The Senate Health, Education, Labor, and Pensions Committee, chaired by Sen. Chris Dodd (D-Conn), passed a health bill on July 15th that finally laid out the specifics of the biggest overhaul of health care in history. You can read a staff draft of the bill HERE (text file). Here are the highlights.
First, everybody has to be in a “qualified plan” as defined by the Secretary of Health and Human Services. If you can’t prove that you have been insured for every month of the last year, you’ll be assessed a surtax to cover the government covering you. Of course, if you don’t pay taxes, as an increasing number of people don’t, it won’t effect you. If you are an employer, you have to pay a minimum percent or dollar amount of the premium for the plan, but only if you don’t already offer insurance to your employees. If you do, and the plan is ‘qualified’, then you don’t pay the surtax. And how much is the tax? Whatever the Sec of HHS deems is necessary to get everyone to participate.
But what defines a “qualified plan”? The Kennedy bill mandates guaranteed issue and renewal. Everybody can get insurance and nobody can be canceled, regardless of your past health or your lifestyle choices. The plans could not charge more for people who engage in increased risk lifestyles or habits, such as alcoholism, drug addiction, obesity, etc. Each qualified plan must have a modified community rating to pay more to areas of the country where medicine costs more. There can be no caps on annual or lifetime benefits. And family policies must cover ‘children’ up to age 26. Qualified plans must have at least three levels of cost sharing, cover a list of preventive services approved by the government and cover “essential health benefits,” as defined by the new Medical Advisory Council (MAC), who would be appointed by the Secretary of Health and Human Services. The MAC would have control over such services as out patient care, emergency services, all hospitalization, maternity care, mental health, pharmaceuticals, rehab, and any other services that it deemed essential to health. The MAC would also define what was “affordable and available coverage” for different income levels.
The Kennedy bill would expand Medicaid to cover everyone up to 150% of the poverty level, with the federal government paying for all the increased costs to the states. People making between 150% and 500% of the poverty level would be subsidized by the government on a sliding scale. To put that in perspective, a family of four making $110,000 would still get a small subsidy. People living in big cities would get larger subsidies. Of course, this Committee has no ability to write actual tax law to fund this legislation. That’s up to the finance committee.
The largest of all the hurdles in the bill is the “public plan option,” in which the government will offer to include people in Medicare. To sweeten the offer, the legislation calls for physicians to be paid at Medicare rates plus 10%. The legislation makes no mention of the future payments. Nor does it acknowledge that the Sustainable Growth Rate calculations for physician reimbursement from Medicare are currently calling for a 21% cut in compensation. Group health plans with 250 or fewer members would be prohibited from self-insuring, leaving ERISA to big businesses.
The legislation calls for health insurance to be sold through “gateways” set up by state governments that market only “qualified plans.” These “gateways” would have “navigators”, also paid by the state, the enroll people. The organizations receiving these funds could be community organizer groups or unions.
As previously stated, an interesting loophole exists in this bill that would exempt health insurance plans that met the standards of a “qualified plan” that were in existence before the legislation. The effect of this could make it very difficult to change jobs, if the new job was paying the higher cost of mandated insurance.
Another huge hurdle is the definition of who must get insurance. The bill defines an “eligible individual” as “a citizen or national of the United States or an alien lawfully admitted to the United States for permanent residence or an alien lawfully present in the United States.” This appears to open the door to medical coverage to every illegal alien who is granted some type of amnesty.
The only hope for controlling costs in this bill is the re-introduction of the gatekeeper concept that was tried 20+ years ago. Under this scheme, the gatekeeper, called a “medical home”, is a patient’s private practitioner would have the control of whether a specialty referral was made, tests were ordered, or hospitalization occurred. He would have 10% of his compensation held back each year until it was known whether he met the limits on spending on each patient. If he failed to meet the spending goals for each patient, he would have to pay for the care from his own pocket.
What are the potential effects of the Kennedy-Dodd bill, should it pass? First is the price tag. Those who pay most of the tax revenues of the country would see their taxes rise significantly. Businesses will have to incorporate these increased costs by lowering wages, hiring fewer people, or moving to other areas of the globe. Small business could be hardest hit, though there is talk of a small business exemption. But it is unlikely that tax increases on the upper income taxpayers would be enough. President Obama has already started to reverse his campaign pledge that those making less that $250,000 “would not see [your] income tax rise one penny.” He is now admitting that medical benefits would need to be taxed. So if someone making $80,000 per year was receiving a $10,000 per health plan, he would be taxed on $90,000, thereby increasing his taxes up to $2,000 without any increase in salary.
The biggest effect would be 50 million new patients. With the current saturation of many private physician practices, many of those patients would come to the ED. Convincing gatekeepers to refer and specialists to accept these patients could get significantly more difficult, exacerbating wait times and holds.
Another huge effect would be the power of the Medical Advisory Committee. Unelected, virtually unsupervised individuals would control what health care looked like in this country, who was covered, who paid, and what services were covered at what compensation.
Cost shifting from the healthy to the unhealthy and those who engage in risky lifestyles would increase dramatically. The only control of this would be through lobbying the members of the MAC.
And finally, this bill would not effect members of Congress despite Mr. Obama’s campaign promise to offer Americans “the same kind of coverage that members of Congress give themselves."
Mark Plaster, MD, is the Executive Editor of Emergency Physicians Monthly