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[HRC Health Care Testimony 9/24/93 Ways and Means] [binder] [1]
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INDEX
1. Kennedy
a)
Medicare/Medicaid cuts too deep
b)
Doctor Choice and Quality Care
2.
Pell
Prevention/unclear
3.
Metzenbaum
a)
Protect consumers against insurance companies
b)
Consumer representation
c)
Assurances that state regulations provide adequate consumer protections
d)
Control excessive drug prices
4.
Dodd
a)
Small business ability to afford plan
b)
Meet health care needs of children
c)
Premium caps don't work and don't get at real cost of
program
5.
Simon
a)
Drug pricing and impact on research
b)
Getting primary care providers into rural areas
c)
Protection of Federally Qualified Health Centers
6.
Harkin
a)
Rural area spending iniquities
b)
Impact of Medicare cuts on rural providers
c)
Periodic exams/Recommendations of U.S. Preventative
Services Task Force
d)
Guaranteed source of funding
7.
Wofford
a)
Abortion
b)
Paperwork reduction/administrative simplification time-frame
c)
Effect on workers compensation
d)
Impact on low-income seniors
8.
Mikulski
a)
Provision for alternate providers participation in plan
b)
Affordability of plan for small business
c)
Long-term care
d)
Women's health
9.
Bingaman
a)
Alain Enthoven/tax caps
b)
Primary care providers in rural areas
10.
Wellstone
a)
Impact of HMO-type high co-payment and deductible
requirements on poor/middle class
b)
Fee for service plan - two-class medicine
c)
Mental health
11.
Kassebaum
a)
Workers compensation integration into new system
b)
Experimental processures - Decision AUTHORITY
c)
ASSURANCES of SAvings
12.
HATCH
a) Dietary supplements
Response to Question from Senator Kennedy
(a)
How do you respond to critics who say your cost estimates are not accurate, the
Medicare and Medicaid cuts are too deep and harm seniors and the poor, the cost
control targets you have set are SO tight that they will result in rationing and lower
quality care?
Medicare
Medicare savings must be viewed in the context of overall health reform.
Without overall health policy reform we would oppose savings of this magnitude,
because there would be no way to protect Medicare beneficiaries from serious
risks of benefit reductions.
During the budget debate the Administration opposed an "entitlement cap" for
this very reason. The cap would have forced reductions in the Medicare program
-- whether or not we accomplish overall health care reform controlling private
sector health care costs -- and whether or not beneficiaries could be protected.
Health care reform will protect against two factors which now make it difficult to
contain Medicare costs without hurting beneficiaries: cost shifting that results
from uncompensated care and price pressures arising from the difference between
private and public reimbursement. rates.
The health plan will not reduce Medicare spending. It will only slow the rate of
growth from three times inflation to twice inflation. In the context of universal
coverage and corresponding private sector cost restraint, there is no reason why
this reduction in the rate of growth should harm beneficiaries.
In contrast to other proposals, the Administration only supports Medicare savings of
this magnitude in the context of health reform.
43 Senators voted for the entitlement cap without a corresponding cap in private
health care costs, and without any assurances about the impact on Medicare
beneficiaries.
Other health care proposals call for Medicare savings comparable to or greater
than ours, but fail to meet the critical test of protecting beneficiaries because they
fail to provide universal coverage or to control private health care spending.
The Chafee/Dole plan, in contrast, would result in comparable Medicare savings
[$111 billion]. However. the Chafee/Dole plan would not guarantee cost controls
in the private health care system and it would not guarantee universal coverage or
expanded Medicare benefits.
Reform and Competition will reduce Medicare costs.
Competitive forces will reduce the cost of health care for people over 65 as well
as for people under 65. With cost differentials of 300 percent between Miami and
Wisconsin. there is much room for savings from competition.
Streamlined administrative procedures will reduce the costs to providers of caring
for Medicare patients.
Medicare savings will be used to provide new Medicare benefits.
Savings from Medicare will be used to finance prescription drug benefits and
long-term care benefits for Medicare recipients.
Medicaid and Low-income Issues
The plan is designed to improve the quality of care available to low income participants.
Medicaid patients today have limited choices -- their choices are limited to
providers who agree to accept Medicaid reimbursement. I think we would agree
that in many cases, the choices today are not what we would like them to be.
Under the health plan, all Medicaid participants will be guaranteed
comprehensive coverage through plans in their regional alliance. However, low
income participants will no longer bear the stigma of being in a separate health
care system. Simply integrating low income people into the broader health care
system will provide many with better choices than they have today.
Low income participants will not face "redlining" which would force them into
plans that cover only low income people. The plan will assure that boundaries
are not drawn in a discriminatory manner and that plans are open to a broad
range of participants.
Essential provider provisions will further assure that assistance is targeted to
underserved areas.
2
Rationing
We are rationing today: people who have insurance get more and better treatment
than the uninsured.
By reducing waste in the system we are confident that we can assure quality while
providing a comprehensive benefit.
Care decisions will be made by doctors -- if care is medically necessary it is
covered.
3
SENATOR TED KENNEDY
c.
How will your plan assure Americans that they will always be able to choose their
doctor and hospital and that their care will be of the highest quality?
Choice is a critical part of every doctor-patient relationship. That's why we're
making sure that everyone has a choice of plan and a choice to remain with
their doctor.
If you want to stay with your doctor or hospital, you could choose the plan
they signed up with. But, you'll also have a wider choice of plans - - from
fee-for-service to preferred provider organizations to health maintenance
organizations.
Our doctors and hospitals deliver some of the highest-quality care in the world
today. They do this in spite of the flood of paper and forms, and rules and
regulations they have to wade through every time they try to treat a patient.
We're stripping away the hassle in delivering care - - freeing up doctors and
nurses and other health care workers to spend more time caring for their
patients instead of worrying about crossing t's and dotting i's on forms for
insurers.
Patients will have an increased voice in ensuring that doctors and hospitals
meet quality standards. Public accountability is one of the strongest motivators
I know of to make sure that the job gets done right. That's what the report
cards will do.
Finally, we're investing more to find out what treatments really do work.
Medicine is an art - - even though most people think it's a science. So much
is unknown in what's practiced today, and sometimes the treatments are not
always in the best interest of the patient. We need to take more of the
guesswork out of medicine.
Senator Metzenbaum
Q. How will the President's proposal protect consumers against
insurance company predatory practices, excessive administrative
costs, and high prices?
A.
Insurance companies will have to compete based on the same
benefit package, and the same requirements, not only against each
other but against others who form health plans.
The current way insurance companies make money, by not
insuring those who get sick, will be eliminated. Must insure
those who choose the plan.
No limitations on preexisting conditions.
The excessive administrative costs are caused by
marketing to healthy groups only -- that will be gone.
Senator Metzenbaum
D.
Q. How will consumers be represented and protected?
A.
They will run the health alliances -- one-half the
members of the board must be consumers.
They will choose the health plans they want from all the
health plans in the alliance, based on quality and price.
They will have complete and informative data on health
plans and providers.
Senator Metzenbaum
Q. How will we assure that state regulations implementing
Federal consumer protections are adequate?
A.
The rules about alliance representation, consumer
information, quality, performance of plans, and price are all
required under the law. A state must make sure they are
adequate.
Without heavy-handed federal regulation, the alliances
are designed to protect consumers. They are consumer controlled
to get the best health care at the best price.
It is the forces of competition that will protect
consumers; but there are safeguards. Discrimination is
specifically forbidden.
We have essential provider status for communities with
particular needs, like urban and rural areas.
SENATOR HOWARD METZENBAUM
d. How will excessive drug prices be controlled?
Prescription drug cost containment is one of the most difficult issues that we
had to deal. Our goal has to find a way to contain costs while assuring
adequate incentives for research and development. A number of Members
believe we have been overly harsh with the drug industry and a number of
others fear we have not been tough enough.
In the private sector, after years of skyrocketing health care costs, health care
plans -- particularly hospitals, HMOs, PPOs and other managed care plans --
have used purchasing mechanisms (such as formularies) to assure that the most
appropriate and cost effective medications are prescribed and dispensed. In
most cases, these techniques have been quite successful in finally containing
costs.
We will build on the success of these purchasers as we are reorienting the
entire health care system towards true competition. However, like you, we
remain concerned about the costs of breakthrough drugs -- medications that
have no therapeutic alternatives with which purchasers can compete.
To address this issue, as part of our National Health Board, we propose the
establishment of a Breakthrough Drug Committee. This body will review new
drug costs and have the authority to make public declarations about excessive
drug prices. We believe this body will provide crucial information to both
public and private purchasers that strengthen their bargaining hands, without
regulating prices.
For the public sector, by now being the largest single purchaser of
prescription drugs, we believe the Medicare program should have access to a
reasonable discount of between 15 and 17 percent. To protect the trust fund
from an abnormally high priced new drug, the Secretary of Health and Human
Services is given the discretion to negotiate with the manufacturer of the drug.
If the company does not negotiate, Medicare does not have to cover the drug -
- an option private sector purchasers make today. (Congress already gave her
this authority earlier this year within the immunization provisions of the
reconciliation bill.)
Dodd
a.
Q: How will you assure that small businesses can afford the
program?
A: We have taken a number of specific steps aimed at making
health care coverage affordable to even our smallest businesses.
The plan will offer significant discounts to help the small firms
who are getting killed by rising costs. For the two-thirds of
small businesses who can still afford to cover their workers
today, this plan will very likely lower their costs.
How?
First, it will give small businesses discounts of up to 80% off
of health care premiums, by capping the amount they have to pay.
Second, by pooling small businesses together to increase their
bargaining clout and allow them to get the same good rates large
businesses get.
Third, it will drastically reduce the administrative overhead
costs that eat up nearly half of the premiums small businesses
pay today. In the new system, small business contributions will
go to health care, not to administrative waste.
'ourth, it will limit the amount health care premiums rise every
/ear, protecting businesses from the huge cost increases they
face year after year.
Fifth, it will increase the tax deductibility for self-employed
businesses from 25% to 100%, making health care expenses fully
deductible.
And finally, it will integrate the health portion of worker's
compensation insurance over time, so that employers don't end up
paying twice for health coverage.
Dodd
b.
Q: How will your program provide the health care children need?
A: This is a very important question, because too many children
go without needed health care today:
30% of all children under two have not been immunized
against preventable childhood disease. In many inner
cities, that figure is 50%.
One in five American children had no contact with a doctor
in 1992.
This plan guarantees all American children comprehensive health
care benefits, and provides unprecedented coverage of the primary
and preventive services SO vital to keeping children healthy.
All benefits package includes prenatal care, immunizations,
regular checkups and well-baby vists, vision and hearing care,
and preventive dental care for children.
Dodd
C.
Q: How do you respond to the criticism that premium caps won't
work and don't get at the real cost problem?
- we don't think caps will come into effect, competition will
bring prices below caps- - they are backstop
- mechanism already in place - - insurance premiums are regulated
today
- easier and less regulatory than alternative approaches such as
setting doctor and hospital fees
- same approach as advocated in bi-partisan legislation put forth
by Kassebaum/Glickman
SENATOR PAUL SIMON
a.
What are you going to do with regard to drug pricing and will it harm research?
(FOR DETAILS OF SUBSTANCE OF POLICY, PLEASE REFER TO ANSWER TO
SENATOR METZENBAUM's SIMILAR QUESTION).
With regard to research, we believe we have developed a policy that balances
the need to expand access, contain costs, and retain incentives for research.
Having said this, there are strong feelings on all sides of this issue.
We welcome suggestions from all parties. In recent days, some representatives
of the industry have suggested that they would like to suggest langauge on how
best to evaluate drug cost effectiveness. They point out that some drug prices,
although seemingly expensive, are much less costly than alternative treatment
options.
We look forward to receiving specific suggestions from the pharmaceutical
industry, as well as advocates for consumers, businesses, insurers, and other
interested parties.
SENATOR PAUL SIMON
b.
Explain what your plan will do to get primary care providers into rural areas.
Right now two-thirds of rural counties do not haver enough doctors. It's no
wonder. Rural areas have a higher proportion of uninsured people than the rest
of the nation. Rural doctors provide more charity care than any doctors in the
country, and they often get paid late. In many cases rural doctors can't take a
day off because there isn't another doctor for miles around.
With universal coverage, rural doctors will be guaranteed that they'll be paid
for every patient they see, eliminating a major disincentive to rural practice.
In addition, the plan will include specific incentives for doctors to practice in
rural areas including expanding the National Health Service Corps and its loan
repayment program and incentives to medical schools to train primary care
doctors. It also gives states the flexibility to develop programs that are more
responsive to rural needs.
The plan will also help break the isolation of rural doctors by encouraging
networks with regional medical centers, hospitals and other doctors.
Technologies such as interactive video will give rural residents access to the
kind of care once available only at major medical centers
SENATOR PAUL SIMON
c.
How will Federally Qualified Health Centers be protected and people be assured
of their services? (Federally Qualified Health Centers are organizations like
community health centers that now get cost reimbursement under Medicaid and
Medicare.)
For many in urban and rural areas, federally qualified health centers,
community and migrant health centers provide the only access to health care
services today. They play a critical role that we want to preserve.
Under reform, health plans will contract with "essential community providers"
so that all Americans - - regardless of where they live, what their income is,
or what race or ethnicity - - will be guaranteed access to quality care.
And, because everyone will be covered under our proposal, the patients that
come to these clinics will now be paying patients - - at the same
reimbursement rate as everyone else. This will provide a substantial boost in
funding for these centers.
Finally, we're increasing funding so that these centers can link up with other
clinics in their area and with centers of excellence so that they can build their
own community-based plans.
SENATOR ToM HARKIN
a.
Rural areas have historically had low spending. Does the budget lock in current
inequties.
Coming from Arkansas, there are few people more sensitive to this issue than
the President and me.
Because we do no yet have the ability to fairly and equitably level the playing
field among states, our budget allocations are based on historic spending
patterns.
However, we direct the National Health Board to initiative a study to the
Congress and the Administration that is charged with developing a formula that
brings states spending closer together. In recent weeks, a number of Members
have suggested that we have a very specific reporting date and timeframe for
action on this issue. We are looking at these suggestions very closely as we
modify our plan.
SENATOR TOM HARKIN
b.
What will be the impact of Medicare cuts on rural providers?
Rural areas have a much higher proportion of elderly residents than other areas
of the country. As a result Medicare payments are an important source of
income for the doctors and hospitals that serve these areas.
If you were to look at the savings we are proposing to Medicare, in isolation,
rural providers would have every right to be concerned. But you need to view
this in the overall framework of the reform we are proposing.
Rural doctors and hospitals will benefit enormously from the predictable
payments that will result from all their patients having comprehensive
insurance coverage.
Some of the savings to the Medicare program will come from working
beneficiaries who will now get coverage through their employers rather than
through Medicare.
Other savings to Medicare will come as we slow the overall growth in both
public and private health care spending. These savings are not cuts in current
levels of spending but reductions in the projected increases in Medicare
spending.
These savings are realistic and achievable without harming doctors, hospitals or
patients.
Harkin
C.
Q: The plan calls for periodic exams. WIll you follow the
recommendations of the U.S. Preventive Services Task Force?
A: Yes, our plan has adopted the periodicity between screenings
and other preventive health services recommended by the U.S.
Preventive Services Task Force.
All the services prescribed in this table will be provided, at
these recommended intervals, free of charge- - no co-payments, no
deductibles.
SENATOR ToM HARKIN
d.
Shouldn't your public health programs and medical research have a guaranteed
source of funding?
Over the course of this century we have seen that vast gains in the health of
people worldwide from breakthroughs in medical research.
As a leader in the Congress in this area, you well know that medical research
and public health initiatives pay great dividends and are among the most cost-
effective health care investments we can make.
Your proposal to establish a medical research trust fund paid for from a portion
of health premiums is a thoughtful and innovative approach to assuring a
steady funding stream for these important efforts. I look forward to continuing
to work with you on this issue.
SENATOR HARRIS WOFFORD
b.
What is the realistic timeframe for the paperwork reductions and administrative
simplifications your plan proposes?
Some of the reductions we're proposing can happen almost immediately. Take
the Medicare program - - one of the things I've heard hospital administrators
complain most about is having to chase down doctors to get them to sign off
on bills before they go out. That can hold up payment for days. I'll give you
an example of what I mean - - the Lakeland Regional Medical Center in
Florida estimates that this paper chase costs them $100,000 in personnel and
supply costs alone. We can do this and look at other ways to streamline
Medicare immediately.
For the system-wide paperwork reductions, they'll be phased in as states get
their systems up and running.
And, even once the system is in place, we'll be continuously looking for ways
to reduce the "hassle factor" for doctors, nurses and other health care workers.
If you have any suggestions for how we can peel off the layers of paperwork,
we'd welcome your input.
Senator Wofford
C.
Q.
HOW will workers compensation be integrated into the new
health care system?
A.
Health plans will deliver the health care for any
injuries that are job related.
We will retain workers compensation insurance under the
state systems, but the employer or workers compensation insurer
will make payments directly to the health plans.
The health plans will be required to have available the
services that are necessary for treatment of work-related
injuries, like long-term rehabilitation.
A Commission will study what further integration of the
health component of workers compensation we can accomplish.
The existing system of workers compensation has an
important incentive -- those with a safe workplace pay less than
those with a lot of injuries. We need to maintain that
incentive.
SENATOR HARRIS WOFFORD
d.
How will your program affect low-income senior citizens?
Low-income seniors will benefit under the Health Security Plan in two ways:
through a new prescription drug benefit and home and community-based long-
term care services.
For 3 out of 4 elderly Americans, the greatest out-of-pocket cost is
prescription drugs. The vast majority of these low-income elderly have no
insurance whatsoever against the cost of prescription drugs. Today, over 8
million elderly have to choose between food and medicine. We think this is a
crime. By covering prescription drugs and making them affordable, this choice
will no longer have to be-made.
The greatest fears of older Americans are that they will have to spend down
their hard-earned savings in order to qualify for any long-term care coverage.
And, the coverage they get is usually for the type of care they do not want - -
nursing home care. The Health Security Plan provides for more cost-effective,
humane and desirable home and community-based care that preserves and
protects not only older Americans' incomes and savings but their dignity as
well.
Mikulski
b.
Q: Some small businesses may have difficulty under your plan.
How will you assure that the program is affordable for them?
A: We have taken a number of specific steps aimed at making
health care coverage affordable to even our smallest businesses.
The plan will offer significant discounts to help the small firms
who are getting killed by rising costs. For the two-thirds of
small businesses who can still afford to cover their workers
today, this plan will very likely lower their costs.
How?
First, it will give small businesses discounts of up to 80% off
of health care premiums, by capping the amount they have to pay.
Second, by pooling small businesses together to increase their
bargaining clout and allow them to get the same good rates large
businesses get.
Third, it will drastically reduce the administrative overhead
costs that eat up nearly half of the premiums small businesses
pay today. In the new system, small business contributions will
go to health care, not to administrative waste.
Fourth, it will limit the amount health care premiums rise every
year, protecting businesses from the huge cost increases they
face year after year.
Fifth, it will increase the tax deductibility for self-employed
businesses from 25% to 100%, making health care expenses fully
deductible.
And finally, it will integrate the health portion of worker's
compensation insurance over time, SO that employers don't end up
paying twice for health coverage.
SENATOR BARBARA MIKULSKI
a.
How will your plan assure that alternate providers (e.g. nurse practitioners) will
be allowed to fully participate in delivering services?
