Bullet-point presentations currently circulating among members of the Senate Finance Committee offer a snapshot of the options and alternatives being considered for the Committee's reform bill which is slated for markup in mid-July, although this timing may shift.
In sharp contrast to the bill language introduced in the House and by the Senate Health, Education, Labor and Pensions Committee, the Finance Committee presentations indicate a preference for consumer cooperatives over a public plan. Under the cooperatives proposal, applicants would be required to meet the standard for nonprofit, participating mutual insurers. Federal seed money in the form of grants for risk capitalization used to meet solvency requirements and loans for initial planning and operating costs (which would have to be repaid) would be made available to start-up cooperatives throughout the country. An advisory board would make recommendations to the Secretary who would have the final authority to approve the business plans and the distribution of federal funds.
Insurance Market Reforms
Insurance market reforms include state-based "self-sustaining" insurance Exchanges for facilitating the purchase of insurance coverage, guarantee issue including no health status rating or pre-existing provisions, and an adjusted community rate. Everyone would be required to have health coverage. The penalty for noncompliance would be based "on a percentage of the average cost of the lowest cost option available." Individuals and families up to 300 percent of federal poverty level (FPL) could receive tax credits to help offset the cost of private insurance premiums.
Benefit Option Categories
Benefit options would fall into four categories: Bronze, Silver, Gold and Platinum with the minimum creditable coverage for "platinum" coverage slated at 90 percent of an individual's estimated expenses; for "gold" 81 percent; "silver" 73 percent; and "bronze" 65 percent.
Mandating Employer Coverage
One option being proposed would not require employers to provide insurance coverage to workers. Instead, companies receiving a tax credit in the insurance Exchange or those with Medicaid-covered workers would be required to help finance coverage for these workers. Another provision would prohibit workers from leaving employer-sponsored coverage and opting into the insurance Exchange unless the coverage offered was determined to be unaffordable (defined as exceeding 12.5 percent of income), addressing crowd-out concerns. New and small businesses offering health coverage though the insurance Exchange would be eligible for a temporary tax credit and tax incentives for initiating wellness programs in the workplace.
Taxing Employer-Sponsored Coverage
Various options are proposed for limiting allowable tax-free health benefits which the reform plan defines as including supplemental health plans (e.g., vision, dental), flexible spending account (FSA) and health savings account (HSA) contributions. Alternatives discussed include taxing benefits on annual incomes in excess of $100,000 for individuals and $200,000 for families and taxing the value of benefit coverage above $6,182 to $7,420 for individuals and $15,700 to $18,840 for families. Tying the federal tax to income is projected to garner $161.9 billion in savings over ten years. Capping the amount of insurance coverage subject to the tax would generate savings of $418 billion over the same period.
Medicaid Expansion Populations
Medicaid eligibility for children and pregnant women would be 133 percent of the FPL, and 100 percent FPL for parents and childless adults, phased in over three years. The states would receive a temporary increase in federal funding over five years for expansion populations. Other Medicaid provisions include a one percent increase in the federal match for states that cover preventative services and an option for developing medical homes and improving care coordination and transitional care for chronically ill enrollees.
Medicare Sustainability Trigger
Congress would establish a mechanism through which Medicare payment policy could be adjusted automatically over the long run. Under the process outlined by the Senate Finance Committee, a target would be set for Medicare spending "that ensures continued sustainability and bends the Medicare cost curve (e.g., 1.5 percent reduction from projected growth rate.)" If that target is not met, an automatic mechanism would be triggered to achieve those spending reductions. Every other year, the Medicare Payment Advisory Commission (MedPAC) would make recommendations to Congress for policy-driven approaches to achieve those reductions, and Congress would consider these policies based on an up or down vote. If Congress enacts the MedPAC recommendations, any savings achieved would count toward the overall spending reduction goal.