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HR3962 as Passed: the importance of close reading

by Bruce Webb

H.R.3962:
Affordable Health Care for America Act (Engrossed as Agreed to or Passed by House)
.

Back in July I singled out what I thought was the single most important provision of the House Tri-Committee Bill in a post called Sec 116: Golden Bullet or Smoking Gun. Yesterday I followed up with a new post here called STILL the Most Important Sentence in the House HR Bill which cited the ALMOST identical language between Sec 116 of the Tri-Committee Bill and Sec 102 of the bill as brought to the floor and posted similar material in diaries at dKos, MyDD, and Open Left. Only to find out from commenter Gerald Weinand, who actually read the bill with close attention to detail, that there were significant changes in wording that drastically changed the impact of this language by shifting it forward in time and then sunsetting it.

I don’t know what to make of this change, but it is the subject of a LONG piece at the BruceWeb Read the Bill Part 3; and a possible reading error. In any event going forward I think it is vital that everyone be reading off the same page. The above link to the bill as passed may not be stable, if not you can search it pretty easily from the Thomas.gov site or use the pdf version published by the GPO: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3962eh.txt.pdf
(Update: MG supplies a better Thomas link: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:h.r.03962 Thanx)

My personal belief and a hope is that a mistake has been made and that this provision was not meant to sunset when the Exchange starts operation, and that a fix will be made, it would be a true shame if the best regulatory control of insurance company profits just ended up on the cutting floor, either deliberately or by accident.

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STILL the most important sentence in the House HC Bill

by Bruce Webb

Much of the criticism about the House Health Care Bill coming from the left revolves around the ‘fact’ that it has no meaningful premium and so profit controls. Moreover most of those same people are promoting HR676 as an alternative. Frankly those people simply haven’t read either bill with attention to detail. And this includes a lot of people sporting the title ‘Dr.’

In both cases the key language comes right up front. In HR3962 it is as follows:

SEC. 102. ENSURING VALUE AND LOWER PREMIUMS.
(a) GROUP HEALTH INSURANCE COVERAGE.—Title XXVII of the Public Health Service Act is amended by inserting after section 2713 the following new section:
‘‘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.

That final sentence simply guts the insurance companies current business which involves widening the spread between premium dollars collected and medical care actually provided. This sentence sets a hard limit on raising premiums while managing the risk pool to exclude those actually being likely to make claims. The tighter you manage your enrollment the harder it is to actually hit your mandated MLR, and every time you raise premiums you have to demonstrate that you have increased payouts to that same degree. Or else you have to rebate the difference.

In the original House Tri-Committee Bill this language was included in Sec. 116 and a site search on that term will pull up a series of posts on this dating back to July. And I have diaried on this elsewhere, yet somehow almost everyone has simply missed the significance of this. Or maybe I have overstated the case. If so explain it to me in comments. I will post a parallel post on the paragraphs that show HR676 to be a ridiculous piece of legislation, a case of a wolfish socialization program hidden in a Medicare for All sheep’s clothing, but for the moment I don’t want to distract from this key provision.

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Opting Out and Individual Affordability Credits: a reply to DOLB

by Bruce Webb

Divorced One and I are having what I think is a useful exchange that started with my post on Eligibility and Enrollment which he followed up with More on the Public Option. If you haven’t read that please do as this piece won’t make much sense otherwise.

DOLB and I now agree that employees can opt-out of employer paid coverage and enroll in the Public Option. The key to entry to the PO is to not be ENROLLED in an employer plan. Now clearly there are ways to decline or drop employer paid coverage today. For example if you are retired military and covered under Tri-Care you don’t need to accept coverage, or if you get married to someone with a family plan you can drop coverage, at worst you would have to wait until the annual Open Enrollment period. There is nothing in ether current law or this proposed legislation that binds you to the employer plan. On the other hand the system is set up as ‘opt-out’ rather than ‘opt-in’, if you accept a job with employer coverage and for whatever reason (perhaps you are a Christian Scientist) refuse to sign up for a plan option the employer is authorized to auto-enroll you in the lowest cost plan. But you can, if you choose take positive steps to opt-out of such coverage. So why does CBO project that so few people will choose to opt-out of employer coverage and into the Public Option? Well you would have to ask them, generally CBO doesn’t discuss its specific methodology, but the answer seems to be that on their calculations such a choice would not be financially advantageous to the worker. This was explained in a response of a congressional staffer to DOLBs email question:

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.

