1
500
23
-
https://clinton.presidentiallibraries.us/files/original/69028f52902b266da06317aadfb9d406.pdf
ab75844230d8c025796c9e64ad666ea8
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records (Segment 10)
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Robert Boorstin
Alice Dunscomb
Date
A point or period of time associated with an event in the lifecycle of the resource
1992-1993
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Description
An account of the resource
This collection is the tenth segment of materials related to the Health Care Task Force. It includes the files of Robert Boorstin, Alice Dunscomb and the Health Care Delivery Room Central Files, also referred to as the General Files. The collection contains calendars, correspondence, memoranda, newsletters, polls, reports, statements, talking points, and drafts of Health Care Economics, Health Care Reform and the Health Security Act. The General Files primarily contain clippings regarding various issues associated with the Health Care Task Force as well as advertisements, analysis, articles, correspondence, draft legislation, fact sheets, legislative summaries, notes, position papers, press releases, publications, reports, scheduling materials, statements, tables, talking points, testimonies, and transcripts.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Extent
The size or duration of the resource.
1,228 folders in 63 boxes
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Briefing Book -Council of Economic Advisors [binder]
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 22
<a href="https://catalog.archives.gov/id/40483517" target="_blank" rel="noreferrer">National Archives Catalog Description</a>
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Source
A related resource from which the described resource is derived
12093636
42-t-12093636-20060885F-Sg10-022-004-2016
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/23/2016
-
https://clinton.presidentiallibraries.us/files/original/c2de8814856cadf35bf7904d90ae91fa.pdf
67de61bf21dc1756f3ab9c3650666553
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records (Segment 10)
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Robert Boorstin
Alice Dunscomb
Date
A point or period of time associated with an event in the lifecycle of the resource
1992-1993
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Description
An account of the resource
This collection is the tenth segment of materials related to the Health Care Task Force. It includes the files of Robert Boorstin, Alice Dunscomb and the Health Care Delivery Room Central Files, also referred to as the General Files. The collection contains calendars, correspondence, memoranda, newsletters, polls, reports, statements, talking points, and drafts of Health Care Economics, Health Care Reform and the Health Security Act. The General Files primarily contain clippings regarding various issues associated with the Health Care Task Force as well as advertisements, analysis, articles, correspondence, draft legislation, fact sheets, legislative summaries, notes, position papers, press releases, publications, reports, scheduling materials, statements, tables, talking points, testimonies, and transcripts.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Extent
The size or duration of the resource.
1,228 folders in 63 boxes
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Conversations on Health, Robert Wood Johnson Foundation -Washington, D.C. 3/26/93 [binder]
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 22
<a href="https://catalog.archives.gov/id/40483516" target="_blank" rel="noreferrer">National Archives Catalog Description</a>
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Source
A related resource from which the described resource is derived
12093636
42-t-12093636-20060885F-Sg10-022-003-2016
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/23/2016
-
https://clinton.presidentiallibraries.us/files/original/d694fe7e6eb34a6a16f803b5a5af7882.pdf
ec6d00902498cd45ba0638018d886595
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records (Segment 10)
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Robert Boorstin
Alice Dunscomb
Date
A point or period of time associated with an event in the lifecycle of the resource
1992-1993
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Description
An account of the resource
This collection is the tenth segment of materials related to the Health Care Task Force. It includes the files of Robert Boorstin, Alice Dunscomb and the Health Care Delivery Room Central Files, also referred to as the General Files. The collection contains calendars, correspondence, memoranda, newsletters, polls, reports, statements, talking points, and drafts of Health Care Economics, Health Care Reform and the Health Security Act. The General Files primarily contain clippings regarding various issues associated with the Health Care Task Force as well as advertisements, analysis, articles, correspondence, draft legislation, fact sheets, legislative summaries, notes, position papers, press releases, publications, reports, scheduling materials, statements, tables, talking points, testimonies, and transcripts.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Extent
The size or duration of the resource.
1,228 folders in 63 boxes
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Conversations on Health, Robert Wood Johnson Foundation -Des Moines, Iowa 3/15/93 [binder]
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 22
<a href="https://catalog.archives.gov/id/40483515" target="_blank" rel="noreferrer">National Archives Catalog Description</a>
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Source
A related resource from which the described resource is derived
12093636
42-t-12093636-20060885F-Sg10-022-002-2016
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/23/2016
-
https://clinton.presidentiallibraries.us/files/original/76ae4f5670087a256fd1b1f3de8d1389.pdf
5ea4caba8075710786817d9b9e8aa26e
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records (Segment 10)
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Robert Boorstin
Alice Dunscomb
Date
A point or period of time associated with an event in the lifecycle of the resource
1992-1993
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Description
An account of the resource
This collection is the tenth segment of materials related to the Health Care Task Force. It includes the files of Robert Boorstin, Alice Dunscomb and the Health Care Delivery Room Central Files, also referred to as the General Files. The collection contains calendars, correspondence, memoranda, newsletters, polls, reports, statements, talking points, and drafts of Health Care Economics, Health Care Reform and the Health Security Act. The General Files primarily contain clippings regarding various issues associated with the Health Care Task Force as well as advertisements, analysis, articles, correspondence, draft legislation, fact sheets, legislative summaries, notes, position papers, press releases, publications, reports, scheduling materials, statements, tables, talking points, testimonies, and transcripts.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Extent
The size or duration of the resource.
1,228 folders in 63 boxes
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Conversations on Health, Robert Wood Johnson Foundation -Tampa, Florida 3/12/93 [binder]
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 22
<a href="https://catalog.archives.gov/id/40483514" target="_blank" rel="noreferrer">National Archives Catalog Description</a>
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Source
A related resource from which the described resource is derived
12093636
42-t-12093636-20060885F-Sg10-022-001-2016
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/23/2016
-
https://clinton.presidentiallibraries.us/files/original/59d708148c289eb4a816b7a24242665f.pdf
00440e0ce0f3a6dc4d058a906f2de59a
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records (Segment 10)
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Robert Boorstin
Alice Dunscomb
Date
A point or period of time associated with an event in the lifecycle of the resource
1992-1993
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Description
An account of the resource
This collection is the tenth segment of materials related to the Health Care Task Force. It includes the files of Robert Boorstin, Alice Dunscomb and the Health Care Delivery Room Central Files, also referred to as the General Files. The collection contains calendars, correspondence, memoranda, newsletters, polls, reports, statements, talking points, and drafts of Health Care Economics, Health Care Reform and the Health Security Act. The General Files primarily contain clippings regarding various issues associated with the Health Care Task Force as well as advertisements, analysis, articles, correspondence, draft legislation, fact sheets, legislative summaries, notes, position papers, press releases, publications, reports, scheduling materials, statements, tables, talking points, testimonies, and transcripts.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Extent
The size or duration of the resource.
1,228 folders in 63 boxes
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Campaign Tool Box NHCC [National Health Care Campaign] [binder]
Creator
An entity primarily responsible for making the resource
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 10
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 21
<a href="https://catalog.archives.gov/id/40483513" target="_blank" rel="noreferrer">National Archives Catalog Description</a>
<a href="https://clinton.presidentiallibraries.us/items/show/49022">Collection Finding Aid</a>
Source
A related resource from which the described resource is derived
12091515
42-t-12091515-20060885F-Sg10-021-070-2016
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/22/2016
-
https://clinton.presidentiallibraries.us/files/original/36a28dd51076847d24096e0ec25b28b9.pdf
c86a8f6f67f80a328092f0f7e8cb6da5
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [Binder] [4]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT
Beginning in January 1996, benefits offered under the Medicare program expand to
cover outpatient prescription drugs.
Any Medicare beneficiary who elects to enroll in the Part B program (97 percent of
the Medicare population) automatically enrolls in the new prescription drug benefit.
As with other Part B benefits, the Medicare prescription drug benefit is funded by both
general revenues and beneficiary premiums. The Part B premium increases to cover the new
benefit. Premiums cunently finance 25 percent of the cost for Part B coverage. Thus,
beneficiaries would pay 25 percent of the cost of the new drug benefit. Other rules related to
enrollment in Medicare Part B also apply to the prescription drug benefit.
CO-PAYMENTS, DEDUCTIBLES AND CAPS
The new drug benefit carries a $250 annual deductible. The amount of the deductible
is set at a variable rate to assure that the same number of beneficiaries meet the deductible
each year as during the first year of coverage. Beneficiaries also pay 20 percent of the cost
of each prescription with an annual limit on out-of-pocket expenditures of $1,000.
COVERAGE
The Medicare benefit covers all drugs and biological products approved by the Food
and Drug Administration prescribed under medically accepted indications as defined in the
American Medical Association Drug Evaluations, the American Hospital Formulary Service
and the United States Pharmacopeia.
Certain pharmaceutical products not covered by the Medicaid program under section
1927(d) of the Social Security Act, including drugs for the treatment of infertility,
medications used to treat anorexia and drugs prescribed for cosmetic purposes, are not
covered. Exceptions to current Medicaid exclusions include barbiturates and benzodiazepines.
The Secretary of the Department of Health and Human Services may require
physicians to obtain approval before prescribing certain medications based on evidence that
they are subject to misuse or inappropriate use or because the Secretary determines that they
are not cost effective.
(8/6/93)
201
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL
All new drugs approved by the FDA are covered under the benefit. However, the
Secretary has the authority to negotiate prices with manufacturers of new pharmaceutical
products if the Secretary concludes that certain products are excessively or inappropriately
priced. Manufacturers that refuse to negotiate lose eligibility for reimbursement of any drug
product by any federal program or health alliance certified by the states. The Secretary also
has the discretion to exclude from coverage drugs listed in Section 1927(d) of the Social
Security Act, except for benzodizephines and barbiturates. Further, the Secretary has the
authority to establish maximum quantities per prescription and limits on the number of refills.
In a case in which the Secretary determines that new drugs are inappropriately or
excessively priced, the Secretary has the authority to establish a price for Medicare purposes
based on negotiations with manufacturers. If a manufacturer refuses to negotiate or the
Secretary is unable to negotiate a price that the Secretary determines to be reasonable, the
Secretary has the authority to exclude the drug from coverage under Medicare.
COST CONTAINMENT
As a condition of participation in Medicare and Medicaid, drug manufacturers sign
rebate agreements with the Secretary to have reimbursement provided for single source and
innovator multiple source drugs covered under Medicare. Rebates are paid to the Secretary
on a quarterly basis.
Manufacturers pay a rebate to the Medicare program based on the difference between
the AMP to the retail class of trade and the weighted-average price of the drug in the nonretail market. The Secretary also may conduct verification surveys of the AMP.
Manufacturers that increase prices at a rate higher than inflation on single source and
innovator multiple source drugs pay an additional rebate on particular drugs. The baseline
price is the average manufacturers' price from April through June, 1993.
(8/6/93)
202
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAtr
The new benefit provides incentives to encourage the use of generic drugs. The
benefit only covers generic drugs unless the physician indicates that a brand-name medication
is required. The Secretary may require that physicians obtain approval before prescribing
specific brand-name products if a generic substitute is available.
REIMBURSEMENT
For brand-name drugs, reimbursement is the lower of the 90th percentile of usual and
customary charges in a previous period or the pharmacists' estimated acquisition cost plus a
professional fee of $5 for participating pharmacies, indexed to the Consumer Price Index.
For generic drugs, Medicare pays the lower of the pharmacist's usual and customary
charge or the median of all generic prices (times the number of units dispensed) plus a $5 per
prescription dispensing fee, indexed to the Consumer Price Index.
Participating pharmacies accept assignment on all prescriptions. Non-participating
pharmacists receive $2 less per prescription.
CHANGES IN PRIVATE INSURANCE REQUIREMENTS
When the Medicare drug benefit takes effect, private insurance policies provided by
former employers either reduce the premium charged to Medicare beneficiaries to account for
the change in coverage or increase coverage for other health services by an amount equal to
the actuarial value of the prescription drug benefit.
Private insurance plans may cover Medicare deductibles and co-payments for
prescription drugs.
SUBSIDIES
Low-income Medicare beneficiaries receive the same financial protection for out-ofpocket costs associated with the drug benefit as provided for other Medicare cost sharing.
(8/6/93)
203
�WORKING GROUP DRAFT
PRIVILEGED ANDL-CONriDENTTAL *
REVIEWS
The Medicare Drug Use Review program parallels the program established in OBRA
90 for Medicaid. Participating pharmacists are required to offer counseling to Medicare
customers on the use of medications.
The Secretary of the Department of Health and Human Services establishes a national
system of Electronic Claims Management as the primary method for determining eligibility,
processing and adjudicating claims, and providing information to pharmacists about the
patient's drug and use under the Medicare drug program.
[HHS proposes: The Secretary contracts with one or more regional carriers using
alternative methods including risk.]
9
(8/6/93)
204
��WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTIAL
MEDICAID
Health plans receive a separate reimbursement for coverage of Medicaid recipients.
•
In order to avoid sudden changes in government and private sector costs
for Medicaid recipient coverage, health plans receive a separate
Medicaid reimbursement.
•
States, through Medicaid or health alliances, are responsible for
determining the capitation rates which health plans receive for coverage
of Medicaid recipients.
•
Payments to health plans for Medicaid recipients are limited by current
Medicaid costs for covered services.
•
Separate capitation rates are determined for coverage of SSI-related
disabled persons on Medicaid and for others on Medicaid.
Medicaid provides "wrap-around" coverage.
•
Alliance health plans cover the comprehensive benefits of the new
benefit package.
•
Medicaid becomes the secondary payer, providing coverage for current
Medicaid benefits not provided, or of limited duration or scope, in the
new benefit package, assuring that Medicaid beneficiaries do not
experience a loss of benefits.
States must maintain current levels of Medicaid spending in the new system.
INTEGRATION OF MEDICAID RECIPIENTS
Medicaid recipients are integrated into regional alliances.
For the comprehensive services in the benefit package, the following Medicaid
recipients are covered by alliance-offered health plans.
(8/6/93)
205
�WORKING GROUP DRAFT
PRIVILEGED ANDXONHBENTIftfc-
All Medicaid-eligible non-SSI-related persons under age 65
All Medicaid-eligible SSI-related disabled persons under age 65 not eligible
for Medicare.
Workers and nonworkers on Medicaid have the same financial requirements as others.
For acute care coverage, Medicaid recipients have the same financial responsibilities as nonMedicaid recipients in the alliance.
Medicaid recipients take part in the same health plan enrollment process, with the
same choices for health coverage, as others. They choose from the same menu of plans as
non-Medicaid recipients during the same annual enrollment period. They may choose plans
costing less than the weighted-average plan for a reduced premium or pay the added costs for
enrollment in a more expensive plan. Like others, they are guaranteed continuous coverage in
a health plan regardless of work situation.
REIMBURSEMENT OF MEDICAID RECIPIENTS
Health plans, as a condition for offering coverage through the alliance, must accept
individuals eligible for Medicaid and contract separately for reimbursement for their coverage.
Health plans with approved contracts with regional alliances are considered to be
qualified to enroll Medicaid recipients. Health plans qualified by regional alliances are not
subject to separate Medicaid approval procedures under current requirements for contracting
with HMOs.
Plans contract with states, through their alliances or Medicaid agencies, for a
capitation rate and maximum capacity for covering the Medicaid-eligible disabled population
described above and for the costs and capacity for covering the other Medicaid recipients
under age 65. The coverage must be for the comprehensive benefit package. Separate rates
are determined for each group.
Total capitated payments for coverage of non-disabled Medicaid recipients and for
coverage of disabled Medicaid recipients specified cannot exceed 95% of:
•
(8/6/93)
Each state's per capita spending for Medicaid on behalf of the
recipient group to pay for services provided in the
comprehensive benefit package
206
�WORKING GROUP DRAFT
PRIVILEGED AND-GONFfBENTIAL
•
In the year prior to implementation of reform
•
Projected forward by the budgeted growth in the state's weighted-average
premium for their alliances
Multiplied by the number of recipients enrolling.
Capitated payments for disabled Medicaid recipients are risk-adjusted.
The federal and state shares of these and other Medicaid costs continue as under
current law.
For a given month, a health plan receives the capitated payment called for in its
contract for each participant enrolled in Medicaid on the first of that month. Capitated
payments are not provided for non-disabled participants in a family in which some members
are not covered by Medicaid.
MEDICAID AS A PAYER
Medicaid continues as a payer for any individual with alliance or employer-sponsored
coverage. Medicaid provides secondary coverage for services that are currently mandatory
and for any optional services chosen by the state if those services are not provided or are
limited in duration or scope in the comprehensive benefit package.
Cost-sharing, including deductibles and co-payments required under alliance plans, is
reduced for Medicaid eligible recipients to the same level of nominal cost-sharing as under
current Medicaid law. For plans, the reduction in cost sharing is part of the negotiated
capitated rate or a separate reimbursement from Medicaid.
STATE MAINTENANCE OF EFFORT
States maintain spending for the acute-care portion of health coverage under Medicaid
at a level equal to its share of total Medicaid spending for services covered in the nationally
guaranteed benefit package in the year prior to implementation of reform. That figure is
projected forward by the budgeted growth in the State's weighted-average premium for the
state population not covered by Medicaid.
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These expenditures pay health insurance premiums in alliances on behalf of
individuals eligible for Medicaid and, if additional resources exist, other population groups.
The Board makes adjustments as necessary in the amounts required of individual states so
long as the total Medicaid maintenance of effort remains constant. The Board may increase
the payments for "low effort" states (i.e., those with spending that is substantially below their
revenue base).
ELIGIBILITY
All current categories of mandatory and optional Medicaid eligible persons remain in
place and no further options are added to current law.
Eligibility determination and administration remains the same as current law.
IMPLEMENTATION
These provisions go into effect on the same date that states implement health reform.
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[ALTERNATIVE VERSION OF MEDICAID POLICY: DRAFTED BY HHS
AND AGREED TO AS POLICY BY WHITE HOUSE STAFF; CHOICE
BETWEEN TWO VERSIONS DEPENDENT ON COST ESTIMATES]
ESTABLISHMENT OF A SINGLE FINANCING POOL FOR PLAN PAYMENTS
Integration of coverage and financing of Medicaid is preferred. However,
consideration of this option awaits a definitive estimate of its effect on overall national and
federal costs.
The previous option provides alliance coverage for Medicaid recipients, but the plans
in which they enroll receive payments from separate financing pools.
•
Providing plans with separate payments for Medicaid non-disabled recipients,
Medicaid disabled recipients and for non-Medicaid alliance members requires a
complex financing structure and the maintenance of the Medicaid
administrative and eligibility structures for recipients seeking acute care
coverage.
•
It also requires added protection to avoid incentives for plans to treat
Medicaid recipients differently from others.
The preferred option to greatly simplify the system would provide plan payments
irrespective of an enrollee's Medicaid status.
•
Instead of having three separate payments for a plan, a plan would
receive a single payment (adjusted for risk) for each enrollee.
•
(8/6/93)
States would no longer need to track enrollees in alliance
health plans as they moved in and out of Medicaid in
order to determine the appropriate plan payment.
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•
PRIVILEGED AND -CONFIDENTtAIr
As in the previous option, providers would receive the
same payment from a health plan for a service provided
to a Medicaid and a non-Medicaid recipient.
Competition and the constraints of the state and national
health budget would limit overall payments to the plan.
This would avoid providing a windfall to providers who
will receive increased payments for their Medicaid
patients.
PHASE-IN OF MEDICAID
If estimates show high premium costs from immediate Medicaid integration are the
result of inexperience among plans with covering the Medicaid population, Medicaid
recipients could be phased in with employment over three years.
•
Blend-in: Under this option, recipients first receive alliance coverage
when they or a head of their family becomes employed. Once in
alliance coverage, they have the same financial requirements as others.
They also remain covered regardless of work situation, even if they
return to welfare or unemployment, and carry Medicaid coverage for
supplemental benefits only.
•
The long-term unemployed remain in Medicaid until after a transition
period. During a three-year transition for non-workers continuously in
Medicaid, states may continue to pay providers directly or contract with
alliance health plans under current Medicaid rules.
After the transition, these remaining nonworkers are integrated
into alliance coverage. SSI-related disabled recipients may be
treated as non-workers or integrated with employed Medicaid
recipients. (SSI-disabled still have the option to continue
Medicaid acute-care coverage.)
[EXCEPT AS NOTED ABOVE, THIS VERSION IS THE SAME AS THE
PREVIOUS OPTION]
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PRIVILEGED AND-CONFIDENTIAIT
STATE MAINTENANCE OF EFFORT
States are held to a maintenance of effort on Medicaid acute care spending as in the
previous policy.
•
The maintenance of effort formula is the same as in the previous policy.
If plans a provided with a single payment, regardless of an enrollee's
Medicaid status, the required level of spending under the MOE would
be transferred as a lump sum to alliances to reduce subsidy costs.
•
During the transition under a plan for phased-in integration of Medicaid
recipients who are employed, maintenance of effort is divided between
coverage for recipients in alliances and direct payments to providers for
recipients still covered in the Medicaid acute care program. Payments
for recipients in alliances is determined in advance for each fiscal
year.
1
SUPPLEMENTAL COVERAGE
Medicaid continues to provide supplemental coverage for all recipients as in the
previous policy.
^he s i z e o f t h i s p o r t i o n i s based on the number o f Medicaid
r e c i p i e n t s under 65 i n t h e year p r i o r t o reform, e s t i m a t i o n o f
the number o f r e c i p i e n t s r e c e i v i n g Medicaid acute coverage a f t e r
reform, and e s t i m a t i o n o f r i s k d i f f e r e n c e s between those i n t h e
A l l i a n c e and those i n Medicaid f o r acute coverage.
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DEPARTMENT OF DEFENSE
The Secretary of Defense considers coordinating the military health system with
national health reform and, if the Secretary determines that coordination is advisable, the
Department develops a plan for implementation.
The Department of Defense maintains the readiness capabilities of military medical
centers as its critical priority and carries out commitments to beneficiaries in the military
health care system at the time that national health reform is enacted.
To develop a program for the military health care system, the Secretary creates an
internal task force and establishes on-going consultation with the branches of the armed
services and with appropriate committees of Congress.
The Secretary is obligated to report to the armed services committees of the United
States Senate and House of Representatives the findings of the task force within one year.
The Secretary may begin implementation of a Department plan for implementation of health
reform 180 days after the submission of the report.
Chapter 55 of Title 10 is amended to permit implementation if the Secretary decides to
coordinate the military system with national health reform.
•
Establishment of Plans
The Secretary may establish military health plans in regions in which military
medical centers are located. Military health plans may contract with civilian
health providers to deliver services to military beneficiaries.
Military health plans conform to requirements and standards for all
health plans. If the military plan meets plan requirements, the military
plan is offered as an enrollment choice within the regional alliance in
which the military medical center is located.
Since military plans may also be subject to federal regulation
under Chapter 55, however, military plans may not be rejected
from participation in regional alliances because of a conflict
between health plan requirements and federal law or regulations
applicable to military health centers.
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Eligibility
In areas in which a military health plan is established, active-duty personnel
automatically enroll in the military health plan. Under current rules for priority
described in section 1086, dependents of active-duty personnel, military
retirees, dependents of retirees and survivors are eligible to enroll. Individuals
who are not currently eligible for care in the military system, are not eligible to
enroll in a military health plan.
Benefits
Military health plans provide the nationally guaranteed benefit package. Under
regulations issued pursuant to section 1112(a), supplemental services may be
provided.
Appropriations and Reimbursement
Payment responsibilities of the Department of Defense, military beneficiaries
and others are established by regulations issued pursuant to section 1112(a).
Regulations provide that each category of enrolled beneficiaries
who have continuously been beneficiaries under sections 1079 or
1086 (without regard to the exclusion of subsection (d) of
section 1086) since December 31, 1993, do not pay higher costs
than under the current military system.
Employers of all military beneficiaries enrolled in a military health plan pay
the employer contribution to the plan. Military health plans receive capitated
payments from Medicare for services to Medicare beneficiaries enrolled in
military plans. [HHS objects to shifting costs from the Department of Defense
to Medicare for services provided in military hospitals to individuals eligible
under both programs. The total cost for such care is $1 billion.]
Each military health plan establishes a financial account for receipts from
military beneficiaries and others on behalf of military beneficiaries enrolled in
the plan. These funds are used for the delivery and financing of care under the
plan.
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VETERANS AFFAIRS
The Department of Veterans Affairs may organize its health centers and hospitals into
health plans or allow them to function as health providers contracting with health plans or
other providers to deliver services.
Health plans organized within the VA system conform to the requirements and
standards for all other health plans. If the VA plan meets requirements for health plans, it is
offered as an enrollment choice within the regional health alliance that serves the area in
which the VA plan is based.
Because VA health plans may also be subject to federal regulation under Title 38 of
the United States Code, however, health alliances may not reject VA health plans from
inclusion within the alliance because of a conflict between health plans requirements and
federal law or regulations applicable to VA health centers.
ELIGIBILITY
All veterans are eligible to enroll in a VA health plan if one exists in their area. If
capacity in the health plan is limited, veterans are eligible to enroll in the following order of
priority:
•
Veterans with service-connected disabilities
•
Veterans meeting the income criteria set forth in 38 U.S.C. §
1722(b) ("low-income veterans")
•
Veterans with higher incomes who do not have serviceconnected disabilities ("higher-income veterans").
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PRIVILEGED AND-GONHDENIIAL
Americans who are not veterans are not eligible to enroll in a VA health plan or to
receive services on a contract basis from a VA health plan. However, dependents of veterans
currently eligible under the Civilian Health and Medical Program - Veterans Affairs
(CHAMPVA) may receive care through a VA health plan. The Secretary of Veterans Affairs
may determine if a VA health plan offers family coverage to the dependents of veterans.
BENEFITS
VA health plans provide the nationally guaranteed comprehensive benefit package to
every eligible person who enrolls. VA health plans may contract with other VA health
centers or non-VA health providers or health plans to deliver the comprehensive benefit
package.
Veterans who enroll in non-VA health plans may not receive care at VA centers for
services in the comprehensive benefit package, except that non-VA health plans may contract
with the VA to provide services in the comprehensive benefit package to veterans enrolled in
non-VA plans.
Veterans with service-connected disabilities and low-income veterans will continue to
be eligible for supplemental benefits not included in the comprehensive benefit package, such
as treatment for post-traumatic stress disorder and certain dental services, at no cost to those
individuals. The VA may offer these supplemental benefits to higher-income veterans at an
additional premium.
APPROPRIATIONS AND REIMBURSEMENT
Federal appropriations for the VA health system cover actual costs of delivering the
comprehensive benefit package for which the VA health plan is not reimbursed by other
sources of revenue on behalf of veterans with service-connected disabilities and low-income
veterans who enroll in a VA plan. Appropriations also cover the actual cost of supplemental
benefits for veterans with service-connected disabilities and low-income veterans.
Higher-income veterans who select the VA plan pay their share of the premium and
any applicable copayment or deductible. Employers of all employed veterans enrolled in a
VA health plan pay the employer contribution.
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The VA has therightto retain all premiums, deductibles, co-payments or other cost
sharing paid to the VA by individuals or employers as well as revenue obtained as
reimbursement by third-party payers.
Medicare reimburses VA health plans and centers for services to higher-income
veterans eligible for Medicare. The Secretary of the Department of Veterans Affairs and the
Secretary of the Department of Health and Human Services will undertake negotiations to
determine the application of Medicare rules and rates of reimbursement for VA services.
[HHS position - HHS believes that the VA should pay for care in VA facilities, and
there should be;no payment from the Medicare Trust Funds.]
VA centers that provide health services on a contract basis to veterans and their
dependents enrolled in other health plans have therightto retain reimbursement from these
plans.
REGULATORY AND MANAGEMENT CHANGES
Restrictions on the Secretary's authority to contract for services are eliminated if
contracting is more cost effective than providing services at VA centers. Redundancies in
oversight activities also are removed.
The Secretary may waive current requirements capping travel funds and restricting use
of personnel funds.
TRANSITION
The provisions of Chapter 17 of Title 38 governing VA health care remain in effect at
any VA health center not functioning as a health plan.
National health reform establishes a revolving fund (with an appropriation to seed the
fund) for investment in the start-up costs of VA health plans. VA health plans may borrow
funds from the revolving fund and obtain multi-year authority to re-pay the fund with
interest. The fund continues without fiscal-year limitations.
(8/6/93)
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PRIVILEGED AND-CQNFIDENTT A T,
INDIAN HEALTH SERVICE
Indian Health Service clinics and hospitals, tribal health centers and urban Indian
programs operate outside regional health alliances. National health reform does not limit
options currently available to tribes to control and operate health facilities under the Indian
Self-Determination and Education Assistance Act. Public Health Service programs for
American Indians and Alaska Natives continue and expand as described under public health
programs.
An Office of Indian Affairs, directed by an Assistant Secretary, is established within
the Department of Health and Human Services to formulate Indian health policy, implement
legislation and develop regulations, coordinate appropriations and negotiate with tribal
governments. The Assistant Secretary and directors of the Indian Health Service and the
Public Health Service consult annually with tribal representatives about health care reform
initiatives that affect Indian communities.
[HHS position: The Indian- Health Service remains under the jurisdiction of the Public
Health System in order to sustain coordination of PHS programs for special populations.]
ELIGIBILITY
American Indians and Alaska Natives currently eligible to receive services at Indian
Health Service are eligible to enroll. All eligible American Indians/Alaska Natives choosing
to receive care through the Indian Health Service must enroll.
American Indians and Alaska Natives may enroll in a health plan offered through the
alliance but receive no federal subsidies for health care costs on the basis of their status as an
American Indian or Alaska Native. American Indians and Alaska Natives who enroll in a
health plan in the alliance are eligible for subsidies available to all Americans on the basis on
income. American Indians and Alaska Natives who enroll in a health plan in the alliance
may receive care through the Indian Health Service if the health plan contracts with the
Indian Health Service.
An Indian Health Service center may serve non-Indians enrolled in health plans in the
regional alliance on a contract basis.
(8/6/93)
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BENEFITS
After a five-year transition during which the Indian Health Service renovates and
expands its clinics, Indian Health Service centers begin to deliver the nationally guaranteed,
comprehensive benefit package.
Indian Health Service centers may contract with other providers or health plans in
order to provide the comprehensive benefit package. Current restrictions on contract services,
including pre-authorization procedures and limitations on eligibility, are removed.
Indian Health Service centers continue to provide the broad range of supplemental
benefits currently available, such as public health nursing and health education, outreach
services, environmental surveillance, health promotion and injury prevention, technical
assistance, training and construction of sanitation infrastructure.
Because American Indians and Alaska Natives are guaranteed access to the
comprehensive benefit package if enrolled in an Indian Health Service center, the current
requirement that an individual live "on or near" a reservation to receive care is repealed.
APPROPRIATIONS AND REIMBURSEMENT
American Indians and Alaska Natives enrolled in an Indian Health Service center are
not required to pay individual contributions for health insurance premiums. Federal
appropriations cover those costs.
The ability of the Indian Health Service to guarantee enrollees in its health plans the
comprehensive benefit package requires adjustment to the Anti-Deficiency Act prohibition
against the Indian Health Service assuming obligations that might put the agency at risk
beyond its appropriation. The appropriations process changes to include a stated amount for
the first three quarters of the fiscal year and "such sums as may be necessary" during the
fourth quarter for unanticipated costs.
The portion of premiums paid by employers on behalf of individual American Indians
and Alaska Natives enrolled in an Indian Health Service center is paid into a fund that
supplements appropriations to the Indian Health Service. If the employer is a tribal
government, the employer is exempt from contributing the employer portion of the premium.
(8/6/93)
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These provisions do not alter the authority of the Indian Health Service to bill
Medicare, Medicaid and other third-party payers for services provided in Indian Health
Service clinics and permit the Indian Health Service to bill those payers for contract care
delivered outside the Indian Health Service.
An Indian Health Service clinic receives reimbursement for non-Indians enrolled in a
health plan in the regional alliance.
REGULATORY AND MANAGEMENT CHANGES
The Indian Health Care Improvement Act is amended to authorize the Secretary of the
Department of Health and Human Services to "contract with persons for services (including
personal services) for the provision of direct health care services" overriding section 37.
104(b) of the Federal Acquisition Regulation, which prohibits federal agencies from awarding
personal-service contracts unless specifically authorized by statute.
(8/6/93)
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FEDERAL EMPLOYEE HEALTH BENEFITS PLAN
Coverage of federal employees under the Federal Employee Health Benefits Plan
(FEHBP) ends as regional health alliances begin operation in the area in which a beneficiary
resides.
Coverage of all FEHBP enrollees and family members ends on a specified date or the
last day of the first pay period beginning after January 1 of the first full year that a regional
health alliance is fully operational in the area in which the enrollee resides.
If any covered family member resides outside the health alliance area, family
enrollment may continue in FEHBP until all covered family members live in an area served
by a health alliance and reciprocal arrangements to provide coverage outside the area are in
place.
Enrollees who move out of the enrollment area of an FEHB plan into an area served
by a regional health alliance change their enrollment to a health plan offered through the
health alliance. The transition occurs as a non-open season FEHB enrollment change.
ELIGIBILITY
Enrollees and covered family members are no longer eligible for FEHBP on the date
that transfer to the new system is complete in the region in which they reside.
Temporary employees retain any eligibility rights they had prior to repeal of Chapter
89.
Restored employees and survivor or disability annuitants retain the rights they had
until such time as they become eligible for coverage through a health alliance.
Any person losing coverage under the FEHBP, except for voluntary cancellation by
them, gross misconduct, or because they are eligible for coverage through a health alliance is
entitled to continued coverage under the FEHBP. Enrollees covered under this provision pay
the entire premium plus a 2 percent administrative fee.
Coverage will continue for federal employees working abroad. Annuitants will be
held harmless.
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TRANSITION
During phase-out, health plans offered on the date of repeal are offered as long as a
contract continues between the Office of Personnel Management and the sponsoring carrier.
The office continues to conduct annual open seasons and makes plan information available to
individuals covered by the FEHBP to the maximum extent feasible.
Carriers continue to offer the same scope of benefits being offered on the effective
date of repeal. Benefit levels are subject to annual negotiations until the FEHBP phases out
entirely.
The office may continue to contract with carriers that have a signed contract in place
on the effective date of repeal. Contract provisions in effect for the contract term ending on
the date of repeal remain in effect unless OPM and the carrier agreed to modifications during
the annual negotiations for the new contract term and signed contract amendments are in
place.
The office may not enter into contracts during the phase-out period with carriers not
already participating in the FEHBP on the effective date of repeal.
The Office of Personnel Management may terminate contracts at the end of a contract
term at the convenience of the government. Generally, decisions to terminate are based on
significant loss of enrollment resulting in a non-viable risk pool or other such phase-out
problems. Enrollees and covered family members in terminated plans are automatically
enrolled in the Standard Option of the government-wide Service Benefit Plan.
CONTRIBUTIONS DURING TRANSITION
During the phase-out period, the employer contribution continues at current levels.
Enrollees pay the remainder of the premium.
Both the employer and the enrollee contribution are funded, collected and distributed
in accordance with existing mechanisms.
When phase-out is completed, the office continues to receive annual appropriations, to
be made available until expended to pay the required employer contribution to premiums for
annuitants as provided under provision of national health reform legislation.
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PRIVILEGED AND-eONFIBENTIAL^
The employer contribution for federal enrollees covered through a health alliance are
made directly by the employing office to the health alliance. The Office of Personnel
Management has no further functions relative to the health insurance coverage of federal
enrollees covered through health alliances.
EMPLOYEE HEALTH BENEFITS FUND
The Employee Health Benefits Fund continues to operate as a reserve fund until
phase-out is complete. When phase-out is complete, and all allowable claims for covered
services are provided, any funds held in accounts held by participating carriers, except for
monies in the contingency reserve accounts of community rated plans, are divided in the ratio
of 72 percent to the employer and 28 percent to individuals enrolled in a fee-for-service plan
on the date of repeal of federal employee health insurance.
Funds remaining in the contingency reserve accounts of community rated plans will be
pooled and distributed in the same proportion as above to the government and those enrolled
in community rated plans on the date of repeal.
ADMINISTRATION
Regulations prescribed by the Office of Personnel Management to carry out Chapter
89 of Title 5 of the United States Code remain in effect unless amended or unless they
conflict with the provisions of this statute. In addition, the federal office may prescribe any
regulations necessary to implement the provisions of this statute.
The Office of Personnel Management and the General Accounting Office retain the
rights to audit provided in prior statute and under regulation and the provisions of the carrier
contracts.
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TRANSITION
SCHEDULE FOR PHASE IN OF STATES
States begin implementation of the new system as early as January 1, 1995.
Implementation involves enactment of a statute adopting federal program standards,
formation of regional health alliances, imposition of requirements for employers and
individuals to obtain coverage.
At the time of state implementation, federal support systems and reforms take effect,
including:
•
Subsidies to assist low-income individuals and small, low-wage employers in
purchasing health insurance
•
Limitations on balance billing by health care providers.
States that do not begin implementation by January 1, 1995 enter the new health care
system either on January 1, 1996.
States must begin implementation in 1996 to avoid federal enforcement action.
Potential federal enforcement action in a state that fails to implement the new system by
January 1, 1997 is described under "Federal Responsibilities" in the section entitled "National
Health Board/National Administration" at Tab 5.
States that expedite implementation receive financial incentives related to maintenance
of effort for the Medicaid program. Other incentives for states to implement health reform
rapidly include:
•
Universal health insurance coverage for all citizens and legal residents
•
Control of growth in spending for health care
•
Relief from short-term cost controls imposed as part of the
transition to reform
•
Stabilization of the insurance market
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•
PRIVILEGED AND-CONTIDENTIAL -
Relief from rising Medicaid costs.
MEDICAID MAINTENANCE OF EFFORT
States maintain current levels of financial support for the Medicaid program.
FEDERAL SUPPORT FOR IMPLEMENTATION
States become eligible for federal support for administrative costs related to
implementation of health reform in three phases:
PHASE 1: Within one month of the passage of federal legislation, each state receives
a planning grant to aid in the development of health care reform plans and alliances.
Planning grants total $100 million and are distributed based on a formula specified in federal
law.
PHASES 2 AND 3: Following passage of state statutes implementing health reform,
the federal government provides financial support for start-up of the regional alliance system.
Funds provided under this provision support start-up costs only; after implementation
of the new system, health insurance premiums absorb administrative costs associated with
regional alliances.
The National Health Board develops the formula for distribution of federal funding for
implementation. The formula takes into account projected start-up costs for administration
and the development of the regional alliance system in each state. States are required to
match federal financial support.
States receive one-third of their total allocation of federal funding for start-up costs
upon passage of legislation implementing health care reform. The National Health Board
releases funds following a determination that the state law conforms with federal
requirements.
The remaining two-thirds of federal funds are released upon submission to the
National Health Board of a state plan of operation. The board forwards funds after
determining that the state plan of operation conforms with federal requirements.
TECHNICAL ASSISTANCE
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The federal government assists states during the transition by drafting model
legislation for state consideration, drawing up regulations and requests for proposals.
Federal funds support technical assistance provided by non-governmental entities in
areas such as contracting, development of automated information exchange system, data
collection and analysis.
RULEMAKING
The American Health Security Act is self-executing unless the National Health Board
determines that rulemaking is necessary.
As to any matters on which the Board determines that the statute is self-executing, the
Board may use interpretive rules or general policy statements to inform the public of statutory
or administrative requirements. In instances in which the Board determines that legislative
rules are necessary, it issues those rules as "interim final rules" but invites public comment on
them. When final rules are issued they are accompanied by a "concise statement of basis and
purpose" within the meaning of section 553 of the Administrative Procedure Act.
An interim final rule is not final agency action within the meaning of the
Administrative Procedure Act and jurisdiction to review it does not lie in any federal court.
Actions seeking judicial review of final agency rules issued under the American Health
Security Act are brought in the Court of Appeals for the District of Columbia not later than
60 days after the publication of the final rule in the Federal Register. No court has authority
to stay, suspend or otherwise impede the implementation of any "interim final rule" issued
under the Act.
IMPLEMENTATION OF CORPORATE ALLIANCES
Corporate alliances initiate operation by January 1, 1996, regardless of the status of
regional alliances in the states in which they operate. An employer with more than 5,000
employees must function as a corporate alliance until all states implement health reform. At
that time, each firm operating a corporate alliance may elect to join regional alliances.
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PRIVILEGED AND 'CONriDENTTAL
INSURANCE REFORM
To reduce the potential for disruption in the health insurance industry during the
transition to the new health system, the American Health Security Act imposes interim
insurance regulations.
States enforce the regulations; the Department of Health and Human Services enforces
them in states that default on the requirement to enforce reforms.
Partially self-funded groups and self-funded multiple employer welfare arrangements
(MEWAs) are subject to the same regulatory requirements as insurers.
Requirements to Keep Coverage In Force: Insurers are prohibited from terminating
or failing to renew health insurance coverage for any insured person, except for non-payment
of premiums or other strictly defined cause.
Insurers are required to accept all newly hired, full-time employees and dependents
added to groups currently insured. Rates charged coincide with rates set according to a stateapproved rate table.
Restrictions on Premium Increases: Premium increases during the transition to
health reform are subject the following requirements:
•
Each insurer divides its business in each state into three sectors:
Individual contracts
Contracts covering groups with less
than 100 participants
Contracts covering larger groups.
•
Any increases in premium rates must apply equally to all covered groups and
individuals:
All small groups and individuals receive the same percentage
increase in rates.
For larger groups, a portion of any increase could be based on
group credibility as long as the total average increase equals the
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increase charged to individuals and small groups.
To address changes in group composition, each insurer is required to develop a single
rate manual for each segment of its market in compliance with guidelines set forth in federal
law or emergency regulation. Base rates in the manual are fixed at the average costs in each
segment.
Changes in premium rates for groups due to changes in the demographic composition
of the group are calculated from the manual. New additions to groups and groups applying
for new coverage are accepted at rates established in the manual.
States with existing statutes reforming the market for health insurance may modify
rules related to premium increases to accommodate the goal of rate compression. The
Department of Health and Human Services, in consultation with states (e.g., the National
Association of Insurance Commissioners), issues guidelines for state modifications.
Premium increases that exceed a prescribed percentage are subject to prior approval by
state insurance regulators.
An administrative process provides a channel for appeal by insurers damaged by this
requirement.
Portability: To increase portability of coverage during the transition to the new health
insurance system:
•
Insurers and self-insured employer plans are prohibited from applying
exclusions for pre-existing medical conditions to new employees and their
dependents who were insured within the 90-day period immediately prior to
current employment.
For new employees and their dependents previously not insured,
exclusions for pre-existing conditions may not extend beyond
six months.
These rules apply both to individual and group insurance
policies.
•
(8/6/93)
Self-funded health plans and employers with insured health plans are
prohibited from imposing waiting periods for coverage on any employee
otherwise eligible under the terms of the plan.
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Reductions in Benefits: To ensure that employers and insurers do not impose caps or
exclusions on coverage for specific medical conditions during the transition, employers and
insurers are prohibited from reducing existing coverage for any medical condition or course of
treatment if the anticipated cost is likely to exceed $5,000 in a year.
As under current law, employers may impose overall caps or reduce coverage as long
as these changes are applied equally to all participants in a health plan.
Access to Coverage: To assure that health insurance is available during the transition
for individuals who lose coverage or are unable to obtain coverage because of health status,
the federal government organizes a national risk pool.
The Department of Health and Human Services administers the pool which contracts
with one or more private insurance firms to act as its intermediaries and administrative
agents.
