The Health Insurance Exchange is a major part of the HR 3200 Bill. Simply stated, the Exchange is a co-op wherein a group is established and then negotiates some "good" deals for its members. The AMA and many other professional groups have exchange type functions and they work reasonably well.
The problem with health care today is the residual of company provided plans and many being gold plated and not taxed. This is particularly true of Union members and Government employees whose benefits have exploded over the years and the benefits are compounded by the lack of taxation. The benefits then extend to their early retirement resulting is ever so much more explosive costs. Just look at GM and the State of California!
Along comes HR 3200 and it says that the Government and ONLY the Government can do exchanges. It takes it one step further and creates a public plan that will drive out all other players, level playing field notwithstanding. We will examine this in detail.
Just to put our opinions on the table. We believe in the following:
1. Universal coverage, no leakage, no scamming the system
2. Individual and not corporate or employer coverage
3. Taxation of coverage on an before-tax basis
4. Catastrophic coverage mandate for all
5. Out of pocket expenses expected unless you want to pay for the added benefit, and
6. Exchanges are an ideal platform to accomplish this. By exchanges we mean private and group based exchanges, and not a public Federal Government managed exchange.
We detailed this in our most recent book on Health Care Policy.
Now Exchanges for the purpose of purchasing health insurance may be a structure whose time is coming. In the recent NEJM article by Frank and Zeckhauser they state:
"Exchanges focus on the purchase of insurance for individuals, households, and groups of small employers — all of which will be more likely to obtain coverage if it is made more affordable or more available, and certainly if it is made mandatory. Exchanges mimic some functions that are performed by large employers as purchasers, including assembling, organizing, and disseminating information about competing health plans; enacting policies that promote risk pooling; specifying benefit packages; negotiating premiums; limiting the number and types of plans that may be marketed; and structuring the enrollment and plan selection process. They thus seek to extend to all consumers the benefits of having a large employer purchase one's insurance."
They continue as follows:
"Should exchanges play a similarly active role in structuring and managing the health insurance market, so as to guide people to appropriate plans, enhance competition, and thereby improve quality and reduce price? A few decades ago, the conventional wisdom in economics was that individuals could make effective choices in markets, even when the options were numerous and complex. Extensive research in behavioral economics calls this belief into question. In many circumstances, particularly when uncertainties and high stakes are involved, consumers have trouble making good decisions. The purchase of health insurance presents just such challenges. Hence the potential benefits of exchanges.
"Consumers facing complex, uncertain, and consequential choices may also rely on simple rules of thumb. An analysis of Medicare recipients choosing among PDPs suggests that they used such rules to their detriment5 — for example, by overweighting premium outlays and slighting the total expected out-of-pocket costs. As a result, many chose a plan that was expected to be more costly and offered no advantages in terms of features or quality. "
These experiences suggest that exchanges should be structured to foster effective consumer choices, and thereby efficient outcomes, by providing consumer-friendly information about the coverage, cost, and quality of different plans. Ironically, one way to enhance the prospect of informed choices is to limit the number of options. Plans then compete on price, quality, or both in order to be included. Requiring plans to offer identical features would promote competition and facilitate decisions but limit choice. The trade-off between these objectives should be carefully weighed by officials legislating, designing, and operating exchanges."
HR 3200 is filled with elements of creating exchanges. Unlike many of the other exchange ideas floating about the HR 3200 is a Government controlled Exchange including a public plan. We feel that it is worth the while to look at this legislation is some detail. By deconstructing the law as written one gets to see what is in the mind of those who wrote it. They clearly despise private enterprise and demand ultimate Government control. We will see this play out as we go through the key sections on the Exchange. Let us start the process.
In HR 3200 the details about an exchange are in Title II and the three following subtitles. These are shown below.
TITLE II—HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS
Subtitle A—Health Insurance Exchange
Subtitle B—Public Health Insurance Option
Subtitle C—Individual Affordability Credits
In subtitle A we have the details of the exchange. The full set of elements are shown below.
Subtitle A—Health Insurance Exchange
Sec. 201. Establishment of Health Insurance Exchange; outline of duties; definitions.
Sec. 202. Exchange-eligible individuals and employers.
Sec. 203. Benefits package levels.
Sec. 204. Contracts for the offering of Exchange-participating health benefits plans.
Sec. 205. Outreach and enrollment of Exchange-eligible individuals and employers in Exchange-participating health benefits plan.
Sec. 206. Other functions.
Sec. 207. Health Insurance Exchange Trust Fund.
Sec. 208. Optional operation of State-based health insurance exchanges.
