Can HR 3200 Be Fixed?

Health care reform looks like it’s stalled. And rightly so, based on the provisions of the House Democrats’ health care reform bill. The grossly misnamed America’s Affordable Health Choices Act (HR 3200) combines the worst of all possible worlds: high taxpayer costs, big increases in federal deficits, and disincentives for businesses to hire, while leaving up to twenty million individuals still uninsured and doing little or nothing to control runaway national health care expenditures.

Although the bill would make health care coverage available to many of the millions who currently cannot afford it, its provisions will potentially add some $200 billion a year to federal expenditures, make only miniscule reductions in Medicare cost trends, and impose play-or-pay provisions and a new surtax that could hurt smaller businesses just as they try to recover from the recession.

So, is there anything that can be done to fix HR 3200 so that it would provide affordable universal health care coverage without increasing federal deficits or halting the recovery from the recession?

The answer is that major changes—some paralleling those in the Wyden-Bennett Healthy Americans Act—are needed in four areas of the bill, those relating to the proposed insurance exchanges, the individual mandate, Medicare, and costs and financing.

The proposed insurance exchanges should be redesigned to maximize the size of the resultant pools and to achieve the benefits of price-competition. Insurers should be required to offer “best value” to the exchanges—with exchange participation a requirement for selling any insurance—to discourage “cherry picking” outside the exchanges through direct marketing to selected employers. Basic coverage should be set by a board independent of Congress to minimize the impact of provider lobbying. Insurers, in turn, should be protected from extreme adverse selection, through exchange-sponsored reinsurance or risk-adjustment. A public plan option should be implemented only in states where insurers fail to control the premium rates offered through the exchange.

The individual mandate should be changed from an after-the-fact penalty for non-insurance—an approach likely to result in both litigation and cheating—to advance selection from a choice of an ERISA-compliant employer plan, participation in an exchange, or a buy-in to a low-cost option tied to Medicaid (the existing public plan). Those failing to make a selection—expected to be primarily the young and healthy—would be automatically enrolled in the low-cost option. Premium collection would be simplified by combining it with income tax withholding, as proposed by the Wyden-Bennett bill. Lower-income individuals’ payments would be partially offset by tax credits or subsidies, but these should be tied to the low-cost option buy-in rate in order to reduce costs to the federal government.

Medicare payment policy responsibility should be transferred to a board independent of Congress—as proposed by White House Budget Director Peter Orszag, with the grudging concurrence of some Democrats—with payment policy authority covering both rates and controls over some of the more egregious provider profit-maximizing practices.

Federal costs and financing needs should be considerably less onerous with these changes, although allowing buy-in to a low-cost option tied to Medicaid implies more demand for already limited resources, so that higher payment rates for scarce providers may be necessary (as provided for in the present version of HR 3200). Although the concept of the play-or-pay mandate is fair in requiring all employers to contribute to the cost of coverage, the “pay” levy should be lower for small businesses. At the same time, two funding sources previously rejected by House Democrats should be tapped: employer-paid benefits above those guaranteed as “basic benefits” and available through the exchanges should be taxed, thereby also discouraging excessive demands for care, while “unhealthy consumption” should be restrained by taxes on certain soft drinks and candy and by higher levies on tobacco and alcohol.

Together these changes would rearrange and simplify the health care landscape, making affordable coverage more truly available while bending the cost curve. Universal coverage would be assured since anyone not making an insurance selection would be automatically enrolled in the low-cost option. Issues of payment-avoidance or penalties for non-compliance would not arise, since coverage payment would be part of regular withholding. Major employers’ self-funded arrangements would be left in place, while other employers and their employees would have a new range of competitive options. Market competition would be maximized by the insurance exchanges’ large pools and limitations on cherry-picking and adverse selection. Consumer responsibility would be encouraged by the requirement to make choices of coverage to meet individual needs. Medicare payments and non-Medicare benefits would be freed from political interference. Costs would be more fairly distributed between employers, individuals, and government—without increasing the federal deficit or undercutting businesses’ ability to recover from the recession.

Is it likely to happen? Probably not, any more than the provisions of the Wyden-Bennett bill are likely to be adopted. And the result that we will have to face? A choice between unaffordable “reform” that sabotages the economy, and no reform at all.

Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care REFORM UPDATE.

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Shaun E. SundahlAndy CressDanJohnJoel Johnston Recent comment authors
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Shaun E. Sundahl
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I on the other hand, disagree with Collier. For decades we have allowed insurance companies to use the capitalist model to compete amongst each other. In the end, insurance company premiums have skyrocketed and they continue to either exempt those with pre-existing conditions or charge excessive premiums. Those who regulate the insurance company industry are virtually non-existent. Allowing insurance companies to compete with each other is a guarantee to maintain the status quo.

