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Health Insurance section of reform should reflect significant benefits
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House Minority Leader John Boehner speaks behind a copy of the Democrat's version
of the health care bill during a news conference on Capitol Hill
in Washington, Thursday, Oct. 29, 2009. (AP Photo/Harry Hamburg)
Reform benefits:
Headlines on health insurance reform should reflect significant benefits resulting from a positive vote in the House on the road to final reform passage.
Age rated health premium differentials are cut by 63 percent for Americans in their 50’s and early 60’s. Exclusions for pre-existing conditions are eliminated. Policy benefits are standardized into four packages that will make comparisons easier. Lifetime limits on benefits for a specific individual are outlawed. Maximum annual out of pocket costs for everyone are limited to reduce medical bankruptcies.
Reforms will be phased in gradually over a 10 year burn in period. People who work for the smallest employers or who buy their insurance as individuals will see significant new benefits and probably reductions in cost.
No change on most employer health insurance plans:
Most people, who are insured through their employers by insurance companies or as part of self insurance schemes, will not be affected by much in the insurance reform portion of what is being talked about. They can, however, be assured that health coverage will be available to them in most future situations.
Exchanges and Coops:
Individuals and the smallest companies will have the ability to participate in either a national insurance exchange or one set up in each of the various states and/or territories. States may authorize their residents to participate in the exchange of a cooperating state.
The public option insurance company:
Last, the most controversial proposal in the bill is for a public option insurance company. Like the health coops, the public option insurance company will be offered the loan of start- up money from the government. Beyond that, it will operate entirely independently.
In similar, developed, OECD countries, the cost of health care administration is between 5 percent and 10 percent. In America, expenses for costs other than benefit payments average 23 percent on the insurance side of the business mirrored by a similar cost structure at health care providers.
The fear voiced by business interests is that they will not be able to compete with this new entity. Eventually, they worry they will be forced out of the market in just the same way as they created the regional near monopolies they currently enjoy. This is a legitimate fear, but since full burn in of this proposal is almost a generation away all sides have plenty of time to adjust.
A public option insurance company will have the same policy choices available as in the exchanges or coops. It hopes to negotiate deals with doctors and other providers similar to Medicare. The public option insurance company will have to operate funded by its premiums. The advantages it will enjoy over private companies will be a lower cost of administration and a mission to hold down costs rather than maximize profits.
Counter moves by industry and possible holes:
There are potential counter-moves from the health insurance industry that could negate any reform benefits. State insurance commissions are mostly responsible for approving rates. It is unclear if all states exercise similar oversight. Insurers could theoretically raise all rates just to protect against reforms. The public option insurance company stands as the competitive bulwark to shenanigans.
Self funded health plans at large employers avoid many federal and state regulations. It is unclear if they have been specifically addressed. A word search of the proposed bill for “employer funded” and “self funded” did not return any hits. Since 55 percent of all persons with health plans participate in these programs, any impact from this legislation on them may be unclear.
According to the U.S. Department of Labor press office, these plans are not actual insurance at all. Instead, benefits for employees are paid from the general assets of the corporation.
Al Portner is a former daily newspaper editor and publisher in seven states and author of the forthcoming “Mark Twain and the Tale of Grant’s Memoir.” He can be reached at alanportner@gmail.com
For more info: L
H.R. 3962
Summary of benefits
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