Monday, February 22, 2010

White House Proposal is Released

As promised, the President has released a health insurance reform proposal which you can read here. It's not 2000 pages; indeed, there are many, many gaps that would have to fill in before this could become law. And there are no real surprises -- nothing that jumps out as something we haven't seen before. It does appear to have been tailored to allow the proposal to move through reconciliation by eliminating many of the non-budgetary items. It also is very streamlined; this definitely is a broad outline, not a detailed proposal. The tough issues -- abortion, immigration -- appear to have been tabled for the moment, and there are obvious questions. Here's a summary:

There will be no denial of coverage due to pre-existing conditions, effective 2014. Within 6 months of passage, there will be high risk pools for people who cannot obtain insurance because of pre-existing conditions.

Individuals will be required to purchase insurance, and will receive tax cuts if their income is not over certain limits in order to make their insurance premiums more affordable. Individuals who fail to buy insurance will pay a flat, sliding-scale fee. Employers will not be required to cover employees, but they will pay a fee for each employee they do not cover who requires a subsidy.

Ultimately, there will be no more lifetime or annual caps on benefits (effective 2014). The proposal doesn't say what happens in the meantime, as best I can tell.

Rescissions or policy cancellations due to illness will be prohibited.

There will be Exchanges -- an electronic marketplace -- where consumers can shop for available insurance company options. However, there will be a national entity that would govern or control health insurance premium increases.

Premiums will be limited to a certain percentage of income (sliding scale, anywhere from 2.2% to 9.5%), and financial assistance to the middle class up to families of 4 with $88,000 of annual income will receive assistance with health insurance costs.

Medicaid would be increased to 133% of the federal poverty level, and the federal government will pay for this increase for the first two years, with the state share increasing over time after that. The controversial deal that was struck for some states -- most notably, Nebraska -- are eliminated.

The Medicare donut hole -- the gap in coverage of prescription drugs -- will be eliminated, and the subsidies currently paid to private HMOs that administer Medicare -- Medicare Advantage Plans -- will be eliminated.

The excise tax on so-called Cadillac plans will be delayed to 2018, and will be increased to plans that cost $10,200 for individuals and $27,500 for families. So if you have a high cost plan, it will remain intact until 2018 if you choose to stay with it.

There will be a stronger appeal process for denials of coverage, similar to the independent reviews that exist in most states today. There are no details here, but based on the House and Senate proposals, it is fair to assume that there would be a final review by an independent review organization that has the power to overturn the insurance company, which already is the case in most states.

There will be government oversight of premium rate increases, and children would be able to stay on their parents' policies to age 26.

Preventive care would be free.

Once the Exchanges are set up, insurers could not base premiums on health history, gender, genetic information, domestic violence, or salary.

Much emphasis is placed on wellness and prevention programs for controlling the cost of chronic illness.

This is, perhaps of necessity, painted in broad, uncontroversial strokes. There is little here for the Republicans to oppose, mostly because the most thorny issues are not addressed at all. For example, again, it adopts the Senate "compromise" on abortion, and there is no mention of immigration. There is no mention of tort reform; I am willing to bet that the White House gives the Republicans some form of malpractice reform pretty early on in Thursday's negotiation.

It seems to me that the White House made an effort to pull from the House and Senate proposals all that they had in common, leaving gaping holes where the devil lurks. I can only assume that the White House decided to start the summit with the provisions that should easily garner bipartisan support; the provisions that, if opposed, make the Republicans look like the party of no. It's boiled down to just over 10 pages -- 10 pages of content that the majority of Americans will support, written in short, plain-spoken snippits that are not controversial. Of course, it's getting from here to a final agreement that is difficult, and the White House knows that. Still, by starting at a point of utter reasonableness, it should be hard for the Republicans to demand that we start with a blank piece of paper.

Anyway, this is the starting line, and it's a decent one -- it would be better with a public option, immediate lifting of lifetime and annual caps, etc. -- but a good, solid place to start. Now's where it starts to get interesting. Jennifer


  1. Jennifer, Thanks for the great summary above. You always do a great job of getting to the heart of the matter! Best to you! Kimberly, HFA

  2. Great Summary, easy to read. Thanks for all the hard work you all do for our community

  3. Thank you for your informative summary Jennifer. I am hoping that the Democrats and the Republicans can agree on these mostly non-contentious points. I worry though about the individual mandate throwing a monkey wrench into any potential agreement. GOP wants to avoid a mandate and make insurance affordable, but not mandatory.

    I hope legislators are sensible enough to negotiate in good faith and move to agreement given what insurance companies like Anthem BC/BS in California (25% to 39% rate increases for almost 1 million Californians) were going to pull. ABC News tonight called attention to other large BC/BS rate increase proposals in other states too.