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HR 3962 HCR: My take, the good, the bad, and the confusing

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Sirveri Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-30-09 07:18 AM
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HR 3962 HCR: My take, the good, the bad, and the confusing
I am attempting to put forth a balanced viewpoint culled from various informational services. My Congressional rep is George Miller, and I will be commenting on the bill that he is pushing forward currently. I was going to send him a letter myself, however the more I read into and study this bill the more I come to understand the good things in it. I do not qualify for Medicaid, and will not for another 30+ years, as such I skimmed those areas and would appreciate more input on them. Also for full disclosure, I currently am on the VA health care system, and thus have no real horse in this race, but I do like math and policy discussions. Hence my interest in this subject. This is NOT an in depth comb thru of the ACTUAL bill.

10-Page Bill summary -

The good:
Insurance reforms. Prohibits insurance rating based on health status or pre-existing conditions, and limits age rating to 2:1. Prohibits annual or lifetime limits on medical spending.

Age rating is still in (bad), but it's capped. Pre-existing conditions are gone. They can no longer cut off your cancer treatments simply because they get expensive.

The bad:
Grandfathers current individual policies. Applies these reforms to the entire market (inside and outside the Exchange), although employers have a five-year grace period to come into compliance.

If your employer does not change policies you might get stuck and boned at your work place for the next five years.

The confusing:
Eligibility. People are eligible to enter the Exchange and purchase health insurance on their own as long as they are not enrolled in employer sponsored insurance, Medicare or Medicaid. The Exchange is also open to businesses, starting with small firms and growing over time. Firms with twenty-five or fewer employees are permitted to buy in the Exchange in 2013, firms with fifty or fewer employees in 2014, and firms with at least one hundred employees in 2015 with discretion to the Commissioner to open the Exchange to larger businesses in that year and the future.

One would assume that this means that people are still tied down to the work place for health care, and if that workplace gives horrendously expensive health care they're going to be mandated to buy it without any choice. But that's not the case.

Affordability credits. Provides financial assistance for premiums and cost sharing for individuals and families with incomes up to 400 percent of the federal poverty level (FPL). Affordability credits are offered on a sliding scale such that premiums range from 1.5 percent of income at the lowest tier to 12 percent at 400 percent FPL. Provides additional assistance for households with incomes up to 400 percent FPL by limiting cost-sharing to 3 percent of plan costs at the lowest tier rising to 30 percent of plan costs at 350-400 percent of FPL. Specific out-of-pocket maximums are added to protect individuals at each income tier.

What this means is that total financial obligation is capped at 12% (which in my opinion is still too high). However what is that cap, the FPL for a single individual is $10,830 in the lower 48. 400% of that would be $43,320, 12% of which would be: $5198.4 per year or 433 dollars a month. The lowest tier is under 133%-150% FPL ($14403/yr-$16245/yr). Those caps are 1.5-3% (<$216/yr-$487/yr). I recommend looking at the chart to determine your FPL level here:
A family of 4 has an FPL of $22050. 400% of that would be $88200/yr.

Another aspect of all of this is that total annual cost is cost based on position on the FPL chart, the lowest position has total annual out of pocket cost capped at 500(single)/1000(family) dollars, escalating to 5,000/10,000 at the 400% mark.

The good:
Repealing the antitrust exemption for insurers. The bill promotes competition among health insurers and medical malpractice insurers by removing the antitrust exemption so that it no longer shields these insurers from liability for fixing prices, dividing up territories, or monopolizing their market.

This bill will eliminate the anti trust exemption. This is huge and stands on its own two feet.

The good:
Employers. Employers must either provide health insurance to their employees or make a contribution to help fund affordable health insurance. Employers that choose to offer coverage contribute at least 72.5 percent of premium for workers, 65 percent for families. However, if the coverage is unaffordable for low-wage workers, that worker can choose subsidized coverage in the Exchange and the employer makes a contribution to the Exchange. Employers who do not offer qualified coverage contribute 8 percent of their payroll to help cover expenses of employees who seek coverage through the Exchange.

Employers must cover 72.5% for single workers and 65% for families. However if that is not enough and causes hardship to the employee they can then seek access to the exchange and purchase the government run insurance option. I suspect this links to the FPL as stated above, if the amount you are required to pay violates your FPL limit you will have access to the exchange and thus the public option (or whatever else you want to buy). There is however a problem with this...