The risk pool provides coverage to any uninsured person or group unable to obtain
coverage in the private insurance market. Premiums and assessments against all insurers
support the pool, with assessments calculated based on market share in the health insurance
market. Self-funded health plans also contribute to the pool through an assessment.
Because the pool is voluntary, it operates under traditional insurance rating methods.
Premiums vary according to age, gender and place of residence.
States set premium rates at no more than 150 percent of standard insurance rates in
each area. If premiums are not sufficient to pay claims incurred by the pool, additional
assessments against insurers and self-funded health plans make up the difference.
The pool reimburses providers who treat participants based on Medicare payment
rates; providers may not bill patients for the balance of any fee covered under the pool.
States with existing risk pools continue their operation or enroll individuals currently
insured through pools in the federal pool. A state that transfers participants in its risk pool to
the federal pool must continue its financial support at the same level.
The Department of Health and Human Services can enter into contracts with risk pools
in states to administer the federal pool.
(8/6/93)
228
�WORKING GROUP DRAFT
PRIVILEGED AND •CONFIDENTIAL-
SHORT-TERM COST CONTAINMENT
Until the new health care system begins operation, voluntary controls on health care
prices and expenditures control rates of increase in health care spending.
Health care providers voluntarily limit increases in fees to the rate of increase in the
consumer price index (CPI-U). Increases in expenditures for each sector are targeted at GDP
plus 2 the first year, GDP plus 1 the second year and GDP until full implementation. If the
rate of increase in a sector exceeds the voluntary targets, that sector is subject to imposition
of a rate schedule. Controls remain in place for providers in a state until the state implements
universal coverage through alliances, and alliances establish fee schedules.
Controls apply to hospitals (expenditures only), physicians, dentists, other health
professionals, laboratories (expenditures only), home health agencies, vision products and
other medical devices. Pharmaceuticals are subject to a separate cost-containment strategy
(see below). In total, covered sectors represent nearly 90 percent of all personal health care
spending. Federally qualified HMOs and other risk-based plans, as determined by the
Secretary of the Department of Health and Human Services are exempt from controls.
Two options delineate how controls are implemented:
OPTION 1:
When the President transmits health care reform legislation to Congress, he announces
a program of voluntary limits on increases in prices and expenditures for each sector of the
health care system.
Health care providers are asked to live within the voluntary limits on rates of increase
in prices and expenditures as of the first day of the month in which the program is
announced. Providers are asked to post their fees to allow consumers to monitor compliance
among individuals providers.
Compliance within particular sectors of the health care system is assessed by the
Secretary of the Department of Health and Human Services after the first year. Within 30
days after the conclusion of the first year, the Secretary reports to the President on
compliance with voluntary limits.
(8/6/93)
229
�WORKING GROUP DRAFT
PRIVILEGED AND-eONFIDENTIAfc
For any sector in which prices or expenditures increased beyond the voluntary limits,
the President has the authority to issue an order limits prices and expenditures in that sector
to the level of the voluntary limits. The President transmits any order limiting prices and
expenditures to the Congress, and Congress has 60 days in which to review the President's
order. The order does not become effective until 60 days after its receipt by Congress.
OPTION 2:
When the President transmits health care reform legislation to Congress, he announces
voluntary limits on increases in prices and expenditures for each sector of the health care
system.
Health care providers are asked to live within the voluntary limits on rates of increase
in prices and expenditures as of the first day of the month in which the program is
announced. Providers are asked to post their fees to allow consumers to monitor compliance
among individual providers.
Compliance within particular sectors of the health care system is assessed after the
first year of the voluntary program and, if voluntary limits are not successful, mandatory
back-up controls are imposed.
The health reform legislation authorizes the President to order the Secretary of the
Department of Health and Human Services to impose back-up regulatory controls over health
care prices and expenditures. The legislation also gives the Secretary immediate authority to
require insurers to submit data on claims expense and to prepare for implementation of fee
schedules.
MONITORING COMPLIANCE
Compliance with voluntary price and expenditure rate of increase limits will be
assessed nationwide for each health care sector (e.g. hospitals, physicians, home health
agencies). The price target is the rate of increase in the CPI-U (compiled by the Bureau of
Labor Statistics). The expenditure target is GDP plus 2 the first year, GDP plus one the
second year, and GDP each subsequent year prior to implementation of the full system.
(8/6/93)
230
�WORKING GROUP DRAFT
PRIVILEGED AND-۩NFIBENHAL___
Beginning in mid-October of 1994 — 13 months following announcement of
voluntary limits — and each subsequent month, the annual change in prices for the relevant
component of the CPI-U is compared with the annual change in CPI-U. For community
hospitals, the American Hospital Association panel survey data on expense per patient day is
used to monitor price. If the annual increase in prices for a sector exceeds the increase in the
CPI-U, mandatory rate schedules are triggered.
Expenditure targets for each sector are monitored using data from the Census Bureau
Service Survey. Currently, this survey is conducted annually, but the health portion will be
changed to a monthly basis. (With rapid clearances and fund transfers, monthly data
collection may begin in approximately 6 months). The American Hospital Association
hospital panel survey is used to monitor community hospital expenditures until the Census
data are available.
Estimates of expenditures for a base period are derived from calendar year 1993
Census survey data adjusted for the 4 months under controls.
Mid-October 1994, 9 months of hospital expenditure data and six months of
expenditure data for the other sectors are analyzed to determine whether the targets were met.
Expenditures are reviewed for each subsequent month. Exceeding targets triggers mandatory
rate schedules.
BACK-UP CONTROLS
Using Medicare methods, the Department of Health and Human Services develops rate
and fee schedules for each designated sector of the health care market. To the extent
possible, schedules are based on private-sector payment rates and patterns in each sector to
minimize dislocations to providers.
For example, hospital specific standardized amounts are developed. These hospital
specific multipliers may be blended with regional or state standardized amounts to ease the
transition. For physicians, fee schedule conversion factors are developed on at least a state
level and possibly on a Metropolitan Statistical Area basis. Home health rates and some
outpatient rates may be specific to providers.
(8/6/93)
231
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTtAE-
Insurers begin submitting claims data and preparing for implementation of fee
schedules when reform legislation is enacted. Because fee schedules govern payments in feefor-service plans in the fully-implemented system, preparation for fee schedules is necessary
regardless of whether back-up controls become necessary. The Department of Health and
Human Services provides technical assistance and information insurers and prices claims for
small insurers who request assistance.
If triggered, rate and fee schedules take effect three months following determination
that the targets were exceeded. The first year rates and fees are set at levels estimated to
achieve the target rate of increase for that year, less a portion of the excess amount from the
previous year. Because controls are voluntary the first year, not all of the excess is recovered
in the following year. A cushion of two percentage points is allowed without attempt to
recoup.
In subsequent years, relevant conversion factors and standard amounts or fee schedules
are adjusted to include recovering excess amounts in whole or in part. For example, if
spending in calendar year 1994 exceeds the target of GDP plus 2 percent by 3 percentage
points (GDP plus 5 percent), rate schedules for calendar year 1995 are reduced by one
percentage point — the amount actual expenditures increased beyond the 2 percent buffer.
The adjusted target for calendar year 1995 becomes GDP — the scheduled target of GDP
plus 1 percent reduced by one percent.
Under price controls, health care providers may not bill patients amounts in excess of
rate and fee schedules. Insurers may not pay providers amounts in excess of the rate and fee
schedules. Insurers are expected to pass on savings to consumers in the form of lower
premiums.
(8/6/93)
232
�WORKING GROUP DRAFT
PRIVILEGED AND>€ONriDENTIAE—
SHORT-TERM PRICE CONTAINMENT FOR PHARMACEUTICALS
During the transition to the new health care system, the cost-containment goal for
prescription drugs revolves around holding price increases for pharmaceuticals currently on
the market to the rate of inflation.
Pharmaceutical manufacturers are asked to sign voluntary contractual agreements with
the Secretary of Health and Human Services committing to increases in drug prices equal to
or less than increases in the Consumer Price Index (CPI-U).
To achieve this goal, drug manufacturers who sign agreements are required to meet the
following criteria:
•
The increase in the weighted-average manufacturer's price inflation index
(WAMP) for all products distributed to all classes of trade may not increase at
a rate greater than the percentage increase in the CPI-U for that year.
•
The weighted-average price for all package sizes of each dosage form and
strength of a single source or innovator multi source drug normally distributed
to the retail class of trade may not increase at a rate greater than CPI-U.
To ensure that all manufacturers comply with voluntary agreements, the Secretary
holds back-up authority to enforce limits on increases in drug prices. The Secretary is
authorized to deny coverage or reimbursement through Medicare, Medicaid and Public Health
Service programs for pharmaceutical products produced by manufacturers that do not sign
agreements.
In the case of manufacturers who sign voluntary agreements but fail to comply,
Secretary is authorized to:
•
Order the manufacturer to reduce the price of any product to the appropriate
level if the price increase had not exceeded the inflation rate.
•
Require payment to the United States Treasury of revenues collected by the
manufacturer that are attributable to prices in excess of the inflation rate.
(8/6/93)
233
�WORKING GROUP DRAFT
PRIVILEGED AND-GONFIDENTIAt
DURATION OF AGREEMENT
Voluntary agreements continue in effect for a period of not less than three years.
In conjunction with the newly established Pharmaceutical Review Commission under
the National Health Board, the Secretary makes an annual report to Congress on the extent to
which managed competition affects the pharmaceutical market. Measurable impacts of
competitive forces under health reform include the use of formularies, competitive purchasing
and generic substitution.
Should the Secretary conclude that less than 75 percent of the pharmaceutical market
is not affected by new competitive conditions, the Secretary makes a recommendation to the
President and the Congress about extending voluntary price-control agreements for an
additional period of time.
BREAKTHROUGH DRUG COMMITTEE
To encourage reasonable pricing of breakthrough drugs, a committee of the National
Health Board has the authority to make public declarations regarding the reasonableness of
launch prices. During any period when short-term price controls are in effect the
Commission would have the authority to make public statements about all new drugs
introduced, which normally is 20-30 per year.
After short-term price controls are lifted, the committee could address new drugs that
represent a breakthrough or significant advance over existing therapies. The committee could
also address all drugs subject to a "reasonable price" clause in a contract with the National
Institutes of Health.
The committee could investigate drug prices only in those cases where available
evidence suggests that the price may be unreasonable. The committee could make an initial
determination about the reasonableness of a drug price based on a comparison of prices for
therapeutically similar drugs in the United States and seven other industrialized countries.
If the drug price exceeds what the committee thinks to be reasonable based on the
information available, or if there is insufficient data, the committee would have the authority
to obtain information from the company about the drug's price. The committee could then
issue a report regarding the reasonableness of the drug price. The committee would have no
authority to set or control drug prices.
(8/6/93)
234
��WORKING GROUP DRAFT
PRIVILEGED AND SONFIDENTIAL •
FINANCING HEALTH COVERAGE FOR THE UNDER 65 POPULATION
Americans younger than age 65 purchase health care primarily through insurance
premium contributions by businesses and households, out-of-pocket spending and
government programs, such as Medicaid.
In addition, federal, state and local tax revenues fund care provided by the Department
of Defense, the Department of Veterans Affairs, the Indian Health Service, the Medicare SSI
program, public hospitals, clinics and the public health service.
In the current health insurance system, premiums rise as a consequence of factors over
which consumers exercise little control. Except for the largest groups of purchasers, the
system operates as a sellers' market, with insurers dictating the rates, terms and conditions of
coverage. In the small-group insurance market, pricing policies are often deliberately
designed to ramp up rates for a period of years, particularly for anyone who experiences
medical claims.
Especially for small employers, health insurance is frequently not affordable. Buying
a typical, comprehensive family plan may cost a large firm $4,000 per person, while a smaller
firm may pay $6,000 for the same policy.
For the large firm, the premium represents 29 percent of payroll to purchase coverage
for a worker who earns $7 per hour, or $14,000 per year; for the small firm, it represents 42
percent of payroll for the same worker.
A large firm may pay $2,000 — 14 percent of payroll — for a typical, comprehensive
policy for an individual who earns $7 an hour, or $14,000 per year. For the same policy, a
small firm may pay as much as $3,000, an amount that totals 21 percent of payroll for the
same worker.
As a consequence, many low-wage and smaller firms do not provide adequate health
insurance for workers or their dependents. Almost 85 percent of the 37 million Americans
who do not have health insurance and over 90 percent of the 22 million who have inadequate
coverage are members of households headed by an employed worker.
To overcome these critical flaws, the American Health Security Act redefines the
market for health insurance, eliminating conditions that make the current system unfair,
unaffordable and unpredictable. It proposes an approach to financing that is simpler, more
consistent and more fair.
(8/6/93)
235
�WORKING GROUP DRAFT
PRIVILEGED AND CONnDENTTAL
DESIGN OF A PREMIUM-BASED SYSTEM
SUMMARY
FUNDAMENTAL PRINCIPLES:
•
The finance system continues to depend on health insurance
premiums as the basic unit of payment.
•
Employers and employees share the cost of premiums.
•
Caps limit the contributions required of individuals and of small
businesses that pay low wages.
•
Health alliances establish individual and family health accounts,
so that all employer and employee contributions flow into one
account for a family.
•
Three premium rates apply: Individual adult, one-adult family,
and two-adult family with children.
EMPLOYERS:
Employer contributions are based on the weighted-average
premium charged by health plans in an alliance (weighted for the
number of participants in each plan).
Employers pay 80 percent of the weighted-average premium for
an individual or family policy in an alliance, although they may
choose to pay more.
Required contributions are subsidized for employers with average
wages lower than $24,000.
Premiums paid by low-wage firms that employ fewer than 50
people are capped based on average wages.
Employers pay a share of part-time workers' premiums prorated according to hours worked.
(8/6/93)
236
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTTAL-
EMPLOYEES:
Employees pay the portion of the premium their employers do
not cover but no more than 20 percent if they choose an
average-cost plan.
Employees may choose a plan that's more expensive than the
average and pay the extra.
Employees who choose a less-expensive plan pay less.
FAMILIES:
All families buy one policy through their family accounts at the
health alliance.
Families make the same premium contribution for health
insurance if both spouses work outside the home or if only one
does, although all employers contribute to the cost of coverage
for their workers.
In families with two wage earners, the employer of the lower
earner pays at an individual rate; the employer of the higher
earner pays the remainder of a family premium (the family rate
minus the secondary employer contribution).
A single parent buys a policy that covers one adult and children.
A couple with one wage earner buys a policy that covers two
adults.
INDIVIDUALS WHO ARE NOT EMPLOYED OR SELF-EMPLOYED
•
Individuals who are not employed or are self-employed purchase
health insurance through an alliance.
•
For individuals who lose their jobs, unemployment insurance
funds pay the employer's contribution for up to 26 weeks.
(8/6/93)
237
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTLAfc-
SUBSIDIES
Subsidies cover costs for premiums in excess of the caps that
limit employee and employer contributions.
In addition to premium subsidies, families with incomes lower
than 150 percent of the poverty level qualify for subsidies that
reduce their co-payments and deductibles.
TAX DEDUCTIBILITY
Contributions toward premiums that cover the nationally
guaranteed benefit package are tax deductible to the employer
and not counted as income for employees. The tax exemption is
limited to 100 percent of the weighted-average premium in an
alliance.
Premiums that pay for additional benefits or for cost sharing are
tax deductible for three years or until existing collective
bargaining contracts expire.
(8/6/93)
238
�WORKING GROUP DRAFT
PRIVILEGED AND 'CONriDENTIAL
The following chart summarizes rates for employer and employee contributions before
subsidies are applied:
PREMIUM-BASED FINANCING
Unsubsidized Rates
Employer
Employee
Individuals
80% of average rate for an
individual
Premium of chosen plan
less 80% of average
individual rate (20% for
average plan)
One earner with dependent
spouse (non-working or
working part-time)
80% of average rate for 2
individuals, offset by
secondary employer
payments, if any
Same as above, for two
individual rate
One earner with dependent
children, no spouse
80% of average family rate
for one adult and children
Same as above, for oneadult family rate
80% of average family rate
for two adults and children,
offset by secondary
employer payments, if any
Same as above, for twoadult family rate
Same as for individual
No contribution
Primary earner
Same as for individual
Same as above, for
individual rate
Secondary earner
Same as for individual
Same as above, for
individual rate
One or two full-time
earners with dependent
children
Primary earner
Secondary earner
Two earners, no children
Part-time earner
(8/6/93)
prorated according to hours
worked
239
No contribution if
dependent spouse or child;
otherwise, same as for
family
|
�INSERT TO FINANCING
S i m p l i f i c a t i o n of Rules f o r Dual-Earner F a m i l i e s
The c u r r e n t d r a f t o f t h e f i n a n c i n g p r o p o s a l r e q u i r e s f a m i l i e s
t o d e s i g n a t e p r i m a r y and secondary employers and s e t s d i f f e r e n t
c o n t r i b u t i o n r e q u i r e m e n t s f o r each. I n a d u a l - e a r n e r f a m i l y , t h e
p r i m a r y e a r n e r pays a t a f a m i l y r a t e , t h e secondary e a r n e r a t an
i n d i v i d u a l r a t e , and t h e p r i m a r y employer r e c e i v e s a r e f u n d o u t o f
the secondary employer's c o n t r i b u t i o n . C u r r e n t f i n a n c i n g e s t i m a t e s
have been done on t h i s b a s i s .
We a r e w o r k i n g on a s i m p l i f i e d model e l i m i n a t i n g t h e
d i s t i n c t i o n between p r i m a r y and secondary employers and any need t o
do an e n d - o f - t h e - y e a r r e c o n c i l i a t i o n .
Under t h i s model, t h e employers o f a w o r k i n g husband and w i f e
w i l l b o t h pay i n t o a f a m i l y ' s account a t t h e f a m i l y r a t e u n t i l t h e
premium i s p a i d .
Each employer w i l l t h e n be n o t i f i e d t o s t o p
making payments. I f any e x t r a payments a r e made, t h e employer and
employee i n v o l v e d w i l l r e c e i v e a r e f u n d o r a c r e d i t t h a t can be
r o l l e d over t o t h e f o l l o w i n g year.
T h i s approach minimizes a d m i n i s t r a t i v e c o m p l e x i t y . There w i l l
be no need t o a p p o r t i o n o b l i g a t i o n s between employers a t t h e
b e g i n n i n g o f a year, t o a l t e r payment r a t e s d u r i n g a year because
of a spouse's change o r l o s s o f a j o b , o r t o r e c o n c i l e payments a t
the end o f t h e year. Indeed, employers w i l l n o t need even t o know
whether an employee has a working spouse; t h e y w i l l pay a f a m i l y
r a t e r e g a r d l e s s o f t h e o t h e r spouse's employment. However, t h e y
w i l l be a b l e t o s t o p c o n t r i b u t i o n s e a r l i e r i n t h e year i f an
employee does have a w o r k i n g spouse. Thus, t h e system w i l l l i g h t e n
payment burdens w i t h o u t c r e a t i n g new b u r e a u c r a t i c burdens.
T h i s system a l s o minimizes s u b s i d i e s t o d u a l - e a r n e r f a m i l i e s .
I f one spouse has e a r n i n g s low enough t o be s u b s i d i z e d , t h e
f a m i l y ' s p o l i c y w i l l s t i l l o f t e n be p a i d up by t h e o t h e r e a r n e r and
employer. Furthermore, i f one o r b o t h earners a r e unemployed d u r i n g
the year, t h e p o l i c y may s t i l l be p a i d up d u r i n g t h e r e m a i n i n g
months o f employment.
T h i s system spreads t h e c o s t o f a f a m i l y p o l i c y more e v e n l y
across employers t h a n today's system. The two employers o f a d u a l e a r n e r f a m i l y w i l l share t h e premium e q u a l l y i f t h e c o n t r i b u t i o n o f
n e i t h e r employer i s capped. On t h e o t h e r hand, i f one employer
( e . g . , a s m a l l b u s i n e s s ) i s capped, i t w i l l pay p r o p o r t i o n a t e l y
l e s s o f t h e t o t a l premium b e f o r e t h e f a m i l y ' s account i s p a i d up.
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
DESIGN OF PREMIUM-BASED FINANCING
INDIVIDUAL AND FAMILY HEALTH INSURANCE ACCOUNTS
A regional or corporate alliance maintains a health insurance account for each
individual or family eligible for coverage under the American Health Security Act. All
contributions from employers and members of the household toward the purchase of health
insurance flow into the account. Alliances credit payments to the account and transfer
premium payments to the health plan in which the individual or family members enroll.
When an individual or a family enrolls in a health alliance, it automatically establishes
an account that tracks payments for health insurance for the family, eliminating dual coverage
and the need to coordinate benefits in separate policies.
Alliance health insurance accounts are book entry accounts only, not bank accounts.
Regional alliance funds are kept on deposit in the Inter-Alliance Health Security Fund
described under Tab 13. Corporate alliances also maintain accounts for their employees
following the same guidelines as regional alliances.
Use of Funds: Funds in health insurance accounts are used only for the benefit of
account holders. At the end of any calendar year, if a reconciliation process conducted by the
alliance determines that the account contains excess deposits, consumers may withdraw excess
funds for personal use. Withdrawals are treated as taxable income.
Right to Information: Beneficiaries receive regular reports documenting transactions
in their health insurance accounts and have access to information about their account at any
time. Reports distinguish tax-free employer contributions, taxable employer contributions,
and employee and other individual contributions. Alliances may contract with local banks,
employers or a public agency to act as conduits for consumer information about health
insurance accounts.
(8/6/93)
240
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFfBENTiAfe-
Opening and Transferring Accounts: Employees provide information for their
accounts when they enroll in a health alliance.
Accounts are fully and automatically transferrable through the Inter-Alliance Health
Security Fund. A change in employment or residence automatically triggers any needed
transfer of accounts based on information provided through the employer.
When a consumer moves into a region served by a new alliance, individuals without a
connection to an employer transfer their health insurance account by notifying the InterAlliance Health Security Fund through any alliance.
(8/6/93)
241
�WORKING GROUP DRAFT
PRIVILEGED AND-GONFfBENTfAI^
EMPLOYERS IN THE NEW SYSTEM
REGIONAL ALLIANCES
For each of their eligible employees, employers contribute a minimum of 80 percent
of the weighted-average premium for an individual or family policy in their regional alliance.
Employers may pay a share greater than 80 percent of the premium.
For firms in which the average, full-time wage is less than $24,000,
the employer contribution is reduced by a subsidy paid on behalf of qualifying individual
employees. The employer pays no more than a fixed percentage of wages per individual
worker. Where x equals the wage of an individual employee, WAP equals the weightedaverage premium and Z equals the level at which subsidies phase out, or WAP/. 12, the
employer subsidy equals:
.8(WAP/Z)(Z-x)
The following table shows employer subsidies in an alliance in which the weighted
average premiums are $1,800 for individuals and $4,200 for two-adult families:
Employer Subsidies as Dollar Amounts and
as a Percentage of Full Employer Contribution
Wages
Individual Policy ($1,440)
Family Policy ($3,360)
$5,000
$960 (66%)
$2,880 (86%)
$10,000
$480 (33%)
$2,400 (72%)
$15,000
0
$1,920 (58%)
$20,000
0
$1,440 (43%)
$25,000
0
$1,160 (28%)
1 $30,000
0
$0
[ $35,000
0
$
0
1
In addition, the contribution for low-wage employers with 50 or fewer employees is
capped at the following levels:
(8/6/93)
242
�WORKING GROUP DRAFT
PRIVILEGED AND -€QNFIDENTIAL
Firm Size
<20
Employees:
% of Employee Pay
21-49 Employees:
% of Employee Pay
<$9 Thousand
3.2
3.2
$9-12 Thousand
3.2
3.8
$12-15 Thousand
3.8
4.4
$15-18 Thousand
4.4
5.5
$18-21 Thousand
5.5
6.6
$21-24 Thousand
6.6
7.6
Average Payroll for Full-time
Equivalent Workers
CORPORATE ALLIANCES
For each of their eligible employees, employers in corporate alliances pay a minimum
of 80 percent of the weighted-average premium for an individual or family policy among
health plans available to their employees.
Employers may pay a share greater than 80 percent of the premium.
The employer pays an additional amount if 20 percent of the weighted-average
premium exceeds a fixed percentage of an employee's wages. In those cases, the employer
closes the gap between the percent of wages and the premium contribution.
(8/6/93)
243
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTTAL
If a large employer joins a regional health alliance, the rules are the same as for other
employers, except that the employer must maintain payments at a level equal to the
employer's average insurance costs over the previous two years. The employer contribution
in that case totals either 80 percent of the weighted-average premium or the two-year
average for insurance costs adjusted for health inflation, whichever is greater.
The employer continues to pay for health insurance at that level for four years. The
employer contribution is adjusted over the four subsequent years until it reaches the level of a
community rate:
•
In the fifth year, the employer's rate declines to 75 percent of the
previous year's payment plus 25 percent of the amount the
employer would pay under a community rate.
•
In the sixth year, the employer's rate declines to 50 percent of
the base amount plus 50 percent of the community rate.
•
In the seventh year, the employer's rate declines to 25 percent on
of the base payment plus 75 percent of the community rate.
•
In the eighth year, the employer reaches a full community rate.
Similarly, subsidies to which an employer is entitled increase over several years from
25 percent in the fifth year, to 50 percent in the sixth year, 75 percent in the seventh year and
100 percent in the eighth year.
REQUIREMENT FOR EQUAL CONTRIBUTIONS
Employer contributions to alliances on behalf of employees may not vary according to
the health plan the employee selects.
Employers that contribute more than 80 percent of the average premium for any
employee must contribute at the same level for all employees, unless a collective bargaining
agreement requires otherwise.
(8/6/93)
244
�WORKING GROUP DRAFT
PRIVILEGED AND "CONFIDENTIAL
If the health plan chosen by an employee costs less than the contribution required
from his or her employer, the employee may claim excess funds from the alliance health
account as taxable income at the end of the year.
PART-TIME EMPLOYEES
All regional and corporate alliance employers contribute a pro-rated portion of the
regional alliances's weighted average premium. The contribution is pro-rated based on the
ratio of hours worked to a thirty hour work week.
Regional alliances cover part-time workers. A part-time worker who is the spouse or
child of a full-time worker covered through a corporate alliance is an exception; a part-time
worker in that situation receives coverage through the corporate alliance.
DESIGNATION OF PRIMARY AND SECONDARY EMPLOYERS
For each health insurance account, employed individuals and families designate a
primary employer.
•
If an individual works at more than one job, the primary
employer is the employer that pays the highest monthly wage.
•
In families with two working adults, the primary employer is the
employer of the higher wage earner.
•
A secondary employer is any other employer of an individual or
family member.
Families and individuals designate a primary employer once a year at the time of
when alliances conduct open enrollment. They may change the designation only if the
primary earner changes jobs, ends full-time employment or becomes unemployed.
Primary employers contribute to health premiums and also withhold each employee's
portion of the premium from wages. Secondary employers make employer contributions only;
they do not withhold employee contributions.
(8/6/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND-GQNFIDENTIAL
The payment obligations of primary employers vary by family status of the employee:
•
If an employee has a spouse and dependent children, primary
employers pay 80 percent of the weighted-average premium of a
two-adult family policy.
•
If an employee has dependent children but no spouse, primary
employers pay 80 percent of the weighted-average premium of a
family policy covering one adult.
•
If an employee has no children and a spouse who is either not
employed or employed part-time, primary employers pay 80
percent of the weighted-average premium for policies covering
two individuals.
•
If an employee has no dependents, primary employers pay 80
percent of the weighted-average premium for an individual
policy.
Secondary employers pay 80 percent of the weighted-average premium for an
individual policy.
At the end of each calendar year, if contributions from all employers exceed 80
percent of the weighted-average premium for the appropriate family policy, the primary
employer receives a refund paid out of contributions from secondary employers.
Similarly, in the case of an employer that contributes to the cost of a policy covering
two adults, if total employer contributions exceed 80 percent of the weighted average
premium, the primary employer receives a refund.
In both cases, the refund equals the difference between total employer contributions
and 80 percent of the appropriate weighted-average premium. However, the refund may not
exceed the value of an employer contribution for an individual policy.
Any additional amount (such as employer contributions from more than two jobs) is
refunded to the employee.
(8/6/93)
246
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL-
If an individual or family designates a new primary employer during a year, the refund
is divided among primary employers in the same ratio as their contributions. Refunds to
employers are not treated as income.
If an individual whose employer is designated as the primary employer becomes
unemployed, the employer of a spouse automatically becomes the primary employer for
family coverage.
ADMINISTRATION
When employees begin a new job, employers collect the following information and
convey it to the appropriate health alliance:
•
Registration information, including name, address, Social
Security number, names of spouse and dependent children and
spouse's work status and employer.
•
Health alliance account number and health plan.
•
Designation of primary employer.
Employers forward the information to the alliance within 30 days. Alliances respond
by informing the employer of the proper schedule for contributions and withholding. Pending
notice by the alliance, employers make contributions according to tables provided by the
Inter-Alliance Health Security Fund.
At the close of each pay period but no less than once each month, employers forward
premium contributions and amounts withheld from employees' pay for health insurance to the
Inter-Alliance Security Fund, which transfers payments to the appropriate alliances.
On a quarterly basis, employers provide the following information to the InterAlliance Health Security Fund:
•
(8/6/93)
Amount of wages paid to each employee.
247
�WORKING GROUP DRAFT
PRIVILEGED AND~GQNFieENTfAir
•
Total employer contributions to alliance accounts on behalf of
each employee.
•
Total amount withheld from each employee's pay and deposited
in an alliance account.
•
Period of time period covered by contributions.
In conjunction with quarterly reports, employers reconcile their health insurance
accounts with alliances. Employers maintain records for auditing purposes that document
insurance contributions, withholding and payments to alliances.
(8/6/93)
248
�WORKING GROUP DRAFT
PRIVILEGED AND •CONFIDENTIAL
EMPLOYEES IN THE NEW SYSTEM
The wide variety of employment configurations among American families require
establishing different mechanisms to ensure proper payment and accounting of health
insurance premiums:
REGIONAL ALLIANCES
Employees pay the premium charged by the health plan they choose minus employer
contributions on their behalf. If an employer pays the required 80 percent of the weightedaverage premium, an employee pays 20 percent of the premium for an average-cost plan.
Employers may pay part or all of the employee share of the premium.
During the annual open enrollment period conducted by alliances, each regional
alliance publishes a table showing subsidies available to individuals and families toward the
cost of premiums by income level. Subsidies represent the amount required to reduce an
individual or family contribution for an average-cost plan to a capped percentage of income.
(8/6/93)
249
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL-
The following table shows employer subsidies in an alliance where the weighted
average premiums are $1,800 for individuals and $4,200 for two-adult families:
Employee Subsidies as Dollar Amounts and
as a Percentage of Full Employee Contribution
|
Income
Individual Policy ($360)
Family Policy ($840)
$5,000
$240 (66%)
$720 (86%)
$10,000
$120 (33%)
$600 (72%)
$15,000
0
$480 (58%)
$20,000
0
$360 (43%)
$25,000
0
$240 (28%)
$30,000
0
$120 (14%)
1 $35,000
0
$0
|
Subsidies may apply toward the purchase of any health plan offered through the
alliance. An employee eligible for a subsidy who chooses a health plan costing more than the
average pays the additional amount over the weighted-average premium.
An employee who chooses a less expensive plan pays less than the maximum
percentage of income. If an individual or family eligible for a subsidy chooses a less
expensive plan, they pay the difference between their employer contribution and the cost of
the plan, up to a fixed percentage of income. Subsidies may not be converted to cash.
CORPORATE ALLIANCES
Employers and employees in corporate alliances divide responsibility for premium
contributions according to the same rules as employers in regional alliances. Required
contributions are calculated based on the weighted-average premium for health plans
available through the corporate alliance.
(8/6/93)
250
�WORKING GROUP DRAFT
PRIVILEGED AND •CONFIDENTIAL
Employees in corporate alliances do not pay more than a fixed percentage of wages
toward the premium for the average-cost plan available to them. However, employees in
corporate alliances are not eligible for public subsidies. Employers that operate corporate
alliances assume responsibility for covering any gap between the maximum contribution
required of employees and the total premium.
CHOICE OF ALLIANCES
A family in which one full-time worker is covered through a corporate alliance and
one full-time worker is covered through a regional alliance chooses an alliance in which to
enroll.
If the family enrolls in a regional alliance:
•
The employer in the corporate alliance pays 80 percent of the
weighted-average premium in the regional alliance.
•
Rules described under "Payment Obligations of Primary and
Secondary Employers" determine whether the required
contribution is calculated for an individual or family policy.
•
No caps apply to contributions by employers operating corporate
alliances.
•
An individual or family may qualify for a cap on contributions
depending on income.
(8/6/93)
251
�WORKING GROUP DRAFT
•
PRIVILEGED AND •CONFIDENTIAfc
Corporate alliance employers make payments to the family's
account at the regional alliance.
If the family enrolls in the corporate alliance:
•
The employer in the regional alliance pays the regional alliance
rate for a family or individual policy.
•
The cap on contributions by employers in regional alliances
applies.
•
The cap on employee contributions does not.
•
Regional alliance employers make payments to the family's
account at the corporate alliance.
•
If a corporate alliance pays more than 80 percent of the premium
for its participants, it provides the same additional contribution
for employees in dual-earner families that choose coverage
through a regional alliance.
(8/6/93)
252
�PRIVILEGED AND -eONFIDENnAL-
WORKING GROUP DRAFT
A family with full-time workers eligible for different corporate alliances also chooses
one alliance in which to enroll. In those cases, the family establishes an account with one
alliance, and the other employer contributes to that account an amount equal to what it would
have paid into its own corporate alliance.
The following chart summarizes eligibility for alliance coverage:
Spouse 1
Spouse 2
Full-time employee,
regional alliance employer
None or dependent
(nonworking or part-time)
Regional alliance
Full-time employee,
corporate alliance
employer
Same as above
Corporate alliance
Source of Coverage
Part-time employee, self- Same as above
employed, and nonworkers
Regional alliance
Full-time employee,
regional alliance employer
Choice of regional or
corporate alliance
(8/6/93)
Full-time employee,
corporate alliance
employer
253
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAi,
SUMMARY: WORKING FAMILIES
TWO WORKING SPOUSES WITH CHILDREN
•
Families in which both spouses are employed purchase a family
policy that covers two adults and children.
•
They designate a primary employer and establish a single health
insurance account to receive all employer and employee
contributions for their coverage.
•
The primary employer pays 80 percent of the weighted-average
premium for the appropriate family policy up to any cap that
limits its contributions. It withholds the required employee
contribution for the health plan selected.
•
The secondary employer pays 80 percent of the weightedaverage premium for an individual policy, up to any cap that
applies.
•
The primary employer receives a refund from any excess funds
left over from secondary employer contributions at the end of
the year. The refund equals the difference between total
employer contributions and 80 percent of the weighted averagepremium for the appropriate family policy.
•
No refund may exceed the value of an individual policy,
however, and regional alliances first recover any subsidies paid
on behalf of the account.
TWO F U L L - T I M E WORKING SPOUSES WITH NO CHILDREN
•
(8/6/93)
Each spouse obtains coverage from his or her employer to
purchase an individual policy under normal rules.
254
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
ONE SPOUSE WORKING FULL TIME AND ONE SPOUSE WORKING PART TIME
•
If the full-time worker is eligible for a corporate alliance, the
family establishes a health insurance account through the
corporate alliance. Otherwise, the couple obtains coverage
through the regional alliance.
•
The primary employer pays 80 percent of the weighted-average
premium for two individual policies, up to any cap on its
contribution. It withholds the full employee contribution for the
plan selected.
•
The secondary employer pays a pro-rated share of the premium,
unless the employer's contributions are capped at a lower level.
•
The primary employer receives a refund from any excess funds
left over from secondary employer contributions at the end of
the year. The refund equals the difference between total
employer contributions and 80 percent of the weighted averagepremium for two individual policies.
•
No refund may exceed the value of an individual policy,
however, and regional alliances first recover any subsidies paid
to the primary employer.
SINGLE PARENT WITH CHILDREN
•
The wage-earner and his or her employer purchase a family
policy that covers one adult.
ONE EARNER WITH SPOUSE
•
(8/6/93)
The wage-earner and his or her employer pay a rate equal to the
sum of two individual policies.
255
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTLtt:
ONE EARNER WITH SPOUSE AND CHILDREN
•
The wage-eamer and his or her employer purchase a family
policy that covers two adults.
EMPLOYED CHILDREN
•
If a full-time employee is under age 21 and works for two or
more consecutive quarters, he or she receives coverage through
the regional or corporate alliance and selects a health plan under
normal rules.
•
If a part-time employee is under age 21 and covered under a
family policy, his or her employer contributes to the family
health insurance account the amount due under normal rules for
a secondary employer.
(8/6/93)
256
�WORKING GROUP DRAFT
PRIVILEGED AND-GBNFIDENIIAL
SELF-EMPLOYED, NON-WORKERS, PART-TIME AND SEASONAL EMPLOYEES
Self-employed individuals, non-workers, and part-time and seasonal employees who
are the spouse of a full-time employee receive coverage through their spouse according to
rules described above.
Other individuals in these categories enroll in regional alliances and open health
insurance accounts.
Employer and employee contributions from part-time and seasonal work, as well as
direct deposits from self-employment and unearned income, accumulate as credits in health
insurance accounts to cover the cost of health insurance.
Alliances provide individuals and families in these categories with a schedule of direct
payments to their accounts. They make contributions through designated repositories, such as
local banks, or through automatic withdrawals or withholding from pension plans or public
benefit programs.
•
SELF-EMPLOYED INDIVIDUALS
A self-employed person purchases an individual policy from the
regional alliance and pays the full premium.
To purchase a health plan that charges the weighted-average
premium, a self-employed person pays no more than the
combined contribution of an employee and an employer with
fewer than 20 workers. (See chart on contributions from small
firms.)
A self-employed individual who chooses a health plan that is
more expensive than the weighted average pays the required
contribution plus the additional cost for the plan.
A self-employed individual whose spouse is not employed or
whose spouse earns lower wages purchases family coverage
under rules described above. If the employed spouse is the
higher earner, the self-employed individual pays an individual
rate, up to the cap described above.
(8/6/93)
257
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTTAL
NON-WORKERS
A non-working individual or family purchases a policy from the
regional alliance and pays the premium.
A non-working person with a family purchases coverage
according to the above rules unless the spouse is employed. If
the spouse is employed, the family obtains coverage through the
employer. Employer and employee contributions purchase a
family policy that includes two adults.
PART-TIME EMPLOYEES
Individuals holding one or more part-time jobs who are not the
spouse or dependent child of a full-time employee purchase
health insurance through regional alliances.
There is an exception for part-time employees who have been
full-time employees of corporate alliances for at least six
months. They continue to purchase coverage through the
corporate alliance.
Part-time workers are responsible for the cost of the premium
minus contributions from employers, but the total amount due
does not exceed a fixed percentage of income.
A part-time worker who has a family purchases family coverage
according to the above rules.
(8/6/93)
258
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL
UNEMPLOYED WORKERS AND THEIR FAMILIES
Workers who lose their jobs are eligible for a maximum of six months of health
insurance coverage over a twelve-month period without additional payments under the
following rules:
•
When a worker employed for more than six months loses his or
her job, the former employer continues making insurance
contributions through the end of the month following
termination.
•
If the employee worked less than six months, employer
contributions end after the month of termination.
Federally funded assistance extends employer contributions for up to a total of six
months. To be eligible for federal assistance for health insurance coverage, a worker must:
•
Meet the monetary eligibility requirements under the state
unemployment insurance program (a minimum of 20 weeks
worked in the first four of the last five completed quarters prior
to termination).
•
The cause of termination is not relevant.
•
State unemployment insurance offices verify eligibility.
•
To continue eligibility, individuals abide by state requirements to
search for work.
The unemployment health coverage program makes the former employer's contribution
toward the cost of insurance premiums but does not extend to supplemental insurance or
benefits.
(8/6/93)
259
�WORKING GROUP DRAFT
PRIVILEGED AND -GONFfDENTIAL
BENEFIT
Unemployment health coverage provides employer contributions through the month in
which new employment begins. The program extends up to a maximum of six months over a
twelve-month period, but health insurance benefits are extended during periods when
unemployment benefits are extended.
To continue eligibility, an unemployed worker must meet state requirements for work
search or provide certification that they are ill. An unemployed person who relocates may
transfer insurance coverage to a new health alliance.
EXCESS CONTRIBUTIONS
If a worker covered by the unemployment health coverage program accumulates
excess employer contributions, funds in the health insurance account are refunded to the
unemployment program at the end of the year.
The amount of the refund equals the difference between all employer contributions and
payments by the unemployment insurance fund and the cost of coverage up to the value of
unemployment assistance.
ADMINISTRATION OF UNEMPLOYMENT BENEFIT
The Department of Labor administers the unemployment health coverage program.
State unemployment insurance programs operate the program.
The unemployment insurance agency makes direct payments to health alliances on
behalf of eligible individuals, which appear as credits on the individual's family health
insurance account.
PREMIUM CAPS BASED ON INCOME
Individuals and families apply for caps on insurance contributions when they open a
health insurance account. Applications may be made during any open enrollment period, at
the time of transfer to a new alliance, or after a change in life circumstances, such as
unemployment or divorce.
(8/6/93)
260
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTIAL
Alliances distribute applications for premium caps directly to consumers and through
employers, banks and designated public agencies. Consumers forward completed applications
to alliances or an agency designated by the state.
Determination of eligibility is based on wages in the case of individuals and families
with less than $1,000 in unearned income. Employees with incomes that entitle them to caps
on premium payments and with less than $1,000 in unearned income, submit a declaration of
estimated annual income during the open-enrollment period.
Eligible individuals and families with more than $1,000 in unearned income also
submit a declaration of estimated income. Individuals and families in that category make
quarterly deposits to their health accounts from unearned income or authorize increased
withholding by their employers.
DETERMINATION OF ELIGIBILITY
Alliances credit the health accounts of individuals and families eligible for subsidies.
Subsidy levels are determined based on wages and estimates of unearned income submitted
by the individual.
If employer or employee contributions are capped, the alliance credits the employee's
health insurance account each month for a subsidy based on estimated income and the
weighted-average premium. The alliance transfers funds to cover the subsidy to the health
plan in which the individual enrolls. Credits are conditional until a year-end determination
that the individual or family qualified for the cap.
States designate the alliance or another agency to make periodic determinations of
eligibility for subsidies for individuals who are self employed or who do not work.
Alliances credit individual health insurance accounts based on estimated annual
income submitted by the individual. Beneficiaries receive notice of any change in required
payments following an eligibility determination.
Credits are conditional until a year-end determination that the individual or family
qualified for the cap.
(8/6/93)
261
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENnAL
COST-SHARING SUBSIDIES FOR LOW-INCOME PERSONS
In areas not served by any HMO or preferred provider health plans, individuals with
family incomes less than 150 percent of the poverty level qualify for subsidies to cover copayments and deductibles. Subsidies reduce cost sharing to the level charged by an HMO or
preferred provider network. Alliances determine whether HMOs or preferred provider
networks are available.
TAX SUBSIDIES
Employer contributions toward the premium for the nationally guaranteed
comprehensive benefit package are tax deductible to the employer and not counted as income
to the employee. The tax exemption is limited to 100 percent of the weighted average
premium in an alliance.
Any premium payment by a self-employed person for the comprehensive benefit
package is fully tax deductible.
Once alliances are established, contributions continue to be tax-preferred only if made
through an alliance.
