The Word in the House 2/24/2012 - The Next Step in Health Care Reform

Not unexpectedly, the Health Care Reform Implementation bill, H.559, generated a lot of debate on the House floor this past week, about 15 hours.  In comparison, the debate on last year’s health care bill lasted around 18 hours.  This treatment of how health care benefits are provided is very complex, but I will try to give an overview of the salient points of this bill.

The purpose of this year’s bill is to set up the health benefits exchange that was mandated by the federal Affordable Care Act (ACA) of 2010.  It begins to separate access to healthcare benefits from employment status.  The exchange will allow consumers to compare insurance products through a standardized portal and will benefit both small businesses as well as individuals by letting them choose a benefit plan that best suits their needs with greater affordability through federal tax credits and subsidies. 

The exchange will feature 4 levels of plans (bronze, silver, gold and platinum) from two instate insurers as well as a minimum of two multistate insurers.  Consumers will have a choice of at least 10 different plans to choose from.  There is also a provision to grandfather many current plans.  Premiums will be based on income of the insured person or family.  Up to $300M of federal subsidies will be available to individuals in the form of tax credits depending on how many individuals buy insurance through the exchange.  This is why it is important to broaden participation as much as possible.  The greater the pool of participants, the lower the costs will be to the plan.

Beginning in 2014 businesses with fewer than 51 employees will be required to purchase insurance through the exchange if they choose to offer health insurance to their employees.  They may also choose to help their employees purchase insurance through the exchange instead.  Individuals who do not have health insurance through their employer or who are not working will be required by the ACA to purchase health insurance, thereby guaranteeing that everyone is covered under some level of insurance plan. 

To help pay for this coverage, individuals or families up to 400% of poverty level ($92,200 for a family of 4 or $44,000 for a single person) will be eligible for the federal assistance.  For example, it is estimated that a household making less than $52,625 would pay no more than 9.5% of its income.  Insurers could also offer wellness rewards and discounts. 

One of the important features of this bill is a ban on discretionary clauses in health insurance policies.  This type of clause is found in practically all health insurance policies written in Vermont and allows the insurer to have the final say in decisions as to whether to pay a claim.  Courts have deferred to these clauses even when consumers have appealed decisions.  A vote on this provision to disallow such clauses was passed unanimously, joining 19 other states that have a similar ban.

Recognizing that even under the present system of private insurance there is no way to predict future costs and that historical premium increases have sometimes exceeded 15% per year, analysis has shown that with the subsidies provided under the Affordable Care Act, small businesses who currently provide health insurance for employees will save money and employees of those that don’t will be able to purchase affordable insurance.  Finally, health insurance through the exchange will be portable, i.e. you won’t lose it if you lose your job.  

Passing this bill puts Vermont in the position of determining its own health care future rather than having it be defined and implemented by the federal government in 2014 when all states are required to do so.