(1) House Poised to Debate Health Reform Bill Following Introduction of H.R. 3962

At an October 29 press conference, House leaders announced the release of legislative language for H.R. 3962, the “America’s Affordable Health Choices Act.” This 1,990-page bill is expected to be considered on the House floor late next week.

An AHIP statement on the House bill can be found by clicking here. While the precise timing of House floor action is uncertain, House leaders reaffirmed this week that, before voting on the bill, members will have 72 hours to review the legislative language and a yet-to-be-released manager’s amendment that will make additional changes. House Majority Leader Steny Hoyer (D-MD) said late yesterday that he expects the manager’s amendment to be released on Monday and that the bill could be considered on the House floor as early as Thursday. Over the past 24 hours, however, there have been indications that this timeframe is likely to be pushed back. Leader Hoyer has notified members that, if necessary, the House may be in session on the weekend of November 7-8 and on the following Monday and Tuesday.

The following are key elements of the House bill that was introduced yesterday:

Insurance Market Reforms (2010): Beginning in 2010, the following reforms would take effect:

· an 85% minimum would be set for medical loss ratios, with rebates required for plans that do not meet this requirement;

· rescissions would be allowed only when fraud occurs and would be subject to independent review;

· plans would be required to justify premium increases in an annual review process that would be conducted by the HHS Secretary in conjunction with the states;

· the “look-back” period that applies for purposes of determining whether a person has preexisting conditions would be reduced from six months to 30 days and the timeframe during which a plan can exclude coverage for the preexisting conditions of new enrollees would be reduced from 12 months to three months;

· individuals through age 26 who are not otherwise covered would be allowed to remain on their parent’s health coverage at their parent’s discretion; and

· lifetime limits would be prohibited.

Insurance Market Reforms (2013): Beginning in 2013, additional reforms would take effect: guaranteed issue and renewal, no preexisting condition exclusions, no premium variation based on health status or gender, and premium variation based only on age (no more than 2:1), geography, and family size.

Government-Run Plan: Beginning in 2013, a government-run health insurance plan would be established and offered through the newly created health insurance exchange. The Secretary would negotiate payment rates with health care providers. Medicare providers would be presumed to participate in the government plan unless they opt out.

Health Insurance Exchange: Individuals without coverage and small employers would be eligible to purchase coverage through a newly established health insurance exchange. The exchange would be administered by a Health Choices Commissioner who would have wide-ranging authority, including setting standards for participating plans, auditing and sanctioning participating plans, enforcing insurance market reforms, and collecting data for quality improvement and other activities.

Interstate Health Insurance Compacts: Beginning in 2015, two or more states could facilitate the purchase of individual health insurance coverage across state lines. The NAIC would develop model guidelines for the creation of such compacts.

Premium Assistance: Beginning in 2013, individuals and families with incomes up to 400 percent of the federal poverty level who are not Medicaid-eligible would qualify for affordability credits.

Individual Coverage Requirement: A requirement for individuals to obtain coverage would be established beginning in 2013. A 2.5% tax would be imposed on the modified adjusted gross income of individuals who fail to meet this requirement, although exemptions would be allowed in cases of hardship.

Employer Mandate: Employers would be required to either provide specified health coverage to employees or pay a tax equal to 8% of the average wages of their workforce. Small employers with annual payrolls below $500,000 would be exempt from this requirement. For employers with payrolls between $500,000 and $750,000, the tax would range from 2% to 6%. To meet the coverage requirement, employers would be required to pay 72.5% of the premium for individual coverage and 65% of the premium for family coverage.

CLASS Program: A national voluntary long-term care insurance program, funded by premiums, would be established to provide cash benefits to meet the needs of individuals who have functional limitations.

The items noted above represent only a sample of the provisions in this bill. There are hundreds of additional provisions contained within the 1,990 pages of this very large bill. House leaders have released a section-by-section summary and an implementation timeline for this bill.

(2) Senate Bill Submitted to CBO for Scoring; Government Plan Included

At an October 26 press conference, Senate Majority Leader Harry Reid (D-NV) announced that the Senate’s health reform bill would be submitted to the Congressional Budget Office (CBO) later that day and that this bill includes a public option that states could choose to opt out of (but without any “trigger”). He also noted that this bill includes health insurance cooperatives.

Leader Reid did not offer any additional details about the bill that was submitted to CBO, except that it is a “meld of the two bills” that previously were approved by the Senate HELP Committee and the Senate Finance Committee. It is not clear when legislative language will be publicly released. After the CBO score is completed, probably next week, we expect that there will be at least a 72-hour interval before the Senate floor debate begins. In a brief question and answer session with reporters, Leader Reid declined to say whether he believes 60 senators will vote to approve cloture on a bill containing a public option.

A statement released by AHIP following Leader Reid’s announcement can be found by clicking here.

(3) Budgetary Concerns Prompt Senators to Voice Opposition to CLASS Act

A group of seven senators – six Democrats and one Independent – recently addressed a letter to Senate Majority Leader Harry Reid (D-NV), urging him not to include the CLASS Act in the Senate’s health reform bill. The CLASS Act would establish a national voluntary long-term care insurance program, funded by premiums, which would provide cash benefits to meet the needs of individuals who have functional limitations.

The letter notes that the CLASS Act would reduce the federal budget deficit during the first ten years only because the program would begin collecting premiums in 2011, but wouldn’t begin paying out benefits until 2016. It then expresses concern that the program would increase the deficit in the decades following the first ten-year budget window. The senators caution: “We have grave concerns that the real effect of the provisions would be to create a new federal entitlement program with large, long-term spending increases that far exceed revenues. This is especially the case if savings from the first decade of the program are spent on other health reform priorities.”

The letter was signed by Sens. Kent Conrad (D-ND), Joseph Lieberman (I-CT), Mary Landrieu (D-LA), Evan Bayh (D-IN), Blanche Lincoln (D-AR), Ben Nelson (D-NE), and Mark Warner (D-VA).

(4) CBO Projects That Antitrust Bill Would Have Little Impact on Premiums

The Congressional Budget Office (CBO) issued a cost estimate this week addressing the impact of H.R. 3596, the “Health Insurance Industry Antitrust Enforcement Act of 2009.”

This bill would repeal portions of the McCarran-Ferguson Act pertaining to health insurance plans and medical malpractice insurers. It was approved by the House Judiciary Committee last week and also is included in the health reform bill, H.R. 3962, that was announced by House leaders on October 29.

CBO indicated that this legislation could cause premiums to either increase or decrease, but suggested that “in either case the magnitude of the effects is likely to be quite small.” CBO’s analysis emphasized that state laws already prohibit the activities (e.g., price fixing, bid rigging, and market allocations) that would be prohibited under federal law if this bill is enacted and, therefore, any premium reductions resulting from this legislation are likely to be small. CBO further noted that insurers might see their costs and premiums increase to the extent that they are subject to additional litigation as a result of this legislation – but indicated that these effects also would be small.

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This entry was posted by Adam V. Russo on Monday, November 2nd, 2009 at 9:59 am and is filed under Health Care Legislation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.