April 2010 Archives

 

There are three provisions in Sec. 202 that include the requirements for Grandfathered Healthcare Coverage, Grace period for current employment based health plan, and Limitation on individual health insurance coverage.

(1) Grandfathered health insurance coverage is private individual health insurance that was effective and offered before the first day of Y1 (2013). In order for private coverage to be immune from the requirements for insurance under the Healthcare Reform Bill, it must comply with certain conditions. These conditions are limitations on new enrollment, limitation on changes in terms or conditions, and restrictions on premium increases.

The" limitation on new enrollments" states that private insurers cannot enroll new individuals into their private health program on or after the first day of Y1. This limitation does not apply to later enrollment of dependent(s) of an individual who is already enrolled in a private health insurance prior to the start of Y1.

Subject to "Restrictions on premium increases" in the succeeding paragraph, the "limitation on changes in terms or conditions" requires that private health insurers do not change any of its term or conditions including benefits and cost sharing that already is effective before the start of Y1.

"Restrictions on premium increases" limits private health issuers from price discrimination based on the risk groups. Premium increases/decreases must apply for all risk group enrollees or it cannot be applied at all.

(2) Under the Grace period for current employment based health plan section, the Healthcare Reform Bill states that an employment based health plan that is in effect before the first day of Y1 should have a grace period of 5 years to adapt to the requirements of a Qualified Health Benefit Plan. After the fifth year, current employment based health plans must meet all the requirements. During the grace period, the current employment based health plan is treated as an acceptable coverage.

(3) Limitation on individual health insurance coverage states that any individual health insurance coverage that is not grandfathered can only be offered on or after the first day of Y1 as a participant of the Health Insurance Exchange.

 

I think that this provision is beneficial for everyone because those who want to keep their old private plans can do so without being penalized and those who choose to have public health insurance can purchase it through the Health Insurance Exchange. Enrollees who choose to stay with their private health insurance plans will be protected from price discrimination as well as adverse selection. Private health insurers may lose from this provision because they may not make as much profit due to all of the restrictions that they have to comply with. If this is a problem, they have the option to remain a private insurer and not accept any new enrollees or they can join the Health Insurance Exchange and be subject to the rules of the public plan. Another benefit of this provision is for those who have employment based insurance coverage. This is because they are granted sufficient time within the five year grace period to transition from employment based insurance to Qualified Health Benefit Plans.  I believe that with this provision, the U.S. healthcare system is one step closer to the French Healthcare system, which is said to be one of the best healthcare systems in the world.

 

http://www.theattackdemocrat.com/2009/11/house-final-bill-title-iiprotections.html

http://www.opencongress.org/bill/111-h3962/text

http://health.burgess.house.gov/UploadedFiles/House_HCR_bill.pdf

http://www.aarp.org/community/groups/displayTopic.bt?groupId=44&topicId=3057602&rview=false&pageNum=3

http://www.theattackdemocrat.com/2009/11/house-final-bill-title-iiprotections.html

Subtitle B - Public Health Insurance Option

| 9 Comments

Section 321 - 330

This provision requires the Secretary of Health and Human Services to develop a public health insurance plan within the Health Insurance Exchange.  The Health Insurance Exchange is an organized marketplace to purchase health insurance set up through a government entity.  The exchange would benefit people without access to employer insurance or a public plan like Medicaid.  This also includes self-employed people buying insurance on their own. The Exchange will help insurers compete in cost efficient ways and expand insurance coverage to more people. 

Exchanges are not insurers, but would contract with private insurers to offer a public plan option to cover specific populations.  Premiums for the public option are based on geographic locations and are required to cover the cost of coverage and administrative costs of the plan. Furthermore, the Secretary of Health and Human Services negotiates payment for health care providers and items and services.  

From an economic perspective, it would not be efficient because it limit choice for consumers wanting to purchase less or more coverage.  In addition, with the market share too small and limited eligibility, it could increase premiums and promote "cherry-picking" of customers. Overall, I think the exchange would increase insurance enrollment, deliver financial support as well as spreading risk and controlling costs.