Additional benefits, including coverage of cost sharing, continue to be fully tax
deductible for three years after enactment.
In the case of an existing collective bargaining agreement that continues in effect
beyond January 1, 1997, additional benefits are deductible for the duration of the contract.
Section 125 plans (so-called "cafeteria plans") are amended to exclude employee
contributions for health benefits.
Employers submit annual reports to the Internal Revenue Service and list on employee
W-2 forms the amount of taxable and tax-exempt contributions to health insurance.
RECONCILIATION OF ACCOUNTS
After the end of each year, alliances determine whether individuals met their
obligations to purchase health insurance coverage.
(8/6/93)
262
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFH
The alliance determines whether health insurance accounts for individuals and families
who received no subsidies contain surplus funds that may be withdrawn for personal use.
Alliances pay appropriate refunds to primary employers of families with two employed
spouses; refunds are paid from contributions of secondary employers, as described above.
Individuals and families who receive subsidies but earn higher incomes than estimated
are responsible for repaying excess subsidies.
As part of the year-end reconciliation, states may require submission of state or
federal tax returns to alliances or develop other mechanisms for verifying income.
Designated agencies may verify income data with the Internal Revenue Service, the Social
Security Administration and the Inter-Alliance Health Security Fund.
In the case of dual-earner families that benefit from subsidies to employers, the
alliance provides a refund to the primary employer after subtracting the total subsidy. The
reconciliation does not require submission of any additional information related to income.
RECAPTURE OF SUBSIDIES FROM UNEARNED INCOME
A new provision of the Internal Revenue code establishes a mechanism to recapture
subsidies paid to employers on behalf of employees who have more than $1,000 in unearned
annual income.
Under the new mechanism, alliances report to the Internal Revenue Service net
insurance subsidies to individuals, consisting of direct subsidies to employees and other
individuals and subsidies to employers that indirectly benefit employees.
If an employer contribution is capped at a percentage of employee pay, the employee
is responsible for repaying subsidies received up to a specified percentage of unearned income
(adjusted gross income minus wages and salaries).
Individuals who receive subsidies document on a form submitted to the Internal
Revenue Services that they paid the required amount of total income, including unearned
income, for the employee contribution to health insurance. An underpayment greater than 20
percent triggers penalties and mandatory withholding for income tax and health insurance.
(8/6/93)
263
�WORKING GROUP DRAFT
PRIVILEGED AND ^CONFIDENTIAL
SUBSIDY GRANTS TO STATES
The federal government provides funds for health insurance subsidies through
quarterly grants paid to states. Appropriate levels of federal subsidy grants are determined
through the following procedure:
•
A summary report of individual and family health accounts totals
the aggregate cost and distribution of premium subsidies to
eligible employers and individuals.
•
Alliances file quarterly reports with the Inter-Alliance Health
Security Fund documenting the shortfall in premium revenue as
a result of caps on contributions, as well as subsidies for cost
sharing.
•
The Inter-Alliance Health Security Fund verifies state reports
against employers' quarterly statements and tax information
submitted to the United States Treasury.
In addition, the Inter-Alliance Health Security Fund audits state
and alliance subsidy determinations during the first 18 months of
the program. The last twelve months of this 18-month period
forms the base year for determining federal subsidy grants in
future years.
•
After two years, the federal government provides states with
subsidy grants based on the initial year's audited subsidies
adjusted for changes in population, employment and income.
In order to adjust the amounts of federal subsidy grants, twice each year alliances
submit reports documenting subsidies paid during the previous two quarters. Subsidy grants
are adjusted to account for significant changes in the number of applications for subsidies.
Subsidy determinations by states and alliances are audited annually. Federal subsidy
grants are adjusted to reflect changes in the rate of errors.
(8/6/93)
264
�WORKING GROUP DRAFT
PRIVILEGED AND CQNFIBENIIAL
If the National Health Board determines that a state fails to establish an effective
mechanism for determining and distributing subsidies, the Secretary of the Department of
Health and Human Services establishes an alternative mechanism to administer subsidies in
that state.
(8/6/93)
265
�WORKING GROUP DRAFT
PRIVILEGED AND CONHDENTIAL
SUMMARY: IMPACT OF REFORM
NEW STANDARDS AND RULES FOR HEALTH INSURANCE:
A nationally guaranteed package of health benefits.
Shared responsibility, so that consumers and their employers
both contribute to the cost of health care — but in a reformed
market that controls cost to make coverage predictable and more
affordable.
Negotiated premiums obtained through health alliances that represent
consumers and employers.
Consumers choose the health plans they prefer.
Incentives for cost-conscious choice, so that consumers receive the savings if
they pick a less expensive plan and pay the extra if they choose a more
expensive one.
Open enrollment, with no participating health plan allowed to deny coverage to
any eligible person or to drop any eligible person from enrollment.
The ability to transfer policies without interruption, so that individuals can
change jobs without fear of losing coverage.
No exclusions for existing medical conditions, so that health plans must cover
all medical conditions.
Premium rates for just three policies: individual; one-adult family; two-adult
family.
Community rates, no American paying more because of existing illness,
disability, age, sex, race, occupation or any individual characteristic.
(8/6/93)
266
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
Adjusted payments to health plans, so that alliances pay more to plans that
enroll those with higher medical costs and less to plans that enroll younger,
healthier people.
Guarantees of limited premium increases so employer contributions (tied to
average alliance premiums) and average employee contributions grow no faster
than a nationally set rate.
INDIVIDUAL AND FAMILY HEALTH ACCOUNTS:
•
Alliances establish individual and family health accounts, so that all employer,
employee, and other contributions flow into one account for a family.
•
All funds in alliances are kept on deposit in the federally created
Inter-Alliance Health Security Fund.
•
Consumers are guaranteed that money paid into their account is
used only for their premium.
•
Financing of insurance is fully transparent; consumers receive
reports on their accounts and have the right to see data at any
time.
•
All families buy a single policy through their family account.
Because no overlapping or dual coverage exists, the need to
coordinate benefits disappears. In families with two earners, the
lower earner's employer pays an individual rate; the higher
earner's employer pays a family rate and receives a year-end
refund out of the other employer's contribution.
(8/6/93)
267
�WORKING GROUP DRAFT
PRIVILEGED AND •CONFIDENTIAL
PREMIUMS CAPPED:
•
Employers and employees share in premium costs: For an
employee with a given family status, employers pay 80 percent
of the average premium in a health alliance. Employees pay 20
percent if they enroll in an average-cost plan. Employees who
enroll in less expensive plans pay less; employees who enroll in
more expensive plans pay more.
•
Firms with less than $24,000 average wages receive subsidies.
Premium contributions for individual employees at small,
low-wage employers are capped at levels as low as 3.2 percent,
depending on a firm's size and average wage.
•
No employee pays more than a specified percentage of income
for a plan at the weighted-average premium. However,
employees with significant unearned income repay subsidies to
their employers through their federal income tax.
•
Self-employed individuals pay premiums capped according to
income. Their payments are fully tax deductible.
•
For individuals who lose their jobs, unemployment insurance
covers the prior employer's contribution for up to six months.
After that period, unemployed workers who are not covered
under a spouse's policy are treated the same as non-workers.
•
Premiums for non-working individuals who do not qualify for
Medicaid are capped.
TAX DEDUCTIBILITY:
•
Employer contributions toward the premium for the national
benefit package are tax deductible to the employer and not
counted as income for employees.
•
Additional benefits, including coverage for cost sharing, are tax
deductible for three years or the life of existing collective
bargaining contracts. (This policy to be reviewed.)
(8/6/93)
268
�WORKING GROUP DRAFT
PRIVILEGED ANI>€eNFIDENTIAL
ADMINISTRATION:
•
Minimum paperwork for employers: Alliances compute
employer deductions and withholding; employers write one
check each pay period for all their employees and file one report
each quarter through the Inter-Alliance Health Security Fund.
•
Employees and other individuals fill out one form when they
begin a new job or move into an area. They make an annual
choice of health planfromthe menu offered by their alliance.
•
State unemployment insurance offices verify eligibility for
unemployment health coverage.
•
Alliances determine premium caps for wage earners based on
self-declared income, which is verified with federal agencies.
•
States assign to alliances or other agencies subsidy eligibility
determination for non-workers and the self-employed.
•
Alliances receive national funds to offset the cost of caps on
employer, employee and individual premium contributions.
•
Alliances file quarterly reports with the Inter-Alliance Health
Security Fund documenting the shortfall in premium revenue
caused by caps on contributions.
The Fund verifies claims using employers' quarterly reports and
Treasury tax data, and it audits state subsidy determinations.
After two years, states receive a block grant reflecting the base
year's subsidies and changes in population, employment and
income. States are liable for any shortfallfromfailure to collect
premiums.
(8/6/93)
269
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
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Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
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<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
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Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Security Act - Working Group Draft] [Binder] [4]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
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2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621470" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
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William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
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5/7/2015
Source
A related resource from which the described resource is derived
17621470
12093636
42-t-12093636-20060885F-Seg5-008-010-2015
-
https://clinton.presidentiallibraries.us/files/original/8227e6d20762468fcf2847f1d2694e2b.pdf
1ada50991f336a9e53230aa84cc57845
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task. Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [Binder] [3]
Stack:
Row:
S
52
Section:
Shelf:
Position:
7
3
�WORKING GROUP DRAFT
PRIVILEGED ANO-CONriDENTL\L-
PRIORTTY PROJECTS
A health professions special projects and demonstration training authority is
established to support the transition to the new health system, including support for the
following new projects:
•
Training of providers in mental health, substance abuse treatment and
prevention, geriatrics, and developmental disabilities.
•
Training for school-based health providers in immunization, reduction of
substance abuse, dealing with teen pregnancy, control of violence, and linking
students and families with the community health system.
•
Students in baccalaureate-level nurse training programs preparing for careers in
teaching, community health service, and specialized clinical care.
•
Training related to managed care, cost-effective practice management,
continuous quality improvement practices, and provision of culturally sensitive
care.
Programs also support Priority Health Training Programs designed to improve the
supply, distribution, and quality of providers, including those in areas with inadequate health
systems: rural areas under section 778, inner-city areas under new authority.
Support expands for:
•
Service-linked regional educational networks; e.g., AHECs (section 746),
geriatric education centers (section 777).
•
Health administration (section 771), public health training positions (section
761), special projects (section 762) and preventive medicine (section 763).
•
Professional nurse clinician and nurse anesthetist training positions and nursing
special projects (sections 820, 821, 822, 830 and 831).
(8/6/93)
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Primary care loans are provided for students in dentistry, nursing and targeted allied
health professions; e.g., occupational health and physician therapy.
FUNDING
An additional annual investment of $200 million funds workforce related programs
specified above.
(8/6/93)
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INCENTIVES FOR PHYSICIANS TO PROVIDE PRIMARY CARE
In addition to refocusing federal support for physician education to focus on primary
care, the Medicare programs increases its rates of reimbursement for primary care physicians.
RATE INCREASES
Eliminate office consultations as a separate service and use the savings to increase
fees for all office visits: Office consultations are eliminated as a separate category of
service; codes for office visits also cover consultations. The relative values for office
consultations are redistributed to office visits without increasing total spending.
Because office consultations currently pay more than office visits, the change has the
effect of increasing fees for office visits. Because primary care physicians perform
consultations less often than sub-specialists perform them, it increases payments for primary
care without increasing Medicare spending.
Increase the relative value of allowances for office visits to reflect time spent
before and after visits: Currently, the relative values for procedures, including medical
visits, account for physician time spent immediately prior to an office visit for preparation
and immediately after an office visit for chart work, patient instructions, etc.
Increasing the work component under primary care services by 10 percent increases spending
for those services; the increase is offset by reducing relative values for all services.
Establish a resource-based method to pay for the physician overhead component
of the physician fee-schedule: The Secretary develops a methodology and data sets for
implementing a resource-based system for determining practice expense relative value units
for each physician's service.
The current physician-fee schedule includes a work component that accounts for the
physician's activities and a practice expense component that accounts for overhead (other than
malpractice). The work component is based on resources used; the practice expense
component is based on historic charges.
(8/6/93)
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Because primary care services occur more often in office settings, actual overhead
costs are higher than for surgical services. Under the current system, surgical services are
assigned a higher overhead fee than primary care services. Collecting data on actual overhead
costs and developing an allocation method for assigning overhead to individual procedures
increases the relative value primary care services and decreases it for many non-primary care
services.
Provide a separate expenditure target rate of growth for primary care: Establish
a third category for primary care services, expanding the existing two categories which cover
surgical services and all other services.
Provide a higher expenditure target rate of growth for the separate primary care
services target: Increasing the target for primary care services decreases the target for other
services.
Bonus Payments: Eliminating the 10 percent bonus payment for non-primary care
services in rural and urban Health Professional Shortage Area shifts additional resources to
increase the bonus payment to 20 percent for primary care services in those areas.
(8/6/93)
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ACADEMIC HEALTH CENTERS
Academic health centers perform broad community functions that must be sustained in
the competitive environment created under health reform.
ENSURING SUPPORT FOR TEACHING AND RESEARCH MISSIONS
The American Health Security Act creates a national pool of funds to support costs
associated with the institutional costs of research, development of new medical technology,
treatment of rare and unusually severe illnesses and provision of specialized patient care.
Medicare payments and a surcharge on private health insurance premiums flow into
the pool. Funds are allocated to academic health centers and affiliated teaching hospitals
through a fixed percentage added to hospital payments.
Academic health centers, including affiliated teaching hospitals, receive a new,
separate payment as reimbursement for costs incurred over and above the cost of routine
patient care. Only institutional costs not covered by typical fees for patient care, and which
can be analytically justified, are included in the formula.
This approach represents a revision of the current Medicare indirect medical education
payment formula to factor in the impact of universal health insurance coverage. The revised
system reduces Medicare payments to teaching hospitals for the cost of caring for uninsured
patients and disproportionate share of low-income patients because such payments will no
longer be required once universal coverage exists.
In Fiscal Year 1992, Medicare Indirect Medical Education payments totalled $3.6
billion, including the cost of bad debts, charity care and other costs not related to medical
education. As these costs decline, Medicare IME costs are reduced accordingly, and
Medicare payments reflect the program's proportionate share of the total remaining costs.
All private payers also contribute explicitly to the national fund on a proportionate basis.
(8/6/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND CONITDENTIAL
FINANCING CLINICAL RESEARCH
The American Health Security Act expands investment in clinical investigations and
research related to the delivery of health services and outcomes. Health plans also are
required to provide coverage for routine patient care associated with approved clinical trials.
(See Guaranteed National Benefit Package, Tab 4.)
ENSURING ACCESS TO ACADEMIC HEALTH CENTERS
To ensure that all patients receive the specialized services available through academic
health centers when appropriate:
•
The Department of Health and Human Services, in cooperation with states and
health alliances, identifies rare diseases, specialized procedures and treatments
for which health plans are required to establish contractual relationships with
academic health centers.
•
Health alliances monitor contractual relationships between health plans and
academic health centers to assure appropriate coverage for severity of illness
and to prevent anti-competitive pricing.
•
Health alliances oversee quality management and patient grievance mechanisms
to ensure appropriate detection, referral, morbidity and mortality of illnesses
eligible for referral and specialized treatment.
•
Health alliances provide consumers with information regarding potential
eligibility for clinical trials of relevant investigational treatments.
ENSURING RURAL AND URBAN ACCESS TO ACADEMIC HEALTH CENTERS
To secure appropriate access to academic health centers for patients in rural and urban
areas with inadequate health care systems:
•
(8/6/93)
Grants to academic health centers assist in the development of an information
and referral infrastructure to support rural health networks.
139
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
•
Grants to establish health-care networks in inner-city areas build on existing
urban charity hospitals and affiliated neighborhood clinics.
•
Health alliances institute additional protection to ensure access by rural and
urban underserved populations to special services.
(8/6/93)
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��WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
HEALTH RESEARCH INITIATIVES
The American Health Security Act encourages cost-conscious choices on the part of
consumers and health care providers through explicit financial incentives. At the same time,
expanded investments in health research represent integral features of cost control and quality
goals under health reform. The assessment of costs and effectiveness of new procedures and
technologies will be increased through expanded funding and refocusing of clinical trials on
more common conditions, high cost procedures, and highly variable treatment patterns.
Advances in medical science, development of new medications and technology, as
well as innovations in the organization and delivery of personal and public health services
hold the promise of increased efficiency in the health care system, longevity and improved
quality of life.
New funding for health research focuses on two areas:
•
Prevention research related to biomedical and behavioral aspects of health
promotion and prevention of disease.
•
Health services research related to the development of quality and outcome
measures, access and financing and cost effectiveness, as well as research
related to consumer choice and decision making, primary care and evaluation
of health reform.
PRIORITY AREAS FOR PREVENTION RESEARCH
The National Institutes of Health expands prevention research under current authority
of section 301(a) in priority areas including:
•
Child health, including perinatal health, birth defects and diseases of
childhood, unintentional injuries, learning and cognitive development,
and adolescent health.
•
Chronic and recurrent illnesses, including research on Alzheimer's disease,
cancer, cardiovascular diseases, bone and joint diseases, and other chronic
(8/6/93)
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�WORKING GROUP DRAFT
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diseases and conditions.
•
Reproductive health, including contraceptive development and use, sexually
transmitted diseases, adolescent pregnancy, and pregnancy-related
complications.
•
Mental health, including 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.
•
Substance abuse, including targeted research related to vulnerable populations,
such as high-risk youth, the development of medications and prevention of
dependence on tobacco, alcohol, and drugs.
•
Infectious diseases, focusing on new and emerging infectious diseases, vaccine
development and basic vaccine research, as well as infectious diseases
including:
HIV infection and AIDS - Research on behavior, vaccines, transmission
of HIV, and prevention of disease progression to AIDS.
Tuberculosis - Research on new vaccines to prevent TB, early
diagnosis, and preventing disease progression.
•
Health and Wellness Promotion including:
Nutrition [section 301(B)(3)] - Includes defining optimal diets, dietary
links to disease, and obesity.
Physical activity - Includes an emphasis on fitness for all ages, and
fitness and aging.
Environmental health - Includes an emphasis on identifying health
hazards and their effects, and disorder-specific research.
(8/6/93)
142
�1'"
WORKING GROUP DRAFT
PRIVILEGED AND-e©NFtDENTIAL
•
Prevention Research and Infrastructure Resource Development including basic
science development providing foundations for prevention efforts across a
range of diseases and disorders, encompassing behavioral and social
approaches, and genetics.
•
Resource development including support for prevention research training and
enhancement of statistical and epidemiologic techniques.
COORDINATION AND FUNDING OF PREVENTION RESEARCH
An additional investment of $1.5 billion annually funds new research activities in the
above priority categories. The National Institutes of Health distributes funds using three
mechanisms: grants, contracts, and NIH intramural research.
The NIH Associate Director for Prevention coordinates the prevention research
programs of the national research institutes under current authority of section 402 (7), and
will report annually to the NIH Director and the Secretary on the status and progress of
prevention research activities.
In consultation with the national research institutes, the NIH Associate Director will
develop an ongoing plan for prevention research activities conducted by the NIH.
Prevention research findings are translated into, or appropriately integrated with,
personal health services and public health programs to maximize the impact of prevention
research on disease reduction and improved health status.
PRIORITY AREAS FOR HEALTH SERVICES RESEARCH
This research provides the knowledge to increase the cost effectiveness,
appropriateness and quality of care in a reformed health care system. The health services
research program includes research designed to improve the effectiveness and appropriateness
of clinical practice through several interrelated activities, including:
•
(8/6/93)
Effectiveness research
143
�WORKING GROUP DRAFT
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Quality and outcomes research
Development and dissemination of clinical practice guidelines
Research and evaluation related to administrative simplification under health
care reform
Research on consumer choice and information resources
Evaluation of health care reform.
A new generation of health services research intended to answer critical questions on
the effectiveness of treatments for common clinical conditions is initiated. Patient-outcomes
research and the development of clinical practice guidelines form a central part of the health
services research agenda.
Examples of specific areas of health services research:
•
Effectiveness research which examines the appropriateness and effectiveness of
alternative strategies for the prevention, diagnosis, treatment, and management
of clinical conditions, in terms of patient outcomes. The Medical Treatment
Effectiveness Program research focuses on conditions that meet one of more of
the following criteria:
Large number of individuals are affected.
Uncertainty or controversy regarding effectiveness of treatment exists.
Associated risks and/or costs of treatment are high.
•
(8/6/93)
Patient outcomes research teams (PORTs) are 5-year grants that include
elements of formal literature synthesis, data acquisition and analysis,
development of clinical recommendations, dissemination of findings, and
evaluation of the effects of findings on change in clinical practice.
144
�WORKING GROUP DRAFT
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The development of clinical practice guidelines improves the quality,
appropriateness, and effectiveness of health care. The guidelines also represent
standards of quality, performance measures, and medical review criteria
through which health care providers may assess or review the provision of
health care. Guidelines assist in the determination of how diseases, disorders,
and other health conditions can most effectively and appropriately be
prevented, diagnosed, treated, and managed clinically.
Research and evaluation regarding computerized medical records and
information systems simplifies the administration of health care.
Studies assess the impact of barriers to access, utilization, and continuity of
health care services on health care reform.
Research and analytic work contributes to efforts to devise, implement,
maintain, and evaluate the new system of health care budgets, at the national,
state and alliance levels.
Expanded research into risk adjustment facilitates efficient measurement of
health care needs.
Long-term care research and demonstrations focused on new program models
expand the range of financing and administration for those services.
Research into service organization and structure include examination of the
relationship of continuity, accessibility, and comprehensiveness of primary care
to cost, quality, and access.
(8/6/93)
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EVALUATION OF HEALTH CARE REFORM
The introduction of comprehensive health reform affects every aspect of American
health care. To support implementation of the American Health Security Act, evaluation
research includes:
•
Short-term research - Evaluate the responsiveness of the system to health care
reform, including its effects on institutions, health care professionals, and
specific population groups.
•
Long-term monitoring - Examine the effect of reforms on cost, quality and
access. Longitudinal studies using databases developed through the
augmentation of national and regional surveys and analyses of secondary data
are needed.
•
Demonstrations and evaluations - Address critical issues in health care reform,
such as quality assurance and medical liability.
CONSUMER CHOICE AND DECISION-MAKING RESEARCH
Research aimed at improving information resources that enable purchasers to make
health care choices based on their relative value and quality assumes top priority. This
research contributes to improved decision making by consumers, resulting in more costeffective service delivery and health plan selection. Prospective research efforts include:
•
Consumer awareness of benefit plans, availability of supplemental coverage,
cost-sharing, and utilization.
•
Effect of consumer knowledge on the selection of health plans including the
relationship between health status and choice of plan.
•
Types of information and form of media most effective in assisting consumers
in selecting health plans and providers, including information on costs and
quality of care.
(8/6/93)
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�WORKING GROUP DRAFT
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•
Impact of improved information on consumer satisfaction, access to care,
quality of care and cost of services.
•
Patient choice and decision making related to treatment alternatives.
COORDINATION AND FUNDING OF HEALTH SERVICES RESEARCH
An additional $300 million investment supports the health services research program
described above (funding for the Quality Management Improvement Program and activities
related to information system development are outlined in other sections of the plan).
The Agency for Health Care Policy and Research in the Public Health Service and the
Office for Research and Demonstrations in the Health Care Financing Administration assume
administrative responsibility for research related to the impact of health care reform.
Research activities are conducted through intramural and extramural programs using the
mechanisms of grants, contracts, and cooperative agreements.
(8/6/93)
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PUBLIC HEALTH INITIATIVE
The public health system and the reformed health care delivery system share a
common purpose: to improve the health of the American population at an affordable cost.
While health reform strengthens the personal care delivery system, an enhanced public
health system also plays an essential role to:
•
Protect Americans against preventable, communicable diseases, exposure to
toxic environmental pollutants, harmful products and poor quality health care.
•
Identify and control outbreaks of infectious disease and patterns of chronic
disease and injury.
•
Inform and educate consumers and health care providers about their roles in
preventing and controlling disease and the appropriate use of medical services.
•
Define and validate new prevention and control interventions.
The public health initiative in the American Health Security Act calls for reinventing
public health to work efficiently and in concert with the personal health care system. It
builds on the capability of health alliances and plans to reach out to individuals in their
populations, providing them with information about prevention and appropriate use of medical
services. The initiative promotes readiness and flexibility in the public health system by
strengthening core functions at the local, state, and federal level. It also focuses attention on
specific health problems of regional and national significance to consolidate categorical
programs into an integrated health system, reducing administrative burdens.
The public health initiative repairs, strengthen, and consolidate essential Federal, State,
and local public health functions through three approaches:
•
Improving the performance of the core functions of public health.
•
Authorizing a flexible pool of resources to address priority health problems of
regional and national significance.
(8/6/93)
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�WORKING GROUP DRAFT
•
PRIVILEGED AND-CONHDENIIAL
Expanding federal support for unified data systems, technical assistance and
information networks.
Because dealing effectively with public health problems requires the coordinated
involvement of multiple parties, the initiative is designed to foster inter-agency collaboration
and public-private partnerships, including close working relationships between public health,
community groups, alliances, and plans.
CORE PUBLIC HEALTH FUNCTIONS
Health reform clears the way for the emphasis of public health activities to shift away
from the direct delivery of health services. It positions public health to maintain a strong
defense against preventable diseases and conditions that affect local communities and to work
with the health delivery system to address them. The following essential functions are
supported:
•
Protection of environment, housing, food, and water — Enforcement
functions related to air pollution (including indoor air), exposure to high lead
levels, water contamination, handling and preparation of food, sewage and solid
waste disposal, radiation exposure, radon exposure, noise levels and abatement,
consumer protection and safety.
•
Quality assurance — Enforcement functions to ensure that providers, clinics,
hospitals, long-term care facilities, laboratories, and allied health providers
meet established standards through licensure, certification, and inspection.
•
Investigation and control of diseases and injuries — Identification,
containment and provision of appropriate emergency and treatment resources
for community-wide health problems, including emergency preparedness and
control of violence.
•
Public information and education — The mobilization of communities and
motivation of individuals to reduce risks to health, such as tobacco use, abuse
of alcohol and other drugs, sexual activity that increases vulnerability to HIV
infection and sexually transmitted diseases, inadequate nutrition, physical
inactivity, and childhood immunization.
(8/6/93)
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Laboratory services — The provision of individual testing and pathology
services, including the system of state laboratories that screen for metabolic
diseases in newborns, provide toxicology assessments of blood lead levels and
other environmental toxins, diagnose sexually transmitted disease and
tuberculosis requiring partner notification, test for cholera and other infections
or food-bome diseases, and monitor the safety of water and food supplies.
Targeted outreach to individuals not enrolled in health plans — The
ongoing task of reaching underserved populations, including undocumented
immigrants, homeless individuals, migrant workers, and others who are not
effectively linked to the health care system.
During the transition to the new health care system, public health
centers and clinics continue to provide personal health services
directly to these groups, while working with alliances to develop
effective processes for moving these populations into the health
delivery system.
Training and education — Ensuring adequate training with special emphasis
on public health professionals such as epidemiologists, biostatisticians, health
educators, public health administrators, sanitarians, and laboratorians.
Leadership, policy development, and administration — Public health's
responsibility to define health goals, standards, and policies that affect the
health of whole communities; to define health issues of major importance and
devise interventions to address them; to build coalitions with related public
sectors such as housing, public transportation, and agriculture; and to ensure
accountability for public resources devoted to health. Public health coordinates
closely with the leadership of alliances and plans, mobilizing community
support for public health policies and initiatives.
Health-related data collection, surveillance, and outcomes monitoring —
The basic tool for the health care system as a whole, providing for regular
collection and analysis of information on key dimensions to ensure timely
awareness, decisions, and interventions related to epidemics, emerging patterns
of disease and injury, prevalence of risks to health, and outcomes of personal
health services.
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Plans provide the basic source for most data, emanating from
patient enrollment and encounters with health care providers; but
in order to monitor accurately the developing health issues for a
given population, public health uses this information and
complementary survey data to carry out its surveillance,
monitoring, and analysis responsibilities. Timely analyses of
these data are critical to the task of assessing accountability of
plans and their providers as well as defining community health
problems and outcomes.
Funds are distributed to states using a formula based on three weighted factors that
take into account population (one-third), poverty rate (one-third), and years of productive life
lost (one-third). No state receives an allocation less than the State's grant in the last year
preceding enactment of this initiative. To receive funds under the formula, states are required
to maintain their current level of support for public health and prevention activities at no less
than the average of the past two years' funding level.
Accountability for effective use of state formula grant funds are monitored through
reporting progress in achieving health improvements using a common data set of health
outcomes developed as a part of the Healthy People 2000 initiative.
PRIORITY HEALTH PROBLEMS OF REGIONAL AND NATIONAL SIGNIFICANCE
Additional funds support a federal program to develop innovative strategies for
addressing priority health needs of regional and national significance. The purpose of this
program is to address specific issues in ways that are responsive to the needs of populations
served by alliances and plans and that consolidate rather than proliferate authorities,
management structures, and funding and reporting requirements.
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A national advisory board, with representation from alliances and plans, is created to
advise the Secretary of Health and Human Services on emerging high priority health problems
amenable to prevention and control. Proposals are solicited for innovative interventions that
link public health agencies and the delivery system to achieve measurable reductions in the
incidence of illness and injury. Grants are made through competitive awards to state and
local government agencies, not-for-profit organizations and research institutions. As
effective interventions from these projects are identified, information is disseminated to
facilitate their adoption in other communities.
The following are examples of the types of regional and national priority health issues
to be addressed:
•
Infectious diseases
Immunization — Education and outreach to ensure the broadest possible
immunization coverage against childhood vaccine-preventable infectious
diseases, as well as influenza, pneumonia, hepatitis B, and tetanus among
adults.
HIV/AIDS — Education for prevention, confidential screening programs, and
partner notification programs particularly in urban areas with special focus on
minorities, women, children, and adolescents.
Tuberculosis — Case location, targeted education, and training for providers
regarding treatment and control measures, with special attention to its spread
among homeless people.
•
Chronic and environmentally related diseases
Diabetes — Community-oriented diabetes education and control programs,
directed especially to minority and low-income populations at highest risk,
appear to offer economies of scale to complement individually provided
medical services.
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Violence and iiyury control — The leading cause of years of potential life
lost among Americans and the leading cause of death among children,
adolescents, and young adults, this category requires close collaboration among
several systems, including law enforcement, education, transportation, and
recreation and parks. It is linked to alcohol misuse and requires an integrated
multi-faceted set of interventions.
Health-related behavior and other priority issues
Tobacco prevention — The increasing incidence of smoking among
adolescents and women poses future risks for heart disease and cancer, as well
as low-birthweight babies and infant morbidity.
Comprehensive school health — Furthering development of links between
health and education in a nascent program of comprehensive school health
program.
Maternal, child health, and family planning — With continued special
attention is needed to provide education and outreach to prevent infant
mortality and morbidity. In addition, the persistent and intractable incidence of
adolescent and unwanted pregnancy calls for targeted education and outreach in
support of family planning services. Closely linked to social services,
interventions include targeted public education, programs of home visiting, case
management for children with special needs, and child and spouse abuse
services.
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FEDERAL INTRAMURAL FUNCTIONS
In support of federal assistance for core public health functions and categorical
activities, additional funds improve direct federal capacity, including:
•
Federal surveillance and health statistics, laboratories, and epidemiologic
services — Whether fighting the "old" diseases such as tuberculosis and
cholera or "newer" ones such as Lyme disease or antimicrobial-resistant
infections, public health's basic tools are data collection and biostatistical
analysis, laboratory capacity, and epidemiologic expertise. An effective and
efficient central capacity at the Federal level provides for economies of scale in
addressing many of these health problems.
An essential part of reinventing public health is the consolidation of currently
fragmented public health data systems and the integration of these systems with
the regional and national data network described in the Information Systems
chapter. The need for separate public health data systems is minimized to the
extent that the elements included in the regional and national data network
support public health functions. The unified health information system
provides timely information to support health policy development, budget
formation, efficient program administration and general improvement of the
public's health and does so at the lowest cost and burden.
•
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Technical assistance and national health information networks — To
support the reinvention of public health at local, State, and Federal levels and
the application of findings from priority health programs described above,
technical assistance and information networks are needed to link Federal, State,
and local public health agencies and various grant-supported programs carried
out by State, local, and not-for-profit agencies. Information from these
networks and the health data system provide the basis for regular reports to the
President and the Congress for purposes of monitoring the effectiveness of this
initiative.
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ADDITIONAL FUNDING
The public health initiative requires an additional investment of $1.1 billion in FY
1996, with additional increases in the succeeding four years. Funds are distributed as follows:
•
Core public health functions: $700 million in first year
•
Priority health programs: $300 million in first year
•
Federal intramural functions: $100 million in first year.
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LONG-TERM CARE
A new long-term care program, created through Title XV of the Social Security Act,
encompasses five components:
•
Expanded home and community-based services.
•
Improvements in Medicaid coverage for institutional care.
•
Standards to improve the quality and reliability of private long-term care
insurance and tax incentives to encourage its purchase.
•
Tax incentives that support the efforts of individuals with disabilities to obtain
employment.
•
A demonstration study intended to pave the way toward greater integration of
acute and long-term care.
HOME AND COMMUNITY-BASED SERVICES
The American Health Security Act increases federal authority to provide home and
community based services to individuals with severe disabilities without regard to income or
age.
The expanded home and community-based service program is a federal/state match
primarily federally funded with the state contribution set roughly equal to current state
Medicaid spending on the severely disabled. When fully implemented, federal funding is
capped based on the estimated cost of serving the eligible population.
Each state submits for federal approval a plan outlining the implementation of
expanded home and community-based services.
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Eligibility: The Secretary of the Department of Health and Human Services
establishes uniform eligibility criteria, which states implement using a standard instrument
developed by the department. To be eligible, an individual must meet one of the following
conditions:
•
Require personal assistance, stand-by assistance, supervision or cues to
perform three or more of the following five activities of daily living (ADLs):
eating, dressing, bathing, toileting and changing location.
•
Present evidence of severe cognitive impairment, as indicated by:
A specified score on a standard mental status protocol developed by the
Secretary of the Department of Health and Human Services or
A score specified by the Secretary on the standard mental status
protocol described above, as well as evidence of the need for constant
supervision because the applicant poses a significant danger to self or
others, has multiple and significant behavior problems, or is unable to
administer prescribed medications, or
A designation of severe or profound mental retardation as indicated by a
score of 36 or less on a standard intelligence test.
For children under the age of six, evidence that the child is
dependent on technology and otherwise requires institutional
care.
Benefits: States define services available under the program. The list includes
personal care and personal assistance services; both agency-administered and consumerdirected services must be available. Consumer-directed services are those provided by
individuals who are hired, trained and managed by the person receiving the services.
Additional services that may be covered include: homemaker and chore assistance,
home modifications, respite services, assistive technology, adult day services, habilitation and
rehabilitation, supported employment and home health services not otherwise covered.
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Services other than those listed above may also be covered; they may be delivered in a
range of community residential situations or outside the home, except in licensed nursing
homes or ICF-MR'S.
The Home and Community Based Services program supplements other coverage for
care. It does not reimburse for services to which the individual is entitled under the
nationally guaranteed, comprehensive benefit package, Medicare or private insurance.
Co-insurance: Eligible individuals pay co-insurance to cover a portion of the cost of
all services they receive.
•
The amount of co-insurance for all income levels equals, on average, 20
percent of the cost of services received. The Secretary develops a sliding scale
to determine the amount of co-insurance.
•
Co-insurance calculated based on the amount paid by the program. Providers
must accept the combined federal reimbursement and co-insurance as payment
in full.
•
The Secretary may waive the co-insurance requirement, except for nominal
payments, for individuals with incomes below 100 percent of the federal
poverty level, as defined by the Office of Management and Budget.
Medicare Beneficiaries: Individuals eligible for Medicare pay a premium of $20 per
month, which increases annually by the percentage increase in the Social Security Cost of
Living Adjustment. Individuals with incomes below 100 percent of poverty do not pay the
premium.
State Administration: To implement the program, the state plan:
•
Designates an agency or agencies to administer the program.
•
Specifies benefit and payment policies.
•
Defines services included in the state program in addition to personal
care/personal assistance.
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Specifies how the state determines eligibility and sets co-insurance
requirements, develops care plans, allocates resources, coordinates services and
assures quality.
Provider Reimbursement: States may distribute grants through medical vendor
payments to providers, through vouchers or cash payments to individuals, or through capitated
payments to providers such as HMOs.
States that provide vouchers or cash payments specify the administration and methods
used to determine the amount of the voucher or cash assistance. Voucher payment systems
comply with applicable Social Security and unemployment insurance laws.
Funding: The Department of Health and Human Services allocates funds for the
program to the states.
The Department of Health and Human Services establishes a national expenditure
ceiling for home and community based services. States may claim federal matching funds up
to the expenditure ceiling, which is based on the average estimated cost of serving individuals
eligible for the program.
The national expenditure ceiling increases annually consistent with the rate of increase
allowed in the national budget for health care. The Secretary determines a formula to allocate
funds to the states based on:
•
Estimated number of individuals with severe disabilities.
•
Age and gender distribution in the population.
•
Prevalence of poverty.
•
Average wage for individuals in service occupations in the state.
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Federal Matching Rates: The Secretary of the Department of Health and Human
Services determines federal matching rates for allowable costs according to a formula that
reflects:
•
Current state spending for the eligible population under Title XIX for the
Personal Care Option.
•
Home and Community Based Waiver Program.
•
Home Health Services and state long-term care programs.
The federal matching rate is no lower than 70 percent or higher than 95 percent for
any state.
Funding phases in beginning in fiscal year 1996. In that year, states receive 20
percent of their allocation under the national budget, 40 percent in FY-1997, 60 percent in
FY-1998, 80 percent in FY-1999 and 100 percent in FY-2000. Minimum benefit
requirements do not take effect until the program is fully implemented.
IMPROVEMENTS TO MEDICAID COVERAGE FOR INSTITUTIONAL CARE
The American Health Security Act amends Title XIX of the Social Security Act to
provide the following improvements in coverage for institutional care under Medicaid:
•
States establish a medically needy program for all residents of a nursing home
or an intermediate care center for the mentally retarded.
•
States permit residents of nursing homes and intermediate care homes for the
mentally retarded to retain $100 per month as a living allowance.
That amount is excluded from calculation of an individual's
obligation to spend down private assets to qualify for Medicaid
coverage.
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States allow single residents of nursing homes and intermediate
care centers for the mentally retarded to retain up to $12,000 in
personal assets in determining eligibility for Medicaid coverage.
States establish estate-recovery programs and extend look-back periods for
illegal transfers of assets to 60 months. States apply penalties for transfers of
income as well as resources and impose penalties effective at the time of
Medicaid eligibility. Penalties are cumulative, not consecutive and limit
transfers of assets to a spouse to the Community Spouse Resource Allowance.
In order to encourage the purchase of private long-term care insurance, states
may alter Medicaid eligibility requirements to allow individuals who use
qualified long-term care insurance to retain a assets above the standard amount
($12,000).
Individuals with assets in excess of protected amounts must spend down excess
resources in order to qualify for Medicaid coverage. States may limit the
amount of enhanced asset protection.
REGULATION OF AND TAX INCENTIVES FOR PRIVATE LONG-TERM CARE
INSURANCE
A long-term care insurance policy is any insurance policy, rider, or certificate
advertised, marketed, offered, or designed to provide coverage for not less than 12
consecutive months for each covered person on an expense incurred, indemnity, prepaid, or
other basis for diagnostic, preventive therapeutic, rehabilitative, maintenance, or personal care
services provided in a setting other than an acute-care hospital.
Long-term care insurance policies include:
•
Group and individual annuities and life insurance policies, riders or certificates
that provide directly or indirectly, or that supplement long-term care insurance
•
Policies, riders or certificates that pay benefits based on cognitive impairment
or loss of functional capacity.
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Long-term care insurance excludes any insurance policy, rider or certificate that
primarily offer supplemental coverage for Medicare, hospital expenses, medical and surgical
expenses, hospital confinement indemnity coverage, major medical expense coverage,
disability income or related asset protection, accident coverage, coverage in the case of
specified diseases or specified accidents, or limited health insurance coverage.
The definition of long-term care insurance also excludes life insurance policies that
provide accelerated payment of benefits and a lump-sum payment and in which neither the
benefits nor eligibility are based on the need for long-term care services or the standard
eligibility triggers.
Any other product advertised, marketed, or offered as a long-term care insurance
policy, rider, or certificate is considered a long-term care insurance policy subject to these
limitations.
Consumer Education: Federal appropriations of $10 million to states and $1 million
to organizations for fiscal year 1996-98 provide grants for consumer information, counseling
and assistance grant programs to educate consumers about long-term care insurance.
Regulation: Minimum long-term care insurance product and business standards and
requirements for monitoring and enforcing insurance industry practices and state regulatory
systems are established. The Department of Health and Human Services awards grants to
states to establish demonstration programs to improve enforcement of long-term care
insurance.
The Secretary of the Department of Health and Human Services promulgates federal
regulations for long-term care insurance offerings within two years. Federal regulations
require, for example, that policies:
•
Provide for nonforfeiture of benefits in the event of policy lapse.
•
Offer inflation protection at an annually compounded benefit rate.
•
Do not limit coverage based on pre-existing conditions.
•
Require third party notification of pending lapse and reinstatement for up to
five months after termination if lapse was due to incapacitation.
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•
Clearly define covered services, benefit eligibility triggers, premiums and
expected increases, and the tax treatment of the long-term care insurance
policy.
•
Define eligibility for benefits based on an independent professional functional
assessment.
•
Contain requirements concerning continuation and conversion of group policies
and other regulations for group policies.
Federal regulation of business practices related to long-term care insurance include,
but are not limited to:
Requirements for states to establish an appeals process for beneficiaries.
Mechanisms for timely resolution of consumer complaints.
Provisions regarding adequate responses to claim denials.
Training and certification of agents.
Limits on commissions paid to agents.
Requirements for premium approval and pricing assumptions.
Prohibitions against improper sales practices.
Association endorsement or sale of policies.
The Secretary of the Department of Health and Human Services also may regulate the
long-term care insurance aspects of Continuing Care Retirement Communities.
States implement and enforce standards for long-term care insurance. Within two
years, states submit to the Secretary of the Department of Health and Human Services a plan
describing the implementation and enforcement.
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If a state fails to submit a plan or its plan is not approved, no long-term care
insurance policy may be sold in the state until it submits an acceptable plan. Penalties apply
for agents and insurers who fail to comply with these requirements.
States submit annual reports; the Department of Health and Human Services conducts
periodic audits of state performance.
Tax Treatment of Premiums for Long-Term Care Insurance: The Internal
Revenue Code is amended to provide for:
•
The exclusion from taxable income of amounts paid for services or as cash
payments under a qualified long-term care policy.
A qualified policy for tax purposes is a policy that pays for
benefits for persons with at least three limitations in the
performance of activities of daily living or comparable cognitive
impairment and meets minimum federal long-term care
insurance requirements.
•
The maximum daily benefit excluded is $110 in 1994 with annual adjustments
based on increases in the wage price index or an alternative selected by the
Treasury Department in consultation with the Department of Health and Human
Services.
•
The cost of qualified long-term care policies as defined in this section may be
included as an itemized medical expense deduction.
•
The definition of medical expenses is clarified to include qualified long-term
care services.
•
Employer-paid premiums for long-term care insurance are treated as
deductions for employers and excluded from taxable income for employees.
