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How might 'Berniecare' work?

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Sen. Bernie Sanders, a Vermont independent who is running for the Democratic presidential nomination, has something in common with Sen. Ted Cruz, a contender for the Republican nomination: He’s introduced legislation that would repeal the health insurance sections of the Patient Protection and Affordable Care Act (PPACA).

Unlike S. 339 — the ObamaCare Repeal Act bill, a bill that Cruz introduced earlier this year  — Sanders’ major health care system change bills would also kill the State Children’s Health Insurance Program (SCHIP); the TriCare program for military dependents and veterans; the provisions of the Social Security Act that created Medicare and Medicaid; and the health insurance provisions in the Employee Retirement Income Security Act of 1974 and the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Sanders recently made headlines by unveiling a brief summary of his current proposal for creating what he says would be a “federally administered single-payer health care program.”

See also: Sanders releases ‘Medicare for all’ health plan

The bills he has introduced in the Senate give a more comprehensive look at his ideas for reshaping the U.S. health care system. He has offered several versions of a sweeping American Health Security Act (AHSA) bill. He introduced the latest version, S. 1782, in December 2013, as the first PPACA health insurance open enrollment period was already under way.

Many refer to PPACA as “Obamacare,” even though members of Congress wrote and amended the bill that became PPACA.

Sanders’ AHSA bills and his new single-payer health care proposal summary appear to reflect Sanders’ own thinking.

For a look at some of the “Berniecare” details that might interest insurance professionals, read on.


1. The Berniecare proposals would create a big single-payer health insurance gorilla.

In addition to putting the people who are now in Medicare, Medicaid, TriCare, SCHIP plans and commercial health insurance plans in the new AHSA plan system, Berniecare would create a new long-term care benefits (LTCI) program that would pay both for facility-based care and home health care.

The Berniecare proposals would ban “balance billing,” or the practice of charging patients for the difference between what a care provider wants to bill and what a plan wants to pay. In the Berniecare system, providers who wanted to treat patients would have to accept the amounts the AHSA plans wanted to pay.

S. 1782 does not appear to intentionally, explicitly prohibit care providers from providing services outside the Berniecare system, but the provision banning balancing billing states that, “No person may impose a charge for covered services for which benefits are provided under this act.” A strict reading of that provision might prohibit a provider from providing any services covered by AHSA plans outside of the AHSA plan framework.

In a “no duplicate health insurance” provision, Sanders seeks to prohibit any public or private insurer from selling insurance that would compete with the AHSA plans.

“State health security program shall prohibit the sale of health insurance in the state if payment under the insurance duplicates payment for any items or services for which payment may be made under such a program,” according to the text of the provision.

But the Berniecare proposals explicitly give a state program, an employer-sponsored plan or a union plan the ability to provide supplemental benefits. They are silent on the subject of the sale of other types of supplemental health benefits, such as hospital indemnity insurance policies or critical illness insurance policies.

See also: Doctors’ strike suspended in England amid progress in talks

A hand putting a jigsaw puzzle together

2. A state health security program would run each state’s health program.

A state could team up with other states to form a regional health security planning consortium.

A state or regional health security entity would have to submit its health care services plan to the American Health Security Standards Board (AHSSB).

Just as the U.S. Department of Health and Human Services (HHS) now takes over running PPACA programs in states that are unable or unwilling to meet HHS PPACA implementation standards, the AHSSB would take over in states that failed to meet the AHSA standards.

See also: Nebraska: Non-exchange states have choices to make 


3. Sanders does not say anything about how the entities in charge of administering the AHSA plans would operate.

Today, the federal government does not actually administer the day-to-day operations of the traditional Medicare program. It hires large contractors to do that. Some of the contractors are business support services companies, and some are large health insurers.

In the AHSA bills and the new Medicare-for-all summary, Sanders does not say who would pay provider claims. His Berniecare proposals imply that private providers would continue to exist, and that providers would continue to be subject to current federal bans on fraud and abuse.

S. 1782 states that an AHSA plan would negotiate fee schedules with providers. A state could adjust the payment schedule amounts “on a quarterly or other periodic basis depending on whether expenditures under the schedule will exceed the budgeted amount with respect to such expenditures.”

S. 1782 also states that a state could devote only 3 percent of its health program budget to administrative costs.

See also: Watchdog: CMS keeps bad Medicare administrators

Piggy bank in a vise (by Cathy Yeulet)

4. AHSA program administrators might rely mainly on negotiations with providers and, possibly, on a built-in cap on funding growth to hold down health care spending. 

The current versions of the Sanders proposals ban the strategy of trying to hold down health care spending by giving patients any out-of-pocket cost “skin in the game.”

The S. 1782 version of Berniecare was introduced before President Obama signed a bill that did away with an old, never-implemented “sustainable growth rate” (SGR) statute that was supposed to link growth in Medicare reimbursement rates to growth in per-capita U.S. gross domestic product (GDP).

See also: Medigap issuers may take a hit

Like the old SGR system, S. 1782 would cap AHSA spending growth to a level 3 percent over per-capital GDP growth.

In the new Medicare-for-all proposal, Sanders argues that eliminating the costs associated with current public and private health insurance systems would slash U.S. health care spending. He does not mention a GDP-linked cap on future health care spending growth.

Image: TS/Cathy Yeulet

A tree rising toward the clouds

5. If a state or regional AHSA went over budget, it would have to use state money to make up the difference.

The S. 1782 version of Berniecare would make a state the main bearer of health spending risk.

The bill would create a new type of staff-model health maintenance organization (HMO), or “comprehensive health service organization” (CHSO), that would employ salaried clinicians and be paid on a capitated basis.

In the past, some staff model HMOs were accused of trying to make their numbers work by skimping on care.

In S. 1782, Sanders has tried to address concerns about CHSO service quantity and quality by proposing that a CHSO meet designated care access, continuity-of-care and specialty care referral standards; operate a patient grievance program; conduct regular member satisfaction surveys; and give one-third of its board seats to independent consumers.

But an AHSA could work with providers outside the CHSO framework.

If an AHSA plan ended the year with a budget surplus, it could keep the extra money and use the money on health care costs in later years.

If an AHSA plan exceeded its budget in a given year, “the state shall continue to fund covered health services from its own revenues,” according to the bill text.

See also:

Weiss Takes A Look At HMO Spending On Medical Care

Ruling Favorable To HMOs Stirs Call For Patient Rights Bill

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