 

Tang Xiong

http://edlabor.house.gov/documents/111/pdf/publications/AHCAA-SECBYSEC-102909.pdf

Sec. 215. Ensuring adequacy of provider networks

| 3 Comments

Sec. 321-330 Affordable Health Care for America Act

| 8 Comments

This provision of the Affordable Health Care for America Act begins by establishing that the public health option is only available through the Health Insurance Exchange and must meet all of the requirements to Exchange-participating benefits plans.  A health insurance exchange is an organized marketplace where customers can purchase health insurance that is set up by the government to help insurers comply with the consumer protections or laws that are designed to ensure fair competition and the free flow of truthful information in the marketplace, compete in cost-efficient ways, and expand coverage to more people. The provision goes on to say that the secretary must establish geographically adjusted premium rates for the public option enabling the public options ability to fully finance health benefits and administrative costs. Also to negotiate rates  for items and services so that the payment rates are not lower than Medicare rates but not higher than rates paid by QHBP offering entities. Finally that enrolling in this option is voluntary.

 

I really believe that having a health insurance exchange would be greatly beneficial to all Americans. We all know the big insurance company's have been lobbying against this public option because they believe that it is impossible to compete with the government.  So, in light of this, the big insurance companies may be considered the losers because in order to compete with the government they are going to have to lower the price of their premiums, which may mean lower salaries and bonuses for the executives.    I know if we had have a market where Americans can quickly shop for a health care plans, compare their benefits and prices, and choose the plan that's best for them, our nations uninsured rate would plummet. No plan should deny coverage because of a preexisting condition. All of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs. I believe it is important to have the choice of a public health insurance option while allowing the ability to acquire a private plan. This will give people a better range of choices, make the health care market more competitive, and keep insurance companies on their toes.

 

Sources:

http://www.opencongress.org/

www.healthreform.gov

 

 

House bill H.R.3962 - Affordable Health Care for America Act

Section 201: Requirements Reforming Health Insurance Marketplace

 

Section 201 titled "Requirements Reforming Health Insurance Marketplace broadly outlines standards to ensure that new health insurance coverage and employment based health plans that are offered meet standards guaranteeing access to affordable coverage, essential benefits, and other consumer protections.  One requirement is that a health benefits plan will not be a qualified health benefits plan under this provision unless the plan meets the applicable requirements related to affordable coverage, essential benefits, and consumer protection. A requirement for employer based health plans is that an individual should be treated as being enrolled in an employer based health plan if the individual is a participant or beneficiary in such plan.

 

The final part of this bill states that the Commissioner may permit a qualified health benefits plan to provide coverage through a qualified direct primary care medical home plan, as long as the qualified health benefits plan meets all requirements that are otherwise relevant. I believe this part of the provision would reduce costs. Direct primary care medical homes can typically service approximately 90 percent of the medical issues most people need to see a doctor for. This kind of medical care can also remove time consuming and costly insurance reimbursement processes from routine and inherently low cost services and procedures. 

 

I found this provision for the most part to be very vague and my main question, which I couldn't find an answer to was, what will be considered standardized care? This provision has very broad ideas, which could have potential of working but more details are needed. A drawback from this provision is that employers may be the losers from this bill because they will be force to comply with the new requirements. Although I have some questions about this provision, I think overall it would be beneficial for improving access to health care for people at all income levels and for employers looking to provide coverage to their employees. With this bill, people will be ensured access to necessary care, which in return will reduce the costs of people waiting until emergencies to seek care. There is also potential for significant reduction in costs, which would lead to lower premiums.

