More on the Public Option in the current house bill HR 3962

by Divorced one like Bush

Bruce Webb put up a post titled “Health Care Exchange: Eligibility vs. Enrollment“. I have gained some clarification on the subject and have shared it with Bruce. I have asked him to comment also.

There is a concern as to whether access to the Public Option (PO) was limited. Bruce’s reading of the bill was that everyone has access to the PO based on section 411(3) which reads:

Beginning with Y2, if an employee declines such offer but otherwise obtains coverage in an Exchange- participating health benefits plan (other than by reason of being covered by family coverage as a spouse or dependent of the primary insured), the employer shall make a timely contribution to the Health Insurance Exchange with respect to each such employee in accordance with section 413.

Thus, the PO is not as restricted as people thought and in the future the possibility is that it could grow and be what people are saying it would be; a force for controlling costs, especially regarding insurance premiums. Sounds good, no?

My reading was that section 411(3) was tied in some way to whether your employer was “exchange eligible” or not. There are provisions that would allow all employers in the future to be exchange eligible but it is dependent on a report or two being produced and then the “commissioner” acting on the report or congress acting on the report. To me, this leaves too much political wiggle room.

I think we both assumed that exchange eligible or not, if the employee chose the PO, the employer would have to pay for the choice by paying into the exchange, the result being that the cost to the employee would be the same regardless of what decision said employee makes.

Well, Bruce was correct. Everyone has the option to choose the PO. Though there is a financial barrier. A big financial barrier that in my opinion makes this bill crap. I’ll post my thoughts more on this later.

I contacted my congress person’s office. They put me in touch with their legislative person. I asked this person (via email) which of us were correct.

Turns out, as noted, Bruce is correct that everyone has the option for the PO. However, if you make this choice in lieu of accepting one of the employer provided options you, my friend are on your own. You are on your own and will have to accept the total cost of the PO plan because the payment your employer makes into the exchange does not follow you.

The reason given for such a set up in the house bill is that there is concern that the employers would push their employees into the exchange. The legislative person noted that HR 3962 specifically is attempting to discourage this.

This is the essential two responses by the legislative person:

Any individual (but not any employer) can participate in the Exchange and therefore could sign up for the public option. BUT, to do so, they would have to dis-enroll in their qualifying coverage and meet the other requirements necessary to participate in the Exchange. However, there is zero incentive for anyone to do this since they’d be responsible for 100% of the cost of the care they chose in the Exchange. If they stuck with their employer sponsored or other qualifying care, the vast majority of the cost of coverage is picked up by someone other than the individual. That’s why so few people are projected to enter into the public option. Additionally, access to the Exchange, and the public option, IS restricted for employers. Only the smallest businesses can use it at first, and later slightly larger businesses. The Secretary can then choose to open it up to all employers if she feels the Exchange has the capacity to handle that. The goal is to do so.

I then asked: 411(3) notes that the employer has to make a contribution to the exchange following the rules of section 413 if the employee chooses to get health care via such. How does this square with your statement that the employee would be 100% responsible for the cost of the exchange coverage? Is the employer contribution not tied to their employee’s choice? That is, the employer is just simply being charged as a participate in the over all exchange pool to provide the exchange money and thus the payment is not an offset of the cost incurred by the employee to purchase coverage from the exchange?
There response:

Exactly—money does not follow the person in the House bill. The Senate Finance bill does attempt to have the money the money follow the person I believe, but that gets complicated and provides a potential incentive for employers to try and push employees into the Exchange, which is expressly discouraged in HR 3269.

This is a link to a section by section synopsis of the bill.