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Health Care Reform - Clinton
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Health Care Reform - Clinton
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17
15
5
2
U.S. DEPARTMENT OF LABOR
OF LABOR
Pension and Welfare Benefits Administration
UNITED STATES PATRICAL
Office of the Assistant Secretary
October 9, 1992
MEMORANDUM TO HANS KUTTNER
GREGORY HUBBARD
STEVE BANDEIAN
FROM:
ANN L. COMBS
Attached is summary of Rep. Bill
Ford's (D-MI) health care proposal.
His staffer has been talking to the
Clinton campaign. It may give us a
better handle on some of Clinton's
rhetoric. I have bill language if
you are interested.
Attachment
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
CONGRESSMAN WILLIAM D. FORD (MICHIGAN)
CHAIRMAN, COMMITTEE ON EDUCATION AND LABOR
U.S. HOUSE OF REPRESENTATIVES
OverviewSummary
A single unified system providing universal access to health
insurance for all Americans through 3 component parts -- an
employer mandate (Mediworkers) coverage for children (Medikids),
and an element to cover adults not connected to the workforce
(MediWrap).
MediWorkers
An employer mandate covering full-time adult employees (and
spouses who do not work full-time). Employees pay no more than
20% of premium.
Basic benefits (including preventive services), with a $250
individual deductible, 20 percent coinsurance, and $2,500
stop-loss, but with first-dollar coverage for pregnancy-related
and preventive services.
Process for premium/benefit equalization that assures
employer premiums are related to payroll and health plan receipts
are related to risk.
Additional insurance reform (including guaranteed
availability, acceptance of actuarially based premium rate, no
preexisting condition exclusion) to ensure availability to all.
MediKids
Provides health benefits to all children under 22 years of
age, regardless of familial, employment, educational, or economic
status.
Same benefits as in MediWorker, plus early, periodic,
screening, and diagnostic services and increased mental health
benefits. No deductible for kids under age 18, $150 annual
deductible thereafter. No copayment for kids under 3 or for
pregnancy-related or preventive services. Minimal copayment
schedule for ages 3-11, 20 percent copayment ages 12-21, and
$1,500 stop-loss per child.
MediWrap
Provides health benefits to all individuals 22 years of age
or older who are not covered under MediWorker or Medicare. There
would be a national-rated premium.
Notwithstanding the national-rated premium, no individual's
- 2 -
liability could exceed the premium percentage established under
the MediWorker component of UniMed times the individual's gross
income. Part-time and seasonal workers would receive a credit
toward this income-related cap for payments credited through
employment.
Same benefits as in MediWorker.
Cost Containment
Under MediWorkers, (1) maximum charge limits, (2) encouraged
use of managed and coordinated care (through network plans,
utilization review, use of practice guidelines and outcomes
research), (3) local quality review boards, (4) use of uniform
claims forms and electronic billing, uniform health plan cards,
etc., (5) limitation on capital expenditures, and (6) initiatives
toward medical malpractice reform.
Under MediKids and MediWrap, (1) mandatory assignment and
use of specific payment rates, (2) managed and coordinated care
initiatives, (3) use of uniform claims forms and electronic
billing, etc., and (4) demonstrations on medical malpractice
reform.
Low-Income Assistance
Premiums - Employee/employer premiums related to wages
(viz., lower for low-income workers). Premiums for non-worker
coverage capped at a percentage of gross income.
Deductible and Coinsurance - Reduction/rebate of deductibles and
coinsurance for individuals with income below poverty level, with
phase-out in assistance through 200 percent of poverty level.
Financing
MediWorker - Financed entirely through payroll-related
premiums, with employees paying no more than 20% of the premium.
MediKids - Financed through MediWorker payroll premium,
premium on child employees, State medicaid maintenance of effort
payment (with additional Federal matching revenues), and other
revenue sources.
MediWrap - National-rated premium (subject to income cap),
(non-worker self-employment taxes), and Medicaid maintenance of
effort payments.
Low Income Assistance - (1) Income tax on gross income (other
than wages, self-employment, and other income subject to premium
or taxes under the three programs) at flat rate (of 1/5 of
premium percentage), and (2) other Federal general revenues.
ruary 24, 1992
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Short Overview/Summary
Title/Program
Summary of Policy
Notes
Short Title
Universal Medical Care Act of 1992 or "UniMed".
F:\FHBC\UNIMED.SUM
UniMed Program
Program administered by an independent Health Bene-
fits Administration (HBA), to ensure that basic, afford-
able medical care is available to all citizens, under a uni-
fied, coordinated program. The MediWorker component
imposes an employer mandate to provide basic insurance
benefits to employees and their spouses. The MediKids
component ensures that the same basic benefits (with
modifications to take into account the medical needs pe-
culiar to children) are extended to the children of work-
eΓB and nonworkers. The MediWrap component extends
basic benefits to adults who are not in the workforce.
Effective: January 1, 1995.
MediWorker Component
An employer mandate covering full-time adult employ-
MediWorker Component of UniMed will be set forth in
ees (and spouses who do not work full:time).
new title V of ERISA.
1
Basic benefits (including preventive services), with a
$250 individual deductible, 20 percent coinsurance, and
$2,500 stop-loss, but with first-dollar coverage for preg-
nancy-related and preventive services.
Funded by premiums paid by employers and (through
withholding) by employees at a prescribed "MediWorkers
national premium percentage" (MNPP) of payroll, except
that employees pay no more than 20% of premium.
Process for premium/benefit equalization that assures
that employer and employee premiums are related to
payroll and group health plan receipts are related to ac-
tuarial risk.
MediKids Component
Provides health benefits to all children under 22 years
of age, regardless of familial, employment, educational,
or economic status.
MediWrap Component
Provides health benefits to all individuals 22 years of
age or older who are not covered under MediWorker
component or Medicare.
Medicare Changes
Reduction in age of initial eligibility from 65 to 60.
February 24, 1992
MEDIWORKERS COMPONENT OF UNIMED [TITLE I]
Issue/Topic
Policy
Notes
A. EMPLOYER MANDATE
MediWorker Component of UniMed will be set forth in
new title V of ERISA.
F:\FHBC\UNIMED.SUM
Enrollment Requirement
All employers are required to enroll full-time employees
(and spouses who are not full-time employees) who are
not children under a qualified group health plan. U.S.
companies employing U.S. nationals abroad would have
to meet this requirement.
These plans can be insured or self-insured. Self-em-
ployed individuals (with or without employees) would be
covered under MediWrap component of UniMed.
B. GROUP HEALTH PLAN REQUIREMENTS
Summary of Requirements for All Group Health
To be qualified, a group health plan must meet speci-
Plans
fied requirements, including-
(1) providing required core benefits [see C1. below];
(2) limiting deductibles, coinsurance, and total cost-
2
sharing [see C.2-4. below];
(3) providing consumer protection (including maximum
employee premiums, no preexisting condition limits,
"portability" of benefits, and solvency protection); and
(4) providing for equalization of premiums and capita-
tion rates for core benefits.
C. REQUIRED "CORE" BENEFITS
C1. "Core" Services:
Employers can supplement core benefits.
C1. (a) Inpatient hospital services
Unlimited; except limited to 45 days of inpatient men-
tal health services in any year.
C1. (b) Physicians' services
Unlimited inpatient and outpatient physicians' services
and community health clinic services (except for limit on
mental health services, see below).
C1. (c) Mental health services
Limited to 45 days of inpatient care per year and 20
outpatient visits per year. Would treat as qualified pro-
viders (for outpatient services) psychologists and clinical
social workers.
H.L.C.
uary 24 1992
C1. (d) Alcohol and drug abuse treatment services
Limited specified dollar value (viz., $5,000) in any 3-
year period.
C1. (e) Pregnancy-Related Services
Coverage of prenatal, labor, delivery, and postnatal
services, including services of certified registered nurse
midwives.
C1. (f) Preventive Services
F.\FHBC\UNIMED.SUM
Coverage of--
Screening mammography and screening pap smears (at
frequency to be specified by HBA),
Family planning services, &
Adult immunizations.
HBA to establish an advisory committee to make rec-
ommendations on additional preventive benefits; HBA
can add new preventive benefits if appropriate, taking
into account cost, but only after providing at least 2
years' notice.
C1. (g) Laboratory and Diagnostic tests
Diagnostic and laboratory tests are covered.
C1. (h) Case management services
To be covered for people diagnosed with certain ail-
ments, specified by HBA.
C2. Deductible
Single, per person annual deductible.
3
C2. (a) Amount
$250, indexed by inflation-related increases in SSA
wage base (viz., $230 contribution and benefit base).
C2. (b) Exceptions
Does not apply to pregnancy-related services or preven-
tive services
C3. Coinsurance/Copayments
-
C3. (a) Percentage
20 percent.
C3. (b) Exceptions
Does not apply to pregnancy-related services or preven-
tive services.
Can be greater in the case of provision of services by
nonparticipating⁻ providers under qualified network
plans.
C4. Limit on Cost-Sharing
$2,500 per person. Amount indexed by increases in SSA
wage base.
D. MAXIMUM CHARGE LIMITS AND MINIMUM
PAYMENT RATES
H.L.C.
February 24, 1992
MEDIWORKERS COMPONENT OF UNIMED [TITLE I]-Continued
Issue/Topic
Policy
Notes
D1. Establishment of Reference Payment Rates
In connection with the periodic establishment of the
MediWorkers national premium percentage (MNPP) [see
F:\FHBC\UNIMED.SUM
G2 below] and using medicare payment methodology or
similar prospectively determined payment methodology,
HBA will set reference payment rates.
HBA may, upon application by a State, permit substitu-
tion of State-based rates, if (1) the rates will apply to all
payors (including the MediKids and MediWrap compo-
nents), (2) the rates will not result in total expenditures
greater than those otherwise permitted under all the
programs, and (3) will not result in a significant shifting
of costs among the different components.
D2. Maximum Charge Limits
Institutional services.-For institutional services (viz.,
Maximum charge limits consistent with medicare
other than professional services), the reference payment
model.
rates are the maximum charges that can be imposed by
providers for covered services for individuals under
qualified group health plans.
Professional services.-For physician and other profes-
sional services, the maximum charges are the same pro-
portion above the reference payment rates as the limit-
ing charge permitted under the medicare RB-RVS pay-
ment system.
Enforcement.-Violation of the charge limits would sub-
ject providers to civil money penalties and exclusion
under MediKids and MediWrap components of UniMed.
D3. Controls on Capital Expenditures for Hospi-
-Hospitals required to report annually to HBA on ex-
tals
penditures for capital. HBA will require justification for
rates of increase in capital costs identified as excessive.
The HBA will reduce, prospectively, the maximum
charge limits for hospital services to the extent the iden-
tified excessive rate of increase in capital expenditures
has not been justified.
H.L.C.
ebruary 24, 1992
E. EMPLOYEE & CONSUMER PROTECTIONS
These would include (1) limiting employee premiums to
20% of MNPP, (2) prohibiting use of preexisting condi-
tion restriction on basic benefits, (3) enrollee protection
against plan insolvency, (4) standardization of health
plans cards and health claims forms, and (5) protections
for emergency out-of-plan coverage in the case of net-
F:\FHBC\UNIMED.SUM
work plans (such as HMO's).
F. ADDITIONAL REQUIREMENTS FOR INSURED
Also, insured plans must also meet requirements relat-
PLANS
ing to (1) guaranteed availability of basic benefit plans
for all employers (without regard to size) in a State, (2)
guaranteed renewability (except for cause), (3) requiring
the offering of basic benefit plans (with preemption of
State benefit mandates), & (4) limitation on premium to
the MNPP of wages.
G. PREMIUM EQUALIZATION PROCESS
G1. Summary/Overview
-(1) Employers effectively pay premiums based on a
percent of payroll. [This provides inter-employer equity.]
-(2) Group health plans, after "equalization", effective-
ly receive a netted "actuarial" premium based on the de-
5
mographic characteristics of individuals enrolled. [This
provides inter-insurer equity and provides opportunity
(and therefore incentive) for health plans to contain
costs.] Since health plans are not paid based on actual
cost, employees, employers, and plans may "profit" from
containing costs (either through managed care or pre-
ferred provider arrangements or through employer/em-
ployee wellness programs, or other means).
G2. Specification of Employer Premiums
(MediWorkers National Premium Percentage
(MNPP))
H.L.C.
February 24, 1992
MEDIWORKERS COMPONENT OF UNIMED [TITLE I]-Continued
Issue/Topic
Policy
Notes
G2. (a) In general
Employers (other than those that are meeting mandate
through self-insurance), pay a premium for basic benefits
F:\FHBC\UNIMED.SUM
equal to a percentage (periodically adjusted by HBA) of
payroll to the qualified plan. This percentage is referred
to as the MediWorkers National Premium Percentage or
"MNPP".
Plans of self-insured employers are treated the same as
insured plans for purposes of "equalization" of payable
premiums to benefits to be provided.
Payroll subject to MNPP would be capped for each
worker at twice the maximum wages subject to the So-
cial Security tax.
G2. (b) Computation of MediWorkers National Premium
-Establishment of initial MNPP. The MediWorkers Na-
Percentage (MNPP)
tional Premium Percentage (MNPP) of payroll for 1st
year only (viz., 1995) will be specified in the statute.
Subsequent MNPP.HBA will adjust the MNPP each
6
year to reflect changes in health care costs relative to
payroll. HBA must set the MNPP high enough to cover
all expenses. HBA will take into account efficiencies re-
sulting from medical care innovations as well as new
technologies.
H.L.C.
ebruary 24, 1992
G3. Requirement of Equalization
-Equalization Premiums Payable to FHBEC.-Each
qualified group health plan (including self-insured em-
ployers and Taft-Hartley plans) must pay to the Federal
Health Benefits Equalization Corporation (FHBEC,
which is within the Health Benefits Administration) an
amount equal to the amount by which (A) the employer
F:\FHBC\UNIMED.SUM
premiums (viz., computed as an HBA-specified percent of
payroll) exceed (B) the "capitation amount" [see G4
below] for all individuals covered under the plan.
Equalization Rebates Paid by FHBEC-FHBEC must
pay each group health plan (including self-insured em-
ployers and Taft-Hartley plans) an amount equal to the
amount by which (A) the employer premiums (viz., per-
cent of payroll) [see G3 below] are less than (B) the "capi-
tation amount" [see G4 below] for all individuals covered
under the plan.
G4. Computation of Capitation Amounts
G4. (a) Summary
The capitation amount, which is used by FHBEC as a
reference rate for the amount employer plans should
have received for basic benefits, for an individual is
7
equal to the product of a base rate (common to all indi-
viduals) and the weighting factors (for the actuarial class
to which the individual is assigned). The base rate and
weighting factors (as well as actuarial classes) are estab-
lished by the HBA under the process described below.
G4. (b) Establishment of Actuarial Classes
The HBA shall assign individuals covered under quali-
fied group health plans to "actuarial classes". These
classes are established by the HBA, based on a combina-
tion of age, sex, disability status, area of residence, and
other appropriate factors, and would be actuarially
sound. The HBA shall establish the minimum number of
actuarial classes and shall not provide for disease-specif-
ic or condition-specific classifications.
H.L.C.
February 24, 1992
MEDIWORKERS COMPONENT OF UNIMED [TITLE I]-Continued
Issue/Topic
Policy
Notes
G4. (c) Computation of Relative Weight for Each Actuar-
Using sample data supplied by FHBEC in its work, the
F:\FHBC\UNIMED.SUM
ial Class
HBA computes "weighting factors" that reflect the rela-
tive costs of each actuarial class compared to the average
for all the classes.
HBA would obtain information, on covered individuals
by social security number only, on plan enrollment, age,
sex, and other relevant actuarial characteristics neces-
sary to assign accurate weighting factors for each indi-
vidual. Privacy Act protections would apply to restrict
use and disclosure of the information. There would be a
one-time collection of information, with periodic adjust-
ment. The information would only be used for purposes
of capitation payment computations.
G4. (d) Computation of National Average Expenditures
The FHBEC would compute each year, based on the
(Base Rate)
MediWorkers national payroll percentage (MNPP), a na-
tional average per capita amount of.expenditures ("base
8
rate") for basic health care services under all qualified
group health plans (including self-insured plans). This
base rate would be based on formula: (A) total projected
payroll for MediWorkers covered individuals subject to
MediWorkers premiums, times (B) MNPP, divided by (C)
average number of covered individuals under
MediWorkers component of UniMed.
G4. (e) Computation of Capitation Amount
For each individual in an actuarial class, the "capita-
tion amount" would be the product of the national aver-
age expenditures and the weighting factor for the class.
G5. Transitional Premium Subsidy for Small Busi-
Businesses with 25 or fewer employees would be eligi-
ness
ble for a subsidy to reduce the employer share of
MediWorker premiums.
The subsidy would begin at 50% of the employer share
in 1995, and be phased down to be 37.5%, 25%, & 12.5%
in 1996, 1997, & 1998.
H. ENFORCEMENT AND RELATED ADMINISTRA-
TIVE ISSUES
H.L.C.
Enforcement of employee's rights under group
-After exhausting plan's own claims review proce-
health plans through Special Counsel and Group
dures, employees may bring complaints to a Special
Health Plan Review Board
Counsel of HBA, who will attempt to resolve disputes in
Early Resolution Program (ERP).
-Under the ERP process there will be facilitators to
eliminate misunderstandings, clarify issues, and identify
F:\FHBC\UNIMED.SUM
settlement options and assist in encouraging settlement
of disputes. However, neither party waives the right to
further adjudication of issues at conclusion of ERP proc-
ess.
-Special Counsel or employee may bring disputes left
unresolved by ERP to administrative review before ALJ
of the Group Health Plan Review Board (GHPRB), sub-
ject to court review in Federal Circuit Court of Appeals
of appropriate Circuit.
I. MISCELLANEOUS
11. Preemption of State provisions
11. (a) Preemption of State Benefits Mandates
State law cannot require benefits other than the basic
required benefits.
6
11. (b) Preemption of State Restrictions on Managed Care
State cannot impose certain restrictions on bona fide
network plans nor on proper utilization review pro-
grams.
12. Repeal of COBRA continuation requirements
COBRA continuation coverage requirements are
superceded by UniMed and are therefore repealed.
13. Increase Deduction for expenses for self-em-
Would extend current 25% deduction through 1/1/95; as
ployed
of that date would increase to 100%, but limit to ex-
penses for required health benefits only.
H.L.C.
