NU Online News Service, Feb.19, 3:32 p.m. EST
The White House and congressional Democratic leaders are crafting a new health care reform bill including a tax on high-priced health insurance plans, according to administration officials and industry sources.
Other provisions being worked on would cut the size of payments to private providers for the Medicare Advantage program and limit health insurance organizations' medical loss ratios–the percentage of HMO premium revenues that go to pay for actual medical services.
Under Medicare Advantage, the government pays private health care organizations a fee to manage care for Medicare beneficiaries. These programs provide prescription drug and wellness services for beneficiaries as well as treatment for illnesses, as under traditional fee-for-service plans.
But the program is costly–an estimated 14 percent more than traditional fee-for-service–and health care reform plans passed by the Senate and House would reduce payments for these services.
The House would cut the program by an estimated $150 billion over 10 years; the Senate bill would reduce the cost by $125 billion over 10 years by instituting a competitive bidding process.
Officials at the Department of Health and Human Services confirmed that medical loss ratio limits would be included in the new "proposal," or, as some termed it, "best ideas."
Whether Democratic leaders will use the reconciliation legislative process, which would reduce the votes needed to secure passage in the Senate to 51, but which expires in April, or some other means, is unclear, the sources said.
As the bill is being drafted, Obama administration officials vowed to continue their push for health care reform legislation.
In comments on his blog yesterday, White House communications director Dan Pfeiffer confirmed the administration's plans.
Specifically, he said, "We're going to continue to push for meaningful health insurance reform that gets control of skyrocketing costs, puts an end to insurance company abuses, extends coverage to millions of uninsured Americans and lowers our deficit."
Meanwhile, he added, "the insurers are defending their increases on American families by calling for passage of health reform, while running ads to defeat it… Imagine that."
In comments before unveiling a study critical of the recent decision by health insurers to sharply increase rates for individuals and small businesses, HHS officials said the new proposal would, at a minimum, require health plans to spend a minimum percentage of premiums on medical costs.
According to industry analysts, currently the Senate and House bills propose different medical loss ratios. During her Thursday press conference, HHS Secretary Katherine Sebelius would only say that the bill would call for more stringent ratios than California, which has a 70 percent medical loss ratio in its individual market.
HHS officials also said the bill being drafted would ban lifetime limits on benefits but does not mention annual limits; and also would ban rescinding coverage, discrimination based on pre-existing conditions and limit premium differences based on age.
It would also reward high-quality and efficient care, offer lower premiums (when subsidies are factored in), and seek to create competition among insurers with a health insurance exchange, the administration officials said. HHS officials would not specify whether the plan would endorse state or national exchanges.
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