Senate Finance Committee Chairman Max Baucus has released the eagerly awaited text of his version of the health reform bill.
The “chairman’s mark” – the America’s Healthy Future Act bill – would bar insurers from discriminating against people based on health status, denying coverage because of pre-existing conditions, or imposing annual caps or lifetime limits on coverage, according to Baucus, D-Mont.
Implementing the bill would cost about $856 billion over 10 years, but it would not add to the federal budget deficit, Baucus says.
In addition to promising to save money by fighting fraud and making the health care system more efficient, Baucus seeks to pay for some program costs by imposing a $2,000 annual cap on an individual’s flexible spending account contributions, and, starting in 2013, levying “a non-deductible excise tax of 35% on insurance companies and plan administrators for any health insurance plan that is above the threshold of $8,000 for singles and $21,000 for family plans,” according a summary provided by Baucus. “The tax would apply to the amount of the premium in excess of the threshold. The tax would apply to self-insured plans and plans sold in the group market, but not to plans sold in the individual market. The threshold would be indexed for inflation, and a transition rule would increase the threshold for the 17 highest cost states for the first 3 years.”
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The Finance Committee will begin voting on the bill next week, Baucus says.
“We worked to build a balanced, common-sense package that ensures quality, affordable coverage and doesn’t add a dime to the deficit,” Baucus says in a statement. “Now we can finally pass legislation that will rein in health care costs and deliver quality, affordable care to the American people.”
In addition to banning medical underwriting, the bill would create health care affordability tax credits to help low and middle income families buy private health coverage.
The bill also would create new health coverage tax credits for small businesses, and it would create Web-based coverage purchasing exchanges.
Rather than creating a government-run “public option” plan, the bill would “give consumers the choice of non-profit, consumer owned and oriented plans (CO-OP),” Baucus says.
Most individuals would have to own health coverage. Employers would not have to offer coverage, but many employers who did not offer it would have to reimburse the government for part of the cost of providing the health care affordability tax credit.
The bill would standardize Medicaid coverage for everyone earning less than 133% of the federal poverty level.
Other provisions would:
- Allow plans to vary coverage rates based on an insured’s age, tobacco use and family composition.
– Encourage all of a patient’s doctors to coordinate care and reduce duplication and waste.
- Create incentives for health care providers to use electronic medical records and other health information technology.
- “Increase health care research so doctors know what care works best for which patients.”
- Cover the cost of annual “wellness visits” for Medicare participants and their doctors.
- Eliminate out-of-pocket costs for screening and prevention services for Medicare enrollees.
- Create incentives in Medicare and Medicaid for enrollees who participate in healthy lifestyle programs.
- Increase federal Medicaid funding for states that cover recommended preventive services and immunizations for enrollees at no extra cost.
- Provide free tobacco cessation services for pregnant women who are enrolled in Medicaid.
The following is the text of Baucus’s summary of “The America’s Healthly Future Act”
Providing Quality Coverage to All Americans
Americans who like their health insurance and want to keep it can do so. For the millions of Americans who don’t have or can’t afford employer-provided coverage, or who are being denied coverage due to a pre-existing condition, the Chairman’s Mark reforms the individual and small-group markets, making coverage affordable and accessible.
Individual Market Reforms – The Mark would require insurance companies to issue coverage to all individuals regardless of health status; insurers would no longer be allowed to limit coverage based on pre-existing conditions. Limited variation in premium rates would be permitted for tobacco use, age, and family composition. Variation in rating would be allowed between geographic areas, but would not differ within a geographic area.
Small Group Market Reforms – Rating rules for the individual market would also apply to the small group market, as defined by states. This would include groups of one to 50 employees, but could include companies with up to 100 employees, depending on current state law.
Health Insurance Exchanges – The Mark would make purchasing health insurance coverage easier and more understandable by using the Internet to present consumers with available plans. The Mark would create state-based web portals, or “exchanges” that would direct consumers purchasing plans on the individual market to every health coverage option available in their zip code. The exchanges would offer standardized health insurance enrollment applications, a standard format companies would use to present their insurance plans, and standardized marketing materials. The exchanges would have a call center for customer support. The exchanges would also enable users to determine whether they are eligible for health care affordability tax credits or public programs and would enable consumers without access to the Internet to enroll through the mail or in person in a variety of locations.