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TAX INCENTIVES FOR INDIVIDUALS WITH DISABILITIES WHO WORK
Employed individuals who require assistance with activities of daily living and who
purchase personal care and personal assistance services may obtain a tax credit for 50 percent
of their costs, up to a maximum of $15,000 per year.
The Internal Revenue Service issues regulations defining personal care/personal
assistance services eligible for the tax credit, including:
Personal services, including, but not limited to, those appropriate to carrying
out activities of daily living in or out of the home.
Home services, including meal preparation and shopping.
Assistance with life skills, including money management.
Communication services.
Security services, including monitoring alarms.
Mobility services.
Work-related support services.
Service coordination.
Assistive technology services, including evaluation and training of family
members.
Emergency services, including substitute services.
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DEMONSTRATION STUDY OF ACUTE AND LONG-TERM CARE INTEGRATION
The Secretary of the Department of Health and Human Services conducts a
demonstration program for integrated models of acute and long-term care services for
individuals with disabilities and chronic illnesses. The demonstration:
•
Defines organizational arrangements to integrate models of acute and longterm care services.
•
Assesses the operational and financial viability of the integrated models
developed and tested.
•
Evaluates the impact of integrated models.
•
Determines the appropriateness of including these models as program options
in the managed competition structure.
The Secretary of the Department of Health and Human Services establishes minimum
benefit specifications. Sponsors of integration models include the following services:
•
Comprehensive medical benefits.
•
Specialized transitional benefits.
•
Long-term care benefits.
•
Specialized habilitation services for participants with developmental disabilities.
The Secretary of the Department of Health and Human Services establishes
eligibility criteria for the demonstrations including one or more of the following groups:
•
Individuals with disabilities covered under the basic health insurance program.
•
Medicare beneficiaries who qualify for Part A and participate in Part B.
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Medicaid beneficiaries eligible for Medicare or otherwise eligible for long-term
care services under the SSI program.
The Secretary of the Department of Health and Human Services establishes criteria for
sponsor participation. The criteria assesses financial controls, commitment to the goals of the
demonstration, information systems and compliance with applicable state laws.
Demonstration sponsors provide enrollment services, client assessment and care
planning, simplified access to services, on-going integrated acute- and chronic-care
management, continuity of care across settings and services, quality assurance, grievance and
appeal procedures, member services and strong consumer participation.
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ANTITRUST REFORM
The antitrust laws serve an important function in the new health care system, enforcing
rules of competition critical to the efficient operation of the new system.
While the vigorous enforcement of the antitrust laws is important, in several areas
legitimate concerns exist about the need for greater clarity concerning enforcement policy and
the ability of some health care providers to compete effectively during an interim period.
HOSPITAL MERGERS
Hospitals that do not compete in the same market, i.e. those 50 miles or more apart or
those offering different specialized services, and those smaller than a certain size, i.e. 50-75
beds, require certainty that they will not be challenged by the federal government if they
attempt to merge.
For larger hospitals, the Department of Justice and the Federal Trade Commission,
within 12 months of passage of health reform, drafts guidelines, containing examples, of
mergers that do and do not attract enforcement attention. The Department also provides an
expedited business review procedure to allow a seven to ten-day turn around and an answer
on which the inquirer may rely if it acted in accordance with the information it provided to
the Department and the Department's response.
HOSPITAL JOINT VENTURES AND PURCHASING ARRANGEMENTS
Hospitals may enter into joint ventures for technological equipment and ancillary
services. The Department of Justice and the Federal Trade Commission publishes guidelines
within 12 months of passage of this legislation establishing safe harbors on which hospitals
may rely. The guidelines contain examples of ventures that would not survive antitrust
scrutiny.
The expedited business review process described above also applies to these joint
ventures and purchasing arrangements.
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PROVIDER COLLABORATION
During the transition to the new health care system, physicians and other providers
may require some protection to negotiate effectively with health plans and to form their own
plans. To protect physicians and other providers from the market power of third party payers
forming health plans, providers are provided a narrow safe harbor to establish and negotiate
prices if the providers bear some financial risk in the plan. The financial risk may not be
simply fee discounting.
Physicians who provide health services for the benefit package may combine to
establish or negotiate prices for the health services offered if the providers bear risk and if the
combined market power of the providers does not exceed 20 percent. This safe harbor does
not apply to the implicit or explicit threat of a boycott.
STATE ACTION IMMUNITY
A state that seeks to grant antitrust immunity to hospitals and other institutional health
providers has the authority to do so under the state action doctrine.
If a state establishes a clearly articulated and affirmatively expressed policy to replace
competition with regulation and actively supervises the arrangements, the hospitals and other
institutional providers involved will have certainty that they will not face enforcement action
by the federal government.
McCARRAN-FERGUSON
The current exemption from the antitrust laws enjoyed by health insurers is repealed,
eliminating the ability of health plans to collectively determine the rates they charge.
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FRAUD AND ABUSE
The American Health Security Act establishes an all-payer health care fraud and
abuse enforcement program, increases funding for and coordinates activities of various
branches of government for enforcement against fraud and abuse in the health care system.
IMPROVED COORDINATION
The fraud and abuse enforcement program coordinates federal, state and local law
enforcement activities aimed at health care fraud and abuse. The Department of Justice and
the Department of Health and Human Services jointly direct the program.
TRUST FUND
Fines, penalties, forfeitures and damages (other than restitution) for fraud or abuse in
health care delivery are deposited in a trust fund to supplement federal efforts to combat
health care fraud and abuse.
Exceptions are made to the extent that current law directs that the money be given to
other parties (such as the states) or deposited in other trust funds (such as the Medicare Trust
Fund).
CONTROL KICKBACKS
The American Health Security Act expands the scope of the current anti-kickback
statute from covering only Medicare and Medicaid to covering all health payers. The new
provision calls for punishment for the payment or receipt of any item of value as an
inducement for referral of any type of health care business (subject to the exceptions
described below).
The federal government is authorized to seek civil remedies in U.S. District Court,
including: civil penalties, injunctive relief to halt kickback schemes and ability to secure
assets in appropriate cases. The statute provides a new administrative remedy involving civil
monetary penalties for kickback violations.
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Exceptions to the kickback provision include payments for items or services furnished
to patients paid for on an at-risk basis to that provider furnishing the items or service, such
as capitated payments. Also included are payments made on an "at risk" basis to a health
plan ("at risk" would include capitation, global fees, and perhaps other bundled payment
arrangements). The exception covers all "downstream" payments made to providers by such
an "at risk" plan, even fee-for-service payments. Similarly, if a provider network is paid by
a plan on an "at risk" basis, any downstream payments for ancillary items and services made
by the network are covered by the exception. In addition, the statutory and regulatory ("safe
harbor") exceptions under the current kickback statute apply to an expanded kickback statute
that applies to all payers.
END SELF REFERRALS
Payment to an entity for any item or service is prohibited (subject to the exceptions
discerned below) in which the physician ordering services has a financial relationship with the
entity and in which the physician does not render that item or service.
Self-referral limitations carry an exception in which items or services are paid for on
an at-risk basis to that provider, such as capitated payments. The exception to the Antikickback prohibitions for "at risk" payments to plans and networks, described above, also
applies to self-referral prohibitions. The exceptions in section 1877 are retained except that:
•
The exception for group practices is narrowed to prevent the creation of sham
groups.
•
Exceptions for investments by large entities require that the company hold
$100 million in shareholder equity.
TOUGHEN PENALTIES FOR WRONGDOERS
Current federal authority is amended to allow forfeitures of proceeds derived from
health care fraud. The forfeiture remedy allows the federal government to use either criminal
or civil remedies to seize assets derived from fraudulent or illegal activities.
A new health care fraud statute, modeled after existing mail and bank fraud statutes,
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sets penalties for schemes to defraud either public or private health care programs. The
existing mail fraud statute is amended to address schemes that use private delivery services in
addition to the United States mail system.
A new federal criminal statute prohibits deliberately making false statements to health
plans, health alliances or state health care agencies.
A new federal criminal statute prohibits the payment of bribes, gratuities or other
inducements to administrators and employees of health plans, health alliances or state health
care agencies.
The federal government is authorized to assess civil monetary penalties against
individuals who engage in any of the following prohibited activities:
•
False Claims
•
•
Submitting a false orfraudulentclaim for an item or service. (See
section 1128A(aXl)(B).)
•
Submitting a claim for a physician's service provided by a
person who was not a licensed physician, whose license was
obtained through misrepresentation or who improperly
represented to a patient that he or she was a certified specialist.
(See section 1128A(a)(l)(C).)
•
The routine waiver of co-payments if co-payments are required
under a health plan.
•
Claiming a higher health-service code in order to obtain higher
reimbursement for a health service.
•
(8/6/93)
Submitting a claim for an item or service not provided as claimed. (See
section 1128A(a)(l)(A) of the Social Security Act. All references in
this section are to the Social Security Act unless otherwise specified.)
(Many of these actions are already the basis for civil monetary penalties
with respect to Medicare and Medicaid.)
Unbundling orfragmentingcharges as part of a bundled-
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payment scheme. (See section 1866(g).)
•
Engaging in practices such as unnecessary multiple admissions
to a hospital or other health care institution or engaging in other
inappropriate medical practices in order to circumvent a bundled
payment scheme.
False Statements
•
Failing to report information or reporting inaccurate information
that is required to be submitted to a data bank. (See section
421(c) of the Health Care Quality Improvement Act.)
•
Submitting false or fraudulent statements to the National Health
Board, a health alliance or a plan. (See section
1876(i)(6)(A)(v).)
Violations Specific to Plans
•
•
Acting to cancel the enrollment of or refusing to enroll an
individual in violation of the law. (See section
1876(i)(6)(A)(iii).)
•
Engaging in any practice that reasonably could be
expected to have the effect of denying or discouraging
enrollment by eligible individuals whose medical
condition or history indicates a need for substantial future
medical services. (See section 1876(i)(6)(A)(iv).)
•
(8/6/93)
Failing substantially to provide medically necessary services,
items or treatments required (under law or contract) to be
provided to an individual. (See section 1876(i)(6)(A)(l).)
Employing or contracting with any individual or entity excluded
from participation in the health care system for the provision of
services, utilization review, medical social work or
administrative services or employing or contracting with any
entity for the provision (directly or indirectly) through such an
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excluded individual or entity of such services. (See section
1876(i)(6)(A)(vi).)
•
Miscellaneous
•
Failing to cooperate with quality program or utilization review.
•
Paying or receiving unlawful kickbacks (subject to exceptions).
•
Submitting a claim for an item or service submitted by an
excluded person. (See section 1128A(a)(l)(D).)
•
Failing to report violations of federal criminal law.
Whistleblowers are protected against adverse employment
actions through mechanisms similar to section 7 of the Inspector
General Act.
The penalty amount is $10,000 per item or service claimed (consistent with the Civil
False Claims Act (31 U.S.C. § 3729) and an assessment of no more than triple the amount
claimed. The law provides for pre-judgment interest or penalties and assessments imposed
by an administrative law judge.
The standard of knowledge in these cases is "knows and should know."
The basis for exclusion from Medicare and state health programs serves as the basis
for an exclusion from all other health programs.
The following actions represent the basis for exclusion from health care programs.
The exclusion from the programs is mandatory:
•
Criminal conviction relating to fraud, theft, embezzlement, breach of
fiduciary responsibility or other financial misconduct in connection with
the delivery of a health care item or service. (See section 1128(a)(1) and
(b)(1).)
•
Criminal conviction relating to the neglect or abuse of patients in
connection with the delivery of a health care item or service. (See
(8/6/93)
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section 1128(a)(2).)
With respect to the following bases for exclusion, the Department of Health and
Human Services determines whether, given the facts of the case, an individual should be
excluded:
•
Criminal conviction relating to fraud, theft, embezzlement, breach of
fiduciary responsibility or other financial misconduct in connection with
an act or omission in a program operated by or financed in whole or in
part by any federal, state or local government agency. (See section
1128(b)(1).) (This would cover convictions for fraud against any nonhealth related government program.)
•
Criminal conviction relating to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance. (This would not
include convictions for simple possession.) (See section 1128(b)(3).)
•
Revocation, suspension, or loss of a license to provide health care for
reasons of professional competence, performance, or financial integrity
or the surrender of a license pending a formal disciplinary proceeding
for allegations of professional competence, performance or financial
integrity. (See section 1128(b)(4).)
•
Exclusion from Medicare or other federal or state health care programs
(e.g., CHAMPUS, VA). (See section 1128(b)(5).)
•
Furnishing or causing to be furnished items or services to patients that
fail to meet professionally recognized standards in a gross and flagrant
manner or in a substantial number of cases. (See section
1128(b)(6)(B).)
•
Commission of an act described in the federal criminal laws specifically
related to health care or civil monetary penalty laws specifically related
to health care. (See section 1128(b)(7).)
•
Entities controlled by an excluded individual. (See section 1128(b)(8).)
(8/6/93)
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•
Individuals who have a majority ownership interest in or hold
significant control over the operations of an entity convicted of an
offense related to the delivery of a health care item or service.
•
Failure to disclose required information regarding ownership, controlling
interests or convictions of individuals with ownership or controlling
interests, officers, directors, agents or managing employees. (See
section 1128(b)(9).)
•
Failure to provide access to documentation or to provide documentation
related to the health care claims submitted to a health benefit plan, a
health alliance or the government. (See section 1128(b)(ll).)
•
Failure to grant physical access, with reasonable notice, to appropriate
authorities for on-site reviews and surveys. (See section 1128(b)(12).)
•
Defaulting on repayment of scholarship funds or loans in connection
with health professions education made or secured in whole or in part,
by the Secretary of the Department of Health and Human Services.
(See section 1128(b)(14).)
The current procedure under which the Department of Health and Human Services
may exclude an individual or entity prior to a hearing continues conditional on the prior
determination of another tribunal, such as a criminal conviction or action by a federal or state
administrative body.
All other exclusions take effect after a hearing and administrative law judge decision
regarding the exclusion.
ANTI-FRAUD STANDARDS FOR ELECTRONIC MEDIA CLAIMS
A requirement for standards to safeguard against fraud and abuse in an electronic
media environment (i.e., to assure the identity of those submitting claims electronically, and
impose provider responsibility for such claims) is included.
(8/6/93)
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PROGRAMS AND PROVIDERS FOR UNDERSERVED POPULATIONS
The American Health Security Act provides guaranteed health insurance coverage for
all Americans, but health insurance alone does not assure access to health care unless it is
backed up by an adequate system of providers. In addition, certain populations require
supplemental services to secure adequate health care.
Federal support for programs and providers at the state and community levels continue
to be necessary to assist vulnerable population groups in obtaining health care and using
resources effectively.
As health care reform is implemented, health insurance coverage extends to services
now delivered by providers supported by the Public Health Service. The need for support for
supplemental services and services targeted at special populations, such as adolescents,
undocumented individuals, homeless persons, those infected with HIV and AIDS, the mentally
ill and substance abusers, and American Indians/Alaska Natives, continue.
Currently, 72 million Americans live in areas officially designated as underserved
areas, including 38 million residents of in urban areas and 34 million residents of rural areas.
During the transition to health reform, efforts to expand capacity focus on those areas with
the highest concentrations of low-income people.
A variety of federal programs address the needs of the underserved populations.
During the transition to health reform, these programs are maintained or expanded. As health
care reform is implemented, these programs may be phased out or consolidated.
(8/6/93)
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ESSENTIAL COMMUNITY PROVIDERS
To assure access for underserved populations and residents of areas in which shortages
of physicians and hospitals exist, established health providers may apply to the Department of
Health and Human Services for designation as essential providers. Essential providers
include:
•
Comprehensive primary care providers, including
•
•
Rural health clinics and federally qualified health centers defined under
section 1905(l)(2)(B)(iii).
•
Indian Health Service providers and outpatient health programs or
facilities operated by a tribe or tribal organization under the Indian
Self-Determination Act.
•
Other public and private non-profit providers certified by states and
approved by the Department of Health and Human Services.
•
•
Migrant and community health centers, health care for the homeless
programs and health services for residents of public housing programs,
receiving funding under sections 329, 330, 340, and 340A of the Public
Health Service Act or under the new comprehensive primary care
authority.
Physicians, nurse practitioners, physician's assistants, nurse midwives,
dentists and other providers working in Medically Underserved Areas or
Health Professional Shortage Areas who are certified by States and
approved by the Department of Health and Human Services.
Special service primary care providers, including
•
•
(8/6/93)
Public and private non-profit providers of prenatal and pediatric care
and ambulatory services for children with special health needs.
Programs funded under Title X of the Public Health Act.
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Adolescent and school-based health clinics funded under the proposed
new authority.
Clinics funded under the Ryan White Act.
Private non-profit and public special service providers certified by the
states and approved by the Department of Health and Human Services.
CONTRACTS AND PAYMENTS BY HEALTH PLANS
Incentives encourage health plans and essential providers to enter into contracts to
promote appropriate integration of services and access to preventive and primary care.
For a three-year period following implementation of the American Health Security
Act, health plans must either contract with essential providers in areas served by the plan or
reimburse essential providers for services to patients enrolled in the plan. Reimbursement
rates coincide with Medicare payment principles applied to federally qualified health centers.
During that time, a plan may be relieved of the obligation to reimburse essential community
providers if it demonstrates to the alliance and to Department of Health and Human Services
that it has adequate capacity and an appropriate range of services for vulnerable populations
in a service area.
The Secretary of the Department of Health and Human Services commissions a study
to define essential community providers, as well as funding mechanisms, operation, contract
arrangements and payment rules. The Secretary monitors the impact of national health reform
on essential providers and on access to services traditionally delivered in these settings.
PRIMARY CARE FOR UNDERSERVED POPULATIONS
During the transition to health reform, Community and Migrant Health Centers, the
Health Care for the Homeless Programs, and the Health Services in Public Housing Program
continue to provide comprehensive preventive and primary care with case management of
specialty care and hospital services.
(8/6/93)
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During this period, federal funds subsidize the costs of comprehensive preventive and
primary care based on a sliding-fee scale for individuals with incomes below 200 percent of
the federal poverty level who do not have health insurance. Federal funds also subsidize the
cost of specified supplemental services not covered by insurance for low-income patients.
Funding increases to allow for the expansion of programs and services during this period.
Under new authorities, funding for comprehensive primary care delivered to
underserved populations also becomes available for other types of organizations, such as
health departments, maternal and child health clinics, residency-based practices and safetynet hospital clinics.
Eligible providers meet service provision requirements for Community Health Centers
with the following exceptions:
Services may target particular populations such as clinics for
women or services limited to specific age groups.
Requirements for community input apply but requirements for
community-board governance do not apply.
In the case of competing applications, community and migrant
health centers and health care for the homeless, or those
providers who meet all requirements receive preference.
With full implementation of reform, the level of federal funding declines and the focus
shifts to supporting supplemental services, such as transportation, outreach, non-medical case
management, translation, child care during clinic visits, health education, nutrition, social
support and home visiting services. To assure the integration of these programs into health
delivery systems and plans, these providers are treated as essential providers, a designation
that carries certain benefits and protection.
By the year 2000, these provisions:
•
(8/6/93)
More than double the number of homeless individuals and families served from
431,000 people to approximately 1 million.
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Increase the number of migrant and seasonal farmworkers served from 500,000
to 1 million.
Increase from 300,000 to one million the number of undocumented persons
with access to care through community and migrant health centers and other
comprehensive providers of primary care.
Special Service Programs
Federal funds also support special service programs for certain populations. For each
of these programs, during the transition to health care reform, a full range of services are
available to individuals who do not have health insurance and certain supplemental services
are available for entire target populations. With full implementation of reform, Federal funds
shift to supporting these supplemental services, reducing grant support.
The following populations are affected:
•
Undocumented Persons: Continue to have access to care
through community and migrant health centers and other
providers of primary care, including additional funding to
subsidize costs.
Existing statutory provisions requiring emergency care for
undocumented persons, including care for pregnant women,
continue. Annual grants to states disproportionately affected by
the requirement cover a portion of the state share of costs for
Medicaid emergency services.
•
Services for Adolescents and School-Aged Youth: Grants
support comprehensive primary care services with an emphasis
on prevention, health education and health promotion with
funding priority for programs serving high-risk youth.
While many of the clinics are school based or linked to schools,
services are aimed at school-age youth with emphasis on
adolescents both in and out of school. Services also include
mental health and substance abuse counseling.
(8/6/93)
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Health Promotion and Education: A related program supports
community initiatives aimed at the development of health
promotion public information and education programs aimed at
school-age youth and adolescents.
Other activities include promotion of service linkages and
community initiatives targeted to high priority problems. The
initiative is phased in over 6 years.
Family Planning: Support for family planning under Title X
continues, although at decreased levels after health reform is
implemented. The focus shifts to providing services for
adolescents and other individuals who do not receive family
planning through regular medical providers.
Mothers and Children: The Maternal and Child Health
formula grant continues to serve four million women, although
the need for funds for direct services decreases.
With minor modification of Title V of the Social Security Act,
pregnant women at risk for complications and their infants have
access to comprehensive perinatal centers with active outreach,
home visiting and coordinated social and support services. The
new program serves 25,000 pregnant women and infants.
HIV Services: Through annual increases during the transition,
the Ryan White program expands to serve approximately
100,000 individuals by the year 2000 at funding levels roughly
equivalent to those of the FY 1994 budget request adjusted for
inflation.
(8/6/93)
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NATIONAL HEALTH SERVICE CORPS
The National Health Service Corps and related programs expand to reduce the
shortage of primary providers in areas with inadequate access to care. The goal is to have
11,000 participants in the field by the year 2000.
The increase in the supply of primary providers is sufficient to meet the needs of 17.2
million people who lack access to a primary care provider in urban and rural underserved
areas.
HEALTH CARE SYSTEM DEVELOPMENT
Under current authorities of sections 1820 of the Social Security Act, and sections
301, 330, 338, and 338 J of the Public Health Service Act, funding and technical assistance
support local planning and development of primary care capacity, participation in managed
care and community based networks and health plans. New authority supports the
development of telecommunications systems, particularly in rural areas.
New funding is distributed roughly in conjunction with the distribution of target
populations: 56 percent to rural areas and 44 percent to underserved urban areas.
CAPITAL ASSISTANCE
To assure that adequate facilities are available to meet the needs of the reformed
health care system, existing authorities are amended to allow for a program of loans and loan
guarantees to provide essential providers with capital for facility renovation and new facilities.
A portion of reimbursements for services pay for capital investments. However, the
immediate need for capital funds would be met by loaning facilities required amounts which
would be paid back over time from their reimbursement revenues.
Qualifying providers of primary care, substance abuse treatment, public hospitals, and
Indian Health Service clinics may qualify for loans.
(8/6/93)
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PRIVILEGED AND-GONFIDENnAL—
MENTAL HEALTH AND SUBSTANCE ABUSE PROGRAMS
Mental health and substance abuse initiatives refocus existing formula grants and
strengthen selected existing demonstration programs to assist states in the conversion to
community-based mental health and substance abuse programs to provide services under
health reform and to improve delivery systems.
As states implement health reform, Community Mental Health and the Substance
Abuse Prevention and Treatment Formula Grants that pay for benefits covered in the
guaranteed national package are phased out. Some funding for treatment is retained for
services not covered, such as residential care beyond 90 days for substance-abusing women
and their children. As direct treatment funding ends, some funds shift to support development
of new service systems, provide supplemental services and maintain population-based
prevention services.
To improve state and health alliance systems, the State Systems Development Program
and the Mental Health Systems Improvement Program, both funded with the five percent
technical assistance set aside from formula grants, continue.
STATE MAINTENANCE OF EFFORT AND FUNDING DISTRIBUTION
States are required to maintain support for mental health services and for substance
abuse treatment and prevention activities.
A revision of the current formula grant program provides states more flexibility to
support local priorities as defined in state plans. States are required to continue using an
amount not less than the amount received under the 20 percent prevention set-aside in their
1994 block grant allocation. After satisfying the prevention requirements, states would be
free to use the remainder of available block grant funds for systems development,
supplemental services and treatment services not covered by health insurance.
(8/6/93)
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Block grant funds cover two activities critical to the success of health care reform:
•
Systems Development: Creation of cost-effective communitybased services requires strengthening mental health and
substance abuse services, including new systems of care,
improving management and monitoring capacity of states and
health alliances.
•
Supplemental Services: Support services for substance abuse
patients, adults with serious mental illness and seriously
emotionally disturbed children include outreach services,
translation, child care, shelter, transportation, case management,
supervision through the justice system and monitoring of
substance abuse patients.
SPECIAL INITIATIVES
Target Cities: The Target Cities Program, which is working with nine communities
to integrate AOD services with a broad array of health services as well as with education and
justice system, expands to include 32 target cities in the largest metropolitan areas within a
5-year period.
The program emphasizes development of managed care procedures and encourages the
merger of public an private tier programs. Smaller metropolitan and rural areas receive funds
to support development of a continuum of substance abuse treatment services linked with
primary health care systems. After full implementation of health reform, the Target Cities
program could be phased out.
Community-Wide Prevention Coalitions: Powerful means for bringing together all
of the important sectors in a community to address alcohol, tobacco and drug use, especially
among young people, support for new coalitions emphasize links with target cities. The
community partnership would extend to at least 35 percent of the U.S. population within 5
years.
(8/6/93)
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Other Research and Demonstration Projects: Fulfilling the promise of the
American Health Security Act requires development of integrated systems of care that meet
the needs of patients by providing comprehensive coordinated services. Funding supports
demonstration programs that test the effectiveness of specific approaches to providing quality
services to various populations, particularly those that are difficult to reach.
Potential areas of focus for research and demonstration initiatives include:
Targeted Knowledge Development: Developing outreach to AIDS and HIV-infected
drug abusers, the homeless, individuals involved in the criminal justice system and
populations with co-morbidity, and developing mechanisms for sharing information about the
applicability of promising approaches to prevention within specific populations and servicedelivery settings and the effectiveness of prevention and early intervention services in
reducing health costs.
Substance Abuse: developing of systems that link substance abuse treatment with
primary care, target rural and remote areas and Culturally distinct populations, and facilitate
the transfer of knowledge.
Mental Health: Developing systems that link mental health treatment with primary
health care, increase services for children with severe emotional disturbances and for seriously
mentally ill adults, and improve dissemination of knowledge.
Training and Staff Development: Health professionals receive information and
training to screen and identify mental health and substance abuse problems and risk factors.
The Department expands its curriculum development and health education efforts in clinical
prevention within schools of medicine, nursing, and social work as well as its information
services for current health professionals.
(8/6/93)
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AMERICAN INDIANS AND ALASKA NATIVES
The Public Health Service also has special responsibilities for the delivery of health
care to Native Americans. The Indian Health Service currently provides comprehensive
health care to more than 1.3 million American Indians and Alaskan Natives through directly
operated programs, and services purchased from other providers.
Supplemental financing and services assure availability of and access to care by
American Indian and Alaska Native populations with diverse language and cultural needs,
many of whom live in remote and underserved reservation areas. Supplemental services
include transportation, outreach and follow-up, community health representatives, public
health nurses, non-medical case management, child care during clinic visits, health education,
nutrition, home visiting, and supplemental mental health and substance abuse prevention and
treatment services.
In addition, the Indian Health Service expands its population-based public health and
prevention activities. Under new authority, it covers all residents, Indian and non-Indian,
living on reservations in addition to Indian populations living near reservations.
Population-based public health and prevention activities include surveillance and
monitoring of health status, medical outcomes, threats to public health, public health
laboratories, community-based control programs, community health protection and public
health information.
To increase the recruitment, preparation, and retention of American Indians and Alaska
Natives into medical, nursing, public health and other health profession, existing programs are
expanded. The Indian Health Scholarship Program and Loan Repayment Program expands to
fund all eligible applicants under the current authorities of sections 104 and 108 of P.L. 94437. Additional financial assistance increases the number of American Indians and Alaska
Natives entering training programs under current authorities of sections 103 and 105 of P.L.
94-437.
Additional funding expands construction of water, sewer, and other sanitation and
environmental health facilities, as well as provide for training and technical assistance to
tribes that wish to operate tribal facilities under P.L. 86-121 and Section 302 of P.L. 94-437.
(8/6/93)
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FUNDING
Total additional investments in FY 1996 for the programs discussed above will be $2.4
billion including:
Comprehensive primary care and targeted services: $500 million
Services for Adolescents and School-Aged Youth: $400 million
National Health Service Corps: $600 million
Mental health and substance abuse programs: $400 million
American Indians/Alaska Natives: $300 million (not including
sanitation/environmental health)
Capital Assistance: $200 million
(8/6/93)
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MEDICARE
STATE INTEGRATION
The Secretary of the Department of Health and Human Services has authority to
permit states to integrate Medicare beneficiaries into health alliances under specified
conditions that ensure:
•
Beneficiaries have the same or better coverage as standard Medicare benefits
•
Federal financial liability is not increased.
[HHS Position - Alliances must offer at least one fee-for-service option that offers
the Medicare benefit package at no greater cost to the beneficiary than traditional
Medicare. If only an enhanced benefit package is offered, the cost to the beneficiary
still can be no greater than under traditional Medicare.]
TRANSITION
After a state establishes health alliances and enrolls its population in them, states can
request inclusion of Medicare beneficiaries in the population covered under health alliances:
States submit proposals to the Secretary of HHS describing:
•
The state plan for integration of Medicare and providing evidence regarding
compliance with standards related to access, quality of care and cost
containment
•
The state's capacity to ensure equity for Medicare beneficiaries and providers
•
Administrative capacity to carry out the option
•
Ability to ensure that the financial and fiduciary interests of the federal
government are served by the proposal.
States are permitted to discontinue a Medicare integration program at the end of any
fiscal year with sufficient notice to the federal government, beneficiaries and health providers.
The federal government will assume administration of Medicare in a state if
assurances are not met and the state is not operating an effective Medicare program.
(8/6/93)
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ASSURANCES
To approve a waiver, the federal government must be assured that Medicare
beneficiaries have:
•
Access to the same, or higher, level of benefits as standard Medicare.
•
Access to care that is substantially comparable to standard Medicare. The state
must demonstrate adequate risk adjustment methodologies to assure that plans
have sufficient compensation to provide appropriate access to care.
•
Assurance of at least one fee-for-service option with out-of-pocket expenses
no higher than under traditional Medicare program for comparable or better
benefit.
•
Assurance of equal, or better, protection against balance billing.
•
Protection under comparable, or better, quality assurance mechanisms.
•
Assurance of the same, or better, appeal rights in the event of disputes,
including right to an administrative law judge hearing and judicial review when
applicable.
States operate within a capitation rate consistent with budget limits on growth of
federal spending for Medicare. No cost-shifting to the Medicare program occurs as a result
of Medicare integration in a state. Savings accruing to the state are shared with the federal
government and/or Medicare beneficiaries (savings may be used to reduce the Medicare Part
B premium in the state).
States assume additional administrative costs (e.g., special processing of claims by
out-of-state carriers and intermediaries for claims received from residents of states in which
Medicare is integrated). The Federal government retains the right to evaluate, directly or
through contractors, the state's program and audit records to determine compliance with
assurances.
(8/6/93)
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INDIVIDUAL ELECTION AT AGE 65 TO REMAIN IN THE HEALTH ALLIANCES
After establishment of health alliances, individuals have the right to elect to remain in
an alliance when they reach age 65. If they remain in the alliance, they continue to receive
the nationally guaranteed comprehensive benefit package with the full range of options
available to individuals younger than age 65.
Plans negotiate rates with alliances for participants over age 65 choosing to remain in
the alliances; these rates are separate from those covering younger participants. Any plan
providing coverage through an alliance must bid to cover the older population to continue
operating through the alliance.
Alliances risk-adjust premiums among plans using methods prescribed by the National
Health Board. Medicare pays a fixed contribution to alliances equal to the costs that
Medicare would be projected to bear — under the new budget constraint — for the same
beneficiary population in the alliance. Beneficiaries pay the difference between Medicare's
payment and the plan's premium.
At annual enrollment, beneficiaries over age 65 may return to Medicare or choose a
new plan through the alliance.
[HHS proposes the following alternative: In states that do not elect to integrate
the Medicare program into their state program, individuals upon becoming
entitled to Medicare have the option of remaining in their current risk-based
health plan through the local alliance. Beneficiaries exercising this option
continue to receive the national benefit package.
The total premium paid to the plan by Medicare and the beneficiary is capped
at an amount equal to 95 percent of the average per capita cost. The premium
for individuals over age 65 equals the premium for younger participants with
an adjustment for age. The beneficiary is responsible for paying any difference
between the Medicare payment and the total premium.]
MEDICARE MANAGED CARE
Changes in payment methodology improve and strengthen the Medicare managed care
program:
•
(8/6/93)
A research initiative focuses on the development and demonstration of healthstatus adjusters.
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Interim measures improve the current payment methodology, including:
•
Making adjustments to reflect payments currently not captured in the
payment methodology because of coordination of benefits or services
received through VA or DOD.
•
Seeking discretionary authority to establish a ceiling and floor for
payments and to create a special pool for high-cost cases.
For the longer term, demonstrations of alternative payment methodologies (such as
competitive bidding, new risk sharing arrangements and cost reimbursement subject to limits)
are implemented.
Coordinated open enrollment promotes managed care. Medicare establishes an annual
open enrollment period for Medicare managed care plans and Medigap plans. Medicare
develops and distributes comparative materials on all managed care and Medigap plans, with
the plans paying the cost. A third party coordinates enrollment to reduce the possibility of
favorable selection. One-year enrollment replaces current month-to-month commitment.
Medigap insurance practices conform with the new requirements for open enrollment
and other new insurance reform standards for supplemental insurance under health care
reform.
Medicare offers beneficiaries greater choice of managed care options through the
following changes:
•
Expanding choice of managed care plans: Within three years of enactment, all
health plans capable of qualifying for a Medicare contract are required to enter
into a cost contract as a condition for participation in health alliances.
•
Medicare Point-of-Service option: A non-enrollment based Point-of-Service
option is created within fee-for-service Medicare. Medicare contracts with for
the creation of comprehensive preferred provider networks in major
metropolitan areas. Beneficiaries not enrolled in a capitated health plan choose
whether to use the network of preferred providers on a service-by-service
basis.
(8/6/93)
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Dublin Core
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Title
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Health Care Task Force Records
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An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
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2006-0885-F
Text
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Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
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[Health Security Act - Working Group Draft] [Binder] [3]
Creator
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
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2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621469" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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Preservation-Reproduction-Reference
Date Created
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5/7/2015
Source
A related resource from which the described resource is derived
17621469
12093636
42-t-12093636-20060885F-Seg5-008-009-2015
-
https://clinton.presidentiallibraries.us/files/original/68a77175aba44b0fdae056a01b225000.pdf
a0c9145db167aae5ff04fed81f0645f7
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [Binder] [2]
Stack:
Row:
Section:
Shelf:
Position:
s
52
7
7
3
�WORKING GROUP DRAFT
PRIVILEGED AND-eONFIDENTIAL^
ELECTION TO FORM A CORPORATE ALLIANCE
Large employers eligible to form corporate alliances elect to exercise that option or to
purchase health coverage through a regional alliance.
During the implementation of the new health system, a large employer has a one-time
opportunity to enroll all of its individual establishments employing fewer than 100 workers in
regional alliances at community rates.
Large employers periodically have the opportunity to switch to regional alliances,
according to the following terms:
•
The employer pays a risk-adjusted, weighted-average premium for a period of
four years, after which the rates charged to that employer adjust to obtain a
community rate over four years.
•
The election applies to all employees of the employer, nationwide.
•
Employers or establishments that join regional alliances must continue to
purchase coverage through them.
TAFT-HARTLEY PLANS AND RURAL COOPERATIVES
The board of directors of an existing Taft-Hartley plan or rural cooperative elects
whether to form a corporate alliance. If it elects not to form a corporate alliance, its member
employers purchase health coverage through regional alliances like any other employer.
If an employer that participates in a Taft-Hartley plan or rural cooperative leaves the
arrangement, it purchases coverage through the regional alliance like any other employer.
ENROLLMENT
Each corporate alliance offers all eligible persons health plans that provide the
nationally guaranteed comprehensive benefits.
(8/6/93)
67
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTIAI
Corporate alliances hold annual open enrollment periods during which individuals and
families choose among health plans. The open enrollment period for the corporate alliance
coincides with the enrollment period for regional alliances.
ENROLLMENT OF NEWLY ELIGIBLE PERSONS
Corporate alliances provide a mechanism for promptly enrolling individuals and
families who become eligible for coverage between open enrollment periods.
A corporate alliance provides enrollment materials to each eligible person within 10
days of receiving notification of eligibility. Individuals choose a health plan within 30 days
of receiving enrollment materials. If an application for enrollment is submitted prior to the
fifteenth day of any month, coverage is effective on the first day of the following month. If
the application is made after the fifteenth of the month, coverage is effective on the first day
of the following month.
OVER-SUBSCRIPTION IN A PLAN
A health plan may become over-subscribed, meaning that the plan does not have
sufficient capacity to serve everyone who wants to enroll. When a plan is over-subscribed,
existing members of the plan have preference to continue in the plan. In determining which
new members join an over-subscribed plan, a corporate alliance uses a process of random
selection.
HEALTH PLANS
Corporate alliances provide health benefits to eligible employees and dependents either
through a self-funded employee benefit plan or through contracts with state-certified health
plans.
Contracts between health plans and corporate alliances comply with the following
requirements:
(8/6/93)
68
�WORKING GROUP DRAFT
PRIVILEGED AND CONHDENIIAL
Premium rates charged to the corporate alliance may be based on community
rating, adjusted community rating or experience rating.
For corporate alliances composed of more than one employer, such as TaftHartley plans and rural electric or telephone cooperatives, premium rates
charged to individual employers must be community rated.
Health plans that contract with corporate alliances must accept all eligible
employees and their dependents, regardless of individual characteristics, health
status, anticipated need for health services, occupation, affiliation with any
person or entity (except for affiliation with another alliance or health plan).
Health plans may not terminate, restrict or limit coverage for the nationally
guaranteed comprehensive benefit package.
•
Exclusions for existing medical conditions and waiting periods or riders
that exclude certain individuals are prohibited.
•
Health plans may not cancel coverage for eligible employees and
dependents until they enroll in another health plan.
FAILURE TO PAY PREMIUMS
If a corporate alliance fails to make premium payments to a health plan, the plan may
terminate coverage after reasonable notice. If coverage is terminated, the corporate alliance is
responsible for providing coverage to individuals previously insured under the contract.
A health plan that notifies a corporate alliance of its intention to terminate coverage
also sends a copy of the notice to the Secretary of Labor.
(8/6/93)
69
�WORKING GROUP DRAFT
PRIVILEGED ANP-GQNEfBENTIAL~
INFORMATION
Corporate alliances assure that employees have ready access to comparative
information about health plans. Information is obtained through a brochure published
annually. At a minimum, the brochure must include the following information about health
plans:
•
Cost to consumers, including premiums and average out-of-pocket expenses.
•
Characteristics and availability of health providers.
•
Restrictions on access to providers and services.
•
The annual Quality Performance Report for each health plan containing
measures of quality presented in a standard format.
Corporate alliances are responsible for assuring that employees are aware of
information they may obtain from participating plans.
CHOICE OF PLANS
Each corporate alliance contracts with at least one fee-for-service health plan. A
corporate health plan has a fee-for-service component if a participant has the option of
consulting any health provider, subject to reasonable plan requirements.
Reasonable plan requirements include utilization review and requirements to obtain
approval for certain service before they are obtained but does not involve primary care
physicians or networks acting as gatekeepers.
A corporate alliance may be excused from the requirement to offer a fee-for-service
option in a geographic area in which the regional alliance obtains a waiver from the
requirement.
(8/6/93) "
70
�9
o
PRIVILEGED AND-GONHDENIIAL
WORKING GROUP DRAFT
In addition to a fee-for-service plan, a corporate alliance contracts with at least two
other health plans offering the comprehensive benefits. A corporate alliance may be excused
from this requirement if an insufficient number of state-certified plans exist in a particular
geographic area, or if the plans are unwilling to contract with the corporate alliance.
CONTRACTS WITH HEALTH PLANS
Corporate alliances contract with health plans on at least an annual basis but may enter
into multi-year contracts.
Contracts include certification requirements outlined in federal and state law, as well
as a statement regarding the maximum capacity the plan is willing to serve. A corporate
alliance may set additional requirements for contracting health plans.
RISK ADJUSTMENT
A corporate alliance may, but is not required to, use a risk adjustment system to
account for variations in enrollment among health plans with respect to risks and access to
basic health services among participants.
PAYMENTS AND RATINGS
A corporate alliance makes direct payments to health plans.
A corporate alliance has the option of using any type of rating arrangement with
health plans, including full or partial self-funding, prospective or retrospective experience
rating, adjusted community rating, community rating by class, or community rating. In a
Taft-Hartley plan or a rural cooperative, participating employers are charged on a community
rated basis.
Employees covered in all corporate alliances pay a community rate for their portion of
premiums, however.
(8/6/93)
71
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTIAL-
GRIEVANCE PROCEDURE
Each corporate alliance establishes a procedure through which individuals may file
complaints against health plans. The procedure includes a process through which the
corporate alliance works with the health plan to resolve complaints.
For a state-certified health plan, the corporate alliance reports to the state any
complaints that involve violations of state or federal certification requirements.
PLAN OF OPERATION
Corporate alliances submit plans of operation to the Department of Labor. The
Secretary of the Department of Labor determines whether the plan meets all statutory and
regulatory requirements.
(8/6/93)
72
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
ERISA
The American Health Security Act amends the Employee Retirement Income Security
Act of 1974 (ERISA) to create a new chapter governing employee health benefit plans and
modifying the current ERISA preemption section.
REQUIREMENTS RELATED TO EMPLOYEE HEALTH BENEFIT PLANS
A new chapter or title of ERISA establishes fiduciary and enforcement requirements
for employers and others sponsoring health benefit plans in corporate alliances. Current
provisions of ERISA do not apply to health benefits except by specific reference. Provisions
address:
Ensuring that everyone enrolled in corporate health alliances obtains coverage
providing at least the nationally guaranteed benefit package
Establishing fiduciary requirements for employers, plan sponsors and plan
fiduciaries
Setting requirements related to information and notification made available to
employees
Ensuring compliance with national standards with respect to uniform claims
form, data reporting, electronic billing and other areas
Establishing financial reporting requirements for self-funded health benefit
plans and for corporate alliances
Setting financial reserve requirements for self-funded health benefit plans.
The new title or chapter also sets fiduciary requirements for employers in regional
alliances governing the withholding of employee contributions from wages. The Department
of Labor may enter into agreements with states to enforce these requirements.
(8/6/93)
73
�WORKING GROUP DRAFT
PRIVILEGED AND<€ONFIDENTmL
FINANCIAL RESERVE REQUIREMENTS
New requirements for financial reserves apply to self-funded health plans. Selffunded health plans establish a trust fund that is maintained at a level equal to the estimated
amount that the plan owes providers at any given time. The plan pays claims from the trust
fund. Trust funds are protected by special status in bankruptcy proceedings if the sponsoring
employer fails.
Reserve requirements may be met through letters of credit, bonds or other appropriate
security rather than establishing the trust fund.
A new national guaranty fund for self-funded health plans provides financial
protection for health providers in case of financial failure of a plan. The Department of
Labor oversees the national guaranty fund; it operates in a manner similar to state insurance
guaranty funds.