February 24, 1992
MEDIKIDS COMPONENT OF UNIMED [TITLE II]
Issue/Topic
Policy
Notes
A. ELIGIBILITY/ENTITLEMENT
Extension of MediWorkers component, providing cover-
F:\FHBC\UNIMED.SUM
age to all children residing in the U.S. who are under 22
years of age, regardless of employment or education sta-
tus.
Enrollment at birth or time of immigration; enrollment
not prerequisite to receive services or benefits.
B. REQUIRED BENEFITS
Employer's group health plan can supplement benefits;
but benefits under MediKids component are primary.
B1. Services
B1. (a) Basic Services
Except as specified, would include the MediWorkers
"core" service package, including-
-inpatient hospital services (subject to 45 day annual
limit for inpatient mental health services), except that
preadmission authorization would be required for inpa-
tient mental health services and no admission would be
10
approved if could adequately treat as an outpatient;
-physicians services and community health clinic serv-
ices;
-mental health services (but with outpatient limit of
40 visits per year, rather than 20 under MediWorkers
component of UniMed);
-alcohol and drug abuse treatment services;
-pregnancy-related services;
-laboratory and diagnostic tests; &
-case management services.
H.L.C.
lary 24, 1992
B1. (b) Authonal MediKids Services
Would include the following additional services (subject
to a periodicity schedule established by HBA in consulta-
tion with the American Academy of Pediatrics):
-periodic screening services, including comprehensive
physical examinations, age appropriate immunizations,
laboratory tests, and health education;
F:\FHBC\UNIMED.SUM
-vision services, including screening and corrective
eyeglasses or lenses;
-dental services, including screening and preventive
dental and corrective dental services; and
aids. -hearing services, including screening and hearing
Would also include prescription drugs, including insulin
and medically appropriate nutritional supplements.
Would also include the föllowing (if part of plan of care
prescribed by a physician):
-treatment of developmental and learning disabilities
(other than the educational component); and
-speech, occupational, and physical therapy.
HBA would examine (and report to Congress) concerning
the appropriateness of providing coverage for long-term
11
care services under the MediKids component of UniMed.
B2. Deductible
Under age 18, none would apply.
At age 18, there would be a deductible of $150, indexed
to SSA wage base (as with MediWorkers' deductible)
B3. Coinsurance
None for children under 3 or for pregnancy-related
services or preventive services.
For other services, copayment schedule for children 3-
11 (i.e., $5 per outpatient visit) and 20 percent coinsur-
ance for children 12 and older.
B4. Limit on Cost-Sharing
$1,500 per kid, indexed by increases in SSA wage base.
C. PAYMENTS FOR SERVICES
Single payor-model (like medicare).
H.L.C.
February 24, 1992
MEDIKIDS COMPONENT OF UNIMED [TITLE II]-Continued
Issue/Topic
Policy
Notes
C1. Payment Rates
HBA to establish payment rates based on reference
payment rates established under MediWorkers compo-
F:\FHBC\UNIMED.SUM
nent of UniMed, with appropriate modifications to reflect
children-only coverage under the MediKids component.
For services not covered, will establish appropriate
schedule based on concepts used in establishing
MediWorkers reference payment rates.
C2. Payment Method
Assignment is mandatory.
D. MISCELLANEOUS
D1. Funding
Financing for MediWorkers children through
MediWorkers premiums. (See B1 under Financing [Title
VI]) and for MediWrap children through addition to
MediWrap premiums (see C1 under Financing [Title
VI]).
D2. Use of Intermediaries
As in medicare, except HBA would do the contracting
12
for fiscal administration. Would permit States to admin-
ister.
D3. Treatment of HMO's and Capitation
HBA would be authorized to contract with HMO's
under a capitation contract in manner similar to author-
ity of HHS to contract on a risk basis with HMO's under
the medicare program.
D4. Relation to Medicare & Medicaid Programs
Primary payor to medicare and medicaid programs.
States would be required to maintain effort in terms of
eligibility and benefits for children (above those provided
under MediKids component of UniMed). This would not
duplicate low-income assistance.
H.L.C.
bruary 24, 1992
MEDIWRAP COMPONENT OF UNIMED [TITLE III]
Issue/Topic
Policy
Notes
A. ELIGIBILITY/ENTITLEMENT
All legal permanent residents aged 22 through 59 who
cannot establish coverage under medicare (as disabled)
F:\FHBC\UNIMED.SUM
or under a qualified employer health plan (as a full-time
employee or spouse).
B. BENEFITS (including deductibles, coinsurance, etc.)
[Same as basic services under MediWorkers component]
Employers can supplement benefits for part-time and
seasonal workers.
C. PAYMENTS FOR SERVICES
Single payor model (like medicare).
C1. Payment Rates
HBA to establish payment rates based on reference
payment rates established under MediWorker component
of UniMed, with appropriate modifications to reflect pop-
ulation covered under the MediWrap component.
C2. Payment Method
Assignment is mandatory.
D. MISCELLANEOUS
D1. Premiums
There would be a monthly actuarially determined na-
13
tional community-rated premium subject to an income
related cap. Part-time and seasonal employees would re-
ceive credit for both the employer and employee amounts
of the UniMed part-time/seasonal payroll tax paid, as
well as any part of the Health Care equalization self-em-
ployment tax paid.
D2. Use of Intermediaries
As in medicare, except HBA would do the contracting
for fiscal administration. Would permit States to admin-
ister.
D3. Treatment of HMO's
HBA would be authorized to contract with HMO's
under risk-based contract in manner comparable to au-
thority of HHS to contract with HMO's under medicare
program.
D4. Relation to Medicaid Program
Primary payor to medicaid. Medicaid could supplement
these benefits.
H.L.C.
February 24, 1992
COST CONTAINMENT AND QUALITY CONTROL [TITLE IV]
Issue/Topic
Policy
Notes
A. COST CONTROL MECHANISMS
Costs to employers are controlled through premiums
F:\FHBC\UNIMED.SUM
based on the MNPP of UniMed wages and capitation
payments to qualified group health plans.
Al. Prices & Capital Expenditures
Payment levels to providers are restricted through use
of maximum charge levels under the MediWorker compo-
nent and through mandatory assignment under the
MediKids and MediWrap components.
Control over capital expenditures through reduction in
maximum charges to reflect excessive increases in cap-
ital expenditures by hospitals.
A2. Encouraging "Managed" or "Coordinated" Care
Encouraging the use of "managed" or "coordinated" care
through MediWorker payments to plans based on capita-
tion, preemption of State anti-manged care laws, pay-
ments to network plans under MediKids and MediWrap
components, and increasing Federal funding for out-
comes research.
14
B. QUALITY CONTROL MECHANISMS
B1. National Standards
To counter-balance the significant incentives that capi-
tation provides for cutting costs, HBA would establish
national quality standards, including standards to moni-
tor the use of preauthorization review and other utiliza-
tion review and network controls, and financial solvency
standards.
B2. Local Quality Review Advisory Bodies
HBA would provide for establishment of local quality
review monitoring advisory bodies, with representation
of employers, labor organizations, and individuals, to ob-
tain locality-specific, non-individually-specific informa-
tion on utilization and quality of services under different
plans in a community or service area, and to provide
feedback to plan sponsors, the HBA, employers, and
labor organizations.
C.IMPROVEMENTS IN ADMINISTRATIVE EFFI-
CIENCY
H.L.C.
Jary 24, 1992
C1. Unitorm Claims Forms & Electronic Billing
All plans would have to use a uniform claims form and,
as may be required by the HBA, uniform electronic bill-
ing standards.
C2. Uniform Health Care Cards
Health care enrollment cards would have to be electron-
ically coded for uniform input, as prescribed by HBA.
F:\FHBC\UNIMED.SUM
D. MEDICAL MALPRACTICE REFORM
HBA would report to Congress on specific steps (such
as the use of early resolution process under the
MediWorker program as a means of alternative dispute
resolution) that could be taken to improve system.
15
H.L.C.
February 24, 1992
LOW-INCOME ASSISTANCE [TITLE V]
Issue/Topic
Policy
Notes
DEDUCTIBLES AND COINSURANCE ASSISTANCE
Throughout the UniMed Program (comprising
MediWorkers, MediKids, and MediWrap components),
F:\FHBC\UNIMED.SUM
assistance for deductibles and coinsurance for required
services would be based on adjusted gross income (in-
cluding joint income for couple). There would be no
deductibles and coinsurance for those with income below
100 percent of poverty line; the deductibles and coinsur-
ance would be phased out until there is no low-income
assistance for individuals with income above 200 percent
of the poverty level.
16
H.L.C.
ruary 24, 1992
FINANCING [TITLE VI]
Issue/Topic
Policy
Notes
A. MEDIWORKERS COMPONENT OF UNIMED:
Employer pays a total premium to health plan based on
The funding of the transitional premium subsidy for
Use of Payroll-Based premium
the MediWorkers National Premium Percentage (MNPP)
small business, would come from other Federal revenues.
\FHBC\UNIMED.SUM
of total payroll computed by HBA. However, the wages
counted cannot exceed twice the maximum wage level
subject to Social Security taxes (approx. $125,000).
Employer may charge the employee based on a percent-
age of wages (but percentage may not be greater than 1/15
of the MNPP specified by HBA).
B1. MediKids Element of the MediWorkers National
In recognition of coverage to be provided under UniMed
Premium Percentage (MNPP)
to workers' children, the MNPP paid to group health
plans under the MediWorkers component would include
a portion to be directed to funding the MediKids compo-
nent.
B1. (a) Determination of Aggregate Amount to be Collect-
HBA would estimate the total cost for the year under
ed Through Premium
the MediKids component for children of adults covered
under MediWorker component.
17
B1. (b) Payment of MediWorkers National Premium
In setting the appropriate level of the MNPP, the HBA
Percentage under MediWorkers Component as Element
would add a percentage determined to be required to
of Funding for MediKids Component
raise the MediWorkers element of funding MediKids
computed under B1.(a) above.
In applying the MNPP 80 computed under the
MediWorkers component, this additional element of
funding for the MediKids component would automatical-
ly be shared 80/20 between the employer and employees.
B2. MediKids Element of MediWrap Premium
This element would not apply to children whose parents
are full-time workers because the parents pay premiums
for their children through the MediWorker program.
H.L.C.
February 24, 1992
FINANCING [TITLE VI]-Continued
Issue/Topic
Policy
Notes
B2. (a) Amount of Flat Monthly Premium Element
As part of the MediWrap premium for individuals who
are not covered through the MediWorker component and
F:\FHBC\UNIMED.SUM
who have a child covered under MediKids, there would
be a MediKids premium element equal to a nationally
specified community-rated actuarial premium to be es-
tablished by HBA for each child under the MediKids
component of UniMed. There would be no variation by
age, sex, marital status, etc. The premium component
would be computed on a monthly basis (as is the case for
the MediWrap premium for adults).
B2. (b) Payment of Premium Element
Parents would be required to pay the premium element
each year in conjunction with the payment of the
MediWrap premium.
A8 with the MediWrap premium, parents would receive
a credit for employer/employee equalization premiums
paid and low-income assistance would be available to
eliminate or reduce the premium element.
18
B3. State Medicaid "Maintenance of Effort" Pay-
States are required to pay the MediKids component a
ment
"maintenance of effort" amount.
B4. Treatment of Workers under Age 22
There would be a payroll-based "equalization" tax com-
This would treat wages of child workers the same as
puted for workers under age 22 equal to the
the wages of adult workers.
MediWorkers National Premium Percentage (MNPP) of
their wages. The tax would have a ceiling of twice the
maximum level of wages subject to the Social Security
tax.
B5. Additional Federal Funds
Additional Federal funds would come from previous
general revenues dedicated to medicaid and from other
taxes (to be specified).
C. MEDIWRAP COMPONENT OF UNIMED
C1. Actuarial Premium Collected Through In-
come-Tax System
H.L.C.
ebruary 24. 1992
C1. (a) Amount of Premiums
Nationally specified community-rated monthly actuarial
In the case of MediWrap beneficiaries with children,
premium to be established for each individual (no family
the amount of the premium would be increased to in-
premium). There would be no variation by age, sex, mar-
clude a MediKids element. See B2(a) above.
ital status, etc.
C1. (b) Limit on Amount of Premium to MNPP of
In order to provide protection to low-income individuals,
F:\FHBC\UNIMED.SUM
Total, Gross Income
the MediWrap premium (including any MediKids ele-
ment) could not exceed the MediWorkers National Pre-
mium Percentage (MNPP) of total, groes income (includ-
ing joint income for a married couple and any children's
income).
C1. (c) Crediting MediKids and MediWrap Equaliza-
There would be credited against MediWrap premium
tion Employment Taxes and MediWrap Self-Employment
amount (including any MediKids element), total
Taxes
MediWrap and MediKids equalization taxes paid (includ-
ing both employer and employee shares).
C1. (d) Collection
To be paid with income taxes (including provision in es-
timated taxes).
C2. State Medicaid "Maintenance of Effort" Pay-
States are required to pay the MediWrap component of
ment
UniMed a "maintenance of effort" amount.
19
C3. MediWrap Employment Equalization Tax for
There would be a payroll-based "equalization" tax com-
This would treat wages of part-time and seasonal work-
Part-Time and Seasonal Workers
puted for part-time and seasonal workers, equal to the
ers the same as the wages of adult workers. An employer
MediWorkers National Premium Percentage (MNPP), in-
may pay all or a portion of the employee's share of the
cluding the MediKids element, of their wages. The tax
payroll-based tax, and (as under the MediWorker compo-
would have a ceiling of twice the maximum level of
nent) this payment would not be included in income of
wages subject to the Social Security tax (approx.
the employee.
$125,000).
C4. MediWrap Tax on Self-Employment Income
Tax on self-employment income, equal to the
This assures that self-employment income is not treat-
MediWorkers National Premium Percentage (MNPP) (up
ed more favorably than wage income.
to twice the maximum wages subject to Social Security
taxes, viz., approx. $125,000). This is non-refundable.
C5. Source of Additional Federal Funds
Remaining Federal funds would come from previous
general revenues dedicated to medicaid and from other
sources (to be specified).
D. MEDICARE PROGRAM ELIGIBILITY EXPAN-
Increase cap on HI part of FICA & SECA tax to extent
SION
necessary to fund expenses for expanded eligibility.
H.L.C.
February 24, 1992
FINANCING [TITLE VI]-Continued
Issue/Topic
Policy
Notes
E. LOW-INCOME ASSISTANCE (COVERING LOW-
Addition to income tax at flat rate of 1/5 of the
INCOME EMPLOYEES, CHILDREN, AND OTHERS)
MediWorkers National Premium Percentage (MNPP).
F:\FHBC\UNIMED.SUM
However, wages, self-employment income and other in-
come, to the extent a UniMed premium has been com-
puted based on such income, would not be subject to this
additional tax.
20
H.L.C.
ruary 24, 1992
OVERALL ADMINISTRATION [TITLE VII]
Issue/Topic
Policy
Notes
Health Benefits Administration (HBA)
Health Benefits Administration (HBA), headed by 15-
member bipartisan board appointed from private sector
\FHBC\UNIMED.SUM
by President with Senate confirmation, 6-year staggered
terms. 3 appointed from each of the following: labor; em-
ployers; medical community, insurance community,
consumer representatives. The HBA would administer
UniMed through a variety of entities:
-The Federal Health Benefits Equalization Corpora-
tion (FHBEC), a corporate entity established in the HBA
and with structure and powers similar to the Pension
Benefit Guaranty Corporation (PBGC), would be respon-
sible for assessment, collection, and distribution of pre-
mium equalization payments from and to qualified group
health plans.
An Office of the Special Counsel, appointed by the
President subject to Senate confirmation, with responsi-
bility for encouraging early resolution of disputes and
21
enforcement of the Act.
An Early Resolution Program (ERP) Office to develop
program procedures, conduct case intake, maintain ros-
ter of "facilitators", and otherwise carry out the ERP pro-
gram.
A Group Health Plan Review Board (GHPRB), consist-
ing of 9 members appointed by President with Senate
confirmation and similar to OSHRC, to appoint ALJ's to
hear complaints of participants and beneficiaries not re-
solved through ERP.
H.L.C.
February 24, 1992
MEDICARE REVISIONS & MISCELLANEOUS PROVISIONS [TITLES VIII & IX]
Issue/Topic
Policy
Notes
A. REDUCTION IN AGE OF MEDICARE ELIGIBIL-
Reduce, as of January 1, 1995, age of initial eligibility to
ITY
60.
F:\FHBC\UNIMED.SUM
B. MISCELLANEOUS PROVISIONS
1. Repeal of COBRA Continuation Provisions
Effective January 1, 1995, repeal the COBRA continu-
ation requirements contained in ERISA, the IRC, and
the PHSA.
2. Grant Program for Expansion of Federally Quali-
Provide an authorization of appropriations of an addi-
fied Health Centers
tional $400, $800, $1200, $1600, and $1,600 millions in
fiscal years 1993 through 1997 for expansion of services
to medically underserved individuals by Federally quali-
fied health centers.
22
H.L.C.
February 20. 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Overview/Summary
Title/Program
Summary of Policy
Notes
F:\FHBC\UNIMED
Short Title
Universal Medical Care Act of 1992 or "UniMed".
UniMed Program
Program administered by an independent Health Bene-
fits Administration (HBA), to ensure that basic, afford-
able medical care is available to all citizens, under a uni-
fied, coordinated program. The MediWorker component
imposes an employer mandate to provide basic insurance
benefits to employees and their spouses. The MediKids
component ensures that the same basic benefits (with
modifications to take into account the medical needs pe-
culiar to children) are extended to the children of work-
ers and nonworkers. the MediWrup component extends
basic benefits to adults who are not in the workforce.
Title I. MediWorker Component
An employer mandate covering full-time adult employ.
ees (and вроивев who do not work full-time).
Basic benefits (including preventive services), with a
1
$250 individual deductible, 20 percent coinsurance, and
$2,500 stop-loss, but with first-dollar coverage for preg-
nancy-related and preventive services.
Funded by premiums paid by employers and (through
withholding) by employees at " prescribed "MediWorkers
national premium percentage" (MNPP) of payroll, except
that employees pay no more than 20% of premium.
Process for premium/benefit equalization that assures
that employer and employee premiums are related to
payroll and health plan receipts are related to actuarial
risk.
Additional insurance reform (including guaranteed
availability, acceptance of actuarially based premium
rate, no preexisting condition exclusion) to promote
availability to all employers and employees.