In a country that trains too many specialists and not enough primary care
providers, we cannot afford to waste a resource as valuable as advance practice
nurses.
Nurse practitioners, nurse midwives and physicians assistants, along with
primary care doctors, are at the center of our efforts to emphasize primary and
preventive care.
Our plan will work to remove inappropriate practice barriers so that all health
professionals can work to the full scope of their training.
Mikulski
C.
Q: How will your plan solve the terribly important problem of
long-term care?
- growing elderly population, this is a problem that won't be
solved overnight
- this plan takes significant steps toward extending availabiity
and affordability of long-term care for seniors
- creates new federal home care program, providing home and
community-based care to elderly and disabled
- adds a drug benefit to the Medicare program, lifting a major
financial burden off of the backs of many seniors
- strengthens protections for nursing home recipients
Mikulski
d.
Q: What will your program do for women's health?
- unlinks access to health care from employment status, health
status, marital status
- offers full coverage of primary and preventive care for women
such as pre- and post-natal care, mammograms, Pap smears,
cholesterol screenings, etc.
- directs new research funds into illnesses that strike primarily
women, such as breast cancer, redressing the lack of research
attention that has been paid to women's health problems in the
past
- offers broad coverage for children and new benefits for
seniors, helping ease the caregiving budren on American women
today
Response to Senator Bingaman
a.
Alain Enthoven says that by not capping the exclusion from income of employer paid
health insurance premiums at the level of the lowest price plan you have reduced the
effectiveness of your cost containment program.
Taxing health benefits hurts the middle class
We looked at the possibility of taxing health insurance, but concluded that
it was the wrong way to pay for health care reform. According to the
Treasury Department, if our plan taxed all premiums over the average, it
would raise taxes for over 35 million working Americans a year. We
rejected this idea because we think it would be wrong to raise taxes on
middle class working Americans.
Taxing health insurance will not bring us health security. It would only result in a
bigger tax burden on the middle class. Health care reform must control costs
without creating new or hidden taxes on the middle class. Taxing health benefits
is just that -- a new tax on the middle class.
During the last two decades most Americans have seen little or no growth in
wages. Many working Americans have traded higher wages for health insurance.
Under the Clinton health reform plan. comprehensive health insurance will not be
taxed -- now or in the future. Only insurance coverage over and above
comprehensive insurance will be subject to any tax, and this will not apply to
anyone now covered by a collective bargaining agreement for many years.
Other health reform plans would tax all or some of the employer contributions for
basic health insurance, without requiring universal coverage through employer
contributions. This is wrong for several reasons:
If the cost for employers to provide health insurance goes up, fewer
employers will provide health insurance.
If basic health benefits are taxed at the individual level, it will increase
middle class taxes by taxing the only portion of their income that has seen
any growth over the past two decades.
SENATOR JEFF BINGAMAN
b.
How will your program assure an adequate supply of primary care providers and
get them into rural areas.
Right now two-thirds of rural counties do not haver enough doctors. It's no
wonder. Rural areas have a higher proportion of uninsured people than the rest
of the nation. Rural doctors provide more charity care than any doctors in the
country, and they often get paid late. In many cases rural doctors can't take a
day off because there isn't another doctor for miles around.
With universal coverage, rural doctors will be guaranteed that they'll be paid
for every patient they see, eliminating a major disincentive to rural practice.
In addition, the plan will include specific incentives for doctors to practice in
rural areas including expanding the National Health Service Corps and its loan
repayment program and incentives to medical schools to train primary care
doctors. It also gives states the flexibility to develop programs that are more
responsive to rural needs.
The plan will also help break the isolation of rural doctors by encouraging
networks with regional medical centers, hospitals and other doctors.
Technologies such as interactive video will give rural residents access to the
kind of care once available only at major medical centers
SENATOR PAUL WELLSTONE
a.
How will your plan protect the poor and middle class in view of the high co-
payment and deductible requirements even for HMO-type plans?
For HMOs, there are no deductibles, but some advocates have raised concerns
about the $10 co-payment per service requirement.
For the lowest income of our nation, (150 percent of poverty or less), the
Health Security Plan picks up all or most of this vulnerable population's
premiums and co-payments. We believe this is an important protection for the
low income of our nation.
However, some still believe that the co-payment is too high for some lower
middle income class individuals. We believe this is a legitimate concern and
would like to work with you and others to evaluate options to address it.
SENATOR PAUL WELLSTONE
b.
Won't we have two-class medicine, with only the upper-incomes able to afford
fee for service?
We believe that in the reformed health care delivery system that it is very
possible that fee-for-service plans will be competitive with managed care
options.
With the operation of market forces, Doctors and hospitals that wish to assure
the success of the fee-for-service plan will find a way to keep costs down so
and such a plan can be offered at prices competitive with HMOs and PPOs.
However, in response to feedback we have received from your office and a
number of others, we are considering of providing for some kind of point-of-
service option for closed model HMOs plan.
Senator Kassebaum
A,
Q. How will workers compensation be integrated into the new
health care system?
A.
Health plans will deliver the health care for any
injuries that are job related.
We will retain workers compensation insurance under the
state systems, but the employer or workers compensation insurer
will make payments directly to the health plans.
The health plans will be required to have available the
services that are necessary for treatment of work-related
injuries, like long-term rehabilitation.
A Commission will study what further integration of the
health component of workers compensation we can accomplish.
The existing system of workers compensation has an
important incentive -- those with a safe workplace pay less than
those with a lot of injuries. We need to maintain that
incentive.
SENATOR KASSEBAUM
B. 1)
On experimental procedures, who will make the decision, and based on what
criteria?
Our doctors and hospitals deliver the highest-quality care in the world. That's
because we have long encouraged research into new cures and treatments for
diseases.
We'll continue to encourage innovation, but we want to also ensure that
patients are protected from both the costs and the dangers of experimental
procedures that are unsafe.
Approved research trials achieve both goals - - they advance medicine and
lead to new cures and treatments, but they're also safe. The comprehensive
benefits package covers the routine medical costs for patients whose treatment
is part of a research trial. So, if your child needs a bone marrow transplant
and that's approved, your child will have the benefits of the best that science
has to offer and you will have the comfort in knowing that your child is in safe
hands.
The National Health Board will have the authority to add new procedures to
the covered benefits as they as proven safe and effective.
SENATOR NANCY LANDON KASSEBAUM
How can we assure our constituencies that savings will be there and cover new
spending?
Our plan lays out specific line item savings. They have been scored by the
Office of Management and Budget and they will be scored by the
Congressional Budget Office.
Let me also say that over the last eight months, I have talked to hundreds of
people involved at all levels of our health care delivery system. I have heard
stories about waste and inefficiency to numerous to mention. I have also heard
success stories where doctors and hospitals are working to hold cost down, far
below the national average.
We must and we can spend our health care dollars more wisely.
DIETARY SUPPLEMENTS
SENATOR HATCH:
I would like to ask you a question about Dietary Supplements. Millions of people
have found vitamins, minerals, herbs and other supplements to be essential to protect their
health. Yet these consumers are concerned that the Food and Drug Administrations is going
to take away their suppplements.
I have introduced a bill which is cosponsored by more than half of the United States
Senate, which would guarantee the availability of these products. What will the
Administration do to insure that people will be able to use dietary supplements to decrease
their chance of illness?
POSSIBLE HRC RESPONSE:
Senator Hatch, I agree with you that dietary supplements can be valuable in
promoting health. I believe in vitamins and take them on a regular basis. I
believe that the decision to use these products should be left largely to
American consumers. As long as supplements are safe, people should have the
right to purchase them.
But I am sure that you share my concern about false and misleading claims
that some have made about these products by those who are attempting to
make money off of sick and desperate people. We need to strike the proper
balance between getting accurate information to people about the value of these
products and prohibiting false and misleading claims.
The Clinton Administration looks forward to working with you on how best to
achieve this balance.
Background on Dietary Supplements
Recently, Members have been inundated with mail from people
who use dietary supplements. Most of the mail is generated by an
extremely effective campaign conducted by the supplement industry,
a significant part of which is based in Utah. In its literature,
the supplement industry has made completely inaccurate charges
against the Food and Drug Administration, including the charges
that the FDA intends to require prescriptions to purchase vitamins
and the charge that it intends to ban herbs and other similar
products.
For many years, the FDA was relatively lax about regulating
these products. As a result, manufacturers have become accustomed
to making illegal and deceptive claims (for example, there are
products marketed to AIDS patients that claim they will enhance the
immune system).
There is a preception that this approach changed in 1990 with
the enactment of the Nutrition Labeling and Education Act, which
established the rules making health claims (such as "this product
is useful in preventing cancer") on foods and dietary supplements.
As the FDA has proceeded to issue regulations to implement the
NLEA, the dietary supplement industry has become very nervous that
companies will be prohibited from making many of the claims that
they have become accustomed to making.
Under the NLEA, prior to making a claim, a company must
present its scientific evidence to the FDA and get a ruling from
the agency that the claim is valid. The food processing industry
supported the NLEA and strongly opposes any proposal to establish
a separate standard for dietary supplements.
Senator Hatch's bill would not require premarket review.
Instead to prohibit a false claim, the FDA would have to take the
company to court and prove that the claim was false and misleading.
Senator Hatch would also remove the regulation of claims from the
FDA and place it in the National Institutes of Health. This
proposal reflects Senator Hatch and the supplement industry's
hostility towards the FDA.
Democrats in the Senate and the House strongly oppose both
eliminating premarket review for claims on supplements and taking
the program out of the Food and Drug Administration. However,
Congressman Waxman is working on a compromise bill that would
address a number of issues raised by the supplement industry, and,
most important, would guarantee the availability of these products
as long as they are safe.
2
INDEX
Democrats
Baucus (D-MT)
-
Global budgeting
-
Fuller explanation for rural access to health care
-
Premium caps
-
Impact on small business
-
Public health program funding
Boren (D-OK)
-
Tax caps - wants greater explanation
-
Employer contribution - wants greater explanation
-
Impact on subsidies if financing is not solid
Bradley (D-NJ)
-
Alternative financing plan (wants additional sin taxes)
-
Basic benefits package - what's in it/ability to get 2nd opinion
-
(NOTE: He is likely to ask you a question regarding pharmaceuticals as
is Hatch.)
Breaux (D-LA)
-
Global budget - dictating insurance behavior/premiums at cap
-
Alliances - too regulatory/won't allow competition to work
-
Small business ability to afford employer mandate
-
Financing mechanisms other than those already mentioned
-
Paying for elderly, prescription drugs, long term care
-
Retiree benefit - explanation of $4 billion estimate
-
Tax cap
Conrad (D-ND)
-
Growth in expenditures/Rise in GDP
-
Rural areas under global budget
-
Funding infrastructure improvements for rural areas out of discretionary
monies
-
Funding for Public Health Funds/Medicare GME funds (pro-GME)
Daschle (D-SD)
-
Rural access
-
Burden reduction on small business under reform
Mitchell (D-ME)
-
Explain why plan won't result in $600 billion new spending (Senator
Mitchell wants this on the record. Steve Edelstein gave them the
numbers of $350 in new spending and $250 in redirected spending.)
-
Rural health care
Moynihan (D-NY)
-
Trade-offs/benefits for those currently Medicaid covered who won't be
under the new system
-
State role in financing Medicaid
-
Rationale for allowing Medicaid premiums paid into the Alliance to
decrease more slowly than premium payments made by private sector
-
Explain $80 billion Long Term Care estimate/what services and #'s
people served
-
Rate of health care expenditure growth after year 2000/what happens
after that year
-
Policy basis for allowing employers continued tax deductibility for
supplemental policies, but having employees pay their share of the
supplemental premium with after tax dollars
-
Making the Alliances accountable to consumers and employers
-
Explain why our plan is better than either single payer or market system
-
Job loss as result of reform
-
Plan's ability to address lack of physician/providers in inner cities/rural
areas
-
Since issuing plastic "Health Security Cards" for everyone, why not
plastic Social Security cards?
-
Wage cap/health insurance premiums
Pryor (D-AR) - unable to attend due to illness
Rockefeller (D-WVA)
-
Decision on residency slots - regional council or state-by-state (He
favors state.)
Republicans
Chafee (R-RI)
-
Gun control and costs to health care
-
Community based care & federally qualified health center
-
Budget - overambitious Medicare cuts
Danforth (R-MO)
-
Financing - spending $$ we don't have
-
Plan phase in/benefit distribution
Dole (R-KS)
-
No information provided
Durenberger (R-MN)
-
Treatment of State Health Care Plans & federal entitlements
Grassley (R-IA)
-
Medicaid - worried about negative impact on Iowans based on Medicaid
distribution
-
Global budgets
Hatch (R-UT)
-
Examples of improved quality while reducing costs
Packwood (R-OR)
-
Abortion (Disturbed over recent action on the Hyde Amendment, he will
probably focus quite hard on this issue.)
-
Oregon - Ability to implement its plan limiting services
-
Global Budgeting - equity among states
-
Inordinate federal regulation
Roth (R-DE)
-
Cost Containment
-
Seniors and federal employees access to plan
Wallop (R-WY)
-
Opposed to employer mandate - focus on excessive government
expansion, subsidies, retirement encouragement
-
United Mine Worker "Orphan" program - fear it will be negated under
reform
SENATOR MAX BAUCUS
ISSUE:
How will rural areas be affected by global budgets?
ANSWER:
First, Senator, we are not using global budgets. Our
back-up enforcement mechanisms will be used only on the
cost of the benefit package that is provided to all
Americans.
Secondly, although. this is a little known fact, health
care inflation in rural areas is running at as high a
rate as it is in other areas of the nation. As a
result, like all parts of the country, slowing down
growth rates benefits all populations.
Lastly, premium targets in all states begin at what
health care costs there are today, plus increases for
people who are now uninsured.
The National Health Board will provide information
about cost differences to states and alliances. This
should provide high cost areas with information they
need to bring costs down. Over time, the National
Health Board will monitor differences in costs and will
make recomendations to the Congress to narrow
differences across areas.
SENATOR MAX BAUCUS
ISSUE:
Rural areas - pleased with what he has heard so far, but may ask her to
elaborate.
ANSWER:
Right now two-thirds of rural counties do not have enough doctors. It's no
wonder. Rural areas have a higher proportion of uninsured people than the rest
of the nation. Rural doctors provide more charity care than any doctors in the
country, and they often get paid late. In many cases rural doctors can't take a
day off because there isn't another doctor for miles around.
With universal coverage, rural doctors will be guaranteed that they'll be paid
for every patient they see, eliminating a major disincentive to rural practice.
In addition, the plan will include specific incentives for doctors to practice in
rural areas including expanding the National Health Service Corps and its loan
repayment program and incentives to medical schools to train primary care
doctors. It also gives states the flexibility to develop programs that are more
responsive to rural needs.
The plan will also help break the isolation of rural doctors by encouraging
networks with regional medical centers, hospitals and other doctors.
Technologies such as interactive video will give rural residents access to the
kind of care once available only at major medical centers
Baucus
Premium caps - will they be decided on by the States?
States will not be responsible for setting or enforcing
premium caps.
Federal law will specify the allowable increase in
premiums over time.
Premiums targets for each alliance will be set by the
National Health Board.
Premium targets for alliances in each state will be set
based on the real cost of providing the guaranteed
benefits in that state today, with increases for those
now uninsured.
SENATOR MAX BAUCUS
ISSUE:
Impact on small businesses
ANSWER:
Two-thirds of small businesses currently cover their employees. For these
businesses, health care reform will mean a chance to expand and create new
jobs. The Wall Street Journal calls the plan "an unexpected windfall" for
small businesses.
Some people say that this proposal is going to hurt small businesses. And it's
important to keep in mind that my critics are right on one important point:
asking all employers -- including low-wage small businesses -- to provide
comprehensive coverage for their employees without discounts would be
unreasonable. But that's not what my plan is -- my plan provides discounts of
between 30 and 80% for small businesses, depending on the average wage of
their workers.
Most small businesses will receive a windfall because they will be getting
substantial discounts compared to what they pay now. Studies show that the
fastest growing small businesses are the ones that provide health insurance.
So they will be able to create new jobs and expand their businesses.
You see, the whole problem with the way people get insurance today is that
the insurance companies have all the power, and small businesses and
consumers get the short end of the stick. My plan changes the market to give
small businesses and consumers more bargaining power and really put them in
the driver's seat.
A lot of small businesses that don't provide insurance want to -- they just
can't afford it. Listen to Diane Welch of San Jose, California -- she owns an
Italian restaurant there with 40 employees. She says -- this was in the
newspaper a few days ago -- that she is looking forward to my proposal
because it has bothered her that she and her husband couldn't afford to provide
coverage for their employees. With the discounts, health care would finally be
reasonable, she said. And she said of the price: "It's something we could
definitely handle."
Let's look at what a low-wage small business might pay. For a small business
whose employees make an average of $12,000 a year, they would only have to
pay $420 a year per employee to get their employees comprehensive health
benefits. In today's market, they might have to pay as much as $4000 per year
per employee, but after reform, it's affordable because of the discounts which
we are proposing for small businesses, Now compare that to the average big
business, paying $2200 a year for each employee. We're talking about a
discount of 80% for the small business.
When we look at what effect this will have on small businesses, one interesting
example is Hawaii. Hawaii passed a plan in 1974, the Prepaid Healthcare Act,
that requires all businesses to contribute to the cost of their employees' health
insurance. But small businesses have continued to thrive. In 1991, Hawaii was
the nation's third fastest-growing state for small businesses, and Hawaii's
unemployment rates are consistently among the lowest in the country.
SENATOR MAX BAUCUS
ISSUE:
How much funding will be given to public health programs?
ANSWER:
One of the key goals of health reform is to improve the health of Americans at
an affordable cost. Public health programs pay a pivotal role in achieving this
goal. The Health Security Plan will inject billions of dollars into public health
programs and will redirect current funding to ensure that all Americans have
access to high-quality health care.
We're injecting new funds into community health centers, migrant health
centers, public hospitals and clinics to expand capacity and support enabling
services such as outreach, transportation, case management and counseling
services.
We're also continuing and expanding public health programs that protect
Americans against preventable, communicable diseases, harmful products, toxic
pollutants and poor quality health care.
The Health Security Act will define and validate new prevention and control
interventions.
Senator Boren
2. What does the employer contribute under the employer mandate,
and why do we need an employer mandate?
The employer contributes 80% of the premium for the
average plan in the alliance. There are adjustments because of
dual wage earners in families, but fundamentally it is 80% of the
average premium.
Employer mandate is necessary if we are to provide the
security of universal coverage.
It builds on the system we have today -- 90% of people
insured today with private insurance get it through their
employer.
Employers who do not cover employees today are pushing
the cost of health care on to the employers who do provide
coverage - through uncompensated care.
1
SENATOR BILL BRADLEY
ISSUE:
FINANCING. Are there any alternatives to financing the
plan as currently established?
ANSWER:
We are still considering the most appropriate level of
taxation of tobacco. The ranges are between 75 cents
and $1 more than the current tax. I know you have been
a long time advocate of increases on tobacco taxes as
both a disincentive to use and a revenue raiser.
Except for a 1 percent corporate assessment on firms
with over 5,000 employees, we do not believe additional
revenue is necessary. However, we are more than
willing to review and discuss alternatives that you or
other Members may have in mind. Do you?