Subtitle B—Public Health Insurance Option
Sec. 221. Establishment and administration of a public health insurance option
Sec. 222. Premiums and financing.
Sec. 223. Payment rates for items and services.
Sec. 224. Modernized payment initiatives and delivery system reform.
Sec. 225. Provider participation.
Sec. 226. Application of fraud and abuse provisions.
Subtitle C—Individual Affordability Credits
Sec. 241. Availability through Health Insurance Exchange.
Sec. 242. Affordable credit eligible individual.
Sec. 243. Affordable premium credit.
Sec. 244. Affordability cost-sharing credit.
Sec. 245. Income determinations.
Sec. 246. No Federal payment for undocumented aliens.
Now let us detail several of the key parts of this Title. First, the establishment of the Exchange as follows:
(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.
Thus this statement does the following:
1. Establishes a Health Choice Administration, a new Government Agency
2. Creates a Commissioner
3. Facilitates an exchange for affordable and quality health insurance
4. Creates a public option
The Commissioner now has the authority as stated:
(b) OUTLINE OF DUTIES OF COMMISSIONER.—In accordance with this subtitle and in coordination with appropriate Federal and State officials as provided under section 143(b), the Commissioner shall—
(1) under section 204 establish standards for, accept bids from, and negotiate and enter into contracts with, QHBP offering entities for the offering of health benefits …
(2) ….. facilitate outreach and enrollment in such plans of Exchange-eligible individuals and employers ….
(3) conduct such activities related to the Health Insurance Exchange as required, including establishment of a risk …..
Now the individuals are granted access as follows:
(a) ACCESS TO COVERAGE.—In accordance with this section, all individuals are eligible to obtain coverage through enrollment in an Exchange…
(b) DEFINITIONS.—In this division:
(1) EXCHANGE-ELIGIBLE INDIVIDUAL.—The term ''Exchange-eligible individual'' means an individual who is eligible …
(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…
(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, …
Thus you have to must be in the exchange unless you are poor, old, or grandfathered. Thus as written it will eventually drive all out of the grandfathered plans into the Exchange Plans. The benefits are as described below:
SEC. 203. BENEFITS PACKAGE LEVELS.
(a) IN GENERAL.—The Commissioner shall specify the benefits to be made available under Exchange-participating health benefits plans during each plan year, consistent with subtitle C of title I and this section.
(b) LIMITATION ON HEALTH BENEFITS PLANS OFFERED BY OFFERING ENTITIES.—The Commissioner may not enter into a contract with a QHBP offering entity under section 204(c) for the offering of an Exchange-participating health benefits plan in a service area unless the following requirements are met:
(1) REQUIRED OFFERING OF BASIC PLAN.—The entity offers only one basic plan for such service area.
(2) OPTIONAL OFFERING OF ENHANCED PLAN.—If and only if the entity offers a basic plan 0 for such service area, the entity may offer one enhanced plan for such area.
(3) OPTIONAL OFFERING OF PREMIUM PLAN.— If and only if the entity offers an enhanced plan for such service area, the entity may offer one premium plan for such area.
(4) OPTIONAL OFFERING OF PREMIUM-PLUS PLANS.—If and only if the entity offers a premium plan for such service area, the entity may offer one or more premium-plus plans for such area. All such plans may be offered under a single contract with the Commissioner.
Now the law starts to specify the minimum and maximum plan offerings in statutory law. This is very dangerous because as all plan administrators well know as medicine changes we want the plans to adapt. But by making this statutory law we make it near impossible to ever change it. These four divisions further make such changes near impossible. Now they detail the options:
(c) SPECIFICATION OF BENEFIT LEVELS FOR PLANS.—
(1) IN GENERAL.—The Commissioner shall establish the following standards consistent with this subsection and title I:
(A) BASIC, ENHANCED, AND PREMIUM PLANS.—Standards for levels of Exchange participating health benefits plans: basic, enhanced, and premium (in this division referred to as a ''basic plan'', ''enhanced plan'', and ''premium plan'', respectively).
(B) PREMIUM-PLUS PLAN BENEFITS.— Standards for additional benefits that may be offered, consistent with this subsection and sub title C of title I, under a premium plan (such a plan with additional benefits referred to in this division as a ''premium-plus plan'').
(2) BASIC PLAN.—
(A) IN GENERAL.—A basic plan shall offer the essential benefits package required under title I for a qualified health benefits plan.
(B) TIERED COST-SHARING FOR AFFORD ABLE CREDIT ELIGIBLE INDIVIDUALS…
(3) ENHANCED PLAN.—A enhanced plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided...
(4) PREMIUM PLAN.—A premium plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided ...