Small Group Purchasing Through SHOP Exchanges – Under the Chairman’s Mark, small businesses would have access to state-based Small Business Health Options Program (SHOP) exchanges. These exchanges – like the individual market exchanges – would be web portals that make comparing and purchasing health care coverage easier for small businesses.
Transitioning to a Reformed Insurance Market – Once the insurance market reforms take effect, people who want to keep the insurance they have today can do so. Plans would be allowed to continue to offer the coverage they offer today and this coverage would be grandfathered. These grandfathered plans would only be available to those people who are enrolled today or, in the case of a small employer, to new employees and their dependents. People who qualify for the health care affordability tax credits in the reformed market would not be able to use the credits to purchase grandfathered plans. Tax credits would be offered only to purchase plans created in the reformed market that meet the new benefit standards.
Transitioning for Rating Requirements – Federal rating rules for the individual market (other than for grandfathered plans) would take effect by January 1, 2013. Federal rating rules for the small group market would be phased in over a period of up to five years, as determined by each state, with approval from the Secretary of HHS.
Medicaid – The Chairman’s Mark would standardize Medicaid eligibility for all parents, children, pregnant women and childless adults at or below 133 percent of the Federal Poverty Level (FPL), or $30,000 a year for a family of four ($14,400 for an individual), beginning in 2014. Individuals between 100 percent of FPL and 133 percent of FPL would be given the choice of enrolling in either Medicaid or in a private health insurance plan offered through a health insurance exchange. The federal government would provide additional funding to states for services for newly eligible Medicaid beneficiaries. The Chairman’s Mark would also guarantee prescription drug benefits to all Medicaid beneficiaries.
Prescription Drug Benefits – Medicare beneficiaries who enroll in the Medicare Part D prescription drug program will receive significant help purchasing prescription drugs when they hit the coverage gap portion, or “donut hole” of the benefit. Instead of paying 100 percent of their drug costs in the gap, Part D beneficiaries with low to moderate incomes will receive a 50 percent discount on the price of brand-name drugs covered by their plan. The discount makes expensive medicines more affordable and helps beneficiaries stay on treatments that their doctors prescribe.
Children’s Health Insurance Program – The Chairman’s Mark would not make changes to the Children’s Health Insurance Program (CHIP) until after September 30, 2013, when the current reauthorization period ends. Then, states would be required to provide children between Medicaid eligibility levels and at least 250 percent of FPL with wraparound coverage to supplement the core benefit package available through the exchange. These additional services would be the early and periodic screening, diagnosis and treatment (EPSDT) services available to children in Medicaid. Current CHIP cost-sharing protections would continue to apply. CHIP benefits under this new form of delivery would be equally as or more generous than the current structure.
Addressing Health Care Disparities – The Chairman’s Mark would require federal health programs to collect uniform data on race, ethnicity, gender and disability to help program administrators and researchers work to end disparities among these groups.
Promoting Maternal and Child Health – The Chairman’s Mark would provide funding to states, tribes and territories to develop and implement one or more evidence-based Maternal, Infant and Early Childhood Visitation programs. Program options would provide training and consultation aimed at reducing infant and maternal mortality and its related causes by producing improvements in prenatal, maternal and newborn health, child health and development, parenting skills, school readiness, juvenile delinquency and family economic self-sufficiency.
Making Coverage Affordable
The cost of health insurance has increased five times faster than wages over the last eight years. Estimates show that just seven years from now, most Americans will spend nearly half their income on health insurance. American businesses pay nearly three times more than our major trading partners for health care benefits. Unaffordable coverage prevents these companies from competing in the global market. The Mark makes coverage more affordable by providing tax credits for low and middle-income individuals and small businesses, and by strengthening public programs.
Options for Standard Benefits – The Mark creates four benefit categories for the reformed health insurance market: bronze, silver, gold and platinum. No policies (except grandfathered policies) would be issued in the individual or small-employer market that do not comply with one of the four categories. All insurers would have to offer coverage in the silver and gold categories. All plans would be required to provide primary care and first-dollar coverage for preventive services, emergency services , medical and surgical care, physician services, hospitalization, outpatient services, day surgery and related anesthesia, diagnostic imaging and screenings, including x-rays, maternity and newborn care, pediatric services (including dental and vision care), prescription drugs, radiation and chemotherapy, and mental health and substance abuse services. Plans would not be allowed to set lifetime limits on coverage or annual limits on any benefits. Plans would have out-of-pocket limits at least equal to the limits for Health Savings Accounts (HSAs), which will be $5,950 for an individual and $11,900 for a family in 2010.