SENATOR BRADLEY
ISSUE:
What's in the basic benefits package? Can a person get a second opinion?
ANSWER:
The comprehensive benefits package is as comprehensive as what most
Fortune 500 companies offer today. It covers a full range of services,
including mental health services, substance-abuse treatment, some dental
services and clinical preventive services.
Just as they do today, health plans will determine whether second opinions will
be covered.
Senator Breaux
1.
Global budget - concern that budget will dictate insurance
behavior and that premiums will be set at cap from the
beginning
We do not believe that the budget enforcement mechanism
will ever be used. It is simply a backstop and
provides employers and consumers with greater
bargaining power.
There is evidence from other public and private systems
that competitive forces can and will result and
premiums that are below the budget targets.
Since consumers will choose plans based on price and
service, health plans will be under strong competitive
pressure to keep premiums below the budget targets.
Consumers are paying out of pocket to enroll in more
expensive plans.
Senator Breaux
2.
Alliances - too regulatory; would not allow compeittion to
work
The opposite is true. With limited exceptions,
alliances must offer all health plans that want to
participate.
States will qualify health plans, as they do today.
The real function of alliances is to give employers and
consumers the same bargaining power large groups have
today.
We have examples of this working today -- for example,
CALPERS or the public employees program in Minnesota.
Senator Breaux
4. What is the financing mechanism?
Uninsured workers and their employers, approximately 30
million people, will contribute under the new system.
Savings from slowing the rate of growth in Medicare and
Medicaid, as we phase in the new system, will also be available.
The tax on tobacco and the contribution from large
corporations that choose to self-insure to help support the
health services that they use, such as academic health centers.
Senator Breaux
5. Prescriptions drugs for the elderly and long-term care, how
will we pay for these? Isn't it spending more money without
requiring more from beneficiaries?
Prescription drugs are cost-effective and necessary.
Seniors shouldn't be forced to choose between food and medicine;
if they don't take their drugs, they end up back in the hospital.
Long-term care can save money. Why do we force people to
spend down, or go into nursing homes when they are just as happy
to stay at home if they have some services.
Senator Breaux
6.
New retiree benefit - how did you arrive at a cost of $4
billion
Without the enhanced retiree heath benefit, early
retirees would be treated like other non-workers under
the President's plan. Since many retirees have low
incomes, they would receive substantial subsidies
anyway. The $4 billion figure represents the
additional cost of the enhanced benefit.
Our cost estimates are prudent, and build in the
expense of expected increases in retirement as a result
of the plan.
Senator Breaux
7.
Tax cap - why not apply it to employers also.
All benefits in the nationally guaranteed package are
tax deductible and not counted as income for employees.
Additional benefits now offered are also not taxed, for
a period of ten years.
Our nationally guaranteed benefits are comprehensive,
and are comparable to those now offered by Fortune 500
firms. The package meets all of the needs of the vast
majority of Americans.
Ultimately, employer-paid benefits over and above the
guaranteed package should be treated just like wages --
tax deductible for employers but counted as income for
employees.
3
SENATOR KENT CONRAD
ISSUE:
Slowing GDP Growth at Faster Rate. Even under the
President's cost containment proposal, GDP. growth rates
will still be far in excess of our competitors. Can't
we do better that the President is proposing?
ANSWER:
Senator, you are right. Even under what some people
claim are excessively rigid cost containment goals of
the President's proposal, health care spending will
still be in the high teens later in this decade. This
will be much higher than any competitor.
However, most critics have stated that we cannot even
meet our targets. The President and I believe that
these experts are off-target. We believe the potential
is there for doing even better than our projections,
but I doubt we could get any tighter cost containment
goals passed.
ISSUE:
How will rural areas be affected by global budgets?
ANSWER:
First, Senator, we are not using global budgets. Our
back-up enforcement mechanisms will be used only on the
cost of the benefit package that is provided to all
Americans.
Secondly, although this is a little known fact, health
care inflation in rural areas is running at as high as
rates as they are in other areas of the nation. As a
result, like all parts of the country, slowing down
growth rates benefits all populations.
Lastly, premium targets in all states begin at what
health care costs there are today, plus increases for
people who are now uninsured.
The National Health Board will provide information
about cost differences to states and alliances. This
should provide high cost areas with information they
need to bring costs down. Over time, the National
Health Board will monitor differences in costs and will
make recomendations to the Congress to narrow
differences across areas.
4
SENATOR KENT CONRAD
ISSUE:
Will the infrastructure improvements for rural areas be
funded out of discretionary monies? If so, aren't
these funds much harder to maintain?
ANSWER:
First, since rural populations are disproportionately
uninsured, underinsured, and on Medicaid, the primary
structural change in rural areas will be that health
care providers will benefit from a higher paying
insured population. These monies are obviously not
discretionary and should help contribute to
underwriting the costs of necessary infrastructure
improvements.
With regard to the other improvement investments, there
is no questions that discretionary monies are more
difficult to obtain. We are looking at options and
would welcome suggestions.
SENATOR KENT CONRAD
ISSUE:
Where will new funding come from for the commendable
training, recruitment, and retention initiatives you
are contemplating for rural primary care mid level
providers? Is it from Public Health funds or Medicare
GME funds.
ANSWER:
Expanding coverage without ensuring an adequate
provider base is like having a movie ticket with no
theater to go to. To address this issue, we will use
funding sources from PHS. We feel very positive about
our commitment to solving the rural mid-level provider
access problem. Howaver, we are open to any
suggestions you may have.
SENATOR DASCHLE
ISSUE:
May ask for an example of how the plans will help those in rural areas.
ANSWER:
Right now two-thirds of rural counties do not have enough doctors. It's no
wonder. Rural areas have a higher proportion of uninsured people than the rest
of the nation. Rural doctors provide more charity care than any doctors in the
country, and they often get paid late. In many cases rural doctors can't take a
day off because there isn't another doctor for miles around.
With universal coverage, rural doctors will be guaranteed that they'll be paid
for every patient they see, eliminating a major disincentive to rural practice.
In addition, the plan will include specific incentives for doctors to practice in
rural areas including expanding the National Health Service Corps and its loan
repayment program and incentives to medical schools to train primary care
doctors. It also gives states the flexibility to develop programs that are more
responsive to rural needs.
The plan will also help break the isolation of rural doctors by encouraging
networks with regional medical centers, hospitals and other doctors.
Technologies such as interactive video will give rural residents access to the
kind of care once available only at major medical centers
SENATOR DASCHLE
ISSUE:
How the health care burden on small businesses will be reduced if the
proposal is adopted.
ANSWER:
Two-thirds of small businesses currently cover their employees. For these
businesses, health care reform will mean a chance to expand and create new
jobs. The Wall Street Journal calls the plan "an unexpected windfall" for
small businesses.
Some people say that this proposal is going to hurt small businesses. And it's
important to keep in mind that my critics are right on one important point:
asking all employers -- including low-wage small businesses -- to provide
comprehensive coverage for their employees without discounts would be
unreasonable. But that's not what my plan is -- my plan provides discounts of
between 30 and 80% for small businesses, depending on the average wage of
their workers.
Most small businesses will receive a windfall because they will be getting
substantial discounts compared to what they pay now. Studies show that the
fastest growing small businesses are the ones that provide health insurance.
So they will be able to create new jobs and expand their businesses.
You see, the whole problem with the way people get insurance today is that
the insurance companies have all the power, and small businesses and
consumers get the short'end of the stick. My plan changes the market to give
small businesses and consumers more bargaining power and really put them in
the driver's seat.
A lot of small businesses that don't provide insurance want to -- they just
can't afford it. Listen to Diane Welch of San Jose, California -- she owns an
Italian restaurant there with 40 employees. She says -- this was in the
newspaper a few days ago -- that she is looking forward to my proposal
because it has bothered her that she and her husband couldn't afford to provide
coverage for their employees. With the discounts, health care would finally be
reasonable, she said. And she said of the price: "It's something we could
definitely handle."
Let's look at what a low-wage small business might pay. For a small business
whose employees make an average of $12,000 a year, they would only have to
pay $420 a year per employee to get their employees comprehensive health
benefits. In today's market, they might have to pay as much as $4000 per year
per employee, but after reform, it's affordable because of the discounts which
we are proposing for small businesses, Now compare that to the average big
business, paying $2200 a year for each employee. We're talking about a
discount of 80% for the small business.
When we look at what effect this will have on small businesses, one interesting
example is Hawaii. Hawaii passed a plan in 1974, the Prepaid Healthcare Act,
that requires all businesses to contribute to the cost of their employees' health
insurance. But small businesses have continued to thrive. In 1991, Hawaii was
the nation's third fastest-growing state for small businesses, and Hawaii's
unemployment rates are consistently among the lowest in the country.
SENATOR GEORGE MITCHELL
Issue:
Many in the Senate have been asserting that the Clinton plan will cost
$600 billion in new spending, we know this isn't true, but what exactly is
the breakdown?
Answer:
I appreciate the opportunity to clarify this issue which has generated some
confusion and much misunderstanding.
We project that over the first seven years of reform, $609 billion in federal
dollars will be required to fund the program.
--
Of that amount, $259 billion is money the federal government is already
spending on coverage for working people on Medicare and Medicaid.
Their coverage will now be paid for by their employers and this money
will be redirected to the alliances to help pay for their care.
--
$169 billion is needed to insure that health insurance premiums are
affordable for small businesses and people with low incomes.
--
$80 billion goes to pay for the new home and community-based long-
term care services.
--
$72 billion pays for the new prescription drug benefit under Medicare to
improve security for older Americans.
--
$29 billion is spent on public health initiatives and administration of our
program.
So in reality, the actual figure for new spending is $350 billion over the first
seven years of the program.
SENATOR MITCHELL
ISSUE:
Rural health care - How the plan deals with that.
ANSWER:
Right now two-thirds of rural counties do not have enough doctors. It's no
wonder. Rural areas have a higher proportion of uninsured people than the rest
of the nation. Rural doctors provide more charity care than any doctors in the
country, and they often get paid late. In many cases rural doctors can't take a
day off because there isn't another doctor for miles around.
With universal coverage, rural doctors will be guaranteed that they'll be paid
for every patient they see, eliminating a major disincentive to rural practice.
Further, rural hospitals will see increased per person payments as Medicaid
rates are spread across all consumers in the alliance area, including private-
paying consumers.
In addition, the plan will include specific incentives for doctors to practice in
rural areas including expanding the National Health Service Corps and its loan
repayment program and incentives to medical schools to train primary care
doctors. It also gives states the flexibility to develop programs that are more
responsive to rural needs.
The plan will also help break the isolation of rural doctors by encouraging
networks with regional medical centers, hospitals and other doctors.
Technologies such as interactive video will give rural residents access to the
kind of care once available only at major medical centers.
SENATOR DANIEL PATRICK MOYNIHAN
Issue:
What are the trade-offs and benefits for those people now covered by
Medicaid who would not be entitled to Medicaid under the new system you
propose?
Answer:
The Health Security plan offers real benefits to people covered by Medicaid.
First, and foremost it guarantees them the same comprehensive benefits and the
same choice of plans as everybody else.
It also eliminates welfare-lock, by allowing people to move from welfare to
work with the assurance that they will still have coverage.
Some have raised concerns about what happens to benefits offered by some
state Medicaid programs above those offered in our comprehensive benefits
package. By maintaining a supplemental program for additional benefits, we
make sure that Medicaid beneficiaries still have access to these services.
Moynihan
What is the state role in financing the continuing Medicaid
system and the new health care system?
New government spending -- for increased benefits for
the elderly and for discounts for small businesses and
low income families -- will be financed by the federal
government.
States are expected to continue spending what they are
today under Medicaid for the nationally guaranteed
benefits. But state spending will be limited over time
at a much lower rate than today.
Moynihan
What is the rationale for allowing Medicaid premiums paid into
the alliance to decrease more slowly than the premium payments
made by the private sector.
We expect the premiums paid into alliances by states
for Medicaid recipients to increase at the same rate as
private premiums.
But since the Medicaid population is expected to grow
faster than the general population, Medicaid spending
in total will increase and as a percentage will rise
faster than private spending.
SENATOR DANIEL PATRICK MOYNIHAN
ISSUE:
Please explain how the $80 billion program cost estimate was arrived at
for long-term care: what services are assumed in that estimate and how
many people are served?
ANSWER:
We based the $80 billion program cost for the long-term care program on the
per capita cost of state programs and national demonstrations that offered a
wide array of services (ranging from skilled nursing services to personal
assistance services and help with shopping). Included in this figure is the cost
of improvements in Medicaid coverage for institutional care and tax incentives
for long-term care insurance. The $80 billion also assume a premium of $10
per month.
Just over 3 million people have the level of disability that would qualify them
for the home and community-based services program.
SENATOR DANIEL PATRICK MOYNIHAN
ISSUE:
How does the President's plan insure that alliances are accountable to
consumers and employers? What options do consumers and employers
have if they are displeased with the performance of an alliance?
ANSWER:
The Health Security Plan has very strict rules preventing anyone associated
with the health care industry from serving on the board of an alliance. Only
representatives of the employers and consumers who receive coverage through
the alliance can serve on the board.
The board and the alliance will be held accountable, with all its workings in
full, public view. If any problems develop, there would be a powerful
constituency -- everyone who gets health care in that region -- with an
interest in solving the problem immediately. Because consumers and employers
sit on the board of the alliance, if they don't like how it's functioning they have
both every incentive and authority to see that it's changed.
SENATOR DANIEL PATRICK MOYNIHAN
ISSUE:
Single payer vs individual mandate - Why is your plan the best?
ANSWER:
Given that we want to guarantee everyone comprehensive benefits that can
never be taken away, there are a couple of approaches as to how you could do
that.
The first is, you could go with a single-payer system as they have in Canada.
It achieves universal coverage, people can choose their doctor, and their system
is simpler than the one we have now. But to go to a single-payer system in
America would mean turning a lot of the parts of the health care system
that are currently in the private sector over to the government. And it
would also mean raising a lot of new tax revenue. And with all that we're
currently wasting in our health care system, we didn't think that was the way to
go.
Then some of the Republicans have proposed what's called "an individual
mandate" -- requiring all individuals to purchase insurance. Now we agree
with the idea behind this: that everybody should take responsibility for
their health care, and everyone must contribute something to the cost.
But the question is: how do you make sure that people actually go out and buy
the insurance? Most people agree that it would require some kind of new
and intrusive bureaucracy to track down people and make sure that
everyone buys insurance, and that's not something we wanted to do. And then
there's the problem of how you prevent employers from just dropping
people's coverage once they realize that they're basically off the hook and
don't have to provide insurance to their employees. And once employers start
dropping people, that would mean we need more subsidies for low-wage
people, which would mean a need for more taxes. So after really thinking this
through, we decided that that was not the way we wanted to go.
We finally decided that the best approach builds on the current system -- a
system where most people get their insurance through their workplace, and
if you're unemployed, the government helps out until you get back on your
feet.
There is widespread support for this idea. The United States Chamber of
Commerce, representing hundreds of thousands of businesses all over the
country, supports the idea, because they agree that everyone must take
responsibility for the cost of health care in this country. The AMA supports
this idea, and so does the HIAA. The first person to propose this was President
Nixon in 1974. It was introduced by Senator Packwood at that time, and
Senator Jeffords has also proposed a bill supporting the same idea. So there is
real bipartisan support for these ideas.
Right now, three-quarters of all employers cover their employees. And the
businesses that cover their employees are paying for those that don't. When
someone without insurance goes to the hospital, don't think those costs
disappear into thin air. Those costs are passed along to you, your business and
every consumer in higher premiums, $20 Tylenols at the hospital, and higher
Medicaid and Medicare taxes in every state.
So we ask all businesses to take some responsibility for their own employees.
For low-wage small businesses who can't afford insurance, we will provide
substantial discounts -- of up to 80% -- so that small business owners can
finally get comprehensive coverage for themselves, their families, and their
employees at an affordable price.
SENATOR DANIEL PATRICK MOYNIHAN
ISSUE:
What happens to the rate of health care expenditure growth after the year
2000? The administration documents only look at spending until the year
2000, and I am curious what the Administration anticipates for
expenditures growth after that time.
ANSWER:
We believe the out-of-control spending has to get under control immediately -
- that's why we've focused on the period up to 2000.
Our primary concern is creating economic incentives and a framework that
encourages competition on the basis of quality and efficiency. If we do this
right, we won't have to inevitably assume that the open-ended cost increases
that have characterized our system will continue. With this accomplished, we
as a nation will have'to consider the level of health care spending that's
acceptable. We'll have a mechanism in place to do this.
SENATOR DANIEL PATRICK MOYNIHAN
ISSUE:
There is considerable lack of physicians and other providers who are
willing to serve in inner cities and rural areas. How does the President's
plan address this problem?
ANSWER:
Rural areas and inner cities have a higher proportion of uninsured people than
the rest of the nation. Rural and inner city doctors provide more charity care
than any doctors in the country, and they often get paid late.
With universal coverage, these providers will be guaranteed that they'll be paid
for every patient they see, eliminating a major disincentive to rural and urban
practice.
In addition, the plan will include specific incentives for doctors to practice in
rural and urban areas including expanding the National Health Service Corps
and its loan repayment program and incentives to medical schools to train
primary care doctors. It also gives states the flexibility to develop programs
that are more responsive to needs of underserved areas.
Moyrition
QUESTION:
If you are planning to issue plastic "Health Security Cards" for
every American, why can't you issue plastic Social Security cards
to everyone?
ANSWER:
Mr. Chairman, I must confess I haven't spent that much time
studying the issue of a permanent Social Security card, so I
would defer to your judgment and that of Social Security
Commissioner nominee Shirley Chater in this area.
With respect to a health security card, as with any health
insurance card that is used regularly -- even many times in
a month for some people -- durability will be an important
consideration.
Furthermore, we envision that information would be encoded
on the card that also would need to be accessed regularly --
such as information regarding plan enrollment, the status of
one's deductible, and so on.
Finally, we hope that the Health Security card will give
Americans the same sense of security they now feel with
respect to the Social Security system. In addition to its
utilitarian purposes, the card is an important reminder to
everyone that they have comprehensive health coverage that
can never be taken away.
If he asks about the Card Sering one in the
same as that of Social Security, Id advise
saying that there have Leen confidentiality (privacy
issues rawid but that we would be happy to
discuss this usue with him & s talf at later
date
Manishan
QUESTION:
I opposed the President's budget proposal to lift the wage cap on
contributions into the Medicare trust fund, although it was
enacted anyway as part of reconciliation. How can you now turn
around and propose a wage cap on health insurance premiums for
the under 65? won't some people end up paying more for their
Medicare payroll tax than they pay for their current health plan?
ANSWER:
Mr. Chairman, while I very much appreciate your concern for
the Medicare program and the integrity of its financing, I
do believe the issues are separable.
Medicare is a payroll tax funded program. It is a pay-as-
you-go system. Young workers pay a tax to cover the
expenses of today's retirees. Years from now, tomorrow's
retirees will be supported by the generations behind them.
The proposal we made in Reconciliation was meant to shore up
the solvency of the Medicare trust fund for years into the
future. That was an important change.
In our health reform plan, by contrast, each individual is
responsible for paying their own health insurance plan
premium. If they work, their employer will contribute
toward that premium. If they are low income, we will
subsidize that premium. And if their employer is a small
business or low wage firm, we will subsidize that
contribution, too.
We chose this method because it is the way people under 65
purchase health insurance coverage today.