(5) PREMIUM-PLUS PLAN.—A premium-plus plan is a premium plan that also provides additional benefits, such as adult oral health and vision care, approved by the Commissioner. The portion of the premium that is attributable to such additional benefits shall be separately specified.
Now what are these four levels. Let us start at the end, the Premium Plus. This is the Union Plan, the payback to the Unions for ensuring the election of the current President. They are now immortalized into law! You cannot make this up.
- Now back to Basic. This is the minimum coverage with the maximum payment.
- Enhanced is the minimum coverage with a minimum payment.
- Premium is the maximum coverage with maximum payment.
- Then we are back to the gold plated Union Plans. Affordable only by companies who will NOT be competing in a world economy, like….well like the Government…and most likely no other company which will survive.
Now how ill this be paid for. The answer is as follows:
(4) DIRECT PAYMENT OF PREMIUMS TO PLANS.—Under the enrollment process, individuals enrolled in an Exchange-partcipating health benefits plan shall pay such plans directly, and not through the Commissioner or the Health Insurance Exchange.
Now we are finally at the Public Plan:
SEC. 221. ESTABLISHMENT AND ADMINISTRATION OF A PUBLIC HEALTH INSURANCE OPTION AS AN EXCHANGE-QUALIFIED HEALTH BENEFITS PLAN.
(a) ESTABLISHMENT.—For years beginning with Y1, the Secretary of Health and Human Services (in this sub title referred to as the ''Secretary'') shall provide for the offering of an Exchange-participating health benefits plan (in this division referred to as the ''public health insurance option'') that ensures choice, competition, and stability of affordable, high quality coverage throughout the United States in accordance with this subtitle. In designing the option, the Secretary's primary responsibility is to create a low-cost plan without compromising quality or access to care.
(b) OFFERING AS AN EXCHANGE-PARTICIPATING HEALTH BENEFITS PLAN.—
(1) EXCLUSIVE TO THE EXCHANGE.—The public health insurance option shall only be made available through the Health Insurance Exchange.
(2) ENSURING A LEVEL PLAYING FIELD.—Consistent with this subtitle, the public health insurance option shall comply with requirements that are applicable under this title to an Exchange-participating health benefits plan, including requirements related to benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing.
(3) PROVISION OF BENEFIT LEVELS.—The public health insurance option—
(A) shall offer basic, enhanced, and premium plans; and
(B) may offer premium-plus plans...
(g) ACCESS TO FEDERAL COURTS.—The provisions of Medicare (and related provisions of title II of the Social Security Act) relating to access of Medicare beneficiaries to Federal courts for the enforcement of rights under Medicare, including with respect to amounts in controversy, shall apply to the public health insurance option and individuals enrolled under such option under this title in the same manner as such provisions apply to Medicare and Medicare beneficiaries.
Thus the Public Plan will have elements like private plans, shall be run by the Government, people will be allowed to sue, and the Secretary and reporting Commissioner will decide what to offer and at what price.
In addition there is nothing in the Bill, HR 3200, to make this self supporting. Namely the Government may easily subsidize this Plan. The "level playing" field statement is ambiguous at the least and open to continuous litigation at the worst.
Now what does the Public Plan charge? The following details that:
SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES.
(a) RATES ESTABLISHED BY SECRETARY.—
(1) IN GENERAL.—The Secretary shall establish payment rates for the public health insurance option for services and health care providers consistent with this section and may change such payment rates in accordance with section 224.
(2) INITIAL PAYMENT RULES.—
(A) IN GENERAL.—Except as provided in subparagraph (B) and subsection (b)(1), during Y1, Y2, and Y3, the Secretary shall base the payment rates under this section for services and providers described in paragraph (1) on the payment rates for similar services and providers under parts A and B of Medicare.
(B) EXCEPTIONS.—
(i) PRACTITIONERS' SERVICES.—Payment rates for practitioners' services otherwise established under the fee schedule under section 1848 of the Social Security Act shall be applied without regard to the provisions under subsection (f) of such section and the update under subsection (d)(4) under such section for a year as applied under this paragraph shall be not less than 1 percent.
(ii) ADJUSTMENTS.—The Secretary may determine the extent to which Medicare adjustments applicable to base payment rates under parts A and B of Medicare shall apply under this subtitle.
(3) FOR NEW SERVICES.—The Secretary shall modify payment rates described in paragraph (2) in order to accommodate payments for services, such as well-child visits, that are not otherwise covered under Medicare.
(4) PRESCRIPTION DRUGS.—Payment rates under this section for prescription drugs that are not paid for under part A or part B of Medicare shall be at rates negotiated by the Secretary.
