative language.
- There would be a “public plan option” of health insurance offered by the federal government. In this new government health plan, the federal government would pay health care providers Medicare rates + 10%. The +10% is clearly intended to attract short-term legislative support from medical providers. I hope they are not so naive that they think that differential would last.The House bill outline “creates a new public health insurance within the Exchange … the public health insurance option competes on ‘level field’ with private insurers in the Exchange.” There are no specifics on how the public plan would work, or on provider payment rates.
- Group health plans with 250 or fewer members would be prohibited from self-insuring. ERISA would only be for big businesses.The House bill outline is silent on this point.
- States would have to set up “gateways” (health insurance exchanges) to market only qualified health insurance plans. If they don’t, the Feds will set up a gateway for them.The House calls it an Exchange rather than a Gateway. While the Senate bill would tell each State, “Create a Gateway or we’ll create one for you,” the House bill outline says to each State, “We’re creating a single new national Exchange. You’re in it unless you develop your own State or Regional Exchange.”
- Health insurance plans in existence before the law would not have to meet the new insurance standards. This creates a weird bifurcated system and means you would (probably) be subject to a different set of rules when you change jobs.The House bill outline appears to parallel the Kennedy-Dodd draft: “Phases-in requirements to benefit and quality standards for employer plans.” This means that new plans will be more expensive than old plans. It also means they’re creating a bifurcated system with all sorts of perverse unintended consequences for employment flexibility.
- The bill does not specify what spending will be cut or what taxes will be raised to pay for the increased spending. That is presumably for the Finance Committee to determine, since it’s their jurisdiction.The House bill outline lists specific topics for changes to Medicare reimbursement:
- Changing (how?) the Medicare reimbursement for doctors, called the “Sustainable Growth Rate” (SGR).
- “Increasing reimbursement for primary care providers”
- “Improving” the Medicare drug program. I won’t be surprised if, when I see the specifics, I disagree that their changes are “improvements.” In the past this has meant having the federal government mandate specific prices for drugs.
- Cutting payments to Medicare Advantage plans.
- Expanding low-income subsidies for seniors and eliminating cost-sharing for all preventive services in Medicare.
The House bill outline also uses positive language to describe things that might generate budgetary savings from Medicare and/or Medicaid. The hospital readmissions point is specific. The first two points could increase or decrease federal spending, depending on the specifics.
- “Use federal health programs … to reward high quality, efficient care, and reduce disparities.”
- “Adopt innovative payment approaches and promote[s] better coordinated care in Medicare and the new public option through programs such as accountable care organizations.”
- “Attack the high rate of cost growth to generate savings for reform and fiscal sustainability, including a program in Medicare to reduce preventable hospital readmissions.”
- The bill defines an “eligible individual” as “a citizen or national of the United States or an alien lawfully admitted to the United States for permanent residence or an alien lawfully present in the United States.”The House bill outline is silent on this point.
- The bill would create a new pot of money for state gateways to pay “navigators” to educate people about the new bill, distribute information about health plans, and help people enroll. Navigators receiving federal funds “may include … unions, …”The House bill outline is silent on this point.
This would have severe effects on the more than 100 million Americans who have private health insurance today:
- The government would mandate not only that you must buy health insurance, but what health insurance counts as “qualifying.”
- Health insurance premiums would rise as a result of the law, meaning lower wages.
- A government-appointed board would determine what items and services are “essential benefits” that your qualifying plan must cover.
- You would find a tremendous new disincentive to switch jobs, because your new health insurance may be subject to the new rules and would therefore be significantly more expensive.
- Those who keep themselves healthy would be subsidizing premiums for those with risky or unhealthy behaviors.
- Far more than half of all Americans would be eligible for subsidies, but we have not yet been told who would pay the bill.
- The Secretaries of Treasury and HHS would have unlimited discretion to impose new taxes on individuals and employers who do not comply with the new mandates. (The House bill outline is not specific on this point.)
- The Secretary of HHS could mandate that you provide him or her with “any such other information as [he/she] may prescribe.” (The House bill outline is not specific on this point.)
I strongly oppose the Kennedy-Dodd bill and the House Tri-Committee bill.
If this topic interests you, I highly recommend Jim Capretta’s blog Diagnosis.
(photo credit: speaker.house.gov)
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- Ten more things about the official Kennedy-Dodd health care bill
- The belt-and-suspenders of the Kennedy-Dodd health care bill
- Parsing the President’s health care reform letter
- Health insurance for poor kids
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@Sick of messiah –
Finally someone who I agree with……. Has everyone bumped their heads????? We must type up bullet points and distribute them everywhere. So many people choose to keep their heads in the sand because it depresses them. Iam sick of people who care only about what affects themself and no longer care about what is good for the nation!!! We are “We the People”.
@katherine gross – Murder babies.
I just have one question for those against healthcare for all, If you loose your job tomorrow what would you do. Don’t let corporate influence cause you to vote against your family self interest
@Chris Lavinier – Chris: If I lost my job, I would get my fanny out on the street and work without sleep if I had to. I would claw and scratch to make a living. I would do everything I could to provide for my family. NO healthcare is turned away now. Many use the emergency room as their health care and 82% of those claims are never payed by the beneficiaries. This will bankrupt the US.
