Senator Baucus from the Senate Finance Committee has introduced a new proposal for health care and we want to discuss some initial issues here. The document is entitled Framework for Comprehensive Health Reform.
Our first comments will be regarding the fee structure and the minimal coverage.
1. Fees
The plan says the following regarding fees:
"Beginning January 1, 2013, health insurance plans in the individual market would be required to offer coverage on a guaranteed issue basis and would be prohibited from excluding coverage for pre-existing health conditions. Limited benefit plans and lifetime limits would be prohibited, and health insurance companies would be prohibited from rescinding health coverage.
Health insurance premiums would be allowed to vary based only on tobacco use, age, and family composition according to the following ratios:
Tobacco use – 1.5:1
Age – 5:1
Family composition:
Our first comments will be regarding the fee structure and the minimal coverage.
1. Fees
The plan says the following regarding fees:
"Beginning January 1, 2013, health insurance plans in the individual market would be required to offer coverage on a guaranteed issue basis and would be prohibited from excluding coverage for pre-existing health conditions. Limited benefit plans and lifetime limits would be prohibited, and health insurance companies would be prohibited from rescinding health coverage.
Health insurance premiums would be allowed to vary based only on tobacco use, age, and family composition according to the following ratios:
Tobacco use – 1.5:1
Age – 5:1
Family composition:
- Single – 1:1
- Adult with child – 1.8:1
- Two adults – 2:1
- Family – 3:1
Premiums could also vary to reflect geographic differences. Taking all these factors together, premiums could not vary by more than 7.5:1."
What this means is that the young get what would be a 7.5:1 reduction from the older folks, those below Medicare. That is generally not what is the case in a mandatory plan. One would assume that if you purchased insurance at say 18 years of age that you would pay into the plan over your lifetime at some relatively constant rate. Otherwise you will be overburdening the middle aged people with children. One mus remember that the family with children is paying for the health, education, and other expense for these children who will become the future taxpayers who will in turn pay for the costs of the single younger people when they get older.
This plan seems to fail in understanding the holistic nature of the society. Baucus seems to want to get the younger people who are not in the plan now into the plan by offering a low cost entry. This will add a dramatic burden on the middle class family. One can rationalize the ratio for family coverage but the steep dependence of rates on age will only burden the already overburdened middle class families.
Also the tax on smokers is good but there should be a comparable tax on overweight and obese individuals. There should be a 1.8-2.2 on overweight and 3.5-5.0 on obese individuals. They are the ones with chronic costs which go on for long periods. Smokers just die after 3 to 6 months with lung cancer.
2. Structure of the Plan
Baucus then goes on to say the following about the structure of the Plan:
"Benefit Options. Four benefit categories would be created: Bronze, Silver, Gold and Platinum, with the following actuarial values:
Bronze (minimum creditable coverage) = 65%
Silver = 73%
Gold = 81%
Platinum = 90%
A separate “young invincible” policy would be available in addition to these benefit options. This policy would be targeted to young adults who desire a less expensive catastrophic coverage plan but with a requirement that preventive services be covered below the catastrophic amount. Cost-sharing for preventive benefits would be allowed.
No health insurance policies could be issued (other than grandfathered plans) that do not meet the actuarial standards set for these plans. All health insurance plans in the non-group and small group market would be required, at a minimum, to offer coverage in the Silver and Gold categories.
All plans sold in the non-group and small group market would be required to cover the following benefits: preventive and primary care, physician services, outpatient services, emergency services, hospitalization, day surgery and related anesthesia, diagnostic imaging / screenings (including x-rays), maternity and newborn care, pediatric services (including dental and vision), medical / surgical care, prescription drugs, radiation and chemotherapy, and mental health and substance abuse services that meet minimum standards set by federal and state laws.
Plans would be prohibited from applying annual or lifetime limits on benefits. Cost-sharing would be eliminated for preventive services except where value-based insurance design is used, and out-of-pocket limits for all benefit categories would be tied to current HSA standards."
One assumes that what he means in the sloganed plan descriptions, his metallic metaphors to be precise, is that the plan as specified would pay 65% and you would have a 35% out of pocket requirement. He is stipulating that at a minimum any plan must be a 65% coverage of the stipulated benefits and that the individual would have to cover the remaining from their own funds. Frankly that is not unreasonable. He then stipulates that other plans could exist. The problem is why does his have to say anything more than the minimum. He should stay with the minimum plan and let the industry invent the others. The naming of the Plans, as he does, appears as if some staffer is trying to pretend that they know something about marketing...if they did, why don't they go into marketing and get out of Washington. Keep the minimum and get rid of the rest. Cute earns no one any points.