It is possible that some high income people will pay more in
Medicare taxes -- or more in income taxes or more in their
home mortgage -- than they do for their health insurance
premium. We must be careful not to compare apples and
oranges in weighing the significance of these differences.
Senator Moynihan
6.
Global budgeting - some states will get more, others less
The beginning point for alliances in each state is the
real cost of providing the guaranteed benefits in that
state today, with increases for those now uninsured.
This is fair.
Over time, premiums in every state will be held to the
same rate of increase -- inflation in the rest of the
economy.
The National Health Board will provide information to
alliances on cost differences, and may make
recommendations to narrow those differences.
2
SENATOR JAY ROCKEFELLER
ISSUE:
Primary care training incentives. Specifically, would
the President consider having the residency slots
allotment done by a state-by-state council, rather than
a regional council? I am concerned that individual
states should have the authority and not be influenced
by factors outside the state.
ANSWER:
Senator, you have been the first person to raise this
with me. However, your concerns make sense and your
suggestion is, as always, well worth considering. I
would like to follow-up this question with a meeting
with you or staff to discuss your and other options on
this very important matter.
SENATOR JOHN CHAFEE
QUESTION: What will be doing to control the costs associated
guns?
ANSWER:
Senator Chafee, you have been a leader on this issue
for some time now. Your bill banning hand guns is just
one example of this. I could not agree more with you
that the health care costs associated with violent gun
crime is extraordinary.
Earlier this week, Congressman Reynolds pushed for his
legislation to tax guns and ammunition. I am
personally sympathetic to his and any other proposal
aimed at reducing violent crime and the health care
costs associated with it. Although we have no specific
proposal on this issue, I am sure we would welcome any
suggestions that you and other Members might have.
8
SENATOR CHAFEE
ISSUE:
Community-based care and federally qualified health centers. If phasing
in health care reform, what are you doing to protect them? How will the
plan help them in the long run to remain as part of our health care
infrastructure?
ANSWER:
For many in urban and rural areas, federally qualified health centers,
community and migrant health centers provide the only access to health care
services today. They play a critical role that we want to preserve.
Under reform, health plans will contract with "essential community providers"
so that all Americans - - regardless of where they live, what their income is,
or what race or ethnicity - - will be guaranteed access to quality care.
And, because everyone will be covered under our proposal, the patients that
come to these clinics will now be paying patients - - at the same
reimbursement rate as everyone else. This will provide a substantial boost in
funding for these centers..
Finally, we're increasing funding so that these centers can link up with other
clinics in their area and with centers of excellence so that they can build their
own community-based plans.
SENATOR JOHN CHAFEE
ISSUE:
Budget - With regard to the Medicare cuts where are you expecting that
to come from. Aren't they a little overambitious?
ANSWER:
First of all, I would like to point out that our plan does not call for cuts to the
Medicare program but rather reductions in the projected rate of increase in
Medicare spending as we slow the overall growth in health care spending.
Some have questioned whether such savings can be realized. Over the last
eight months, I have talked to hundreds of people involved at all levels of our
health care delivery system. I have heard stories about waste and inefficiency
to numerous to mention. I have also heard success stories where doctors and
hospitals are working to hold cost down, far below the national average.
We must and we can spend our health care dollars more wisely. If we do, we
will have the funds we need to pay for this program.
I might also point out, Senator, that as we calculate it, over the same period of
time, there is no more than $11 billion difference between your plan and our
plan.
SENATOR JOHN DANFORTH
Issue:
How will the plan be paid for? Will we be spending money that we don't
have?
Answer:
As I stated in my opening statement, the majority of this plan will be paid for
the way most health care is today -- through premiums paid by employers and
employees.
In addition, to help pay for the new prescription drug and home care benefits
and to ensure that premiums will be affordable to small businesses and low-
income individuals, our plan lays out specific line item savings and calls for an
increase in the tax on tobacco. The savings have been scored by the Office of
Management and Budget and they will be scored by the Congressional Budget
Office.
Some have raised questions as to whether such savings can be realized. Over
the last eight months, I have talked to hundreds of people involved at all levels
of our health care delivery system. I have heard stories about' waste and
inefficiency to numerous to mention. I have also heard success stories where
doctors and hospitals are working to hold cost down, far below the national
average.
We must and we can spend our health care dollars more wisely. If we do, we
will have the funds we need to pay for this program.
Danforth
How quickly will the plan be phased in? How will the benefits be
distributed.
The plan will be phased in by state, with states coming
in as they are ready.
The earliest states -- those who have been most active
-- can begin in 1995. All states will be part of the
system by 1997.
Benefits are phased in two stages, with expanded mental
health and substance abuse benefits and expanded dental
benefits beginning in 2001.
SENATOR DAVE DURENBERGER
ISSUE:
Worried about how State Health plans will be treated.
ANSWER:
Health reform intends to build on, not undo successful state efforts. State
flexibility is a cornerstone of our plan for precisely this reason. In your state,
for example, the group purchasing activity, the attention to children and
preventive care, the successful rural health outreach efforts all would be
maintained and enhariced under reform.
It may be that some state plans set out different policies on which we cannot
be flexible, for example the guaranteed benefits package. In some
areas benefits, quality standards, choice of doctor, cost control states will have
to conform with the federal framework to guarantee all Americans the same
high quality care, the same comprehensive benefits, and the same affordability.
SENATOR DAVE DURENBERGER
ISSUE:
What will happen to federal entitlements?
ANSWER:
The Health Security plan offers real benefits to people covered by Medicaid.
First, and foremost it guarantees them the same comprehensive benefits and the
same choice of plans' as everybody else.
In addition, we strengthen the Medicare program by increasing choices and
benefits for beneficiaries. Seniors will continue to enjoy the security that the
Medicare program provides with the addition of new benefits for prescription
drugs. For the protection of our seniors, it will remain a separate program.
Over time, once the new system is successfully up and running, as seniors turn
65 and become eligible for Medicare they will have the option of remaining in
their health plans through the alliance or joining traditional Medicare.
States will also be able to integrate all their citizens, including Medicare
beneficiaries into a single plan with approval from the federal government.
Senator Grassley
Q. How will Medicaid fit into the new system? Why should states
pay based on historical payments?
For the first time, Medicaid recipients will be just like
everyone else. They will be guaranteed what everyone else is
guaranteed, through the regional alliance. Current Medicaid
recipients who work will be covered through employer and
individual contributions, and those covered by AFDC or SSI will
be paid for by state and federal contributions.
States pay based on what they are paying today, adjusted
for inflation.
Provides enormous fiscal relief to states because the
double digit increases in Medicaid spending will end. Medicaid
increases will be limited to inflation plus population over time.
09-29-93 01:32PM
TO 94567739
P002/002
For Hatch
Q: Are there other examples of systems being able to demonstrate
improved quality while reducing costs?
A:
Yes, doctors at the Hospital of Latter Day Saints in Salt Lake
City targeted the problem of post operative wound infections and
improved quality while reducing costs. It has been estimated that
this problem costs the nation 1.5 billion dollars in excess
hospital days. These doctors reduced the rates of post
operative infection by improving the timing of pre-operative
antibiotic administration. They demonstrated giving antibiotics 2
hrs before surgery the could cut the infection rate by half.
When this information was used to improve quality hospital wide,
infection rates were reduced at a cost savings of $ 450,000 in
the first year. This is an example of appropriate care resulting
in shorter hospital stays, savings of hundreds of thousands of
dollars and most important better outcomes for surgical patients.
Mrs. Clinton;
We should have a report "prop" for you tomorrow
morning. ( This was the info I was referring earlier).
SENATOR BOB PACKWOOD
ISSUE:
Abortion - how will the plan handle this? Does it have to be in the benefit
package? Will people have access to these services even with the
"conscience clause"? Will you fight to have this service available in your
plan?
ANSWER:
The comprehensive insurance package covers pregnancy-related services.
Though abortion, like other types of surgery, is not specifically mentioned,
most plans will cover it -- as they do now. Plans will cover abortions, as all
procedures, when a doctor believes it is appropriate or necessary. Abortion
coverage is not mandated, and a conscience clause allows doctors and health
institutions, like a Catholic hospital, to exclude abortion coverage for moral or
religious reasons.
What is new in this health plan is coverage for preventive care, including
family planning, which should reduce the number of abortions which is our
common goal.
We've worked to create a health plan that covers abortion where necessary, but
we have also worked to make sure that people have a choice and that abortion
is as rare as possible.
SENATOR BOB PACKWOOD
ISSUE:
Could Oregon implement its plan which limits services?
ANSWER:
Health reform intends to build on, successful state efforts. Oregon is to be
commended on its efforts to assure a level of health care coverage to all its
citizens. With its emphasis on primary and preventive care, it is a model for
the rest of the nation.
But while state flexibility is a cornerstone of our plan, it may be that some
state plans set out different policies on which we cannot be flexible, for
example the guaranteed benefits package. In some areas benefits, quality
standards, choice of doctor, cost control states will have to conform with the
federal framework to guarantee all Americans the same high quality care, the
same comprehensive benefits, and the same affordability. As a result, to the
extent Oregon does not meet these criteria, it would not be able to implement
its plan.
Packwood
Global budgeting - some states will get more and some less, will
this be fair?
The beginning point for alliance premium targets in
each state is the real cost of providing the guaranteed
benefits in that state today, with increases for those
now uninsured. This is fair.
Over time, premiums in every state will be held to the
same rate of increase -- inflation in the rest of the
economy.
The National Health Board will provide information to
alliances on cost differences, and may make
recommendations to narrow those differences over time.
Some compare these premium caps to payments by Medicare
to providers or health plans. But the two are
different.
Higher Medicare payments mean more federal dollars
going into a state. In our plan, most of the money to
pay for premiums is coming from a state's own employers
and residents. A higher target means more spending for
employers and consumers.
SENATOR BOB PACKWOOD
ISSUE:
Amount of federal regulation - Isn't there an inordinate amount of
regulation in this plan, is the government going to be running this or the
private sector?
ANSWER:
If you tried your hardest to create the most complicated system you could
think of, you couldn't come up with something more complicated than the
system we have today. Hundreds of forms confront doctors, nurses and
consumers at every turn. Because the benefits packages are so complicated -
- with different rules. for coverage and different rules for cost sharing, patients
wind up paying bills they never thought they'd have to pay. And, it's no
wonder. You'd have to be a lawyer or hire a good one to even begin to
understand the fine print.
Hospitals have to hire people who specialize in different insurers and they have
manual after manual that become their Bibles - - all so they can figure out
what's covered and what's not, and who's going to pay. And then you have
utilization reviewers looking over their shoulders to make sure every t is
crossed and every i is dotted.
That's what's got to change. The President specifically rejected a government-
run system, opting instead for a system rooted in the private sector and based
on what we have today. Under our proposal, government will set standards,
provide security and safety, and then get out of the way. The Health
Security Plan will free doctors from the avalanche of paperwork, and
streamline the system. It will create a single claims form, give every American
a Health Security card which will lead to electronic billing, and it will reduce
regulation of doctors and hospitals to cut the unnecessary paperwork for
doctors and patients.
There will be, however, some more regulation of the insurance industry. We
will stop insurers from refusing to cover people because of pre-existing
conditions, make it illegal for an insurance company to raise your premium
when someone in your family gets sick, and make it impossible for insurance
companies to charge small businesses 35% more than big businesses.
SENATOR BILL ROTH
Issue:
How will Seniors and Federal Employees have access to the plan?
Answer:
Seniors will continue to enjoy the security that the Medicare program provides
with the addition of new benefits for prescription drugs. It will remain a
separate program.
Over time, once the new system is successfully up and running, as seniors turn
65 and become eligible for Medicare they will have the option of remaining in
their health plans through the alliance or joining traditional Medicare.
The Federal Employees Health Benefits Program is very much a model for our
plan. That program will be folded into to the new system with federal
employees entering health plan offered in their area. They will continue to
enjoy a wide choice of high quality health plans much as they do today.
They will also benefit from an increase the government's share of the
contribution from 72 to 80%.
SENATOR WALLOP
ISSUE:
He is against the employer mandate so he'll probably ask theoretical questions
concerning the plan, i.e., why the expansion of government, why the implied
subsidies, why have people give up gainful employment in order to get better
health insurance coverage?
ANSWER:
The President specifically rejected a government-run system, opting instead for
a system rooted in the private sector and based on what we have today. Under
our proposal, government will set standards, provide security and safety, and
then get out of the way.
There will be, however, some more regulation of the insurance industry. We
will stop insurers from refusing to cover people because of pre-existing
conditions, make it illegal for an insurance company to raise your premium
when someone in your family gets sick, and make it impossible for insurance
companies to charge small businesses 35% more than big businesses.
The Health Security Plan provides security to all Americans - - that means a
comprehensive package of benefits individuals and businesses can afford.
We're providing discounts to the low-income individuals and we're providing
discounts of 30-80% for small businesses.
Economists and business leaders agree that comprehensive health care reform is
a necessary element in a strategy to increase long-term economic growth,
reduce the deficit, and create jobs. Today, the rising cost of health care is a
hidden tax on American workers and employers -- hurting businesses,
limiting job creation and threatening our competitiveness. The bottom line is
this: most businesses provide health care to their workers. Health care
reform will lower their health care costs -- allowing them to create jobs
and increase wages.
Manufacturers -- the employers that pay the highest wages to middle-class
Americans -- have been forced to lay off workers because of rising health
costs. Our health care reform proposal will have dramatically lower health
costs for manufacturers and make it easier for them to compete and create
new jobs.
From small businesses that provide insurance to manufacturers like Chrysler
and US Steel, costs will be controlled and money will be freed up for job
creation. The Wall Street Journal has called the plan "an unexpected windfall"
for small businesses. Studies show that the fastest growing small businesses
are the ones that provide health insurance.
In addition, there will be jobs created in the health care industry,
particularly for nurses and home health workers who will be providing more
care. Joshua Weiner, a health economist at the Brookings Institution, predicts
that the Health Security Act will create 750,000 home health care jobs, and that
overall the plan will be a job creator.
6
SENATOR MALCOLM WALLOP
QUESTION: How will this plan affect the United Mineworker
"Orphan" program.
ANSWER:
I am well aware that this is an important issue to both
you and Senator Rockefeller. We believe that our plan
should have no negative impact, and perhaps a positive
impact, on the United Mineworker "Orphan" program.
This is because the UMW program is ostensibly a
supplemental plan for the over 65 population of retired
coal miners and their widows, and (we believe) Medigap-
type plans like these should not be affected. In fact,
reform may well have a positive impact because the new
Medicare drug and long-term care benefit should reduce
the health care liability of the coal companies that
underwrite the costs of these plans.
INDEX
A.
GENERAL FRAMEWORK
POLICY BRIEF:
,
7-PAGE PLAN SUMMARY
Q & A
B.
COMPREHENSIVE BENEFITS
POLICY BRIEFS:
COMPREHENSIVE BENEFITS
MENTAL HEALTH AND SUBSTANCE ABUSE
WOMEN'S HEALTH
PRESCRIPTION DRUGS
Q & A
C.
STATES UNDER REFORM
POLICY BRIEFS:
a
TRANSITION TO NEW SYSTEM
STATES: THEIR ROLE IN REFORM
Q & A
D.
HEALTH ALLIANCES
POLICY BRIEF:
HEALTH ALLIANCE BOARD
Q & A
E.
HEALTH PLANS/INSURANCE REFORMS
POLICY BRIEFS:
INSURANCE REFORMS,
RISK ADJUSTMENT AND REINSURANCE
Q & A
F.
QUALITY AND RESEARCH
POLICY BRIEFS:
QUALITY
RESEARCH
PROTECTING AGAINST FRAUD AND ABUSE
Q & A
G.
SMALL AND BIG BUSINESS
a
POLICY BRIEFS:
JOBS AND HEALTH REFORM
SMALL BUSINESS
BIG BUSINESS
WORKERS' COMPENSATION
UNIONS AND HEALTH REFORM
Q & A
H. PROVIDERS
POLICY BRIEFS:
HOSPITALS
DOCTORS
NURSES
MALPRACTICE REFORM
ADMINISTRATIVE ,SIMPLIFICATION
CREATING A NEW HEALTH WORKFORCE
Q & A
I.
CONSUMER PROTECTION
POLICY BRIEFS:
CONSUMER CHOICE
PRIVACY
Q & A
#
J.
OLDER/DISABLED AMERICANS
POLICY BRIEFS:
AMERICANS WITH DISABILITIES
LONG-TERM CARE
PRESCRIPTION DRUGS
Q & A
K. MEDICARE
POLICY BRIEFS:
MEDICARE
Q & A
a
:
L. MEDICAID
POLICY BRIEFS:
MEDICAID
Q & A
M. FINANCING
POLICY BRIEFS:
FINANCING SUMMARY
Q & A
N. COST CONTAINMENT
POLICY BRIEFS:
a
SAVINGS
COST CONTAINMENT
Q & A
O.
UNDERSERVED
POLICY BRIEFS:
RURAL COMMUNITIES
CHILDREN AND FAMILIES
ADOLESCENTS
AIDS/HIV AND CHRONIC DISEASE
AFRICAN AMERICANS AND HEALTH CARE REFORM
UNDOCUMENTED PERSONS
Q & A
P.
OTHER GOVERNMENT PROGRAMS
POLICY BRIEFS:
FEHBP
VETERANS
AMERICAN INDIANS AND ALASKA NATIVES
Q & A
0
:
***
HRC REQUESTED INFORMATION
- MEMO ON MINIMUM TOBACCO CONTENT PROVISIONS
- COMPARISON PROVISONS
- BIASED SELECTION
- TAXING HEALTH BENEFITS AND THE MIDDLE CLASS
- PREMIUM AND DISTRIBUTION DATA
- AEI/ MARTIN FELDSTEIN BRIEFING
- STATE COST CONTAINMENT EFFORTS
- ANTITRUST
A. GENERAL FRAMEWORK
POLICY BRIEF:
7-PAGE PLAN SUMMARY
Q & A
Costs of Doing Nothing
HAPPY w/ insurance WAS
why not single payer?
Government regulation
Employer V. individual mandate
An untested PlAN
POLICY BRIEF
THE HEALTH SECURITY ACT OF 1993
Health Care That's Always There
Every American citizen will receive a Health Security Card that guarantees you a
comprehensive package of benefits that can never be taken away.
Guaranteeing comprehensive benefits that can never be taken away. Controlling health care
costs for consumers, business and our nation. Improving the quality of American health care.
Increasing choices for consumers. Reducing paperwork and simplifying the system. Making
everyone responsible for health care. These are the principles of the Health Security Act of 1993
and they are not negotiable.
In America, rights and responsibilities go hand-in-hand. We will ask everybody to pay
something, even if your contribution is small. Everyone must assume responsibility. No one
should get a free ride.
Most important, we're going to offer new opportunities and new incentives for people to stay
healthy -- and to treat small problems before they become big ones. Our goal should be to keep
people healthy, not treat them after they become sick.
What's Wrong With the Current System
The things that are wrong with our health care system are threatening everything that's right with
American health care.
Over the next two years, one out of four of us will be without health coverage at some
point. Change jobs, lose your job, or move -- and your insurance company is currently
allowed to drop you.
Today's system is rigged against families and small businesses. Insurance companies pick
and choose whom they cover. Then they drop you when you get sick. If you have a pre-
existing condition, you usually can't get any insurance at all.
