WASHINGTON BUREAU — Insurance carrier and producer groups say they believe the Senate’s new Patient Protection and Affordable Care Act bill would backfire, by making health care and private health coverage even harder to afford than they are today.
Industry group staffers are still speedreading through the 2,074-page PPACA bill, but America’s Health Insurance Plans, Washington, says a combination of weak efforts to control health care costs, a weak health insurance coverage ownership requirement, and strict limits on health insurance pricing would lead to huge problems.
H.R. 3962, the House health bill, would require individuals who intentionally refused to buy acceptable health coverage to pay a 2.5% tax penalty, and, in theory, it could expose taxpayers who failed to buy insurance or pay the penalty tax to the same threat of going to prison that violators of other tax laws face.
The PPACA bill, introduced Wednesday by Senate Majority Leader Harry Reid, D-Nev., would cut the penalty tax for going bare to $750 per uninsured individual, and it explicitly states that individuals who failed to pay the penalty tax would not face criminal prosecution.
“This proposal encourages people to wait until they are sick to purchase coverage, which will significantly drive up costs for those who are currently insured,” AHIP President Karen Ignagni says.
In addition, by limiting health insurers to charging the oldest insureds only 300% of what they charge the youngest insureds, the bill “will raise the cost of coverage for millions of young families in more than 40 states” that offer insurers more flexibility, Ignagni says.
Some health policy experts say health system changes that lead to big increases in premiums for young, healthy people could encourage those people to evade the coverage ownership requirement, making the pool of people who do have health insurance less healthy and leading to further increases in health coverage costs.
“We believe that all Americans, regardless of health status or medical history, should have guaranteed access to affordable coverage,” Ignagni says. “We have proposed guarantee issue coverage with no exclusions for pre-existing conditions in conjunction with a coverage requirement and adequate subsidies for working families. We stand by these commitments, but agree with a wide range of health policy experts that market reforms will not work if there is not an effective coverage requirement.”
Other provisions, such as provisions expanding public health programs that pay providers low rates, could lead health care providers to increase rates for people who pay for care using private cash, or the cash in their own pockets, Ignagni says.
That kind of increased cost-shifting would threaten the current employer-based coverage system, Ignagni says.
But “we believe that these issues can be addressed and improved to achieve these goals, and we will continue to work with policymakers toward that end,” Ignagni says.
The National Association of Insurance and Financial Advisors, Falls Church, Va., emphasizes that it likes many of the provisions in the PPACA bill, including health insurance affordability credits, wellness and prevention provisions, a requirement that insurers sell coverage on a guaranteed issue basis, and provisions protecting consumer access to insurance agents.
“However, there are a number of health reform issues that need further consideration before the bill will meet NAIFA’s reform goals,” NAIFA says.
The bill includes many restrictions on insurers, such as a provision that would make all health insurance rate increases subject to state review, but it does not include any kind of medical malpractice reform, NAIFA says.
National Association of Health Underwriters, Arlington, Va., has published a preliminary analysis of the bill that focuses mainly on summarizing the bill and discussing barriers in the Senate that might keep the bill off the Senate floor.
“It’s not clear that Senator Reid has the 60 votes needed to move forward at the moment, because three moderate senators, Blanche Lincoln, D-Ark., Mary Landrieu, D-La., and Ben Nelson, D-Neb., have not given their commitments,” NAHU reports.
NAHU says it believes the minimum allowable actuarial value for an acceptable health plan “has been reduced to 60%…which should accommodate most consumer-directed account-based plans.”
The small business tax credit in the bill would help only small businesses with low-income employees, NAHU notes.
The CBO has said that the PPACA bill would reduce the federal budget deficit from 2010 to 2019, but, if Congress reverses a permanent 23% Medicare provider reimbursement cut scheduled to take effect in 2011, that would cost about $247 billion, NAHU says.
Like AHIP, NAHU has been emphasizing the need for a strong individual health insurance ownership mandate, and NAHU Chief Executive Janet Trautwein talked about that position in an interview on FOX Business.