Senate HELP Bill Doesn't Help Enough

The health reform bill that will be introduced next week in the Senate Committee on Health, Education, Labor and Pensions (HELP) includes a public plan, but it just skims being adequate. The Center for Policy Analysis has set two key benchmarks for an effective public plan: 1) broad eligibility, to assure a large and stable risk pool; and 2) the government's ability to set reasonable reimbursement rates, in order to control costs.

A letter from Senators Kennedy and Dodd on July 1 promised a strong public option that can keep costs down, expand coverage, and offer affordable options for coverage. The portion of the chairman's mark, released today (July 2), describes a public plan referred to as a Community Health Insurance option (Title XXXI, Subtitle A - Affordable Choices, Sec. 3106).

Eligibility. Employees with access to coverage from work are excluded from enrolling in the Community Health Insurance option (Subtitle B, Sec. 3111,(b)(C); and Sec. 3116 (4)(a)(4)(v)IV), pp. 132-133). An individual who is eligible for employer-sponsored coverage can join the public plan only if the workplace plan's coverage doesn't meet the standard for minimm qualifying coverage, or if it is not affordable ((4)(v)(IV) and (4)(B)pp.132-4). A plan is unaffordable if the premium is greater than 12.5% of the indivudual's adjusted gross income (AGI) (Sec. 3103, p. 70) An employee with an AGI of $50,000 a year, who pays $500 a month for insurance, would not qualify to join the Community option. $50,000 times 12.5% equals $6.250, more than the annual premium of $6,000. An individual with an AGI of $100,000, paying $12,000 a year for family coverage, also just misses the 12.5% mark, which is $12,500. If the same person paid $13,000 a year for coverage she would qualify.

Reimbursement Rates. The Community option cannot reimburse health care providers for a rate higher in aggregate than the average reimbursement rates paid by health insurers through the Gateway (Sec, 3106. (6) p. 80). While this is some limitation, it does not stanch inflation in health spending nearly as much as pegging reimbursement to a fixed rate set by the public sector, as Medicare does.

Affordability. Employers are required to pay at least 60% of the premium for workplace insurance. But if they choose not to buy insurance, they are required to pay on $750 a year per worker to a state fund. Since this is far less than the average annual cost of most premiums, the incentive is for the employer to drop coverage. This would pave the way for more people enrolling in the public plan - as long as that plan is affordable.

Individuals are required to pay from 1% of 12.5% of their annual income, on a sliding scale, for health insurance premiums.

It is widely expected that the Senate will pass a more conservative proposal than the House. The chairs should improve their proposals to make the public plan widely and immediately available, as well as affordable. If they do not, hopefully there will be constructive amendments from other Senators on the Committee.