Health Care Affordability Tax Credits -The Mark would provide an advanceable, refundable tax credit for low and middle-income individuals to subsidize the purchase of health insurance. Beginning in 2013, tax credits would be available on a sliding scale for individuals and families between 134-300 percent of FPL (Federal Poverty Level) to help offset the cost of private health insurance premiums. Beginning in 2014, the credits are also available to individuals and families between 100-133 percent of FPL. The credits would be based on the percentage of income the cost of premiums represents, rising from three percent of income for those at 100 percent of poverty to 13 percent of income for those at 300 percent of poverty. Individuals between 300-400 percent of FPL would be eligible for a premium credit based on capping an individual’s share of the premium at a flat 13 percent of income. A cost-sharing subsidy would be provided to limit the amount of cost-sharing that individuals and families between 100-200 percent of FPL have to pay. Undocumented immigrants are prohibited from benefiting from the credit.
Small Business Health Care Affordability Tax Credits – This proposal would provide a tax credit to small businesses that offer health insurance to their employees. In 2011 and 2012, eligible employers can receive a small business credit for up to 35 percent of their contribution. Once the exchanges are up and running in 2013, qualified small employers purchasing insurance through the exchanges can receive a tax credit for two years that covers up to 50 percent of the employer’s contribution. Small businesses with 10 or fewer employees and with average taxable wages of $20,000 or less will be able to claim the full credit amount. The credit phases out for businesses with more than 10 employees and average taxable wages over $20,000, with a complete phase out at 25 employees or average taxable wages of $40,000.
Cafeteria Plan Changes – This proposal creates a Simple Cafeteria Plan – a vehicle through which small businesses can provide tax-free benefits to their employees. This change would ease the participation restrictions and include self-employed individuals as qualified employees. The proposal also exempts employers who make contributions for employees under a simple cafeteria plan from pension plan nondiscrimination requirements applicable to highly compensated and key employees. Finally, the proposal allows for qualified long-term care insurance to be provided under a cafeteria plan to the extent the amount of such contributions does not exceed the eligible long-term care premiums for the contract. This proposal is effective beginning on January 1, 2011.
Consumer Owned and Oriented Plan (CO-OP) – The Mark creates authority for the formation of the Consumer Owned and Oriented Plan (CO-OP). These plans can operate at the state, regional or national level to serve as non-profit, member-run health plans to compete in the reformed non-group and small group markets. These plans will offer consumer-focused alternatives to existing insurance plans. Six billion dollars of federal seed money would be provided for start-up costs and to meet solvency requirements.
Personal Responsibility – The Mark would create a personal responsibility requirement for health care coverage, with exceptions provided for a variety of reasons including religious conscience (as defined in Medicare) and an exemption for undocumented workers.
Individuals who fail to meet the requirement are subject to a penalty. If an individual’s income is between 100 and 300 percent of poverty, the penalty for failing to obtain health coverage is $750 per person per year with a maximum of $1,500 per family. If an individual’s income is above 300 percent of poverty, the penalty for failing to obtain coverage is $950 per person per year with a maximum of $3,800 per family.
Exemptions from the penalty will be made for individuals where the full premium of the lowest cost option available to them (net of subsidies and employer contribution, if any) exceeds ten percent of their adjusted gross income (AGI); those below 100 percent of FPL; any health arrangement provided by established religious organizations comprised of individuals with sincerely held beliefs (e.g., such as those participating in Health Sharing Ministries); those experiencing hardship situations (as determined by the Secretary of Health and Human Services); and an individual who is an Indian as defined in section 4 of the Indian Health Care Improvement Act. Additionally, in 2013, individuals at or below 133 percent of FPL will be exempt from the penalty. When making these determinations, income from individuals not subject to the mandate should not be considered.
