President Obama’s Blueprint Takes Senate Proposal For Foundation

On February 22, President Barack Obama released a health reform proposal to be used as the basis for discussion at the February 25 health care summit. The President’s proposal primarily makes some changes to H.R. 3590, the Senate-passed Patient Protection and Affordable Care Act, with some concessions to the House bill (forget the public plan option). Retained with modifications are provisions for the excise tax on so-called “Cadillac” plans, phase-out of the Medicare donut hole, and state-based health insurance exchanges. (not federal, national exchanges, as proposed in the House).

Also included is the provision from the House and Senate bills is health insurance premium controls, fortified by the President’s proposal to create a new Health Insurance Rate Authority to provide needed oversight at the federal level and help states determine how rate review will be enforced and “monitor insurance market behavior.” This new HIRA appears to be a response to the recent attempt by Anthem Blue Cross of California to raise individual health insurance premiums by up to 39%.

Meanwhile, while our legislators fiddle on health reform, “Insurance Companies Prosper, Families Suffer” a report on the U.S. Department of Health and Human Services-managed Web site Health Reform.gov asserts. The report reviews health insurance premiums requested by the largest health insurers over the last year in various states, such as 56% in Michigan, 24% in Connecticut, 23% in Maine, 20% in Oregon, and 16% in Rhode Island... In response, California Sen. Dianne Feinstein has vowed to introduce legislation to prevent insurers from raising premiums “unfairly.” The Commonwealth Fund in 2009 issued several reports examining the economic and coverage effects of health insurance premiums and out-of-pocket costs.

An HHS review of the literature found that “some of the premium increases requested by insurance companies are 5 to 10 times larger than the growth rate in national health expenditures,” while “profits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation.” Furthermore, the five largest health insurance companies – WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana – took in combined profits of $12.2 billion, up 56% over 2008, and their CEOs were each compensated up to $24 million in 2008.

At any rate, opinions on what needs to be done for health reform continue to pour in. In a statement issued on February 19, Jeffrey C. McGuiness, President and CEO of the the HR Policy Association, said that “policy makers should give far greater consideration to the views of the employer community which provides billions of dollars annually to fund the nation’s employment-based system of health care and administers health care programs covering millions of Americans through their self-insured plans….Although the proposals passed by the House and Senate last year embraced several key elements needed for true reform, four essential elements are still missing—robust provider payment reform, aggressive actions to advance transparency, increased individual responsibility, and medical malpractice reform.”.

The Society of Actuaries also is providing its members’ suggested “ideal components of a health reform package,” in the first of four articles published in the February/March 2010 issue of Actuary. .Although, as the article noted, there are nearly as many actuary opinions as there are actuaries, many agreed that cost control and efficiency must be given priority and that likely there would a need for a broad-based tax to fund coverage expansion.

All of this shows that we can at least lay the foundation for health reform then continue to upgrade the structure.