Saturday, December 19, 2009

Latest CBO On Senate Plan

The CBO Report on the latest Senate Plan has been released. We make some observations here.

"Provisions Regarding Insurance Coverage

The legislation would take several steps designed to increase the number of legal U.S. residents who have health insurance. Starting in 2014, the legislation would establish a requirement for such residents to obtain insurance and would in many cases impose a financial penalty on people who did not do so. The bill also would establish new insurance exchanges and would subsidize the purchase of health insurance through those exchanges for individuals and families with income between 133 percent and 400 percent of the federal poverty level (FPL). Policies purchased through the exchanges (or directly from insurers) would have to meet several requirements: In particular, insurers would have to accept all applicants, could not limit coverage for preexisting medical conditions, and could not vary premiums to reflect differences in enrollees’ health. The options available in the insurance exchanges would include private health insurance plans andcould include two national or multi-state plans operated under contract with OPM."

It continues:

"Starting in 2014, most nonelderly people with income below 133 percent of the FPL would be made eligible for Medicaid. The federal government would pay all of the costs of covering newly eligible enrollees through 2016; in subsequent years, the federal share of spending would vary somewhat from year to year but would average about 90 percent by 2019. (Under current rules, the federal government usually pays about 57 percent, on average, of the costs of Medicaid benefits.) In addition, states would be required to maintain current coverage levels for all Medicaid beneficiaries until the exchanges were fully operational; coverage levels for children under Medicaid and CHIP would have to be maintained through 2019. Beginning in 2014, states would receive higher federal reimbursement for CHIP beneficiaries, increasing from an average of 70 percent to 93 percent. The legislation would also provide states with additional CHIP funding in 2014 and 2015."

This is a massive expansion of Medicaid:

Now as for Medicare:

"Provisions Affecting Medicare, Medicaid, and Other Programs

Other components of the legislation would alter spending under Medicare, Medicaid, and other federal programs. The legislation would make numerous changes to payment rates and payment rules in those programs ...those provisions would reduce net direct spending by $483 billion over the 2010–2019 period.

Permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector...

Setting payment rates in the Medicare Advantage program on the basis of the average of the bids submitted by Medicare Advantage plans in each market...

Reducing Medicaid and Medicare payments to hospitals that serve a large number of low-income patients...

The legislation also would establish an Independent Payment Advisory Board, which would be required, under certain circumstances, to recommend changes to the Medicare program to limit the rate of growth in that program’s spending...

Reductions in subsidies for non-Medicare benefits offered by Medicare
Advantage plans

Changes to payment rates or methodologies for services furnished in the fee-for service sector by providers other than hospitals, physicians, hospices, and suppliers of durable medical equipment that is offered through competitive bidding..."