The bad:
Small business protections. Small businesses with annual payrolls below $500,000 are exempt from requirements to offer or contribute to coverage, including the 8 percent payroll contribution for failure to provide health benefits to their workers. As a result of this exemption, 86 percent of Americas businesses are exempt from any requirement to provide coverage to their employees. The 8 percent requirement is phased in for small businesses with an annual payroll between $500,000 and $750,000. There is also a tax credit program to help low-wage small businesses offer coverage to their employees.

This basically means that 'small businesses' can tell their employees to stuff it when it comes to health care, and effectively shifts the burden from the employer onto the employee, who may not be able to afford it because they are living at a subsistence wage. Bear in mind, this primarily applies to businesses with less than 20 employees, and is partially offset by a tax credit given to these companies in the next article here:
Small business tax credits. Small business tax credits are available for businesses with 10 or fewer employees and $20,000 or less in average wages. The credits phase-out if the employer has 25 or more employees or if average wages are $40,000 or more. The credits are available on rolling basis for the first two years that an employer offers qualified coverage.

25 x 40k = 1000k, which is higher than the minimum level that MUST provide health coverage. So all businesses which are under the 500k annual payroll quota will get tax breaks for providing coverage to their employees. One would hope that this would encourage employers to offer health care to their employees. I have only read the synopsis however, so I do not know the exact rates of tax incentives given, and can not comment on their supposed effectiveness.

The complicated:
Follow-on biologics. Creates an FDA licensure pathway for "biosimilar" generic biological products, allowing these products to come to market and compete with brand name biologics. The biosimilar product must have no clinically meaningful differences in safety, purity or potency from the reference product, and may not be licensed until at least 12 years after the date that the brand-name product was licensed.

This whole section is confusing and has been talked about a couple of times here. However reading this paragraph doesn't appear to allow biological product manufacturers the right to just add ibuprofen to their product and call it something new. Instead it appears that it is designed to promote the formation of generics, however after 12 years. The current number for patent length that I've read was 20 years, so this would appear to be a step in the correct direction for promoting cheaper medication.

The bad:
Individuals. Individuals are required to obtain health insurance coverage or pay a fee equal to lower of 2.5 percent of their adjusted income above the filing threshold or the average premium on the Exchange. Individuals and families below the income tax filing are exempt. (NOTE: In 2009, the threshold for taxpayers under age 65 is $9,350 for singles and $18,700 for couples). Individuals may apply for a hardship waiver if coverage is unaffordable and selected exemptions from the mandate are provided in the statute. Those with coverage through the VA or who are eligible for government-sponsored healthcare because they are a member of a tribe are considered to have fulfilled the requirement to obtain coverage.

The thing that is pissing everyone off, the mandate. Lets talk about this for a second, if you are in the lowest tier FPL, you will pay less for health insurance than you would in penalties. One would also assume that you would be able to opt out with a waiver if desired. That said, the monthly cost for people on the lowest FPL tier is 20-40 dollars per month. At first this provision made me quite angry, stimulating my American anti-taxation sentiment. However the more I came to think about it, the more it made sense. If everyone is going to have insurance, everyone is going to have to pay something for it. There will be no free lunch. Some would argue that we must require the younger members of society to pay into the program to have proper cost reductions and protections from expensive medical boondoggles that they might incur.

The bottom line:
Is this the perfect bill. No, that bill does not exist, and probably will never exist. Is this nothing more than corporate welfare yet again. That's a good question, the real answer to that lays in how the cost caps are applied. Is the cap applied directly to the insurers, or does the government just swoop in to pick up the tab? I don't know the answer to that, and it's not entirely clear from the 10 page summary how that works. Is this 10 page summary nothing but garbage and misrepresents the bill? I suppose that's a possibility, however I doubt that it significantly obfuscates major portions of the bill. That said, there could be things in the bill that are give aways to various interest groups that have not been reported. Alan Grayson supports it, yee haw rah rah rah. I don't really care who supports this bill. Jesus and Moses and Muhammad and Buddha could all come down on a mystical ray of sunshine and claim support for the bill, that's not an excuse to blindly support it.

So what is my ultimate opinion. I hate the mandate, however I can accept it, and I can see that there are some compromises. The end result appears to be protection of the basic tax payer, which is the ultimate goal of the bill. If it does turn into a corporate welfare bill it is irrelevant, because OUR costs will be capped, and the remainder will be paid for by the government. Where they find that money might become an issue however. I think that this bill IS better than nothing, simply because it will cap the vast majority of peoples out of pocket expenses. That said, it provides a frame work to improve upon. The biggest issue I have with it is the time frame, I would have preferred for the bill to go active starting late 2010 or early 2011.

I encourage all constructive debate and comments on this issue.
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