Andy Cress
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Andy Cress

I have read H.R. 3200, and it is a mess. It will not achieve the stated goal, only claiming to add a small portion of uninsured, while removing coverage for a significant number of currently insured folks (all of them after the 5-year grace period). Also, if Medicaid is the model, availability of Medicaid providers will be a worse problem than it is now. The cost is staggering. The additional administrative costs alone will make health care much more expensive. Current estimates at 2 trillion, which we all know will increase tenfold over time. I’d rather suffer temporarily while we… Read more »

Dan
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Dan

Our congressional representatives are a disgrace to this country. Yes, Democrats and Republicans alike. Neither party is even talking about actually solving the underlying “real” problems with our country. Get rid of the greedy lawyers, special interest groups, lobbyists and corrupt government officials and you won’t have outlandish malpractice claims and suddenly the cost of healthcare becomes market driven. I have yet to hear one congressperson state that they are willing to accept the same healthcare package that they are trying to force down the throat of the American people. We need to clean house in 2010. We’re a country… Read more »

John
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John

HR 3200 is nothing more than a vehivle to kick start HR 676

Nancy
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Nancy

This notice is at the top of the site noted above for the bill :
ATTENTION! – The text in this section originates from a work-in-progress by the U.S. Congress. As a result, there may be missing or inaccurate information within the text posted here.
How can we make “informed” opinions if this is the information we get ???????

Joel Johnston
Guest

Having read a good bit of the bill myself, I have to agree with Balmy. HR3200 as it was released to the public in July, DOES permit competitive private companies to operate along side the government’s public option. HOWEVER, there are considerable stipulations required for a private company to be considered plausible and register for the new Health Insurance Exchange. I won’t go into these in detail here, but you can read for yourself these stipulations here: http://www.newhealthcareplan.com/frontend/TableOfContents/ and reading through the Subtitle B, C, and D. The really ugly part of this bill, is the fact that it has… Read more »

Nancy
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Nancy

Am I misinformed ? I thought that the Congress and Senate ARE covered by a competative list (their choice) of 111 insurance companies that have contracted with the government.

Balmy
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Balmy

The projected cost of the plan will be grossley underestimated. History shows the cost will be at least two to four times the estimated cost. The Post Office, Amtrack, and VA health care are text book examples of government managed programs. Amendments will be added in the dark of night to achieve the socialist program desired. There are hundreds of billions of dollars of fraud and corruption in Medicare/Medicaid that the government can not provide oversight to control. Just imagine what will happen in a national health care program. The answer to most of the cost problems can be solved… Read more »

jan jessen
Guest

Having been an RN and now being a senior on disablility, I see many things wrong with HR200. I have not completed reading it, to be honest. I have read many articles pro and mostly con. I have great concern about no mention of quality care, only the bottom line money. And from many resources that bottom line appears to be going up . Governmental control over the entire system takes away our privacy and our right to choose to what type of health care we wish to have. Ideally it would be wonderful for everyone to have coverage. However,… Read more »

Jeanette
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Jeanette

To Allen and Anna- First, Allen, thank you for your very knowledgable insight into this bill. Anna, I didn’t read anything about a “death panel”, but I did read where payment will not be paid to a hospital for any incident that occurs more than once in a fiscal year. Elderly have numerous bouts of pnuemonia or other ailments in a year, but with this bill, payment will not be made. What about that small child who suffers from sickness due to cancer? Who then pays? Will the hospital refuse to take them? Then what? I just finished radiation for… Read more »

Anna
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Anna

I’m not a fan of the new bill for several reasons, but would people please stop with the “death panel” bs! NO, Linda Daniels, you will not be asked to commit suicide. Have you actually read that page or are you just parroting what Betsy McCaughey (who is a part of the Hudson Institute which gets funding from bio tech co. and insurance companies) and Palin? It’s late years counseling, a medical counseling service that helps you make treatment decisions, write a living will, state whether or not you want to be revived, etc. Some people don’t want to spend… Read more »

Nancy
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Nancy

“If this bill passes and I need medical care I will be ask to commit suicide.” The bill permits seniors, IF THEY WISH, to consult with their physician to discuss end of life issues and that Medicare MUST pay for this consultation but not more often than once every 5 years. IT DOES NOT SAY SENIORS MUST CONSIDER SUICIDE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! End of life issues is not only ending your life but HOW you want it to end which is mandated by what you put in your Living Will, Durable Power of Attorney etc. which should be done in consultation with… Read more »

Dean Mattila
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Dean Mattila

Being a senior, I am more practical by nature of grey hair I guess. but, I want to find out in Health Care Bill HR3200 how they propose to revamp the pay out for medical care for seniors. Present form, Medicare pays 80% for medical services and the remaining 20% is to be paid by the Medicare senior. This leaves 20% of the burden to be paid out of pocket. Most seniors who can afford it, purchase supplemental insurance plans to cover this 20% not covered by Medicare. This supplemental insurance can cost from $100 to $400 a month. With… Read more »

Douglas Winfrey
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Douglas Winfrey

Coleen, This bill does not address any specifics as to care, it only addresses the management of the government intervention to try and control cost of the private sector and provide a cheaper option to uninsured americans.

Tim Faulkner
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Tim Faulkner

How can I get a hard copy sent to me?