3. Minimum Benefits
Now to the minimum benefits,
What this means is that the young get what would be a 7.5:1 reduction from the older folks, those below Medicare. That is generally not what is the case in a mandatory plan. One would assume that if you purchased insurance at say 18 years of age that you would pay into the plan over your lifetime at some relatively constant rate. Otherwise you will be overburdening the middle aged people with children. One mus remember that the family with children is paying for the health, education, and other expense for these children who will become the future taxpayers who will in turn pay for the costs of the single younger people when they get older.
This plan seems to fail in understanding the holistic nature of the society. Baucus seems to want to get the younger people who are not in the plan now into the plan by offering a low cost entry. This will add a dramatic burden on the middle class family. One can rationalize the ratio for family coverage but the steep dependence of rates on age will only burden the already overburdened middle class families.
Also the tax on smokers is good but there should be a comparable tax on overweight and obese individuals. There should be a 1.8-2.2 on overweight and 3.5-5.0 on obese individuals. They are the ones with chronic costs which go on for long periods. Smokers just die after 3 to 6 months with lung cancer.
2. Structure of the Plan
Baucus then goes on to say the following about the structure of the Plan:
"Benefit Options. Four benefit categories would be created: Bronze, Silver, Gold and Platinum, with the following actuarial values:
Bronze (minimum creditable coverage) = 65%
Silver = 73%
Gold = 81%
Platinum = 90%
A separate “young invincible” policy would be available in addition to these benefit options. This policy would be targeted to young adults who desire a less expensive catastrophic coverage plan but with a requirement that preventive services be covered below the catastrophic amount. Cost-sharing for preventive benefits would be allowed.
No health insurance policies could be issued (other than grandfathered plans) that do not meet the actuarial standards set for these plans. All health insurance plans in the non-group and small group market would be required, at a minimum, to offer coverage in the Silver and Gold categories.
All plans sold in the non-group and small group market would be required to cover the following benefits: preventive and primary care, physician services, outpatient services, emergency services, hospitalization, day surgery and related anesthesia, diagnostic imaging / screenings (including x-rays), maternity and newborn care, pediatric services (including dental and vision), medical / surgical care, prescription drugs, radiation and chemotherapy, and mental health and substance abuse services that meet minimum standards set by federal and state laws.
Plans would be prohibited from applying annual or lifetime limits on benefits. Cost-sharing would be eliminated for preventive services except where value-based insurance design is used, and out-of-pocket limits for all benefit categories would be tied to current HSA standards."
One assumes that what he means in the sloganed plan descriptions, his metallic metaphors to be precise, is that the plan as specified would pay 65% and you would have a 35% out of pocket requirement. He is stipulating that at a minimum any plan must be a 65% coverage of the stipulated benefits and that the individual would have to cover the remaining from their own funds. Frankly that is not unreasonable. He then stipulates that other plans could exist. The problem is why does his have to say anything more than the minimum. He should stay with the minimum plan and let the industry invent the others. The naming of the Plans, as he does, appears as if some staffer is trying to pretend that they know something about marketing...if they did, why don't they go into marketing and get out of Washington. Keep the minimum and get rid of the rest. Cute earns no one any points.
3. Minimum Benefits
Now to the minimum benefits,
- Preventive and primary care: This is reasonable and frankly it applies to all plan participants so why talk of pediatric care as a separate line item.
- Physician services: What does this mean? The Primary Care should cover the physician services and what is different here?
- Outpatient service: Again, one assumes that outpatient is minor surgery and procedures such as a colonoscopy. If so why do we need day surgery and related anesthesia. The procedure includes the medication. One would not want a colonoscopy without versed and fentanyl.
- Emergency services: This is clearly a reasonable service for emergencies and the like. There should however be a restriction or added fee if they are used for non-emergency purposes, colds and the like. One mus drive abuse out of the ER.
- Hospitalization: One assumes that this is the non-physician hospital charges and that the physician/surgeon charges are separate and under (1) above.
- Day surgery and related anesthesia: One asks how is this different that outpatient.
- Diagnostic imaging / screenings (including x-rays): One assumes that there is a reason for singling out this diagnostic procedure, especially for cost reduction.Otherwise this is a physician service as is (1).
- Maternity and newborn care: As stated above this is also a physician service for the mother and for the child.
- Pediatric services (including dental and vision): Regarding the physician services we feel it is already covered. Yet now we open the dental issue and this is a first. It is also another explosive cost that we never saw before.
- Medical / surgical care: This is also confusing as regards to what? Is this for a surgeon, or what type of medical care.
- Prescription drugs: This is reasonable within limits.
- Radiation and chemotherapy: This should be part of the catastrophic coverage portion.
- Mental health and substance abuse services: This must be well regulated because it has been shown to be an area open to significant abuse.
Oh yes, and the "young invincible" plan must be for Hill Staffers!
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