Effective: January 1, 1995.
ary 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Overview/Summary
Title/Program
Summary of Policy
Notes
FHBC\UNIMED
Title II. MediKids Component
Extension of the MediWorker component, providing
health benefits not only to workers' children, but to all
children under 22 years of age, regardless of familial,
employment, educational, or economic status.
Same benefits as under McdiWorker component, but
adding additional preventive benefits, prescription drugs,
and certain therapeutic services, increasing outpatient
mental health benefits, and decreasing cost-sharing for
the youngest.
Funding for MediKids component of UniMed derived
substantially through premium payments integrated
under MediWorker component, to the extent that HBA
determines such integration necessary for maintenance
of effort in relation to existing practices in the work.
place. Remainder of funding derived from States under
maintenance of effort determined in relation to existing
2
medicaid assistance, from payroll Laxes on workers
under age 22 (and who therefore do not qualify for cover-
age under MediWorkers component), and from additional
general revenues, including Federal funds from previous
general revenues dedicated to medicaid.
Effective: January 1, 1995.
Title III. MediWrap Component
Further extension of MediWorkers component, provid-
ing health benefits to all individuals 22 years of age or
older who are not covered under MediWorker component
or Medicare.
Same benefits as in MediWorkers component.
Funded through a national community-related premi-
um, subject to a low-income assistance cap set at a per-
cent of income.
Effective: January 1, 1995.
February 20, 1992 (12:50 p.m.)
Title IV. Cost Containment
Cost containment features integrated throughout
UniMed Program, such as (1) encouraging use of "man-
aged" or "coordinated" care (through HMO's, ulilization
review, use of practice guidelines and outcomes re-
F:\FHBC\UNIMED F:\FHBC\ UNIMED
search), (2) use of uniform claims forms and uniform
health plan cards, and (3) initiatives toward medical
malpractice reform.
Based in the MediWorkers component, UniMed Pro-
gram will provide for (1) payment of health plans based
on actuarial capitation, thus fostering competition, (2)
maximum charge limits (based on medicare payment
methodology), and (3) locally-based quality monitoring to
ensure full availability of services and providers.
Under MediKids and MediWrap components, UniMed
Program will also provide for mandatory assignment and
use of specific payment rates.
Title V. Low-Income Assistance
Premiums.-McdiWorkers component employee premi-
ums related to wages (viz., lower for low-income work.
ers). MediKids component funded in part through
MediWorkers premiums. Additional premiums for
3
MediKids component and premiums for MediWrap com-
ponent capped at the percent of income applied under
the MediWorkers component.
Deductible and Coinsurance.-Throughout the UniMed
Program, reduction/rebate of cost-sharing for individuals
with income below poverty level, with phase-out in low-
income assistance until there is no assistance for those
with income exceeding 200 percent of poverty level.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Overview/Summary
Title/Program
Summary of Policy
Notes
F:\FHBC\UNIMED
Title VI. Financing
UniMed Program generally keyed to funding based on
the MediWorkers National Premium Percentage, as pre-
scribed by HBA.
MediWorkers Component.-Financed entirely through
payroll-related premiums, with employees paying no
more than 20%. No Federal funding component.
MediKids Component.-Financed for MediWorkers chil-
dren entirely through MediWorkers premiums. Financed
for MediWrap children through an addition to the
MediWrap community-based premiums, "equalized" pay-
roll taxes on employees under 22, and State medicaid
maintenance of effort payment (with additional Federal
revenues).
MediWrap Component.-Comnunity-rated premium
(subject 4 ome cap), UniMed self-employment taxes,
"equalized" payroll taxes on part-time and seasonal em-
ployees, and Medicaid maintenance-of-effort payments.
Low-Income Assistance.-(1) Income tax on gross in-
come (other than wages and self-employment income
subject to premium or taxes under MediWorkers,
MediKids, or MediWrap components of UniMed) at flat
rate (of approx. 1.5%), and (2) other revenue sources.
Small employer transitional subsidy.-Other revenue
sources.
Medicare program expansion.-Increase in cap on HI
part of FICA and SECA (adjusted annually) to finance
Medicare changes described below (see title VIII).
February 20, 1992 (12:50 p.m.)
Title VII. Overall Administration
Establislunent of independent Health Benefits Adminis-
tration (HBA) headed by a 15-member board.
HBA controls a Federal Health Benefits Equalization
Corporation (FHBEC), with data collection functions and
F:\FHBC\UNIMED
special function under the MediWorker component relat-
ing to "equalizing" premiums paid by employers and
"equalizing" premiums received by plans.
Additional special provisions with respect to enforce-
ment (including an early resolution program to settle
grievances andadministrative review procedures).
Several specified advisory cominittees, to deal with ben-
efits and coverage, rates, etc.
Title VIII. Medicare Changes
Reduction in age of initial eligibility from 65 to 60, ef-
fective January 1, 1995.
Title XIX. Miscellaneous
Repeal of COBRA Continuation
Grants program to expand services of Federally quali-
fied health centers.
Conforming Medicaid program to earlier changes.
5
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Table of Contents of Provisions
Title
Subtitle
Provision
F:\FHBC\UNIMED F:\FHBC\ UNIMED
TITLE I. MEDIWORKERS COMPONENT OF
Subtitle A. Employer Mandate
A1. Enrollment Requirement
UNIMED
A2. Certification of Employer Coverage Under Plan
A3. Coverage Based on Employment in Previous Month
Subtitle B. Group Health Plan Requirements
Summary of Requirements for all Group Health Plans
Subtitle C. Required "Core" Benefits
C1. Core Services
C2. Deductible
C3. Coinsurance/Copayments
C4. Limit on Cost-Sharing
Subtitle D. Maximum Charge Limits and Minimum
D1. Establishment of Reference Payment Rates
Payment Rates
D2. Maximum Charge Limits
D3. Minimum Plan Payment Rates
D4. Payment Methodologies
D5. Controls on Capital Expenditures for Hospitals
Subtitle E. Employee and Consumer Protections
E1. Limit on Employee Premiums
E2. Treatment of Pre-existing Conditions
9
E3. Consumer Protections
E4. Standardization and Benefit Portability
E5. Additional Requirements for Network Plans
Subtitle F. Additional Requirements for Insured Plans
F1. Guaranteed Availability
F2. Guaranteed Renewability
F3. Offering of Minimum Benefit Plan
F4. Premiums/Rating
F5. Plan Certification for Employers
F6. Enforcement of Requirements for Insured Plans
Subtitle G. Premium Equalization Process
G1. Summary/Overview
G2. Specification of Employer Premiums (MediWorkers
National Premium Percentage (MNPP))
G3. Requirement of Equalization
G4. Computation of Capitation Amounts
G5. Information Reporting
G6. Transitional Premium Subsidy for Small Business
H.L.C.
20, 1992 (12:50 p.m.)
Subtitle H. Enforcement and Related Administrative Is-
H1. Enforcement of employee's rights under group
sues
health plans through Special Counsel and Group Health
Plan Review Board
H2. Additional enforcement actions
FHBC\UNIMED
H3. Effect of enforcement prevision
H4. Miscellaneous enforcement and administrative pro-
Visions.
Subtitle I. Miscellaneous
11. Preemption of State provisdns
12. Repeal of COBRA Contination Requirements
13. Incruase Deduction for Ixpenses for Self-Employed
TITLE 11. MEDIKIDS COMPONENT OF unimed
Subtitle A. Eligibility/Entillement
Subtitle B. Required Benefits
111. Services
112. Deductible
B3. Coinsurance
Bd Limit on Cor-Sharing
Subtitle C. Payments for Services
CI. Phyment Dates
12 Payment Method
Subtitle D. Miscellaneous
DI. Premiums
D2. Use 0 Intermediaries
7
D3. Treitment of HMO's and Capitation
1)4. Reation to Medicare and Medicaid Programs
D5. Inforcement
TITLE III. MEDIWRAP COMPONENT OF UNIMED
Subtitle A. Eligibility/Entitlement
Subtitle B. Benefits
Subtitle C. Payments for Services
C1. Payment Rates
C2. Payment Method
Subtitle D. Miscellaneous
D1. Premiums
1)2. Use of Intermediaries
D3. Treatment of HMO's
D4. Relation to Medicaid Program
D5. Enforcement
TITLE IV-COST CONTAINMENT AND QUALITY
Subtitle A. Determination of Premiums Based on
CONTROL
Mediworkers National Premium Percentage (MNPP);
Use of Capitation Rates
Subtitle B. Payment Levels
H.L.C.
Subtitle C. Controls on Capital Expenditures
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Table of Contents of Provisions
Subtitle
Provision
Title
IBC\UNIMED
Subtitle D. Encouraging Use of "Managed" or "Coordi-
D1. Encouraging UBe of "Network Plans"
nated" Care
D2. Encouraging Use of Utilization Review
D3. Use of Practice Guidelines and Outcome Research
D4. Quality Control Mechanisms
Subtitle E. Improvements in Administrative Efficiency
E1. Uniform Claims Forms and Electronic Billing
E2. Uniform Health Cards
Subtitle F. Medical Malpractice Reform
Subtitle G. Cost Contuinment-MediKids and
G1. Payment Rates
MediWrap Components
G2. Encouraging Use of "Managed" or "Coordinated"
Care
G3. Improvements in Administrative Efficiency
G4. Medical Malpractice Reform
A. Premum Assistance
TITLE V-LOW-INCOME ASSISTANCE
B. Deductbles and Coinsurance Assistance
8
C. Applicatnn Process
Subtitle A. MediWorkers Component of UniMed
A1. Employee Share
TITLE VI-FINANCING
A2. Treatment otSelf-Employed
A3. Treatment of Children and Part-Time and Seasonal
Workers
A4. Effective Date and Maintenance of Employer Effort
A5. Funding Early Rewlution Program and Adminis-
trative Review Process
A6. Funding Transitional Premium Subsidy for Small
Business
Subtitle B. MediKids Component of UniMed
B1. MediKids Element of MedWorkers National Premi-
um Percentage (MNPP)
B2. MediKids Element of MediWr.p Premium
B3. State Medicaid "Maintenance "Effort" Payment.
B4. Treatment of Workers under Age22
B5. Additional Federal Funds.
H.L.C.
3
Subtitle C. MediWrap Component of UniMed
C1. Actuarial Premium Collected Through Income-Tax
System
C2. State Medicaid "Maintenance of Effort" Payment
F:\FHBC\UNIMED F:\FHBC\ UNIMED
C3. MediWrap Employment Equalization Tax for Part-
Time and Seasonal Workers
C4. MediWrap Tax on Self-Employment Income
C5. Source of Additional Federal Funds
Subtitle D. Medicare Program Eligibility Expansion
Subtitle E. Low-Income Assistance
TITLE VII-OVERALL ADMINISTRATION
A. Health Benefits Administration (HBA); basic struc-
ture
B. Federal Health Benefits Equalization Corporation
(FHBEC)
C. Office of Special Counsel
D. Early Resolution Program (ERP) Office
E. Group Health Plan Review Board (GHPRB)
TITLE VIII-MEDICARE REVISIONS
A. Reduction in Age of Medicare Eligibility
6
TITLE IX-MISCELLANEOUS PROVISIONS
A. Repeal of COBRA Continuation Requirements
B. Grant Program for Expansion of Federally Qualified
Health Centers
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Employer Mandate
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
A. EMPLOYER MANDATE [subtitle A of title I (new
MediWorkers component of UniMed will be set forth in
subtitle A of title V of ERISA)]
new title V of ERISA.
Title I of ERISA will be amended so as to restrict its ap-
plicability with respect to group health plans to the fidu-
ciary provisions of part 4 of subtitle B. Reporting re-
quirements for group health plans will be part of new
title V of ERISA. The enforcement and court review pro-
visions of part 5 of subtitle B of title 1 will continue to
relate to group health plans, but only with respect to
rules contained in part 4 of subtitle B (fiduciary duties).
New enforcement provisions in title V of ERISA will re-
late to all other aspects of ERISA regulation of group
health plans.
Necessary amendments will be made to ensure that
preemption of State law with regard to matters not COV-
ered under title I will be provided in new title V. Pre-
10
emption will be maintained under title V with respect to
group health plans in the same manner and extent as
currently provided under title I.
A1. Enrollment Requirement
-All employers are required to enroll full-time employ-
ecB (and spouses who are not full-time employees) who
are not children under an employee welfare benefit plan
(as defined in title I of ERISA) that is a qualified group
health plan (us defined below). U.S. companies employ-
ing U.S. nationals abroad would have to meet this re-
quirement.
These plans can be insured or self-insured. Self-em-
ployed individuals (with or without employees) would be
covered under MediWrap component of UniMed.
Coverage would begin with the month following the
month in which became a full-time employee (or spouse).
Effective Date.-Requirement becomes effective us of
January 1, 1995; except not apply to workers (and fumi-
ly) receiving any health care coverage under the terms of
is current collective bargaining agreement.
H.L.C.
A2. Certifi
of Employer Coverage Under Plan
20, 1992 (12:50 p.m.)
A2. (a) Requirement
Each employer must provide to the Health Benefits Ad-
ministration (HBA) at such times (not less often than
annually) as HBA specifies a certification from a quali-
fied group health plan of coverage of full-time employees
(and related spouses) of the employer under the plan.
The plan could charge the employer premium in ad-
vance (but not for more than 3 months in advance) to
make the certification. The plan would assume the risk
of collection for premiums during the period of certifica-
tion.
A2. (b) Enforcement
-IRS shull provide HBA requested information on em-
ployer identification numbers issued; these would be
matched up against HBA records to find out about em-
ployers not reporting.
-If employer failed to meet requirement (viz., failed to
provide required coverage or certification thereof) after
warning from the HBA, the HBA through an order
(which is enforceuble in court)-
(1) would assign full-time employees (and spouses) to a
11
qualified group health plan,
(2) would assess the employer the amount of premium
otherwise due, plus 50 percent, (but the employer would
be prohibited from charging employees any more) during
a 3 month period, and
(3) would require the employer to provide information
on payroll for employees.
An employer's fuilure to pay the premium (and penalty)
ussessed would create a lien (which would have priority
in bunkruptcy proceedings).
A3. Coverage Based on Employment in Previous
Group health plan in liable for those employed full-time
This would also be used as model for portability under
Month
during the previous month for that employer [this would,
the UniMed program.
effectively, require a week's worth of work before you
take responsibility]. If an employee left one job and
started another job during a month, in the following
month the last full-time employer would assume respon-
sibility. The group health plan must continue to provide
coverage to individuals until they leave employment or
establish evidence of other full-time employment.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Group Health Plan Requirements
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
B. GROUP HEALTH PLAN REQUIREMENTS [sub-
title A of title I (new subtitle B of title V of ERISA)]
Summary of Requirements for All Group Health
To be qualified, a group health plan must meet speci-
Plans
fied requirements (detailed below):
[Part I of new Subtitle B]
(1) provide required core benefits (see C1. below];
(2) limits on deductibles, and coinsurance, and a limit
on cost-sharing [see C.2-4. below];
(3) consumer protection provisions (including maximum
employee premiums, no preexisting condition limits,
"portability" of benefits, and solvency protection) [see E.
below; provisions may be incorporated by reference from
general provisions in title VII];
(4) adequate payment rules (Hee D3. below];
(5) meets plan requirements of § 402 of ERISA, trust re-
quirements of § 403 of ERISA [no exceptions], and claims
12
procedures of $503 of ERISA; and
(6) provide for equalization of premiums and capitation
rates for core benefits, including related information re-
porting (in accordance with subsequent subtitle) [see F.
below].
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Required Benefits
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
C. REQUIRED "CORE" BENEFITS
[Part Il of new Subtitle B]
C1. "Coro" Services:
Employers can supplement core benefits.
Details on definitions to be filled in by HBA.
Plans could offer additional benefits (such as hospice
care) if desired (particularly if plans found that addition-
al benefits resulted in no increase in total costs).
C1. (a) Inpatient hospital services
Unlimited; except limited to 45 days of inpatient men-
tal health services in any year.
C1. (b) Physicians' services
Unlimited inpatient and outpatient physicians' services
[See title IX for grant program to expand community
and community health clinic services (except for limit on
health centers.)
mental health services, see below).
C1. (c) Mental health services
Limited to 45 days of inpatient care per year and 20
Would be 40 outpatient visits per year under MediKids
outpatient visits per year. Would treat as qualified pro-
component
13
viders (for outpatient services) psychologists and clinical
social workers.
C1. (d) Alcohol and drug abuse treatment services
Limited specified dollar value (viz., $5,000) in any 3-
year period.
HBA to review dollar limit and is authorized to update.
HBA to specify who are qualified providers.
C1. (e) Pregnancy-Related Services
Coverage of prenatal, labor, delivery, and postnatal
services, including services of certified registered nurse
midwives.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [title I]-Required Benefits
Notes
F:\FHBC\UNIMED
Issue/Topic
Policy
C1. (f) Preventive Services
Coverage of--
Screening mammography and screening pap smears (at
frequency to be specified by HBA),
Family planning services, &
Adult immunizations.
HBA to establish an advisory committee (which would
include doctors and repre. of employers, employees, and
employer health plans) to make recommendations on ad-
ditional preventive benefits. HBA can add new preven-
tive benefits (for all or for populations at risk) if appro-
priate, taking into account cost, but only after providing
at least 2 years' notice (so Congress has time to respond
and 80 employers and plans can adjust to the new bene-
fits).
C1. (g) Laboratory and Diagnostic tests
Diagnostic and laboratory tests are covered.
14
C1. (h) Case management services
To be covered for people diagnosed with certain ail-
ments, specified by HBA. HBA to provide minimum
stundards of qualifications for case managers.
C1. (i) Determinations of Covered Services
Benefits are required only for medically necessary and
reasonable services, or, in the case of preventive services,
in accordance with periodicity schedules.
HBA would establish an advisory committee for review-
ing medical necessity. In particular, the Committee
would review determinations with respect to experimen-
tal treatments.
C1. (j). Demonstrations of New Benefits
The HBA may provide for a set aside, through the Fed-
eral Health Benefits Equalization Corporation (FHBEC)
in an amount not to exceed Yiuth of 1 percent of total
MNPP premiums, in order to conduct demonstration
projects for new benefits and for central funding of ex-
perimental treatments (which individual plans are not
required to pay for).
C2. Deductible
Single, per person annual deductible.
No "fumily" deductible.
H.L.C.
February 20, 1992 (12:50 p.m.)