Insurance companies charge small businesses as much as 35% more than the big guys.
Only 3 of every 10 employers with fewer than 500 employees offer any choice of health
plan. Millions of Americans have almost no choice today.
Twenty-five cents out of every dollar on a hospital bill goes to bureaucracy and
paperwork -- not patient care.
Fraud and abuse are exploding, costing us at least $80 billion a year. That's a dime of
every dollar we spend on health care.
Our nation's health costs have nearly quadrupled since 1980. Without reform, by the year
2000, one of every five dollars we spend will go to health care.
The Health Security Plan
Every American citizen and legal resident will receive a Health Security Card. Once
you get your card, you can never lose your health coverage -- no matter what. If you
get sick, you're covered. If you change jobs, you're covered. If you lose your job, you're
covered. If you move, you're covered. If you have the courage to start a small business,
you're covered.
Your Health Security card guarantees you a comprehensive package of
benefits that can never be taken away. The package is as comprehensive as the
ones that many Fortune 500 companies offer their employees. And in critical ways --
like paying for preventive care and prescription drugs -- the package gives you more
than big companies provide today.
You will be able to choose your doctor. Everyone will have a choice of health
plans. You'l be able to follow your doctors and nurses into a traditional fee-for-
service plan, join a network of doctors and hospitals, or join an HMO. Your boss or
insurance company won't decide how or where or from whom you get your care -- you
will.
Almost everybody will be able to sign up for a health plan at work, like you do today.
You'll get brochures that give you easy-to-understand information on several health
plans -- which doctors and hospitals are included, an evaluation of the quality of
care, a consumer satisfaction survey, and prices. If you're self-employed or
unemployed, you can sign up at your area health alliance, which will be run by
consumers and businesses and bargain for affordable health care for you.
The federal government will set up a national health board -- a board of directors to
set standards and make sure you get the comprehensive benefits and quality care you
deserve. State governments will set up health alliances give consumers and small
businesses the power to buy affordable care; and the businesses with 5,000 or more
employees will be allowed to operate as "corporate alliances."
Insurance companies will be required to use a single claim form to replace the
thousands of different forms they have today. So when you get sick, you won't be
buried in forms -- and neither will your nurse, your doctor or your hospital.
Security of guaranteed, comprehensive benefits.
Health care costs that are under control.
Improved quality of care.
Increased choices for consumers.
Less paperwork and a simpler system.
Responsibility from everyone.
That's what the Health Security Act is all about.
Principle #1:
Security: Guaranteed, comprehensive benefits.
Over the next two years, one of every four of us will lose health coverage for some time. The
Clinton plan guarantees that you will never lose your insurance -- no matter what. All Americans
will receive a Health Security card that guarantees you a benefits package that is as
comprehensive as those offered by most Fortune 500 companies and then some. Here's how the
plan guarantees security:
Makes it illegal for insurance companies to deny you coverage because of "pre-
existing conditions." The Health Security Act also makes it illegal for insurers to raise
your premiums or drop you because you get sick. All health plans will be required to
accept anyone who applies -- healthy or sick, young or old.
Guarantees coverage if you lose your job. The proposal guarantees that you will keep
your health coverage even if you lose your job, with the employer portion picked up by
Federal revenues and savings. Under the current system, if you lose your job, you lose
your health insurance.
Guarantees coverage if you switch jobs, move or start a small business. You will
always be protected -- no matter what. Today, if you switch jobs, move or start a small
business, you can find yourself without health insurance -- and risk bankruptcy.
Emphasizes preventive care. The comprehensive benefits package goes beyond
virtually all current insurance plans by covering a wide range of preventive services,
including mammograms, Pap smears, and immunizations -- at no charge to you. It puts a
new emphasis on helping you stay healthy, rather than waiting until you get sick.
Prevention saves money and improves people's health.
Includes prescription drugs. Many insurance companies and Medicare have failed to
cover prescription drugs. But drug costs are breaking family budgets, forcing many older
Americans to choose between food and medicine. Health insurance should cover
prescription drugs. The Health Security plan does.
All Americans will be guaranteed coverage of :
Preventive Care ( i.e., screenings, physicals, immunizations, mammograms, prenatal care)
Doctor Visits
Prescription Drugs
Hospital Services
Emergency/Ambulance Services
Laboratory and Diagnostic Services
Mental Health and Substance Abuse Treatment
Expanded Home Health Care
Hospice Care/Outpatient Rehabilitation
Vision and Hearing Care
Children's Preventive Dental Care
Principle #2:
Savings: Controlling health care costs.
Here's how the Health Security Act will control health care costs:
Limits how much insurance companies can raise your premium. Insurance companies
will no longer be able to raise your premiums as they please. Today, insurance companies
hike your premiums -- sometimes at several times the rate of inflation -- if you get sick, if
someone in your family gets sick, and for any other reason.
Introduces competition to the health care marketplace. The Health Security plan will
release the chokehold that in today's system, insurance companies have on all of us --
consumers, nurses, doctors, and businesses. Reform will encourage competition -- forcing
costs down as health plans compete by offering high-quality care at an affordable price.
Cracks down on fraud. The health security proposal makes health-care fraud a crime and
imposes stiff penalties on those who cheat the system. It prohibits doctors from referring
patients to outside facilities, like labs, which they own a piece of. It stops the kickbacks that
some laboratories give doctors in an effort to get their business.
Asks the drug companies to hold down prescription drug prices. The Health Security
plan asks drug companies to take responsibility for keeping prices down, without setting
prices. In today's system, overcharging runs rampant --certain prescription drugs cost
Americans three times more than people pay in other industrialized countries.
Reduces paperwork. All health plans will adopt a single, standard claims form by Jan. 1,
1995. Along with other measures to streamline the system and free nurses and doctors from
excess bureaucracy, this will reduce paperwork, cut red tape, and save money.
Squeezes the waste out of Medicare and Medicaid. By slowing the growth of these
government programs, the proposal uses funds that have been wasted on excessive charges
and funnels them into comprehensive benefits. Under reform, Medicare will be expanded to
cover prescription drugs, and there will be a new long-term care program to help cover home-
and community-based care. Today, Medicare and Medicaid spending keeps going up and up.
But the elderly and poor aren't getting any extra benefits. Health security will change that.
Principle #3:
Quality: Making the world's best care better.
Emphasizes preventive care. The Health Security plan puts a new emphasis on preventing
illness before it becomes a medical crisis. Prevention will improve the quality of care by
helping people stay healthy rather than treating them after they get sick. The benefits package
fully pays for a wide range of preventive services; the vast majority of today's insurance
plans don't cover a penny.
Gives consumers the power to judge the quality of care. Consumers will receive quality
"report cards" that provide information on the performance of health care plans and patient
satisfaction. These report cards will hold health plans accountable for meeting high standards.
The National Quality Program will help states share information on health plan performance.
Reforms malpractice. The President's proposal will limit lawyers' fees in order to
discourage frivolous medical malpractice lawsuits. It will also encourage patients and doctors
to use alternative forms of dispute resolution before they end up in court. This will help
eliminate the "defensive medicine" that drives up costs and hurts quality -- doctors ordering
extra tests because they fear lawyers looking over their shoulders.
Encourages cooperation in rural and urban areas. Rural residents will have access to the
latest technology and emergency services through telecommunications links set up between
local doctors and advanced networks of specialists and hospitals. In urban areas, the plan will
increase investment in public hospitals and community health centers.
Provides incentives for more family doctors to practice in rural and urban areas. The
health security plan will give financial breaks to doctors and nurses who work in underserved
rural and urban areas. It will expand the National Health Service Corps. Two of three rural
counties today do not have enough doctors and 111 rural counties have no physician at all.
Increases funding for prevention research. The National Institutes of Health (NIH) will
expand research in areas like children's health, and health and wellness promotion. Preventive
care keeps people healthier and saves money at the same time.
Promotes research on the effectiveness of treatments. Today, a lack of information about
the most cost-effective methods of treatment often leads to expensive defensive medicine and
wide variation in treatments and costs. The plan's investments in research into what
treatments really work will help improve the quality of care.
Principle #4:
Choice: Preserving and increasing what you have today ,
Preserves your right to choose your doctor. The proposal ensures that you can follow your
doctor and his or her team to any plan they might join. Today, more and more employers are
forcing their employees into plans that restrict your choice of doctor. After reform, your boss
or insurance company won't choose your doctor or health plan -- you will.
Increases your choice of health plan. You will be able to choose from among all the health
plans offered in your area -- no matter where you work. Only one of every three companies
with fewer than 500 employees offer any choice of health plan. After reform, every employee
will be able to choose a health plan.
Puts consumers in the driver's seat. The Health Security Act brings competition to health
care -- unleashing the market forces that will lower costs and improve quality. Giving small
businesses and consumers the power to band together in alliances will level the playing field
and give them the same bargaining strength as big businesses.
Increases options for long-term care. The President's proposal will make it possible for
more Americans to continue to live in their homes and communities while receiving care.
Today too many families are split apart when insurance or federal programs only pay for
hospital coverage. The plan will help put an end to this situation and give families the options
they deserve.
Principle #5:
Simplicity: Reducing paperwork and cutting red tape.
Gives everyone a Health Security Card. The card -- with full protection for privacy and
confidentiality -- will allow for electronic billing and the creation of health care information
networks. This will reduce paperwork and simplify the system.
Requires insurance companies to use a single claim form. The Health Security Act will
reduce the insurance company red tape that forces doctors and patients to spend their time
filling out forms and fighting bureaucrats. All health plans will adopt a single, standard
claims form by Jan. 1, 1995. It will enable doctors and nurses to spend more time taking care
of you -- and less time wrestling with paper.
Eliminates fine print. Everyone will get a comprehensive benefits package -- and what you
get will be spelled out in easy-to understand language. If you get sick, insurance companies
won't be able to point to fine print and deny you the coverage you've paid for.
Streamlines billing reimbursement for doctors, nurses and hospitals. The comprehensive
benefits package, a standard rules and codes for payment, and elimination of excessive
government regulations will reduce confusion. Doctors, nurses, and hospitals will have more
time to care for patients; and all of us will benefit.
Removes the burden on business of negotiating insurance. Groups of businesses and
consumers -- regional health alliances -- will negotiate for high-quality care at affordable
prices. This will simplify today's system, where hundreds of thousands of businesses
negotiate with more than 1500 insurance companies. The burden of finding insurance will be
lifted -- and so will administrative costs -- which can run as high as 40% of total health costs
for small business.
Principle #6:
Responsibility: Making everyone responsible for health care.
Cracks down on fraud. The health security proposal makes health-care fraud a crime and
imposes stiff penalties on those who cheat the system. It prohibits doctors from referring
patients to outside facilities, like labs, which they own a piece of. It stops the kickbacks that
some laboratories give doctors in an effort to get their business.
Asks the drug companies to hold down prescription drug prices. The Health Security
plan asks drug companies to take responsibility for keeping prices down, without setting
prices. In today's system, overcharging runs rampant --certain prescription drugs cost
Americans three times more than people pay in other industrialized countries.
Emphasizes preventive care. The Health Security plan puts a new emphasis on preventing
illness before it becomes a medical crisis. Prevention will improve the quality of care by
helping people stay healthy rather than treating them after they get sick. It offers you full
coverage of a wide range of preventive services, but asks you to take responsibility for
keeping yourself healthy.
Reforms malpractice. The President's proposal will limit lawyers' fees in order to
discourage frivolous medical malpractice lawsuits. It will also encourage patients and doctors
to use alternative forms of dispute resolution before they end up in court. This will help
eliminate the "defensive medicine" that drives up costs and hurts quality -- doctors ordering
extra tests because they fear lawyers looking over their shoulders.
Everyone contributes, and no one gets a free ride. In America, rights and responsibilities
go hand-in-hand. Everyone will get a Health Security card that guarantees you a
comprehensive package of benefits that can never be taken away. But we will ask everybody
to pay something, even if your contribution is small. Small businesses and low-wage
workers will get substantial discounts on the cost of insurance, but everyone must take
responsibility.
HOW THE SYSTEM IS FINANCED
The financing proposal was developed under the most rigorous and conservative forecasting
standards. For the first time, representatives from every federal agency involved in fiscal
accounting and financial projections have been brought together to work out the numbers. Then
teams of actuaries, health economists and other financial analysts from outside the government
served as auditors and consultants, checking and rechecking.
The system is financed from five major sources:
1) Medicare savings -- The savings from reducing the growth of Medicare are based on specific,
scorable policy proposals. Every penny of these savings will be channeled back into benefits --
prescription drugs and long-term care -- for the people which these programs serve.
2) Medicaid savings -- The rate of growth of Medicaid can be reduced primarily by folding the
acute care portion of Medicaid into the overall health care system. Since everyone will be
insured, there will be savings in "uncompensated care" -- the money that goes to doctors and
hospitals to compensate for caring for the uninsured.
3) Savings from federal employee health care costs -- As all federal workers are integrated into
the overall health care system, there will be less expense to taxpayers to provide for their health
care.
4) Reducing the benefits of tax-free compensation -- By reducing the rate of growth for health
insurance, the President's proposal lowers the amount of compensation paid as tax-free health
benefits, and frees up money for higher wages, wages for new workers, or profits -- all of which
are taxable and thus bring in new federal revenues.
5) Sin taxes -- There will be some new "sin taxes," the composition of which is not yet decided.
In addition, there will be other savings. Reducing paperwork and administration, cracking down
on health care fraud, and emphasizing prevention will save money in the long-run.
PAYMENT SCENARIOS
As a rule, most individuals and families in which at least one person works will pay a
maximum of 20% of the average health plan premium in their area. Those who choose a
lower cost plan -- from among those offered in the area -- will pay a little less than the 20%
average. Those who choose a more expensive plan will pay a little more, as they do
today. Employers who currently pay 100% of health benefits may continue to do SQ.
Two parent family with children: Two parent families with children -- whether one or
both parents work -- pay a maximum of 20% of the family premium offered by the
average plan in their area. If both parents work, they choose how to pay their family's
share. They can have the share deducted monthly out of either paycheck or write a
check to the local alliance.
Couple: Working married couples -- whether one or both spouses work -- pay a maximum
of 20 percent of the average plan premium. They can have the share deducted monthly from
either paycheck or write a check to the local alliance.
Single-parent family: Working single parents with children pay a maximum of 20%
of the average plan premium for a single parent policy.
Individual: Working single people pay a maximum of 20% of the average premium for an
individual policy in their area.
Part-time worker with no unearned income: Part-time workers pay a maximum of 20% of
the average plan premium for their policy type in their area.
EXCEPTIONS
Exceptions are provided for: (1) the self-employed and independent contractors; (2) part-
time workers who have unearned income; (3) families with incomes below 150% of the
poverty level; and (4) seasonal workers.
Self-employed/independent contractors: The self-employed and individual
contractors can deduct from their taxes 100% of their health care costs. As
with any small business, they pay the employer share. They also pay an individual
share. If a firm earns less than $24,000 a year, it is eligible for subsidies.
Part-time workers with unearned income: Part-time workers with unearned income pay a
maximum of 20% of the average plan premium for their policy type -- individual, couple,
two parent, or single parent family.
The number of hours someone works determines how much of the premium is paid by the
employer and how much by the individual. For example, an employer would pay 40% of the
premium for someone who works half-time. Payment of the remaining 40% of the
premium depends on how much a person makes in unearned income, with subsidies provided
on a sliding scale for those whose incomes are below 250% of the poverty level.
Families with incomes below 150% of the poverty level: Families at this level are eligible
for discounted premiums and pay a maximum of 20% of the employee's share of the average
plan premium. This applies to individuals making $10,455 annually; couples with incomes of
$14,145; families of three earning $17,835; and families of four with incomes of $21,525.
Seasonal workers: Seasonal workers pay a maximum of 20% of the average plan
premium in the area where they reside. Those whose incomes are 150% of the poverty
level or below are eligible for discounted premiums. If they have unearned income and are
not working, seasonal workers are treated the same as part-time workers.
Unemployed and non-working: Unemployed individuals and heads of household who
make less than 150% of the poverty level are eligible for individual subsidies on a sliding
scale. Those with unearned income pay all or part of what would normally be the employer's
share of the premium.
Those whose incomes are 250% of the poverty level or less -- pensioners, for example -- are
eligible for discounts on what would be the employer's share. They are not eligible for
individual subsidies, and pay the normal individual share of the health premium.
QUESTIONS AND ANSWERS
THE COSTS OF DOING NOTHING
Q: I like my health plan. Why can't we keep the system the way it is?
A: For those Americans with good health insurance, our hospitals and doctors
provide some of the highest-quality care in the world. Under reform, we will
preserve this.
But, the current system needs fixing. If we do nothing:
One of every four of us will lose our health insurance at some point
over the next two years. And if you get in an accident during this
period, your finances could be devastated.
By the end of the decade, American workers will lose $655 in wages
each year just to keep health benefits that shrink year after year.
Seven years from today, almost $1 out of every $5 earned by
Americans will go to health spending.
Millions will find that their firms are forced to cut back on benefits
and limit choice of doctor and health plan.
I'VE GOT GOOD INSURANCE
Q: Why should I support this plan? I'm happy with my insurance, and so are most
people I know.
A: People who like their health insurance today have a lot to gain from the health security
plan. First --- and most important -- they'll get something that no amount of money can
buy in today's insurance market: security. Lose your job? You're covered. Want to
change jobs? You're covered. Your child gets sick? You're covered. You just can't
guarantee that today.
People who like their health insurance today will also get
increased choices
the chance to stop trading wage increases for the same health benefits
preventive care benefits that will keep them healthy
Even those Americans who are satisfied with what they've got now have plenty to gain.
And they'll probably pay less for high-quality care. The bottom line is this: you can't
guarantee that what you have today will still be there tomorrow. This reform
proposal provides you with that guarantee.
WHY NOT SINGLE-PAYER?
Q: Isn't the Clinton plan administratively complicated and unduly costly? Wouldn't
single payer be cheaper and simpler?
A: In designing my reform proposal, I reaffirmed an American principle: that health care
should be rooted in the private sector and respond to market forces. Most people get
insurance through their employer today, and that will not change under the Clinton plan.
Some have argued for a "single-payer" system. We are leaving it as an option for states to
set up single-payer systems in their own state. But we explicitly rejected a national,
government-run system. In many countries that might be a good system, but to change
to that kind of system now in America would require a massive tax increase and too
much government. I think that middle-class Americans are already paying too much for
their health care. We can do better, and we will with the Health Security plan.
Q: Isn't the Clinton plan the worst combination of single-payer and managed
competition?
A: No, in fact, I think it's a good blend of some of the different approaches out there. One of
the important things in this process is that we looked at different kinds of approaches and
models -- from Canada to Germany, from Hawaii to New York. So this is an approach
that draws on already existing reform efforts and models out there already.
Now, some people ask: why not just propose a "pure" single-payer or managed competition
plan. The answer is this: our proposal is based on the belief that unleashing the forces of the
marketplace -- allowing health plans to compete based on price and quality -- will help
control costs and improve the quality of care. Competition is the engine of reform, but as a
backstop, to make sure that we achieve all the savings necessary to guarantee coverage, we
put a limit on health insurance premiums -- a device more in line with the single-payer
approach. If the market works as we expect, then the backstop becomes unnecessary.
I want to point out something else apart from the different theories. We have really tried to
make this a bipartisan effort, and that is reflected in the proposal that we are presenting to
Congress. This proposal contains many ideas that have come from Republicans and have
been in past Republican bills.