Responsibility for Employers – The Mark would not require employers to offer health insurance. However, effective January 1, 2013, all employers with more than 50 employees who do not offer coverage will have to reimburse the government for each full-time employee (defined as those working 30 or more hours a week) receiving a health care affordability tax credit in the exchange equal to 100 percent of the average exchange subsidy up to a cap of $400 per total number of employees whether they are receiving a tax credit or not.
As a general matter, if an employee is offered employer-provided health insurance coverage, the individual would be ineligible for a health care affordability tax credit for health insurance purchased through a state exchange. An employee who is offered coverage that does not have an actuarial value of at least 65 percent or who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13 percent of the employee’s income. A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.
Strengthening Coverage of Preventive Services in Medicare and Medicaid
For the nearly one in three Americans covered under Medicare or Medicaid, the Chairman’s Mark makes critical investments in policies that will promote healthy living and help prevent costly chronic conditions like diabetes, cancer, heart disease, obesity and mental illness. Preventive screenings enable doctors to detect diseases earlier when treatment is most effective averting more serious, costly health problems later.
Providing Personalize Prevention Plan and Wellness Visit – The Chairman’s Mark provides Medicare beneficiaries with a free visit to their primary care provider every year to create and update a personalized prevention plan to address health risks and chronic health problems and to design a schedule for regular recommended preventive screenings.
Improving Access to Preventive Services – The Mark eliminates out-of-pocket costs for recommended preventive services for Medicare beneficiaries. Beneficiaries will no longer face financial deterrents for seeking preventive care. The Chairman’s Mark also encourages states to cover preventive services recommended by the U.S. Preventive Services Task Force (USPSTF) and immunizations recommended by the Advisory Committee on Immunizations (ACIP) to adults enrolled in Medicaid. States that opt to cover recommended services and immunizations without cost-sharing would receive a one percent increase in the federal share of the FMAP reimbursement rate for those services. All states would be required to provide comprehensive tobacco cessation services to pregnant women enrolled in Medicaid.
Moving Toward Patient-Centered Care - The Chairman’s Mark creates a new state option and rewards states for providing chronically ill individuals enrolled in Medicaid with a health home. Participating enrollees will receive comprehensive care coordination and management, transitional care and, if relevant, referral to community-based programs and social services. States that take up this option will receive an enhanced match for two years.
Rewarding Healthy Lifestyles – The Mark establishes an initiative that will reward Medicare and Medicaid participants for healthier choices. Funding will be available to provide participants with incentives for completing evidence-based, healthy lifestyle programs and improving their health status. Programs will focus on lowering certain risk factors linked to chronic disease such as blood pressure, cholesterol and obesity.
Reforming the Health Care Delivery System
Medicare currently reimburses health care providers on the basis of the volume of care they provide. For every test, scan or procedure conducted, providers receive payment – regardless of whether the treatment contributes to helping a patient recover. Medicare must move to a system that reimburses health care providers based on the quality of care they provide. The Chairman’s Mark includes various proposals to move the Medicare fee-for-service system towards paying for quality and value. These proposals include the following:
Hospital Value-Based Purchasing – The proposal would establish a value-based purchasing program for hospitals starting in 2012. Under this program, a percentage of hospital payment would be tied to hospital performance on quality measures related to common and high-cost conditions, such as cardiac, surgical and pneumonia care. Quality measures included in the program (and in all other quality programs in this section) will be developed and chosen in cooperation with external stakeholders.
Physician Value-Based Purchasing – This provision would strengthen and expand the Physician Quality Reporting Initiative (PQRI) program, including requiring all eligible health professionals to participate by 2011. It would also improve the Medicare physician feedback program and penalize physicians who utilize significantly more resources than their peers.
Medicare Home Health Agency and Skilled Nursing Facility Value-Based Purchasing – CMS is currently testing value-based purchasing models for these providers. Building on this effort, this provision would direct the Secretary to submit a plan to Congress by 2011 related to home health providers and 2012 related to skilled nursing facilities outlining how to effectively move these providers into a value-based purchasing payment system.
Quality Reporting for Other Providers – This provision would set providers – long-term care hospitals, inpatient rehabilitation facilities, PPS-exempt cancer hospitals and hospice providers – on a path toward value-based purchasing by requiring the Secretary to implement quality measure reporting programs for certain providers. Providers who do not successfully participate in the program would be subject to a reduction in their annual market basket update.