C2. (a) Amount
$250, indexed by inflation-related increases in SSA
wage base (viz., § 230 contribution and benefit base).
C2. (b) Exceptions
Does not apply to pregnancy-related services or preven-
F:\FHBC\UNIMED
tive services
C3. Coinsurance/Copayments
-
C3. (a) Percentage
20 percent.
C3. (b) Exceptions
Does not apply to pregnancy-related services or preven-
tive services.
Can be greater in the case of provision of services by
nonparticipating providers under qualified network
plans.
C4. Limit on Cost-Sharing
$2,500 per person. Amount indexed by increases in SSA
Same index as for deductible. "Family" limit is sum of
wage base.
limits for family members.
15
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Payment Rates & Consumer Protection
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
D. MAXIMUM CHARGE LIMITS AND MINIMUM
PAYMENT RATES
[Part III of new Subtitle B)
D1. Establishment of Reference Payment Rates
In connection with the periodic establishment of the
MediWorkers national premium percentage (MNPP) and
using medicare payment methodology or similar prospec-
tively determined payment methodology, HBA will set
reference payment rules.
HBA may, upon application by a State, permit substitu-
tion of State-based rules, if (1) the rules will apply to all
payors (including the MediKids and MediWrap compo-
nents), (2) the rates will not result in total expenditures
greater than those otherwise permitted under all the
programs, and (3) will not result in a significant shifting
of costs among the different components.
16
D2. Maximum Charge Limits
Institutional services.-For institutional services (viz.,
Maximum charge limits consistent with medicare
other than professional services), the reference payment
model.
rates are the maximum charges that can be imposed by
providers for covered services for individuals under
qualified group health plans.
Professional services.-For physician and other profes-
sional services, the maximum charges are the same pro-
portion above the reference payment rates as the limit-
ing charge permitted under the medicare RB-RVS pay-
ment system.
Enforcement.-Violation'of the charge limits would sub-
ject providers to civil money penalties and exclusion
under MediKids and MediWrap components of UniMed.
H.L.C.
February 20, 1992 (12:50 p.m.)
D3. Minimum Plan Payment Rates
QGHPs must provide payment either of at least 95 per-
cent of the reference payment rates or establish to the
satisfaction of HBA that the rates provide for access to
all required benefits without beneficiaries incurring ad-
F:\FHBC\UNIMED
ditional out-of-pocket expenses.
To avoid cost-shifting for direct medical education ex-
penses, HBA may require that payment for hospital
services for a teaching hospital include an appropriate
additional percentage which reflects, in the aggregate,
an appropriate percentage to provide for direct medical
education costs.
HBA will monitor impact of payment rates on capital
expenditures and medical education, particularly for dis-
proportionate share hospitals.
D4. Payment Methodologies
Plans must make payment using medicare payment
methodologies (e.g., DRG-based system for inpatient hos-
pital services, RB-RVS for physician services, etc.). Pay-
ment for hospital services would include, as under medi-
care, payment for couls of capital and indirect medical
education.
17
H.L.C.
112.50 3 February 1992 , 3 -
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [title I]-Payment Rates & Consumer Protection
Issue/Topic
Policy
Notes
F:\FHBC\ F:\FHBC\UNIMED UNIMED
D5. Controls on Capital Expenditures for Hospi-
-Hospitals required to report annually to HBA on ex-
tals
penditures for capital.
-HBA will require justification for rates of increase in
capital costs identified as excessive. In identifying rates
of increase that are excessive, HBA will take into
account—
1. allowable rates of increase in maximum charge limits
for hospital services (viz., general rate of increase in pay-
ments for hospital services);
2. average rate of increase in capital expenditures for
hospital services generally;
3. rule of increases in unit costs of capital (e.g., based
on an index of costs of construction); and
4. percentage of the hospital's budget devoted to capital
expenditures (in comparison with the average hospital)
(viz., 80 that hospitals with historically low capital ex-
18
penditures are permitted to rise to the average).
-HBA would establish standards (like those used
under certificate of need luws) for finding that a higher
rate of increase in hospital capital expenditures is justi-
fied. In order to provide for predicability, HBA will pro-
vide a process under which a hospital could apply, before
making capital expenditures that otherwise might result
in an excessive rute of increase in capital expenditures,
for "pre-approval" of the additional expenditures.
-The HBA will reduce, prospectively, the maximum
charge limits for hospital services to the extent the iden-
tified excessive rate of increase in capital expenditures
has not been justified. This is an effective "disallowance"
of excessive, unjustified capital expenditures.
E. EMPLOYEE & CONSUMER PROTECTIONS
[Part IV of new Subtitle B]
H.L.C.
February 20, 1992 (12:50 p.m.)
E1. Limit on Employee Premiums
Employee premiums cannot exceed 20% of
Employer can pay employee's share, and remains tax-
MediWorkers National Premium Percentage (MNPP) es-
free to employee.
tablished by HBA.
F:\FHBC\UNIMED
E2. Treatment of Pre-Existing Conditions
There may be no preexisting condition restrictions for
basic benefits.
E3. Consumer Protections
-Physician incentive plans (viz., plans that provide di-
rect incentives for physicians to reduce or limit services
to individuals) must meet medicare requirements.
-Insured plans must have satisfuctory protection of en-
rollees with respect to potential insolvency and self-in-
sured plans must maintain an adequate escrow reserve.
-In case of plan insolvency, enrollees will not be liable
to providers for more than cost-sharing which would
have been required in the absence of insolvency. HBA to
establish the solvency standards taking into account
those standards required by OPM of plans under the
Federal Employees Health Benefits Program (FEHBP).
E4. Standardization and Benefit Portability
Plans would issue health plan cards in a standard form.
19
Plans would process claims using standard forms and
processes established by HBA.
In order to assure the continuity and "portability" of
benefits and providing additional protection against "job-
lock", QGHPs would have to provide notice to the HBA
of individuals enrolled and disenrolled under plans and
coordinate (in accordance with HBA standards) the ac-
counting, reporting, and crediting of deductibles and
cost-sharing previously incurred.
E5. Additional Requirements for Network Plans
Network plans (viz., plans with provider restrictions or
[viz., HMOs, PPOs]
additional cost-sharing for nonparticipating providers be-
yond 20 percent) must meet additional requirements re-
lating lo
-full disclosure of conditions, &
-providing for out-of-plan coverage in cases of emer-
gencies.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Insurance Reform
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
F. ADDITIONAL REQUIREMENTS FOR INSURED
Also, insured plans must also meet the following re-
These effectively are the elements of 'insurance reform'
PLANS
quirements:
included in the proposal.
[Part V of new Subtitle B]
F1. Guaranteed Availability
Guaranteed availability of busic benefit package for all
employers (without regard to size) in any State in which
the insurer does business; except that HMO's and simi-
lar limited enrollment plans can limit enrollment on a
1st-come-1st served busis and may limit to those employ-
ers in their service delivery area (which area must be
reasonable, as determined by the HBA).
The insurer must agree to take employers assigned to
the plan by HBA under A2. above. The HBA would es-
tablish a method for reassignment and would pay over to
plan 100 percent of premium otherwise due.
If HBA believes that reinsurance was not generally
20
available to help small insurers who might otherwise be
at risk (because they can no longer underwrite and must
depend upon capitation-related income) and that such re-
insurance is necessary to carry out the MediWorkers
component of UniMed, the HBA is authorized to estab-
lish a reinsurance program (and to charge appropriate
premiums for this purpose).
F2. Guaranteed Renewability
Policies must be guaranteed renewable (viz., no cancel-
lation by insurer due to health status), unless terminat-
ed for cause or unless terminates all group health plans
in a State (and, in such сиве, makes financial provision
for claims previously incurred).
F3. Offering of Minimum Benefit Plan
Must offer qualified group health plans that are only
States cannot require offering of other benefits or other
basic plans (viz., no additional benefits beyond the mini-
types of plans; see H1. below.
mum), if offer other plans.
H.L.C.
February 20, 1992 (12:50 p.m.)
F4. Premiums/Rating
Cannot charge (for basic plans) more than the
Risk for insurers will be adjusted through "equaliza-
MediWorkers National Premium Percentage (MNPP)
tion" process.
specified by the HBA.
However, there are no price controls on supplemental
Plans may not require employers to pay for more than
F:\FHBC\UNTMED
plans; for such plans insurers can underwrite groups and
3 months of premium in advance.
charge unequal premiums for additional benefits.
F5. Plan Certification for Employers
Will provide for certification to HBA of employers en-
rolled under plan.
F6. Enforcement of Requirements for Insured Plans
Noncomplying insurer subject to administrative en-
forcement, including administrative order of specific per-
formance plus a penalty of up to $1,000 for each employ-
er for each day of noncompliance or, in egregious caBeB,
loss of status as a qualified health plan.
21
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Premium Equalization Process
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
G. PREMIUM EQUALIZATION PROCESS [Subtitle A
of Title I (new subtitle C of title V of ERISA)]
G1. Summary/Overview
G1. (a) Principles of System
-(1) Employers effectively pay premiums based on a
percent of payroll. [This provides inter-employer equity.]
(2) Group health plans, after "equalization", effective-
ly receive a netted "actuarial" premium based on the de-
mographic characteristics of individuals enrolled. [This
provides inter-insurer equity and provides opportunity
(and therefore incentive) for health plans to contain
costs.] Since health plans are not paid based on actual
cost, employees, employers, and plans may "profit" from
holding down utilization (either through managed or co-
ordinated care or preferred provider arrangements or
through employer/employee wellness programs, or other
22
means).
G1. (b) Approach to Enforcement of Principles
The system will guard against 2 financial risks for
group health plans:
(1) Plans must collect payroll-based premiums (par-
ticularly in the case of employers that go bankrupt in a
month) in an effective manner. This is to be accom-
plished through plans being permitted to charge premi-
ums for months in advance. To provide for predictability,
the premium for a month is related to the payroll of cov-
ered employees for the previous month.
(2) Plans must provide for payment for health benefits
accrued during periods of coverage. This would be as-
sured through requiring, of all qualified group health
plans, adequate protection against insolvency or, in the
case of self-insured plans, some type of escrow account or
other means found satisfactory by HBA.
G2. Specification of Employer Premiums
(MediWorkers National Premium Percentage
H.L.C.
(MNPP))
arv 20. 1992 (12:50 p.m.)
G2. (a) In genera.
Employers (other than those that are eeting mandate
through self-insurance), pay a premium for basic benefits
equal to a percenlage (periodically adjusted by HBA) of
payroll to the qualified plan. This percentage is referred
FHBC\ UNIMED
to as the MediWorkers National Premium Percentage or
"MNPP".
Plans of self-insured employers are treated the same as
insured plans for purposes of "equalization" of payable
premiums to benefits to be provided.
Payroll subject to MNPP would be capped for each
worker at twice the maximum wages subject to the So-
cial Security tax.
G2. (b) Computation of MediWorkers National Premium
Percentage (MNPP)
G2. (b)(1) In general
-Establishment of initial MNPP. The MediWorkers Na-
The MNPP specified for the first year will be sufficient
tional Premium Percentage (MNPP) of payroll for the 1st
to fund the entire MediWorkers component (not includ-
year only (viz., 1995) will be specified in the statute.
ing any low-income assistance under title V).
Subsequent MNPP.HBA will adjust the MNPP each
For timing and process (including use of advisory com-
year to reflect changes in health care costs relative to
mittees), see below.
23
payroll. HBA must set the MNPP high enough to cover
all expenses. HBA can provide for a contingency margin
and can set up as reserve (to stabilize rates during reces-
sionary times or for epidemics).
The HBA would adjust the MNPP each year based on
errors in projections of utilization and total wages in pre-
vious years.
G2. (b)(2) Determination of Trend in Health Care Costs
Health care costs (including administrative costs) to be
(Numerator) for MNPP and In Determining Reference
trended (based on costs in 1991), taking into account the
Payment Rates
following:
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [title I]-Premium Equalization Process
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED UNIMED
(A) Unit health care costs inflation factor (e.g., reflect-
In determining appropriate unit cost inflation, the HBA
ing update in conversion factor for physician services or
would have to consider the 2 different factors which
change in marketbasket for hospital services)
must be reconciled: (1) increases in wages per covered in-
dividual [which is the increase in the revenue stream for
the MediWorkers component] and (ii) increases in inputs
which drive costs of providing services (namely, the
types of factors used in medicare "marketbasket". -type in-
creases).
The unit health care inflation factor derived in this
process would be used by HBA in determining the refer-
ence payment rules for employer plans (and in establish-
ing payment rates under MediKids and MediWrap com-
ponents of UniMed).
The HBA would establish an advisory committee on
health care unit costs.
24
(B) Changes from Medical Care Improvements
This would include new procedures, as well as devices
and new benefits (including preventive benefits). This
would take into account efficiencies resulting from medi-
cal care innovations.
The HBA would use the technology advisory committee
(established for purposes of making coverage recommen-
dations on experimental procedures) for purposes of re-
viewing this component.
H.L.C.
February 20, 1992 (12:50 p.m.)
(C) Trends in demographics and utilization
This would take into account changes in number of cov-
ered individuals and changes in "ge composition in COV-
ered individuals, as well as any changes in required ben-
efits under the MediWorkers component of UniMed.
F:\FHBC\UNIMED UNIMED
Also, HBA would evaluate efficiencies which have re-
sulted or could result from applications of practice guide-
lines and any evidence of inappropriate utilization of
services, as well as evidence of lack of access to or use of
necessary services. This factor would also take into ac-
count the use of health maintenance organization and
other incentives towards managed or coordinated care.
HBA obtains from FHBEC data on utilization of differ-
ent services during the past (to detect trends).
The HBA would establish a separate advisory commit-
tee to review these demographic and utilization changes.
In addition, the views of the advisory committee on qual-
ity would be tuken into account in the review of utiliza-
tion.
(D) Changes in Administrative Costs
This reflects administrative costs as a relative percent
of other expenditures. This would take into account costs
25
for administration of medicare program and coets for ad-
ministration of private health plans. This would also
take into account any need to implement data collection
systems und utilization/peer review systems, and any
new administrative mandates established by HBA. It
would assume implementation of electronic billing ByH-
teins (in conjunction with uniform claims).
(E) Changes in Contingency margin/reserve
This is optional and could serve to buffer percentage
fluctuations from year to year in the economy as well as
to help buffer cash flow fluctuations.
(F) Adjustment for previous year over/under estimates.
In outyears, an adjustment factor to compensate for
over and under-estimations on utilization and other fac-
tors from those assumed.
(G) Change in Demonstration Allowance
This would reflect any change in the optional demon-
stration allowance (not to exceed Y₁₀ of 1 percent).
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [title I]-Premium Equalization Process
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED UNIMED
G2. (c) Projection of Wages (Denominator)
(1) HBA would determine projected total wages subject
to the MediWorkers premium calculation during the sub-
sequent year. The Federal Health Benefits Equalization
Corporation would provide data on structural changes in
workforce (e.g., shift from manufacturing to service) and
other useful historical duta.
Like the Social Security Boards of Trustees, the HBA
would make 3 projections: optimistic, neutral, and pessi-
mistic. The HBA could provide for a contingency reserve
for wage shortfalls to deal with possibility of economic
downturn (to prevent the need to cut benefits or to pro-
vide for massive changes in the MNPP during reces-
sions); this would be achieved by assuring full funding
under the most pessimistic assumptions. The middle
would be used to make the computation, but there would
have to be a sufficient reserve to assure funding if the
26
most pessimistic assumption were to come true.
The HBA would establish a wage advisory committee to
review
G2. (d) Process
The MNPP to be established annually by HBA by regu-
lation. MNPP (and additional information, such as pay-
ment rates) for a year to be published in proposed form
by August 1 of previous year, with a 60 day comment pe-
riod; final regulation to be published by November 15 of
that previous year. Process will begin in 1994 for 1/1/95
effective date.
H.L.C
February 20, 1992 (12:50 p.m.)
G2. (e). Computation of Employer Premium
Employer premiums for a month would be total payroll
This principle reflects coverage under plan based on
(for full-time, 08 well as part-time and children) employ-
employment during previous month. The lag permits the
eeB during the previous month.
system to use more accurate data and provide for greater
In order to "capture" wages for employers going out of
F:\FHBC\UNIMED ::\FHBC\
predictability and stability.
business, in group health plans equalizing premiums
with capitation with FHBEC, the group health plan is
assumed, with respect to an employer, to have collected
the same amount for a month as the amount for the pre-
vious month; this would be to take into account employ-
ers that go out of business and don't provide information
on wages for the month in which they go out of business.
G2. (f) Collection of Employer Premiums
Generally, the timing of collection of premiums is left
up to negotiation between employers and plans. However
(in order to deal with problems of small employers)-
(1) a qualified plan cannot require payment for more
than 3 months of premiums;
(2) in estimaling amount of premiums, the plan cannot
base estimated premiums for future periods on amounts
exceeding the MNPP of the most recent actual payroll;
and
27
(3) the plan must provide for adjustment, not less
often than quarterly, of any estimated premiums based
on actual payroll.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [title I]-Premium Equalization Process
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
G3. Requirement of Equalization
-Equalization Premiums Payable to FHBEC.-Each
qualified group health plan (including self-insured emi-
ployers and Taft-Hartley plans) must pay to the Federal
Health Benefits Equalization Corporation (FHBEC,
which is within the Health Benefits Administration) an
amount equal to the amount by which (A) the employer
premiums (viz., computed as an HBA-specified percent of
payroll) exceed (B) the "capitation amount" [Bee G4
below] for all individuals covered under the plan.
Equalization Rebates Paid by FHBEC-FHBEC must
pay each group health plan (including self-insured em-
ployers and Tuft-Hartley plans) an amount equal to the
amount by which (A) the employer premiums (viz., per-
cent of payroll) [see G3 below] are less than (B) the "capi-
tation amount" [see G4 below) for all individuals covered
under the plan.
28
Payments and rebates would be made, not less often
than quarterly, accordingly to schedule established by
FHBEC.
G4. Computation of Capitation Amounts
G4. (a) Summary
The capitation amount, which is used by FHBEC as a
reference rate for the amount employer plans should
have received for basic benefits, for an individual is
equal to the product of a buse rute (common to all indi-
viduals) and the weighting factors (for the actuarial class
to which the individual is assigned). The base rate and
weighting factors (as well as actuarial classes) are estab-
lished by the HBA under the process described below.
H.L.C.
February 20. 1992 (12:50 p.m.)