Under Sec 411(3) Employers whose employees opt-out of coverage and enroll in an exchange plan, including the PO, have to pay a fee, but according to the congressional staffer the money does not explicitly follow the employee. So where does it go? What does it pay for? And there seems to be only one answer, one discussed below the fold.

The flat fee paid by employers for each opt-out employee goes into the general pot that funds individual affordability credits for Exchange Eligible employees which in this case includes the opt-outs. The rules governing affordability credits are laid out in Title III Subtitle C based on Income Determinations set out in Sec 345. Under the bill if you make more than 400% of Federal Poverty Level you are not eligible for affordability credits. Which means that any opt-out in this category would indeed be stuck with 100% of the cost of an Exchange Plan. But people earning between 150% and 400% of FPL would be eligible for affordability credits on a sliding scale. The question would be whether there are any circumstances under which the value of those credits exceed the value of the employer contribution to the employer plan. CBO seems to be calculating that in most cases the answer is no, the premium limits on those employer plans established in the bill being enough to maintain a rough parity between out of pocket costs between and individual plan under the Exchange and an employer group plan with enough advantage to the latter to keep employees from jumping ship. And maybe they have the balance right.

So when the staffer said that opt-out employees are stuck with 100% of the cost I think it was not quite right, if you are an Exchange Eligible Individual you are eligible for sustainability credits which reduce your cost. But per CBO not enough to actively induce large-scale opting out. Meaning that while everyone is theoretically ELIGIBLE for the Exchange, relatively few people will choose to ENROLL.

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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:

3) CONTRIBUTION IN LIEU OF COVERAGE.—
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.

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CBO Scores Boehner Amendment to HR3962

by Bruce Webb

Last evening the CBO Director Blog announced the release of a score of the Boehner amendment: A Preliminary Analysis of a Substitute Amendment to H.R. 3962, the Affordable Health Care for America Act. The results are not impressive: (as always click to enlarge)


The amendment is scored at reducing the deficit by $68 billion over ten years. I can’t get the breakdown to add up (see page 4) but most of the savings is in the form of malpractice reform at $54 billion with further savings from some administrative changes relating to electronic transfers and adoption of the Eschoo Biologics Amendment all of which offsets a whopping $8 billion net actually spent to expand coverage. So what do we get from spending an average of just around $800 million a year? Essentially nothing, CBO projects that the percentage of the legal non-elderly population without health insurance will stay right at 83%.

I suggest the words ‘Epic fail’ apply here. Heckuva job Johnnie!
____________________________________
Update: Lifted from comments on last post. The GOP’s Health Care Plan
By: Dirk van Dijk, CFA
Dirk provides a nice analysis of the other provisions of the bill beyond the cost and coverage numbers.

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Health Care Exchange: Eligibility vs. Enrollment

by Bruce Webb

In the near four months since it passed out of Committee there has been little discussion of the Senate HELP Bill and the reason is clear, Max Baucus made it clear that Senate Finance would write a bill from the ground up. What this has meant is that the basis for comparing and contrasting alternate bills has been HR3200, the House Tri-Committee Bill. There are three main bills that have been presented in opposition to HR3200 with the Senate Finance Committee coming at it from the center-right while Wyden’s Free Choice Act and HR676, Single Payer, coming from the left.