 

 

http://www.opencongress.org/bill/111-h3962/text

http://www.dpcare.org/

http://edlabor.house.gov/documents/111/pdf/publications/AHCAA-SECBYSEC-102909.pdf

 

 

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The provisions that I looked at for my blog were the Establishment of Health Insurance Exchange; outline of duties; definitions.  This section establishes a type of health insurance exchange.  Basically, a health insurance exchange is a type of program where consumers can purchase health insurance through a government entity.  This will help protect consumers and allow for more people in the population to be covered.  The exchange occurs under the Health Choices Administration, who will facilitate the type and amount of offerings of health insurance.  The commissioner would then establish a process through which candidates attempt to get bids for the exchange program, negotiate contract terms, and define the benefits.  The commissioner would then create a risk pool mechanism to offer the customers protection.  This provision also talked about who would be eligible for the health insurance exchange, which included employers and individuals.  It then went on to explain the type of benefits that people would receive.   

 

            I found this provision in the bill to be quite complicated.  Some states in the U.S. have attempted health insurance exchange programs before, only to see them fail.  Currently, there are only a few states in the U.S. who have health insurance exchange programs running.  If a health insurance exchange program worked out exactly as it should, risk would be spread out greatly and provide insurance to many.  Many believe that insurance exchanges are more efficient because they are better organized than a free market.  The people who would benefit from this, or gain the most would be the unemployed, the poor, and the uninsured.  The people who might lose from this could be the young and healthy who pay low premiums and high coinsurance amounts.  Some of the people that may get covered under the insurance exchange program may be high risk and could cause premiums to rise over time.  Overall, I'm not quite sure how this would affect our country if a health insurance exchange program was implemented nationwide.  I believe it could upset those who are already covered, but benefit those who are seeking insurance coverage. 


http://www.ncsl.org

 

http://edlabor.house.gov/documents/111/pdf/publications/AHCAA-SECBYSEC-102909.pdf

 

http://www.kff.org/healthreform/upload/housebill_final.pdf

Sec. 115 Administrative Simplification

| 8 Comments

This section of the H.R. 3692 - Affordable health care for America Act is designed to simplify the claims and billing process by requiring that all claims and data that is used in claims to be stored electronically so that all information concerning billing and approval is available at the point of service. This bill has two main goals. To provide timely information to both consumers and health care organizations, and to streamline the purchase and payment of health care services. The bill also establishes rules for standardizing forms concerning claim denial and acceptance and establishing uniform codes for claim denial justification.

This bill concerns 3 main parties. Consumers, health care providers, and health insurance companies. It seeks to make the process of approving and paying for health care services more transparent and more streamlined by making all the data electronic and standardized so that any party has access to the info and every party sees the same info. As the bill stands now this section doesn't outline specifically the requirements and standards that must be met, nor is there an estimate of the costs associated with implementing the system. It does mention that incentives and subsidies would be used to get health care providers on board.

I think that this program is sighted in the long term. Many of the requirements are not called to be met until 5 years after the passage of the bill. It is a long-term investment that aims to reduce the overall costs of administration across both Health Insurers and Health Providers.  With that in mind it is difficult to say if there are direct winners and losers in this arrangement. Ultimately the consumer should be the winner because reduced administrative cost by insurance and providers should reduce overall costs to consumers. However, in the near future some of the implementation costs could easily be passed on to consumers which could actually make health care more expensive in the short run.  There is also considerable risk of data loss or mismanagement. Converting a system that uses paper for to one that uses standardized electronic forms for an entire industry is a monumental task. Because forms were not standardized in the past, it may be very difficult to transfer info and some data will have to be manipulated in order for it to fit. This leads to a very considerable risk of data loss and manipulation which could seriously affect consumers.  

Once the plan is implemented I believe the results should be beneficial to all parties involved. Electronic databases are far more powerful and take far fewer employees to maintain that paper ones. The ease of access is also far greater for electronic databases. This means both health insurers and health providers should be able to cut their administrative workforces and reduce administrative costs while at the same time increasing the effectiveness of their information. The quality of health care should go up because of the easier access as well. Because consumers should not have to wait as long to see if the care they need is covered they can better plan for their health needs as well.

