The main Senate health bill — the 2,074-page Patient Protection and Affordable Care Act — has arrived.
The bill is formatted as H.R. 3590, “an amendment in the nature of a substitute,” and intended to be introduced by Senate Majority Leader Harry Reid, D-Nev., on behalf of him and Sens. Max Baucus, D-Mont.; Christopher Dodd, D-Conn.; and Tom Harkin, D-Iowa.
Reid and other Senate Democratic leaders have been working to create the PPACA bill by melding S. 1679, the health bill approved by the Senate Health, Education, Labor and Pensions Committee in July, with S. 1796, the bill approved by the Senate Finance Committee in October.
Effects On Commercial Health Coverage Market
Like the HELP bill and the Finance Committee bill, the PPACA bill would both require health insurers to sell coverage on a guaranteed issue, guaranteed renewable basis, without preexisting condition exclusions (Section 1201); prohibit carriers from rescinding policies that are already in force, except in some cases involving fraud (Section 1001); impose strict limits on insurers’ ability to use age or other demographic factors in setting rates (Section 1201); set up a “health insurance exchange” insurance distribution system (Sections 1301-1313); and offer tax breaks (Section 1401) and direct subsidies (Section 1402) to help people buy coverage.
Like the Senate Finance Committee bill, S. 1796, and unlike the HELP bill or the main House health bill, H.R. 3962, the PPACA bill would encourage the creation of nonprofit health insurance cooperatives (Section 1322).
Like the HELP bill, S. 1679, and H.R. 3962, the PPACA bill would encourage states to offer a public “community health insurance option” through the exchange system (Section 1323).
The PPACA bill would permit states to choose to opt out of offering a community health insurance option.
Health insurance agents could sell products distributed through the exchange system and participate in a health insurance “navigators” program that would be set up by the new exchange system. (Section 1311, subections (e) and (i))
Here is the text of Section 1311(e):
(e) ENROLLMENT THROUGH AGENTS OR BROKERS.–The Secretary shall establish procedures under which a State may allow agents or brokers–
(1) to enroll individuals in any qualified health plans in the individual or small group market as soon as the plan is offered through an Exchange in the State; and
(2) to assist individuals in applying for premium tax credits and cost-sharing reductions forplans sold through an Exchange.
Such procedures may include the establishment of rate schedules for broker commissions paid by health benefits plans offered through an exchange.
But Section 1322 would prohibit the people who serve on the federal co-op advisory board could not have ties to the health insurance industry, and a co-op would have to have conflict-of-interest rules to ward off insurance industry “involvement and interference.”
No Prison Time For Going Bare
America’s Health Insurance Plans, Washington, has argued that making health coverage available on a guaranteed issue, guaranteed renewable, mostly community-rated basis can be actuarially sound and reasonably affordable only if the government requires most people to have health coverage.
Republicans have responded to earlier proposed individual health ownership requirements by questioning whether they would be constitutional and chortling over the idea of Democrats exposing people to the possibility of going to prison over failures to own acceptable health coverage.
The PPACA bill “individual responsibility” section (Section 1501) includes a long preamble explaining why the drafters think an individual is constitutional and necessary. The section requires people to own “minimum essential” health coverage and to pay a $750-per-uninsured-individual penalty if they can afford coverage but fail to buy it.
Like other congressional health bills, the Reid bill also includes a number of individual health ownership requirement exemptions, including a hardship exemption provision.
Toward the end of the section, the drafters write that, “In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.”
Although the PPACA bill would eliminate the threat of going to prison for failing to buy health coverage or pay the associated penalities, “the penalties for individuals who do not obtained insurance are phased in more quickly” than in the Finance Committee bill, S. 1796, “and the exemptions from those penalties are less extensive,” according to the Congressional Budget Office analysis of the bill.
The PPACA bill employer health insurance requirement provisions (starting at Section 1511) would require employers to inform employees about health insurance options. It also would require an employer with more than 200 full-time workers pay a $750-per-employee penalty if it did not provide health coverage. An company with 50 or more employees would have to pay penalties if its full-time employees started buying government-subsidized coverage through the exchange system. (Section 1513)
Long Term Care Insurance
H.R. 3962 and the Senate HELP health bill, S. 1679, contain a Community Living Assistance Services and Supports Act provision. The provision, championed by the late Sen. Edward Kennedy, D-Mass., is supposed to create a voluntary, premium-funded long term care insurance program.
Private insurers have complained that earlier versions of the CLASS Act provision are clearly actuarially unsound, and Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, says the proposed program would probably be underfunded. He predicted that increasing rates enough to make the program pay for itself would lead to adverse selection, and that adverse selection would lead to a “death spiral,” with bad risks crowding out good risks.
The PPACA bill includes a CLASS Act provision (Sections 8001-8002) that calls for the Health and Human Services secretary to develop at least three “actuarially sound benefit plans as alternatives for consideration.” The HHS secretary must set premiums based on an actuarial analysis of the 75-year costs of the program, to ensure solvency throughout the 75-year period, according to the bill text.