Kirt good for you, thats that garbage thats programmed into your head, I hope you never have to find out. my point is exact the emergency rooms are used as free healthcare for those with none which you and i are indirectly paying for. Wise up man. stop thinking you are not made of flesh and bones. example, i have been paying for my healhcare insurance for 15 years never used it if I loose my job all that money I payed is gone. Wise up Man
@katherine gross – If you don’t ‘believe’ in abortion – or open heart surgery, or taking medication such as insulin, blood transfusions, or getting a broken leg set – there is only one thing to do: don’t do it. Believe it or not, you don’t get to choose the health care that your neighbors get – no, not even if you consider your belief in a supernatural being to be the only ‘correct’ belief, and think that your beliefs somehow supercede the right of others to make their own health care decisions privately.
Happily, we don’t live in a theocracy – for that, one must move to a country such as Iran, or somehow go back to the days of the Inquisition. It also means that legal medical procedures are covered by insurance. And abortion, as well as other women’s health care services, had better be covered!
Is anyone going to answer the many people who asked where a copy of the entire bill can be obtained so we can see for ourselves rather than feeling like a mushroom(being in the dark and being fed bull-_ _ _ _)
@Chris Lavinier –
I have worked as a professional inside modern hospitals for 27 years !! Wake-up! Everybody has healthcare NOW!
I work side by side with doctors, nurses, technicians, and engineers on a daily basis!
Nobody with a brain and a pulse inside a hospital wants increased government programs and this Obama-care mess. Each increase in government involvement has meant more paperwork, more patients and LESS money. Cash payments and private insurance “re-imbursements” are what keep medicine in business. Medicare-Medicaid “re-imbursements” are usually well below 30%. Obama-care will expand and set all “re-imbursements” at M-M levels. Do the math! Increasing patient loads while decreasing payments will put many a hospital and clinic out of business. What will be left will be “cut to the bone” canadian style limited care and waiting lists for everything.
Look at our “top money-last place” school system, look at the IRS and our tax code, look at the postal service! And you want Obama-care too???
This “Obama-care” is a page right out of Mein-Kampf.
DGossett Im not a healthcare professional just someone who will use it some day, all my experiences with the system has been negative, my sister had cancer in her throat, she had insurance she had to file for bankrupcy because she couldn’t pay for what the wanderful system we have. she never told me i would have helped if i knew. last year my mother went in to get her knee scoped we burried her 8 days later. its people like you that just don’t understand that if you do your jobs there is enough money for everyone. Greed has taken the system maby it will get better or worse but it need to be changed. the school system are ran by local government, we need the IRS to collect revenue for the things you use but don’t stop to apprecite. tax code is not that hard if you read it. our postal service has been doing a great job since it inception. your hate for President Obama is the issue. So just say I hate The president and stop with the BULL
I have been a democrat for 42 years and will not change my party, but because of the stimulus bill, cap and trade and not the healthcare bill I will never vote for another democrat again.
One question I have. Will the White House, representatives. senators, and others have and pay the same amount for thier insurance. I think not. Please advise.
I'm a student and i need help understanding the bill i get the part about the goverment setting up different insurance plans and people are going to have to buy these plans. The rest just confuse me can you please e-mail me at Demon_1994@yahoo.com if you can just give me an summary about what it is about
@Kellie -
Actually, frogs are smarter than you think. You can add btu's to the water as slowly as you want – the frog will jump when it starts getting uncomfortable. This is long before any cooking occurs. The frog thingy is a myth. We should jump before things get any warmer.
Why do I have to live with the fact that the insurance companies can charge exactly what they want and deny anyone coverage because they see it as a pre-existing condition? Why are you so upset over this and I don't have a right to be that Bush used taxpayer money to fund a useless war and to bail out Wall Street, but I guess that is ok.
Not sure why people are so upset by a universal government run health care plan. We already have universal care, except we have a useless middleman (insurance companies) taking a lot of the money. Bottom line, people get sick, they go to the hospital to get treated (they can't be turned away), if they can't pay, hospitals pass the cost on by increasing rates. Insurance companies pay the increased rates, and then pass the increase cost on to us in premiums, plus additional profit. Those who have the financial wherewithal are already paying for those who don't. We are already paying for the uninsured. The only difference is that we won't be paying the insurance companies.
First we must decide if health care is a right. If someone else is paying for it, I don't see how it can be. You could argue that access to health care is a right (we actually already have that thru emergency room services). We must decide if this is the only alternative to reforming some of the shortcomings in our current system (the bill is 2000 pages already and has yet to be passed). We must decided if you want bureaucrats, who are not elected and therefore not accountable, to set and reset the health care standards and costs. We have to decide if we want to cripple many small businesses who will not be able to afford the cost of covering employees (or the "tax" for failing to). And on and on. So far I see nothing redeeming about this proposal, and suggest we explore other alternatives before we turn another portion of our lives over to the Federal Government.