Health insurance companies may be the only party to raise exception to this Section. There is probably a reason they have not opted to work together with hospitals in streamlining administration. Given some of the strategies we have learned that Insurance companies use, it seems logical that they may actually benefit from a less transparent administration. They have incentives to want to keep their information as protected as possible. Strategies like rescinding policies and denying claims for various reasons that are not explicitly defined in contract are made possible by the administration process. Making that transparent will likely reduce the ability of Health Insurance Companies to practice these strategies. However the profits they lose because of this may be made up by the reduced administrative costs.

Sec 111 Reinsurance Program for Retirees

| 6 Comments

Section 111 of the House version (which isn't law) of the health bill deals with health insurance for retirees. The reinsurance program is temporary and would've been put in place to help employers or groups pay for the cost of insuring their retirees and dependents of the retirees. Retirees that would've qualified for the program have to be 55 or older, not work for the company providing health ins, and not qualify for Social Security. The Secretary of Health and Human Services is the one who would've administering the plan. Claims would've been submitted to the Secretary and 80% of the claim could have been reimbursed. The source of the reimbursements would come from the Retiree Reserve Trust Fund (US Treasury) but could not exceed 10 billion. (I'm assuming there isn't 10 billion just sitting in this fund and the money will come from taxes)

            This provision in the house version would have obviously helped many retirees who didn't yet qualify for social security. Many times, when a company isn't doing so well, benefits to retirees are cut. This provision would have helped those whose benefits would have potentially been cut during these hard economic times. At age 55, most people already have health issues. For this reason, it would be extremely hard on this group if they lost their insurance.Because of pre-existing conditions and age, it would be hard for them to go and shop for insurance on the individual market.

            If this provision were not put into place, many young retirees would go without health ins, especially during these times, when many companies are in financial trouble. With more of the population uninsured, hospitals would try to recoup their losses from the insured, which would increase premiums. If this provision were put into place though, it could potentially decrease premiums, by decreasing the number of uninsured.

             In this situation, I don't think there is anyone who would lose. Yes there would be increased taxes, but that isn't always a bad thing. We'd pay more in taxes but there would be a trade off since we would potentially pay LESS in premiums. 

Kate A. Sundberg

Sec. 114. State Health Access Program grants

| 6 Comments

This provision of the Affordable Health Care for America Act involves the Secretary of Health and Human Services providing grants to States. It is being used as an incentive for States to move forward with a variety of health care reform initiatives. These grants will be used towards establishing programs that expand access to affordable health care coverage for people who are uninsured. Each State must be eligible for a grant and apply in order to receive one. Grants will be provided for one year, and may be extended to four additional years (based on the availability of funds).

Grants will be awarded competitively to States that have a program ready to implement that will expand access to health care. The types of programs under which grants are covered are as follows:
• Community coverage program ("three share") where the employer, government, and the individual all share the coverage responsibility
• State insurance exchanges that develop new, less expensive, portable benefits packages for small employers and part-time and seasonal workers
• Reinsurance plan program that subsidize a certain number of losses within a certain risk corridor
• Innovative strategies to insure low-income childless adults
• Development of statewide or automated enrollment systems for public assistance programs
• Transparent marketplace program which provides an organized structure for the sale of insurance products
• Not-for-profit businesses and consumers purchasing collaborative that provides direct health care service purchasing options for group plan sponsors

In order to be eligible, a State must first apply for the grant, implement the changes necessary for the type of program they are being funded for, and be able to continue with the program after federal funding from the grant period expires. During funding, a State must submit a report to the Secretary where it will be reviewed, studied, and benchmarked for progress and results.


One advantage is that it is supposed to build incentives for states to start health care reform programs, which will hopefully help reduce the number of uninsured. State insurance exchanges hope to drive price prices down by having more competition in the insurance market. They are trying to promote choices amongst individuals, and want people to shop around for their insurance more so prices decrease. Some claim it could offer greater economies of scale and potential efficiencies for products offered. However many are concerned because they claim it creates new government bureaucracies. It will increase the role of the government micromanaging private insurance companies since the state and federal government can control which ones get to participate in the exchange, and would allow bureaucrats to deny all plans access to the exchange. Furthermore, people may question how this is trying to promote competition when the government gets to pick and chose which plans get to "compete".

