Wingnut 102A: When private insurance is outlawed only outlaws will have insurance

OR; HR3200 Sec 102 revisited. by Bruce Webb

We first visited the health care reform meme sweeping the right wing of the Blogosphere with this post HR3200 abolishes private health insurance. This seemed at first to be a simple confusion of the limits of the following from Sec 102 of the legislation:

(A) IN GENERAL.—Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day of Y1.

I pointed out that Sec 102 only refers to ‘Grandfathered’ plans and not to ‘Qualified’ plans eligible to be included in the new Exchanges. But regular commenter Movie Guy showed that the confusion might be on my part and the result of inadequate attention to Sec 123-144. As he put it in comments:

Section 102 can’t be viewed in isolation. Moreover, Section 102 can’t simply be compared to Section 101 as the magic answer. There is far more involved than Webb’s explanations and opinions expressed in the comment posts on the open thread and this main post and related comments. Aside from reading the entire bill, one would need to read some provisions in existing U.S. Code as cited by the bill. This provides the broader picture.

The problem with Section 102 is the clock.

If this provision of the bill is also adopted by the U.S. Senate and a conference bill is passed and subsequently signed by the President, there will be a gap period that isn’t being addressed. The cutoff dates are specific. Yet, the Administration will not have a “Commissioner” until the individual is nominated and confirmed by the U.S. Senate. The “Health Benefits Advisory Committee” will not be in place until the members are selected; the Committee has 18 months to make its initial recommendations. Moreover, the Committee will be advising the Secretary of Health and Human Services. And you can’t call the “Health Insurance Ombudsman” until the “Commissioner” appoints one. Recommend reading some of the other sections, including Sections 123-144.

During the interim period, who will be approving the plans acceptable for the “Health Insurance Exchange” under subtitle A of title II? Based on what criteria? Those are responsibilities identified for the “Commissioner”.

If you lose your job on or after day 1 of the enacted legislation and your company insurance is terminated, what will you do until such time as the “Commissioner”, “Health Insurance Exchange”, Commissioner identified criteria, and accepted list of insurance providers are identified? Who will be able to get new health insurance until that system is up and running? Not Cobra. That won’t be allowed.

If you’re starting a business and need health insurance for yourself and a few employees during the gap period, what are your options for health insurance?

That’s why Section 102 is insane.

Well after wading through a lot of the text of the Bill I came to the conclusion that much of the problem was terminological. Bur rather than waste the research that got me to that point I will include it after the fold. If nothing else it clarifies the proposed timeline.
(UPDATE: in comments on the previous post MG has conceded that if my reading below is correct that his concerns have been largely addressed. But given that there are others out there with this same take, I am going to leave this post up as is.)

First from the Bill text:

p.32 DEADLINE.—The Health Benefits Advisory Committee shall recommend initial benefit standards to the Secretary not later than 1 year after the date of the enactment of this Act.

Not later than 45 days after the date of receipt of benefit standards recommended under section 123 (including such standards as modified under paragraph (2)(B)), the Secretary shall review such standards and shall determine whether to propose adoption of such standards as a package.

p.36 (b) ADOPTION OF STANDARDS.— (1) INITIAL STANDARDS.—Not later than 18 months after the date of the enactment of this Act, the Secretary shall, through the rulemaking process consistent with subsection (a), adopt an initial set of benefit standards.

p. 72 (a) ESTABLISHMENT.—There is established within the Health Choices Administration and under the direction of the Commissioner a Health Insurance Exchange in order to facilitate access of individuals and employers, through a transparent process, to a variety of choices of affordable, quality health insurance coverage, including a public health insurance option.

p. 88-89 2) SOLICITING AND NEGOTIATING BIDS; CONTRACTS.—The Commissioner shall— (A) solicit bids from QHBP offering entities for the offering of Exchange-participating health benefits plans; (B) based upon a review of such bids, negotiate with such entities for the offering of such plans; and (C) enter into contracts with such entities for the offering of such plans through the Health Insurance Exchange under terms (consistent with this title) negotiated between the Commissioner and such entities .

At risk of spoiling the punchline it is necessary to maintain a clear distinction between “date of the enactment of the Act” and day one of “Y 1”. Which latter is defined as follows:
(25) Y1, Y2, ETC..—The terms ‘‘Y1’’ , ‘‘Y2’’, ‘‘Y3’’, ‘‘Y4’’, ‘‘Y5’’, and similar subsequently numbered terms, mean 2013 and subsequent years, respectively.

Before returning to the point lets examine the implementation timeline (from comments)

First unless the Blue Dogs get their way the current plan by the President and House Leadership is to get this bill enacted this year. So lets take the effective date as Jan. 1, 2010.

Second the clock for the Health Benefits Advisory Committee is not 18 months it is one year and the clock starts not when the members are appointed but at the date of enacting of the bill. Meaning that standards will be in place by Jan 1, 2011.

Third this gives the Senate a full year to confirm the Commissioner. Nor do I see that the appointment of the Ombudsman makes much difference here, his role seems relatively minor for implementation.

Fourth, the Commissioner is limited to 45 days to review the standards once received and must have them through the Rule process within 18 months of enactment. Meaning that adopted standards would be in place no later than June 30, 2011.

Fifth the general outlines of the standards are well established in the bill itself, and if the Advisory Committee develops its specific recommendations in a publicly accessible form (and note that insurance companies have representation on the Committee) insurance companies have almost two years to prepare themselves for contract negotiations in the summer of 2011.

Sixth which gives the Commissioner and the companies another 18 months for contract approval and administrative implementation.

So to repeat the question:

If you lose your job on or after day 1 of the enacted legislation and your company insurance is terminated, what will you do until such time as the “Commissioner”, “Health Insurance Exchange”, Commissioner identified criteria, and accepted list of insurance providers are identified? Who will be able to get new health insurance until that system is up and running?

Well on my reading if you lose your job and so your insurance between “day 1 of the enacted legislation” and “day 1 of Y 1” you can get insurance just where you always would have if you lost your job between tomorrow and the date of enactment. As a matter of personal convenience you might ask if the company plans to participate in the Exchange after it goes into operation Jan 1. 2013 but I just am not seeing the inherent insanity some others do. Instead I see two fundamental mistakes. One the belief that the clocks start from the point that the Commissioner and Committee members are confirmed rather than the date the act is enacted. And the second a confusion between that date and Y 1 as referenced in Sec 102, i.e. 2013..