Wednesday, August 12, 2009

A helpful reader on the insurance options in H.R. 3200 

I often find these Congressional Research Service reports helpful in my work. Here's the one that explains the insurance options of the health reform bill. Executive summary below. I need to make a presentation and will be back online afterwards, and may add more comments to this:

This report summarizes key provisions affecting private health insurance in H.R. 3200, America�s Affordable Health Choices Act of 2009, as ordered reported by House Committees on Education and Labor and on Ways and Means. Specifically, this report focuses on Division A (or I) of H.R. 3200 from those committees.

Division A of H.R. 3200 focuses on reducing the number of uninsured, restructuring the private health insurance market, setting minimum standards for health benefits, and providing financial assistance to certain individuals and, in some cases, small employers. In general, H.R. 3200 would require individuals to maintain health insurance and employers to either provide insurance or pay into a fund, with penalties/taxes for non-compliance. Several insurance market reforms would be made, such as modified community rating and guaranteed issue and renewal. Both the individual and employer mandates would be linked to acceptable health insurance coverage, which would meet required minimum standards and incorporate the market reforms included in the bill. Acceptable coverage would include (1) coverage under a qualified health benefits plan (QHBP), which could be offered either through the newly created Health Insurance Exchange (the Exchange) or outside the Exchange through new employer plans; (2) grandfathered employment based plans; (3) grandfathered nongroup plans; and (4) other coverage, such as Medicare and Medicaid. The Exchange would offer private plans alongside a public option. Based on income, certain individuals could qualify for subsidies toward their premium costs and cost-sharing (deductibles and copayments); these subsidies would be available only through the Exchange. In the individual market (the nongroup market), a plan could be grandfathered indefinitely, but only if no changes were made to the terms and conditions of that plan, including benefits and cost-sharing, and premiums were only increased as allowed by statute. Most of these provisions would be effective beginning in 2013.

The Exchange would not be an insurer; it would provide eligible individuals and small businesses with access to insurers� plans in a comparable way. The Exchange would consist of a selection of private plans as well as a public option. Individuals wanting to purchase the public option or a private health insurance not through an employer or a grandfathered nongroup plan could only obtain such coverage through the Exchange. They would only be eligible to enroll in an Exchange plan if they were not enrolled in other acceptable coverage (e.g., from an employer, Medicare, and generally Medicaid). The public option would be established by the Secretary of Health and Human Services (HHS), would offer three different cost-sharing options, would vary premiums geographically, and would have payments to health care providers set by the Secretary based on Medicare payment rates, with adjustments.

Only within the Exchange, credits would be available to limit the amount of money individuals would pay for premiums. For example, a family of three at 133% of the federal poverty line ($24,352 in 2009 annual income) would be required to only pay annual premiums of $365 toward a Basic plan in the Exchange. A family of three at 400% of poverty ($73,240), where the premium subsidies end, would be required to pay no more than $8,056 in annual premiums for a Basic Exchange plan. Individuals eligible for premium credits would also be eligible for cost-sharing credits. (Although Medicaid is beyond the scope of this report, H.R. 3200 would extend Medicaid coverage for most individuals under 133?% of poverty; individuals would generally be ineligible for Exchange coverage if they were eligible for Medicaid.)

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