Monday, March 29, 2010

What's In the Health Care Bill: Title I, Subtitle B. Immediate Actions to Preserve and Expand Coverage.

This is part of a series in which I'm reading the health care bill, because I really don't know what to think of it without doing so. The introduction to the series is here. Title I, Subtitle A is here. Title I, Subtitle C is here. The bill itself, as passed, is here.

Section 1101. Immediate access to insurance for uninsured individuals with a pre-existing condition.

Creates a national pool (which may or may not contract out some of its work to existing state or non-profit high-risk pools), to cover citizens, nationals and documented immigrants who haven't had health insurance for 6 months and have pre-existing conditions.

In order to count, plans have to cover 65 percent of total benefit costs, and have an out-of-pocket limit of $5000 for individuals and $10,000 for families -- and they can't just use the federal money to replace the money they were spending already on these plans. They can only vary the premiums they charge by whether it's individual or family coverage, area, age (by up to 4 to 1), tobacco use (up to 1.5 to 1). They also have to be "established at a standard rate for a standard population," which I take it means they can't be more expensive than private health insurance for non-sick people.

Insurance companies can't encourage high-risk patients to leave their current plans for the high-risk pool, by giving them money. It also counts as encouraging you to leave if your plan considers health status in determining premiums at renewal (so they're hiking rates to get you to leave) or if they've got you on a policy that they're no longer actively marketing. My guess is that the latter clause is to prevent insurance companies from, rather than setting different rates for sick people on their current plan, hiking the rates on that plan and offering everyone who isn't sick a new plan, with lower rates -- thus effectively creating sick-people rates.

There's $5 billion available for this, "without fiscal year limitation" -- it seems like this means this is all they're getting until 2014, although Rutabaga Ridgepole at TPM seems to think otherwise. If there's not enough money to cover costs, HHS "shall make such adjustments are necessary to eliminate such deficit." I'm confused about what kind of adjustments are expected/authorized. Does this include adjustments to the provisions of the law itself -- for example, changing the 65%-coverage requirement or the out-of-pocket limits, or raising premiums? Renee James at the Sunlight Foundation seems to think so: "If we run out of money, we'll get less, pay more and wait longer."

What seems clear, both from that TPM post and xpostfactoid's take on this, is that $5 billion is woefully inadequate, so this question is going to come up. Estimates range from 2 million to 4 million for the number of people who will be eligible for this, and it's clear that state high-risk pools as they stand are horribly inadequate: they're expensive and have low lifetime coverage limits.

Let's split the difference and imagine it's 3 million people who will take us up on this -- let's also assume the $5 billion is per-year, rather than for the next 4 years. 3 million average citizens spend $23 billion on health care in a year (based on a total US health expenditure of roughly $2.3 trillion) -- since the premiums and out-of-pocket expenses of the high-risk insurance pool can't be more than what ordinary people pay, we can count on $23 billion coming from the customers. So this budget will only balance the cost of their health care is only around $28 billion -- about 20% more than 3 million average citizens.

It seems clear that if these people were that cheap to cover, we wouldn't have had health insurance companies in such a tizzy over the requirement (phased in in 2014) that they stop discriminating against those people -- since such people are about 1% of the population, their added costs would necessitate only a 0.2% raise in everyone else's premiums.

Those are going to be some pretty fucking serious adjustments.

Section 1102. Reinsurance for early retirees.

Provides subsidies for the costs incurred by employment-based plans in covering retirees who don't qualify for Medicare (which I believe means they're between 55 and 65). Specifically, it pays 80% of the costs of each individual beyond the $15,000 mark, up to the $90,000 mark (so the maximum they'll pay for any individual is $60,000). Again, they appropriate $5 billion for this, and will just stop taking claim applications beyond that point.

My impression is that, for the most part, the people who qualify will be union retirees whose contract guarantees them continued access to the health insurance they had while they were working. Some conservatives are apparently calling this a giveaway to unions, but it's really a giveaway to employers of union workers -- my guess is the biggest beneficiaries will be state and local governments and car companies (this guy notes that car companies have been having massive numbers of employees retire early). $5 billion seems small for this, too -- they probably won't get much further than GM and Ford's applications.

Section 1103: Immediate information that allows consumers to identify affordable coverage options.

Establishes a Web site through which you can look at health coverage options in your state, using a standardized format, including private options, high-risk pools (including both the one created under section 1101 and any state-based pool), Medicaid, and state child health plans.

HHS is authorized to contract this out, but no money is appropriated.

Section 1104: Administrative Simplification.

HHS has to develop operating rules for electronic transactions related to health care, and health insurance providers have to comply, document their compliance, and report to HHS about it.

Section 1105: Effective Date.


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