Danielle Sweiven

 

http://thomas.loc.gov/cgi-bin/query/F?c111:3:./temp/~c111BnHkZX:e103146:

http://www.hrsa.gov/statehealthaccess/default.htm

http://docs.house.gov/energycommerce/EXCHANGE.pdf

http://www.gop.gov/bill/111/1/hr3962amendments

garymiller.house.gov/.../HR_3962_-_Facts_Are_Stubborn_Things.pdf

Section 110 of the Affordable Health Care Act for America addresses the issue of reductions in group health plans for participants that have retired.  Group health plans will be required to create a provision that prohibits reductions in benefits provided to a retiree if they take place on the date of retirement or postretirement.  In this section, the definition of reductions consists of an increase in premiums or cost sharing, or a decrease in the actuarial value of the benefit package that is greater than five percent.  An exception to this provision is that reductions will be allowed if they are also made to active workers' benefits.  The second exception is caps that employers have already placed on their contribution amount; and lastly, employers are able to apply for a waiver from this provision which must demonstrate the undue hardship these requirements would place on them. 

The losers and winners of this provision are based on how employers decide to react.  This provision could have multiple direct effects.  It does not prohibit employers from reducing retiree's medical benefits before the enactment of this bill nor does it prohibit employers from adding or changing their contribution cap on current plans before enactment.  For this reason, more employers may decide to cap these contributions on retiree benefits.  As it is, only 25% of employer provided retiree medical benefits have remained uncapped.  If threatened by the inability to make retiree benefit changes after the bill would be passed, employers might add caps or decrease those contribution caps already in place.  Another implication is that employers may decrease the benefits provided to active workers or keep cost sharing under the five percent actuarial equivalent threshold in order to get around this provision. In the worst case scenario, employers could decide against offering any retiree health benefits or cut benefits altogether. 

In these situations, the employees or retirees could all be the losers.  This provision gives an incentive for those employers that actually do offer retiree health benefits to decide against offering new retiree benefits.  In addition, if employers cut back on the benefits provided to current workers, there is a possibility of creating a less productive workforce; which could result in employers no longer seeing a reason to provide any employee health benefits.  With health insurance being so closely linked with employment in the U.S., I think the implications of this bill will result in more negative outcomes than positive ones. 

 Laura Stokes

Sources:

http://www.opencongress.org/bill/111-h3962/show

http://healthcarebillindex.com/HR3962/DIVISION_A/TITLE_I/SEC_110/

http://www.sonnenschein.com/pubs/pub_detail.aspx?id=54716&type=E-Alerts

www.ebri.org/pdf/briefspdf/EBRI_IB_01-2010_No338_RetHlth1.pdf

Under the H.R.3962 - Affordable Health Care for America Act

 

This provision tries to monitor increases of health insurance premiums.  The Secretary of Health and Human Services along with the states shall set up an annual review process to review the increases in premiums of health insurance.  The insurance companies must submit a justification for increases to the annual review process before the premium actually increases.  Any increases in premiums must also be posted on their websites.  Upon the initial implementation of the annual review process, the secretary will also set up a continuous on-going monitoring system that will provide the Health Choices Commissioner of any trends in the premium increases as well as make recommendations to the commissioner about whether or not to include or exclude health insurance issuers and large employers in the participation of the health insurance exchange.  These recommendations will be made on the basis of the trends, and the comparison of excess premium growth outside of the exchange as compared to inside the exchange. 

 

To financially be able to set up this process, grants will be given for five years to the annual review committee for each state to carry out the duty of approving premium increases and providing recommendations to the commissioner.  Grants given for each state will be figured out with a formula that considers the number of plans of health insurance offered in each state and the population of that state. 

