House Joins Senate With A Public Option Health Insurance Bill

NU Online News Service, Oct. 29, 4:05 p.m. EDT

WASHINGTON–The House Democratic leadership today proposed health care reform legislation that includes a public option at an estimated cost of $894 billion over 10 years.

It would create a new government-regulated insurance "exchange" where private companies would sell policies in competition with the government and would remove anti-trust exemptions for health insurers.

The bill adds a new provision that would add incentives for the creation of additional state-based non-profit "cooperatives."

But it contains a provision that assures insurance agents' ability to continue to offer all products sold in the "exchange" environment.

Specifically, the language says that nothing in the legislation "shall be construed to affect the role of enrollment agents and brokers under State law, including with regard to the enrollment of individuals and employers in qualified health benefits plans including the public health insurance option."

It also contains provisions removing the health insurers antitrust exemption provided to carriers under the McCarran-Ferguson Act.

Another provision authorizes the Federal Trade Commission authority to examine the health insurance industry on its own initiative.

And, according to officials at the Council of Insurance Agents and Brokers, the exchange provision includes language that grants authority to the "exchange board" to provide counseling and assistance to small businesses purchasing products through the new mechanism.

Specifically, the provision states that the board commissioner, in consultation with the Small Business Administration, will include the following services: "Educational activities to increase awareness of the Health Insurance Exchange and available small employer health plan options; distribution of information to small employers with respect to the enrollment and selection process for health plans available under the Health Insurance Exchange…"

It would also have the SBA provide standardized comparative information on the health plans available under the Health Insurance Exchange.

Information would also be provided to small employers with respect to available affordability credits or other financial assistance; referrals to appropriate entities of complaints and questions relating to the Health Insurance Exchange.

Material given to small employers would also include enrollment and plan selection assistance for employers with respect to the Health Insurance Exchange; and responses to questions relating to the Health Insurance Exchange.

In a statement, Joel Kopperud, a director of government relations for the CIAB, said that "We certainly continue to believe that this legislation has numerous negative implications for the employer-provided group health insurance marketplace."

Mr. Kopperud said the major concern is about the "crowd-out" impact of a Medicare-based, government-run health insurer that would compete against private health plans.

In addition to creating such a "public option," the legislation would eliminate medical underwriting for all groups and establish a narrow community rating law (with no more than a 2-1 rating ratio for older, sicker workers as compared to the young and healthy), Mr. Kopperud said.

The National Association of Health Underwriters reiterated the same concerns it had with the Senate bill providing a public option. Kelly Loussedes, NAHU vice president of public relations, said its members are "very disappointed."

Ms. Loussedes said that, "By injecting more competition into the insurance market, this might seem like an intelligent way to lower overall health care costs."

The truth, though, she said, is that a 'public option' would simply shift health care costs onto private payers — and undermine the private insurance system in the process."

Under the proposed legislation, federal subsidies would be available to millions of lower-income individuals and families to help them afford the policies and to small businesses as an incentive to offer coverage to their workers.

The House bill includes a new provision that would require the secretary of health and human services to negotiate drug prices on behalf of Medicare beneficiaries.

It would also require most Americans to obtain insurance and would require employers to provide health benefits to workers or pay a penalty.

Small businesses would be exempt from the employer mandate if they had payroll less than $500,000 a year, double the threshold in the Democrats' original bill, introduced in July.

The legislation would be financed by a combination of cuts in planned Medicare spending and an income tax surcharge of 5.4 percent on individuals making at least $500,000 annually and couples making at least $1 million.

The bill would require nearly everyone by 2013 to sign up for health coverage either through their employer, a government program or the new exchange.

In the meantime, a temporary government program would help people turned down by private insurers because of medical problems, lawmakers said. After that, insurers could not refuse to provide coverage to the sick, nor could they charge more because of poor health of the insured.

The plan also calls for a significant expansion of Medicaid, the federal-state health program for low-income people. And it would impose a requirement on employers to offer insurance to their workers or face penalties.