Reducing Medical Costs Largely Ignored

Affordability remains the primary issue in Congress.

As I've noted many times, affordability will be a huge concern if nothing is done to curtail the skyrocketing health care costs we're seeing. We have to rein in the cost of treatment at the same time we increase access and insurance affordability. There is little being done to address the ACTUAL COST of health care. See earlier blog entries for the specifics on how to do it. Congress continues to miss the vital target.


The article below does however do a nice job of laying out the actual cost to consumers in the various proposals Congress is considering. I think this article will be informative for readers with questions about plans for consumer cost-shares (premium, subsidies, deductibles) and the expansion of Medicaid. There's a lot of detail here but its important stuff.


Debate Over Affordability Remains At Forefront Of Health Reform
Inside Health Reform
August 19, 2009

While the public plan option -- and its potential impact on private insurance -- have been at the forefront of the debate over health care reform for months, advocates of universal coverage, one of the main tenets of President Barack Obama’s health reform promise, are still fighting over what they see as a perhaps even greater concern: making sure insurance is affordable, especially as opposition to an individual mandate grows in states across the country.
The generous mix of subsidies and Medicaid expansion in the House bill would cost $1.042 trillion (excluding a $239 billion fix to Medicare physician payments, which isn’t paid for), according to a recent rundown by the House Education and Labor Committee: About 60 percent to provide affordability credits that help Americans buy coverage and 35 percent in additional funding to Medicaid and the Children’s Health Insurance Program (CHIP) to strengthen the programs and get more people insured, with the rest going to tax credits for small businesses who want to offer coverage to their employees.
The Senate health committee bill, meanwhile, has been scored by the Congressional Budget Office at a little over $600 billion, but doesn’t include the Medicaid expansion. And a Senate Finance draft has been scored at less than $900 billion but likely includes a physician payment fix that’s much less ambitious than the House version.
That panel’s bipartisan “gang of six” has yet to unveil a compromise as lawmakers seek agreement on an array of policies -- including Medicaid expansion, subsidy levels and limits on cost-sharing.

Differences remain notably on the question of what minimum percentage of medical costs health insurance should pick up, with Sen. Mike Enzi (R-WY) in particular continuing to push for a lesser share than the 65 percent currently under discussion.
“I am sorry that the topic of affordability has not gotten as much attention as I think it deserves,” says Ron Pollack, the founding executive director of Families USA. “The size of subsidies is going to be critically important for how the American public reacts to health care reform.”

Families USA is particularly happy with the expansion of Medicaid in the House bill, which would cover all legal residents up to 133 percent of the federal poverty level (about $29,300 a year for a family of four). The Senate health committee does not have jurisdiction over Medicaid, but it has stated its intention to cover everyone up to 150 percent of FPL.
An early draft of the Senate Finance Committee bill wasn’t as generous, with the “gang of six” compromise extending Medicaid to children and pregnant women up to 133 percent of the FPL and to parents and childless adults up to 100 percent of FPL. But the expansion is now at 133 percent for all.
Pollack and other advocates say Medicaid is a better choice for the low-income because it covers services such as screenings and transportation while providing cost-sharing protections that don’t exist in the private sector. But the Finance Committee, which doesn’t plan to seek tax increases outside of the health care system and must therefore keep federal costs low, is also running into opposition from state officials who don’t want to pick up the tab, now or later, for a federally mandated expansion. In particular, a proposal last month by Finance Chair Max Baucus (D-MT) that states use bonds to fund the expansion led to a revolt by governors who placed a conference call to Baucus.
The Finance Committee is also at odds with the other panels in terms of subsidies, which it proposes to extend to people making up to 300 percent of the FPL ($66,150 for a family of four) versus 400 percent (or $88,200) in the House and Senate health committees, which is what Families USA and other advocacy groups want.
But lawmakers on the panel have other policies at their disposal to keep costs low for consumers, notably in the design of benefits.
In particular, they have yet to reach agreement on what percentage of medical bills -- the actuarial value -- insurance companies will have to foot, at a minimum. The committee started at 76 percent, leaving consumers to pay the remaining 24 percent of their bills; after insurance companies weighed in, the current split is 65 percent -- 35 percent. Finance members are also considering tiers and a maximum out-of-pocket limit for catastrophic events.
The health committee, meanwhile, is offering three tiers of plans:
• Basic Plan: Requires the qualified health plan to provide coverage for not less than 76 percent of the total allowed costs of the benefit provided. Limits the out of pocket limitation (excluding premium costs) from being greater than the limit for high deductible plans that are eligible for HSAs ($5,950 per person/$11,900 per family in 2010, according to the IRS).
• Tier II: Requires the cost sharing percentage to be equal to the cost sharing percentage of the basic plan increased by 8 percentage points, or 84 percent. Restricts the dollar value of the out of pocket limitation to 50 percent of the dollar value of the basic plan ($2,975 per person/$5,950 per family).
• Tier III: Requires the cost sharing percentage to be equal to the cost sharing percentage of the basic plan increased by 17 percentage points (or 93 percent). Restricts the dollar value of the out of pocket limitation to 15 percent of the dollar value of the basic plan ($829.5/$1,785).
The House, meanwhile, offers three levels of plans -- basic, enhanced and premium -- with the newly created Health Choices Commissioner tasked with coming up with cost-sharing rules for each. The House has also set annual limits on out-of-pocket costs at $5,000 for an individual, $10,000 for a family.
In the Finance Committee, Sen. Enzi, in particular, has pushed for a lower actuarial value floor -- one that’s still higher than 50 percent -- “to make sure that there are affordable health insurance plans with affordable premiums,” particularly for young people, an aide tells Inside Health Policy. (Enzi is pushing for a rate differential between younger and older people that’s greater than the 2:1 allowable under the House and Senate health bills for the same reason).
In addition, the aide says, “plans with lower actuarial values could help bring down health care spending by putting the onus on individuals to keep costs down.”