The idea that we should ask all employers to contribute to the cost of their health care
was proposed by President Nixon in 1974. It was introduced by Senator Packwood at that
time, and Senator Jeffords has also proposed a bill supporting the same idea.
Senators Kassebaum and Danforth have limits on the growth of insurance premiums in
their bill, as we do.
Senators Chafee, Kassebaum, Danforth, Bond and Cohen all have proposed setting up
these large purchasing pools -- or "health alliances" -- to give consumers and small
businesses bargaining power in getting affordable insurance.
So this is not one idea. It is a uniquely American solution that will work for this country.
to the hospital, don't think those costs disappear into thin air. Those costs are passed along to
you, your business and every consumer in higher premiums, $20 Tylenols at the hospital, and
higher Medicaid and Medicare taxes in every state.
So we ask all businesses to take some responsibility for their own employees. For low-wage
small businesses who can't afford insurance, we will provide substantial discounts -- of up to
80% -- so that small business owners can finally get comprehensive coverage for
themselves, their families, and their employees at an affordable price.
GOVERNMENT REGULATION
Q: Doesn't the Clinton plan rely on heavy government regulation?
A: No. Nothing could be more confusing than the current system. Hundreds of forms
confront doctors, nurses and consumers at every turn. And insurers are constantly looking
over their shoulder.
After reform, there will be less regulation of doctors, nurses and hospitals so that they
can spend less time filling out forms and more time caring for patients. There will be,
however, some more regulation of the insurance industry. We will stop insurers from
refusing to cover people because of pre-existing conditions, make it illegal for an
insurance company to raise your premium when someone in your family gets sick, and
make it impossible for insurance companies to charge small businesses 35% more than
big businesses.
I specifically rejected a government-run system, opting instead for a system rooted
in the private sector and based on what we have today. Under my proposal,
government will set standards, provide security and safety, and then get out of the
way. My plan will free doctors from the avalanche of paperwork, and streamline the
system. It will create a single claims form, give every American a Health Security card
which will lead to electronic billing, and it will reduce regulation of doctors and hospitals
to cut the unnecessary paperwork for doctors and patients.
EMPLOYER VS. INDIVIDUAL MANDATE
Q: Why not just do an individual' mandate instead of an employer mandate?
A: OK, let's look at what we're trying to do with reform and then talk about some of the
different approaches and why we chose what we did.
Given that we want to guarantee everyone comprehensive benefits that can never be taken
away, there are a couple of approaches as to how you could do that.
The first is, you could go with a single-payer system as they have in Canada. It achieves
universal coverage, people can choose their doctor, and their system is simpler than the one
we have now. But to go to a single-payer system in America would mean turning a lot of
the parts of the health care system that are currently in the private sector over to the
government. And it would also mean raising a lot of new tax revenue. And with all that
we're currently wasting in our health care system, we didn't think that was the way to go.
Then some of the Republicans have proposed what's called "an individual mandate" --
requiring all individuals to purchase insurance. Now we agree with the idea behind this:
that everybody should take responsibility for their health care, and everyone must
contribute something to the cost.
But the question is: how do you make sure that people actually go out and buy the insurance?
Most people agree that it would require some kind of new and intrusive bureaucracy to
track down people and make sure that everyone buys insurance, and that's not something we
wanted to do. And then there's the problem of how you prevent employers from just
dropping people's coverage once they realize that they're basically off the hook and don't
have to provide insurance to their employees. And once employers start dropping people, that
would mean we need more subsidies for low-wage people, which would mean a need for
more taxes. So after really thinking this through, we decided that that was not the way we
wanted to go.
We finally decided that the best approach builds on the current system -- a system
where most people get their insurance through their workplace, and if you're unemployed,
the government helps out until you get back on your feet.
There is widespread support for this idea. The United States Chamber of Commerce,
representing hundreds of thousands of businesses all over the country, supports the idea,
because they agree that everyone must take responsibility for the cost of health care in
this country. The AMA supports this idea, and so does the HIAA. The first person to
propose this was President Nixon in 1974. It was introduced by Senator Packwood at that
time, and Senator Jeffords has also proposed a bill supporting the same idea. So there is real
bipartisan support for these ideas.
Right now, three-quarters of all employers cover their employees. And the businesses that
cover their employees are paying for those that don't. When someone without insurance goes
to the hospital, don't think those costs disappear into thin air. Those costs are passed along to
you, your business and every consumer in higher premiums, $20 Tylenols at the hospital, and
higher Medicaid and Medicare taxes in every state.
So we ask all businesses to take some responsibility for their own employees. For low-wage
small businesses who can't afford insurance, we will provide substantial discounts -- of up to
80% -- so that small business owners can finally get comprehensive coverage for
themselves, their families, and their employees at an affordable price.
AN UNTESTED PLAN
Q: Isn't this plan untested? Should we really be using America for some kind of social
experiment?
A: No, our plan is not untested. Our plan builds on the private, employer-based system that's
already in place. Over 90% of privately insured people get their insurance from their
employers. For most of them, the system works very well. They have access to some of the
highest-quality care in the world.
Yet, for the 37 million Americans who are uninsured and the 22 million underinsured, our
current system does not work.
Our plan seeks to preserve what's right with the current system and fix what's wrong - - that
means providing security for all Americans. We're doing this by requiring employers and
individuals to take responsibility for purchasing health insurance.
Preserving what's right also means getting skyrocketing health care costs under control. We
can surely do both.
If we look at our international competitors and at models of reform around America, we know
this can work. There's no reason why other countries spend so much less than we do on
health care - - and still guarantee comprehensive benefits for their people. Look at
Germany and Japan for a few examples. Germany and Japan have been able to keep the
growth in their health care costs in line with the rest of their economy while ours have been
growing at twice and three times the rate of inflation.
Look at California, where hospitals have kept the rates at which their costs grow well below
the national average in the last decade.
Look at Minnesota - - with health care costs 15-20% lower than the national average - -
they've enacted limits on the rate of growth of public and private health care spending that
will achieve a 10% reduction in the rate of growth each year for the first five years of their
cost containment program. The Mayo Clinic has also kept its costs down - - below 4%.
Washington State also believes it can rein in spending. Under their reform, growth in
premiums is limited to 5% per year by 1998 - - down from 11% today. With these targets
in place, Washington State expects to save $8 billion through 2000.
There's plenty of evidence out there in places that have made serious attempts to cut waste,
reduce paperwork and red tape, and encouraging competition that this can work.
B. COMPREHENSIVE BENEFITS
POLICY BRIEFS:
COMPREHENSIVE BENEFITS
MENTAL HEALTH AND SUBSTANCE ABUSE
WOMEN'S HEALTH
PRESCRIPTION DRUGS
Q & A
what you will pay
6
Benefits package
ABORTION
older see Section into Americans & ANSWER complete
mam mography
mental Health
POLICY BRIEF
DRAFT
COMPREHENSIVE BENEFITS
Today's insurance market offers a multitude of policies, each of which
spells out benefits, co-insurance schemes, and detailed exceptions and policy
riders. The vast majority of policies place severe limits on certain conditions
and have lifetime limits. They pay doctors and hospitals only when people get
sick, rather than reimbursing providers to keep people healthy. Consumers
must also cope with policies that are incomprehensible and are often denied
benefits after discovering exclusions hidden in the fine print.
Guaranteeing every American a comprehensive package of benefits that
can never be taken away will do much to eliminate these problems.
Guaranteed Comprehensive Benefits
Every American will receive a Health Security Card that will
guarantee a comprehensive package of benefits as generous as those
offered by most Fortune 500 companies - - including hospital and
professional services, hospice and home care, durable medical
equipment, mental health, and other services.
No Lifetime Limits
Unlike many current insurance plans, the plan places no lifetime
limits on medical coverage and guarantees a full range of medically
necessary or appropriate services.
Uniform Benefits Help Consumers Choose
A single set of benefits and standard cost-sharing arrangements will
replace the hundreds of different benefits packages in today's market.
Consumers, not insurers, will be in the driver's seat, choosing among
plans on the basis of price and quality. There will be no hidden
loopholes - - and regardless of age, income, or health status, the same
set of rules apply to everyone.
Preventive Services
This benefits package will include a full range of services that detect
and prevent illness -- going beyond virtually all current insurance
plans. Preventive services -- including annual physicals, well-baby
care, immunizations, pre-natal care, cholesterol screenings,
mammograms, and Pap smears -- are provided at no charge, no matter
how a person gets care.
Mental Health Services
For the first time, mental health and substance abuse services will be
an integral component of the national system of health care. This
historic change in the treatment of mental illness and substance abuse
will require a phase-in period to allow time to develop the service
system capacity to deliver and manage this more comprehensive
benefit.
The year 1996 will mark the first time every American will have some
mental health and substance abuse coverage.
Expanded mental health and substance abuse benefits will be offered
no later than the year 2001, once the service and management capacity
is in place.
Prescription Drugs Coverage
Medicare recipients will receive all the benefits that they do today. In
addition, the Health Security plan will expand Medicare coverage to
include outpatient prescription drugs.
New Home and Community-Based Long-Term Care Benefits
Seniors and Americans with disabilities will be able to stay at home or
in the community and still receive the care they need through a new
long-term care benefit.
Medicaid nursing home coverage will be improved so that individuals
can keep more of their resources.
CHART 11
BENEFITS UNDER THE HEALTH SECURITY PLAN
COVERED:
NOT COVERED:
Hospital Services
Services that are not Medically
Necessary or Appropriate
Emergency Services
Private Duty Nursing
Services of Physicians and other
Health Professionals
Cosmetic Orthodontia and other
Cosmetic Surgery
Clinical Preventive Services
Hearing Aids
Mental Health and Substance
Abuse Services
Adult Eyeglasses and Contact
Lenses
Family Planning Services
In Vitro Fertilization Services
Pregnancy-related Services
Private Room Accommodations
Hospice
Custodial Care
Home Health Care
Personal Comfort Services and
Extended-care Services
Supplies
Ambulance Services
Investigational Treatments,
(except for Medically Necessary
Outpatient Laboratory and
or Appropriate Care provided as
Diagnostic Services
part of an Approved Research
Trial)
Outpatient Prescription Drugs
and Biologicals
Outpatient Rehabilitation
Services
Durable Medical Equipment,
Prosthetic and Orthotic Devices
Vision and Hearing Care
Preventive Dental Services for
Children
Health Education Classes
CHART 13
BENEFITS: THE HEALTH SECURITY PLAN
COMPARED WITH CURRENTLY OFFERED PLANS
BENEFITS
HEALTH SECURITY PLAN
BLUE CROSS
FORTUNE 500
STANDARD, FEHBP
COMPANY
LOW COST
HIGH COST
SHARING (HMO)
SHARING (FFS)¹
Medical Plan
No lifetime dollar maximum
No lifetime dollar maximum
Lifetime maximum for organ/
Lifetime maximum for
Maximum
limit
limit
tissue transplants, mental
inpatient substance abuse
health and substance abuse
Out-of-Pocket
$1500 / individual
$1500 / individual
$3000 / individual
$1,000 per covered individuals
$3000 / family maximum
$3000 / family maximum
$3000 / family
- does not include deductibles
Deductibles
None
$200 / individual
$200 / individual
$200/individual
$400 / family
$400 / family
$400/family
Inpatient Hospital
Full coverage, no coinsurance
20% coinsurance
$250 per admission deductible
Full coverage in-network:
20% coinsurance out-of-
no dollar or day maximum
no dollar or day maximum
No dollar or day maximum
network
Doctors Office
$10 copay per visit
20% coinsurance
25% coinsurance
20% coinsurance
Visits, Hospital
Outpatient
no dollar or visit maximum
no dollar or visit maximum
Outpatient Lab
Full coverage
20% coinsurance
25% coinsurance
Full coverage in-network
20% coinsurance out-of-
network
Emergency
$25 copay per visit, waived
20% coinsurance
Full coverage within 72 hrs. of
Full coverage - required plan
in emergency
accident
notification within 48 hours
Preventive
Full coverage, based on
Full coverage, based on
25% coinsurance
not specified
Services
periodicity schedule
periodicity schedule
100% well childcare
Prescription Drugs
$5 per prescription
$250/year deductible
$50 deductible
20% coinsurance
20% coinsurance
50% coinsurance for drugs for
40% coinsurance
treatment of mental or nervous
conditions
1. FFS . fee for service
2. Deductibles counted toward out-of-pocket limits.
3. Mental health and substance abuse have separate provisions, see below.
4. Including well-child and prenatal care, periodic health exams, targeted tests and vaccines.
BENEFITS
LOW COST
HIGH COST
BLUE CROSS
FORTUNE 500
SHARING (HMO)
SHARING (FFS)
STANDARD, FEHBP
Inpatient Mental
Full coverage
$250 per admission deductible;
20% coinsurance pre-
Health (MH) and
20% coinsurance
40% coinsurance
certification required
Substance Abuse
30 day limit / episode
(SA)⁵
60 day annual limit
30 day limit / episode
Unlimited days
Substance abuse: Full coverage
60 day annual limit
in-network
$3,000 maximum for substance
abuse treatment program - 28
20% coinsurance out-of-
day max.
network; 30 days per stay; 2
stays maximum
$50,000 lifetime maximum
Outpatient Mental
All outpatient except
All outpatient except
40% coinsurance; 25 visits
20% coinsurance for employee
Health and
psychotherapy - $10 / visit
psychotherapy 20%
annual maximum includes
Substance Abuse
coinsurance
partial hospitalization
50% coinsurance for dependent
Psychotherapy - $25 / visit;
Substance Abuse: 20%
30 visits annual maximum
Psychotherspy - 50%
$50,000 lifetime maximum
coinsurance, 30 visit maximum
coinsurance; 30 visits annual
maximum
Hospital alternatives full
coverage; 120 day annual
Hospital alternatives 1 day
maximum
deductible, 20% coinsurance;
120 day annual maximum
Hospice
Full coverage
20% coinsurance
100% coverage for home
Not specified
hospice; $250 per admission
for inpatient hospice with 5
consecutive day limit
Home Health (HII)/
Full coverage as inpatient
20% coinsurance as inpatient
25% coinsurance
20% coinsurance
Extended Care
alternative
alternative
(ECF SNF and
25 visit limit for home nursing
Rehab Hospitals)
100 day annual limit extended
100 day annual limit
care
care facilities
extended care facilities
Routine Eye Exams,
$10 per exam, or 1 set of
20% coinsurance
Not covered
Not specified
Eyeglasses
glasses.
Glasses limited to children
Glasses limited to children
only
only
Preventive and
$10 / visit
20% coinsurance
Covered at fee schedule
Not specified
Emergency Dental
Preventive services limited to
Preventive services limited to
children <18
children <18
Prenatal Care
Full Coverage
Full Coverage
25% coinsurance
20% coinsurance
Outpatient
$10 copay per visit;
20% coinsurance;
25% coinsurance
Not specified
Rehabilitation
reassessed at 60 days for
reassessed at 60 days for
continuing improvement
continuing improvement
25 visit limit
Durable Medical
Full coverage
20% coinsurance
25% coinsurance
Not specified
Equipment
5. In 2001, inpatient and outpatient MH/SA limitations and higher cost sharing are phased out.
6. In the year 2000, adult prevention / restoration, orthodontis.
MENTAL HEALTH AND SUBSTANCE ABUSE BENEFIT SUMMARY
When untreated, mental disorders and substance abuse generate high social
and economic costs. Treatment yields important benefits to both the individual and
society, such as improvement in overall health, increased productivity, and reduced
costs for health services, social welfare, and other public services.
Traditional mental health and substance abuse coverage, however, has been
an impediment to realizing these aims, Currently, most private insurance plans cover
only a very narrow band of mental health services and limit inpatient hospital care
and outpatient visits to mental health professionals. Annual limits, lifetime caps,
and copayments higher than for other illnesses further restrict access to mental
health care.
Recent experience shows the promise of a different approach. Under this
model, a health plan covers a comprehensive array of services and has the flexibility
to manage the services according to medical and psychological necessity. This
approach underlies the mental health coverage in the Health Security Act.
[Note: Work is still underway on this particular aspect of the health care reform
plan so there may be changes in this coverage prior to the time the proposed
legislation is submitted to Congress.]
Mental Health and Substance Abuse included in Comprehensive Benefit
Package
For the first time, mental health and substance abuse services will be an
integral component of the national system of health care. This historic
change in the treatment of mental illness and substance abuse will require a
phase-in period to allow time to develop the service system capacity to deliver
and manage this more comprehensive benefit.
The year 1996 will mark the first time every American will have some
mental health and substance abuse coverage.
Annual and Lifetime Limits and Preexisting Condition Exclusions will be
Eliminated
Lifetime and annual mental health and substance abuse coverage limits will
be eliminated.
Individuals with a wide range of mental and substance abuse disorders are
covered and exclusion from coverage based on pre-existing conditions will be
eliminated.
Encourages use of Innovative Alternatives to Inpatient Treatment
The new benefit is designed to encourage use of proven, cost-effective,
innovative alternatives to inpatient treatment by including non-residential
options such as partial hospitalization, day treatment, psychiatric
rehabilitation, ambulatory detoxification, home-based services, behavioral
aide services.
In addition, outpatient services including diagnosis, brief office visits for
medical management, substance abuse counseling and relapse prevention are
covered to encourage early intervention and less restrictive treatment
options.
Support Provided for Family Members of Patients
Family members of an individual receiving mental or substance abuse
services may receive medically necessary or appropriately related services in
conjunction with the patient (so-called collateral treatment).
Expansion of Benefits in 2001
Efficient management of benefits will determine the utilization of these
services by the year 2001, prior to then utilization limits will exist.
At this time, beginning in 1996, inpatient treatment is covered a maximum of
30 days per episode with a 60 day annual limit. As the treatment system
adapts to the anticipated changes, the annual limit increases to 90 days in
1998 and is replaced by benefit management by 2001.
Maintenance of Current Public Programs During Phase-in
The phase-in period requires continuation of the existing public system of
mental and substance abuse treatment services. However, states are
encouraged to integrate all aspects of treatment by combining their
expenditure for public mental health and substance abuse programs with the
funds available to health alliances.
Health Research Initiatives
Under health research initiatives, research in the area of mental disorders
in children and adolescents, child abuse and neglect, women's mental health,
mental disorders in the elderly and their caregivers, severe mental disorders
and violence.
Sept. 93
DRAFT
WOMEN'S HEALTH
Women are more likely to need health care than men, and yet are less
likely to have insurance. Women are most likely to provide health care -- both
professionally and informally-- yet are least likely to receive needed care
themselves. They are increasingly the victims of life-threatening illness, yet
still are at the bottom of our medical research agenda.
Women make up a larger portion of the population holding part-time
jobs and clerical or sales jobs--jobs which usually don't offer health
insurance to employees.
Women tend to live longer and thus require more long-term and home
health services, services that are often unavailable and underfinanced.
Many women must rely on their spouses for health insurance, and risk
being dropped if they divorce or if they are widowed.
A Comprehensive Benefits Package
Women will be guaranteed a comprehensive package of benefits that
will include unprecedented coverage of preventive care, such as
mammograms, diagnostic services, and prenatal care.
All women will be guaranteed universal coverage regardless of marital
status, employment status, or their ability to pay.
It also provides coverage for diagnostic for women experiencing
menopause including diagnostic visits and estrogen replacement
therapy when medically advised.
