Provisions of the plan:
Obama promised that you could keep your health plan—but the “tri-committee” House bill, “America’s Affordable Health Choices Act of 2009” (H.R. 3200), assures that this will not be possible. Unless your plan, unlike any other business, can survive without a single new customer.
“Grandfathered health insurance coverage” is not permitted to enroll any individual if the effective date of coverage is on or after the first day of Y1 (§ 102). It is also not allowed to make any changes in terms or conditions.
Plans that are not grandfathered are basically prohibited from following the principles of insurance; that is, they cannot price coverage according to risk, but must force low-risk individuals to subsidize those of higher risk. Such plans are truly not insurance, but rather a type of welfare benefit. The means of financing is not correctly called a “premium.” A mandatory payment is properly called a “tax.” For lower-income individuals, the effective tax will be reduced by an income-based subsidy.
“Qualified” benefits will limit cost-sharing and will have to include expensive benefits such as mental health and substance abuse services. Benefits will be “recommended” by a public-private Health Benefits Advisory Committee chaired by the Surgeon General. Any potential profits (but not losses!) will be limited.
A “public health insurance option” (§ 221) will have start-up funding of $2 billion. Payment rates for items and services will be decided by the Secretary, based on Medicare rates (§ 223). Rates, determined by an administrative process, “shall not be set at levels expected to increase overall medical costs” beyond a certain level. The Secretary will have discretion to establish rates so as to provide for more efficient delivery, reduced disparities, or improved health outcomes.
To establish a provider network, “health care providers participating under Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary.”
“Innovative” payment methods include bundling and “partial capitation.”
Besides the automatic provider network, public startup funding, implied taxpayer protection against bankruptcy, and price controls on providers, the public plan has other advantages over private plans. One is that disputes must be adjudicated in federal court, whereas private plans are subject to various laws governing torts and contracts. Another is apparent immunity from costly state benefits mandates and premium taxes. It is also not clear that the public plan would be subject to the accounting and financing standards that prevent private plans from accumulating huge unfunded liabilities like those of Medicare. Hardly a “level playing field.” (Also see testimony before the Committee on Education and Labor, U.S. House of Representatives, by Robert Moffit, 6/23/09).
Individuals who lack “acceptable health care coverage” at any time during the tax year will face an additional tax not to exceed the applicable national average premium.” In other words, they can pay the “premium” and get “coverage”—or pay a comparable tax and not get coverage.
Title VI (“program integrity”) increases funding for detecting “waste, fraud, and abuse,” while “enhancing” penalties and increasing compliance burdens.
Each act, or “false statement, omission, or misstatement of material fact” will carry a penalty of $50,000 (§ 1611-1612). There are also penalties of $15,000 per day for failure to provide “timely access” to records (§ 1613). It is clearly stated that “no proof of specific intent to defraud” is required (§1645).
Providers will have to have a compliance program, including written policies, a compliance officer, a compliance committee, an anonymous mechanism for reporting noncompliance, auditing procedures, and on and on (§ 1635).
The AMA’s endorsement may have been purchased by “rebasing” the sustained growth rate (SGR) to 2009 (§ 1121)—not eliminating price controls or the ban on balance billing. Some service categories, such as “evaluation and management” will be considered separately.
To “reduce health disparities,” pilot programs are to be set up for improving communication with Medicare beneficiaries who have limited English proficiency.
Consequences
- Eight million uninsured people would get hit with a huge tax increase, but still have no insurance. According to the Congressional Budget Office (CBO), the gap between the subsidies and the cost of “acceptable” coverage is too big to close for 8 million Americans.
- The initial cost of $789 billion over 10 years will balloon later, as the program is fully implemented. Note that the CBO’s “net cost” of $597 billion assumes that the $789 billion cost estimate will be partly offset by $98 billion in increased tax revenue, $58 billion in savings and increased premium collections, and $36 billion in lower Medicaid and SCHIP spending. According to a Democrat House staffer, the bill would add up to $1.5 trillion in total costs over 10 years, writes Dennis Smith.
- While the draft of the House bill that AAPS has seen does not contain the word “abortion,” every single pro-life amendment failed in Senate committees (including prohibition of federal funding for abortion, conscience protection for providers, no federal mandate for abortion coverage, and no invalidation of state laws such as parental consent). Concerned Women for America calls it the “biggest power grab by abortion advocates since Roe v. Wade.”
- The public option will probably cover 12 million illegal aliens. The House Ways and Means Committee nixed on a 26-to-15 straight party-line vote an amendment introduced by Rep. Dean Heller (R-NV) to require database checks to verify citizenship (Newsmax.com 7/19/09).
- The bill provides federal payment for “nurse home visitation services,” which could enable federal intrusion into every aspect of family life.
- The Lewin Group estimated that 120 million or more Americans would lose group coverage at work, leaving fewer than 50 million customers for private carriers. Health Savings Accounts would probably be finished off altogether (Investors Business Daily 7/15/09).
- The House bill greatly increases the bureaucracy between physician and patient, as shown by a chart prepared by Republican staff members of the Joint Economic Committee (World Net Daily 7/16/09).
- The House bill establishes a “real time” data system to determine, at the time of service, the individual’s financial responsibility and “whether the individual is eligible for a specific service with a specific physician at a specific facility, which may include utilization of a machine-readable health plan beneficiary identification card” (Health Freedom Watch, July 2009). Does this make medical treatment a right, or a privilege?
- The cost of 15 million to 20 million new Medicaid beneficiaries would be bankrupting to many states—which are not allowed to print money—especially when the initial federal subsidy phases out (American Spectator 7/14/09). Gov. Phil Bredeson of Tennessee said he feared Congress was about to bestow “the mother of unfunded mandates” (NY Times 7/19/09).
Additional information:
- “Myth 10: If You Like Your Doctor and Your Health Plan, You Can Keep Them,” AAPS Mythbusters.
- “Myth 9: A ‘Public Option’ Is Needed to Spur Competition, Keep Private Plans Honest, and Bring Down Costs,” AAPS Mythbusters.
- “Kennedy Bill Breaks Obama’s Promises,” AAPS News of the Day 6/22/09.
- Patient Opt-out
- Read the bill, see CBO cost estimates, follow congressional action
