Health Care Reform - Latest News - March 22, 2010
As many of you already know - the latest version of Health Care reform was passed in the House last night, as was approval for a list of reconciliation items agreed to for the senate bill. This bill HR 4872 can be seen compared to the original house & senate bills in a document compiled by the Henry J Kaiser Foundation, Menlo Park, California. This document does a good job of laying out the differences in the bills side by side. It has the reconciliation items outlined in italics for ease of identification as well. For those of you who do not wish to read the entire grid, below is a shorter breakdown of what is in the original house bill 3590 and the most recent bill HR 4872.
The Kaiser Foundation Grid can be seen by clicking the link below:
Side by Side Comparison of Major Health Care Reform Proposals
WHAT'S IN H.R. 3590?
H.R. 3590 -- the bill that the Senate passed late on Christmas Eve -- is on track to become law whether or not the Senate approves H.R. 4872.
The final version of H.R. 3590 would:
- Enact the Community Living Assistance Services and Supports Act long long term care benefits program.
- Require insurers selling in the individual market, in the small group market and through the exchange system to sell coverage on a guaranteed issue and guaranteed renewable basis. Plans could base rating variations only on age, family use, tobacco use and location, and the rates for the oldest insureds could be only 3 times higher than the rates for the youngest insureds. Rates for tobacco users could be only 50% higher than the rates for non-tobacco users.
- Create a new health insurance exchange system that individuals and employers with up to 100 employees could use to buy subsidized health coverage, and 4 "tiers" of coverage, ranging from catastrophic plans to platinum plans.
- Create a new system of nonprofit health insurance co-ops.
- Permit states to form multi-state health insurance compacts, to create multi-state markets for health insurance.
- Create a health insurance tax credit for employers with 25 or fewer employees and average annual wages of less than $50,000.
- Impose penalties on employers with more than 50 employees that fail to provide health coverage and on inidividuals with incomes over a minimum income threshold who fail to have health coverage.
- Require employers with more than 200 employees to enroll employees in health plans automatically.
- Impose a $750 per-employee penalty on employers with more than 50 employees that fail to provide health coverage.
- Impose minimum medical loss ratios that are similar to those in H.R. 3590: 85% for group plans with more than 100 participants; 80% for small group plans; and 85% for Medicare Advantage plans.
- Impose a 40% “Cadillac plan” excise tax on insurers that sell relatively expensive health plans. Insurers now would pay the tax when they sold plans that cost more than $8,500 for individuals and $23,000 for families.
- Tighten health savings account and flexible savings account reimbursement rules. Individuals could not use account funds to pay for over-the-counter medications unless the medications were prescribed by doctors.
- Cap annual FSA contributions at $2,500, but increase the limit annually by a cost of living adjustment, starting Jan. 1, 2011.
- Apply the existing Medicare payroll tax to investment income starting in 2013, and increase the tax by 0.9 percentage points, to 2.35%, for wages over $200,000 per year for individuals and over $250,000 per year for couples.
- Adopt a national standard for eligibility verification and claims status by Jan. 1, 2013; a standard for electronic fund transfers by Jan. 1, 2014); and a variety of other standards by Jan. 1, 2016.
- Give states 5-year grants to develop medical malpractice reform programs.
WHAT'S IN H.R. 4872?
Originally, the Reconciliation Act was going to include health insurance rate regulation provisions. The version passed Sunday by the House excludes that version, because the Senate parliamentarian ruled that H.R. 4872 backers could not handle the provision using the budget reconciliation process.
H.R. 4872 echoes the language of H.R. 3590 in many places and changes it in others.
Provisions that are still in H.R. 4872 would:
- Create a $1 billion Health Insurance Reform Implementation Fund.
- Exempt the first 30 employees of any employer from the no-coverage penalty.
- Increase the per-employee penalty imposed on employers that fail to provide health coverage to $2,000 per employee, from $750.
- Require individuals making more than $200,000 per year and couples making more than $250,000 per to pay a new 3.8% tax on interest, dividends, capital gains and other investment income. (This new tax is higher than the 2.9% tax on investment income recently proposed by President Obama.)
- Increase the Cadillac plan tax limits to $10,200 for individuals and $27,500 for families, and to $11,850 and $30,950 for for retirees and high-risk professionals. Calculations of health benefits value now will exclude dental plans and stand-alone vision plans.- Push the effective date of the $2,500 cap on annual FSA contributions back to Jan. 1, 2013.
- Increase the no-coverage penalty for individuals with relatively high incomes and decrease the penalty for low-income individuals.
In the weeks prior to this current bill coming to the house floor, some states have already begun proceedings to exempt themselves from the federal mandates to have individuals purchase insurance. Whether or not this will be doable, remains to be seen and what impact it would have on the overall plan's effectiveness would also be questionable.
Much of the idea of "guaranteed issue" with pre-existing conditions being something that people could not be denied insurance for, would not be sustainable unless all people had to purchase insurance.
Much like the current model for Home and Car insurance, none of us would be able to afford property rates if we all waited until we had a house fire to purchase insurance - the pool would simply not be large enough to absorb the payouts for such disasters, so rates would have to be astronomical to account for this type of activity. If states are indeed allowed to withdraw from the federal mandate, it remains to be seen whether or not the 'guaranteed issue' part of the plan would be feasible at all.
The Exchanges and how they would be managed are also a big question, as is the role of the broker/agent in these scenarios.
As your insurance agent, I plan to keep you apprised of changes that may impact you as they happen.
Please feel free to contact me with any questions you may have.