The Department of Labor may inspect the books and records of self-funded health
plans and assume control over plans if they fail to meet reserve requirements. Health benefit
plans notify the Department of Labor if they fail to meet requirements.
PREEMPTION OF STATE LAWS
The ERISA preemption provision is modified to:
•
Apply the preemption only with respect to employers and health benefit plans
in corporate alliances.
•
Permit taxes and assessments on employers or health benefit plans in corporate
alliances if the assessments are nondiscriminatory in nature.
•
Permit states to develop all-payer hospital rates or all-payer rate setting.
States also may require all payers, including health benefit plans
in corporate alliances, to reimburse essential community
providers.
(8/6/93)
74
��WORKING GROUP DRAFT
PRIVILEGED AND-CONriDENTOfc
HEALTH PLANS
Health plans provide coverage for the nationally guaranteed comprehensive benefit
package through contracts with regional or corporate alliances. Only state-certified health
plans are allowed to provide health insurance and benefits.
ENROLLMENT
Health plans accept every eligible person enrolled by an alliance without regard to
individual characteristics, health status, anticipated need for health care, occupation, affiliation
with any person or entity (except affiliation with a corporate alliance or health plan).
Health plans may not terminate, restrict or limit coverage for the comprehensive
benefit package for any reason, including non-payment of premiums. They may not cancel
coverage for any individual until that individual is enrolled in another health plan.
Health plans may not exclude participants because of existing medical conditions or
impose waiting periods before coverage begins. Riders that serve to exclude certain
participants also are prohibited.
With the approval of the state, health plans may limit enrollment because of
restrictions on the plan's capacity to deliver services or to maintain financial stability.
COMMUNITY RATING
Health plans use community rating to determine premiums, establishing separate rates
for individuals and for families that include children.
Beginning in August of each calendar year, alliances negotiate premium rates with
each health plan contracting for coverage through that alliance. Negotiations set individual
and family premiums for each health plan within the alliance. During an annual open
enrollment period, alliances publish the negotiated rates for all health plans.
(8/6/93)
75
�') 0
PRIVILEGED AND ^CONFIDENTLY
WORKING GROUP DRAFT
Employers and employees pay a community-rated premium. However, payments to
health plans by alliances are adjusted to account for the level of risk associated with
individuals enrolled in plans. The adjustment is made using a formula developed by the
National Health Board.
REINSURANCE
Health plans may purchase reinsurance to cover disproportionate costs beyond those
predicted by risk adjustment formulas.
INFORMATION
Each health plan provides to the alliance and makes available to consumers and health
care professionals information concerning:
•
Costs
•
Qualifications and availability of providers
•
Procedures used to control utilization of services and expenditures
•
Procedures for assuring and improving the quality of care
•
Rights and responsibilities of consumers and patients.
Health plans are responsible for the accuracy of information submitted and may be
disqualified from participating in an alliance if information is inaccurate.
In keeping with the overall goal of increased consumer knowledge about health care
issues and choices, health plans are expected to encourage patients to participate in decisions
about treatment options and to offer consumers up-to-date information regarding potential
benefits, risks, and costs of various medical and surgical procedures.
(8/6/93)
76
�WORKING GROUP DRAFT
PRIVILEGED AND'CONFIBENnAfc
Health plans in states that allow advance directives and surrogate decision making
related to medical treatment are required to provide information about those legal options at
the time of enrollment in the plan.
GRIEVANCE PROCEDURE
Health plans establish a grievance procedure for participants to use in pursuing
complaints. If the grievance procedure fails to resolve a complaint, consumers have the
option of pursuing the issue with the alliance ombudsman or pursuing other legal remedies.
HEALTH PLAN ARRANGEMENTS WITH PROVIDERS
Health plans enter into agreements with health care providers to deliver services. Not
withstanding state laws to the contrary and except for services provided under a fee-forservice component, a health plan is authorized to:
Limit the number and type of health care providers who participate in the
health plan.
Require participants to obtain health services other than emergency services
from participating providers or from providers authorized by the health plan.
Require participants to obtain a referral for treatment by a specialized physician
or health institution.
Establish different payment rates for participating health providers and
providers outside the plan.
Create incentives to encourage the use of participating providers.
Use single-source suppliers for pharmacy, medical equipment and other health
products and services.
(8/6/93)
77
�WORKING GROUP DRAFT
PRIVILEGED AND GONHBENTtAfc
In addition, state laws related to corporate practice of medicine and to provider
ownership of health plans or other providers do not apply to arrangements between integrated
health plans and their participating providers.
Health plans cover emergency and urgent care provided to members outside of its
service area. Reimbursement is based on the fee-for-service rate schedule in the alliance
where the services are provided.
During a transitional period, health plans must cover services provided to their
members by designated essential community providers. Payments to essential providers are
based on the Medicare method for community health centers.
Health plans may not discriminate against providers on the basis of race, ethnicity,
gender, religion, mix of health professionals or patient population.
A state has the authority to waive the obligation to reimburse essential community
providers for a particular health plan operating in a particular area. To obtain a waiver, a
health plan demonstrates that it has the capacity to deliver a comparable range and level of
services to consumers in the area served by the essential community provider.
ADDITIONAL REQUIREMENTS FOR PLANS
In addition to the requirements discussed above, health plans must meet national,
uniform Conditions of Participation established by the National Health Board, including:
Fiscal soundness, including minimum standards for financial reserves, loss ratios etc,
and disclosure of financial condition to all purchasers.
Truth in marketing, including standards for fair marketing practices and disclosure to
consumers all material information regarding the plan and its performance.
Verifying credentials of practitioners and facilities, including bi-annual checks of
providers against national databases, investigating and resolving consumer complaints
and dropping providers who consistently fail to meet quality standards or are
responsible for fraud or mismanagement. Health plan must ensure that all practitioners
and health institutions meet state licensing standards.
(8/6/93)
78
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTLY.
Consumer Protection, including disclosure of all material information regarding the
plan and their rights and responsibilities, providing due process for patients to appeal
denial, termination or reduction of coverage and resolving appeals of complaints.
Confidentiality, including maintaining a policy for protecting patient privacy and
confidentiality in compliance with law and allowing patients to obtain copies of their
medical records upon request. (See "Administrative Simplification and Information
Systems," Tab 16.)
Complaints, including investigating and attempting to resolve complaints about
practitioners, providers, treatments, access to care and health plan policies and
procedures.
Disenrollment for cause, including permitting consumers to resign from health plans
at any time for good cause. The purchaser is responsible for ensuring that gaps in
coverage do not occur as a result.
Utilization Management, including disclosure of protocols for controlling utilization
and costs.
Methods used to manage the network of providers, such as the selection criteria
and internal performance standards.
Compensation methods for providers, such as capitation;
Incentives to providers to control utilization;
Utilization review criteria - criteria by which health care services are
determined to be inappropriate; and
Protocols for managing the care of high-cost patients.
Data Management and Reporting, including maintaining encounter data and required
quality data electronically and reporting the data to the national network. (See
Information Systems and Administrative Simplification, Tab 16, and Quality
Management and Improvement, Tab 15.)
(8/6/93)
79
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTTAL
SUPPLEMENTAL INSURANCE
Supplemental insurance to cover both cost sharing and additional health benefits is
allowed.
A supplemental benefit policy may cover all or some portion of benefits not included
in the comprehensive package, such as long-term rehabilitation services and cosmetic surgery.
A policy covering cost sharing might pay a portion of co-payments and co-insurance
required by a health plan.
Any entity that offers supplemental policies must abide by the rules for supplemental
insurance. However, the following types of insurance policies are not subject to these rules:
Long-term care insurance
Insurance against specific diseases
Hospital or nursing home indemnity insurance
Medigap insurance
Insurance against accidents.
COST SHARING
The National Health Board develops two standard, supplemental cost-sharing policies.
One model provides standard coverage; the other maximum coverage. Once developed, only
the model policies may be offered, and every health plan that uses the high cost sharing
model (described under Guaranteed National Benefit Package, Tab 4) is required to offer
both.
Limitations on pre-existing medical conditions are prohibited, and supplemental
policies must be available to every participant in a health plan at the same price. Policies
may not exclude cost-sharing coverage for specific diseases or conditions.
(8/6/93)
80
�WORKING GROUP DRAFT
PRIVILEGED AND €QNF 1DENI lAtr
Only qualified health plans with the high cost sharing option (see section on
Guaranteed National Benefit Package, Tab 4) may offer supplemental insurance for cost
sharing under the comprehensive benefit package. A member of a health plan may purchase
supplemental insurance for cost sharing only during the annual enrollment period.
The price of any insurance policy covering cost sharing includes the cost of additional
benefits plus any expected increase in utilization caused by the insurance.
No plan may sell coverage for cost sharing at a price that results in a loss-ratio less
than 90 percent. (The loss ratio is the ratio of the premium returned to the consumer in
payout relative to the total premium collected.)
The National Health Board develops rules for the coverage of cost sharing in corporate
alliances. The rules may require that only one standard, supplemental policy is offered, or
that no policy is offered if an employer already substantially covers cost-sharing.
ADDITIONAL BENEFITS
No health plan, insurer, or any other person may offer anyone eligible for the
guaranteed benefit package a supplemental insurance policy that duplicates coverage in the
national benefit package.
Any health plan that sells duplicate coverage is disqualified from participating in
alliances. Any firm or individual who offers such policies is subject to loss of the license to
sell insurance.
No policy covering additional health services may fail to cover for a period longer
than 6 months, limit or restrict coverage for any illness, disease, or other condition that
existed prior to the purchase of the policy. All policies covering additional benefits must be
offered at a single price to all individuals in a alliance.
Insurance policies providing coverage for additional benefits must be available to any
purchaser, subject to the capacity and financial limits of the insurer. Coverage available only
through membership in fraternal, religious, professional and other organizations and policies
sold to employers to cover benefits for their employees are exceptions.
(8/6/93)
81
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFH
The National Health Board develops, in consultation with the states, minimum
standards that prohibit marketing practices by insurance companies and agents that involve:
•
Tying or otherwise conditioning the sale of supplemental
insurance to the purchase of the comprehensive benefit package.
•
Providing compensation to an agent selling supplemental benefits for
promoting or otherwise encouraging the purchaser of supplemental
benefits.
•
Using or disclosing to any party information about the health status or
claims experience of participants in the plan for the purpose of
marketing supplemental benefits.
(8/6/93)
82
��WORKING GROUP DRAFT
PRIVILEGED AND €ONFIDENTIAL
RISK ADJUSTMENT
Alliances adjust premium payments to health plans to reflect the level of risk assumed
for patients enrolled in comparison to the average population in the area. The adjustment
mechanism takes into account factors such as age, gender, health status and services to
disadvantaged populations.
DEVELOPMENT OF FEDERAL MODEL SYSTEM
Nine months before the date on which states first enroll consumers in regional
alliances, the National Health Board promulgates arisk-adjustmentsystem.
Regional alliances are required to use therisk-adjustmentsystem unless an alliance
obtains a waiver from the National Health Board. The Board provides technical assistance to
states and alliances in implementing the federal system.
The federal system takes into account the following:
•
Appropriate compensation for health plans that enroll individuals
with higher or lower-than-average health costs.
•
Variations in health costs and utilization such as demographic
characteristics and health status.
•
Factors that impede access to health care, such as geographic location,
prevalence of poverty, language and cultural barriers.
•
Factors related to the unique problems of mental illness.
The risk adjustment system uses prospective adjustment of payments to health plans
and reinsurance to protect health plans that have a disproportionate share of high cost cases.
Greater reliance may be placed on reinsurance in the first two years until a more sophisticated
risk adjustment system is fully implemented.
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ADVISORY COMMITTEE
The National Health Board creates an advisory committee to provide technical advice
and recommendations regarding the development of therisk-adjustmentsystem. The
advisory committee is composed of fifteen representatives of health plans, alliances,
consumers, experts, employers and health providers. Once it is adopted, the committee makes
recommendations for updating therisk-adjustmentsystem.
The National Health Board may conduct research and undertake demonstration
projects to support the development of the system.
RISK ADJUSTMENT SYSTEM REQUIRED
States are required to assure that alliances use the federal risk-adjustment system.
A state that wishes to modify the system or substitute another risk-adjustment
mechanism applies to the National Health Board. The Board grants a waiver if the alliance
demonstrates that its proposed system is at least as effective and accurate as the model
system.
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RURAL COMMUNITIES IN THE NEW SYSTEM
Economic and demographic characteristics of many rural communities result in a
larger number of uninsured and underinsured citizens in rural areas. Under the American
Health Security Act, access to care is ensured for Americans who live in rural areas through:
Alliance requirements to serve rural areas
Investment in infrastructure
Creation of incentives to expand rural community-based networks and plans
Investments for the development of the health workforce
Expansion of the rural public health system.
GUARANTEED UNIVERSAL ACCESS
Alliances have the capacity to ensure adequate health services in rural areas by:
Creating alliance-sponsored plans
Fostering cooperative relationships among rural and urban
providers
Requiring urban health plans to serve rural areas in the alliance
Developing an information and referral infrastructure to link academic health
centers and rural health providers
Offering long-term contracts to health plans serving rural areas.
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INFRASTRUCTURE DEVELOPMENT DURING TRANSITION
As described in more detail in the section on Protecting Underserved Populations (Tab
25), qualifying community-based organizations in rural areas have access to federal loan
guarantees for capital improvements. A budget authority of $16 million per year supports the
loan guarantee program, which is estimated to be sufficient to finance $1.1 billion in new
capital expenditures and $500 million in renovations. It is expected that approximately 56
percent of this capacity will develop in rural areas.
RURAL COMMUNITY-BASED NETWORKS AND PLANS
Federal funding and technical assistance become available to support local planning
and development of primary care systems in areas with inadequate health services, such as
rural areas. Grants support the development of telecommunications capacity to link rural
providers with health care centers and institutions as well as continuing education and
professional support.
A net increase over current activities of about $60 million is anticipated as a result of
these development activities. Resources follow the distribution of target populations; rural
areas will receive approximately 56 percent of this fund.
WORKFORCE
The National Health Services Corps and related programs expand to reduce the
shortage of health care providers in rural areas. Incentives are provided to attract and retain
health professionals in rural areas.
Tax incentives encourage practice in rural areas. Incentives include:
•
(8/6/93)
A non-refundable personal tax credit of $1,000 per month that can be
recaptured during the first five years of practice by a physician in a rural area
with a shortage of health professionals ($500 for physician assistants and nurse
practitioners).
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The exclusion from gross income of National Health Service Corps Loan
Repayments received under section 338B.
An allowance of up to $10,000 annually (depreciation not required) for the
purchase of medical equipment used in areas with a shortage of health
professionals.
Deductibility of up to $5,000 in annual student loan interest for physicians,
physician assistants, advanced practice nurses and registered nurses performing
services under agreements with rural communities.
The allocation of residency positions in new health care systems involves special
attention to geographic factors.
Increased relative compensation for primary care physicians also encourages practice
in rural areas. (See section on Creating a New Health Workforce, Tab 17).
PUBLIC HEALTH SYSTEM
To assure access to health care in rural areas, supplemental services are provided for
low-income populations. These services include: transportation, outreach, non-medical case
management, translation, child care during clinic visits, health education, nutrition, social
support and home visiting services. (See section on Protecting Underserved Populations, Tab
25.)
These services are provided through current authority for Migrant Health Centers,
Community Health Centers and Health Care for the Homeless under the Public Health Act.
New authorities make funds available to other providers of comprehensive primary
care, such as federally qualified health centers, local health departments, maternal and child
health clinics, primary care physician graduate medical practices and disproportionate share
hospital clinics.
(8/6/93)
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INTEGRATION OF WORKERS' COMPENSATION INSURANCE
Health plans provide treatment for individuals with work-related injuries covered
under workers' compensation insurance.
Workers' compensation insurers (including self-funding employers) continue to be
responsible for the costs of treatment based on current law and reimburse health plans for
services provided. Reimbursement is based on a fee schedule or on an alternative
arrangement established by alliances or negotiated between workers' compensation insurers
and health plans.
To obtain state certification, a health plan demonstrates its ability to provide or
arrange for comprehensive medical benefits for work related-injuries and illnesses, including
rehabilitation and long-term care services.
•
Health plans employ or enter into contracts with specialists in industrial
medicine and occupational therapy.
•
Health alliances are responsible for coordinating access to specialized health
providers or centers of excellence in industrial medicine and occupational
therapy.
•
Alliances may designate as subcontractors health care professionals and
institutions that provide specialized services for the treatment of work-related
injuries and illnesses on behalf of all health plans serving the alliance region.
Individuals enrolled in health plans within the alliance receive treatment for workrelated injuries or illnesses from their health plans, although emergency treatment may be
obtained from any provider.
State laws regarding choice of provider for workers' compensation cases are
overridden with respect to individuals covered through health alliances. Exceptions may be
necessary in cases of disputes.
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Each health plan designates a workers' compensation case manager to coordinate the
treatment and rehabilitation of injured workers. The case manager ensures that:
•
The plan of treatment for an injured worker meets appropriate protocols and is
designed to assure rapid return to work.
•
The plan of treatment is coordinated with the workers' compensation insurance
carrier and/or the employer to facilitate rapid return to work.
•
The health plan complies with medical and legal requirements related to
workers' compensation.
•
If the health plan is unable to provide a needed service to treat a work-related
injury or illness, the workers' compensation case manager, in consultation with
the workers' compensation carrier, refers the worker to an appropriate provider.
Health plans are reimbursed by workers' compensation insurance carriers or selffunded employers for work-related medical benefits in accordance to the fee-for-service
schedule in the alliance.
•
Alliance fee schedules include rehabilitation, long-term care and other services
commonly used for the treatment of work-related injuries and illnesses.
•
Alliances are permitted to adopt varying arrangements with health plans for
providing work-related medical benefits, including negotiating per case
capitation payments.
•
Health plans are permitted to negotiate fees that vary from the fee-for-service
rate schedule with workers' compensation insurers and employers.
Health plans and providers are not allowed to bill patients with work-related injuries
or illnesses for additional charges beyond those covered by the health plan.
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Information related to provider and health plan performance in treating work-related
injuries and illnesses (including the health plan performance in facilitating injured workers'
returning to work) are included in reporting information about the quality of care provided by
the health plan.
Nothing in this policy alters or diminish the effects of state workers' compensation
laws as the exclusive remedy for work-related injuries or illnesses. [See language in OSHA
29 USC Sec. 653(b)(4)]. Disputes related to whether an injury or illness is work-related are
resolved in accordance with existing state laws.
Health benefits for work-related injuries and illnesses continue to be defined by states.
For regional alliances, the federal requirements related to workers' compensation
become effective two years after implementation of the state health reform program. For
corporate alliances and federal workers' compensation programs, the federal requirements
become effective in 1998.
Compensation programs under FECA, the Jones Act and the Longshoreman's Act are
subject to similar requirements.
The Department of Labor and the Department of Health and Human Services study the
feasibility and appropriateness of transferring the financial responsibility for all medical
benefits (including those now covered under workers' compensation and automobile
insurance) to the new health system. These departments report to the President, and present a
detailed plan for integration if it is recommended, on or before July 1, 1995.
The Department of Health and Human Services and the Department of Labor are
authorized to conduct a demonstration program in one or more states related to treatment of
work-related injuries and illnesses.
•
The Department of Health and Human Services and the Department of Labor,
in consultation with states and experts on work-related injuries and illnesses,
develop protocols for the appropriate treatment of work-related conditions.
•
The Department of Health and Human Services and the Department of
Labor enter into contracts with one or more alliances to test the validity
of protocols.
(8/6/93)
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The demonstration may include the development of per-case
capitation payments to health plans for the treatment of workrelated injuries and illnesses.
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INTEGRATION OF AUTOMOBILE INSURANCE
Individuals receive treatment from health plans for injuries sustained in automobile
accidents.
In cases in which an automobile insurance carrier is responsible for the costs of
treatment (based on current law), the automobile insurer reimburses the health plan for
services provided. Reimbursement is based on a fee schedule or on an alternative
arrangement established by the alliance or negotiated between the automobile insurer and the
health plan.
To obtain state certification, a health plan demonstrates its ability to provide or
arrange for (through contracts with appropriate health care providers) medical benefits for
automobile injuries.
•
Health plans provide or arrange for the full range of services commonly
reimbursed by automobile insurance carriers for the treatment of automobile
injuries, including long-term rehabilitation and long-term care services.
•
Health alliances may enter into contracts with centers of excellence or with
certain specialists for the purpose of providing all health plans with access to
providers of specialized treatments for automobile injuries.
Health providers may not bill patients injured in automobile accidents for charges in
excess of payments made by health plans. Health plans may negotiate different fees with
automobile insurance carriers.
For regional and corporate alliances, the federal requirement for automobile insurance
is effective two years after the state health reform program is implemented.
(8/6/93)
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INTER-ALLIANCE HEALTH SECURITY FUND
The newly established Inter-Alliance Health Security Fund collects employer,
employee, and other individual contributions for health insurance premiums and acts as a
clearinghouse, using the banking system periodically to transfer premium payments to health
plans on behalf of regional alliances.
The Fund holds all money received for regional alliances until it is either paid to
health plans or to the regional alliances to cover their administrative costs. The Fund transfers
to corporate alliances premium payments from regional alliance employers whose employees
are enrolled in a spouse's corporate alliance plan.
The Fund provides regional alliances with individual data on contributions by
employers, employees, and other persons. This information is the basis for individual and
family health accounts (see Financing Health Coverage, Tab 30), which are book entry
accounts only.
The Fund also compiles aggregate data used in determining federal subsidies.
The Fund receives federal and state subsidy payments and periodically transfers such
payments to the accounts of regional alliances. The Fund also provides loans for the
development of community-based health plans.
EMPLOYER AND EMPLOYEE CONTRIBUTIONS
Employers deduct employee contributions from wages. Employers transfer their
payments, including withheld employee contributions, through local financial institutions.
Employers make payments to a local bank or authorize automatic withdrawals from accounts
held at the bank.
•
(8/6/93)
Alliances contract with local banks to act as agents to collect premium
contributions. Banks that participate in the Treasury tax and loan depository
system are eligible for contracts with alliances.
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•
PRIVILEGED AND CONriDENTIAL
Alliances provide employers with a means of identification
similar to the system used for payment of FICA and FUTA taxes
and with software for electronic filing.
Employers may file electronic reports directly through the
clearinghouse run by the Inter-Alliance Health Security Fund.
•
Employers make contributions at the close of each pay period
but no less than once each month.
Employers who file electronically authorize electronic fund
transfers. Employers who do not report electronically deposit
contributions at a local bank.
The fund may use financial incentives to promote electronic filing and funds transfer.
PAYMENT BY SELF-EMPLOYED INDIVIDUALS AND NON-WORKERS
Self-employed individuals and non-workers pay premiums directly to the alliance.
Payments may be made to alliances, at contracting banks or through direct deposit
authorizations.
Alliances provide software to individuals to allow electronic filing and payment of
premiums.
ADMINISTRATION
A board of directors composed of five members appointed by the President oversees
the Inter-Alliance Health Security Fund, a non-profit public corporation.
The President designates the chairman of the board.
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A federal appropriation provides initial financing for the Inter-Alliance Health
Security Fund. Services fees charged to alliances for using its services pay on-going
administrative costs; fees are set based on a per-person basis and submitted to the Secretary
of the Treasury for approval.
Federal Reserve Banks act as depositories, custodians and fiscal agents for the Health
Security Fund, acting in a role similar to the one they play for government corporations. The
fund operates an account in the U.S. Treasury. Each alliance has an account with the Fund.
ACCOUNTING FOR PREMIUM CONTRIBUTIONS
Employer and employee contributions received by local banks are deposited into
collateralized accounts at banks currently used for holding federal tax payments. Money is
transferred periodically, through the Federal Reserve System, to the Fund. The Fund credits
appropriate alliance accounts.
ACCOUNTING FOR OTHER FUNDS
Subsidies for health plan premiums are transferred to the Fund and credited to alliance
accounts.
State funds deposited in accordance with maintenance-of-effort requirements are
transferred periodically to the Fund and credited to alliances as designated by the state.
Premium surcharges collected from corporate alliances are collected through local
banks (in the same manner as employer contributions) and transferred to the Fund.
DISBURSEMENTS FROM ALLIANCE ACCOUNTS
Alliances authorize disbursements from their Fund accounts to make premium
payments to health plans and to cover alliance expenses. The Fund establishes procedures for
proper authorization of disbursements.
(8/6/93)
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The Fund prepares an annual report for each alliance describing the dispersal of funds.
The report is public information.
BRIDGE LOANS TO ALLIANCES
The Fund is authorized to make bridge loans to alliances that experience short-term
shortages. The Fund develops procedures for approving these loans, including maximum loan
amounts and the rate of interest. The Secretary of the Treasury approves the procedures.
Bridge loans are deducted from the interest earned on money deposited with the Fund.
The Secretary of the Treasury issues regulations governing the bridge loan program and
establishes a maximum amount of interest income that may be applied for the program.
LOANS TO COMMUNITY-BASED HEALTH PLANS
The Fund is authorized to establish a loan program to assist the development of
community-based health plans. The program may provide direct loans to health plans or
guarantee loans made by private financial institutions.
The Treasury Department includes in its request to Congress for appropriations an
amount necessary to provide or guarantee loans and to administer the loan program. The
Fund submits an annual report describing how loan funds are used and the results of the
program.
REGULATIONS
The Secretary of the Treasury issues regulations specifying the procedures followed by
employers, banks, the Inter-Alliance Health Security Fund and other entities related to the
collection and disbursement of premium contributions.
(8/6/93)
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BUDGET DEVELOPMENT AND ENFORCEMENT
The American Health Security Act organizes the market for health care and creates
mechanisms to control costs through enhanced competition, consumer choice, administrative
simplification, and increased negotiating power through health alliances. A national health
care budget serves as a backstop to that system of incentives and organized market power.
The budget ensures that health care costs do not rise faster than other sectors of the economy.
The national health care budget centers on the weighted average premium for the
nationally-guaranteed benefits package in regional health alliances, establishing a target for
how much that average premium may increase each year. The federal government assumes
responsibility for enforcing alliance budgets in the first three years of implementation and
then transfers that responsibility to the states.
COVERED EXPENDITURES
Health care expenditures covered by the budget include premiums paid to cover the
guaranteed comprehensive benefit package whether paid by employers, employees, or
individuals. Medicare and Medicaid expenditures are included under separate budgets.
Supplemental benefits beyond the comprehensive benefit package, as well as workers'
compensation and auto insurance benefits, are not included in the budget. Premiums for
insurance policies providing coverage for cost-sharing are not included.
ANNUAL INCREASES
Each year, the National Health Board establishes the rate at which health insurance
premiums are allowed to increase.
During the first two years of implementation, the inflation factor equals the three year
average of the increase in the Gross Domestic Product. Thereafter, the inflation factor equals
the three year average of the increase in the per capita GDP.
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The Board adjusts the inflation factor for each state (or for each alliance during the
initial period of federal enforcement) to reflect unusual changes in the demographic and
socio-economic characteristics of the population covered by alliances in that state. The
National Health Board develops a methodology for making such adjustments using commonly
accepted actuarial principles. Demographic changes considered include, at a minimum, age
and gender.
The Board consults with each state (each alliance during federal enforcement) prior to
the establishment of the annual inflation factor.
The budget inflation factor is applied at the alliance level initially, and then at the
state level once the state assumes responsibility for enforcing the budget. A state with
multiple alliances could assign a different inflation factor to each alliance, as long as the
statewide factor remains unchanged.
NATIONAL PER CAPITA BASELINE TARGET
The National Health Board calculates a national per capita premium target based on:
•
Projected per capita health expenditures for the guaranteed benefits package in
the first year of the new system.
•
With adjustments for expected increases in utilization by the uninsured and
under-insured and to recapture currently uncompensated care.
FIRST YEAR BIDDING AND NEGOTIATION PROCESS
In the year prior to implementation, each alliance conducts a bidding and negotiation
process with health plans. The Board provides alliances with information and technical
assistance to aid in the bidding process. The bidding is conducted either by providing plans
with the alliance's budget target prior to bidding, or by inviting blind bids followed by
negotiations and re-bidding.
(8/6/93) "
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Once an alliance is satisfied with the negotiated health plan premiums, it submits them
to the National Health Board for review. The first-year bidding process occurs earlier than in
subsequent years to allow time for a more thorough review by the National Health Board and
possible re-negotiation of premiums.
NATIONAL BOARD REVIEW
The Board calculates for each alliance a per capita premium target, using the national
per capita baseline target as a reference point. For each alliance, the Board adjusts the
national target for current regional variations in health care spending and for rates of underinsurance and underinsurance. To measure regional variations in health care spending, the
Board uses such factors as:
•
Variations in premiums across states based on surveys and other data.
•
Variations in per capita health spending by state, as measured by the Health
Care Financing Administration.
•
Variations across states in per capita spending under the Medicare program.
•
Area rating factors commonly used by actuaries.
The Board establishes the premium targets for alliances so that the weighted average
of the alliance targets equals the national per capita baseline target.
The Board calculates an estimated weighted average premium for each alliance, using
the proposed premiums submitted by the alliance and a projection of the distribution of
enrollment across plans. If the estimated weighted average premium for an alliance is greater
than the alliance's premium target, then the Board notifies the alliance and allows it to renegotiate premiums. If an alliance chooses to re-negotiate premiums, it submits the revised
premiums to the Board and proceeds with enrollment.
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FIRST YEAR BUDGET ENFORCEMENT
The Board calculates an estimated weighted average premium based on the final bids
submitted by the alliance. If the estimated weighted average premium for the alliance
exceeds the alliance's premium target, an assessment is imposed on each plan whose bid
exceeds the target, and on the providers receiving payment from that plan. The assessment
on the plan is equal to the percentage amount by which the alliance target is below the bid.
Payments to providers by that plan are assessed at the same percentage. Alternative:
Assessments on plans above the alliance target are calculated so that the total assessments are
sufficient to reduce the estimated weighted average premium to the alliance target. The
alternative is being reviewed for its implications for budget scoring;
ESTABLISHING A BASELINE BUDGET FOR EACH ALLIANCE
Following the first open enrollment period, the Board calculates for each alliance the
weighted average premium, using actual premiums and enrollment figures. The first year
weighted average premium becomes the baseline per capita budget for the alliance.
In each subsequent year, an alliance's per capita budget equals its budget for the
previous year, increased by the inflation factor.
ADJUSTING THE BUDGET INFLATION FACTOR
In general, as described above, the budget inflation factor is the increase in the per
capita GDP (GDP in the first two years), measured on a three year moving average basis.
If, however, an alliance's actual weighted average premium in a given year exceeds its
premium target, then the inflation factor for that alliance is reduced for the following two
years to recover excess spending.
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PROCESS FOR MAKING ADJUSTMENTS IN TARGETS OVER TIME
The National Health Board appoints an advisory commission to recommend
adjustments to the methodology for calculating premium targets. The Board provides states
and alliances with information about regional differences in health care costs and practice
patterns. The commission explores methods to reduce variations in budget targets across
states due to differences in practice patterns, physician supply, population characteristics, and
other appropriate factors. Adjustments to targets may not be made without Congressional
action.
FEDERAL ENFORCEMENT OF THE BUDGET
For the first three years of full implementation (1996-1998), the federal government
assumes responsibility for enforcing the health care budget. By October 1 of each year —
beginning in 1997 — alliances submit to the National Health Board for approval their
proposed health plan premiums and fee schedules for providers under fee-for-service
arrangements.
Based on proposed premiums, the Board calculates the anticipated weighted average
premium for each alliance. The anticipated weighted average premium is the average of the
proposed premiums weighted by current enrollment in each plan, with special rules in cases
of plans entering or leaving the alliance.
If an alliance's anticipated weighted average premium exceeds its per capita budget
target, an assessment is imposed on each plan whose premium increase (adjusted upward to
reflect the previous year's assessment) exceeds the alliance's budget inflation factor. The
same assessment is imposed on providers receiving payment from that plan. The assessment
on the plan is equal to the percentage difference between the plan's premium increase and the
alliance's budget inflation factor (adjusted upward to reflect the previous year's assessment).
Payments to providers by that plan are assessed at the same percentage.
(8/6/93)
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ENFORCEMENT WHEN A STATE IS RESPONSIBLE
States may assume responsibility for the budget any time after universal health
insurance coverage through regional alliances is begins. States must assume budget
responsibility by the year 1999.
When a state assumes responsibility for the budget, its budget target equals the
weighted average of the targets for all alliances in the state.
BUDGET INCENTIVES
States retain 50 percent of federal revenue savings on subsidies for low-income
individuals if its weighted average premiums across all health plans total less than the budget
allowed. Subsidy savings equal the percentage by which alliance health spending fell below
budgeted amounts multiplied by total federal subsidies in the state. States retain half of that
amount.
If health alliances within a state control spending within the parameters established by
the budget, the budget for the following year is calculated based on the original target, not the
lesser amount.
First Level of Enforcement: State is Responsible for Additional Cost of Subsidies
A state is financially responsible for additional subsidy costs if premiums exceed the
budget target. To calculate the state's financial liability, the percentage by which alliance
spending exceeds the budget target is multiplied by total subsidies in that state. That amount
is owed by the state.
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Second Level of Enforcement: Compliance with Federal Cost Containment
A state's alliances are in compliance with national cost containment goals if:
•
The increase in the weighted average premium falls within a 1% band above
the inflation factor; and
•
The actual weighted average premium is no more than 10 percent higher than
the per capita budget target for the state.
The annual allowed increase for spending on health care in alliances is the established
inflation factor plus a band up to 1 percent above that amount. If spending is below the
band, a state may roll over up to 50 percent of the unused amount to the next budget year,
accumulating up to a maximum of 5 percent. If spending exceeds the band, the state must
recover the excess in the following year, creating a two-year budget enforcement cycle.
If a state exceeds the band, federal enforcement action takes effect the following year.
If bids for the following year do not ensure compliance with the inflation factor plus the
band, as well as and recover excess spending, then an assessment on plans and providers is
imposed as described under "Federal Enforcement of the Budget."
TOOLS TO MEET PREMIUM TARGETS
In addition to creating a well-structured marketplace for health coverage, alliances
have the ability to control costs through premium negotiations and the authority to refuse
contracts with health plans whose premiums are too high. Tools available to states to contain
costs include:
•
Premium negotiation and regulation.
•
Limiting enrollment in high-cost plans by:
•
(8/6/93)
Freezing new enrollment in high-cost plans.
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•
PRIVILEGED AND-e8NEIDENHAL—
Surcharging high-cost plans or paying rebates to consumers who enroll
in low-cost plans.
•
Setting rates for health providers.
•
Controlling health care investments through planning.
BUDGETS FOR CORPORATE ALLIANCES
A large employer may operate a corporate alliance rather than purchasing health
coverage through a regional alliance, provided it complies with cost-containment goals.
Large employers whose health plans do not meet national spending goals are required to
purchase coverage through regional alliances.
During the first two years of implementation, the inflation factor equals the three year
average of the increase in the per capita Gross Domestic Product (GDP). Thereafter, the
inflation factor equals the three year average of the increase in the per capita GDP minus one
percentage point.
The National Health Board develops a methodology for calculating an annual premium
equivalent within a corporate alliance. Beginning after the third year of implementation of
health reform, each corporate alliance annually reports its average premium equivalent for the
previous three years to the Department of Labor.
If the increase in the premium equivalent exceeds the allowed rate of growth during
two of any three years, the Department of Labor may require the employer to purchase health
coverage through a regional alliance.
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QUALITY MANAGEMENT AND IMPROVEMENT
Health reform transforms the current prescriptive quality assurance program into a
quality-management system focused on performance measures and continuous improvement.
Quality assurance programs in the current system rely on external checks, forms and
process manuals. Insurance carriers, peer review organizations, state and federal inspection
agencies audit the work being done in hospitals, doctors' offices and laboratories, and penalize
the providers if they fail to follow rules. Patients play a minor role, lacking reliable
information upon which to compare the quality of health plans, providers or treatments.
Under the American Health Security Act, customer-focused continuous improvement
assures quality improvement.
NATIONAL QUALITY MANAGEMENT PROGRAM
The National Quality Management Program develops the quality information and
accountability program. An advisory council under the National Health Board, appointed by
the President, oversees the program.
The council consists of 15 members representative of the population, including
representatives of consumer groups, health plans, states, purchasers of care and experts in
quality of care and related fields of health service research.
The National Quality Management Program:
•
Develops the core set of quality measures and consumer survey questions and
updating them over time to reflect changing goals for quality improvement in
health care.
•
Conducts consumer surveys that gauge access to care, use of health services,
outcomes and satisfaction.
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As part of that effort, the program develops sampling strategies to ensure that
performance reports reflect populations difficult to reach with traditional
consumer-sampling methods, including consumers who fail to enroll in a
health plan or resign from plans.
Sets national goals for performance on selected quality measures.
Establishes minimal standards of access and quality for plans on selected
measures.
Supports research, technology assessment and development of reliable tools for
measuring health outcomes.
Evaluates the impact of health reform on the quality of care.
Reports annually on performance of the health care system.
Reviews and recommends changes to the quality measures annually and
establishes a five-year priority list for measures to be included in the future.
Uses the national network of regional centers to obtain quality management
data. (See section on "Information Systems and Administrative Simplification,"
Tab 16.)
PERFORMANCE REPORTS
The National Quality Management Program under the National Health Board develops
a core set of measures of performance that apply to all health plans, institutions and
practitioners. It publishes annual performance reports outlining the results of those measures
for each health plan, creating a public system of accountability for quality and providing
consumers with meaningful information.
It also provides annual reports to the states on the comparative performance of health
plans and state quality programs. Quality reports include information on the performance of
alliances and health plans on as many as 50 measures of access to care, appropriateness of
care, health outcomes and satisfaction with care.
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It provides the results of a smaller number of quality measures for health care
institutions, doctors and other practitioners if the available information is statistically
meaningful. State performance reports include trends, performance on national quality
measures and on goals for national performance on access, appropriateness and health
outcomes.
The following criteria determine the selection of national measures of quality
performance:
The measures reflect important aspects of care in terms of
prevalence of illness, morbidity, mortality or cost.
The set is representative of the range of services provided to consumers
by the entities in question.
Measures are reliable and valid and data needed for calculation can be
obtained without undue burden.
Performance on measures included in the set vary widely among the
entities on the performance report.
When the measures are rates of process of care, these processes are
linked by strong scientific evidence to health outcomes.
When the measures are outcomes of care, performance lies within the
control of providers and adequate risk adjustment can be accomplished.
STATE ROLE
As part of the Quality Management Program, states assume responsibility to:
•
Develop and implement plans to meet enrollment, access and quality standards
established by the federal government.
•
Assure that plans and providers meet essential national standards through
licensure and certification procedures.
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Monitor the extent to which plans make the full range of benefits covered in
the guaranteed package accessible to all population groups.
Prepare comparative reports on the performance of alliances, plans, providers
and practitioners.
Establish in each alliance a premium check-off system at enrollment where an
annual amount— up to $2 per enrollee— can be designated for the purpose of
supporting a consumer advocacy program.
Establish a program of technical assistance administered through either a nonprofit foundation or another organization dedicated to that purpose.
Eligible organizations may include public-private partnerships, consortia
led by academic medical centers or other forms.
Technical assistance may include a variety of activities such as:
fostering collaboration among health plans and providers; disseminating
information about successful quality-improvement programs, practice
guidelines and research findings; and providing educational courses and
other forums for providers to exchange information on the valuative
sciences and quality improvement activities.
Technical assistance is targeted at improving quality management
practices and not designed to regulate or interfere with the
administration of plans and providers.
A per capita levy on insurance premiums, with the amount established
by the National Health Board, funds the program.
Providers and health plans are not required to use technical assistance
resources as a condition of participation in the new health care system,
although health plans are accountable for improving performance on
national quality measures.
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ROLE OF ALLIANCES
As part of the quality management program, health alliances:
•
Resolve consumer complaints, grievances and requests to leave a health plan.
•
Disseminate to consumers information related to quality and access to aid in
their selection of plans.
•
Prepare comparative reports on the quality of health plans, providers and
practitioners.
•
Conduct education programs to assist consumers in using quality and other
information in choosing health plans.
ROLE OF HEALTH PLANS
As part of the Quality Management Program, health plans:
•
Measure and disclose performance on quality measures.
•
Report on, maintain and improve the quality of care delivered by providers and
practitioners.
•
Meet national, uniform Conditions of Participation established for health plans
by the National Health Board (See "Health Plans," Tab 9).
DEVELOPING INFORMATION FOR QUALITY MANAGEMENT
An electronic network of regional centers containing enrollment, financial and
utilization data is created, as outlined in the section on Information Systems, Tab 16. Health
plans, providers and alliances report information required for the national Quality
Management Program through the regional network; information required includes data
related to enrollment, clinical encounters, consumer satisfaction and specific quality measures.
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Regional centers electronically link state-level quality programs, health alliances and
plans, providing quality and utilization information for each health plan and provider as well
as comparative information on other health plans and states. Regional centers audit samples
of data to ensure integrity.
To supplement routinely collected information, health plans gather clinical data
specified by the national Quality Management Program from samples of medical records. To
assure coordination with other information-gathering activities, consumer satisfaction surveys
are conducted as described in the section on Information Systems under Tab 16. Results from
consumer surveys, in combination with other information, will gauge access to health care,
use of service, outcomes and satisfaction.
DISSEMINATION OF KNOWLEDGE TO IMPROVE THE QUALITY OF CARE
To enhance the practice of medicine and promulgate information about best practices
and effective treatment approaches, the National Quality Management Program:
•
Surveys statistically valid sample populations to gather information related to
consumer satisfaction, access to care and health outcomes. Survey samples
include representation of populations considered to be at risk for inadequate
health care. The national quality program administers the survey; states may
add quality measures of local interest.
•
Develops practice guidelines that assist providers in achieving quality standards
and underpin national measures of quality.
•
Develops methodology standards for practice guidelines, an evaluation and
voluntary certification process for guidelines developed by the private sector.
•
Operates a clearinghouse and dissemination program for practice guidelines.
•
Disseminates information documenting clinically ineffective procedures and
treatments.
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•
Supports research on topics central to quality management and improvement,
including outcomes research, dissemination methods, ways of measuring quality
and design of electronic information systems.
•
Establishes scientific standards and procedures for evaluating the clinical
appropriateness of protocols used to manage health service utilization.
•
With the advice of the national quality advisory committee, defines priorities
for health-care evaluation research and recommends projects. The priorities
will target diagnoses with the highest level of uncertainty in treatment
decisions, widest variation in practice patterns, significant costs and incidence.
STREAMLINING REGULATORY ACTIVITIES
Minimum Standards for Health Care Institutions. The National Quality
Management Programs develops uniform standards for licensing of health care institutions
that focus on essential performance requirements related to patient care. As they are
developed, those standards replace current regulations except in areas of fire safety, sanitation
and patient rights.
When the new standards are in place, agencies charged with certifying health
institutions eliminate routine surveys of institutions except for those with problematic records,
in response to complaints and randomly selected validation sites.
By January 1, 1996, the National Quality Management Program completes
demonstration projects for new performance standards and revise standards according to the
findings. Demonstration projects must evaluate the impact of these standards in assuring
quality of care, reducing cost and burdens on providers.
Current standards are retained until new ones are tested, promulgated, evaluated and
implemented. In the interim, government agencies responsible for licensing and certifying
health care institutions are required to coordinate inspections, minimize paperwork and reduce
the number of inspections.