The major critiques of HR3200 have focused around the Public Option, with SFC debating whether it should even be part of the bill, while the Free Choice Act and HR676 arguing that it is too weak. This latter set of arguments seems to me largely driven by a profound misreading of the bill that may in its turn be driven by ideology from the Single Payer Now folk that have combined into a toxic stew that has led both the original HR3200 and his successor to be labeled in the harshest possible ways.

In the eyes of many progressives the problem with the PO is that it is just too cramped and limited to a “small sliver” of the American people, that “200 million people” will find it unavailable, that only people who are currently uninsured can get it, and so on. Well none of that is right, but seeing why will take some lengthy quotation and parsing, which for those interested can be found under the fold.

During the campaign Obama promised people that if they liked their current insurance they could keep it, and the bill does that, but what too many people took away is the idea that if they had current insurance, particularly through their employer that they HAD to keep it, that only those people who didn’t have coverage at all, mostly the young, the self-employed, and workers in small businesses, would be served by the Exchange and the PO. Well lets go to the text, in this case the new House Bill.

SEC. 302. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS.
(a) ACCESS TO COVERAGE.—In accordance with this section, all individuals are eligible to obtain coverage through enrollment in an Exchange-participating health benefits plan offered through the Health Insurance Exchange unless such individuals are enrolled in another qualified health benefits plan or other acceptable coverage. (p.156)

The key word here is “enrolled”. Under the bill if your employer offers you insurance it has to be in the form of a Qualified Health Benefits Plan or QHBP, meaning that it has to meet all the accessibility, affordability and coverage provisions applicable to an Exchange plan which should mean in practice there would be little advantage to getting a QHBP Plan inside or outside the Exchange. So the bill writers and subsequently the CBO built in the assumption that most people who accept employer coverage, to the degree that they added a provision for employers to auto-enroll employees in the lowest cost plan offered by the employer. This process led many people to believe they were then simply locked into the company plan. Well not so fast, NOTHING permently locks you in, instead you have a number of different opt-out options.

Now one not acceptble option is simply not to have insurance at all, there are some religious exceptions but under the Individual Responsibility section there is a requirement for individuals to prove they have ‘Acceptable Coverage’. And what is that?

(2) ACCEPTABLE COVERAGE.—For purposes of
this division, the term ‘‘acceptable coverage’’ means
any of the following:
(A) QUALIFIED HEALTH BENEFITS PLAN COVERAGE.—Coverage under a qualified health benefits plan.
(B) GRANDFATHERED HEALTH INSURANCE COVERAGE; COVERAGE UNDER CURRENT GROUP HEALTH PLAN.—Coverage under a grand- fathered health insurance coverage (as defined in subsection (a) of section 202) or under a current group health plan (described in sub- section (b) of such section).
(C) MEDICARE.—Coverage under part A of title XVIII of the Social Security Act.
(D) MEDICAID.—Coverage for medical assistance under title XIX of the Social Security Act, excluding such coverage that is only available because of the application of subsection (u), (z), or (aa) of section 1902 of such Act.
(E) MEMBERS OF THE ARMED FORCES AND DEPENDENTS (INCLUDING TRICARE).—
Coverage under chapter 55 of title 10, United States Code, including similar coverage furnished under section 1781 of title 38 of such Code.
(F) VA.—Coverage under the veteran’s health care program under chapter 17 of title 10 United States Code.
(G) OTHER COVERAGE.—Such other health benefits coverage, such as a State health benefits risk pool, as the Commissioner, in coordination with the Secretary of the Treasury, recognizes for purposes of this paragraph.

Well that is clear enough, an individual meets his responsibility requirement by showing he is covered under his employer plan, his spouse’s employer plan, perhaps a parent’s family plan or by a range of other public insurance plans. And in any of those latter situations the employee can opt-out of new employer coverage offers. But one of these opt-out possibilities is somewhat hidden here, that is the one that allows any employee to opt-out of employer coverage altogether and get an individual or group plan through the Exchange, including the PO, because in doing so he would meet the requirement of (A), the Public Option is explicitly defined as a QHBP. So where did the idea that the PO was only for the uninsured and was so limited to a fraction of the population arise?

