A closer look at the House bill: Taking on the Insurance Industry
Posted on October 29th, 2009 by Jason Rosenbaum in Solutions that Work
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Over the next few days, I'll be taking a closer look at the provisions on the House health care bill - H.R. 3962, the Affordable Health Care for America Act. As was the case when the original tri-committee bill was released, the House committees have a ton of fact sheets on the bill that are required reading for folks looking to learn more.
Overall, the House bill is a bill that takes on the insurance industry. Here's how:
A Public Health Insurance Option
First and foremost, the House bill creates a public health insurance option, available in the new health care marketplace called the "Exchange," that would compete directly with private insurance. The public option won't have to worry about profits or stockholders, and because it is run by HHS, it will have huge bargaining clout to get good rates from providers. Overall, while the public option in the House bill won't save taxpayers as much money as a public option based on Medicare rates, it will still save money according to the CBO.
Because of all that savings, and because the public option will have a mandate to provide health care to people, not maximize profit, it will be a strong competitor to private insurance, keeping prices down and attracting customers. Private insurance will be forced to compete or face losing their most profitable customer base - the individuals and small group customers who are in the Exchange from the start.
Insurance Industry Regulations
The House bill puts new regulations on the insurance industry to curb their bad practices.
The practice of rescission - terminating someone's insurance plan because they get sick - would be outlawed immediately. Similarly, as soon as this bill is signed, lifetime caps on insurance coverage would be outlawed.
After the Exchange is set up in 2013, all insurers, not just the ones in the Exchange, will be barred from denying care for pre-existing conditions, charging more if your are a woman or sick, or employing annual benefits caps. They will have to cap out-of-pocket expenses at a standard level, keep administrative costs down to below 15%, and publicly disclose and justify their rate increases.
Medicare beneficiaries and the unemployed will benefit as well, with overpayment to private companies through Medicare eliminated and COBRA coverage extended until the Exchange is set up.
Finally, the House bill will eliminate the anti-trust exemption on health insurance companies, making it possible to finally prosecute them for their monopolistic practices.
Immediate Relief
The House bill also provides immediate relief for people at the mercy of the insurance industry by setting up an interim high risk pool open to people who have been uninsured for at least a few months or who have been denied insurance because of pre-existing conditions.
Though clearly not a long term solution, the high-risk pool, combined with the COBRA extensions mentioned above, would get people out from the trap the insurance industry has put them in until full reforms kick in.
Taking on Drug Companies
The House bill also gives us significant savings from drug companies, which according to the Washington Post would amount to between $125 and $150 billion in cuts to their profits.
It does this by eliminating the donut hole which forces seniors to pay unaffordable prices for prescription drugs, starting immediately and completely closing the hole by 2019. It also requires the Secretary of HHS to negotiate for better drug prices for Medicare and Medicaid, and makes it easier for Medicare Part D to offer free generic prescription drugs to enrollees.
Of course, some issues, like biologics (new drugs exempted from generic competition), are still unresolved.
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There's a lot to talk about in the House bill - employer responsibility, fair financing, a whole host of other reforms that take effect immediately. Over the next few days I'll talk about those. However, the overall thrust of the bill is clear - it takes on the insurance industry for consumers, strengthening care for folks without insurance, on the individual market, in small and large businesses, and on Medicare and Medicaid.
I thought I had heard every stupid new regulation they were planning to implement but I was wrong. Monopolistic practices? Maybe if some states didn't have such arduous regulations they would have a greater variety of insurance providers. Also, if people were allowed to purchase insurance across state lines every monopoly would instantly disappear. Will insurance companies even compete in the same market as the public option or will the government have a monopoly in the national insurance market?
I'm glad to hear that the government will now be allowed to negotiate drug prices with the drug companies. Miracle of miracles. Also, the public option will have considerable negotiating power and be able to save the government $25 billion dollars according to the CBO as sited in the article you point us to. However, it would save $85 billion if rates were linked to Medicare. Also, I don't understand how this could be a savings as it is a new program, not a reduction or increase of efficiency in an existing program. What money is being saved?
I also see that insurers will be regulated more thoroughly than before, that no one will be denied due to pre-existing conditions. This is good, but not quite as good as you make it sound considering that 35 states already outlaw this practice.
I am sorry to say, we are not at the mercy of the insurance companies. We are at the mercy of a system that encourages unsustainably high medical health care costs. We the consumer only see the premiums not what is pushing the premiums higher.
In previous battles it has been shown that the consumer will side with his doctor even if the doctor is demanding higher fees. The consumer somehow has come to believe the insurance company should manage to cover these higher fees without raising premiums.
This website constantly harps on the obscene profits of the insurance industry and never recognizes that 61% of the Americans covered by private insurance are receiving it from NON-PROFIT organizations (most of the insurance organizations in the Blue Cross Blue Shield Assoc. are non-profits). You always mention the for profit companies (Aetna, Cigna, etc.) that only insure the other 39%.
Finally, there is really only one way to control costs at their source. That is to look at the factors driving those costs and to address them squarely. The simplest way to do this is to nationalize healthcare and create a Single Payer government operated system of insurance based on Medicare. This insurance monopoly would be able to negotiate the lowest rates possible (what medical care provider will be able to refuse them?) and can create the most uniform and efficient administrative system, and furthermore can most efficiently direct medical care providers across the nation to use best practices.
The current bill out of the house that you are asking us to support is far far short of what is necessary. I would have more respect for your position if you merely said: "Politics stinks. We can't expect much from our leaders. Hold your nose and support this bill."
Blue Cross, for all intents and purposes, acts exactly the same as for-profit insurance.
As for the single payer solution, well, it's been discussed to death.
You've misrepresented the CBO estimate regarding the public plan option. The CBO analysis released 10/29 projects that the public plan option will enroll 6 million people (under 2% of Americans), and will cost MORE than its private competitors. Any savings on overhead will be cancelled out by higher costs because sicker people will end up in the public plan and the public plan will engage in less stringent "management" (AKA denials of coverage) than its private competitors. You can see the full CBO analysis here: http://www.cbo.gov/ftpdocs/106xx/doc10688/hr3962Rangel.pdf The part about public plan option is on page 6.
In other words, the public option would almost work *too* well.
This CBO score is actually a bit odd, given how they've scored similar provisions in the past. Still trying to figure out what's different here.
While I will always insist that it is important to know the cost of any proposed action, I am also deeply concerned that certain persons in the civil debate are attacking the House Bill as "too expensive." I think we all need to know at what point do more than forty thousand deaths annually due to the unavailability of health insurance become "too expensive" if that number is not already "too expensive." In my book this level of mortality constitutes a public health disaster and must be dealt with accordingly.