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Medicare Peer Review Organizations. The peer review organization system under
Medicare continues until the new quality system is implemented and the Secretary of the
Department of Health and Human Services determines that Medicare enrollees are protected
adequately through National Quality Management Program. PROs will end at that time.
During the interim, the PRO program is streamlined. (See Administrative
Simplification, Tab 16.)
The Clinical Laboratory Improvement Act. Regulation of clinical laboratory testing
are re-focused to emphasize quality protection while reducing administrative burdens.
BUDGET
A budget of $300 million for FY-1996 included as part of the Public Health Service
budget for infrastructure (Tab 20) develops the analytic and support functions necessary to
provide technical assistance, data analysis and report on plan performance. Funds for the
operating costs of the National Quality Management program are included in the operating
costs of the health care system.
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INFORMATION SYSTEMS
Timely and reliable information represents a critical element in efforts to reform the
health care system and to protect and improve the health of the nation.
Health care reform establishes a new framework for health information. Using
standard forms, uniform health data sets, electronic networks and national standards for
electronic data transmission, the information framework supports:
•
The development of clear and useful information for consumers.
•
Measurement of health status.
•
Monitoring and evaluation of the health care system.
•
Issuance of Health Security Cards.
•
Development of links among health care records to improve patient care.
•
Analysis of patterns of health care.
•
Streamlined and simplified administration with associated cost savings.
•
Identification of fraudulent activities.
The new information system features:
•
Strong privacy, confidentiality and security protection.
•
The formation of partnerships between the public and private sectors.
•
National standards for clinical and administrative data.
•
Appropriate links to the National Information Infrastructure programs.
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Electronic network to ensure the timely availability of reliable
information.
DATA AND INFORMATION FRAMEWORK
Every American receives a national health security card to assure access to needed
health services throughout the United States. Much like ATM cards, the health security card
allows access to information about health coverage through an integrated national network.
The card itself contains a minimal amount of information.
The National Health Board [See HHS position arguing for the Department to assume
this responsibility. Position is articulated at the end of section on National Health
Board/National Administration, Tab 5jj, in consultation with state and private entities and
other relevant organizations, develops and implements uniform national standards for
administrative, clinical, financial and other health care related information. Standards include:
•
Uniform minimum health data sets with standard data items and definitions.
•
Electronic data interchange standards for transfer of information.
A comprehensive health care information privacy framework is established based on
federal legislation, applicable to all states, alliances, health plans and providers. Provisions
include mechanisms for management and oversight of privacy and security. Principles of the
framework include:
•
Uniform privacy and confidentiality rights with special emphasis on protection
of highly sensitive data.
•
Appropriate security measures and technology.
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•
Enforcement mechanisms and penalties.
•
Coordination with policies established under the National
Information Infrastructure.
•
Creation of a national privacy panel focusing on privacy
protection as applied to health care information (see discussion
below).
The Board [See HHS position arguing for the Department to assume this
responsibility. Position is articulated at the end of section on National Health Board/National
Administration, Tab 5] establishes national, unique identifier numbers for plans, providers and
patients, selecting an identification number system at the conclusion of a process that include
public hearings and formal notice and comment procedures.
INFORMATION SYSTEMS
Health plans implement and maintain core discrete electronic documentation of all
clinical encounters with health providers using current information system technology as the
foundation for the system. Encounter records are captured, retained and transmitted as a
byproduct of the routine provision of care.
•
Records may be based on insurance claims or clinical encounters (depending
on the type of health delivery system).
•
The record may be plan or community based or shared among several plans.
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•
Encounter records conform to the uniform minimum
administrative and clinical data sets developed by the board
[HHS Position: HHS is responsible for this] and transmitted as
appropriate to the national network (see discussion below).
•
Emphasis is placed on the goal of electronic records and
electronic data interchange with associated economic efficiencies.
A phase-in period, with incentives, is planned to achieve this
goal. During the phase-in period, standard forms may be used.
•
Current information systems technology readily supports the capture, retention
and electronic data interchange of encounter records as a byproduct of the
provision of care and with favorable benefit cost efficiencies.
•
Development of regional encounter data systems in this fashion will also
support analysis of utilization and treatment patterns, as well as quality and
outcome monitoring and research as a basis for improving health care.
Within this framework, plans are encouraged to make innovations:
•
It is not the intent of health care reform to mandate explicit approaches to this
requirement. Rather, flexible, local solutions to local needs and conditions will
be fostered.
•
This requirement does not call for implementation of a costly, full-scale
computerized patient record. It calls for using today's technology to provide
information to providers.
•
The framework promotes the formation of community based health information
systems that improve the quality of care and reduce cost by minimizing
duplicate procedures, tests and adverse drug interactions.
•
Plans, providers, states and health alliances receive federal technical assistance
to enable timely conformance with these requirements and to select cost
effective technical solutions.
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Federal assistance is focused on long-term goal of developing a Point-ofService system.
A POINT-OF-SERVICE INFORMATION SYSTEM
The long-term strategy for health care information envisions creation of a Point-ofService information system that brings valuable information to consumers, health providers,
payers and policy makers. The envisioned system offers significant potential for more
effective, continuing quality improvement. In such a system, clinical, administrative and
payment data move electronically among employers, health plans, physicians' offices,
hospitals, laboratories, pharmacies and other providers. The system:
•
Collects information as a by-product of the delivery of care.
•
Protects the privacy, confidentiality and security of information.
•
Provides ready access to information for appropriate uses.
The national system will evolve from information systems established by health plans,
alliances and regional centers. Accelerating its development will require additional funding
from the federal government to support technology development and regional demonstration
projects in health plans, communities, alliances and federal health centers.
FEDERAL, STATE, ALLIANCE AND HEALTH PLAN DATA NETWORK
An electronic network of regional centers containing enrollment, financial, and
utilization data is created. The network receives standardized enrollment, encounter, and
related data from plans for aggregation, analysis and feedback to plans, alliances, states and
the Federal Government. The network will be pilot tested before full scale implementation.
•
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The network supports analytic needs, such as monitoring of budgets, measuring
access and state accountability, assessing quality, among states, health plans,
health alliances and the federal government.
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•
States and alliances could operate their own regional centers and serve the
switch function as part of the national network.
•
Federal funds will assist in financing the network, which is built in
collaboration with private sector, state and existing federal programs.
•
Required data is entered once and is a by-product of routine
administration and provision of care by health plans and
alliances.
•
Health plans maintain uniform electronic records of encounters or claims.
•
Plans transmit encounter data, in the form of a uniform
minimum data set, to the network on a regular basis. The
uniform encounter data set is designed to meet a variety of data
needs.
•
The network records national enrollment information. Health alliances and
plans maintain detailed local enrollment files and submit at least a portion of
those files to the network on a regular basis.
Creation of the network does not inhibit plans and health and health alliances from
being innovative in meeting the information needs discussed above.
CONSUMER SURVEYS AND PUBLIC HEALTH SURVEILLANCE
Consumer surveys of satisfaction, access to care and related measures are conducted
on a plan-by-plan and state-by-state basis.
•
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HHS carries out the consumer surveys in accordance with the overall quality
measures and standard survey questionnaires developed by the Advisory
Council to the National Quality Management Program.
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In addition to economic efficiencies, centralized administration of the consumer
surveys assures the uniformity and comparability of survey information and
provides the basis for objective national, state and regional norms and
comparisons.
National population based surveys are conducted by HHS to monitor the
implementation of health care reform and assess its impact on the general
population, potentially vulnerable populations, states and the health care
system.
Certain public health surveillance and data systems will continue to be needed
to monitor the health status of the population and to identify and address
emerging threats to the public health. Public health data systems involving the
federal government, states, and local governments are strengthened and more
closely integrated within the overall information systems framework.
GOVERNANCE
A National Health Data Advisory Council is established. The Council, reports to the
Board [HHS Position: The Secretary of HHS does this] and oversees the information and data
activities, including standard setting and privacy protections, of the federal government under
health care reform. Membership includes consumers, users and providers of data developed
by plans, alliances, states, and the federal government.
BUDGET
Under the Public Health Service budget for health care infrastructure, $200 million is
needed to carry out the consumer survey program. Funds to establish and operate the
information system and regional networks are included in the operating costs of the new
health care system.
As part of the PHS infrastructure budget, $200 million will be necessary to carry out
the consumer survey program. Funds to establish and operate the informaton system and
networks will be included in the operating costs of the health care reform program.
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PROTECTION OF PRIVACY
To assure the protection of privacy, security and confidentiality in the new health care
system, the federal government undertakes to:
•
Establish national privacy safeguards covering all health records, based
on a Code of Fair Information Practices, including
•
Uniform and comprehensive privacy and confidentiality
protection for individually identifiable health care information.
A uniform national standard simplifies compliance for
organizations that operate nationwide and provide protection for
data that are linked or potentially linked to other data systems.
•
Protection for all types of health care information:
•
•
(8/6/93)
With the same level of protection for all illnesses and
diseases.
•
•
Whether it is part of the new health care system or exists
outside it.
Regardless of the form in which records are kept (paper,
microfilm or electronic), location (storage, transit,
archive), owner, user or repository (government, health
provider, private organization).
Establish effective mechanisms for enforcement, including significant penalties
for breach of legal requirements.
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Establish a national privacy framework is founded on a Code of Fair
Information Practices stipulating, for example, that individuals who are the
subject of data collected:
•
Have the right to know about and approve the
uses to which the data are put.
•
Are assured that no secret data systems are
permitted to exist.
•
Have the right to review and correct data about
themselves.
•
Have adequate assurance that data may be
collected and used only for legitimate purposes.
Establish a system of universal identifiers for the health care system:
•
A unique individual identifier for participants in health plans.
The unique identifier may be the Social Security
Number or a newly created number limited to the
health care system. (See discussion of selection
under Information Systems, Tab 16)
•
In either case, the national privacy policy
explicitly forbids the linking of health care and
other information through the identification
number.
Issue effective security standards and guidance for health care
information.
Currently, no uniform, comprehensive privacy standards related
to health care information exist.
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The National Health Board develops and periodically revises
health care information security standards with active
participation by other relevant federal agencies (e.g. Department
of Health and Human Services, Department of Defense,
Department of Veterans Affairs, National Highway Traffic
Safety Administration, Consumer Product Safety Commission,
and National Institute of Standards and Technology in the
Department of Commerce).
Establish a Data Protection and Security Panel under its direction. The
panel oversees and manages privacy and security by, for example:
•
Setting privacy and security standards through interpretive rules
and guidelines.
•
Monitoring and evaluating the implementation of standards set
by statute, regulations and guidelines.
•
Sponsoring or conducting research, studies and investigations.
•
Supporting the development of fair and comprehensible consent
forms governing the disclosure and re-disclosure of information
to authorized persons, for authorized purposes, at authorized
times.
•
Developing the technology for implementing security standards
and sharing information in the health care setting.
•
Working with health care providers to foster development of
security practices.
Establish an education and awareness program to train personnel with
access to health care information as well as to inform consumers of
their rights with respect to the collection and disclosure of personal
information.
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ADMINISTRATIVE SIMPLIFICATION
The National Health Board enters into contracts for the development and
implementation of:
Standard forms to record enrollment, clinical encounters and insurance
reimbursement.
Automation of insurance transactions and industry-wide adoption of standard
forms.
Simplified coordination of benefits.
The creation of "standard and unique" identification numbers for all health care
providers, health plans, employers and enrolled consumers.
Steps to streamline the administration of the Medicare program.
STANDARD FORMS
After consultation with providers, plans, employer groups, and others, an advisory
committee to the National Health Board adopts standard forms used for insurance
reimbursement, health plan enrollment and to record clinical encounters.
The advisory committee determines the standard information requirements and data
definitions for forms by July 1, 1994. All health plans and alliances adopt content
requirements by December 31, 1994.
By January 1, 1995, all health plans adopt a single, standard form for reimbursement
according to the following classes of providers:
•
The UB-92 for institutional providers
•
The Standard Health Insurance Claim Form (similar to the HCFA-1500) for all
non-institutional providers except pharmacies and dentists
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•
HCFA 1500 for dentists
•
The Universal Drug Claim Form developed by the National Council on
Prescription Drug Programs for pharmacies that seek reimbursement.
The standard claim form serves the secondary purpose of collecting information
required for state monitoring, accountability and the measurement of quality outcomes.
All health plans and employers also adopt a national, standard enrollment form. In
conjunction with standard claim reimbursement and encounter information, enrollment data is
used for monitoring accountability and performance.
INSURANCE TRANSACTIONS
The National Health Board oversees the development of standards for the automation
of insurance transactions, including claims payments and status reports, remittance advice,
eligibility, coordination of benefits and utilization management.
Standard coding and content requirements eliminate multiple, conflicting requirements
on health providers for information, formats and definitions.
The National Health Board identifies and consolidates existing standards in the health
care industry, working from prototypes developed by the American National Standards
Institute.
The Board reviews standards in consultation with groups such as the Workgroup for
Electronic Data Interchange, the American National Standards Institute, the National Institute
of Standards and Technology.
By July 1, 1994, the National Health Board designates national standards that
providers, plans, alliances and employers adopt as a condition of participation in the health
system. The Board establishes requirements related to content, definitions and a strategy for
implementation no less than six months before the requirement for standardized transactions
takes effect.
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All government health programs, including the Department of Defense, CHAMPUS,
Department of Veterans Affairs, Medicare and Medicaid adopt national standards
immediately. All private payers, including purchasers of health insurance through regional
and corporate alliances, adopt national standards for electronic transactions after January 1,
1995.
Major public and private payers, hospitals, major employers and corporate alliances, as
well as clinics and group practices of 20 or more professionals automate the core transaction
set by July 1, 1995. States may deny payments to plans that have not automated transactions
by that date.
To speed implementation, the National Health Board provides technical assistance to
health alliances and plans.
UNIQUE IDENTIFICATION NUMBERS
The National Health Board undertakes a process to determine, adopt and enforce
unique identification numbers for consumers in health plans.
STREAMLINING MEDICARE
The Medicare program participates in the implementation of standard forms, uniform
billing, electronic claims submission, remittance notices, coordination of benefits, unique
identification numbers and streamlining of utilization review as required under health reform.
In addition, the Medicare program consolidates current roster of 83 insurance
companies that act as contractors; it contracts separately for different functions (e.g. claims
processing using a common system across contractors, provider profiling, provider relations,
audit, fraud and abuse prevention).
Medicare eliminates extra billing for Part B providers such as durable medical
equipment providers, orthotic and prosthetic suppliers and ambulances.
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Medicare streamlines claims processes further by:
•
Deleting information related to Medicare as a secondary payer from claim form
and incorporating into national eligibility file.
The Department of Health and Human Services develops and
mandate model coordination of benefit rules immediately for
Medicare, workers' compensation, auto insurance and other nonalliance health coverage.
Additional coordination of benefits reforms occurs when the
national enrollment file is developed and operational (January 1,
1996) After the enrollment file is operational, insurers are
required to forward coordination of benefits claims to
appropriate insurers, through the enrollment file if necessary.
•
Deleting Medigap reporting requirement from the claim form; supplemental
insurance becomes part of the national eligibility file.
The Health Care Financing Administration also:
•
Incorporates evaluations from physicians and their representatives into annual
performance evaluations of carriers, expanding the current five-state pilot
project nationally.
•
Eliminates complexities caused by dual funding sources and rules for Medicare
Part A and Part B claims.
Efforts already underway by HCFA eliminate some complexities.
In 1996, the Health Care Financing Administration begins to
implement national, standard, integrated claims processing
system for all Medicare claims, with the goal of full
implementation by 1998.
•
(8/6/93)
Streamlines the process for settling cost reports, working through the
Medicare-Technical Advisory Group on Hospital Administrative Issues.
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•
Eliminates the requirement for physicians to sign an acknowledgement of
awareness of penalties associated with falsifying claims information on an
annual basis and replaces with a single acknowledgement when granted
hospital privileges.
•
Eliminates pre-billing requirement for attestation by physician of diagnoses and
major procedures performed in the hospital.
[HHS argues for streamlining but not eliminating the pre-billing requirement
for attestation by physicians through work of the Medicare-Technical Advisory
Group on Hospital Administrative Issues.]
•
Simplifies the "Important Letter to Medicare Patients" in consultation with the
Medicare-Technical Advisory Group.
•
Repeals legislation requiring review of at least ten surgical procedures.
•
Improves upkeep of data in "Common Working File."
•
Limits system changes for Medicare and Medicaid programs to once every six
months and notifies health care providers 120 days in advance of any major
change in billing proecedures.
•
Consistent with the 4th Scope of Work, the PRO program will continue to
move toward analysis and improvement of patterns of health care and
outcomes, and away from individual case review, as appropriate.
The National Health Board explores developing standards for a single annual
inspection of health care institutions to replace multiple inspections performed by federal,
state, local and private accreditation, survey and certification agencies.
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CREATING A NEW HEALTH WORKFORCE
Ensuring quality health care and access for all Americans requires adjustments to the
focus of investments in health care training and education in the following areas:
•
Shifting the balance in the graduate training of physicians from specialties to
primary care.
•
Increasing investments in the training of nurse practitioners and physician
assistants.
•
Recruiting and supporting the education of health professionals from population
groups under-represented in the field.
•
Supporting workforce planning for health professions at the state level.
•
Adjusting Medicare payment formulas to increase reimbursement for primary
care.
DEVELOPMENT AND SUPPORT FOR GRADUATE MEDICAL EDUCATION
Legislative authority establishes a new system to manage the supply of specialty
training for physicians, encompassing several initiatives:
Managing the number of post-graduate training positions for physicians: After a
five-year phase-in period, at least 50 percent of new physicians are trained in primary care
rather than in specialty fields in which an excess supply currently exists. Primary care
includes family medicine, general internal medicine and general pediatrics.
To achieve the goal of bringing primary care and specialty training into balance, the
number of primary care residency positions increases by approximately 7 percent each year
over the five-year period. During the same period, the number of specialty training positions
declines by approximately 10 percent each year.
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The total number of first-year residency positions available continues to exceed the
number of graduates of U.S. medical and schools. The new system encourages the location
and focus of physician training to more closely reflect community medical practice.
Determination of approved residency positions: The Secretary of the Department of
Health and Human Services determines the number of training positions in each specialty
acting on the recommendations of the National Council on Graduate Medical Education and
allocated to regional councils. Regional councils distribute positions to individual residency
programs within each area of the country.
The Secretary appoints the National Council on Graduate Medical Education, which
includes medical educators, practicing physicians, consumers, hospital administrators, nurses
and others.
The Council recommends the total number of training positions for each medical
specialty, based on the national need for new physicians in specific specialties. The national
Council apportions residency positions to regions taking into account:
•
Current regional distribution and quality of training programs.
•
The need to maintain access to a range of primary care and specialty training
positions for members of racial minority groups and others traditionally underrepresented in the profession.
•
Other factors relating to specific specialties and training programs
In developing its recommendations, the Council seeks the views of professional
medical associations and other appropriate organizations. Positions are allocated for each
post-graduate year to account for differences among specialties in the point of training when
residents enter specialty training. For example, family medicine training begins in the first
year of post-graduate training, while training in internal medicine specialties begins in the
fourth year.
Residency training programs that do not participate in the allocation process are not
eligible for support from the pooledfinancialsystem. (See discussion below.)
(8/6/93)
129
�WORKING GROUP DRAFT
PRIVILEGED AND- CONFIDENnAL
Allocation of residency positions: The Secretary of the Department of Health and
Human Services appoints ten regional councils to allocate training slots among individual
residency training programs.
Regional councils include representatives of academic institutions training physicians
in the region, as well as representatives of regional health alliances and health plans,
consumers and others.
Regional councils receive applications from training institutions in each area for
residency positions in each specialty. Positions are allocated to accredited residency programs
based on such factors as:
•
Program quality.
•
Relevance of the training program curricula to the future practice
of physicians.
•
Participation of under-represented minority groups.
•
Participation of locally coordinated education programs.
The Secretary of the Department of Health and Human Services reviews regional
council decisions and retains the right to amend allocations for good cause, to ensure
continuity, allocations to program are available for periods of up to three years and are made
at least one year in advance of the residency training year.
Funding for residency training: Funds to support graduate medical education are
pooled from all insurers to reflect the benefits that all patients and health plans receive from
graduate medical education and training. Residency programs receive funds for each
approved training position. Payments are based on a formula which considers the national
average for resident salaries and the costs of faculty supervision and other related teaching
expenses.
(8/6/93)
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�WORKING GROUP DRAFT
PRIVILEGED ANDreONFIDENTTAL
Funds from two sources are pooled:
•
Medicare contributes to the direct medical education fund based on the
percentage of hospital bed days its patients use (38 percent in 1992).
•
Other payers contribute through a surcharge on health plan premiums.
Currently, Medicare pays explicitly for graduate medical education, based on historic
costs. In FY-1992, Medicare payments for Graduate Medical Education totalled $1.5 billion.
(Other payers currently support Graduate Medical Education implicitly through elevated
hospital charges.)
Estimated cost: The fund requires an appropriation of approximately $6 billion
initially, including approximately $1.6 billion from Medicare. Costs plateau or decline as the
number of specialty residents declines over time.
Allocation of payments: Funding is provided directly to training programs approved
for residency training positions, encouraging the development of non-hospital based training,
particularly programs that provide a greater portion of their training in ambulatory and
primary-care settings, such as Health Maintenance Organizations and community clinics.
Transition payments: Transition payments are provided to teaching hospitals which
are required to reduce their residency training programs. Hospitals receive transition
payments to offset a portion of the costs associated with hiring replacement staff and
maintaining services.
Payments are phased out over a five-year period, beginning at the rate of 150 percent
of the current national average for direct medical education payments for an equivalent
position. Payments decline by 25 percent each year.
(8/6/93)
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�WORKING GROUP DRAFT
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RE-TRAINING PHYSICIANS IN PRIMARY CARE
In order to further expand the availability of primary care physicians, support are
provided for the development of programs to re-train mid-career specialists to serve as
primary care physicians. Areas to be explored include the use of incentives, the type and
length of effective retraining programs and the development of certification criteria.
COMMUNITY-BASED TRAINING OF PRIMARY CARE PHYSICIANS
Health reform supports community-based undergraduate and graduate medical
training, continuing education and faculty development in primary care, broadening the impact
of existing public support, which is limited to programs at the pre-doctoral and residency
levels in family medicine (section 747) and general internal medicine and general pediatrics
(section 748).
SUPPORT FOR TRAINING OF MINORITIES AND DISADVANTAGED PERSONS
To increase the diversity of the health care workforce, support is provided to programs
that increase the number of health professionals among racial minority groups and
disadvantaged persons. The goal of these programs is to double the level of underrepresented minorities enrolled in the first year of medical school to a level of 3,000 students
by the year 2000.
Strategies include:
•
Continuingfinancialassistance for under-represented minorities and
disadvantaged students entering health professions training programs under
sections 724 and 736.
•
Increasing support for recruitment and retention of under-represented minority
and disadvantaged students in medicine, dentistry, nursing, public health and
other health professions under section 1707.
•
Maintaining efforts to foster interest in health careers among under-represented
minorities at the pre-professional and professional levels.
(8/6/93)
132
�'.3 '0
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•
PRIVILEGED AND-CONriDENTIAIr
Supporting programs to increase the number of minority faculty in the health
professions, minority health services researchers and minority basic scientists.
TRAINING FOR NURSE PRACTITIONERS, NURSE MIDWIVES AND PHYSICIAN
ASSISTANTS
Expanded training: Current funding for training of nurse practitioners, under section
822, and physician assistants, under section 750 will be amended to
•
Increase current funding levels to double the number of graduates produced
annually, giving priority to the expansion of existing programs, and
•
Establish long-term goals and a funding strategy to maintain the supply of
practitioners.
A similar program is implemented to support nurse midwives.
Barriers to practice: To remove inappropriate barriers to practice, the Secretary of
the Department of Health and Human Services develops and encourages the adoption of
model professional practice statutes for advanced practice nurses and physician assistants,
either under a new general authority for special projects or by amendment of sections 822 or
750.
RURAL HEALTH PROVIDER GRANTS
A rural health provider grant program supports a wide range of activities, including
new community training programs for rural practitioners, the development of rurally oriented
health education curricula, and the improvement of medical communications technology.
(8/6/93)
133
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
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Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Security Act - Working Group Draft] [Binder] [2]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621468" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
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William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
5/7/2015
Source
A related resource from which the described resource is derived
17621468
12093636
42-t-12093636-20060885F-Seg5-008-008-2015
-
https://clinton.presidentiallibraries.us/files/original/d467559ce398c96e28eaff62002b515e.pdf
a0a086e20ef9a08ba73f54da15aadce0
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [Binder] [1]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�(7\
�^3
WORKING GROUP DRAFT
PRIVILEGED AND "CONFIDENTIAL
TABLE OF CONTENTS
1.
2.
Coverage
4.
Guaranteed National Benefit Package
5.
National Health Board/National Administration
6.
State Responsibilities
7.
Regional Health Alliances
8.
Corporate Alliances/ERISA
9.
Health Plans
10.
Risk Adjustment
11.
Rural Communities in the New System
12.
Integration of Workers Compensation and Automobile Insurance
13.
Inter-Alliance Health Security Fund
14.
Budget Development and Enforcement
15.
Quality Management and Improvement
16.
Information Systems and Administrative Simplification
17.
8/6/
Ethical Foundations
3.
/
Introductory Overview
Creating a New Health Workforce
93}
i
DETERlViiMELi TO BE AN
ADMINISTRATIVE MARKING
INITIALS: _03__ DATE:
�^3
WORKING GROUP DRAFT
PRIVILEGED AND-eONFIDENTIAL
TABLE OF CONTENTS (CONTINUED)
18.
Academic Health Centers
19.
Health Research Initiatives
20.
Public Health Initiatives
21.
Long-Term Care
22.
Malpractice Reform
23.
Antitrust Reform
24.
Fraud and Abuse
25.
Programs For Underserved Populations
26.
Medicare
27.
Medicaid
28.
Government Programs
•
•
•
•
29.
Transition
•
•
•
30.
(8/6/93)
Department of Defense
Veterans Affairs
Indian Health Service
Federal Employee Health Benefits Plan
State Phase-In
Insurance Reforms
Short-Term Cost Controls
Financing Health Coverage
��23
WORKING GROUP DRAFT
PRIVILEGED AND -GONHBENTtftL
THE PROBLEM
All Americans, those who have health insurance and those who do not, understand that
serious problems exist in the health care system:
•
Americans lack security — One out of four people — or 63 million people - will lose health insurance coverage for some period during the next two
years. Thirty-seven million Americans have no insurance and another 22
million lack adequate coverage.
Losing or changing a job often means losing insurance.
Becoming ill or living with a chronic medical condition can
mean losing insurance coverage or not being able to obtain it.
•
Health care costs are rising faster than other sectors of the economy —
Precipitous growth in health care costs robs workers of wages, fuels the growth
of the federal budget deficit and puts affordable care out of reach for millions
of Americans.
Left unchecked, rising health care costs will consume almost
two-thirds of the increase in Gross Domestic Product for each
American for the rest of the decade.
Health care costs will grow from 14 percent of GDP to 19
percent even without an expansion of coverage to insure all
Americans.
•
Bureaucracy overwhelms consumers and health providers — Excessive
paperwork confuses and frustrates doctors, nurses, patients and their families.
Bureaucracy also drives up costs. Studies document that
administrative costs contribute a steeply rising portion of the
expenses involved in running a typical doctor's office or hospital.
(8/6/93)
�^3
WORKING GROUP DRAFT
PRIVILEGED AND-GONriDENTIAL
Quality is uneven — Because no c ear standards define best medical practice,
lack of information and inadequate attention to prevention make the quality of
health care across America uneven, Consumers have no reliable information
with which to measure the quality o : their health care or coverage.
Coverage for long-term care is inadequate — Many elderly and disabled
Americans enter nursing homes and other institutions when they would prefer
to remain at home. Families exhaust their resources trying to provide for
disabled relatives.
Many Americans cannot obtain quality care — In many rural and inner-city
areas, shortages of doctors, clinics and hospitals form barriers to care.
Fraud and abuse cheat everyone — Many Americans believe that exorbitant
charges, fraud and abuse undermine both quality and access to care.
(8/6/93)
�^3
WORKING GROUP DRAFT
PRIVILEGED AND SGNFfBENTIAfc
THE AMERICAN HEALTH SECURITY ACT OF 1993
OVERVIEW
The American Health Security Act guarantees comprehensive health coverage for all
Americans regardless of health or employment status. Health coverage continues without
interruption if Americans lose or change jobs, move from one area to another, become ill or
confront a family crisis.
Through a system of regional and corporate health alliances that organize the buying
power of consumers and employers, the American Health Security Act stimulates market
forces so that health plans and providers compete on the basis of quality, service and price.
The Act transforms traditional health insurance into qualified health plans that meet
national standards on quality and access to care but allows each state to tailor the new system
to local needs and conditions, opening the way for local innovation.
It frees the health care system of much of the accumulated burden of regulation and
paperwork, allowing doctors, nurses, hospitals and other health providers to focus on
providing high-quality care.
CREATING SECURITY
The American Health Security Act enhances the security of the American people by
extending universal coverage in a environment that improves quality and controls rising costs:
•
All employers contribute to health coverage for their employees,
creating a level playing field among companies.
•
The required contribution is phased in over time.
Everyone shares the responsibility to pay for coverage.
(8/6/93)
�^3
WORKING GROUP DRAFT
PRIVILEGED AND^eeNFIBENTIAfc-
Limits on out-of-pocket payments protect American families
from catastrophic costs, while subsidies ease the burden on lowincome individuals and small employers.
A comprehensive benefit package with no lifetime limits on
coverage guarantees access to a full range of medically
necessary or appropriate services.
Elderly and disabled Americans receive coverage for outpatient
prescription drugs under Medicare for the first time.
Guaranteed choice of health plans and providers enhances choice
for many Americans.
|
No health plan may deny enrollment to any applicant because of health,
employment or financial status or may charge some patients more than
others because of age, medical condition or other factors related to risk.
All health plans meet national quality standards and provide
useful information that allows consumers to make valid
!
comparisons among plans and providers.
Separate programs increase federal support for long-term care
and improve the quality and reliability of private long-term care
insurance.
CONTROLLING COSTS
The American Health Security Act brings projected growth in health care costs in line
with growth in Gross Domestic Product by 1997. It accomplishes this goal by increasing
competition in health care, reducing administrative costs and imposing budget discipline:
•
(8/6/93)
A standard, universal package of health benefits and reliable information about
the price and performance of health plans encourages informed choices and
eliminates the frustration of hidden exceptions.
�22
WORKING GROUP DRAFT
PRIVILEGED AND .CONFIDENTIAL ^
Consumers pay less for low-cost plans and more for high-cost plans creating
incentives for cost-conscious choice.
•
Health plans receive fixed premiums based on risk characteristics of
their patients. Working under a fixed budget, they have incentives to
spend resources cost effectively.
If savings attained through effective competition and reductions in administrative costs
do not achieve the spending goals, the national health care budget provides a backstop,
ensuring that health care spending is in line with economic growth.
Like the private sector, major government programs, including Medicare and
Medicaid, also operate under a budget restraining the growth of federal and state spending for
health care.
I
ENHANCING QUALITY
The American Health Security Act improves the quality of health care by creating
standards and guidelines for practitioners, reorienting quality assurance to measuring
outcomes rather than regulatory process, increasing! the national commitment to medical
research and promoting primary and preventive care.
Explicit quality goals and standards shape the health care system.
Health plans are held accountable foij quality improvement.
Regular publication of accessible information about quality and cost allows
consumers to make informed choicesi among health care plans.
Increased investment in research advances medical knowledge.
A special funding mechanism ensures that academic health centers continue
their vital role in research, training and specialty care.
(8/6/93)
�23
WORKING GROUP DRAFT
PRIVILEGED AND-GONFfBENTIAk-
New investments support training for primary care physicians and other health
professionals; federal action helps remove artificial barriers to practice that
hinder nurses and other non-physicians.
Investments in public health enhance the level of protection for all Americans.
Changes in Medicare rate schedules and in the allocation of
federal funds supporting graduate medical education provide new
incentives for primary care physicians.
Preemption of state laws limiting the scope of practice and new
funding for the education of health professionals who are not
physicians enhance opportunities for nurses, social workers and
other non-physician providers.
EXPANDING ACCESS TO CARE
The American Health Security Act invests in the development of an adequate health
care system in areas with inadequate service. Those investments hold the promise of
improving the availability and quality of health care in rural communities and urban
neighborhoods.
•
•
Health alliances assume responsibility for building health networks in rural and
urban areas with inadequate access. |
I
National loan programs support the efforts of local health
providers to develop community-based plans.
i
•
Investments in new health programs such as school-based clinics
and community clinics expand access to care for underserved
populations.
Financial incentives attract health professionals to areas with inadequate care.
(8/6/93)
8
�23
WORKING GROUP DRAFT
PRIVILEGED ANDr€eNFIDENTIAlr
REDUCING BUREAUCRACY
The American Health Security Act reduces the burden of paperwork and
administration; regulatory, billing and reporting requirements decline, and consumers
experience a streamlined and simpler system:
|
•
A single, comprehensive benefit package that covers every eligible
person eliminates confusion about coverage.
Administrative costs caused by multiple policies with different benefits and risk
selection disappear.
Standard forms for insurance reimbursement, the submission of claims and
clinical encounter records simplify paperwork and reduce administrative costs.
The cost of administering coverage in small companies declines because they
purchase through health alliances that exercise market power reserved only for
large employers in today's system.
Federal regulatory requirements for Medicare, Medicaid and other programs are
simplified.
Health care coverage for workers' compensation and automobile insurance
merge into the new health system, reducing duplication and waste.
Malpractice reform eliminates any incentives for unnecessary
tests or procedures.
REDUCING FRAUD AND ABUSE
The American Health Security Act cracks down on health care providers and
institutions that impose excessive charges or engage: in fraudulent practices, setting tough
standards and imposing stiffer penalties including: I
I
•
New criminal penalties for fraud related to health care and for the payment of
bribes or gratuities to influence the delivery of health services and coverage.
(8/6/93)
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL
New civil monetary penalties against providers who submit false claims.
Tighter restrictions eliminate referral "kickbacks" in the private sector,
and new standards prohibit physicians from prescribing services
delivered at institutions in which they hold financial interests.
Accountability standards make provider fraud and other misbehavior automatic
grounds for exclusion from all health plans.
(8/6/93)
10
��23
WORKING GROUP DRAFT
PRIVILEGED ANELCONFfBENTOL
ETHICAL FOUNDATIONS OF HEALTH REFORM
The values and principles that shape the new health care system reflect fundamental
national beliefs about community, equality, justice and liberty. These convictions anchor
health reform in shared moral traditions.
UNIVERSAL ACCESS: Every American citizen and legal resident should
have access to health care without financial or other barriers.
COMPREHENSIVE BENEFITS: Guaranteed benefits should meet the full
range of health needs, including primary, preventive and specialized care.
CHOICE: Each consumer should have the opportunity to exercise effective
choice about providers, plans and treatments.
EQUALITY OF CARE: The system should not create two tiers of service but
determine the quality and level of care based only on differences of need, not
individual or group characteristics.
FAIR DISTRIBUTION OF COSTS: The health care system should spread
the costs and burdens of care across the entire community, basing the level of
contribution required of consumers on ability to pay.
PERSONAL RESPONSIBILITY: Under health reform, each individual and
family assumes responsibility for protecting and promoting health and
contributing to the cost of care.
INTER-GENERATIONAL JUSTICE: The health care system should
respond to the unique needs of each stage of life, sharing benefits and burdens
fairly across generations.
WISE ALLOCATION OF RESOURCES: The nation should balance
prudently what it spends on health care against other important national
priorities.
(8/6/93)
11
�23
WORKING GROUP DRAFT
PRIVILEGED ANDuCGNFIDENTIAL •
EFFECTIVENESS: The new system should deliver effective care, avoid
ineffective measures and support research that leads to the discovery and
development of effective treatment and new approaches.
QUALITY: The system should deliver high quality care and provide
individuals with the information necessary to make informed health care
choices.
EFFECTIVE MANAGEMENT: Simplifying and continually improving the
health care system and making it easy for both patients and providers to use
reduces administrative costs.
PROFESSIONAL INTEGRITY AND RESPONSIBILITY: The health care
system should treat the clinical judgments of professionals with respect and
protect the integrity of the provider-patient relationship while ensuring that
health-care providers fulfill their responsibilities.
FAIR PROCEDURES: To protect these values and principles, fair and open
democratic procedures must lie behind decisions concerning the operation of
the health care system and the resolution of disputes that arise within it.
LOCAL RESPONSIBILITY: The new health care system must allow states
and local communities working within the framework of national reform to
design an effective, high-quality system of care that serves each of their
citizens.
(8/6/93)
12
��23
PRIVILEGED AND ^ONFIDENTTAtr
WORKING GROUP DRAFT
COVERAGE
All eligible Americans are guaranteed access to health services in a nationally defined,
comprehensive package of benefits with no lifetime limits on coverage.
Categories of eligible individuals:
•
American citizens
•
Nationals
•
Citizens of other countries legally residing in the United
States
•
Long-term non-immigrants.
SOURCES OF HEALTH COVERAGE
Every eligible person receives a Health Security Card entitling him or her to obtain
coverage through a health plan that provides services in the comprehensive benefit package.
Eligible individuals enroll in a health plan through a health alliance unless they are:
Medicare recipients; active duty military personnel covered by the Department of Defense; or
individuals who enroll in the Department of Defense, Department of Veterans Affairs or the
Indian Health Service plans. (See section on Government Programs, Tab 28.)
Individuals covered under Medicare continue to receive benefits through Medicare.
Individuals eligible for Medicaid receive Medicaid coverage through regional health alliances.
Individuals eligible for health care provided by the Department of Defense,
Department of Veterans Affairs and the Indian Health Service may continue to receive care
through those programs.
(8/6/93)
13
�23
WORKING GROUP DRAFT
PRIVILEGED AND-€ONFIDENTEAir
All employed persons choose a health plan through a corporate or regional health
alliance. Employees of firms with 5000 or fewer workers become members of a regional
alliance established to serve the area in which they live. Employees of firms with more than
5000 employees obtain coverage through a corporate alliance established by their employer
unless the employer chooses to purchase coverage through the regional alliance.
Members of Taft-Hartley plans with more than 5000 members obtain coverage from
an alliance formed by the Taft-Hartley plan. Employees of rural electric and telephone
cooperative plans that include more than 5000 members may receive coverage through a
corporate alliance formed by the cooperative.
All employees of government, including federal, state, local and special-purpose
agencies obtain coverage through the regional alliance where they live. All individuals who
are self-employed or not employed obtain coverage through regional alliances unless they are
eligible for Medicare.
Health coverage continues without interruption for individuals who become
unemployed. Unemployment insurance funds assume payment of the employer's share of
premiums for up to 26 weeks on behalf of any employee who works at least 20 hours per
week for the preceding four quarters and becomes unemployed.
Alliances provide financial assistance to unemployed workers and their families on the
basis of income, subsidizing all or part of the employee's contribution toward the cost of the
premium, deductibles and co-payments. If an unemployed individual is covered through a
corporate alliance, the unemployed individual may remain in the corporate alliance for up to
one year. (See Financing Health Coverage, Tab 30)
OBTAINING COVERAGE
Individuals obtain health coverage by enrolling in a plan through a regional or
corporate health alliance. The National Health Security card serves as proof of eligibility.
(8/6/93)
14
�23
WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTtAfc-
An individual eligible for Medicaid, whether employed or unemployed, continues to
apply for Medicaid coverage at the appropriate office. The Medicaid card serves as proof of
eligibility for coverage through the regional health alliance. (See Medicaid section, Tab 27.)
Individuals over age 65 continue to receive coverage through the Medicare program.
Individuals over the age of 65 but not eligible for Medicare receive coverage through regional
alliances, into which they pay premiums. Depending on income, they may be eligible for
subsidies to pay all or part of the cost of premiums and required cost sharing.
Individuals who are disabled and eligible for Medicare continue to receive Medicare.
Regardless of age, retirees who receive health coverage through their former
employers or pension funds continue to receive those benefits. Retired workers and their
spouses under the age of 65 whose former employers do not provide health benefits obtain
coverage through a regional alliance.
ASSURANCE OF COVERAGE
It is the obligation of every eligible individual to enroll in a health plan.
Anyone who does not meet the established deadline for enrollment automatically is enrolled
in a health plan when he or she seeks medical care. Regional alliances assign patients who
do not seek enrollment to a health plan; they automatically assign any newborn infant who is
not enrolled through his or her parents to a plan.
No health plan may cancel an enrollment until the individual enrolls in another plan.
(8/6/93)
15
�23
WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL-
EMPLOYER OBLIGATION
All employers contribute to the purchase of health coverage for their employees and
withhold required contributions from wages on behalf of employees.
Firms that employ more than 5000 workers ensure that their employees are enrolled in
health plans that meet federal guidelines and report information about enrollment. Employers
with more than 5000 employees that choose to operate corporate alliances pay a premium
surcharge of 1 percent of payroll to the Inter-Alliance Health Security Fund to support the
cost of the health care system.
Large employers may fulfill their obligation to provide coverage by operating a
program of self-insurance through a corporate alliance, contracting with an insurance carrier
or joining the regional alliance. If a large employer merges with a firm in the regional
alliance, it may continue as a corporate alliance. If the number of employees falls below
4800, the employer joins the regional alliance.
PAYMENT OF PREMIUMS
All employers pay 80 percent of the weighted-average premium for health insurance
coverage in the regional alliances which serve their employees or in their corporate alliance.
For small and low-wage employers, the required employer contribution is capped at a
percentage of payroll. (See section on Financing Health Coverage, Tab 30.)
Employed individuals pay 20 percent of the weighted-average premium for a health
plan chosen through an alliance. An employee who chooses a less expensive plan pays less,
and an employee who chooses a more expensive plan pays more.
An employer also may pay a larger share of the employee's portion of the premium.
Self-employed and unemployed individuals are responsible for paying the entire
premium unless they are eligible for assistance based on income.
(8/6/93)
16
�23
WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL .
ENFORCEMENT
In conjunction with income-tax reporting, the Secretary of the Treasury requires the
filing of information related to enrollment in a qualified health plan. The Secretary may
require any individual who fails to enroll in a health plan by a specified date to enroll and
pay a penalty in addition to delinquent premiums.
The Secretary of the Treasury also ensures that all employers fulfill the obligation to
provide coverage through a qualified health plan.
COORDINATION OF COVERAGE
When an individual obtains necessary medical services outside the geographic area
served by his or her regional or corporate alliance, the plan pays for care under arrangements
established among alliances.
UNDOCUMENTED PERSONS
Undocumented persons are not eligible for the guaranteed health benefit. However,
employers are required to pay health insurance premiums for all of their employees,
regardless of immigration status.
Alliances do not share information related to health insurance premiums paid by
employers with the Immigration and Naturalization Service.
Individuals living in the United States without proper documentation may continue to
use emergency and other health services as provided under current federal law. Health care
institutions that serve a large number of patients who are not eligible for coverage continue to
receive federal funding to compensate for their care.
Any individual not eligible for the national benefit package may purchase coverage
from a private insurance plan to the extent such plans are available.
(8/6/93)
17
�23
WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL-
TERRITORIES
Individuals who reside in territories of the United States receive the comprehensive
benefit package in a manner consistent with their existing systems.
OTHERS
Migrant workers receive coverage through the health alliance located in the area of
their primary residence. If a migrant worker does not have a permanent residence, he or she
receives coverage through the regional alliance that serves the area in which the worker
chooses to enroll in a health plan.