Well a couple of places. First as noted the expectation is that most new employees without health insurance would simply enroll in whatever employer supplied plan level that met their needs, and that those who failed to do so would simply be auto-enrolled by the employer as provided in Sec 412 (c)

(c) AUTOMATIC ENROLLMENT FOR EMPLOYER SPONSORED HEALTH BENEFITS.—
(1) IN GENERAL.—The requirement of this subsection with respect to an employer and an employee is that the employer automatically enroll such employee into the employment-based health benefits plan for individual coverage under the plan option with the lowest applicable employee premium.
(2) OPT-OUT.—In no case may an employer automatically enroll an employee in a plan under paragraph (1) if such employee makes an affirmative election to opt out of such plan or to elect coverage under an employment-based health benefits plan offered by such employer. An employer shall provide an employee with a 30-day period to make such an affirmative election before the employer may automatically enroll the employee in such a plan. (p. 273-4)

If the employee does opt-out during that 30 days he is not “enrolled” and so falls under the definition of “exchange eligible individual” as defined in Sec 302. At which point the provisions of Sec 411 (3) kick in:

(3) CONTRIBUTION IN LIEU OF COVERAGE.—
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.

In short you are ‘exchange eligible’ unless you ACCEPT enrollment or ALLOW yourself to be auto-enrolled. On my reading there is no such thing as a lockout for any given individual, if you want the PO you can get it, though not without taking some positive action.

But what about employers? Why are they locked out of the Exchange and the PO? Well the answer is that they aren’t, at least not permanently, that is simply the result of misunderstanding the language governing ‘transition’. Subject for another post.

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HR3962: the new House Bill and its Scoring

by Bruce Webb

Well I have been venturing around the blogosphere and it is grievously clear that most people did not take my advice and Read the Bill!. Well it is not too late: http://docs.house.gov/rules/health/111_ahcaa.pdf (3.3 MB) Moreover CBO followed up with their preliminary analysis:
http://www.cbo.gov/ftpdocs/106xx/doc10688/hr3962Rangel.pdf

The above image is Table 2 and it shows the before (current law) and after numbers. There is a substantial amount of confusion on this with some people adding where instead they should be subtracting and I’ll have to admit while I got the arithmetic operation I mislabeled the results elsewhere. So lets sort it out.

Under current, pre-reform law CBO projected that by 2019 there would be 54 million uninsured American residents, which figure includes undocumented workers. Since under current political conditions it is impossible to extend real reform to include “illegals” any solution will be by nature incomplete. In the case at hand CBO projects that the House bill would extend coverage to 36 million residents leaving 18 million without insurance. Of that 18 million a third or 6 million will be “illegals” leaving 12 million legal non-elderly residents without coverage (some people have tried to add 18 + 12 to get to 30, going the wrong way down One Way Math Street). This 12 million number will include both the so-called ‘invincibles’ who would rather pay the fine than get coverage as well as people who are Medicaid eligible but for whatever reasons can’t manage the paperwork labyrinth. But generally if you are a legal resident of the U.S. who wants insurance you will be able to get it. (Affordability is another question, I think the bill contains adequate provisions for that, others will have differing opinions, we can fight that out in comments or on subsequent posts).

In percentages that adds up to 94% of the total non-elderly population up from 81% today, while it is 96% of the legal non-elderly population, up from 83% today. Not exactly the Universal Single Coverage that people like me would like, but still closing roughly 75% of the gap. Not bad considering the somewhat artificial restraints of both keeping the bill’s cost under $900 billion AND making it deficit neutral over the ten year window.

(Minor note. People are still referring to ‘HR3200’ but as you can see the bill number has changed to ‘HR3962’

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