New Emphasis on Women's Health Research
New research initiatives will concentrate on child health (including
birth defects, prenatal care, and adolescent health), and on chronic
and recurrent illnesses that primarily strike women -- including breast
cancer, ovarian cancer, and osteoporosis.
Medical research initiatives will be expanded to include efforts to
isolate and cure diseases such as breast cancer and cervical cancer.
Expansion of Home and Community-Based Long-Term Care Services
Long term care services will be expanded to include new coverage for
home and community care and strengthened coverage for nursing
home care. This will alleviate the undue burden born by women, our
nation's primary care givers for both children and elderly relatives.
Sept. 93
DRAFT
PRESCRIPTION DRUGS
Prescriptions drugs are frequently the most cost effective intervention to treat
medical conditions. However, these potentially life-saving products are often
inaccessible because there is inadequate insurance coverage for Americans and
because the cost of pharmaceuticals have far outpaced the general inflation rate.
Until very recently, prescription drug price increases dwarfed percentage increases in
the rest of the economy. Between 1980 and 1992, while the general inflation rate
increased by 22 percent, drug prices increased 128 percent. New medications,
especially biotechnology drugs -- although full of potential to advance medical
treatment advance potential, are extremely expensive.
Almost 25 percent of Americans under age 65 do not have any type of public
or private prescription drug insurance coverage. As a result, expensive, frequently
taken medications (like antibiotics for children) become such a financial burden that
many vulnerable populations go without.
The high cost of prescription drugs and their heavy reliance on medications,
cause a significant financial burden for Older Americans. Since Medicare does not
cover outpatient prescription drugs, only 46 percent of all drug costs for seniors are
paid for by public or private insurance plans. As a result, prescription drug costs are
the highest out-of-pocket medical costs for 3 out of 4 older Americans. A recent AARP
study found that nearly 8 million Americans over the age of 55 report that they must
choose between buying food and paying for prescription drugs.
Coverage for Prescription Drugs Included within the Comprehensive
Benefit Package:
All health plans for the under 65 population will be required to cover
outpatient prescription drugs. Under the low-cost sharing option plan, the
beneficiary will pay $5 per prescription. Under the high-cost sharing option
plan, the beneficiary will be covered for 80 percent of his/her prescriptions
after a $250 deductible is met. The insured person's copayments will count
towards the overall out-of-pocket $3,000 cap.
Provides a New Medicare Outpatient Prescription Drug Benefit:
Like the nationally guaranteed package, Medicare beneficiaries will have 80
percent coverage for their medications after a $250 deductible is reached. In
addition, a $1,000 annual cap is placed on out-of-pocket prescription drug
costs. Costs above this amount will be fully covered.
Drug Costs for the Under 65 Population will be Controlled:
The national guaranteed benefit, offered by private sector plans, will use
managed care purchasing mechanisms to hold down the rate of growth of
current drug prices. For new drugs, private purchasers will have the benefit
of information provided by the National Health Board about the
appropriateness of prices. The Board cannot regulate prices.
Provides for Cost Containment of Medicare Prescription Drug Benefit:
The Medicare program, which will become the world's largest purchaser of
medications, will receive a discount for prescription drugs currently on the
market. Without the authority to use parallel private sector purchasing
tools, the Secretary of Health and Human Services will be given authority to
negotiate the price of new drugs for the Medicare program.
Patient Counseling by Pharmacists:
To help avoid unnecessary, inappropriate and expensive hospitalizations,
pharmacists will be required to provide patient counseling.
Sept. 93
QUESTIONS AND ANSWERS
WHAT YOU WILL PAY
Q: How much will I have to pay for the new benefits package?
A: Nobody can tell you exactly how much you'll pay for health care when the
reform takes affect in your state. It will vary, of course, depending on where you
live and which plan you choose: Everyone -- employers and individuals -- will
be asked to take responsibility for contributing something, even if its only a small
amount, to the cost of their health care. Premiums for working Americans will be
shared by employers who pay 80% of the average cost premium and employees
who pay the remaining 20%. If you choose a lower cost plan, you'll pay a little
less and, like today, if you choose a higher cost plan, you'll pay a little more.
BENEFITS - - SPECIALIZED SERVICES
Q: If I develop cancer will I still be able to go to the Mayo Clinic?
A: Academic health centers like the Mayo Clinic are the flagships of our health care system.
Their research has fueled advances in medical care that have spread throughout the world. We
also know that for some medical conditions, especially where treatment is very complex or
the technology is changing rapidly, care is best provided in an academic center.
Under our proposal, all health plans must contract with one or more academic health
centers for certain, specialized procedures and diseases. Health plans will be monitored to
ensure that patients are offered appropriate referral to those centers.
Of course, not every health plan in the country will contract with the Mayo Clinic. If
you live far away from Minnesota, you may have to join the fee-for-service option in the
alliance which will cover the Mayo Clinic and any other hospital. If, on the other hand, you
are interested in assuring that you can be cared for in a local academic center, plans will
publish a listing of their contractual relations. And you can choose a plan which contracts
with that center.
ABORTION
Q: Does the plan cover abortion?
A: The comprehensive insurance package covers pregnancy-related services. Though
abortion, like other types of surgery, is not specifically mentioned, most plans will cover it --
as they do now. Plans will cover abortions, as all procedures, when a doctor believes it is
appropriate or necessary. Abortion coverage is not mandated, and a conscience clause allows
doctors and health institutions, like a Catholic hospital, to exclude abortion coverage for
moral or religious reasons.
What is new in this health plan is coverage for preventive care, including family planning,
which should reduce the number of abortions which is our common goal.
The Presike has
he has
I've worked to create a health plan that covers abortion where necessary, but Have also
worked to make sure that people have a choice and that abortion is as rare as possible.
Mammography
Q:
I am a women who is 42 years old and am concerned about the
issues surrounding mammography screening. Under the Health
Security Act will it be difficult to get this screening and
will I have to pay a lot of money for this service?
A:
The Health Security Act is deeply committed to womens'
health issues. The plan is designed to work toward ensuring
appropriate mammography screening in order to reduce the
tragedy of breast cancer. Mammography screening is included
for women over the age of 50, at no cost every two years.
This recommendation was based on the best scientific
literature available today, including the National Cancer
Institute. For all other women mammography screening will
be covered when it is medically necessary or appropriate.
This decision will be made between a women and her
physician. For these women, mammography will be covered
with the same co-payments, just as any other medical
procedure.
MENTAL HEALTH BENEFITS Q & A
1.
Aren't mental illnesses and substance use disorders very different than other conditions? If
these aren't real medical problems, we shouldn't cover them in health care reform.
1A.
No, MH/SA disorders are not different than other conditions. MH/SA disorders cause
distress, and disability. They can produce significant dysfunction. Medical treatments are
available that reduce distress and dysfunction, and prevent disability. Left untreated,
MH/SA disorders lead to direct costs (including other health care problems) and indirect
costs (e.g., lost productivity).
The majority of private insurance plans now cover MH/SA treatment, as well as Medicaid,
Medicare, and CHAMPUS. Insurance companies have recognized the legitimacy of the
suffering and disability these disorders cause.
Won't everyone want to see a therapist if insurance will pay for it?
2A.
No, everyone will not want to see a therapist under health care reform. In a given year,
only 10-11% seek care for a MH/SA problem. Only 6% of the population currently seek
specialty MH/SA services. Of those who use ambulatory services, 50% only go once or
twice. There is a great deal of misunderstanding of MH/SA conditions, as well as
resistance to treatment, and stigma about seeking treatment. Many people are reluctant to
admit they have MH/SA problems and seek help for them.
Furthermore, not everyone seeks care because not everyone has a mental disorder. Even
those people with symptoms do not always experience distress or functional impairment
sufficient to seek help.
1.
Aren't mental illnesses and substance use disorders very different than other conditions? If
these aren't real medical problems, we shouldn't cover them in health care reform.
1A.
No, MH/SA disorders are not different than other conditions. MH/SA disorders cause
distress, and disability. They can produce significant dysfunction. Medical treatments are
available that reduce distress and dysfunction, and prevent disability. Left untreated,
MH/SA disorders lead to direct costs (including other health care problems) and indirect
costs (e.g., lost productivity).
The majority of private insurance plans now cover MH/SA treatment, as well as Medicaid,
Medicare, and CHAMPUS. Insurance companies have recognized the legitimacy of the
suffering and disability these disorders cause.
2.
Won't everyone want to see a therapist if insurance will pay for it?
2A.
No, everyone will not want to see a therapist under health care reform. In a given year,
only 10-11% seek care for a MH/SA problem. Only 6% of the population currently seek
specialty MH/SA services. Of those who use ambulatory services, 50% only go once or
twice. There is a great deal of misunderstanding of MH/SA conditions, as well as
resistance to treatment, and stigma about seeking treatment. Many people are reluctant to
admit they have MH/SA problems and seek help for them.
Furthermore, not everyone seeks care because not everyone has a mental disorder. Even
those people with symptoms do not always experience distress or functional impairment
sufficient to seek help.
If there aren't any benefit limits, won't people be entitled to receive everything they want?
How will decisions be made about who receives services?
3A.
People will receive services based upon what they need. Like all of health care services
under health care reform, providers will be operating within a budget and will have to
manage care. Their incentive will be to provide only care that is medically appropriate.
Providers will make decisions about the scope, volume, and duration of services that are
necessary and appropriate. A wide range of services will be available for those who need
them.
4.
Won't we be paying for coverage of the worried well? I don't want to pay for someone to
talk to my neighbor about their problems of living.
4A.
Enrollees will not receive care unless they have a diagnosable MH/SA disorder. Not
everyone meets the criteria for such illnesses. Even when they meet the criteria, not
everyone would meet the criteria of significant risk for functional impairments at work,
home, school, or community. Any enrollee will be evaluated if they perceive a need for
MH/SA treatment, but no one will get care unless it is medically necessary and appropriate.
Persons with SA problems or serious psychological symptoms will be eligible for these
services. Enrollees will still be free to pay out-of-pocket for services they may desire
outside the health plan.
5.
Given the dissatisfaction among providers with managed care, why is this being proposed?
5A.
People have complained about restricted access, micro-management, intrusion on
professionals' decisions about care. Utilization management strategies will now be used
for all of health care -- mental health providers are not being singled out for special
attention. Health care reform offers the opportunity and challenge to providers to organize
and manage care, to assure efficient and appropriate utilization of health care resources.
Does the health reform proposal include treatment on demand for drug abuse?
6A.
The plan includes treatment for substance abuse. Experience tells us that this benefit will
increase access and number of users of the benefit, likely by 30-40%. However, careful
management of the benefit will decrease the volume of services per user. This is not a
costly treatment, compared to the costs that result from lack of treatment. Substance abuse
is estimated to encompass only approximately 1.5% of total health care costs, and 15%
of MH/SA care costs.
7.
Why should we cover substance abuse in this plan?
7A.
Right now, we are spending much more in this country to deal with the effects of substance
abuse than we are on treating the problem itself. Increased crime, criminal justice costs
including incarceration, lost productivity, premature mortality, child abuse, fetal alcohol
syndrome, crack babies, spread of the AIDs epidemic, a resurgence of TB -- all of these
costs are a direct or indirect result of the monumental drug abuse problem in this country.
If we redirect adequate dollars to prevention and early intervention, we can improve the
quality of life for many Americans, and save many billions of dollars at the same time.
8.
How will we know that plans don't ignore the needs of the severely ill and undertreat those
with mental illness or substance abuse? How will we know if plans are doing what they are
paid to do?
8A.
The system includes stringent accountability standards for AHPs. A "report card" will be
completed on each plan every year. Plans will be monitored for their treatment of the
severely ill, and those suspected of undertreatment will be investigated. HAs may
reprimand, reeducate, or decertify substandard AHPs. Consumer surveys will be another
important measure of AHP performance.
Aren't we taking a major risk if health care reform leads to an elimination of the public
sector MH/SA system and "safety net"?
9A.
The Plan provides for an array of services that cover all of the functions once performed
by the public system, except forensic services. One goal of health care reform is to create
a unitary system of care. The current system is fragmented, duplicative, unfair, confusing,
inequitable, and discriminatory. Health care reform allows the elimination of this two-class,
two-tiered system. The states will have a major role in system oversight and monitoring.
Resources from the public sector are brought in to be part of the reformed system. States
can bring in public sector providers and programs as preferred providers during a transition
period; the transition period is intended to ensure that states can develop necessary
capacity.
10.
How will health care reform help the homeless person on the street who has a mental illness?
Won't the elimination of the public sector safety net result in more homeless persons with
mental illness?
10A. The Plan includes a strong outreach effort. A special funding stream has been proposed
which will provide outreach to the homeless mentally ill and other historically underserved
populations. We will also increase access through educational programs for all Americans
about what health care reform means for them.
Currently, no one is accountable to provide services to the homeless. This plan provides
guaranteed coverage, outreach, and flexibility to provide mobile services and a range of
services that are more likely to respond of homeless persons with mental illness. We do
not believe this plan will create more homeless mentally ill, and monitoring activities will
watch this issue closely.
Aren't mental health and substance abuse treatments open-ended, without clear cut goals or
endpoints?
11A. This is a myth. The fact is that when people feel better and their symptoms resolve, they
stop treatment. Most people only go for 1 or 2 sessions of therapy. Mental health and
substance abuse experts have developed innovative treatments, which are able to help
people with these problems in shorter time than ever. Traditional, longer therapies are still
available for those with more complex problems. In addition, medications now offer
symptom control for many persons who previously required indefinite hospitalization
because of mental illness. Scientific advances promise to improve treatments even more
in the future.
12.
Does the plan stipulate who can provide mental health and substance abuse treatment?
12A. The President's plan leaves decisions about providers and settings to the states, which will
be responsible for licensing and certification. These decisions will not be made more
explicit at the federal level. If a given professional group provides cost-effective services,
it would be to the state's advantage to include them as providers.
13.
What will happen to solo practitioners?
13A. Solo practitioners will be able to enroll as providers in AHPs, to qualify for reimbursement
for the care of plan enrollees. They may remain independent, and receive reimbursement
as out-of-plan providers. Individuals will be permitted to pay out-of-pocket for any
service they desire which the AHP does not provide to them.
Does this plan cover psychotherapy?
14A. The Plan covers medically necessary individual, group, and family therapies of all types.
Most people will have brief episodes of treatment. Persons with more severe and complex
disorders (who are very symptomatic and functionally impaired) will be provided extended
psychotherapy. Like all MH/SA treatment, this will be part of a managed system of care.
15.
Is the fact that MH/SA is being included going to increase premiums?
15A. It is likely that most people will see an increase in their premiums. In return, enrollees
receive full MH/SA benefits, including catastrophic coverage in the private sector (which
now results in transfer to the public system of care).
6.
Are there gatekeepers? Is there a procedure for grievance? Denial of services?
16A. Under the plan, each enrollee will be entitled to screening and assessment of MH/SA
complaints, with referral for medically appropriate services. For enrollees unhappy about
treatment or denial of services, a grievance procedure will be available.
What happens if an enrolllee doesn't get along with the assigned therapist?
17A. Each AHP will have a selection of therapists. If the enrollee does not get along with one
therapist, others will be available.
18.
Won't AHPs want to avoid enrolling people with mental illness and substance abuse?
18A. The Plan will include a system of risk adjustment. AHPs will be paid a combination of
pre-payment and reimbursement based on services provided. Adjustments will be made for
high-cost cases, to minimize the incentives to undertreat. In addition, because AHPs have
responsibility for the care of their enrollees, and have no public system in which to dump
patients, it will make financial sense for them to treat those with MH/SA disorders rather
than waiting until symptoms become so severe that more expensive treatment is required.
Clinical Laboratory Improvement Act (CLIA)
Ease reglatory burden on laboratories performing simple and
moderately complex tests. Revise personnel standards for rural
and urban underserved ares.
Rural Cooperatives
C. STATES UNDER REFORM
POLICY BRIEFS:
TRANSITION TO NEW SYSTEM
STATES: THEIR ROLE IN REFORM
Q & A
0
Single Payer
POLICY BRIEF
DRAFT
TRANSITION
States may enter the new system as early as January 1, 1995 and all states
must enter the new system by January 1, 1997. States are given start-up funds and
technical assistance in developing state plans and legislation. States entering the
new system on a fast track have some additional flexibility in complying with federal
regulations, all of which may not have been completed at the time of a state's entry
into the new system. To assure a rapid transition, the National Health Board, the
Department of Labor and the Department of Health and Human Services are
authorized to issue any regulations on an interim and final basis.
Incentives for States to Enter the New System Quickly:
Federal discounts for low-wage small businesses and individuals;
Access to additional start-up funds;
Reduced Medicaid costs;
Faster achievement of guaranteed, comprehensive benefits for the state's
residents.
Immediate Insurance Reform Measures:
To reduce the potential for disruption in the health care system during the
transition, certain insurance reform measures will be enacted, and will take effect
immediately upon passage of the legislation. These include:
Prohibiting insurers from dropping people or failing to renew their coverage,
with strictly defined exceptions.
Limiting premium increases. Premium increases that exceed a prescribed
percentage will be subject to prior approval by state insurance
commissioners.
Limiting the application of exclusions for pre-existing medical conditions to
new employees and their dependents.
Prohibiting self-funded health plans and employers with insured health
plans from imposing waiting periods for coverage on any employee otherwise
eligible under terms of the plan.
Prohibiting employers and insurers from reducing existing coverage for any
medical condition or course of treatment if the anticipated cost is likely to
exceed $5,000 a year.
Authorizing the Secretary of HHS to establish a national high-risk pool. It
will provide insurance coverage to individuals who get dropped by their
health plans or who otherwise could not get coverage during the transition.
The pool will be funded through premiums charged to enrollees and
assessments against health insureers included self-funded plans.
Limiting Price and Expenditure:
While there is no imposition of short-term cost controls, the President will urge all
health care sectors to limit price and expenditure increases to a specified amount.
The Secretary of HHS will monitor prices and expenditures and periodically
report on conformity with the President's request.
The Secretary is given increased statutory authority to obtain information on
prices and expenditures to assist in monitoring compliance.
Confidentiality of data is assured.
Sept. 93
DRAFT
STATES-- A NEW ROLE UNDER HEALTH REFORM
Right now, federal and state governments lack sufficient authority to control
costs. Many states, facing rising Medicaid budgets and diminishing private
insurance coverage, have tried to contain costs and expand access, only to run into
road blocks in federal law, such as ERISA, Medicaid, and Medicare. Although the
states regulate private insurers, the haven of self-insurance created by ERISA has
greatly limited the states' ability to control health costs.
On the other hand, while the federal government determines policy for
Medicare, it shares authority with the states over Medicaid, and it has no
responsibility for regulating private health insurance. Federal cost containment
measures focus on public programs and often have the effect of shifting costs to
private payers. Limiting expenditures only for federal programs has resulted in
increased cost-shifting from Medicaid and Medicare to private insurers and the
states.
The health reform proposal follows a comprehensive approach to controlling
the growth of costs in both the public and private sectors, and establishes a new
partnership between the states and federal government, with joint responsibility for
assuring high quality health care, universal coverage, and enforceable cost control.
The program will not try to run health care from Washington-- it will allow
states, alliances, and health plans competing for consumers to work out solutions at
the local level.