Students living away from home receive coverage through an alliance in the area
where they are enrolled in school.
Employees are defined to include not only those workers defined as employees under
Internal Revenue Service rules but broadly enough to discourage employers from designating
employees as independent contractors in order to avoid payment of health insurance
premiums. For purposes of health insurance, independent contractors who earn more than 80
percent of their annual incomes from one employer are covered as an employee of that
employer.
Part-time employees (as defined for purposes of Social Security withholding) receive
coverage through a regional alliance. Employers make a contribution based on a percentage
of wages earned. Individuals employed part time pay the remainder of the premium for the
health plan they choose after contributions from their employers are deducted. They may be
eligible for subsidies, depending on income.
(8/6/93)
18
��23
WORKING GROUP DRAFT
PRIVILEGED AND-eONFIDENTIAL
GUARANTEED NATIONAL BENEFIT PACKAGE
The health benefits guaranteed to all Americans provide comprehensive coverage,
including mental health services, substance-abuse treatment, some dental services and clinical
preventive services.
The guaranteed benefit package contains no lifetime limitations on coverage, with the
exception of coverage for orthodontia.
MEDICAL SERVICES COVERED
Each health plan must provide coverage for the following categories of services as
medically necessary or appropriate with additional limitations and cost-sharing only as
specified in the American Health Security Act of 1993 or by the National Health Board.
Covered health services are:
Hospital services
Emergency services
Services of physicians and other health professionals
Clinical preventive services
Mental health and substance abuse services
Family planning services
Pregnancy-related services
Hospice
Home health care
Extended-care services
(8/6/93)
19
�23
WORKING GROUP DRAFT
PRIVILEGED ANDfCONFtBENTEAlT
•
Ambulance services
•
Outpatient laboratory and diagnostic services
•
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.
DEFINITION OF SERVICES
Hospital services:
•
Inpatient hospital, including bed and board, routine care,
therapeutics, laboratory, diagnostic and radiology services and
professional services specified by the National Health Board
when furnished to inpatients.
•
Outpatient hospital services
•
24-hour a day emergency department services
•
Definition: A hospital is an institution meeting the requirements of
§1861(e) of the Social Security Act.
(8/6/93)
20
�2
WORKING GROUP DRAFT
PRIVILEGED AND-eONFIDENTTAL
Services of physician and other health professionals:
•
Includes inpatient and outpatient medical and surgical professional services,
including consultations, delivered by a health professional in home, office, or
other ambulatory care settings, and in institutional settings.
•
Definitions
•
A health professional is someone who is licensed or otherwise
authorized by the State to deliver health services in the State in which
the individual delivers services.
•
Covered services are those that a health professional is legally
authorized to perform in that state. No state may, through licensure
requirements or other restrictions, limit the practice of any class of
health professionals except as justified by the skill or training of such
professional.
The benefit package does not require any plan to reimburse any particular
provider or any type or category of provider. However, each plan is expected
to provide a sufficient mix of providers and specialties and appropriate
locations to provide adequate access to professional services.
Clinical preventive services:
•
Specified in Table I .
•
Limitation: Must be provided as consistent with the periodicity schedule
specified in Table I or as specified by the National Health Board in regulations.
(8/6/93)
21
�2^
WORKING GROUP DRAFT
PRIVILEGED AND«€ONFIDENTTAfc
T A B L E I — COVERED CLINICAL PREVENTIVE SERVICES
Immunizations
Age
Tests
0-2
4 DTP, 3 OPV, 3-4 HiB, 1
MMR, 3 HBV
1 Hematocrit, 2 Lead*, 7 Clinician visits""
3-5
1 DTP, 1 OPV, 1 MMR
1 Urinalysis, 2 Clinician visits""
6-19
1 Td
Pap/pelvic" every 3 years after menarche, 5
Clinician visits'"
20-39
1 Td every 10 years
Cholesterol every 5 years; Pap/pelvic" every 3
years
40-49
1 Td every 10 years
Cholesterol every 5 years; Pap/pelvic" every 3
years
50-64
1 Td every 10 years
Cholesterol every 5 years; Pap/pelvic and
Mammogram every 2 years
++
1 Td every 10 years
Pneumococcal - once
Annual influenza
65 +
Cholesterol every 5 years
Mammogram** every 2 years
Preventive
Key
+
++
+++
DTP
OPV
= For children at high risk for lead exposure only.
= Papanicolaou smears and pelvic exam for females who have reached childbearing
age and are at risk of cervical cancer.
= Once three annual negative smears have been obtained.
= For females of childbearing age at risk for sexually transmitted disease, an annual
Pap smear and screening for chlamydia and gonorrhea.
= Females only.
= All visits including immunizations, laboratory tests and other screening tests,
including history, blood pressure measurement, risk assessment, and targeted health
advice/counseling.
= Diphtheria, tetanus, pertussis vaccine
= Oral polio vaccine
(8/6/93)
22
|
�7o
WORKING GROUP DRAFT
HiB
PRIVILEGED AND ۩NFfBENTIAL
= Haemophilus influenzae type B vaccine
HBV = Hepatitis B vaccine
MMR = Measles, mumps, rubella vaccine
Td
= Tetanus diphtheria toxoid
(8/6/93)
23
�23
WORKING GROUP DRAFT
PRIVILEGED ANI^eONFtDENTlAL
(Continuation of covered services)
Mental health and substance abuse — inpatient and residential treatment:
•
Inpatient hospital, therapeutic family or group homes, residential
treatment centers, community residential treatment, community
residential treatment and recovery for substance abuse, residential
detoxification services, crisis residential services and other residential
treatment services.
•
Limitations
•
•
Inpatient hospital substance abuse treatment covers only medical
detoxification as required for the management of neuropsychiatric or
medical complications associated with withdrawal from alcohol or
drugs.
•
•
Maximum of 30 days per episode, 60 days annually for all settings in
this category. Health plans upon special appeal may grant an exception
waiver of only the episode maximum for the limited number of cases in
which discharge is not medically appropriate because the patient
continues to make or is at serious risk of making an attempt to harm
them self or to harm others.
Inpatient hospital care for mental and substance abuse disorders is
available only when less restrictive nonresidential or residential services
are ineffective or inappropriate.
Definitions:
•
•
(8/6/93)
A hospital is an institution meeting the requirements of §1861(e) or (f)
of the Social Security Act.
A residential treatment facility is one which meets criteria for licensure
or certification established by the state in which it is located.
24
�23
WORKING GROUP DRAFT
•
PRIVILEGED ANI>eeNFIDENTIAfc-
Eligibility
Persons are eligible for mental health and substance abuse services other than
screening and assessment and crisis services if they have, or have had in the
past year, a diagnosable mental or substance abuse disorder, which meets
diagnostic criteria specified within DSM-III-R, and that resulted in or poses a
significant risk for functional impairment in family, work, school, or
community activities.
•
These disorders include any mental disorder listed in DSM-III-R or
their ICD-9-CM equivalents, or subsequent revisions, with the
exception of DSM-III-R "V" codes (conditions not attributable to a
mental disorder) unless they co-occur with another diagnosable
disorder.
•
Persons who are receiving treatment but without such treatment would
meet functional impairment criteria are considered to have a disorder.
Family members of an eligible participant receiving mental or substance abuse
services may receive medically necessary or appropriately related services in
conjunction with the patient (so-called collateral treatment).
Mental health and substance abuse — professional and outpatient treatment
services:
•
Professional services, diagnosis, medical management, substance abuse
counseling and relapse prevention, outpatient psychotherapy.
•
Limitations
•
•
(8/6/93)
Outpatient coverage is limited to 30 visits except clinical management
and substance abuse counseling.
Substance abuse and relapse counseling must be provided by
licensed/certified substance abuse providers.
25
�WORKING GROUP DRAFT
PRIVILEGED AND "eONFfDENTTAt;
•
Eligibility criteria specified above for inpatient mental health and substance
abuse treatment services apply, except that all persons are eligible for screening
and assessment and 24-hour crisis services.
•
Definitions for services of physicians and other health professionals apply.
Mental health and substance abuse — intensive non-residential treatment
services:
•
Partial hospitalization, day treatment, psychiatric rehabilitation, ambulatory
detoxification, home-based services, behavioral aide services.
•
Limitations
•
•
•
120 days per year for listed services
Provided only for the purpose of averting the need for, or as an
alternative to, treatment in residential or inpatient settings, or to
facilitate the earlier return of individuals receiving inpatient or
residential care, or to restore the functioning of individuals with serious
mental or substance abuse disorders, or assist individuals to develop the
skills and access the supports needed to achieve their maximum level of
functioning within the community.
Eligibility: As specified for inpatient mental health and substance abuse
treatment services.
Family planning services
Pregnancy-related services
Hospice care:
•
Covered services (as under Medicare):
•
(8/6/93)
Nursing care provided by or under the supervision of a registered
professional nurse.
26
�7o
WORKING GROUP DRAFT
PRIVILEGED ANDTONFfBENTMT-
•
•
Physicians' services.
•
Counseling services for the purposes of training the individual's family
or other caregiver to provide care and for the purpose of helping the
individual and those caring for him or her to adjust to the individual's
death.
•
Short-term inpatient care, although respite care is provided only on an
occasional basis and may not be provided for more than 5 days.
•
Medical supplies and the use of medical appliances for the relief of pain
and symptom control related to the individual's terminal illness.
•
Home health aide and homemaker services.
•
•
Medical social services under the direction of a physician.
Physical or occupational therapy and speech-language pathology.
Limitations
•
•
•
Only for terminally ill individuals
Only as an alternative to continued hospitalization.
Definition:
•
(8/6/93)
An individual is considered terminally ill if the
individual has a medical prognosis of a life
expectancy of 6 months or less if the terminal
illness runs its normal course.
27
�2o
WORKING GROUP DRAFT
PRIVILEGED ANDXONFIDENHAL
Home health care:
•
Same services as under the current Medicare program (including skilled
nursing, physical, occupational and speech therapy, prescribed social services)
with the addition of prescribed home infusion therapy and outpatient
prescription drugs and biologicals.
•
Limitations
•
Only as an alternative to institutionalization (i.e., inpatient treatment in
a hospital, skilled nursing or rehabilitation center) for illness or injury.
•
At the end of each 60 days of treatment, the need for continued therapy
is re-evaluated. Additional periods of therapy are covered only if the
risk of hospitalization or institutionalization exists.
Extended care services:
•
Inpatient services in a skilled nursing or rehabilitation facility.
•
Limitations
•
Only after an acute illness or injury as an alternative to continued
hospitalization.
•
Maximum of 100 days per calendar year.
Ambulance services:
•
Ground transportation by ambulance, including air transportation by an aircraft
equipped for transporting an injured or sick individual.
•
Limitations
•
(8/6/93)
Ambulance service is covered only in cases in which the use of an
ambulance is indicated by the individual's condition.
28
�23
WORKING GROUP DRAFT
•
PRIVILEGED AND-CONFIDENTIAfc
Air transport covered only in cases in which other means of
transportation are contra-indicated by the patient's condition.
Outpatient laboratory and diagnostic services:
•
Prescribed laboratory and radiology services, including diagnostic services
provided to individuals who are not inpatients of a hospital, hospice or
extended care facility.
Outpatient prescription drugs and biologicals:
•
Drugs, biological products, and insulin.
•
Limitation:
•
Must be prescribed for use in an outpatient
setting.
•
No frequency or quantity limitations other than
reasonable rules for amount to be dispensed and number
of refills. Health plans are permitted to establish
formularies, drug utilization review, generic substitution,
and mail order programs.
Outpatient rehabilitation services:
•
Outpatient occupational therapy, outpatient physical therapy, and outpatient
speech-pathology services for the purpose of attaining or restoring speech.
•
Limitations
•
(8/6/93)
Coverage only for therapies used to restore functional capacity or
minimize limitations on physical and cognitive functions as a result of
an illness or injury.
29
�23
WORKING GROUP DRAFT
•
PRIVILEGED AND CONriDENTIAL
At the end of each 60 days of treatment, the need for continued therapy
is re-evaluated. Additional periods of therapy are covered only if
function is improving.
Durable medical equipment, prosthetic and orthotic devices:
•
Covered services:
Durable medical equipment
Prosthetic devices (other than dental) which replace all or part of an
internal body organ
Leg, arm, back and neck braces
Artificial legs, arms and eyes (including replacements if required due to
a change in physical condition)
Training for use of above items.
imitations
Items must improve functional abilities or prevent further deterioration
in function.
Does not include custom devices.
Vision and hearing care:
•
Covered services:
Routine eye exams, including procedures performed to determine the
refractive state of the eyes
Diagnosis and treatments for defects in vision
(8/6/93)
30
�WORKING GROUP DRAFT
•
•
PRIVILEGED AND 'CONFIDENTIAL
Routine ear examinations.
Limitations
•
Eyeglasses and contact lenses limited to children under the age of 18.
•
Routine eye examinations limited to one every 2 years for persons 18
years of age or more.
Preventive dental services for children:
•
Treatment for prevention of dental disease and injury, including maintenance of
dental health, and emergency dental treatment for injury.
•
Limitation: Non-emergency dental services limited to children under age 18.
Health education classes:
Participating health plans are permitted to cover health education or training for
patients that encourage the reduction of behavioral risk factors and promote healthy
activities. Such courses may include smoking cessation, nutritional counseling, stress
management, skin cancer prevention, and physical training classes. Cost sharing is
determined by the plan.
INTEGRATION OF PUBLIC AND PRIVATE MENTAL HEALTH CARE SYSTEMS
The benefit package requires the maintenance of the existing public system for mental
health and substance abuse. It also requires maintenance of the existing block grant program
to the states that supplements their spending on mental and addictive disorder programs.
In order to promote the eventual integration of the public and private systems for
treatment of mental and addictive disorders into a single system of care, states are encouraged
to use the flexibility allowed under health reform to fold their expenditures for public mental
health and substance abuse programs into funding available to regional health alliances to
require integrated care for all health needs, including mental and addictive disorders.
(8/6/93)
31
�23
WORKING GROUP DRAFT
PRIVILEGED AND GONFIDENTIAfc-
States adopting this direction may obtain a waiver from limits in the benefit package
and are eligible for federal matching funds to develop integrated service systems.
The Department of Health and Human Services argues for the addition of the
following requirements for states to obtain waivers to support the integration of public and
private mental health systems:
States may obtain a waiver from the limits in the benefit package and include
extended care services after showing that the capacity to deliver, manage and monitor the
quality of a more comprehensive mental health and substance abuse benefit through integrated
acute and extended care systems is feasible in the state. States also must document that the
waiver will not result in additional premium costs and that Medicaid has been integrated.;
States choosing this approach are allowed greater flexibility in their use of block grant funds
to assist in the development o community based systems of care.
EXCLUSIONS
The benefit package does not cover services that are not medically necessary or
appropriate, private duty nursing, cosmetic orthodontia and other cosmetic surgery, hearing
aids, adult eyeglasses and contact lenses, in vitro fertilization services, sex change surgery and
related services, private room accommodations, custodial care, personal comfort services and
supplies and investigational treatments, except as described below.
COVERAGE OF INVESTIGATIONAL TREATMENTS
The comprehensive benefit package includes coverage for medically necessary or
appropriate medical care provided as part of an investigational treatment during an approved
research trial. The intention of this provision is to cover routine medical costs associated
with an investigational treatment that would occur even if the investigational treatment were
not administered.
•
(8/6/93)
An investigational treatment is a treatment the effectiveness of which has not
been determined and which is under clinical investigation as part of an
approved research trial.
32
�WORKING GROUP DRAFT
PRIVILEGED AND^GONFIDENTIAL
An approved research trial is a peer-reviewed and approved research program,
as defined by the Secretary of the Department of Health and Human Services,
conducted for the primary purpose of determining whether or not a treatment is
safe, efficacious, or having any other characteristic of a treatment which must
be demonstrated in order for that treatment to be medically necessary or
appropriate.
Coverage is automatically available if the research trial is
approved by the National Institutes of Health, the FDA, the
Department of Veterans Affairs, Department of Defense or a
qualified non-governmental research entity as identified in NIH
guidelines.
EXPANSION OF BENEFITS
The initial benefit plan provides comprehensive preventive coverage for all patients
and focuses comprehensive dental, mental health and substance abuse coverage on priority
concerns including preventive dental services for children and treatment for seriously mentally
ill adults, seriously emotionally disturbed children and individuals with substance-abuse
disorders.
The plan proposes to phase in additional benefits in the year 2000. The National
Health Board has discretion to introduce additional benefits earlier if savings from reform and
budget resources permit. Additional benefits included in planned expansion include:
Clinical Preventive Services:
•
(8/6/93)
For specific high-risk patients only (as defined by the National Health
Board), the following targeted screening tests and vaccinations are
covered as preventive services: hemoglobin electrophoresis, tuberculin
skin test, rubella antibodies, hearing test, hepatitis B vaccine (for age
groups not already covered), pneumococcal vaccine, influenza vaccine,
mammogram, colonoscopy.
33
�23
WORKING GROUP DRAFT
•
PRIVILEGED AND<ONFIDENTL\fc
Periodic medical examinations: every 3 years for individuals ages 20 to
39, every 2 years for adults ages 40 to 65, and annually for adults ages
65 or more.
Dental Services:
•
Preventive dental care extended to adults
•
Restorative services
•
•
•
Low Cost Sharing — $20 per visit
High Cost Sharing — 40 percent co-insurance, $50 deductible, and
$1500 annual maximum benefit for prevention and restoration
Orthodontia in cases in which it is necessary to avoid reconstructive surgery
•
Low Cost Sharing — $20 per visit
•
High Cost Sharing — 40 percent co-insurance, $50 deductible, and
$2,500 lifetime maximum benefit
Mental Health and Substance Abuse:
•
Improved inpatient coverage, increasing annual maximum benefit from 60 days
to 90 days
•
Elimination, in plans with high cost sharing, of the deductible for inpatient care
equal to charge for one day
•
Elimination of limits on outpatient therapy visits. In plans with high cost
sharing, reduction of cost sharing requirement to 20 percent for initial 12 visits
and 50 percent for subsequent visits. In plans with low cost sharing, reduction
of cost sharing requirement to $10 per visit for initial 12 visits and $25 per
visit for subsequent visits.
•
Coverage for case management with no cost sharing.
(8/6/93)
34
�23
WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTTAL-
Phasing in additional coverage for mental health benefits allows health plans to
develop the skills and capacity to provide a more comprehensive mental health and substance
abuse benefit.
COST SHARING
Consumer out-of-pocket costs for health services in the comprehensive benefit
package is limited, to ensure financial protection, and standardized to ensure simplicity in
choosing among health plans.
Health plans use standard consumer cost sharing requirements. Health plans may offer
consumers one of three cost sharing schedules:
•
Low cost sharing: $10 co-payments for outpatient services; no co-payments
for inpatient services.
•
Higher cost sharing: $200 individual/$400 family deductibles; 20
percent coinsurance; $2000/3000 maximum on out-of-pocket spending.
•
Combination: Plan provides low cost sharing if participants use
preferred providers and higher cost sharing (20 percent coinsurance) if
they use out-of-network providers.
(8/6/93)
35
�WORKING GROUP DRAFT
PRIVILEGED AND-GQNFIDENTIAtr
LOW COST SHARING
Cost-sharing
Overall
- Deductible
- Coinsurance
- Out-of-pocket max
Limitations
None
$10 per visit
None necessary
Inpatient Hospital
Full coverage
Professional services, outpatient
hospital services.
$10 per visit
Emergency services
$25 per visit
Waived in emergency.
Preventive services, including
well-baby, prenatal
Full coverage
Services limited to
periodicity in Table 1.
Hospice
Full coverage
As hospital alternative for
terminally ill.
Home health care
Full coverage
As inpatient alternative;
coverage reassessed at 60
days; added coverage only
to prevent institutional
care.
Extended care facilities (SNFs,
rehab facility)
Full coverage
As hospital alternative;
100 day limit.
Outpatient physical, occupational,
speech therapy
$10 per visit
Only to restore function or
minimize limitations from
illness or injury;
reassessment at 60 days;
additional coverage only if
improving.
DME, outpatient lab, ambulance
Full coverage
Routine eye and ear exams,
|| eyeglasses
(8/6/93)
$10 per exam or
1 set glasses
36
Private room only when
medically necessary
Eyeglasses limited to
children only
�23
WORKING GROUP DRAFT
Dental services
-Initial: Prevention
PRIVILEGED AND-eGNffBENTIAL
$10 per visit
For <18 only
Remove age limit on
prevention
-Additions in 2000:
Restoration
$20 per visit
Orthodontia
$20 per visit
Prescription drugs
Only to avoid
reconstructive surgery
$5/prescription
Mental health / substance abuse
Initiai
Inpatient services:
Full coverage
30 day/episode; 60
day/year max
Full coverage
120 days maximum
$10 per visit
no limits
$25 per visit
30 visits maximum
Full coverage
30 day/episode; 90
day/year max
Full coverage
120 days maximum
$10 per visit
no limits
$25 per visit
no limits
Hospital alternatives:
All outpatient except
psychotherapy:
Psychotherapy:
2000
Inpatient services:
Hospital alternatives:
Outpatient incl. 1-12
psychotherapy visits:
12+ psych visits:
(8/6/93)
37
�23
WORKING GROUP DRAFT
PRIVILEGED AND- CONriDENTIAL
HIGH COST SHARING
Cost-sharing
Overall
- Deductible
- Coinsurance
- Out-of-pocket max
Individual
Family
Limitations
$200/400
indiv/family
20%
$2,000
$3,000
Inpatient Hospital
20% co-ins
Professional services, outpatient
hospital services including
emergency.
20% co-ins
Preventive services, including
well-baby, prenatal
Co-ins and
deductible does
not apply
Private room only when
medically necessary
Services limited to
periodicity in Table 1.
Hospice
20% co-ins
As hospital alternative for
terminally ill.
Home health care
20% co-ins
As inpatient alternative;
coverage reassessed at 60
days; added coverage only
to prevent institutional
care.
Extended care facilities (SNFs,
rehab facility)
20% co-ins
As hospital alternative;
100 day limit.
Outpatient physical, occupational,
speech therapy
20% co-ins
Only to restore function or
minimize limitations from
illness or injury;
reassessment at 60 days;
additional coverage only if
improving.
(8/6/93)
38
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL^
DME, outpatient lab, ambulance
20% co-ins
Routine eye and ear exams,
eyeglasses
20% co-ins
Eyeglasses limited to
children only
20% co-ins
For <18 only
Dental services
-Initial: Prevention
-Additions in 2000:
Restoration
Orthodontia
Prescription drugs
(8/6/93)
Remove age limit on
prevention
$50 deduc +
40% co-ins
40% co-ins
$250/year deduc
20% co-ins
oop max applies
39
$1500 annual max
Only to avoid
reconstructive surgery;
$2500 lifetime max
�23
WORKING GROUP DRAFT
PRIVILEGED ANDrCONFfDENTIAL-
Mental health / substance abuse
Initial
Inpatient services:
1 day deductible
20% co-ins; oop max
applies
30 day/episode; 60
day/year max
1 day deductible
20% co-ins
120 days maximum
20% co-ins
no limits
50% cost sharing
30 visits maximum
20% co-ins; oop max
applies
30 day/episode; 90
day/year max
20% co-ins
120 days maximum
20% co-ins
no limits
50% cost sharing
no limits
Hospital alternatives:
All outpatient except
psychotherapy:
Psychotherapy:
2000
Inpatient services:
Hospital alternatives:
Outpatient incl. 1-12
psychotherapy visits:
12+ psych visits:
(8/6/93)
40
�WORKING GROUP DRAFT
PRIVILEGED AND-GQNHBENHAt
COMBINATION COST SHARING
Services (with same limitations as
above)
In network
Out of network
None
$200/400
indiv/family
20%
Overall
- Deductible
- Coinsurance
$10 per visit
None necessary
$2,000
$3,000
Inpatient Hospital
Full coverage
20% co-ins
Professional services, outpatient
hospital services.
$10 per visit
20% co-ins
Emergency services
$25 per visit
20% co-ins
Preventive services, including
well-baby, prenatal
Full coverage
Full coverage
Hospice
Full coverage
20% co-ins
Home health care
Full coverage
20% co-ins
Extended care facilities (SNFs,
rehab facility)
Full coverage
20% co-ins
Outpatient physical, occupational,
speech therapy
$10 per visit
20% co-ins
DME, outpatient lab, ambulance
Full coverage
20% co-ins
$10 per exam or
1 set glasses
20% co-ins
- Out-of-pocket max
Routine eye and ear exams,
eyeglasses
(8/6/93)
41
�23
PRIVILEGED AND CONFIDEN^HAL
WORKING GROUP DRAFT
Dental services
-Initial: Prevention
$10 per visit
20% co-ins
Restoration
$20 per visit
$50 deduc +
40% co-ins
Orthodontia
$20 per visit
40% co-ins
$5/prescription
$250/year deduc
20% co-ins
oop max applies
-Additions in 2000:
Prescription drugs
(8/6/93)
42
�^3
WORKING GROUP DRAFT
PRIVILEGED AND SONHBENHAI—
Mental health / substance abuse
Inilial
Inpatient services:
Full coverage
1 day deductible
20% co-ins; oop max
applies
Full coverage
1 day deductible
20% co-ins
$10 per visit
20% co-ins
$25 per visit
50% cost sharing
Full coverage
20% co-ins; oop max
applies
Full coverage
20% co-ins
$10 per visit
20% co-ins
$25 per visit
50% cost sharing
Hospital alternatives:
All outpatient except
psychotherapy:
Psychotherapy:
2000
Inpatient services:
Hospital alternatives:
Outpatient incl. 1-12
psychotherapy visits:
12+ psych visits:
(8/6/93)
43
��WORKING GROUP DRAFT
PRIVILEGED ANEUCONFIDENTL\L -
NATIONAL HEALTH BOARD
The American Health Security Act creates an independent National Health Board
responsible for setting national standards and overseeing the establishment and administration
of the new health system by states.
The National Health Board and existing executive agencies divide responsibility for
administration of the new health care system.
AUTHORITY OF THE NATIONAL HEALTH BOARD
The Board may contract with other agencies or entities, at the Board's discretion, to
obtain the information and expertise it needs to fulfill its responsibilities. The Board may
also establish advisory committees to assist it in performing any of is duties.
The Board undertakes the following functions:
•
OVERSIGHT OF STATE SYSTEM
The Board establishes requirements for state plans, provides technical
assistance, monitors compliance with federal standards and ensures access to
health care for all Americans.
[See Department of Health and Human Services position statement at end of
this section.]
•
COMPREHENSIVE BENEFIT PACKAGE
The Board interprets and updates the nationally guaranteed benefit package and
issues regulations. The Board may recommend to the President and Congress
appropriate adjustments to the nationally guaranteed benefit package to reflect
changes in technology, health care needs and methods of service delivery.
(8/6/93)
44
�23
WORKING GROUP DRAFT
•
PRIVILEGED AND-CQNHDENTIAfc-
BUDGETS
The Board issues regulations concerning implementation of the national budget
for health care spending and enforces the budget.
The board establishes baseline budgets for alliances by allocating
national spending to alliances to reflect regional variations.
The Board certifies compliance with the budget. See section
entitled "Budget Development and Enforcement" at Tab 14 for a
description of this process.
•
NATIONAL QUALITY MANAGEMENT SYSTEM
The Board establishes and manages a performance-based system of quality
management and improvement described in the section entitled "Quality
Management and Improvement" at Tab 15. The Board develops measures to
be used in the annual quality performance report of health plans. In developing
these measures, the Board consults with appropriate parties, including
providers, consumers, health plans, states, purchasers of care, and experts in
law, medicine, economics, public health, and health services research including
appropriate agencies such as AHCPR, NIH and HCFA.
To measure quality, the Board develops and implements standards to establish
a National Health Information System as described in the section on
Information Systems and Administrative Simplification at Tab 16.
[See Department of Health and Human Services position statement at end of
this section ]
Decisions on benefits and quality by the National Health Board also apply to corporate
alliances.
(8/6/93)
45
�23
WORKING GROUP DRAFT
PRIVILEGED ANDrCONFTDENTIAE
MEMBERSHIP
The National Health Board consists of seven members appointed by the President by
and with the advice and consent of the Senate. At least one of the members represents the
interests of states.
The President designates one member as chairman. The chairman serves a term
concurrent with that of the President and serves at the pleasure of the President. The
chairman may serve a maximum of three terms.
The other members serve staggered four year terms. These members may be
reappointed for one additional term. The President may remove a member for neglect of duty
or malfeasance in office.
When a vacancy occurs, other than by expiration of term, the President appoints a
successor to serve the remainder of the term. A vacancy in the membership of the Board
does not impair the right of the remaining members to exercise all powers of the Board. The
Board designates a member to act as chairman during any period when no chairman is
designated by the President.
Upon expiration of a term of office, a member continues to serve until a successor is
appointed and qualified. The President has the power to fill all vacancies that occur on the
Board during the recess of the Senate by granting commissions that expire with the next
session of the Senate.
QUALIFICATIONS
The President nominates Board members on the basis of their experience and expertise
in relevant subjects, including health carefinanceand delivery, state health systems, consumer
protection, business, law or delivery of care to vulnerable populations. Members of the
National Health Board must be citizens of the United States.
(8/6/93)
46
�^3
WORKING GROUP DRAFT
PRIVILEGED ANI^€ONriDENTIAL
During the term of appointment, Board members serve as employees of the federal
government and can hold no other employment. A member of the Board may not have a
pecuniary interest in or hold an official relation to any health care plan, health care provider,
insurance company, pharmaceutical company, medical equipment company or other affected
industry. Before assuming an appointment to the National Health Board, the prospective
member must certify under oath that he or she has complied with this requirement.
After leaving the Board, former members are subject to post-employment restrictions
applicable to comparable federal employees.
OPERATION OF THE BOARD
The National Health Board appoints and sets the compensation of an executive
director. The Board also appoints additional officers and employees, subject to applicable
civil service rules, as necessary to carry out its functions. The Board hires sufficient staff to
carry out the functions described above.
The Board establishes advisory committees. Advisory committees include
representatives of states, health providers, employers, consumers and affected industries.
The Board may contract, with the Department of Health and Human Services and
other governmental and nongovernmental bodies, for the conduct of research and analysis as
required to execute its responsibilities. The Board has access to all relevant information and
data available from appropriate federal departments and agencies. It coordinates its activities,
particularly the conduct of original research and associated studies, with the activities of
appropriate federal agencies.
The Board prepares and sends to the President and Congress an annual report
addressing the overall implementation of the new health care system, including federal and
state implementation, data related to quality improvement and other issues. The annual report
includes recommendations for changes in the administration, regulation and laws related to
health care and coverage, as well as a full account of actions taken by the Board during the
previous year.
(8/6/93)
47
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL—
The Office of Management and Budget reviews the Board's budget, which is submitted
to Congress in conjunction with the President's budget. The Office of Management and
Budget does not review regulations issued by the Board or its annual report to Congress prior
to publication.
The General Accounting Office conducts periodic audits of the Board.
RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES
The Department of Health and Human Services continues to administer its existing
programs, such as Medicaid, Medicare and the Public Health Service. The Department of
Health and Human Services also administers and implements those aspects of the new health
care system not delegated to the National Health Board or any other federal department.
The Department of Health and Human Resources disagrees; with the division of
responsibility outlined in this section. Rather than delegate responsibility for review of state
plans for implementation and oversight of state systems, as well as administration of the
quality management program to the National Health Board, the Department of Health and
Human Services argues that those tasks should fall within its purview.
The Department argues that because the Secretary of the Department of Health and
Human Services has responsibility for ensuring that all individuals have access to the
federally guaranteed comprehensive health benefits, that responsibility should not be divided
between two separate federal authorities, such as the National Health Board and the
Department. One federal authority should review and approve state plans, oversee state
implementation and enforce federal requirements.
The Department maintains that its experience working with states on Medicaid and
other public health programs positions it to review state plans and oversee state systems. It
also argues that HHS should oversee the development of the Quality Management Program
under health reform because it is currently developing state-of-the-art quality systems in the
Medicare program and in the Public Health Service. HHS views each of these tasks as a key
operational responsibility that will require diverse expertise, significant personnel resources
and the ability to coordinate across health programs.
(8/6/93)
48
�^3
WORKING GROUP DRAFT
PRIVILEGED ANI>eeNFfE«ENTISrr
NATIONAL ADMINISTRATION
The National Health Board reviews plans submitted by the states describing the
implementation of the new health care system. [See Department of Health and Human
Services position stated at conclusion of preceding section.] Corporate alliances are
supervised through ERISA and the Department of Labor. (See Corporate Alliances/ERISA,
Tab 8.)
In the event that a state fails to meet the deadline for establishing regional health
alliances, or fails to operate the alliance system in compliance with federal requirements, the
National Health Board ensures that all eligible individuals have access to services covered in
the comprehensive benefit package.
To induce a state to act, the National Health Board informs the Secretary of the
Department of Health and Human Services of a state's failure to comply. The Secretary has
the authority to order the withholding of federal health appropriations.
The National Health Board has the authority to certify to the Secretary of the Treasury
that a state is not in compliance with requirements established in federal law. In such a case,
the Secretary of the Treasury may deny employers located in that state the right to deduct a
specified portion of contributions for health insurance from taxable income.
If a state persists in its failure to comply with federal requirements, the National
Health Board informs the Secretary of the Department of Health and Human Services. The
Secretary is required to take one of the following actions to ensure that all eligible individuals
have access to nationally guaranteed health benefits:
•
Dissolve an existing health alliance and establish one or more regional
alliances in compliance with federal requirements
•
Contract with private parties or others to establish and operate regional
alliances
•
Order regional alliances or health plans to comply with specific federal
requirements
•
Take other steps as needed to assure coverage.
(8/6/93)
49
�WORKING GROUP DRAFT
PRIVILEGED AND ^CONriDENTIAL
An alliance operating under the supervision of the Secretary of the Department of
Health and Human Services is responsible for meeting all requirements imposed on regional
health alliances.
When a state demonstrates to the National Health Board that it is prepared to resume
its statutory responsibilities, the state may establish its own alliances or take over
management of alliances established under federal supervision.
(8/6/93) "
50
��WORKING GROUP DRAFT
PRIVILEGED ANEreONPfBENHAk
STATE RESPONSIBILITIES
States assume responsibility for ensuring that all eligible individuals have access
through a health alliance to a health plan that delivers the nationally guaranteed
comprehensive benefit package.
STATE PLANS
Each state submits to the National Health Board a plan for implementation of health
reform, demonstrating that its health care system meets all requirements under federal law.
States periodically update the plan, as required by the National Health Board.
State plans designate an agency or official charged with coordinating the state
responsibilities under federal law and delegating those responsibilities to state agencies or
entities.
The plan also describes how the state intends to perform each of the following
functions:
Allocation and monitoring of the budget for health care spending when
the state assumes responsibility for the budget.
Administration of subsidies for low-income individuals and families.
Certification of health plans.
Financial regulation of health plans.
Administration of data collection and quality management and
improvement program.
Establishment and governance of health alliances.
(8/6/93)
51
�5
?
PRIVILEGED ANDrONFIDENTIMr
WORKING GROUP DRAFT
ESTABLISHMENT OF ALLIANCES
No later than January 1, 1996, each state must establish one or more regional health
alliances responsible for providing health coverage to residents in every area of the state.
The state ensures that all eligible individuals enroll in a regional or corporate alliance
and that all alliances offer health plans that provide the comprehensive benefit package. The
state also ensures that each alliance enrolls all eligible persons in the geographic area covered
by the alliance.
ALLIANCE SIZE AND POPULATION
The geographic area assigned to each regional alliance must encompass a population
large enough to ensure that it exercises adequate market leverage in negotiating with health
plans. States may establish one, and only one, regional alliance in each area.
The state may not establish boundaries for health alliances that concentrate racial or
ethnic minority groups, socio-economic groups or Medicaid beneficiaries. An alliance may
not subdivide a primary metropolitan statistical area, but an alliance that covers a
Consolidated Statistical Metropolitan Area within a state is presumed to be in compliance
with these requirements.
An alliance may not cross state lines, but two or more contiguous states may agree to
coordinate the operation of alliances. Coordination may include adoption of joint operating
rules, contracting with health plans, enforcement activities and establishment of fee schedules
for health providers.
OPERATION OF ALLIANCES
A regional alliance may operate as a non-profit corporation, an independent state
agency or an agency of the state executive branch.
A board of directors governs regional alliances that are non-profit corporations.
States establish a mechanism for selecting members of alliance boards and describe the
mechanism in implementation plans submitted to the National Health Board.
(8/6/93)
52
�-
WORKING GROUP DRAFT
PRIVILEGED ANDrCONFIDENTtAE "
The board of each alliance has an even number of employer and consumer
representatives, plus one additional member to serve as chair. The board must include the
following:
•
Employers whose employees purchase health coverage through the
alliance.
•
Employees who purchase through the alliance.
•
Self-employed individuals who purchase through the alliance.
•
Other individuals who obtain coverage through the alliance.
The board of directors of an alliance may not include members of the following
groups or their immediate families:
•
Health care providers or their employees, owners of health plans or their
employees, or other persons who derive substantial income from health
plans or the provision of health care.
•
Members of associations, law firms or other institutions or organizations
that represent the interests of health care providers, health plans or
others involved in the health care field, or who practice as a
professional in an area involving health care.
•
Owners, employees, board members or individuals who derive
substantial income from pharmaceutical companies and suppliers of
medical equipment, devices and services.
To make alliances accountable to consumers and employers, states may establish
statewide councils composed of representatives of employer and consumer organizations to
prepare a list of nominees for alliance boards.
(8/6/93)
53
�WORKING GROUP DRAFT
PRIVILEGED AND-CONriDENTIAL
States require each alliance to provide an ombudsman to assist consumers in dealing
with problems that arise with health plans and the alliance. States may also permit consumers
at annual enrollment to check off a $1 contribution from their premium payment to support
work the office of the ombudsman or other consumer representatives.
In addition to a Board of Directors or Advisory Board, each regional alliance
establishes a Provider Advisory Board made up of representatives of health care professionals
who practice in health plans administered by the alliance.
In the case of a health alliance that is a state agency or an independent state entity
administered by a state-appointed authority, an advisory board consisting of representatives of
the same groups is appointed to provide advice to the agency.
RISK ADJUSTMENT
States must ensure that each alliance establishes arisk-adjustmentmechanism that
complies with the federal standard. Risk-adjustment mechanisms account for differences in
patient populations related to age, gender, family size, health status and services to
disadvantaged populations. (See section on "Risk Adjustment," Tab 10.)
STATE REGULATION OF PLANS
States qualify health plans to participate in alliances. Each state establishes a
mechanism to assess the quality of health plans, their financial stability and capacity to
deliver the comprehensive benefit package to the proper geographic market of each plan.
Only plans qualified by the state may offer health coverage through alliances.
States define requirements related to levels of service and the geographic distribution
of service required of health plans to ensure adequate choice for all eligible participants,
including residents of low-income areas and areas in which the health care system is
inadequate. A state must provide consumers the opportunity to purchase a plan at the
weighted-average premium. States may either require at least some plans to cover the entire
alliance area, or sub-alliance service areas, or may provide a subsidy that allows consumers
to pay only the weighted-average premium.
(8/6/93)
54
�WORKING GROUP DRAFT
PRIVILEGED AND-€0NFiDENTIXL
[HHS Position: States may adjust payments to plans to reflect differences in costs
across service areas.
Where no plan applies, the state must assure that at least one health plan is available
for every eligible individual residing within its service area.
States may establish requirements for health plans to assure access to services,
including the requirement to reimburse or contract with designated specialty providers and
centers of excellence.
States may not discriminate against health plans on the basis of their domicile.
A state may not regulate premium rates charged by health plans, except when
necessary to meet budget requirements or regulate plan solvency. (See section on Budget
Development and Enforcement, Tab 14.)
SOLVENCY AND FISCAL OVERSIGHT
Each state establishes capital standards for health plans that meet minimum federal
requirements established by the National Health Board in consultation with the states.
The minimum capital requirement consists of $500,000. Additional capital may be
required for factors likely to affect the financial stability of health plans, including:
Projected enrollment, number of providers and rate of growth.
Market share and strength of competition.
Degree and approach to risk sharing with providers and financial
stability of providers.
Structure of the plan and degree of integration.
Prior performance of plan, risk history and liquidity of its assets.
(8/6/93)
55
�WORKING GROUP DRAFT
PRIVILEGED AND-eeNHDENTIAt^
Each state defines financial reporting and auditing requirements and requirements for
fund reserves adequate to monitor the financial status of plans.
States designate an agency that assumes control if a health plan fails. Procedures
established by states to handle the failure of health plans assures continuity of coverage for
consumers enrolled in the plan.
GUARANTY FUNDS
Each state has a guaranty fund to provide financial protection to health care providers
and others if a health plan becomes insolvent. States may use existing guaranty fund
arrangements provided that the arrangement meets national standards.
Guaranty funds pay health providers and others if a health plan is unable to meet its
obligations. Guaranty funds cover liability for services rendered prior to health plan
insolvency and for services to patients after the insolvency but prior to their enrollment in
other health plans. Guaranty funds are liable at least for payment of all services rendered by
a health plan for the comprehensive benefit package, including any supplemental coverage for
cost sharing provided by the health plan.
If a health plan cannot meet its financial obligations to health care providers, the
providers have no legal right to seek payment from patients for any services covered in the
comprehensive benefit package other than the patients' obligations under cost-sharing
arrangements.
If a health plan fails, health providers are required to continue caring for patients until
they are enrolled in a new health plan.
All health plans must participate in a guaranty fund, and the fund is liable for all
claims against the plan by health care providers, contractors, employees, governments or any
other claimants. The guaranty fund stands as a creditor for any payments made on behalf of
a plan.
(8/6/93)
56
�WORKING GROUP DRAFT
PRIVILEGED AND -eONFlUEN l I A l r
If a health plan fails, the state may assess payments of up to 2 percent of premiums on
other plans within the alliance to generate sufficient revenue to cover outstanding claims
against the failed plan. The failure of a health plan is defined as the imminent inability to
pay legitimate claims.
A guaranty fund has the ability to borrow funds against future assessments in order to
meet the obligations of the failed plan.
ADDITIONAL BENEFITS
Any state may provide health benefits in addition to those required under the
nationally guaranteed package. However, in order to expand benefits, a state must
appropriate revenue from sources other than those established by the American Health
Security Act to support delivery of the nationally guaranteed benefit. A state may not rely on
a payroll tax on employers or another revenue source focusing solely on corporations.
SINGLE-PAYER OPTION
A state may establish a single-payer health care system rather than an alliance system
offering multiple plans. A state may establish a single-payer alliance for part of the state.
A single-payer system is one in which the state or its designated agency makes all
payments to health care providers with no intermediaries, health plans or other entities
assuming financial risk. However, providers, such as HMOs, networks of physicians and
hospitals, assume risk by accepting capitated payments to cover the health needs of
individuals.
A single-payer system provides, at a minimum, the health services defined in the
comprehensive benefit package and impose requirements for co-insurance, co-payments,
deductibles and out-of-pocket limits no greater than those charged by regional alliances.
Single-payer systems also must comply with requirements for quality management and
improvement, the collection of health data and other guidelines for health plans and alliances.