G4. (b) Establishment of Actuarial Classes
The HBA shall assign individuals covered under quali-
fied group health plans to "actuarial classes". These
classes are established by the HBA, based on a combina-
tion of age, sex, disability status, area of residence, and
F:\FHBC\UNIMED
other appropriate factors, and would be actuarially
sound. The HBA shall establish the minimum number of
actuarial classes and shall not provide for disease-specif-
ic or condition-specific classifications. Within each class,
insurers can reasonably anticipate that individuals will
use similar amounts of basic health benefits.
G4. (c) Computation of Relative Weight for Each Actuar-
Using sample data supplied by FHBEC in its work, the
ial Class
HBA computes "weighting factors" that reflect the rela-
tive costs of each actuarial class compared to the average
for all the classes. So a weight of "1.0" represents an av-
erage risk or average amount of anticipated health care
expenditures. A weight of "2.0" represents as group that
is likely to have health cure expenses for busic services
that are twice the national average. The weights would
be subject to annual adjustment.
29
FHBEC would obtain information, on covered individ-
uals by social security number only, on plan enrollment,
age, sex, and other relevant actuarial characteristics nec-
essary to assign accurate weighting factors for each indi-
vidual. Privacy Act protections would apply to restrict
use and disclosure of the information. There would be a
one-time collection of information; information would be
periodically audited (in conjunction, say, with the audit-
ing of how much spent for different classes of individ-
uals) and individuals would have acceBB to verify or
change information. The information would only be used
for purposes of capitation payment computations. Quali-
fied group health plans would be required to report to
FHBEC information on "medical events affecting capita-
tion" [things that would affect, prospectively, payments
to be made to plans], by social security number only.
In the equalization process, QGHPs would submit the
social security number of covered individuals and would
receive payment for all individuals on on aggregate (viz.,
there would be 110 individual specific payment).
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [title I]-Premium Equalization Process
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
G4. (d) Computation of National Average Expenditures
The FHBEC would compute each year, based on the
(Base Rate)
MediWorkers national payroll percentage (MNPP), a na-
tional average per capita amount of expenditures ("base
rate") for basic health care services under all qualified
group health plans (including self-insured plans). This
base rate would be based on formula: (A) total projected
payroll for MediWorkers covered individuals subject to
MediWorkers premiums, times (B) MNPP, divided by (C)
average number of covered individuals under
MediWorkers component of UniMed.
The base rale would not take into account discounting
from the payment rates.
The HBA may ask the FHBEC to examine historical in-
formation on utilization to recommend appropriate
weighting factors to be applied.
30
G4. (e) Computation of Capitation Amount
For each individual in an actuarial cluss, the "capita-
tion amount" would be the product of the national aver-
age expenditures and the weighting factor for the class.
G5. Information Reporting
Qualified group health plan must report quarterly to
the FHBEC information on (1) case (viz., demographic/
actuarial) characteristics of enrollees, including informa-
tion on "medical events affecting weighting factors" and
(2) payroll for covered enrollees.
Qualified group health plans must report to GAO and
Information to be used (1) to check appropriateness of
FHBEC (and HBA) information (not in individually iden-
the MediWorkers National Premium Percentage (MNPP)
tifiable form) required to audit expenditures for core ben-
and the capitation amounts are appropriate and (2) to
efits.
identify patterns of under-utilization.
H.L.C.
G6. Transitional Premium Subsidy for Small Busi-
Businesses with 25 or fewer employees would be eligi-
Taking into account the subsidy, for small employers,
ness
ble for a subsidy to reduce the employer share of
the employer share of the premiums would increase from
MediWorker premiums.
40% to 80% of the MNPP.
F:\FHBC\UNIMED
The subsidy would begin at 50% of the employer share
in 1995, and be phased down to be 37.5%, 25%, & 12.5%
in 1996, 1997, & 1998.
Employers would apply to the HBA for the subsidy. The
subsidy would be available as a direct reduction of the
premium required of the employer (and charged by an
insurer against the employer).
31
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
H. ENFORCEMENT AND RELATED ADMINISTRA-
TIVE ISSUES [subtitle A of title I (new subtitle D of title
V of ERISA)]
H1. Enforcement of employee's rights under group
health plans through Special Counsel and Group
Health Plan Review Board
H1. (a) In general
-After exhausting plan's own claims review procedures
(see H4. (a) below), employees may bring complaints to
Special Counsel of HBA, who will attempt to resolve dis-
putes in Early Resolution Program (ERP).
-Special Counsel or employee may bring disputes left
unresolved by ERP to administrative review before AIJ
of the Group Health Plan Review Board (GHPRB), sub-
ject to court review in Federal Circuit Court of Appeals
of appropriate Circuit.
32
H1. (b) Special Counsel process
-Exclusive avenue for actions against group health
plans is by means of complaint filed with local office of
Special Counsel (SC)
-Complaint must be brought within 1 year after notifi-
cation of plan.
-Complainant informs SC of desire to use ERP at time
of complaint.
-Within 10 days, SC notifies plan of complaint and of
election (if any) of complainant for ERP.
-If ERP is not elected, SC decides within 75 days after
date of complaint whether the SC has reasonable cause
to bring the complaint as a charge before an AIJ of the
GHPRB.
-If ERP is not elected, upon the earlier of 75 days or
finding of no reasonable cause, SC must issue right to
proceed letter to complainant. Upon receipt of right to
proceed letter, complainant may bring charge to an AIJ
of the GHPRB independently of the SC.
H.L.C.
February 20, 1992 (12:50 p.m.)
H1. (c)(1) Early Resolution Program
-Plan must submit to ERP upon election by complain-
ant. Process runs for 120 days after notification of plan
by SC. Otherwise applicable administrative review proc-
ess is held in abeyance during ERP.
F:\FHBC\UNIMED
-1. A Director of the ERP and staff will develop pro-
gram procedures, conduct case intake, maintain roster of
"facilitators", coordinate fucilitator selection process, pro-
vide meeting sites, maintain records, and provide
facilitators with legal assistance and administrative sup-
port staff.
-2. HBA Board administers program through the Di-
rector of the ERP. In acting as administrator of ERP,
Board will include 2 additional experts in mediation and
reconciliation of disputes, one representing plan interests
and one representing employee interests.
3. Board will establish lawyer referral panels, legal
specialty panels, and health benefits consultants panel to
serve as resources for assistance to facilitators and the
parties involved in ERP.
H1. (c)(2) Requirements for referral to ERP
-1. Dispute involves participant's assertion of
33
-(A) claim for health benefits (which may be accompa-
nied by claims such as age discrimination, unjust termi-
nation, etc.);
-(B) plan's failure or refusal to comply with partici-
pant's request for information or documents; or
-(C) plan's failure otherwise to comply with require-
ments of applicable law.
-2. Plan has issued final determination under plan's
claim procedure under same standards required under
$503 (picked up in title V) and participant elects to par-
ticipate in process.
3. All parties have opportunity to obtain independent
legal advice to determine whether to enter process, ob-
tain legal representation, basic legal and factual issues
involved.
H.L.C.
February 20. 1992 (12:50 0 m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
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Issue/Topic
Policy
Notes
F:\FHBC\UNIMED UNIMED
H1. (c)(3) Certain parties excluded.
-Certain coBeB excluded—
-(A) case in which complainant is unable to have a
basic understanding of the ERP process, unless they are
represented by a legal guardian or other court-appointed
representative;
-(B) matters within 90 days of court filing dates under
limitation statutes.
H1. (c)(4) Role of facilitators
-Facilitators in the process will do the following:
-1. Facilitate discussions between parties to assist
them in:
-(a) eliminating simple misunderstandings and dis-
putes arising from ill feelings or lack of communication,
-b) gaining a better understanding of opponent's posi-
tion,
-(c) identifying settlement options and undisputed is-
34
sues.
-2. Clarify legal and factual issues involved.
3. Identify additional key information and documents
for assessing parties' positions and predicting outcome of
further adjudication.
4. Encourage settlement by suggesting areas of con-
sensus.
5. Assist in drafting of settlement agreements.
-6. Present the parties with assessment of respective
positions and likely outcome of further adjudication.
H.L.C.
February 20, 1992 (12:50 p.m.)
H1. (c)(5) Entry into ERP proceedings
Neither party waives right to further adjudication of is-
sues at conclusion of process.
-1. Plan must inform participants of ERP when re-
F:\FHBC\UNIMED
sponding to benefit cluims.
-2. SC will encourage referrals by organizations and
agencies.
-3. SC presents participants with written description
of program and requests signed contract to participate
under rules. Contract forwarded to plan for signature.
$100 filing fees filed by both sides (with waiver authority
for participants)
H1. (c)(6) Selection, impartiality, assignment of
1. Facilitators recruited by Board from among qualified
facilitators
professionals who have demonstrated-
-(a) expertise in the law governing employee benefits,
-(b) health plan experience
-(c) ability to act impartially,
-(d) ability to perform quick evaluations and to
present them in nontechnical terms, and
-(e) ability to foster communication between parties
and encourage settlement in an informal setting.
35
-2. To ensure impartiality, the Board shall-
-(a) require disclosure upon application for position of
facilitator situations where conflicts of interest might be
anticipated,
-(b) assess impartiality during training by Board,
-(c) request facilitator to identify any possible conflict
at time of case assignment,
-(d) ask evaluation by parlies.
3. Facilitators will be assigned on blind, random
basis, with opportunity on both sides to strike unaccept-
able selections.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED F:\FHBC\ UNIMED
H1. (c)(7) 120-day process-Timetable
-1. Plan notified within 10 days of complainanťs elec-
tion to enter program.
-2. Facilitator selected within 30 days after notifica-
tion of plan
3. Analysis stage lasts 45 days
4: Evaluation stage lasts until end of 120-day period
following notification of plan
-5. Process may be suspended to permit agency ruling
or to permit second conference upon consent of complain-
ant and plan.
36
H.L.C.
UNIVERSAL MEDICAL CARE (UN ED) ACT OF 1992
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
\FHBC\UNIMED \FHBC\ UNIMED
H1. (c)(8) 120-day process-Analysis Stage
-1. IN GENERAL.-In the commencement of the confer-
ence proceedings of the Early Resolution Program with
respect to any dispute, the facilitator assigned to the dis-
pute shall-
-(A) identify the necessary parties,
(B) confirm that the case is eligible for the Program,
-(C) ensure that the requirements of (c)(2) and (c)(3)
are met and that each party is informed that, while legal
representation is not necessary, there is legal represen-
tation available,
(D) set a conference date,
-(E) at the option of the fucilitator, request position
papers from the parties of not more than 10 pages in
length, if the facilitator determines that such papers are
needed to clarify the parties' positions and issues in dis-
37
pute,
-(F) with appropriate legal assistance provided by the
SC, analyze the record of the claims procedure conducted
pursuant to plan's internal claims review procedure and
any position papers submitted by the parties to deter-
mine if further case development is needed to clarify the
legal and foctual issues in dispute, and whether there is
any need for additional information and documents.
H.L.C.
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Issue/Topic
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Notes
F:\FHBC\UNIMED
-2. POSITION PAPER REQUIREMENTS.-Any position
paper referred to in paragraph (1)(E) which is submitted
by a party shall include a brief, informal statement of
the facts, the issues, and the arguments in support of
the party's position, together with any additional infor-
mation or documents which the parly would like to have
considered. The parties may attach to such papers any
relevant documents or other evidence. Copies of each po-
sition puper will be sent to the other party.
-3. FURTHER CASE DEVELOPMENT.-Further case devel-
opment pursuant to paragraph (1)(F) shall be accom-
plished by directing parties to clarify legal issues and to
produce additional information and documents, identify-
ing the need for any agency rulings, consulting with ex-
perts, and conducting brief legal research as needed.
38
4. COORDINATION OF COMMUNICATIONS.-Any commu-
nications with the purties pursuant to this subsection
shall be made through letters addressed to both parties
or conference calls. Copies of any correspondence to or
from a party will be provided to the other.
H.L.C.
H1. (c)(9) 120-Day Process-Evaluation stage
-EVALUATION STAGE.-Conference proceeds us follows:
-1. The facilitator convenes conference between the
parties, designed to last between 2 and 4 hours.
-2. At the outset of the conference, the facilitator reit-
F:\FHBC\UNIMED
erates objectives and groundrules.
3. The facilitator asks each party additional questions
as determined necessary by the facilitator. If written po-
sition papers were not required by the facilitator, each
party shall be given the opportunity to make a state-
ment summarizing the facts, issues, and arguments in
support of such purty's position, and present, or inform
the fucilitator of, any additional evidence such party con-
siders to be relevant to the evaluation.
-4. The facilitator maintains neutral stunce between
the parties.
5. The facilitator encourages parties to discuss posi-
tions openly, with the goal of identifying undisputed is.
sues and exploring settlement.
-6. If settlement is reached, facilitator assists in the
preparation of " written settlement agreement (which
shall remain confidential at the option of the parties)
39
and shall explain the terms of the settlement to parties.
-7. If no settlement is reached, the facilitator presents
evaluation, including an assessment of the parties' posi-
tions and the likely outcome of litigation. The evaluation
may also include suggestions for narrowing the issues in
dispute (through agency rulings, additional discovery, or
other means).
8. The facilitator encourages parties to discuss settle-
ment again, or to enter into partial agreement on as
many issues as possible.
-9. A second conference may be scheduled at the sug-
gestion of the fucilitator or a party if it is likely to lead
to settlement or a substantial narrowing of the issues.
-10. The facilitator not to meet separately with either
purty. All parties are present at any conferences held
during the proceedings.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
H1. (c)(10) 120-day proceeding-expert assistance to
-1. INDEPENDENT PROFESSIONALS.-The facilitator
facilitutor
may, with respect to any dispute to which the facilitator
is assigned, appoint not more than 2 independent profes-
sionals to assist in mediation and conciliation on issues
with respect to which such professionals have special ex-
pertise.
-2. Legal AND ADMINISTRATIVE support.-Each
facilitator may be assisted by one or more Employee
Benefit Specialists assigned by the Board, consisting of
an attorneys employed in the HBA specializing in benefit
issues under this Act.
40
H.L.C.
February 20, 1992 (12:50 p.m.)
H1. (c)(11) ERP-Misc.
-1. Facilitators compensated on hourly basis and re-
-Costs.-No additional fees on complainants. Annual
ceive travel and out-of-pocket reimbursement. Allowed to
user fee on plans at $.05 a head (with special rules for
serve pro bono.
smaller plans). Costs of ERP to be covered by $100 entry
-2. Facilitators shielded from liability to parties.
F:\FHBC\UNIMED UNIMED
3. Parties may be represented. Board will ensure that
parties are referred to experienced lawyers with exper-
tise.
-4. Legal Effect.-Facilitator may assist in drawing up
binding settlement agreement between parties.
Procedings completely non-binding if no settlement is
reached. If settlement is reached, non-binding and non-
precedential with respect to those not party to the pro-
ceedings. Settlement agreements are filed in Federal dis-
trict court and enforceable by the court upon application
of any party. Neither party to waive rights as part of
agreement. Parties may withdraw at any time before set-
tlement.
-5. Procedural rules.-No formal rules of evidence. All
statements and evidence admissible. Ouths not required
for submission of evidence.
-6. Confidentiality.-Oral and written communications
41
generated within the contest of ERP not subject to dis-
covery in any subsequent legal proceeding, except
-(a) the settlement agreement itself (if any),
-(b) facilitator's final case report indicating no settle-
ment reached.
Parties may agree in settlement to provide for confiden-
tiality of settlement. No transcripts or recordings made.
Facilitator's evaluation is oral. Outside expert's testimo-
ny oral.
H1. (d) Review by Group Health Plan Review Board
-SC, or complainant with right to proceed letter from
(GHPRB)
SC, appeals to GHPRB if matter not resolved in ERP.
H1. (d)(1) Hearings, etc
Every official act of GHPRB entered of record, hearings
subject to §554 of APA, and hearings and records open
to public. May muke rules for proceedings, but unless
other rule adopted, Federal Rules of Civil Procedure
apply.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
H1. (d)(2) Depositions, evidence, fees
GHBRB may order testimony by deposition. Persons
may be compelled to appear and depose, produce evi-
dence.
H1. (d)(3) Investigatory powers
Same powers as NLRB
H1. (d)(4) ALJ determinations; final order of Board
An ALJ appointed by Board will hear and make deter-
minations upon any proceeding before the Board as-
signed by the Board to the ALJ. AIJ makes a report of
final dispostion to the Board. Report of ALJ becomes
final order of Board within 30 days unless a party ap-
peals to the Board or a Board member directs that mat-
ter come before the Board.
H1. (e) Circuit Court review
"Any person" aggrieved by final order of GHPRB may
obtain review in U.S. court of appeals for the circuit in
which "violation occurred or employer resides or trans-
42
acts business". Action must be filed within 60 days of
date of GHPRB's final order (or upon expiration of 30-
day review period). Copies of petition filed with court,
GHPRB, other parties. GHPRB files hearing record with
court. Court has jurisdiction to affirm, modify, or set
aside, in whole or in part, order of the Board and power
to enforce the order. Order may be modified or set aside
only to extent order is determined to be "arbitrary or ca-
pricious".
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
FHBC\ UNIMED
Additional enforcement actions
(a) Civil enforcement actions by HBA, FHBEC, etc.
-Brought by HBA to enjoin any act or practice which
-Note that actions are brought against "insurers" here
violates any provision of title V of ERISA or to obtain
and not "plans".
any other appropriate legal or equitable relief to redress
Also, A2 provides for administrative enforcement of em-
such violations or to enforce any provisions of title V.
ployer mandate itself.
-HBA may assess civil penalties against plans (includ-
ing self-insured employers) of up to $1,000 a day from
date of plan failure or refusal to meet prescribed report-
ing requirements (including under A2.(b)). HBA may
bring civil action to collect. Amounts collected used ex-
clusively for ERP.
-The Federal district courts have exclusive jurisdiction
of civil actions under title V. Cases may be brought in
district where plan is administered, breach took place, or
defendant resides or may be found. No amount in contro-
43
versy requirement.
-Reasonable attorney's fees to prevailing party.
-Authority to sue to be delegated to FHBEC, SC, etc.
with respect to matters within their jurisdiction.