 

From an economic perspective, this provision addresses the rising cost of health insurance.  This monitoring system is good because it forces health insurance issuers to watch their premium costs.  In a way, it is like a credentialing system to monitor hospitals.  Hospitals increase their quality because they know they are being watched, and that is what will happen to insurance companies and the price of their premiums.  The public information of the increases of premiums will also eliminate the problem of asymmetric information and adverse selection.  Consumers will now be able to shop around better for their insurance which will increase competition of health insurance, and eventually, drive down the cost of premiums for all insurance.  Healthy consumers with a low marginal utility for health insurance will then be able to find the insurance that matches their value with their costs of insurance.  This bill is overall beneficial to the economy as a whole.

 

Tyaunna Sorenson

 

Sources:

www.opencongress.org

http://www.nrlc.org/healthcarerationing/HouseLegislation.html

SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS

Megan Sipper

HCM Econ Blog

4-1-10

 

Analyze House bill H.R.3962 - Affordable Health Care for America Act

Provisions

 

HR 3962 IH

 ''SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS.

''(a) IN GENERAL.--Each health insurance issuer that offers health insurance coverage in the small or large

 group market shall provide that for any plan year in which

 the coverage has a medical loss ratio below a level specified

 by the Secretary (but not less than 85 percent), the issuer

 shall provide in a manner specified by the Secretary for

 rebates to enrollees of the amount by which the issuer's

 medical loss ratio is less than the level so specified.

 ''(b) IMPLEMENTATION.--The Secretary shall estab

lish a uniform definition of medical loss ratio and method

ology for determining how to calculate it based on the av

erage medical loss ratio in a health insurance issuer's book

 of business for the small and large group market. Such

 methodology shall be designed to take into account the

 special circumstances of smaller plans, different types of

 plans, and newer plans. In determining the medical loss

 ratio, the Secretary shall exclude State taxes and licensing

 or regulatory fees. Such methodology shall be designed

 and exceptions shall be established to ensure adequate

 participation by health insurance issuers, competition in

 the health insurance market, and value for consumers so

 that their premiums are used for services.

 ''(c) SUNSET.--Subsections (a) and (b) shall not

 apply to health insurance coverage on and after the first

DSK29S0YB1PROD with BILLS

6 ''SEC. 2754. ENSURING VALUE AND LOWER PREMIUMS.

 ''The provisions of section 2714 shall apply to health

 insurance coverage offered in the individual market in the

 same manner as such provisions apply to health insurance

 coverage offered in the small or large group market except

 to the extent the Secretary determines that the application

 of such section may destabilize the existing individual

 market.''.

 (c) IMMEDIATE IMPLEMENTATION.--The amend

ments made by this section shall apply in the group and

 individual market for plan years beginning on or after

 January 1, 2010, or as soon as practicable after such date.

I definitely have mixed feelings about this section of the health care reform bill. Suggesting that premiums will be lowered seems like a more complex plan than I think the President has plans for. According to an article regarding the reform by CBSnews, the budget office concluded that premiums for people buying their own coverage would go up by an average of 10 percent to 13 percent, compared with the levels they'd reach without the legislation. That's mainly because policies in the individual insurance market would provide more comprehensive benefits than they do today. For most households, those added costs would be more than offset by the tax credits provided under the bill, and they would pay significantly less than they have to now.
The premium reduction of 14 percent to 20 percent that Mr. Obama cites would apply only to a portion of the people buying coverage on their own - those who decide they want to keep the skimpier kinds of policies available today ( Will Health Care Bill Lower Premiums?). Based on reading articles and watching Obama's speeches, I think that he is suggesting lower premiums because he expects us to be purchasing comparable care. Younger people purchasing health care would enter the risk pool, decreasing costs for others. It is unlikely that people will continue to buy low-value plans, if they do, then they would see lower premiums than they do now. Ideally, in President Obama's plan to create an efficient health care system, insurance company overhead costs would be lower, creating lower premiums for its buyers.

 

 

Will Health Care Bill Lower Premiums? Rep. MMX, The Associated. Web. 30 Mar. 2010. <http://http://www.cbsnews.com/stories/2010/03/17/politics/main6306991.shtml>.

