The Senate Health, Education, Labor and Pensions Committee (HELP) has begun circulating what Senator Edward Kennedy (D-MA) calls a “draft of a draft.”
The proposal is called “the same old tired ideas we have fought against for many years” by Neil Trautwein, vice president of the National Retail Foundation, who is disappointed at the outcome of scores of hours of meeting with the committee (California Healthline 6/8/09).
Key points:
1. Guaranteed issue, community rating. This means guaranteed price increases. Supposedly this effect is overcome by forcing everybody to buy insurance. But the premiums are inevitably still higher for low-risk individuals than they would otherwise be. And now we have the Massachusetts experiment: The insurance mandate was supposed to drop premiums by 25% to 40%. Instead, they increased by7.4% in 2007, 8%-12% in 2008, and are expected to rise 9% this year, compared to an average nationwide increase of 5.7% over the same period. Annual health insurance costs the average family $4,000 per year more than the average American family (Michael D. Tanner, Cato 6/3/09).
2. Government-dictated “quality” standards. “Activities to improve health care quality” include mandatory incentives for case management, care coordination, chronic disease management, best clinical practices, evidence-based medicine, wellness and health promotion, culturally and linguistically appropriate care, etc. A Medical Advisory Council will be established by the Institute of Medicine and the Centers for Disease Control and Prevention to define best practices.
3. “Gateways” to “affordable health choices.” These new state bureaucracies resemble the Massachusetts Connector. Qualified individuals may buy certified insurance through the Gateway. Plans will have to meet many new federal requirements; and no state mandates will be abrogated. “Essential health care benefits” include such costly items as substance abuse, mental health, and rehabilitative services. Apparently, a maximum will be placed on the out-of-pocket limit—another way to guarantee increased costs.
4. Price controls and limits on balance billing. All Medicare providers will have to accept as payment in full the amount designated by an “affordable access plan.”
5. Cost of medical coverage depends on income. The proposal establishes income bands for out-of-pocket limits and for premium credits. This could mean that workers who increase their earnings could face the equivalent of a greater than 100% marginal tax on these earnings. “Premiums” would be a form of progressive taxation rather than an actuarially calculated premium.
6. Increased reporting requirements. To determine payments, subsidies, and compliance with mandatory purchase of acceptable coverage, individuals and other entities will have to make frequent reports to taxation authorities.
7. Coverage of non-citizens. Although plans will not pay for illegal aliens, they may have to pay for aliens who are lawfully present in the country. An amnesty program could instantly add millions of non-citizens to taxpayer-subsidized coverage.
8. “Shared responsibility” = individual and employer mandates. There will be as-yet-unspecified penalties for not having government-qualified coverage; that is, there are large numbers of blank spaces to be filled in with dollar amounts.
While the draft is heavy on regulations, reporting, and mandates, it contains no cost estimates or funding sources. Presumably, that is in the domain of the Senate Finance Committee.
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