(b) Actions against HBA, etc. by employees, employ-
Suits by employees and beneficiaries, by employers, and
, and plans
by plans to review final orders of HBA, FHBEC, elc., re-
strain HBA, FHBEC, etc. from taking any action con-
trary to title, compel HBA, FHBEC, etc. to take action
required under title, brought in the distict court for dis-
tricl where plan has principal office or DC
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
FAFHBC\UNIMED
H2. (c) Actions between employers and insurers
Federal cause of action in Federal district court by in-
surer against employer and by employer against insurer
to enforce contractual terms. Insurer's plan may termi-
nate coverage of employer's employees for cause, such as
nonpayment of premiums in accordance with permitted
terms of plan. The ERP under the Special Counsel of the
HBA is available for settlement out of court. Settlement
agreements obtained under ERP enforceable in Federal
district court (Bee H1. (c)(11) -4.). State causes of ac-
tion are preempted.
44
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
13. Effect of enforcement provisions.
13. (a) HBA and Group Health Plans
-Plan (or self-insured employer) must provide HBA a
certification of insurance for each contracting employer
on timely basis on behalf of employer.
-Certification of insurance (1) demonstrates that plan
continues to meet qualification requirements during the
reporting period, and (2) Bele forth identity of employers
who either have made payments-or assumed obliga-
tions to a plan to make payments-necussary to provide
required coverage to employees during reporting period,
or have developed reserves to provide for such coverage
---HBA must issue to qualified plan a qualification let-
ter upon demonstrating meeting of qualification require-
ments.
-HBA may assess fines for fuilure to comply with re-
45
porting requirements of lilla.
-In the case of an insured plan that fuiled to meet B2.
requirements or to cover an employer that has tendered
(or offered to tender) premlums, HBA can seek specific
performance and impose a fine (of up to $1,000 per day).
--HBA may sue group health plan in Federal district
court for appropriate legal or equituble relief to enforce
requirements of title.
-Plan may sue HBA for qualification letter and for
other appropriate legul or equitable relief to enforce re-
quirements of title.
13. (b). HBA and employers
-Premium surcharge of 50% payable to HBA by em-
ployer (or by plan on behalf of employer) for failure to
provide timely certification of insurance to HBA
-HBA may sue employer in Federal district court for
appropriate legal or equitable relief to enforce require-
ments of title.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED F:\FHBC\ UNIMED
13. (c) HBA and employees
-Employees have right of action against HBA to carry
[Review this provision]
out responsibilities under title, similar to action allowed
under §502(k) of ERISA.
13. (d) FHBEC and group health plans (and employers
Qualified plans must provide FHBEC timely informa-
n the case of self-insured plans)
tion concerning the payroll of the employer, including in-
formation defining the fulltime workforce and other data
relevant to determination of applicable capitation rates.
Together with such data, the plan must provide data
necessary to determine extent to which payments for
services under the plan have or have not exceeded capi-
tation rates.
-FHBEC may sue plans (including employers provid-
ing self-insured plans) in district court for failure to pro-
vide relevant data on covered employees (and spouses).
Fines may be assessed.
46
-FHBEC may sue plans (including employers provid-
ing self-insured plans) in district court for unpaid equali-
zation payments based on capitation rates. Equalization
payments treated same as tax liens (in establishing pri-
ority in bankruptcy and for purposes of collection).
-Plans (including self-insured employers) may sue
FHBEC in district court for unpaid equalization rebates.
H3. (e) Plans and employers
-Insured plan must provide the employer at least an-
nually a certification that the plan is qualified. Employ-
ers held harmless for reliance on such certification.
-Federal cause of action in Federal district court by in-
surer against employer and by employer against insurer
to enforce contractual terms. Insurer's plan may termi-
nate coverage of employer's employees for cause, such as
nonpayment of premiums in accordance with permitted
terms of plan. Settlement agreements obtained in ERP
enforceable in Federal district court. State causes of àc-
tion are preempted.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Policy
Notes
\FHBC\ \FHBC\UNIMED UNIMED
Miscellaneous enforcement and administrative
visions.
(a) Plan claims procedures
A counterpart to ERISA § 503 will appear in title V, re-
quiring mimimum standards for procedures under the
plan for reviewing benefit claims. The provision will be
strenghened to allow a maximum of 60 days for initial
determinations by the plan, and " maximum of 60 days
to respond to appeals of such determinations. Failure to
respond within the time limit will be deemed a denial of
the claim.
(b) Investigative authority in HBA
Investigative authority will be granted to HBA, subject
to delegation to FHBEC, etc. Authority similar to §504
of ERISA.
(c) Regulatory authority
HBA will have broad regulatory authority, similar to
47
§ 505 of ERISA, subject to delegation to FHBEC, etc.
(d) Coordination with other agencies
Provision similar to § 506 of ERISA
(e) General applicability of APA
Provision similar to 507(a) of ERISA applicable where
appropriate.
(f) Conflict of interest in Govt. employees prohibited
Provision similar to § 507(b) of ERISA
(g) Authorization of appropriations
Provision similar to §508 of ERISA
(h) Interference with rights protected under title
Provision similar to § 510 of ERISA
(i) Coercive interference
Provision similar to §511 of ERISA, including prohibi-
tion of discrimination based on health status
(j) Research, studies, annual report
Provisions similar to § 513 of ERISA
(k) Lien for liability
Rules governing lien for liability should be patterned
after § 4068 of ERISA, while ensuring proper treatment
in bankruptcy.
(1) Limitations on causes of action
Follow rules generally applicable under ERISA (6 year/
3 year Instation)
H.L.C.
112.50 Fahriary , 3 3 10Q2 -
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediWorkers Component of UniMed [Title I]-Enforcement and Related Administrative Issues
Issue/Topic
Notes
F:\FHBC\UNIMED
Policy
H4. (m) Criminal provisions
Criminal code provisions currently applicable to ERISA
violations expanded to include references to new title V
provisions.
48
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWorkers Component of UniMed [title I]-Miscellaneous
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
MISCELLANEOUS [subtitle B of title I)
11. Preemption of State provisions
The term "State" includes all States and territories.
(a) Preemption of State Benefits Mandates
State law cannot require benefits other than the basic
required benefits.
1. (b) Preemption of State Restrictions on Managed or
State cannot impose certain restrictions on bona fide
-
Coordinated Caro
network plans nor on proper utilization review pro-
grams.
2. Repeal of COBRA continuation requirements
-|Cross-reference only here; repeal of ERISA, IRC, and
PHSA provisions would be in title IX]
1. Increase Deduction for expenses for self-om-
[Would extend current 25% deduction through 1/1/95;
[Cross-reference only here; provision to appear in title
loyed
us of that date would increase to 100%, but limit to ex-
VI (linancing).)
penses for required health benefits only.]
49
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediKids Component of UniMed [title II]
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
A. ELIGIBILITY/ENTITLEMENT (Subtitle A)
Extension of MediWorkers component, providing cover-
Disabled children may also be eligible for benefits
age to all children residing in the U.S. who are under 22
under the medicare program, but medicare benefits
years of age, regardless of employment or education sta-
would be secondary to MediKids benefits.
tus.
Enrollment at birth or time of immigration; enrollment
not prerequisite to receive services or benefits.
In order to provide for initial enrollment, would require
schools and Head Start programs and (under medicare)
hospitals to enroll individuals beginning September 1,
1994. Births on or ufter 1/1/95 in medicare hospitals
would be automatically recorded. All children immigrut-
ing to the U.S. would be enrolled at time of entry or ad.
justment of status.
However, children covered under current collective bar-
gaining agreements would not be covered until agree-
ment expired (not counting any extensions).
50
B. REQUIRED BENEFITS [Subtitle B]
Employer's group health plan can supplement benefits;
but benefits under MediKids component are primary.
B1. Services
H.L.C.
1. (a) Basic Services
Except as specified, would include the MediWorkers
"core" service package, including-
-inpatient hospital services (subject to 45 day annual
limit for inpatient mental health services), except that
F.\FHBC\UNIMED FHBC\ UNIMED
preadmission authorization would be required for inpa-
tient mental health services and no admission would be
approved if could adequately treat as un outpatient;
-physicians services and community health clinic Berv-
ices;
-mentul health services (but with outpatient limit of
40 visits per year, rather than 20 under MediWorkers
component of UniMed);
-ulcohol and drug abuse treatment services;
-pregnancy-related services;
-laboratory and diagnostic tests; &
-caHe management services.
1. (b) Additional MediKida Services
Would include the following additional services (subject
to a periodicity schedule established by HBA in consulta-
tion with the American Academy of Pediatrics):
-periodic screening services, including comprehensive
51
physical examinations, age appropriate immunizations,
laboratory tests, and health education;
-vision services, including screening and corrective
eyeglasses or lenses;
-dental services, including screening and preventive
dental and corrective dental services; and
-hearing services, including screening and hearing
aids.
Would also include prescription drugs, including insulin
and medically appropriate nutritional supplements.
Would also include the following (if part of plan of care
prescribed by H physician):
-treatment of developmental and learning disabilities
(other than the educational component); and
-speech, occupational, and physical therapy.
HBA would examine (and report to Congress) concerning
the appropriateness of providing coverage for long-term
care services under the MediKids component of UniMed.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
MediKids Component of UniMed [title II]
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
B2. Deductible
Under age 18, none would apply.
At age 18, there would be a deductible of $150, indexed
to SSA wage base (as with MediWorkers' deductible)
B3. Coinsurance
None for children under 3 or for pregnancy-related
services or preventive services.
For other services, copayment schedule for children 3-
11 (like $5 per outpatient visit) and 20 percent coinsur-
ance for children 12 and older.
B4. Limit on Cost-Sharing
$1,500 per kid, indexed by increases in SSA wage base.
C. PAYMENTS FOR SERVICES [Subtitle C]
Single payor model (like medicare).
C1. Payment Rates
HBA to establish payment rates based on reference
payment rates established under MediWorkers compo-
nent of UniMed, with appropriate modifications to reflect
children-only coverage under the MediKids component.
52
For services not covered, will establish appropriate
schedule based on concepts used in establishing
MediWorkers reference payment rates.
HBA to establish such additional, special advisory com-
mittee or committees as may be appropriate to establish
these rates.
Payment methodology will be similar to medicare pro-
gram.
C2. Payment Method
Assignment is mandatory.
Violations subject to exclusion under MediKids and
UniMed components of UniMed, as well as civil mone-
tary penalties.
D. MISCELLANEOUS [Subtitle D]
For Cost-Containment features, see below.
D1. Funding
Financing for MediWorkers children through
These financing methods take into account ability to
MediWorkers premiums. (See B1 under Financing [Title
pay.
VII) and for MediWrap children through addition to
MediWrap premiums (see C1 under Financing [Title
VII).
H.L.C.
D2. Use of Intermediaries
As in medicare, except HBA would do the contracting
for fiscal administration.
Would permit States to administer.
F-\FHBC\UNIMED
D3. Treatment of HMO's and Capitation
HBA would be authorized to contract with HMO's
under a capitation contract in manner comparable to au-
thority of HHS to contract on a risk basis with HMO's
under the medicare program, except that
-payment rate would be 100 percent (rather than 95
percent) of the adjusted average per capita cost (or
AAPCC) for children,
-plans could be "kids-only" plans (e.g., school-based
programs), and
-plans have an affirmative obligation to follow up on
conditions detected through screening.
In addition, HBA would establish an optional primary
care capitation payment methodology under pediatric
group practice arrangements (and for pediatricians in
other cases specified by HBA).
:
D4. Relation to Medicare & Medicaid Programs
Primary payor to medicare and medicaid programs.
[For State financial maintenance of effort requirement,
States would be required to maintain effort in terms of
53
see title VI (Financing).]
eligibility and benefits for children (above those provided
under MediKids component of UniMed). This would not
duplicate low-income assistance.
D5. Enforcement
Covered individuals have access to Early Resolution
Program (ERP) and claims review procedures established
as part of MediWorkers component of UniMed.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
MediWrap Component of UniMed [title III]
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED UNIMED
A. ELIGIBILITY/ENTITLEMENT [Subtitle A]
All legal permanent residents aged 22 through 59 who
cannot establish coverage under medicare (as disabled)
or under a qualified employer health plan (as a full-time
employee or spouse).
Eligible individuals aged 22 through 59 will be deemed
enrolled unless can establish other coverage.
Medicare is secondary payor for disabled and ESRD in-
dividuals.
Effective January 1, 1995, except will not apply to indi-
viduals provided health coverage under a current collec-
live bargaining agreement until such agreement expires.
B. BENEFITS (including deductibles, coinsurance, etc.)
[Same as basic services under MediWorkers component)
Employers can supplement benefits for part-time and
Subtitle B]
seasonal workers.
C. PAYMENTS FOR SERVICES [Subtitle C]
Single payor model (like medicare).
54
C1. Payment Rates
HBA to establish payment rates based on reference
payment rutes established under MediWorker component
of UniMed, with appropriate modifications to reflect pop-
ulation covered under the MediWrap component.
HBA to establish such additional, special advisory com-
mittee or committees as may be appropriate to establish
these rates.
Payment mothodology will be similar to medicare pro-
grain.
C2. Payment Method
Assignment is mandatory.
Violations subject to exclusion under MediWrap and
MediKids components of UniMed, as well as civil mone-
lary penalties.
). MISCELLANEOUS [Subtitle D]
H.L.C.
1. [Premiums]
(There would be a monthly actuarially - cermined na-
-For details, see financing title, as the premium
tional community-rated premium subject to an income
would be collected through income tax system.]
related cap. Part-time and seasonal employees would re-
ceive credit for both the employer and employee amounts
FHRC\ UNIMED
of the UniMed part-time/seasonal payroll tax paid, as
well as any part of the Health Care equalization self-em-
ployment tax paid.)
12. Use of Intermediaries
As in medicare, except HBA would do the contracting
for fiscal administration.
Would permit States to administer.
13. Treatment of HMO's
HBA would be authorized to contract with HMO's
under risk-bused contract in manner comparuble to au-
thority of HHS to contract with HMO's under medicare
program, except that
-payment rate would be 100 percent (rather than 90
percent) of AAPCC (adjusted average per capita cost),
and
-plans could be 100 percent MediWrap.
14. Relation to Medicaid Program
Primary payor to medicaid.
[For State financial maintenance of effort requirement,
55
Medicaid could supplement these benefits.
see title VI (Financing).)
)5. Enforcement
Covered individuals have access to Early Resolution
Program (ERP) and claims review procedures established
as part of MediWorkers component of UniMed.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Cost Containment and Quality Control [title IV]-MediWorkers Component of UniMed
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
A. DETERMINATION OF PREMIUMS BASED ON
[This is specified in title 1 and is cross-referenced here
MEDIWORKERS NATIONAL premium PERCENT-
for informational purposes.]
AGE (MNPP); USE OF CAPITATION RATES
B. PAYMENT LEVELS
[HBA establishes maximum charge levels.)
[This is specified in title I and is cross-referenced here
for informational purposes.]
C. CONTROLS ON CAPITAL EXPENDITURES
[HBA can reduce maximum charge levels to reflect ex-
(This is specified in title I and is cross-referenced here
cessive increases in capital expenditures by hospitals.]
for informational purposes.]
D. ENCOURAGING USE OF "MANAGED" OR "CO-
ORDINATED" CARE
D1. Encouraging Use of "Network" Plans
[Payment based on capitation and preemption of State
[This is specified in title I and cross-referenced here for
anti-managed care laws.]
informational purposes.]
D2. Encouraging Use of Utilization Review.
[Preemption of State anti-managed care laws.]
(This is specified in title I and cross-referenced here for
informational purposes.]
56
D3. Use of practice guidelines & Outcomes re-
Current Federal outcomes-related research, through the
search
Agency for Health Care Policy and Research, would be
expanded to cover employer health plans. FHBEC would
set aside an appropriate percentage of MediWorkers pre-
miums to fund an appropriate share of expenses for out-
comes research.
Plans could deny benefits for services that are not pro-
vided in accordance with practice guidelines which HBA
has recognized for application.
Any practice guidelines would be adjusted over time,
taking into account feedback from local quality monitor-
ing boards (see below).
D4. Quality Control Mechanisms
Policy.-The concept here is to provide for a dynamic
process of locally-driven, consumer-oriented information,
to serve as " counter-bulance to the significant incentives
that capitation provides for cutting costs.
H.L.C.
D4. (a) National Quality Advisory Board
HBA would establish a national advisory committee on
quality standards, to advise HBA concerning substand-
ard plans and to provide guidance and technical assist.
ance to local advisory boards.
F:\FHBC\UNIMED
HBA would establish national quality standards, in-
cluding standards to monitor the use of preauthorization
review and other utilization review and network con-
trols. HBA could establish additional requirements that
network plans and utilization review programs would
have to meet in order to be exempt from any State anti-
managed care laws.
D4. (b) Use of Local Quality Review Boards
HBA would provide for establishment of local quality
review monitoring advisory bodies, with representation
of employers, labor organizations, and individuals. The
bodies would be provided locality-specific information
(collected by FHBEC) on a non-individually-identifiable
basis on utilization and quality of services under differ-
ent plans in a community or service area. These bodies
would-
(1) provide feedback to plan sponsors (in order to im-
57
prove performance),
(2) provide feedback to HBA (in order to take appropri-
ate actions in the case of substandard performance), and
(3) provide information to employers (and labor organi-
zations) that is useful in improving marketplace deci-
sionmaking by taking into account quality measures in
the selection of a qualified group health plan.
Local advisory boards would have access to quarterly
reports supplied by plans to FHBEC.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Cost Containment and Quality Control [title IV]-MediWorkers Component of UniMed
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
D4. (c) Financial Monitoring
In order to protect beneficiaries and the FHBEC sys-
tem, as a condition of qualification plans would be re-
quired to have adequate reserves or otherwise meet fi-
nancial solvency standards specified by HBA.
There would be quarterly financial reports by each plan
(in order to catch plans before they become insolvent).
Beneficiaries are held harmless for bad debts resulting
from failure of plans to make payment for services; pro-
viders must look to plun for most payment. Once a plan
is declared insolvent, HBA would establish procedure for
temporary assignment of individuals to another plan
(which could be MediWrap] pending employer selection
of a new plan.
E.IMPROVEMENTS IN ADMINISTRATIVE EFFI-
[These would also apply under the MediKids and
CIENCY
UniMed components of UniMed.]
58
E1. Uniform Claims Forms & Electronic Billing
All plans would have to use a uniform claims form and,
as may be required by the HBA, uniform electronic bill-
ing standards.
E2. Uniform Health Care Cards
Health care enrollment cards would have to be electron-
ically coded for uniform input, as prescribed by HBA.