The Federal Framework
The federal framework sets a uniform standard for financing, benefits, and
quality assurance. Under the new system, employers and individuals have the same
obligations nationwide. A state cannot deny coverage to any person guaranteed
health benefits under federal law, nor can a state reduce benefits beneath the
federally guaranteed level. Similarly, states must adhere to the financing system
established for the guaranteed benefit package.
The State Role
Within the national framework, the program allows for wide variations in
state policy on the organization and delivery of health services. Under the Health
Security program, direct control of the regional health alliances, the certification of
health plans, and the licensing of providers will rest with the states.
Under the new system, the states remain responsible for regulating health
plans and health care providers. The states also immediately become
responsible for establishing the new regional health alliances. Thus, the
states have the capacity to adapt the national framework to suit their own
conditions.
The phasing in of the new program will proceed state by state. Within the
years 1995 to 1997, states will determine how quickly the alliances are
established and coverage is extended to all. State-by-state phase in and a
central role for the states in running the new system will allow for
adjustments in the national framework to fit local conditions.
Federal support will make it possible to extend coverage to all without
overburdening employers and employees in low-wage areas. Without this
financial assistance, states with low per capita income and large numbers of
part-time and unemployed workers would be hard-pressed to achieve
universal coverage.
A reserve fund established under the program will help states cope with
regional recessions.
States will continue to administer the Medicaid program for long-term care,
and to oversee or conduct enrollment for cash assistance recipients who get
their plan paid for through Medicaid.
09/27/93 08:22 PMfinal1
HEALTH CARE REFORM - BENEFITS TO THE STATES
Governors and state legislators find themselves in the position of
writing smaller and smaller checks for schools and roads and libraries and
bigger and bigger checks for Medicaid and state employee health benefits.
In an effort to lighten the load of exploding Medicaid costs, state
capitals and Washington have engaged in a game of fiscal hot potato --
shifting costs of the program back and forth to one another, while costs keep
rising. The health security plan will help to end the gaming and build a new
and constructive partnership between states and the federal government. A
partnership based on seamless coverage, enforceable cost control, and
Medicaid savings will benefit everyone -- especially the states.
DISCOUNTS
The Federal government will provide the funds for employer and
consumer discounts for low-wage firms and low-income families.
The Federal government, not state employee health programs, will help
pay for the health benefits of early retirees.
CAPS
The Federal government will take responsibility for enforcing caps on
premium increases.
State Medicaid spending for the guaranteed benefits will be capped at the
budgeted rate of growth, resulting in substantial savings from projected
spending.
REDUCED SPENDING
States and localities will be able to reduce direct spending on the
thousands of residents on General Assistance/General Relief medical
assistance when those individuals will be guaranteed the comprehensive
benefits package.
States and localities will be able to reduce direct support to hospitals and
clinics that now care for the uninsured.
Spending on Medicaid long-term care services will be transferred to the
new long term care program and capped at the budgeted rate of growth.
In aggregate, state spending for the new long term care program will be
the same as baseline spending for long term care services under Medicaid.
Sept. 93
QUESTIONS AND ANSWERS
SINGLE PAYER
How would the single payer system work?
A state that wants to use a single payer system would
describe in a plan how its single payer system will work, just as
it would describe how a regional alliance system would work. It
would submit the plan to the National Board.
The plan would have to demonstrate how the state will
accomplish the requirements under the new system -- the
comprehensive benefit package, universal coverage, quality,
information, and compliance with budget requirements.
A state has the authority to include everyone in the single payer
system, including those who would otherwise be covered by
corporate alliances.
If a state wants to include the Medicare population, it
would have to receive a waiver from HHS. The waiver would be
granted only if the state could demonstrate that Medicare
recipients and the Medicare trust fund would be no worse off.
The National Board will approve the plan if the state plan
demonstrates how it will meet the requirements, such as universal
coverage and the benefit package.
A state must finance a single payer system either with the
financing under this plan or with a payroll tax that produces the
same amount of revenue. Additional costs, such as for reduced
premium payments by individuals, or for additional benefits,
could be financed in any way the state chooses.
A single payer system is one in which the state or a
designated agency makes payments directly to health care
providers with no intermediaries, health plans, or other entities
assuming financial risk. Providers, such as HMO's, networks of
doctors, and hospitals, may continue to assume risk by accepting
captitated payments to cover individuals.
D. HEALTH ALLIANCES
POLICY BRIEF:
HEALTH ALLIANCE BOARD
Q & A
Alliances
POLICY BRIEF
HEALTH ALLIANCE BOARDS
Health alliances will represent the interests of local consumers and employers,
bargaining on their behalf and ensuring that health plans meet quality and
information standards. The alliance boards will negotiate and contract with health
plans. Although states will appoint board members of regional alliances, the Health
Security plan will specify general criteria to ensure that alliances represent the
business and families paying for health care in that area.
Status of Alliance Boards
Alliances may be established as nonprofit corporations, their boards will
include an even number of employer and consumer representatives, plus one
member to serve as chair.
States may also establish alliances as public agencies or independent public
corporations, but they must include advisory boards representing both
consumers and providers.
Board Representation
Boards must include representatives of at least four groups that purchase
coverage through the alliance: employers, employees, self-employed
individuals, and consumers.
Health care providers, owners of health plans, individuals who derive
substantial income from health plans or providers, or owners, employees,
board members, and others who derive substantial income from
pharmaceutical companies or suppliers of medical equipment, devices, and
services will be prohibited from serving on alliance boards.
Provider Advisory Boards
Each alliance will establish a Provider Advisory Board, with representation
of doctors, nurses, and other health care professionals who practice in the
plans offered in that area.
Nominating Councils
States may establish statewide councils composed of representatives of
employer and consumer organizations to prepare lists of nominees for
alliance boards.
Sept. 93
QUESTIONS AND ANSWERS
ALLIANCES
Two issues are of particular concern to Republicans on the
Committee, and it might make sense for Mrs. Clinton to address them in
Q:
her opening statement. Senator Kassebaum is very concerned that the
Won't
alliances will be too big, regulatory, and bureaucratic--more like
government agencies than purchasing cooperatives.
A:
--The alliances will represent the purchasers of health care in an
area; it is the purchasers who will control the alliance, not the
Federal government.
--The alliances resemble the benefits departments of large
corporations much more than they do governmental entities.
Their job is to negotiate the best deal possible with health plans on behalf
of the members of the alliance, to provide information to consumers, to
handle enrollment, and to adjudicate complaints.
--Alliances do not regulate health plans. That responsibility
is left to state governments, where it is today.
--In fact, alliances are required to offer any health plan that is
certified by the State government, is willing to fulfill the same
contractual obligations as any other insurer offered by the alliance, and
will offer a premium consistent with the budget.
--The whole point of the managed competition system is to put the
individual consumer in the driver's seat, not the government and
not the health plans.
HEALTH ALLIANCES
Q: Don't the boards of the health alliances offer plenty of opportunities for political
corruption?
A: No. First of all, the plan has very strict rules preventing anyone associated with the health
care industry from serving on the board of an alliance. Only representatives of the employers
and consumers who receive coverage through the alliance can serve on the board. The board
and the alliance will be held accountable, with all its workings in full, public view. If any
problems were to develop, there would be a powerful constituency -- everyone who gets
health care in that region -- with an interest in solving the problem immediately.
The alliance's responsibilties are limited. It acts as a purchasing agent -- and makes sure
health plans meet certain standards. It cannot reject any health plan which meets the standards
specified in the law; it must accept all qualified plans.
E. HEALTH PLANS/INSURANCE REFORMS
POLICY BRIEFS:
INSURANCE REFORMS
RISK ADJUSTMENT AND REINSURANCE
Q & A
POLICY BRIEF
.
i
DRAFT
INSURANCE REFORM
Currently, health insurers use a variety of stratagies to discourage or
prevent less healthy people from getting insurance. For example, insurers
commonly (1) refuse coverage to people who cannot meet "medical
underwriting" criteria; (2) limit benefits to people with preexisting health
conditions; (3) charge higher premiums for less healthy people; and (4) refuse
to insure people in certain industries or occupations. As a result, many people
who need health insurance cannot get it.
The Health Security plan will change the insurance market by doing the
following:
Requiring all health plans to accept all applicants,
regardless of health status
Prohibiting all pre-existing condition exclusions and
guaranteeing that coverage cannot be dropped for any reason
Spreading risk broadly through the use of community rating
Enhancing financial protection of enrollees and providers in
the case of financial failure of health plans.
Guarantees Choice of Health Plans:
The Health Security plan will require all health plans to accept any
person who applies for coverage, regardless of the applicant's health
status, job or claims history.
Provides Security:
The Health Security Act will provide security to all Americans by
assuring that their coverage will not be limited or dropped for any
reason. People who switch jobs or move to a new place will have no
gaps in their coverage.
Community Rating:
The Health Security plan will rely on community rating -- charging
healthy people the same as sick people -- to spread health costs over a
large population. Premiums for the comprehensive benefit package will
be adjusted only for geographic location and family status.
Rate increases will not be targeted to sick people or groups. No one
will pay more for health insurance because of a pre-existing condition,
current illness or any other individual characteristic.
Enhanced Financial Protection:
If a health plan does have financial problems, people will be protected
through immediate enrollment in new health plans. Physicians and
hospitals will be not be permitted to bill individuals for the unpaid
claims of a financially troubled health plan.
Health plans will be required to meet federal minimum standards for
solvency.
Sept. 93
ADDRESSING BIASED SELECTION THROUGH
REINSURANCE AND RISK-ADJUSTMENT
BACKGROUND
Competitive insurance markets must address the problem of "biased
selection." Biased selection occurs when a health plan enrolls a
population with a better or worse than average health status.
The problems of biased selection can result from the actions of
individual consumers or health plans.
Individual consumers can contribute to biased selection through
their decisions about when to purchase insurance and the level of
coverage to purchase. Consumers who know they are in poor health
or at higher risk for needing health care services are more likely
to choose to insure and to choose more extensive benefits when they
do insure. This tendency is often referred to as "adverse
selection." In a reformed market, adverse selection may occur if
higher-risk people systematically select certain types of health
plans (e.g., plans that offer greater choice of health care
providers).
Health plans can contribute to biased selection through the use of
various techniques which discourage enrollment by higher-risk
people and attract healthier enrollees. In the current marketplace,
insurers use medical underwriting, preexisting condition
exclusions, minimum group participation requirements, and industry
exclusions to prevent enrollment by poorer risks. Even in a
reformed market, health plans may attempt to influence the
composition of their enrollment. Decisions relating to which
providers to contract with, where to locate service areas and
facilities, and the amount of service and support to provide
higher-cost patients all can affect the mix of enrollees attracted
to a health plan.
Biased selection affects the premiums charged by health plans and
therefore how the competitive market operates. If biased selection
occurs, health plans with relatively sicker or higher-risk enrolled
populations generally will have higher claims expenses than plans
with average enrollment mixes, and will be forced to charge higher
premiums to cover their higher costs. On the other hand, health
plans with relatively healthier enrolled populations will have
relatively lower claims expenses and can charge lower premiums.
To the extent that health plan premiums reflect biased selection
rather than the efficiency and quality of the competing plans, the
benefits of competition are diminished. To achieve all of the
benefits of competition among health plans, strategies to address
the problem of biased selection must be pursued.
ADDRESSING BIASED SELECTION
The health reform plan addresses biased selection in several ways:
Universal coverage and insurance reform address the
problem of health plans cherry-picking only healthy
risks.
In the short-run, limited premium adjustments and
mandatory reinsurance is used to protect health plans
from adverse selection.
Within a couple years after reform, a prospective risk-
adjustment system will be developed. Premiums paid to
health plans will be adjusted to reflect the health
status of the plan's enrollees.
Universal Coverage and Insurance Reform
Many of the risk selection problems that exist in the current
system are addressed through assuring universal coverage to
comprehensive benefits and through insurance reforms.
Universal coverage. In the current system, insurers
worry that people with or at high-risk for health
problems are more likely to seek coverage. In the
reformed system, everyone will have health insurance
coverage. People will be unable to wait until they have
health problems to choose coverage, so this component of
the adverse selection problem will disappear.
Uniform comprehensive benefit package. In the current
system, insurers worry that less healthy people tend to
choose richer benefits. In the reformed system, everyone
will have the same comprehensive benefits package. There
will be less reason for high-risk or low-risk people to
systematically choose a particular health plan because of
the level of benefits offered.
Guaranteed issue and renewability of coverage. Insurers
use medical underwriting and a host of other strategies
to discourage enrollment by higher-risk people. Under a
reformed system, all health plans will be required to
accept any enrollee who applies for coverage. Plans will
not be able to discourage enrollment based on health
status.
Enrollment through alliances. Under the current system,
health plans can influence the composition of their
enrollment through their marketing activities. Under a
reformed system, enrollment will occur through alliances.
Regulations can be used to assure that marketing is not
directed only toward more desirable areas. Standard
service areas for integrated health plans could be used
to limit the ability of health plane to avoid higher-cost
areas.
Satisfaction and disenrollment surveys. Health plans can
discourage higher-risk enrollees by giving them poor
service or failing to contract with providers that can
address special needs. Under a reformed system,
enrollees can be periodically surveyed to detect problems
with health plan service. People who switch plane can be
surveyed to determine if they left their former plan
because of poor service or inadequate access to
specialists. Problems uncovered can be addressed through
alliance contract negotiations or state certification
Mandatory Reinsurance
Mandatory reinsurance will be used to protect health plans that
attract a disproportionate share of enrollees with high-cost or
chronic illnesses.
Under a reinsurance approach, health plans share the costs of
treating higher-cost or chronically ill enrollees. If a health
plan has a high-cost claim or enrollee, the reinsurance system
reimburses a portion of a health plan's payments for these cases.
Health plans are required to pay premium to the reinsurance fund
for this protection.
Reinsurance systems are being used today in a number of states as
part of their insurance reform efforts. For example, as part of
its community-rating law, the State of New York created a
reinsurance pool for high-cost cases. Insurers are required to pay
a premium to the reinsurance pool; in exchange they receive lump-
sum or periodic payments from the pool when they have a claim for
one of the conditions covered by reinsurance.
Risk Adjustment to Health Plan Premiums
Short Term Strategy
A short-term strategy to address biased selection will be pursued
that contains both prospective and retrospective components. This
approach was recommended by a panel of experts on risk adjustment
In the short-term, the following measures will be relied upon:
Demographic adjustments to premiums. Cost weights for
demographic cells (age, sex, etc.) will be developed from
National Medical Expenditure Survey (NMES) and private
insurance data sources.
Limited health status adjustments. Adjustments may be
made for perceived health status or the presence of
chronic conditions, based on data collected through the
use of health status surveys. NMES and private insurance
data will be used to develop cost weights in the short
term.
Retrospective adjustments for high cost cases.
Reinsurance will be used to reimburse health plans for
some of the costs associated with high-cost cases or
diagnoses. Reinsurance may reimburse a percent of costs
above a reinsurance threshold or may provide specific
payments for identified high cost conditions, like AIDS
or organ transplantation. Cost weights will be developed
from a private insurance data base (New York State uses
weights developed from Kaiser data)
Geographic adjustment. Adjusters will be developed to
adjust for price (and perhaps utilization) variations
within health alliance areas. Such adjustors already
exist to some extent for Medicare. Cost weights will be
developed from private insurance and Medicare data.
Medium Term Strategy
Within a few (3-5 years) years, health statue risk adjustors will
be developed which rely on diagnosis-based measures. The risk
adjustment system will rely on diagnosis and treatment information
collected through the data and quality information system
implemented as part of health care reform. Reinsurance may
continue to be used for particularly high-cost cases.
Mental Illness
Given the present state of knowledge, mental illness will need to
be treated differently than other conditions in a risk adjuster
system. There is more disagreement about an appropriate patient
classification system than with physical illness, and the severity
and resource demands of patients within a diagnostic category
probably vary more than with physical illnesses. In addition,
underservice is a problem for the severely mentally ill, and a
purely prospective payment could exacerbate the problem. A heavy
reliance on reinsurance will be necessary in the short and medium
terms.
Research and Model Systems
Federal research efforts will be necessary to support the
development of model risk adjustment and reinsurance systems that
can be used by states and alliances. The federal government will
increase its support for new research related to the development
and testing of risk adjustment systems for the short and medium
terms. An on-going program aimed at improving existing risk
adjustment measures and developing new approaches will be
maintained at the federal level.
QUESTIONS AND ANSWERS
Risk-Adjustment Questions and Answers
Q: Researchers and others have been trying to develop a risk-
adjustment system for Medicare for ten years and have not
succeeded. How are you going to develop a system in two years?
Our plan deals with the risk-adjustment problem in two stages.
During the first couple years after reform, we rely on a
combination of demographic premium adjustments and mandatory
reinsurance to address biased selection. Demographic adjusters for
age, gender and area are possible with current technology.
Reinsurance is currently being used in a number of states as part
of small group reform. We also will develop limited health status
adjusters, based in survey information collected from health plan
enrollees.
Beginning several years into reform, risk-adjusters will be
developed which rely on diagnosis-based measures. Health plans
will be paid based on the relative health status of the population
they enroll.
The new quality management system is key to our ability to
develop a sophisticated risk-adjustment system. Current efforts to
implement good risk-adjusters have been frustrated by the lack of
information about the relative health status of enrollees of health
plans, especially HMOs. Our quality management system captures
diagnosis and treatment information about each patient encounter,
which will for the first time give us the ability to evaluate the
relative health status of the enrollees of each health plan.
Q: How did you arrive at this strategy?
During the task force process, we met with the leading experts
in risk-adjustment field. We also met with health plans that are
currently experimenting with or actually using risk-adjustment, for
example to adjust payments to group practices. There was broad
agreement that our approach was appropriate.
Q: Current risk-adjusters explain only a small amount of the
variation of costs for any specific enrollee. Critics question
whether this is enough to protect health plans?
No adjustment system can explain all expected cost variation
at the individual level- much of the variation in costs is random.
The goal is to develop adjusters that predict enough variation in
health care costs so that health plans can compete successfully on
the basis of efficiency.
The issue of how much variation in costs can be "explained" by
risk adjusters is very complicated. For example, critics claim
that current adjusters based on demographic factors, such as age
and gender, explain only about one percent of variation in expected
costs for an individual. This is true. However, these factors
explain quite a bit of the variation in expected costs across
groups, such as the groups of enrollees in two health plans. Thus,
adjustments for age and gender are very important to assure proper
payment to health plans that get a disproportionate share of older
people or woman of child-bearing age.
Several promising risk-adjustment approaches are currently
being developed and implemented. They use prior health care use by
individuals to predict their future costs and have the potential to
explain a meaningful percent of the cost variation that can be
explained. The federal government will be conducting and
sponsoring research efforts and demonstrations to develop and
improve these adjusters over the next couple of years.
Q: Until risk adjusters are perfected, won't health plans have
incentives to avoid higher risk enrollees? How will these people
be protected?
While the incentive may still be there, the insurance reforms
under the proposal euch as community rating, enrollment through
alliances, guaranteed renewability -- effectively climinate the
tools health plans use to cherry-pick.
Q: Critice are concerned that fee-for-service plans suffer from
adverse selection if the risk-adjusters are not good enough. For
example, the fee-for-service plan in the Minnesota public employees
program became financially inviable when managed competition was
put in place there. How will these plans be protected?
We recognize the need to protect fee-for-service plans from
adverse selection. That is why we mandate reinsurance for high-
cost cases. Reinsurance will be required until better risk-
adjusters are developed.