(b) INCENTIVES FOR PARTICIPATING PROVIDERS.—
(1) INITIAL INCENTIVE PERIOD.—
(A) IN GENERAL.—The Secretary shall provide, in the case of services described in sub paragraph (B) furnished during Y1, Y2, and Y3, for payment rates that are 5 percent greater than the rates established under subsection (a).
(B) SERVICES DESCRIBED.—The services described in this subparagraph are items and professional services, under the public health insurance option by a physician or other health care practitioner who participates in both Medicare and the public health insurance option.
(C) SPECIAL RULES.—A pediatrician and any other health care practitioner who is a type of practitioner that does not typically participate in Medicare (as determined by the Secretary) shall also be eligible for the increased payment rates under subparagraph (A).
(2) SUBSEQUENT PERIODS.—Beginning with Y4 and for subsequent years, the Secretary shall continue to use an administrative process to set such rates in order to promote payment accuracy, to en sure adequate beneficiary access to providers, and to promote affordablility and the efficient delivery of medical care consistent with section 221(a). Such rates shall not be set at levels expected to increase overall medical costs under the option beyond what would be expected if the process under subsection (a)(2) and paragraph (1) of this subsection were continued.
(3) ESTABLISHMENT OF A PROVIDER NET WORK.—Health care providers participating under Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary.
(c) ADMINISTRATIVE PROCESS FOR SETTING RATES.—Chapter 5 of title 5, United States Code shall apply to the process for the initial establishment of payment rates under this section but not to the specific methodology for establishing such rates or the calculation of such rates.
(d) CONSTRUCTION.—Nothing in this subtitle shall be construed as limiting the Secretary's authority to correct for payments that are excessive or deficient, taking into account the provisions of section 221(a) and the amounts paid for similar health care providers and services under other Exchange-participating health benefits plans.
(e) CONSTRUCTION.—Nothing in this subtitle shall be construed as affecting the authority of the Secretary to establish payment rates, including payments to provide for the more efficient delivery of services, such as the initiatives provided for under section 224.
(f) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review of a payment rate or methodology established under this section or under section 224.
Finally the Public Plan will introduce many ways to practice Medicine such as bundling and the Medical Home construct. The opening part of the enabling legislation in HR 3200 is the most telling here. This is accomplished in the following parts:
SEC. 224. MODERNIZED PAYMENT INITIATIVES AND DELIVERY SYSTEM REFORM.
(a) IN GENERAL.—For plan years beginning with Y1, the Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option. The payment mechanisms and policies under this section may include patient-centered medical home and other care management payments, accountable care organizations, value based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.
The above goes to the heart of the Government taking control over health care. They do:
1. Medical Home: This may have value for chronic patients.
2. Accountable Care Organizations
3. Value Based Purchasing
4. Bundling: This places hospitals in charge as we have argued before.
5. Differential Payments
6. Capitation: This was the procedure which HMOs used to ration and deny care!
These are the worst of the worst of the HMO era! They will in my opinion and in the opinion of many other practicing physicians destroy health care. It continues:
(b) REQUIREMENTS FOR INNOVATIVE PAYMENTS.— The Secretary shall design and implement the payment mechanisms and policies under this section in a manner that—
(1) seeks to—
(A) improve health outcomes;
(B) reduce health disparities (including racial, ethnic, and other disparities);
(C) provide efficient and affordable care;
(D) address geographic variation in the provision of health services; or
(E) prevent or manage chronic illness; and
(2) promotes care that is integrated, patient centered, quality, and efficient.
(c) ENCOURAGING THE USE OF HIGH VALUE SERVICES.—To the extent allowed by the benefit standards applied to all Exchange-participating health benefits plans, the public health insurance option may modify cost sharing and payment rates to encourage the use of services that promote health and value.
(d) NON-UNIFORMITY PERMITTED.—Nothing in this subtitle shall prevent the Secretary from varying payments based on different payment structure models (such as ac countable care organizations and medical homes) under the public health insurance option for different geographic areas.
Well that is it. Let us review the HR 3200 Exchange proposals:
1. Controlled by a Commissioner
2. Forces everyone to ultimately participate
3. Specifies what services are provided at what price.
4. Establishes a public plan with no parity with private plans, namely the Government can underwrite
5. Results in the elimination of Private Plans by word of law
6. Restructures any and all medical compensation into Government specified, controlled, prices, and allocated processes and procedures.
Exchange are worthwhile. They work well in free and open markets. Government controlled exchanges working under the letter of the law are a disaster. The overhead will cause irreparable harm to the citizens and destroy the US Medical community as we know it. Please just read the words. They were in my opinion written by an evil mind!
Posts
