As part of a continuing series on unpacking the specific components of H.R. 3200, I will focus today’s column on the creation of the Health Insurance Exchange and the Public Health Insurance Option.
Subtitle A (pages 72 – 115) establishes a Health Insurance Exchange, outlining its functions and setting eligibility and minimum benefit requirements. Individuals and employers will use this newly created exchange to select from a variety of health insurance plans approved by the Health Choices Commissioner, including a public health insurance option.
As stipulated in Section 201 (72-73), the Health Insurance Exchange is established within the newly created Health Choice Administration, and under the direction of the Health Choices Commissioner. The Health Choices Commissioner establishes the process to obtain bids, negotiate and enter into contracts with qualified plans, and enforce the minimum levels of benefits.
Section 202 (73-84) defines who is eligible for participation in the Health Insurance Exchange. In the first year, the Exchange is available for individuals not enrolled in other acceptable coverage, as well as employers with 10 or fewer employees. The Exchange is expanded in the years ahead, with employers with 20 or fewer employees allowed into the Exchange in year two, with the goal of eventually allowing all employers access to the Exchange, as determined by the Health Choices Commissioner.
Section 203 (84-87) discusses the minimum benefits package levels for insurance plans within the Exchange. Again, the Health Choices Commissioner is given discretion in setting these standards, as this section states: “The Commissioner shall specify the benefits to be made available under Exchange participating health benefits plans during each plan year.” Each participating plan will be required to offer at least a “basic” plan in each service area in which they operate, with the option of also offering enhanced, premium, and premium-plus plans as well. The cost-sharing cannot exceed 10% for each benefit category.
Section 204 (88-95) outlines the responsibilities for the Health Choices Commissioner’s contacting authority: solicitation of bids; negotiation with plans; and the entering into contracts with approved plans. These plans are required to be licensed in the state in which they do business, follow data reporting requirements set by the Commissioner, provide for culturally and linguistically appropriate services and communications, and more. Any plan that fails to meet the required standards can be terminated by the Commissioner.
Section 205 (95-106) requires the Commissioner to conduct outreach and enrollment activities to help enroll individuals and businesses into the Exchange. Those eligible to participant in the Exchange must be provided opportunities to enroll via the mail, by telephone, electronically and in person. To help disseminate information and assistance, the Commissioner must also establish community locations, a toll-free hotline, a website, culturally and linguistically appropriate materials, and an auto-enrollment process for individuals who are Exchange-eligible, but have not selected a plan.
Sections 206-208 (106-115) include additional functions of the Commissioner, and would create a Health Insurance Trust Fund to provide the necessary funding for the Health Choices Administration. While the amount of funding required is left open-ended (the level of funding necessary will be determined by the Commissioner), the source of these revenues includes tax increases of individuals that do not comply with the individual mandate, tax increases on employers failing to provide adequate health coverage to their employees, and funds drawn from general appropriations.
Subtitle B (116-128) establishes a “public health insurance option” and describes how this government insurance plan will be financed, how premiums and provider payment rates will be set, and more.
Section 221 (116-118) requires the Secretary of Health and Human Services to develop a “public health insurance option” to operate within the national Health Insurance Exchange. This public health insurance option must be offered by 2013, and must comply with requirements (e.g., “benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing”) that apply to all Exchange-participating health benefits plan. The Secretary “shall collect such data as may be required to establish premiums and payment rates for the public health insurance option and for other purposes under this subtitle, including to improve quality and to reduce racial, ethnic, and other disparities in health and health care.” The same access to federal courts provided to Medicare beneficiaries would apply to individuals enrolled under the public health insurance option.
Section 222 (118-121) requires the Secretary to establish geographically-adjusted premium rates to offset the costs of the benefits and the administrative costs of the plan. Start-up costs for the public health insurance option would be covered by an appropriation of $2 billion from the Treasury Department. The Secretary can request additional funding to provide for initial claims reserves before the public option begins collecting premiums.
Section 223 (121-125) requires the Secretary to establish geographically-adjusted provider payment rates for the public health insurance option. Doctors and hospitals will be reimbursed for services offered to those enrolled in the public option based on “payment rates for similar services and providers under parts A and B of Medicare.” For the first three years, the Medicare-based reimbursement rates base the public option will include a 5% add-on for practitioners who also participate in the Medicare program. While not noted in the legislation, the Congressional Budget Office has estimated that Medicare reimbursement rate are on average 20-30 percent below private health insurance payment levels. After first three years of Medicare-rates-plus-5%, the Secretary is granted greater flexibility in setting the provider payment rates.
Sections 224-226 (126-128) covers additional powers granted to the Secretary of Health and Human Services, as well as efforts to reduce fraud and abuse that have been used in Medicare. The Secretary is required to establish conditions of participation for health care providers, and is also encouraged to utilize innovative payment mechanisms to provide care that is more equitable, more efficient, and higher quality. The Secretary is given discretion on how best to achieve these goals.
This brings us to page 128 of the 1017-page bill. Having covered the new landscape for health care (i.e., the creation of new regulations, a national health insurance exchange and the public health insurance option), I will next take a look at the sticks (mandates) and carrots (subsidies) included H.R. 3200.
Congressman Paul Ryan serves Wisconsin’s 1st Congressional District. To contact him by phone in Washington, D.C., call (202) 225-3031. Or visit Paul Ryan at www.house.gov/ryan