 

Shaw, Donny. "The Budget Reconciliation Cycle Begins Anew." Open Congress. Open Congress for the 111th United States Congress. 6 Apr. 2010. Web. 7 Apr. 2010. <http://www.opencongress.org/>.

Section 9010 of the Health Care Reform Legislation is the imposition of annual fee on health insurance providers. This would be another excise tax that is put onto producers, and this one is assessed on the health insurance industry in the amount of $6.7 billion annually which will also be based on the market share. The business insider states that there are 15 new taxes being imposed on the bill. This section will be a fee applied to all health insurance providers based upon net premiums and any third party fees associated with the administration of those programs.

All health insurance providers will have to pay this fee to their secretary no later than the annual payment date of each calendar year beginning after 2009. The fee is determined by the sum of net premiums written with respect to the health insurance providers that are taken into account during the preceding calendar year. It is also determined by the sum of 200 percent of the insurance providers third party administration agreement fees that are taken into account during the preceding calendar year.

The fees will be established by a table that says the percent of net premiums  written during the calendar year are not more than $25,000,000, more than $25,000,000 but not more than $50,000,000, and more than $50,000,000. As for the third party administration agreement fees are found by a table that says not more than 5,000,000, more than $5,000,000 but not more than $10,000,000, and more than $10,000,000. There will be a penalty for failure to report and unless it is shown that the failure is due to reasonable cause the insurance company will pay $10,000 plus the lesser of: an amount equal to $1,000 multiplied by the number of days during which such failure continues or the amount of the fee imposed by this section that the insurance provider was required to pay.

The federal government provides substantial tax subsidies for health insurance, particularly for high-cost insurance plans for people who have higher incomes. This excise tax would be on insurance companies that are offering very high-cost health insurance plans. With this bill they believe it will supply a significant source of funding for subsidies to enable families of reserved means to afford health insurance, making the overall system more equitable. Moreover, it will also contribute to slowing the rate of growth of health insurance and health care costs.

This bill goes along with a major Health Care Reform Bill,  H.R. 3590 - The Patient Protection and Affordable Care Act which was passed by the House on March 21, 2010 by a party line vote of 219-212. This would expand health care coverage to 31 million currently uninsured Americans through a combination of cost controls, subsidies, and mandates. It is estimated to cost $848 billion over a 10 year period, but would be fully offset by new taxes and revenues and would actually reduce the deficit by 131 billion over the same period. The annual fee on health insurance providers is just one of the taxes that will be imposed.

Many consumers are wondering how the imposition of $11 billion in excise taxes from section 9008, 9009, and 9010 on the health care industry will reduce costs to consumers. Some people are expecting that these health care insurance providers will have to pass their costs over to the consumers, because they won't be able to afford it either.

 

Sources:

 http://www.boston.com/business/personalfinance/managingyourmoney/archives/2009/12/tax_increases_a.html

http://www.businessinsider.com/healthcare-bill-new-taxes-2010-3#imposition-of-annual-fee-on-health-insurance-providers-6

http://www.cbpp.org/cms/index.cfm?fa=view&id=2887

http://www.opencongress.org/bill/111-h3590/text?version=enr&nid=t0:enr:462



Danielle Radotich

National high-risk pool program

| 1 Comment

The provision which I looked at for my blog was the establishment of a national high-risk pool program.  This high risk pool which is expected to be in effect by the middle of June offers immediate access to medical insurance for those Americans with pre existing conditions and has not had insurance within the last six months.  The new pools are to be administered by a state or nonprofit entity under contract. States are not allowed to reduce their current high risk pool efforts.  Premiums for the pool will be established for a standard population and won't vary more than 4 to 1 due to age.  By 2014, the pools will be replaced with insurance exchanges that will let people shop for coverage, so this is only a temporary program.

