8 Things You Need to Know About the New House Health Reform Bill

Nancy Pelosi couldn’t have announced the new House healthcare reform bill, the Affordable Health Care for America Act (H.R. 3962), with any more pomp and circumstance. It was certainly more impressive than the Senate’s mouse-like rollout, apparently intended to avoid rubbing salt in the Baucus “bipartisanship” wound. H.R. 3962 is definitely a major milestone in attempting to reform our broken system-less healthcare; it’s historic, certainly. But no, it’s not the best our legislators could do.

To be fair, House Democrats are being predictably attacked for their effort anyway. There’s the usual carefully contrived “It will raise the cost of Americans’ health insurance premiums; it will kill jobs with tax hikes and new mandates; and it will cut senior’s Medicare benefits.” Thank you Republican John Boehner. There’s also a highly amusing senior’s ad running. Check out this two-faced “how dare you cut (read: wring the waste out of) our government-run healthcare – we’re entitled to it! And by gum you young un’s better be scared of a government-run plan” message.

But ignoring all the hyperbole, here’s the good and the bad you need to know in H.R. 3962.

Good

1. The Numbers: H.R. 3962 will cover 96% of Americans, at a 10-year cost of “under $900 billion.” It will reduce the deficit by $104 billion over the same time period, and reduce Medicare spending growth 1.3% annually by cutting $400 billion primarily from private Medicare Advantage plans. Don’t feel sorry for them, see #2.
2. Consumer Protections: Guaranteed coverage, limited premium variations, standard minimum benefits packages and employer/individual mandates are all still included. That last one protects people from medical bankruptcy. But best of all, insurers are now required to spend 85% of premium revenue on members’ care. Currently in private Medicare Advantage plans, it’s almost the inverse; only $0.14 of every $1.00 in premiums is spent on members’ care. The bill also closes the “donut hole” in Medicare Part D, reducing senior’s out-of-pocket prescription expenses. Prevention and wellness services will be provided in all plans at no cost.
3. Selective Taxation: The bill derives revenue from a 5.4% “millionaire’s tax” on individuals making over $500,000 and couples making over $1 million (0.3% of households in the US, to be exact.) It also taxes medical device makers to the tune of $20 billion.
4. Choice and Potential Competition: A public option will finally give consumers another choice besides private insurance or nothing. The Insurance Exchange where we can compare plans remains intact. The potential for competition seems pretty slim initially though. See Bad #1.
5. Insurance Anti-trust Exemption: This feature, unique to health insurance and baseball, is now history. Meaning private insurers are no longer immune to regulations concerning price-fixing, big rigging, and market allocation. The Federal Trade Commission also now has full rights to investigate the industry.

Bad

1. Weak Public Option: H.R. 3962 contains the negotiated rate version of Medicare Part E. It is both more expensive and more of a burden on the states than the Medicare +5% fixed rate version, as it moves 7 million uninsured (those making less than 150% of the poverty level) over to Medicaid, which is a joint federal/state program. That means the states have to pick up about 10% of the tab. It also means much of H.R. 3962’s cost is due to subsidies to help people afford insurance. Worse, CBO expects that this public option will cost consumers slightly more than private plans, so only 6 million are expected to enroll. How did the House allow this to happen?
2. Delayed Fair Coverage: Yes, the House thought it a great idea to delay fair access for those with pre-existing conditions until 2013. So they are spending big bucks on risk pools until then, which most people can’t afford anyway. John McCain’s really bad idea lives.
3. No Doc Fix: The $230 billion “doc fix” was stripped out of the bill. That means doctors treating Medicare patients are left in limbo regarding a 21% January fee cut until House members vote on a separate bill.

Stay tuned tomorrow when Tim Foley will dig further into the new House bill changes from H.R. 3200.

Photo http://upload.wikimedia.org/wikipedia/commons/c/c2/Nancy_Pelosi_0009_3.jpg // CC BY 2.0