F. MEDICAL MALPRACTICE REFORM
HBA would report to Congress on specific steps that
could be taken to improve system.
More specificully, under the MediWorkers component of
UniMed HBA would examine the feasibility of using the
ERP (early resolution process) as a means of alternative
dispute resolution.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Cost Containment [title IV]-MediKids and MediWrap Components of UniMed
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
G1. Payment Rates
[Under MediKids and MediWrap components of
[Provisions to be in titles II and III and cross-refer-
UniMed, mandatory rates are established using medi-
enced here for informational purposes.)
care payment methodology.]
G2. Encouraging Use of "Managed" or "Coordinat-
od" Care
G2. (a) Encouraging Use of "Network" Plans
[Permit enrollment in HMO's and similar prepayment
[Provisions to be in titles 11 and III and cross-refer-
plans (under capitation-like conditions, such as under
enced here for informational purposes.]
medicare).]
[In addition, under the MediKids component of
UniMed, there would be demonstrations of use of school-
based networks as well D8 primary care capitation dem-
onstration projects.]
G2. (b) Encouraging Use of Utilization Review.
Under MediKids and UniMed components of UniMed,
HBA would be authorized to contract with PRO's in
59
manner similar to how medicare operates if it deter-
mines it to be cost-effective.
G2. (c) Use of Practice Guidelines & Outcomes Research
Expand current Federal outcomes research, through the
Agency for Health Care Policy and Research, to cover
MediKids and MediWrap components of UniMed.
MediKid and MediWrap trust funds would pay their
fair share (based on the proportion of national health
care expenditures made under the programs).
HBA is authorized to deny benefits for services that are
not provided in accordance with practice guidelines
which HBA has recognized may be applied.
G3. Improvements in Administrative Efficiency
[These are the same as under MediWorkers compo-
nent.]
G3. (a) Uniform Claims Forms & Electronic Billing
MediKids and MediWrap components of UniMed would
have to use a uniform claims form and any uniform elec-
tronic billing standards that are used under employer
plans.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Cost Containment [title IV]-MediKids and MediWrap Components of UniMed
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
G3. (b) Uniform Health Care Cards
MediKids and MediWrap components would have
health care enrollment cards which meet MediWorkers
component standards.
G4. Medical Malpractice Reform
In addition to study provided under MediWorkers com-
ponent of UniMed [namely study of alternatives and im-
provements), HBA would establish the use of ERP (early
resolution process) as M means of alternative dispute
resultion under the MediKids and MediWrap compo-
nents.
09
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Low-Income Assistance [title V]
Issue/Topic
Policy
Notes
F.\FHBC\UNIMED
1 PREMIUM ASSISTANCE
1. MediWorkers Component of UniMed
No Federal subsidy.
[Program is progressively financed, with at least 80
percent of premium paid by employer; no additional sub-
Bidy required.]
2. MediKids Component of UniMed
[See Financing: certain premiums limited to percent of
There are no direct premiums (so no explicit low-income
income.] $100 fee for entering the Early Resolution Pro-
assistance needed)
gram is waived.
3. MediWrap Component of UniMed
[See Financing: premium is limited to a percent of in-
come.] $100 fee for entering the Early Resolution Pro-
gram is waived.
DEDUCTIBLES AND COINSURANCE ASSIST-
Throughout the UniMed Program (comprising
NCE
MediWorkers, MediKids, and MediWrap components),
assistance for deductibles and coinsurance for required
services would be based on adjusted gross income (in-
61
cluding joint income for couple). There would be no
deductibles and coinsurance for those with income below
100 percent of poverty line; the deductibles and coinsur-
ance would be phased out until there is no low-income
assistance for individuals with income above 200 percent
of the poverty level.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Low-Income Assistance [title V]
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
APPLICATION PROCESS
[This process would be similar to low-income assistance
Upon application, an individual may obtain a reduction
process provided under S. 1177.)
of deductibles and coinsurance during a year. The indi-
[The program of financial assistance to qualified medi-
vidual could submit a 1040-like estimated income state-
care beneficiaries would continue under the medicaid
ment. Based on the statement, assistance to reduce the
program.]
deductibles and coinsurance could be provided. Falsifica-
tion of the statement would be subject to penalty. Any-
one provided assistance based on an estimate would be
required to file an income tux return (or 1040-like infor-
mation return) for the year in which assistance provided.
The amount of assistance would be adjusted based on
the final income for the year with the individual making
restitution (or being provided additional assistance)
based on the return.
Instead of receiving a direct reduction of deductibles and
coinsurance, an individual may apply at the end of the
62
year, through the filing of a 1040 tax return (or 1040-
like information return) for a rebate of excess
deductibles and coinsurance bused on income during the
year.
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Financing [title VI]-MediWorkers Component of UniMed
Issue/Topic
Policy
Notes
".\FHBC\UNIMED
MEDIWORKERS COMPONENT OF UNIMED
Use of Payroll-Based premium
[These provisions will be in ERISA provisions and
would merely be referenced here]
11. Employer/ee share
Employer pays a total premium to health plan based on
the MediWorkers National Premium Percentage (MNPP)
of total payroll computed by HBA. However, the wages
counted cannot exceed twice the maximum wage level
subject to Social Security taxes (approx. $125,000).
Employer may charge the employee based on a percent-
age of wages (but percentage may not be greater than 1/5
of the MNPP specified by HBA).
[If employer pays share, would be treated the same as
payment for health insurance benefits now. Probubly no
specific provision needed, if this is clearly a premium.]
12. Treatment of Self-Employed
[See MediWrap component, C3 below.]
63
L3. Treatment of Children and Part-Time and Sea-
For treatment of children, see MediKids component at
nal Workers
B4 below. For treatment of part-time and seasonal work-
ers, see MediWrap component at C4 below.
14. Effective Date and Maintenance of Employer
MediWorkers premium would be paid in each month
Note that employees will receive benefits in January
fort
(beginning with January 1995) based on remuneration
1995 based on employment status in December 1994.
paid during previous month (viz., beginning with Decem-
ber 1994).
MAINTENANCE OF EFFORT.-The premiums would not be
required for remuneration of individuals provided health
care coverage under a collective barguining agreement
entered into before date of enactment.
5. Funding Early Resolution Program and Admin-
Annual user fee charged to insurers (including self-in-
trative Review Process
surers) at $0.05 per insured person, to be used exclusive-
ly for funding ERP and administrative review process.
There is also $100 fee per party under the ERP.
3. Funding Transitional Premium Subsidy for
Other Federal revenues.
wall Business
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Financing [title VI]-MediKids Component of UniMed
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
B1. MediKids Element of the MediWorkers National
In recognition of coverage to be provided under UniMed
In essence, a QGHP provides benefits for the children
Premium Percentage (MNPP)
to workers' children, the MNPP paid to group health
of covered workers through payment of a MediKids em-
plans under the MediWorkers component would include
ployment-based premium to FHBEC. A QGHP cannot
a portion to be directed to funding the MediKids compo-
elect to cover children directly under the plan, rather
nent. This would be provided in the terms of group
than paying the MediKids premium.
health plans as a requirement for a qualified group
A QGHP could supplement benefits available to chil-
health plan (QGHP).
dren of workers, just as it can supplement basic benefits
for workers.
B1. (a) Determination of Aggregate Amount to be Collect-
HBA would estimate the total cost for the year under
ed Through Premium
the MediKids component for children of adults covered
under MediWorker component.
This would be done by multiplying (1) the average
number of children under the MediKids component in
the year who are the children of workers (or spouses)
covered under the MediWorker component, by (2) the es-
64
timated average per capita cost under MediKids.
B1. (b) Payment of MediWorkers National Premium
In setting the appropriate level of the MNPP, the HBA
This augmented MNPP would also be applied in com-
Percentage under MediWorkers Component as Element
would add a percentage determined to be required to
puting the additional taxes to finance low-income assist.
of Funding for MediKids Component
raise the MediWorkers element of funding MediKids
ance under title VI.E.
computed under B1.(a) above.
In applying the MNPP 80 computed under the
MediWorkers component, this additional element of
funding for the MediKids component would aulomatical-
ly be shared 80/20 between the employer and employees.
As under MediWorkers, an employer's payment of the
employee share of the MediKids component would not be
considered taxable income to the employee.
B1. (c) Collection by Group Health Plans and Allocation
By incorporation as part of the MNPP, this element of
to MediKids through Equalization Process
funding for the MediKids component is collected in due
course through payment to qualified health benefit plans
and then forwarding to FHBEC (through the equaliza-
tion process). FHBEC would then forward the portion of
the MNPP attributable to the MediKids element to the
MediKids trust fund.
H.L.C.
B2. MediKids Element of MediWrap Premium
This element would not apply to children whose parents
are full-time workers because the parents pay premiums
for their children through the MediWorker program.
F:\FHBC\UNIMED
B2. (a) Amount of Flut Monthly Premium Element
As part of the MediWrap premium for individuals who
The monthly premium element is basically the average
are not covered through the MediWorker component and
monthly per child cost of MediKids for the year.
who have a child covered under MediKids, there would
be a MediKids premium element equal to a nationally
specified community-rated actuarial premium to be es.
tablished by HBA for each child under the MediKids
component of UniMed. There would be no variation by
age, sex, marital status, etc. The premium component
would be computed on a monthly basis (as is the case for
the MediWrap premium for adults).
B2. (b) Payment of Premium Element
Parents would be required to pay the premium element
Low-income assistance would be available to eliminate
each year in conjunction with the payment of the
or reduce the premium element, in the same manner as
MediWrap premium. Insofar as it is included as part of B
for the MediWrap premium for the parent.
MediWrap premium-
(1) in the case of children of part-time and seasonal
workers, parents would receive a credit against the pre-
65
mium in the amount of the employer/employee equaliza-
tion tax paid (but there would be no refund for excess
employer/employee taxes paid), and
(2) in order to provide protection to low-income indi-
viduals, a family's premium (including MediWrap and
MediKids elements) could not exceed the MNPP of total,
gross income (including joint income of married couple)
for members of the fumily.
B2. (c) Collection of Premiums
Premiums would be collected in the same manner as
premiums under the MediWrap component.
B3. State Medicaid "Maintenance of Effort" Pay-
States are required to pay the MediKids component a
Effective for calendar quarters beginning on or after
ient
"maintenance of effort" amount.
January 1, 1995.
H.L.C.
February 20, 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Financing [title VI]-MediKids Component of UniMed
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
B3. (a) Computation
(1) Medicaid Eligibles.-HBA would determine, based
on the law as of January 1, 1992 (including changes in
eligibility scheduled to occur after that date) and for
each calendar quarter beginning on or after January 1,
1995, the average number of individuals in the State
who are entitled to MediKids and who would have been
entitled to medicaid assistance in the quarter.
(2) Per capita MediKids payments.-For each quarter,
the Secretary would estimate the average per child ex-
penditures to be made in the quarter in the State under
the MediKids component.
(3) Maintenance of Effort Amount.-The maintenance of
effort amount is the product of (1) and (2) multiplied by
1 minus the Federal Medical Assistance Percentage
(FMAP) under the medicaid program.
66
B3. (b) How Paid
States required, as a condition of receiving funds under
the Elementary and Secondary Education Act for each
calendar quarter beginning on or after January 1, 1995,
to pay the maintenance of effort amount.
H.L.C.
B4. Trentment of Workers under Age 22
There would be a payroll-based tax computed for work-
This tax is in the nature of an "equalization" tax 80
ers under age 22 equal to the MediWorkers National
that, taking also into account the similar tax for part-
Premium Percentage (MNPP) of their wages. The tax
time and seasonal employees, from an employer's per-
F:\FHBC\UNIMED
would have a ceiling of twice the maximum level of
spective, wages of all employees (whether full-time adult,
wages subject to the Social Security tax.
child, or part-time or scasonal) are effectively subject to
Payroll-related Laxes paid in for wages of children (re-
a premium or tax or similar amount.
gardless of whether they are full-time, part-time, or sea-
There would be a need for coordination between the
sonal), (viz., who are not covered under employer plan,]
IRS (collecting this Lax) and FHBEC (which has informa-
would be credited to MediKids Trust Fund.
tion on health care enrollment for everyone). Payroll
An employer may pay all or a portion of the employee's
would have to be reported with some indication or other
share of the payroll-based Lux, and this payment would
method of identifying those individuals who are covered
not be included in income of the employee [so would
under the 3 different components of UniMed. This would
treat payroll tax the same way as health care premiums
be important in assuring individuals receive appropriate
are currently treated].
credits under the MediWrap component.
Effective for remuneration paid on or after January 1,
1995.
B5. Additional Federal Funds
Additional Federal funds would come from previous
general revenues dedicated to medicaid and from other
Laxes (to be specified).
67
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
1003 3 ,
Financing [title VI]-MediWrap Component of UniMed
Notes
F:\FHBC\UNIMED
Issue/Topic
Policy
C. MEDIWRAP COMPONENT OF UNIMED
C1. Actuarial Premium Collected Through In-
come-Tax System
Nationally specified community-rated monthly actuariul
In the case of MediWrap beneficiaries with children,
C1. (a) Amount of Premiums
premium to be established for each individual (no family
the amount of the premium would be increased to in-
premium). There would be no variation by age, sex, mar-
clude a MediKids element. See B2(a) above.
ital status, etc.
C1. (b) Limit on Amount of Premium to MNPP of
In order to provide protection to low-income individuals,
For low-income workers, practical net effect of this limit
the MediWrap premium (including any MediKids ele-
(and crediting for employment equalization taxes paid)
Total, Gross Income
ment) could not exceed the MediWorkers National Pre-
would be to limit premium to the MNPP of non-wage in-
mium Percentage (MNPP) of total, gross income (includ-
come (viz., interest and dividends), which is usually
ing joint income for a married couple and any children's
small.
income).
In case of coverage during purt of a year, the total,
68
gross income would be proruted based on number of
months of coverage.
C1. (c) Crediting MediKids and MediWrap Equaliza-
There would be credited against MediWrap premium
tion Employment Taxes and MediWrap Self-Employment
amount (including any MediKids element), total
Taxes
MediWrap and MediKids equalization taxes paid (includ-
ing both employer and employee shares), see C4 below,
and self-employment taxes, see C3 below. However, if
the amount of taxes exceeds the amount of the premium,
the taxes would not be refunded.
To be paid with income taxes (including provision in es-
Effectively, low-income individuals not now required to
C1. (d) Collection
timated taxes).
file a tux return will be required to file information re-
turn to obtain relief from full MediWrap premium (in-
cluding any MediKids element).
Would be payable for months in which individuals cov-
ered under MediWrap component of UniMed beginning
with January 1995.
41 1e Medicaid "Maintenance of Effort" Pay.
States are required to pay the MediWrap component of
Effective for calendar quarters beginning on or after
UniMed a "maintenance of effort" amount.
January 1, 1995.
H.L.C.
C2. (a) Computation
(1) Medicaid Base Payment.-HBA would determine the
average quarterly amount expended under the State
medicaid plan (including Federal and State share) for in-
dividuals eligible for MediWrap component of UniMed
F:\FHBC\UNIMED F:\FHBC\ UNIMED
during a base year (probably 1992) for services covered
under that component.
(2) Updating for trend in expenses.-The buse payment
under (1) would be trended forward to reflect (for periods
before January 1, 1995), average, per capita medicaid ex-
penditures for the population and types of services de-
scribed in (1) and, for subsequent periods, by the average
per capitu growth in program expenditures under the
MediWrap component of UniMed in the State up to the
quarter involved.
(3) Maintenance of Effort Amount.-The maintenance of
effort amount is the amount determined under (2) multi-
plied by 1 minus the Federal Medical Assistance Per-
centage (FMAP) used under the medicaid program.
C2. (b) How Paid
States required, as a condition of receiving funds under
the Job Training Partnership Act for each calendar quar-
69
ter beginning on or after January 1, 1995, to pay the
maintenance of effort amount.
H.L.C.
February 20. 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992-Continued
Financing [title VIJ-MediWrap Component of UniMed
Notes
F:\FHBC\UNIMED
Issue/Topic
Policy
C3. MediWrap Employment Equalization Tax for
There would be a payroll-based Lax computed for part-
This tax is in the nature of an "equalization" Lax 80
Part-Time and Seasonal Workers
time and seasonal workers, equal to the MediWorkers
that, taking into account the similar tax for workers
National Premium Percentage (MNPP), including the
under age 22, from an employer's perspective, wages of
MediKids element, of their wages. The tax would have a
all employees (whether full-time adult, child, or part-
ceiling of twice the maximum level of wages subject to
time or seasonal) are effectively subject to a premium or
the Social Security tax (approx. $125,000).
Lux or similar amount.
Payroll-related taxes paid in for part-time and seasonal
There would be a need for coordination between the
workers (other than children) would be credited to
IRS (collecting this tax) and FHBEC (which has informa-
MediWrap and MediKids trust funds for premiums of
tion on health care enrollment for everyone). Payroll
those workers (allocated in proportion to the amounts of
would have to be reported with some indication or other
the MNPP attributable to the MediWorkers and
method of identifying those individuals who are covered
MediKids components); except that (1) IRS would identi-
under the 3 different components of UniMed. This would
fy the social security number of those workers who are
be important in assuring individuals receive appropriate
covered under the MediWorkers component of UniMed
credits under the MediWrap component.
and will transfer such Laxes to the FHBEC for equaliza-
70
tion purposes, and (2) for workers without children, the
MediKids trust fund would only receive its allocation if
the combined MNPP exceeds the MediWrap premium.
An employer may pay all or a portion of the employee's
share of the payroll-based tax, and (as under the
MediWorker component) this payment would not be in-
cluded in income of the employee.
Effective: For remuneration paid on or after January 1,
1995.
C4. MediWrap Tax on Self-Employment Income
Tax on self-employment income, equal to the
This is similar to MediWrap employment equalization
MediWorkers National Premium Percentage (MNPP) (up
tax 80 that self-employment income and wages are treat-
to twice the maximum wages subject to Social Security
ed similarly.
taxes, viz., approx. $125,000). This is non-refundable.
Funds are credited against MediWrap premium (includ-
ing any MediKids element). This Lox is non-refundable.
Effective: Taxable years ending after December 31, 1994;
except would pro-rute to reduce Lax BO as to make it not
applicable for portions of tax years beginning before Jun-
uary 1, 1995
H.L.C.