            I would think that since 5 billion dollars are being used to fund the program that one looking from an economic perspective could have some mixed feelings on the topic.   Allocating this amount of funds, which many are saying isn't going to be nearly enough I would think makes the healthy American tax payers the losers, unless looked at as everyone winning because of more Americans being insured, the overall goal.  I would think the winners of this are those uninsured for at least 6 months with pre existing conditions who can afford to take part in the program.  The largest populations who will benefit are those ages 50-64 who don't yet apply for Medicare.  Aside from now having coverage the program will limit the amount that can be spent on premiums to 35% which is much lower than the current regulations of the state run programs.  Lower premiums are key to affordable coverage, with medical bills being such a burden and reason for so many families with current financial problems.  The government still has not released details such as how much premiums will be or how many people will benefit from the program. 

There are 35 states which are already using some sort of state funded program run by a non profit organization which are varying in effectiveness.  For many citizens they will see no change in there lives or coverage, but for those in the 15 states without a current high risk pool in place some change will be coming.  After reading many horror stories of the state run programs I don't believe that this is going to be overly beneficial to society.  For example with Florida's program the state created its own high-risk pool in 1982, and at its peak it had more than 7,000 members. In 1991, with the program losing tens of millions of dollars, the state stopped accepting new enrollees. Nearly 20 years later and with fewer than 300 people left in the pool, it remains closed.  There will be limitations on those who are enrolled and the amount of choice they will have in there treatments may be limited.  Controlling the costs of a program such as this is crucial to its success and I just don't see with the cost of health care today it being easy to manage.  Finding a knowledgeable team to minimize costs it key, because with all reports I read the $5 billion dollars is not going to be enough to last until 2014. I do believe overall it is good for the nations population, but evidence shows that while it may reduce certain costs including E.R. visits, the plans will have people trying to work the system in no time.

 

Sources

OpenCongress.com

http://www.ncsl.org (National Conference of State Legislatures)


Joe Sampson

This provision imposes an annual fee of two billion dollars on the medical device-manufacturing sector. This fee would be allocated across the industry according to market share, and would not apply to companies with sales of medical devices in the U.S. of five million dollars or less. The fee does not apply to any sales of a Class I or II product that are sold to consumers at a retail price of no more than 100 dollars per unit. This means it would exclude low cost items such as pregnancy tests, contact lenses, and blood pressure monitors that are normally sold directly to consumers through retail outlets. This annual fee of two billion dollars will be established for the years 2011 through 2017, and will rise up to three billion dollars for years after 2017. 

From an economic perspective, this bill will be efficient because revenue for this health care bill needs to be generated somewhere, and posing an annual fee on the richer manufacturing companies might help to gain the money needed. All smaller companies will be exempt from the bill, which will have a positive impact on the economy because it allows small businesses to avoid the fees, and still survive against the huge manufacturing companies. 

The government will gain from this imposition, as well as smaller businesses by avoiding the imposed fees. U.S. citizens will also gain because these large manufacturing companies paying the fees will help provide us with beneficial health care. Large manufacturing companies will be the ones to lose, because they will have to pay a huge fee simply for being a top manufacturer or importer. Their success will lead them to pay fees they never had to pay before, which could harm companies that barely make over five million dollars.

The Medical Device Manufacturers Association states that they support improvements in patient care and promote prevention and wellness. However, they believe that this device tax will prevent them from achieving these intentions. They state, "The majority of innovation from the medical device industry comes from smaller manufacturers who work closely with clinicians and engineers to develop the therapies and treatments of tomorrow. If enacted, this tax will stifle innovation, harm patient care, and weaken the position of the U.S. as the global leader in medical device innovation. MDMA points out that other elements of the bill will result in over twenty billion dollars in cuts to the device industry." Thus, according to MDMA, this bill will not be beneficial to society.

Present law does not impose an annual sector fee on companies that manufacture or import medical devices for sale in the United States. As a result, this bill will be a huge change to large medical manufacturing or importing companies. These companies will have to become highly aware of the new government regulations, and follow all new standards and procedures.

Sources:
http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp111&sid=cp111FK1E5&refer=&r_n=sr089.111&item=&sel=TOC_1145700&

www.opencongress.org

http://www.medicaldevices.org/issues/Health-Care-Reform,-Device-Tax

Shalane Pechacek

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