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Details Emerge On New Health Reform Plans

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WASHINGTON–The White House and congressional Democratic leaders are crafting a new healthcare reform bill that would include limits on medical loss ratios, a tax on so-called Cadillac plans, and cuts in the Medicare Advantage program, according to administration officials and industry sources.

Officials at the Department of Health and Human Services confirmed that medical loss ratio limits would be included in the new proposal, or, as some termed it, “best ideas.”

It remains unclear whether the White House would use the Congressional reconciliation process, which would reduce the votes needed to secure passage in the Senate to 51 but which expires in April, or by some other means, the sources said.

As the bill is being drafted, Obama administration officials vowed to continue their push for healthcare reform legislation.

In comments on his blog Thursday, White House communications director Dan Pfeiffer confirmed the administration’s plans.

“We’re going to continue to push for meaningful health insurance reform that gets control of skyrocketing costs, puts an end to insurance company abuses, extends coverage to millions of uninsured Americans, and lowers our deficit,” he said.

Meanwhile, he said, “the insurers are defending their increases on American families by calling for passage of health reform, while running ads to defeat it. Imagine that.”

HHS officials said the new proposal would require health plans to spend a minimum percentage of premiums on medical costs. The also unveiled a study critical of the recent decision by health insurers to sharply increase rates for individuals and small employers.

According to industry analysts, the Senate and House bills currently propose different medical loss ratios. During her Thursday press conference, HHS Secretary Katherine Sebelius would only say that the bill would call for more stringent ratios than California, which has a 70% medical loss ratio in its individual market.

HHS officials also said that the bill being drafted would ban lifetime limits on benefits but does not mention annual limits. It would also ban rescissions and discrimination based on preexisting conditions and would limit premium differences based on age.

In addition, it would reward high quality and efficient care, offer lower premiums (when subsidies are factored in), and seek to create competition among insurers with a health insurance exchange, the administration officials said. But, HHS officials would not specify whether the plan would endorse state or national exchanges.

Industry sources indicated that the plan also would propose cuts in the Medicare Advantage program; tax credits to small businesses to purchase insurance; a reduction in the doughnut hole for Part D, the prescription drug program under Medicare; and a tax on the excess of Cadillac plans’ value.