C5. Source of Additional Federal Funds
Remaining Federal funds would come from previous
general revenues dedicated to medicaid and from other
sources (to be specified).
F:\FHBC\UNIMED
71
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Financing [title VI]-Medicare Eligibility Expansion
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
D. Medicare Program Eligibility Expansion
Increase cup on III part of FICA & SECA tax to extent
necessary to fund expenses for expanded eligibility.
72
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Financing [title VI]-Low-Income Assistance
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
E. Low-Income Assistance (covering low-income
Addition to income tax at flut rate of 1/5 of the
employees, children, and others)
MediWorkers National Premium Percentage (MNPP).
However, wages, self-employment income and other in-
come, to the extent a UniMed premium has been com-
puted based on such income, would not be subject to this
additional tax.
73
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Overall Administration [title VII]
Issue/Topic
Policy
Notes
FAFHBC\UNIMED
A. Health Benefits Administration (HBA); basic
Health Benefits Administration (HBA), headed by 15-
structure
member board appointed from private sector by Presi-
dent with Senate confirmation, 6-year staggered terms.
(Board also includes 2 additional members solely for pur-
poBeB of administering the ERP process. See, under
title I, H1. (c)(1) -2.) Would be established by not later
than March 1, 1993. Paid at Executive Level 11. No more
than 8 of same political party. 3 appointed from each of
the following: labor; employers; medical community, in-
surance community, consumer representatives. Chair
elected by board. Will include:
-the Federal Health Benefits Equalization Corporation
(FHBEC) (see below);
-the Group Health Plan Review Board (GHPRB) (see
below);
74
-an Office of Special Counsel (SC) (see below);
-an Early Resolution Program Office, headed by Chief
Facilitator (see below);
-an Office of Executive Director, appointed by and
serving at pleasure of the board;
a
MediWorkers Office;
a MediKids Office; and
MediWrap Office.
HBA will also include 4 Advisory Committees with re-
gard to discrete coverage issues.
HBA will administer the entire program, through the
Executive Director, except for independent functions del-
egated by statute to FHBEC, SC, and GHPRB.
HBA will have budgetary independence (similar to
independence in recent legislation for independent SSA)
H.L.C.
B. Federal Health Benefits Equalization Corpora-
Corporate entity established in HBA by not later than
tion (FHBEC)
June 1, 1993. Board of Directors consists of the HBA
board. Sole and exclusive authority over-
-assessment and collection from plans (including self-
F:\FHBC\UNIMED
insured employers) of equalization premiums;
-distribution of equalization rebutes to plans (includ.
ing self-insured employers)
-Has structure und powers similar to those of Pension
Benefit Guaranty Corporation (PBGC) under existing
law. Most administrative and support personnel and
services will be provided by HBA.
-Receipts and disbursements will be off-budget (viz.,
non-budget).
C. Office of Special Counsel
-Purpose is to receive, process, and (if appropriate)
prosecute complaints of violations of Act or plan filed by
participants or beneficiaries. [mode] of Immigration dis-
crimination enforcement]
-Appointed by President with Senate confirmation for
75
6-year term. Removed only for cause.
-Recommends Early Resolution Program before pro-
ceeding to administrative review in procecutorial fushion
before GHPRB or rejecting the case and returning a
"right to proceed" letter to the complainant.
D. Early Resolution Program (ERP) Office
Headed by Director appointed by HBA. Staff will devel-
op program procedures, conduct case intake, maintain
roster of "facilitators", coordinate facilitator selection
process, provide meeting sites, maintain records, and
provide facilitators with legal assistance and administra-
live support staff.
E. Group Health Plan Review Board (GHPRB)
9 members appointed by President with Senate confir-
mation. President designates Chair. 6-year, staggered
terms. Removed only for cause. Appoints ALJ's to hear
complaints of participants and beneficiaries not resolved
through ERP. Governed by APA. (Similar to OSHRC, 29
U.S.C. 661)
H.L.C.
February 20. 1992 (12:50 p.m.)
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Medicare Revisions [title VIII]
Issue/Topic
Policy
Notes
F:\FHBC\UNIMED
A. REDUCTION IN AGE OF MEDICARE ELIGIBIL-
Reduce, as of January 1, 1995, age of initial eligibility to
ITY
60.
Provide for a transitional enrollment period, beginning
July 1, 1994, during which individuals who will be be-
tween 60 and 65 as of January 1, 1995, could enroll.
In the future, there would have to be established special
enrollment process to take into account the fact that
most individuals at age 60 are not receiving Social Secu-
rity benefits.
76
H.L.C.
UNIVERSAL MEDICAL CARE (UNIMED) ACT OF 1992
Miscellaneous Provisions [title IX]
Issue/Topic
Policy
Notes
".\FHBC\UNIMED UNIMED
REPEAL OF COBRA CONTINUATION PROVI-
Effective January 1, 1995, repeal the COBRA continu-
[ONS
ation requirements contained in ERISA, the IRC, and
the PHSA.
GRANT PROGRAM FOR EXPANSION OF FED-
Provide un authorization of appropriations of an addi-
RALLY QUALIFIED HEALTH CENTERS
tional $400, $800, $1200, $1600, and $1,600 millions in
fiscal years 1993 through 1997 for expansion of services
to medically underserved individuals by Federally quali-
fied health centers.
77
H.L.C.
Bush V. Clinton Health Plans
Access
Bush
Clinton
Comment
Goal
Universal access to
Universal access to
health insurance
health insurance
Approach
Incentives
Mandates (taxes by
Clinton plan means job
another name)
loss; slower rate of small
business creation.
Methods
- Tax credits and tax deductions
- Employers must provide health
- Clinton says employers will be
insurance to their employees ("play
eligible for tax subsidies; says
- Reforms of the health insurance
or play")
nothing about what they would be.
market to make insurance more
affordable.
- Endorses similar market reforms
- While Clinton offers few details,
he endorses proposals similar to
the President's; both "take on the
insurance companies."
Paying for the plan
- We have identified sufficient
- Cost controls from "global
- Clinton offers no timetable for
savings to meet the $100 billion,
budgeting" would pay for increased
implementing access provision nor
five year implementation cost
coverage.
any details on the size, scale, or
without raising taxes.
composition of his financing
package.
Small business
- Guarantee that all small
- Mandate that employers provide
- Mandates would make it more
employers can get coverage; rate
health care; provide "tax credits to
difficult for small businesses to
bands to make sure prices are
protect businesses."
form; increased labor costs would
- Of 34 million without health
affordable.
send more jobs overseas.
insurance; 25 million work for
or are family of workers in
- Help for low income workers in
firms with fewer than 25
small firms through tax credits.
employees.
1
Middle class
- Credit and deduction available for
- No help for middle-income
all families with incomes up to
families with low employer
$80,000.
contributions (the 44 million who
- The deductible amount is $3,750
would be helped under the Bush
for families and $1,250 for
plan.)
individuals, minus the value of
- Where employers are hit by the
employer contributions.
new mandate to buy insurance,
- 44 million middle-income
employees would be required to
individuals would receive some
pay a share -- all dollars flowing
help.
from employees' pockets.
Insurance security
- Guarantee that workers can move
- Appears similar; no details
from job to job offering health
provided.
insurance without losing coverage
because of pre-existing conditions
(e.g., already pregnant, having
cancer.)
Choice of benefits
- State laws that mandate benefits
- A new "National Health Care
- Clinton plan could raise costs for
would be pre-empted.
Board" will prescribe minimum
employees by requiring them to
benefits that all employers must
buy more insurance than they do
provide.
already.
- Clinton plan will create a floor
under the cost of plans all
employers must provide.
Choice of doctor
- Health insurance
- Rhetoric of "allow consumers to
- Eliminating the "pay" option of
credits/deduction available for
choose where to receive care."
"pay or play" in the Clinton plan
insurance plans that provide care as
defuses charge that Clinton
consumers want: through private
approach leads to nationalized
physicians; HMOs, etc.
plan/loss of consumer choice.
2
People not working
- Eligible for credit/deduction.
- Private coverage for non-workers
- Bush plan is for a five year
and their families
would be guaranteed private
phase in; Clinton plan may never
- Credit/deduction would be phased
insurance coverage that would be
phase in.
in over 5 years.
- 10 million of the uninsured
arranged through government run
do not work.
purchasing cooperatives (similar to
- Both plans would leave some
- Those who use credit are
Bush-proposed "HINs.")
uninsured; those uninsured would
guaranteed coverage through at
be those who choose not to buy
least one plan the state must make
- Non-workers will pay a sliding
insurance.
available through a private insurer.
scale premium based on income.
- Those now receiving Medicaid
would be transferred to this plan.
- Savings from cost controls would
pay for expansions in coverage; no
timetable provided.
3
Controlling Costs
Bush
Clinton
Comment
Goal
Highest quality at the
Reduce costs no matter
lowest cost
what the quality.
Approach
Deliver care more
"Global budget;"
Clinton plan calls for
efficiently; end causes of
arbitrary limits on how
unprecedented
waste and abuse
much can be spent on
government involvement
health care. Annual
in health resource
increase limited to rate of
allocation decisions.
increases in wages.
Role of government
Run government
A National Health Care
"Global budgets" only
programs more
Board would decide total
squeeze the health cost
efficiently; address forces
health spending and set
balloon; squeezing
that drive costs --
ceilings for each state.
through price fixing will
malpractice, market
lead to shortages (thus
failure, etc.
rationing) and lower
levels of new
No price regulation.
States will decide prices
technology.
for all health services.
Malpractice
Requirement for arbitration
Wants to make alternative to
before going to court; if you then
courts available; no requirement to
go to court and don't do better by
use alternatives.
more than 10 percent, you are
No support for tort reform.
liable for the other side's attorney
fees.
Tort reform.
4
Administrative savings
Use "electronic cards" and
Similar.
Clinton borrows from the Bush
automation to reduce the amount of
list.
paperwork patients and doctors
complete.
Introduce a single, standardized
claims form.
Prescription drugs
No proposal.
End certain tax preferences for
pharmaceutical companies that raise
prices faster than the rate of
inflation.
Information for consumers
Require states to make
No proposal.
information about the cost of health
plans and providers (hospitals, etc.)
available for comparison shopping.
5
Bush V. Clinton Health Plans
Access
Bush
Clinton
Comment
Universal access to
Universal access to
Hea 1th us
health insurance
health insurance
for Aarhon
Incentives
Mandates (taxes by
Clinton plan means job
another name)
loss; slower rate of small
business creation.
Methods
- Tax credits and tax deductions
- Employers must provide health
- Clinton says employers will be
insurance to their employees ("play
eligible for tax subsidies; says
- Reforms of the health insurance
or play")
nothing about what they would be.
market to make insurance more
affordable.
- Endorses similar market reforms
- While Clinton offers few details,
he endorses proposals similar to
the President's; both "take on the
insurance companies."
Paying for the plan
- We have identified sufficient
- Cost controls from "global
- Clinton offers no timetable for
savings to meet the $100 billion,
budgeting" would pay for increased
implementing access provision nor
five year implementation cost
coverage.
any details on the size, scale, or
without raising taxes.
composition of his financing
package.
Small business
- Guarantee that all small
- Mandate that employers provide
- Mandates would make it more
employers can get coverage; rate
health care; provide "tax credits to
difficult for small businesses to
bands to make sure prices are
protect businesses."
form; increased labor costs would
- Of 34 million without health
affordable.
send more jobs overseas.
insurance; 25 million work for
or are family of workers in
- Help for low income workers in
firms with fewer than 25
small firms through tax credits.
employees.
1
Middle class
- Credit and deduction available for
- No help for middle-income
all families with incomes up to
families with low employer
$80,000.
contributions (the 44 million who
- The deductible amount is $3,750
would be helped under the Bush
for families and $1,250 for
plan.)
individuals, minus the value of
- Where employers are hit by the
employer contributions.
new mandate to buy insurance,
- 44 million middle-income
employees would be required to
individuals would receive some
pay a share -- all dollars flowing
help.
from employees' pockets.
Insurance security
- Guarantee that workers can move
- Appears similar; no details
from job to job offering health
provided.
insurance without losing coverage
because of pre-existing conditions
(e.g., already pregnant, having
cancer.)
Choice of benefits
- State laws that mandate benefits
- A new "National Health Care
- Clinton plan could raise costs for
would be pre-empted.
Board" will prescribe minimum
employees by requiring them to
benefits that all employers must
buy more insurance than they do
provide.
already.
- Clinton plan will create a floor
under the cost of plans all
employers must provide.
Choice of doctor
- Health insurance
- Rhetoric of "allow consumers to
- Eliminating the "pay" option of
credits/deduction available for
choose where to receive care."
"pay or play" in the Clinton plan
insurance plans that provide care as
defuses charge that Clinton
consumers want: through private
approach leads to nationalized
physicians; HMOs, etc.
plan/loss of consumer choice.
2
People not working
- Eligible for credit/deduction.
- Private coverage for non-workers
- Bush plan is for a five year
and their families
would be guaranteed private
phase in; Clinton plan may never
- Credit/deduction would be phased
insurance coverage that would be
phase in.
in over 5 years.
arranged through government run
- 10 million of the uninsured
purchasing cooperatives (similar to
- Both plans would leave some
do not work.
- Those who use credit are
Bush-proposed "HINs.")
uninsured; those uninsured would
guaranteed coverage through at
be those who choose not to buy
least one plan the state must make
- Non-workers will pay a sliding
insurance.
available through a private insurer.
scale premium based on income.
- Those now receiving Medicaid
would be transferred to this plan.
- Savings from cost controls would
pay for expansions in coverage; no
timetable provided.
3
Controlling Costs
Bush
Clinton
Comment
Goal
Highest quality at the
Reduce costs no matter
lowest cost
what the quality.
Approach
Deliver care more
"Global budget;"
Clinton plan calls for
efficiently; end causes of
arbitrary limits on how
unprecedented
waste and abuse
much can be spent on
government involvement
health care. Annual
in health resource
increase limited to rate of
allocation decisions.
increases in wages.
Role of government
Run government
A National Health Care
"Global budgets" only
programs more
Board would decide total
squeeze the health cost
efficiently; address forces
health spending and set
balloon; squeezing
that drive costs --
ceilings for each state.
through price fixing will
malpractice, market
lead to shortages (thus
failure, etc.
rationing) and lower
levels of new
No price regulation.
States will decide prices
technology.
for all health services.
Malpractice
Requirement for arbitration
Wants to make alternative to
before going to court; if you then
courts available; no requirement to
go to court and don't do better by
use alternatives.
more than 10 percent, you are
No support for tort reform.
liable for the other side's attorney
fees.
Tort reform.
4
Administrative savings
Use "electronic cards" and
Similar.
Clinton borrows from the Bush
automation to reduce the amount of
list.
paperwork patients and doctors
complete.
Introduce a single, standardized
claims form.
Prescription drugs
No proposal.
End certain tax preferences for
pharmaceutical companies that raise
prices faster than the rate of
inflation.
Information for consumers
Require states to make
No proposal.
information about the cost of health
plans and providers (hospitals, etc.)
available for comparison shopping.
5
H.Kuatner
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON, D.C. 20500
July 24, 1992
THE CHAIRMAN
MEMORANDUM FOR: SAM SKINNER
NICK BRADY
DICK DARMAN
CLAYTON YEUTTER
ROGER PORTER
FROM:
MICHAEL J. BOSKINM
SUBJECT:
Deficit Reduction/Tax Increase in the Clinton Plan
How large a tax increase would be needed to reduce the projected 1996 deficit by
half while funding all the spending that Clinton proposes in his economic plan?
The list of spending cuts must be pruned of proposals that simply are not
feasible or whose savings are clearly imaginary. These include:
--
unspecified "administrative savings"
--
"reform Defense Department inventory system"
--
"RTC management reform"
--
"streamline USDA field offices"
-
o
Total savings from the Clinton plan (excluding the deleted items) are $31.04
billion in 1996 using his optimistic estimates for the following categories
(many of which may also be unfeasible).
Defense cuts
16.50
Intelligence cuts
1.50
100,000 employees
4.50
Cut White House staff
0.01
Debt financing reform
2.00
Cut Congressional staff
0.10
* Line-item veto
2.00
Energy conservation
0.85
Reduce university overhead
0.82
Special purpose HUD grants
0.13
Index nuclear waste fees
0.08
Consolidate foreign broadcasting
0.27
Freeze consultant spending
0.21
Consolidate social service
0.27
Raise Medicare-B costs (technically, a revenue increase)
1.80
31.04
*
We have already given him credit for these claimed budgetary savings. The
$2 billion associated with line-item veto means he is either double-counting,
or there are $2 billion more in unspecified cuts.
2
o
Total spending increases under Clinton's plan are $134.1 billion in 1996.
--
The plan involves spending increases of $64.1 billion, not including
Clinton's health insurance proposal.
--
Clinton's health insurance proposal (disguised play or pay) is estimated
to cost $70 billion per year by 1996. It is not clear what portion of
this cost will be paid with the payroll tax mentioned in the plan.
o
Using (heresy) CBO figures, yields a deficit of $222 billion in 1996
(excluding deposit insurance). To cut that in half while enacting his plan,
Clinton must generate (222/2 + 134.1 - 31.04) = $214.06 billion in revenue.
--
If that amount is to be raised through increases in the personal income
tax, Clinton will need to raise Federal income tax revenues by about 34
percent.
-
This fraction is based on CBO's projection for income tax
revenue of $634 billion in 1996.
-
Actual tax rates would need to be increased by a larger fraction
to generate the needed revenue (since taxable income is a
decreasing function of the tax rate).
Clinton's plan includes the following tax increases (billions of dollars
in 1996, as claimed by Clinton):
-
"increase rates on top 2%, raise AMT,
surtax on millionaires:"
= 23.0
-
"prevent tax fraud on unearned income
for the wealthy:"
= 2.3
-
"limit corporate deductions at
$1 million for CEOs:"
= 0.4
-
"end incentives for opening plants
overseas:"
= 0.4
-
"prevent tax avoidance by foreign
corporations:"
= 13.5
-
"increased fines and taxes for
corporate polluters:"
= 2.9
3
-
"eliminate tax deduction for
lobbying expenses:"
= 0.1
-
a payroll tax as part of the health care
proposal, without any figure given on
that tax's revenues
-
The total 1996 claimed revenue from the
above items (excluding the payroll tax) is $42.6 billion
--
Thus, even granting him these overly optimistic revenues, he still is
$172 billion short, and would have to raise everyone's federal income
taxes by over 25 percent.