If a state chooses to establish a single-payer health system, the federal government
may waive any of the following requirements under the alliance system:
(8/6/93)
57
�WORKING GROUP DRAFT
PRIVILEGED AND* CQNFIDENTtAI=r"
•
ERISA rules governing corporate alliances
•
Rules delineating participation in regional and corporate alliances
•
Rules continuing Medicare and Medicaid as separate programs outside
the alliance structure consistent with requirements for the protection of
Medicare and Medicaid recipients
•
v
Guaranty fund rules
A single-payer system established by a state may eliminate cost-sharing requirements;
however, a state must appropriate revenue from sources other than those established by this
Act to support delivery of the nationally guaranteed benefit.
(8/6/93)
58
��WORKING GROUP DRAFT
PRIVILEGED AND JCONFieENIIAL
"
REGIONAL HEALTH ALLIANCES
Regional health alliances assume the following responsibilities:
•
Representing the interests of consumers and purchasers of health care services.
•
Structuring the market for health care to encourage the delivery of high-quality
care and the control of costs.
•
Assuring that all residents in an area who are covered through the regional
alliance enroll in health plans that provide the nationally guaranteed benefits.
ENROLLMENT
Each regional alliance enrolls all eligible persons, including low-income and nonworking persons, who reside in the geographic area it serves into a health plan that provides
the comprehensive benefits.
Alliances hold an annual open enrollment period during which each individual and
family participating in the alliance has the opportunity to choose among health plans offered
through the alliance. Enrollments made during the annual open season become effective on a
date established by law.
Alliances also provide a mechanism for promptly enrolling individuals and families
who become eligible for coverage between open-enrollment periods.
Individuals and families who move into the region served by an alliance notify the
alliance within 30 days. If the individual is employed, the employer notifies the alliance. If
the individual is not employed, he or she notifies the alliance.
Within 10 days of receiving notification that an eligible person has moved into its
service area, regional alliances provide enrollment materials. Within 30 days of receiving
enrollment materials, eligible individuals are responsible for choosing a health plan and
applying to the alliance for enrollment.
(8/6/93)
59
�WORKING GROUP DRAFT
PRIVILEGED AND <eeNFIDENnAfc-
An application for coverage submitted by the fifteenth day of any month becomes
effective on the first day of the following month. An application made after the fifteenth of
the month becomes effective on the first day of the second month following application.
Alliances establish a mechanism for enrolling individuals who have not chosen a
health plan or purchased insurance when they seek health services. The point-of-service
mechanism follows these guidelines:
•
Within 10 days of enrollment at a point of service, the alliance provides an
individual with materials describing health plans.
•
If the individual does not choose a health plan within 30 days, the alliance
randomly assigns the individual to a health plan.
•
Using the fee-for-service schedule adopted by the alliance, the health plan
chosen reimburses the provider who cared for the uninsured individual prior to
enrollment.
MANAGING ACCESS TO PLANS
Alliances develop a process of random selection for use in determining which
applicants may enroll in a health plan in the event that more consumers apply for a particular
plan than its enrollment capacity can accommodate.
MARKETING
Alliances control direct marketing to consumers by health plans. Marketing rules
include at least the following requirements:
•
The alliance must approve marketing materials used by health plans.
•
If a health plan uses direct marketing, it may not limit distribution to an area
smaller than the geographic area it serves within the alliance.
(8/6/93)
60
�WORKING GROUP DRAFT
PRIVILEGED AND ^ONFfDENHAfc-
Health plans and their agents are prohibited from attempting to influence an
individual's choice of plans in conjunction with the sale of any other insurance.
INFORMATION
Alliances publish (or otherwise make available to consumers) easily understood, useful
information, including brochures, computerized information and interactive media, that allows
them to make valid comparisons among health plans. The following information must be
included:
•
Cost to consumers, including premiums and average out-of-pocket expenses.
•
Characteristics and availability of health care professionals and institutions
participating in the plan.
•
Any restrictions on access to providers and services.
•
The annual Quality Performance Report, which contains measures of quality
presented in a standard format.
INSURANCE RISK
An alliance may not bear insurance risk.
RELATIONS WITH PLANS
Each regional alliance negotiates with health plans to provide the comprehensive
benefit package to all eligible persons in the alliance area through a choice of plans. Only
health plans that enter into contracts with the appropriate regional or corporate alliance are
authorized to provide the guaranteed benefit package.
Alliances contract with health plans on at least an annual basis but may enter into
multi-year contracts. Multi-year contracts may not specify premium increases for future
years in excess of the projected inflation factor for the alliance budget.
(8/6/93)
61
�WORKING GROUP DRAFT
PRIVILEGED ANIXSGNHBENII^L
[HHS position: HHS believes an alliance should have the; authority to prohibit a health
plan: from accepting additional enrollees from: corporate alliances where it docs not accept
new enrollees from the regional alliance.]
CONTRACTING REQUIREMENTS AND EXCLUSION OF PLANS
Alliances write uniform contracts with health plans, including all certification
requirements imposed by federal or state law. Alliances must offer a contract to each
qualified health plan seeking to serve its area unless:
•
The proposed premium exceeds the weighted-average premium within the
alliance by more than 20 percent.
•
The health plan's quality of service or care are unsatisfactory as determined by
the state.
•
The plan engages in practices that have the effect of discriminating against one
or more classes of persons based on race, ethnicity, gender, income or health
status.
•
The plan fails to comply with contract requirements.
•
The plan is a fee-for-service plan that is not a successful bidder.
Through a competitive bidding process, an alliance may limit to
no more than three the number of plans that pay any willing
provider on a fee-for-service basis and have no network of
providers operating under a contract with the plan.
Alliances may not discriminate against health plans or providers on the basis of race,
gender, ethnicity, religion, mix of health professionals or organizational arrangement.
[HHS position: HHS believes that an alliance should be able to reject a health plan if
the health plan's proposed premium would cause the alliance to exceed its budget
t]
(8/6/93)
62
�23
WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAE
AREAS WITH INADEQUATE HEALTH SERVICES
Alliances may use financial incentives to encourage health plans to expand into areas
that have inadequate health services.
Alliances may organize health providers to create a new health plan targeted at such
an area, providing assistance with setting up and administering the plan. An alliance may not
assume risk on behalf of a new health plan but may arrange favorable financing to encourage
a health plan to operate in an area with inadequate health services.
RISK ADJUSTMENT
Alliances use a risk-adjustment mechanism to account for variations in enrollment
across health plans with respect to the health status and risk of participants and access to
basic health services. (See section on Risk Adjustment, Tab 10.)
F E E - F O R - S E R V I C E PLANS
Each Alliance includes among its health plan offerings at least one plan organized
around a fee-for-service system. A fee-for-service system is one in which patients have the
option of consulting any health provider subject to reasonable requirements. Reasonable
requirements may include utilization review and prior approval for certain services but do not
include a requirement to seek approval through a gatekeeper.
Under certain conditions, with approval from the National Health Board, a state may
waive the requirement for each alliance to offer a fee-for-service health plan if the alliance
demonstrates that:
•
A fee-for-service plan is not financially viable in the area.
•
There is insufficient provider interest in participating in a fee-for-service plan.
•
There is insufficient enrollment to sustain a fee-for- service plan.
(8/6/93)
63
�23
WORKING GROUP DRAFT
PRIVILEGED AND-GGNEIQEISIAL
Each state establishes a fee schedule and conversion factors for the fee-for-service
component of health plans in each regional health alliance. Each health plan uses the same
schedule and factor to reimburse health providers under its fee-for-service option.
States consult with health providers in determining conversion factors, relative values
and other variations in the schedule.
The Secretary of the Department of Health and Human Services establishes a national
model fee schedule based on the Medicare RBRVS and DRG systems, which states and
health alliances may adopt. The Department of Health and Human Services develops relative
values for services not now covered by Medicare, such as pediatric care, obstetrics and
workers' compensation.
BALANCE BILLING
A provider may not charge or collect from a patient a fee in excess of the rate
schedule adopted by an alliance. A plan and its participants are not legally responsible for
payment of any amount in excess of the allowable charge.
PROSPECTIVE BUDGETING OF F E E - F O R - S E R V I C E
States have the authority to impose prospective budgeting on the fee-for-service
option offered through health alliances.
Under prospective budgeting:
•
The alliance chooses or develops one fee-for-service plan as the designated
plan for its service area. The alliance negotiates with health providers annually
to develop a budget for the plan.
•
The negotiated budget establishes spending targets for each sector of health
expenditures.
•
The fee-for-service plan periodically reviews service utilization and adjusts
payments to providers to assure compliance with the negotiated budget.
(8/6/93)
64
�?3
WORKING GROUP DRAFT
PRIVILEGED ANDJZQNHDENTIAL
States have the authority to allow the provider community to establish the feefor-service plan. A board composed of representatives of providers may
manage the fee-for-service plan, developing a utilization review system and
other procedures to assure the financial viability of the plan.
PORTABILITY
Health plans pay for urgent care delivered outside the plan's service area.
An eligible individual who intends to establish residence in an area for longer than six months
registers with the local health alliance.
An eligible individual who establishes residence in an area for more than three months
but less than six months may choose to:
•
Continue coverage through the regional alliance and health plan in which he or
she is enrolled, limiting the use of health care to emergency services and urgent
care.
•
Register with the alliance serving the temporary residence and choose a local
health plan.
•
Enroll in a health plan with a fee-for-service component that covers care
provided outside the alliance service area.
(8/6/93)
65
��r
WORKING GROUP DRAFT
PRIVILEGED AND ۩NFtDENHAJL_
CORPORATE ALLIANCES
The following organizations and firms are eligible to form corporate health alliances:
•
Employers with more than 5000 employees
•
Existing plans formed pursuant to collective bargaining (based on current
ERISA definitions) with more than 5000 covered employees, such as TaftHartley plans, although certain limitations apply to the ability of such plans to
provide coverage to associate union members
•
Plans formed by rural electric and telephone cooperatives with more than 5000
covered employees.
The term employer is defined as it is under the ERISA statute.
The threshold of 5000 employees is applied by calculating the number of workers
employed by a firm nationally. The common control test determines whether separate trades
or businesses are treated as a single employer.
Employers whose primary occupation is employee leasing are required to participate in
regional health alliances regardless of the number of employees. Federal, state, local and
special purpose units of governments are required to participate in regional alliances
regardless of their size.
A firm or organization that is certified as a corporate alliance must discontinue as a
corporate alliance if the number of full-time employees of the firm or the number of f u l l time employees covered by the organization falls below 4800.
The Department of Labor regulates employers and determines whether a corporate
alliance may continue to operate in the case of mergers, acquisitions and bankruptcies.
A state adopting a single payer approach may require all employers and individuals to
participate in the single payer system.
(8/6/93)
66
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Security Act - Working Group Draft] [Binder] [1]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621467" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
5/7/2015
Source
A related resource from which the described resource is derived
17621467
12093636
42-t-12093636-20060885F-Seg5-008-007-2015
-
https://clinton.presidentiallibraries.us/files/original/9d59db33d2ddc04d942eeb3d78654abb.pdf
45523e7404b049a427476bcf2d75db62
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [4]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFTPFNTI A
T
TRANSITION
SCHEDULE FOR PHASE-IN OF STATES
States begin implementation of the new system as early as January 1, 1995.
Implementation involves enactment of a statute adopting federal program standards,
formation of regional health alliances, and imposition of requirements for employers and
individuals to obtain coverage.
At the time of state implementation, federal support systems and reforms take effect,
including:
•
Subsidies to assist low-income individuals and small, low-wage employers in
purchasing health insurance
•
Limitations on balance billing by health care providers.
All states have implemented plans approved by the National Health Board by January 1,
1997. The Board may extend the deadline for six months for states that have made a good faith
effort to begin implementation of the new system.
Incentives are offered for states implementing reform prior to January 1, 1997. The
incentives include :
• Access to special start-up funds
• Access to subsidies
• Expedited federal consideration, with federal disapproval of state plans only if
failure to comply with statutory requirements.
MEDICAID MAINTENANCE OF EFFORT
States maintain current levels of financial support for the Medicaid program.
(9/7/93)
215
�WORKING GROUP DRAFT
PRIVILEGED AND^ONHBENHAL
FEDERAL SUPPORT FOR IMPLEMENTATION
States become eligible for federal support for administrative costs related to
implementation of health reform in three phases:
PHASE 1: Within one month of the passage of federal legislation, each state receives a
planning grant to aid in the development of health care reform plans and alliances. Planning
grants total $100 million and are distributed based on a formula specified in federal law.
PHASES 2 AND 3: Following passage of state statutes implementing health reform, the
federal government providesfinancialsupport for start-up of the regional alliance system.
Funds provided under this provision support start-up costs only; after implementation of
the new system, health insurance premiums absorb administrative costs associated with regional
alliances.
The National Health Board develops the formula for distribution of federal funding for
implementation. The formula takes into account projected start-up costs for administration and
the development of the regional alliance system in each state. States are required to match
federalfinancialsupport.
States receive one-third of their total allocation of federal funding for start-up costs upon
passage of legislation implementing health care reform. The National Health Board releases
funds following a determination that the state law conforms with federal requirements.
The remaining two-thirds of federal funds are released upon submission to the National
Health Board of a state plan of operation. The board forwards funds after determining that the
state plan of operation conforms with federal requirements.
TECHNICAL ASSISTANCE
The federal government assists states during the transition by drafting model legislation
for state consideration, drawing up regulations and requests for proposals.
Federal funds support technical assistance provided by non-governmental entities in areas
such as contracting, development of automated information exchange system, data collection and
analysis.
(9/7/93)
216
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL-
RULEMAKING
Rapid implementation of the American Health Security Act is vital to assure access to
health care for millions of Americans to reduce the runaway growth in health care spending. To
expedite implementation, the National Health Board, the Department of Labor and the
Department of Health and Human Services are authorized to issue any regulations by the Act on
an interim and final basis.
IMPLEMENTATION OF CORPORATE ALLIANCES
Large employers and other entities eligible to form corporate alliances must form an
approved corporate alliance or join regional health alliances by January 1, 1997. Corporate
alliances can be formed earlier.
If a state implements universal coverage prior to the date an eligible employer or other
entity forms a corporate alliance, the eligible employer or other entity must form and maintain
an employee benefit plan for its employees and their dependents who reside in the state. The
plan must cover at least the benefits in the comprehensive benefit package. The eligible
employer or other entity must contribute at least 80 percent of the cost of the comprehensive
benefits.
INSURANCE REFORM
To reduce the potential for disruption in the health insurance industry during the transition
to the new health system, the American Health Security Act imposes interim insurance
regulations.
States enforce the regulations; the Department of Health and Human Services enforces
them in states that default on the requirement to enforce reforms.
Partially self-funded groups, self-funded multiple employer welfare arrangements
(MEWAs), HMO's and other health plans are subject to the same regulatory requirements as
insurers.
(9/7/93)
217
�WORKING GROUP DRAFT
PRIVILEGED AND'GONEIDENTlAfc—
Requirements to Keep Coverage In Force: Insurers are prohibitedfromterminating or
failing to renew health insurance coverage for any insured person, except for non-payment of
premiums or other strictly defined cause.
Insurers are required to accept all newly hired, full-time employees and dependents added
to groups currently insured. Rates charged coincide with rates set according to a state- approved
rate table.
Restrictions on Premium Increases: Premium increases during the transition to health
reform arc subject the following requirements:
•
Each insurer divides its business in each state into three sectors:
Individual contracts
Contracts covering groups with less
. than 100 participants
Contracts covering larger groups.
•
Any increases in premium rates must apply equally to all covered groups and
individuals:
All small groups and individuals receive the same percentage
inaease in rates.
For larger groups, a portion of any inaease could be based on
group aedibility as long as the total average inaease equals the
increase charged to individuals and small groups.
To address changes in group composition, each insurer is required to develop a single rate
manual for each segment of its market in compliance with guidelines set forth in federal law or
emergency regulation. Base rates in the manual are fixed at the average costs in each segment.
Changes in premium rates for groups due to changes in the demographic composition of
the group are calculatedfromthe manual. New additions to groups and groups applying for new
coverage are accepted at rates established in the manual.
(9/7/93)
218
�WORKING GROUP DRAFT
PRIVILEGED ANDrGONFtBENTTAE"
States with existing statutes reforming the market for health insurance may modify rules
related to premium increases to accommodate the goal of rate compression. The Department of
Health and Human Services, in consultation with states (e.g., the National Association of
Insurance Commissioners), issues guidelines for state modifications.
Premium increases that exceed a prescribed percentage are subject to prior approval by
state insurance regulators. An administrative process provides a channel for appeal by insurers
damaged by this requirement.
Portability: To increase portability of coverage during the transition to the new health
insurance system:
•
Insurers and self-insured employer plans are prohibited from applying exclusions
for pre-existing medical conditions to new employees and their dependents who
were insured within the 90-day period immediately prior to current employment.
For new employees and their dependents previously not insured,
exclusions for pre-existing conditions may not extend beyond six
months.
These rules apply both to individual and group insurance policies.
•
Self-funded health plans and employers with insured health plans are prohibited
from imposing waiting periods for coverage on any employee otherwise eligible
under the terms of the plan.
Reductions in Benefits: To ensure that employers and insurers do not impose caps or
exclusions on coverage for specific medical conditions during the transition, employers and
insurers are prohibited from reducing existing coverage for any medical condition or course of
treatment if the anticipated cost is likely to exceed $5,000 in a year.
As under current law, employers may impose overall caps or reduce coverage as long as
these changes are applied equally to all participants in a health plan.
Access to Coverage: To assure that health insurance is available during the transition for
individuals who lose coverage or are unable to obtain coverage because of health status, the
Secretary of Health and Human Services may organize a nationalriskpool.
(9/7/93)
219
�WORKING GROUP DRAFT
PRIVILEGED ANI>CONFIDENTIAL
The Department of Health and Human Services administers the pool which contracts with
one or more private insurance Firms to act as its intermediaries and administrative agents.
The risk pool provides coverage to any uninsured person or group unable to obtain
coverage in the private insurance market. Premiums are set in a manner similar to existing state
high risk pools. Because the pool is voluntary, it operates under traditional insurance rating
methods. Premiums vary according to age, gender and place of residence.
Premiums and assessments against all insurers support the pool, with assessments calculated
based on market share in the health insurance market. Self-funded health plans also contribute
to the pool through an assessment.
If premiums are not sufficient to pay claims incurred by the pool, additional assessments
against insurers and self-funded health plans make up the difference.
The pool reimburses providers who treat participants based on Medicare payment rates;
providers may not bill patients for the balance of any fee covered under the pool.
States with existing risk pools continue their operation or enroll individuals currently
insured through pools in the federal pool. A state that transfers participants in itsriskpool to
the federal pool must continue its financial support at the same level.
The Department of Health and Human Services may enter into contracts withriskpools
in states to administer the federal pool.
SHORT-TERM VOLUNTARY COST CONTAINMENT
Upon introduction of thereformplan, the President announces a program urging all
sectors of the health care system, hospitals, physicians, laboratories, drug manufacturers, and all
others, to limit price and expenditure increases to a specified amount.
The Secretary of the Department of Health and Human Services begins a program to
monitor prices and expenditures in the health care system. The Secretary reports periodically to
the President on the extent to which each sector is conforming to the voluntary restraints.
The Secretary has the authority to obtain information on prices and expenditures. All
individual information is confidential. The Secretary periodically issues public reports on the
levels of compliance in each sector.
(9/7/93)
220
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL
FINANCING HEALTH COVERAGE FOR THE UNDER 65 POPULATION
OVERVIEW
CONTRIBUTIONS FOR HEALTH COVERAGE
Payments for health coverage will be divided into two shares: contributions by
individuals and families and contributions by employers.
Individuals who work less than a full year, as well as families whose members jointly
have less than one full year's employer contributions, are also responsible for any unpaid
employer share to the extent they have non-wage income.
INDIVIDUAL AND FAMILY CONTRIBUTIONS
Each individual and family is guaranteed health coverage through the alliance in which
they are enrolled. Where families have workers at firms in two different corporate alliances
or in one regional and one corporate alliance, they may choose coverage through either
alliance.
Alliances offer consumers a choice of health plans. All consumers receive the same
schedule of premiums for enrollment.
Premiums vary according to four family types: single individual, couple without
children, single-parent family, and two-parent family.
Employer contributions pay for 80 percent of the average priced plan in the alliance
for each family type.
Families and individuals pay the difference between 80 percent of the average priced
premium and the actual cost of the plan they select.
The following example illustrates the choices that might face a single individual in an
alliance where the average individual premium is $1,800. The employer contribution is 80
percent of $1,800, or $1,440.
(9/7/93)
221
�PRIVILEGED ANELCONHDENTIAL.
WORKItiG GROUP DRAFT
EXAMPLE: PREMIUMS AND PAYMENTS FOR SINGLE INDIVIDUALS
TOTAL
ANNUAL
PREMIUM
ANNUAL
EMPLOYER
PAYMENT
ANNUAL
EMPLOYEE
PAYMENT
MONTHLY
EMPLOYEE
PAYMENT
PLANA
$1,500
$1,440
$60
$5.00
PLAN B
$1,700
$1,440
$260
$21.66
PLAN C
$1,800
$1,440
$360
$30.00
PLAN D
$2,100
$1,440
$660
|
$55.00
I
SUBSIDIES FOR LOW-INCOME FAMILIES AND INDIVIDUALS
Families and individuals with incomes below 150 percent of poverty in a regional
alliance may apply to their alliance for help in paying their premium. The subsidy will
depend on their family income and the average premium for that family type in the alliance.
If, for example, a family qualified for a subsidy of $460, they could apply $460 toward the
cost of any plan. If that family chose a plan costing less than $460 because of its quality or
convenience, their subsidy would be limited to the actual cost of the plan.
Subsidy costs arc bome by the federal government.
EMPLOYER CONTRIBUTIONS
The contributions of employers total 80 percent of average premiums for each family
status in an alliance.
Firms in the regional alliance pay a fixed per-workcr contribution for each employee
according to his or her family status.
(9/7/93)
222
�WORKING GROUP DRAFT
PRIVILEGED ANDJCONFfDENHAL
The per-worker employer contribution depends on the average number of workers per
family within each family status in the alliance. For example, if two-parent families in a
region have an average of 1.5 workers per family, the per-worker contribution for a twoparent family is 80 percent of the average family premium divided by 1.5. In an alliance
where 80 percent of the average family premium is $3,360, the per-worker contribution is
$2,240 ($3,360 per family divided by 1.5 workers per family). Thus, each employer pays a
flat $2,240 premium for each family worker, and total employer contributions for all family
workers cover 80 percent of family premiums.
The following chart shows the relationship between premiums and per-worker
contributions in an alliance where the average individual premium is $1,800, the average
family premium is $4,200, and the average number of workers per family is as listed:
EXAMPLE: AVERAGE PREMIUMS, WORKERS PER FAMILY, AND PREMIUMS
PER WORKER FOR EMPLOYERS BY FAMILY STATUS OF WORKER
TOTAL
AVERAGE
PREMIUM
80 PERCENT
OF
AVERAGE
PREMIUM
AVERAGE
NUMBER
OF
WORKERS
PER
FAMILY
Single
individual
$1,800
$1,440
1.0
$1,440
Two Parent
Family
$4,200
$3,360
1.5
$2,240
TYPE OF
POLICY
EMPLOYER
CONTRIBUTION
PER WORKER
Premiums and the number of workers per family will vary from one alliance region to
another.
SUBSIDIES FOR EMPLOYERS
No employer in a regional alliance will be required to pay more than 7.9 percent of
payroll for health coverage annually. Firms with fewer than 50 employees will be eligible for
caps varying from 3.5 to 7.9 percent of payroll, depending on the employer's average wage.
(9/7/93)
223
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL.
PREMIUMS IN REGIONAL ALLIANCES
Families and employers pay premiums for coverage under the new system. Separate
premiums are calculated for four categories:
•
Single individuals.
•
Couples.
•
Single-parent families.
•
Two-parent families with children.
Health plans submit premium bids to alliances, which review the bids and either
accept them or negotiate lower amounts.
Premium bids arc made on the basis of community rating, with rate variation allowed
only for family category. Premiums arc not adjusted for geographic area within an alliance.
Premiums are divided into two shares: the employer share and the family share. In
general, employer contributions are calculated to equal 80% of the weighted average premium
in the alliance for each premium category. A weighted average premium (hereafter referred
to as an average premium) is the average premium bid for each category, weighted by plan
enrollment. Families contribute the difference between 80% of the average premium and the
price of the plan they choose.
To assure equity across all employers, employers make a contribution for each worker
("per-worker contribution") based on the family status of the worker. Because some workers
have working spouses, the employer per-worker contribution rates for couples and twoparent fiamilies will be less than 80% of the average premium. The employer contribution
rates for each category are calculated so that their total contributions equal 80% of the
average for that category.
The alliance collects and aggregates all employer contributions and credits each
working individual or family with an amount equal to 80% of the appropriate (based on
family status) weighted average premium in the alliance. The family pays the difference
between the credit and the premium of the plan that they choose.
(9/7/93)
224
�WORKING GROUP DRAFT
PRIVILEGED AND-€ONFIDENTfcAb
INDIVIDUAL AND FAMILY CONTRIBUTIONS
PAYING FOR COVERAGE IN BOTH REGIONAL AND CORPORATE ALLIANCES
All individuals and families in an alliance are charged the same community rates to
enroll in a health plan.
•
Individuals and families pay the difference between 80 percent
of the average premium in their alliance for their family status
and the premium of their chosen plan.
•
Those who select a plan costing the average pay 20 percent of
the premium. They pay the full difference for a plan costing less
than or more than the average.
Working individuals and families may pay their share of premiums in one of several
ways:
•
Withholding from wages by one employer.
•
•
Withholdingfromsources of non-wage income.
Directly to the alliance in annual, quarterly, or other installments,
as the alliance may arrange.
Alliances may require employee withholding to avoid bad debt.
Employers may pay part or all of the individual or family share of the premium.
•
Employers that do so must make the same dollar contribution for
all employees with the same family status, unless a bona fide
collective bargaining agreement requires otherwise.
•
Any additional employer contribution may not vary according to
the health plan selected by the employee, and the employer must
provide a rebate to the employee if the contribution exceeds the
employee's share of the premium. Such a rebate is taxable
income to the employee.
(9/7/93)
225
�WORKING GROUP DRAFT
PRIVILEGED AND-GONHDENTIAL
INDIVIDUALS AND FAMILIES IN REGIONAL ALLIANCES
Premium Subsidies for Low-Income Persons
During the annual open enrollment period conducted by alliances, each regional
alliance publishes a table showing subsidies available to individuals and families toward the
cost of premiums by income level. Subsidies are available to individuals and families with
incomes up to 150 percent of poverty.
An individual or family eligible for a subsidy pays the difference between: (1) Their
plan's premium and (2) The sum of their subsidy and 80 percent of the average premium in
the alliance.
EXAMPLE: PREMIUMS, SUBSIDIES, AND PAYMENTS
FOR A FAMILY WITH SUBSIDY
TOTAL
ANNUAL
PREMIUM
80 PERCENT
OF AVG
PREMIUM
ANNUAL
SUBSIDY
ANNUAL
FAMILY
PAYMENT
PLANA
$3,600
$3,360
$460
$0
PLAN B
$4,000
$3,360
$460
$180
PLAN C
$4,200
$3,360
$460
$380
PLAN D
$4,500
$3,360
$460
$680
Subsidized individuals and families may sometimes be unable to enroll in a plan at or
below the average premium because none is available or enrollment is limited. In such cases,
the alliance raises the subsidy to permit them to enroll in the lowest-cost plan above the
average.
(9/7/93)
226
�WORKING GROUP DRAFT
PRIVILEGED AND-CONriDENTIAb
Cost-sharing Subsidies for Low-Income Persons
In areas not served by a plan or network with low cost sharing and a premium at or
below the average premium in the alliance, individuals with family incomes less than 150
percent of the poverty level qualify for subsidies to cover co-payments and deductibles.
Subsidies reduce cost sharing to the level charged by a low cost sharing plan. Alliances
determine whether such a plan is available. The same process used for determining eligibility
for premium subsidies is used for determining eligibility for cost-sharing subsidies.
Administration of Subsidies for Low-Income Persons
Individuals and families may apply for premium and cost-sharing subsidies during
any open enrollment period, at the time of transfer to a new alliance, or after a change in life
circumstances, such as unemployment or divorce.
Alliances distribute applications for subsidies directly to consumers and through
employers, banks, and designated public agencies. Consumers forward completed applications
to alliances or an agency designated by the state.
Determination of eligibility is based on family income. When applying for a subsidy,
eligible individuals and families submit a declaration of estimated annual income. After the
end of the year, the alliance or another agency designated by the state checks self-declared
estimates of income against income tax returns and other data presented by the beneficiaries
and reconciles estimates withfinalincome for the year.
Beneficiaries receive notice of any additional payment or rebate due following a yearend reconciliation. Subsidies are conditional until a year-end determination that the individual
or family qualified for the subsidy.
INDIVIDUALS AND FAMILIES IN CORPORATE ALLIANCES
Employees of corporate alliance employers pay the difference between 80 percent of
the average premium in the corporate alliance and the premium of their chosen plan.
Employees who select a plan costing the average pay 20 percent of the premium. They pay
the full amount less for a plan costing less than the average; they pay the full amount more
for a plan costing above the average.
(9/7/93)
227
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTtAir
For low-wage full-time workers, the employer contributes an additional amount. If
the worker earns annualized wages of $15,000 or less, the employer contributes the greater of
80% of the average premium or 95% of the premium for the lowest cost plan available to the
employee in the corporate alliance.
FAMILY CHOICE
Alliances may establish procedures for spouses to enroll in separate health plans.
CHOICE OF ALLIANCES
A family in which one full-time worker is eligible for coverage through a corporate
alliance and one full-time worker is eligible for coverage through a regional alliance may
choose one alliance in which to enroll.
If the entire family enrolls in a plan through the regional alliance, the family may
qualify for a subsidy based on income. If the family enrolls in the corporate alliance,
subsidies are not available.
A family with full-time workers eligible for coverage in different corporate alliances
may also choose one alliance in which to enroll.
(9/7/93)
228
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFfDENTlAt
EMPLOYERS IN THE NEW SYSTEM
REGIONAL ALLIANCES
For each of their eligible full-time employees, employers participating in a regional
alliance contribute 80% of the appropriate per worker contribution for the employee's family
status.
The per worker contribution paid by the employer varies only by the alliance area in
which the employee lives and the family status of the employee. There are per worker
contributions for:
•
A single worker.
•
A couple.
•
A single parent worker.
•
A worker with a spouse and children.
Employers receive subsidies that cap total premium contributions for employees at
3.5% to 7.9% of the firm's payroll.
(9/7/93)
229
�PRIVILEGED AND-eONFfDENTlAL
WORKING GROUP DRAFT
Contributions for employers with 50 or fewer employees are capped at a lower level,
based on the average wage of the firm. Caps vary as follows:
CAP ON EMPLOYER
CONTRIBUTIONS AS A
PERCENTAGE OF TOTAL PAYROLL
SMALL EMPLOYER S AVERAGE
WAGE PER FULL-TIME
EQUIVALENT WORKER
Less than $12,000
3.5%
$12,000 to $15,000
3.8%
$15,000 to $18,000
4.4%
$18,000 to $21,000
5.5%
$21,000 to $24,000
6.5%
Greater than $24,000
7.9%
|
Employers with more than 50 employees pay no more than 7.9% of payroll.
CORPORATE ALLIANCES
For each of their eligible full-time employees, employers in corporate alliances
contribute a minimum of 80% of the weighted average premium among the health plans they
offer to employees. The employer contribution varies according the type of policy chosen by
the worker — single, couple, single-parent family, or two-parent family.
For low-wage full-time workers in corporate alliances, the employer contributes an
additional amount. If the worker earns annualized wages of $15,000 or less, the employer
contributes the greater of 80% of the average premium or 95% of the premium for the lowest
cost plan available to the employee in the corporate alliance.
No subsidies are available for corporate alliance employers.
(9/7/93)
230
�WORKING GROUP DRAFT
PRIVILEGED AND -GeNFfDENTIAk^
If a large employer chooses to join the regional health alliances, the rules are the same
as for other employers, except that the per worker premiums contributed by the employer are
adjusted for theriskprofile of its employees. Risk is measured based on the industry
classification of the employer and the demographic characteristics of its workforce.
For thefirstfour years after choosing to join regional alliances, the employer pays the
greater of the community rated per worker premiums or itsriskadjusted per worker
premiums. Theriskadjustment uses a national formula developed by the Department of
Labor, but is calculated separately for each alliance area in which thefirm'semployees live.
The employer contribution for each regional alliance area is adjusted over the four
subsequent years until it reaches the level of the community rated per worker premium:
•
In thefifthyear, the employer's payment is equal to 75% of theriskadjusted
employer share of the per worker premium plus 25% of what the employer
would pay under a community rated per worker premium.
•
In the sixth year, the employer's payment is equal to 50% of theriskadjusted
employer share of the per worker premium plus 50% of what the employer
would pay under a community rated per worker premium.
•
In the seventh year, the employer's payment is equal to 25% of the risk
adjusted employer share of the per worker premium plus 75% of what the
employer would pay under a community rated per worker premium.
•
In the eighth year, the employer begins paying on the basis of community rated
per worker premiums.
Subsidies to which an employer is entitled are similarly phased in over several years.
The employer receives no subsidies in thefirstfour years. It receives 25% of the subsidies
to which it would normally be entitled in thefifthyear, 50% in the sixth year, 75% in the
seventh year, and 100% beginning in the eighth year.
(9/7/93)
231
�WORKING GROUP DRAFT
PRIVILEGED AND-GONFIDENTLAL
EMPLOYER CONTRIBUTIONS FOR FAMILIES WITH WORKERS IN MULTIPLE
ALUANCES
For families where two full-time adult workers are eligible for coverage through
different alliances, the family chooses an alliance through which to enroll in a health plan.
The employer in the chosen alliance makes a premium contribution as it normally
would. The employer in the alliance that is not chosen contributes 80% of the appropriate
per worker premium for the regional alliance area in which its employee lives. The employer
in the alliance that is not chosen makes this payment regardless of whether it participates in a
regional alliance or corporate alliance. The employer payment is forwarded to the chosen
alliance to pay for a portion of the family's coverage.
EMPLOYER CONTRIBUTIONS FOR PART-TIME EMPLOYEES
Regional alliances cover part-time workers, whether they work for a regional alliance
or corporate alliance employer. A part-time worker who is the spouse or child of a full-time
worker covered through a corporate alliance is an exception, and is instead covered through
the corporate alliance.
For part-time workers, all employers — regardless of whether they participate in a
regional or corporate alliance — contribute a pro-rated portion of the regional alliance's
appropriate per worker premium (varying by the worker's family status). The contribution is
pro-rated based on the ratio of hours worked to a thirty hour work week.
All employer payments for part-time workers are forwarded to the regional alliance.
ADMINISTRATION
When an employee begins a new job, employers collect the following information and
forward it to the appropriate health alliance:
•
(9/7/93)
Registration information, including: name, address, identification numbers,
family status, and names and Social Security Numbers of spouse and dependent
children.
232
�1
WORKING GROUP DRAFT
•
PRIVILEGED AND SQNFIDENTI ATT-
Choice of health plan, if the employee is new to the area or newly hired by a
corporate alliance.
Employers forward the information to the alliance within 30 days. Pending notice by
the alliance, employers make contributions according to the premiums provided by the
alliance.
Employers are required to make premium contributions to alliances at least monthly,
but may make them more frequently. Alliances may require electronic payment of premiums
for employers already required to do so under the federal tax system, and may create
disincentives for paper transactions.
When making premium contributions, employers cap their total contributions at the
relevant percentage of total payroll for the period. If an employer is making contributions to
multiple regional alliances, its payments — capped, if relevant — are distributed across
alliances based on the proportion of uncapped premiums due to that alliance. With its last
premium payment for a year, each employer reconciles its total premium payments for the
year capped at the relevant percentage of its total annual payroll, and reports the information
used for this reconciliation to the alliance.
Employers maintain records for auditing purposes that document premium
contributions. The regional alliance that covers the largest share of an employer's workforce
has responsibility for auditing the employer's records. Other alliances abide by that alliance's
audit determinations. The employer or another alliance may appeal the result of an audit to
the Department of Labor.
(9/7/93)
233
�WORKING GROUP DRAFT
PRIVILEGED ANDvCONriDENTlAfc
SELF-EMPLOYED, NON-WORKERS, PART-TIME AND SEASONAL EMPLOYEES
Sclf-cmploycd individuals, part-time and seasonal employees, and non-working
single individuals and families pay premiums based on their family status.
SELF-EMPLOYED INDIVIDUALS
Self-employed people pay the employer share and the individual share of the
appropriate premium (e.g. individual, couple, single parent family, or two-parent family).
Contributions are made to alliances at least quarterly.
The employer share paid by the self-employed person is equal to the amount
employers contribute for workers in the alliance with the same family status. The
contribution is capped as a percentage of self-employed income, using the percentage caps
applied to small businesses in the alliance.
If a self-employed person also works for another employer, any amount contributed
by that employer — prior to any employer subsidies — reduces the person's premium
obligation as a self-employed person.
The self-employed person and his or her family are also responsible for the family
share of the premium. Subsidies are provided to families whose income is below 150% of
poverty.
All premium payments made by self-employed persons are fully tax deductible.
NON-WORKERS AND PART-TIME WORKERS
All part-time workers and non-workers without a spouse working full-time for a
corporate alliance employer are covered through a regional alliance.
Non-working and part-time single people and families make contributions based on
their unearned income. Non-workers and part-time workers pay towards the employer share
and the family share of the appropriate premium for their family status.
(9/7/93)
234
�WORKING GROUP DRAFT
PRIVILEGED AND •GONFtDEN-'HAfc-
Single people and members of families who work only part-time or part of the year
owe one per worker contribution for the appropriate family status minus any employer
contributions (before subsidies) made on their behalf. The required payment is reduced for
families whose family income is less than 250% of poverty.
Non-workers make such payments to the alliance at the end of the year.
Non-workers also are responsible for family share of the premium. Subsidies are
provided to families whose income is below 150% of poverty.
RETIREES [under review]
Retired people not yet eligible for Medicare who are over 55 years of age and who
meet the Social Security requirements for quarters of work are eligible for a subsidy for the
employer share of their premium.
If a retiree has a working spouse, the contributionfromthe retiree subsidy program
covers only the unpaid portion of the employer share of the premium. The retiree subsidy
equals one per worker contribution for the appropriate family status minus the amount
contributed by the spouse's employer.
If the retiree works part-time, the amount contributed by the retiree subsidy program
is reduced by any employer contributions due to the part-time work.
Alliances administer the retiree subsidies. To be eligible for a subsidy, the person
must submit an application to the alliance. The alliance verifies compliance with the prior
work requirement with the Social Security Administration. Information receivedfromSSA is
held strictly confidential.
The retiree and his or her family are also responsible for the family share of the
premium. Subsidies are provided to families whose income is below 150% of poverty.
Where an agreement exists for employers to pay retiree health benefits, the employer's
responsibility will shift to paying the 20% family share on behalf of the retiree.
Employers who realize a reduction in retiree health costs may be assessed a one-time
payment for the extra cost associated with induced early retirements due to the retiree subsidy
program. [Under review.]
(9/7/93)
235
�WORKING GROUP DRAFT
PRIVILEGED AND •GONFIDENTEAb-
STUDENTS
A full-time student covered under a family's policy receives coverage through the
alliance where he or she attends school. The alliance receiving premium payments from the
family and its employer transfers a portion of the family's premium payments to the alliance
providing coverage.
(9/7/93)
236
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL-
MANAGEMENT OF REGIONAL ALLIANCE FUNDS AND RECORDS
FEDERAL PAYMENTS TO ALLIANCES FOR SUBSIDIES
Alliances will periodically request payments from the Department of Health and
Human Services to make up shortfalls as a result of employer and family subsidies. Alliances
will maintain records justifying subsidy payments, which may be verified and audited by
HHS. Federal payments for subsidies are net of state Medicaid maintenance of effort
payments made to alliances.
ALLIANCE MANAGEMENT STANDARDS
States set standards for procedures, policies, due diligence, and good faith in the
management of alliances. These standards are required, at least, to meet federal minimums.
These standards will include record-keeping, budgeting, credit and collections, internal
controls and internal audit, bonding, and general board oversight.
Alliances are required to publish periodicfinancialstatements, including year-end
audited statements prepared in accordance with generally accepted auditing standards and
bearing an unqualified opinion from an outside, independent auditor.
FAILURE TO PAY PREMIUMS
Federal guidelines require that regional alliances exercise due diligence in collecting
unpaid employer and consumer premium contributions, including the imposition of interest
charges and late fees for non-payment and other credit and collection procedures. Premium
contributions owed to regional alliances are privileged compared to other corporate or
personal obligations in bankruptcy proceedings.
Alliances recover for unpaid premium contributions through a premium assessment
paid by employers and consumers. This bad debt premium assessment is not included in the
alliance's weighted average premium for the purposes of budget enforcement, and is in excess
of any capped employer or consumer premium payments.
(9/7/93)
237
�-
WORKING GROUP DRAFT
PRIVILEGED AND CONFIBENTtAfc
STATE MAINTENANCE OF EFFORT PAYMENTS
States make Medicaid maintenance of effort payments to offset subsidy costs.
Maintenance of effort payments are made to regional alliances by states, and reported and
documented to the Department of Health and Human Services.
ALLIANCE MANAGEMENT OF FUNDS
Regional alliances are required to safeguard premium and subsidy payments held in
alliance accounts. Operating funds are held only in banks meeting the Basel capital
standards, and are transferred into investment accounts at least daily. Investment funds,
which are those held longer than one day, are held in instruments or in separate accounts
collateralized by instruments that qualify as collateral for U.S. Treasury funds held in banks.
ERISA standards continue to apply to corporate alliances in their management of
funds representing employee premium contributions.
STANDARDIZATION OF INFORMATION
The Departments of Labor and Health and Human Services develops standardized
forms — and, in the case of electronic submissions, standardized data fields — for use by
alliances, employers, and consumers. DOL and HHS also develops standards for minimum
frequency of information submission to alliances and for alliance record keeping
responsibilities.
PRIVACY
Federal guidelines ensure the confidentiality of financial and other records submitted
to alliances by employers and consumers, and restrict the merger of information held by
alliance and health status information held by plans.
POWER TO BORROW
Alliances have the power to borrow to cover short-term cash flow shortages created
by mismatching of required payments to plans and receipts of premium payments and
subsidies.
(9/7/93)
238
�WORKING GROUP DRAFT
PRIVILEGED AND CONITDENTIALTAX SUBSIDIES
Employer contributions toward the premium and toward cost sharing for the nationally
guaranteed comprehensive benefit package and for additional benefits phased in by the year
2000 are tax deductible to the employer and not counted as income to the employee.
Any premium payment by a self-employed person for the comprehensive benefit
package is fully tax deductible.
Once alliances are established, contributions continue to be tax-preferred only if made
through an alliance.
Benefits that exceed the fully phased in benefit package are taxable to the employee,
however they continue to be fully tax preferred for 10 years after enactment if they were
provided as of January 1, 1993. To qualify for the continued tax exclusion, employers must
register their benefit plans with the Department of Labor prior to December 31, 1994.
If a benefit exceeds an employer's registered plan as well as the guaranteed benefit
package in the year 2000, employers may continue to deduct the cost as a business expense.
However, employer payments for such benefits are counted as taxable income to the
employee.
Section 125 plans (so-called "cafeteria plans") are amended to exclude employee
contributions for health benefits.
Employers submit annual reports to the Internal Revenue Service and list on employee
W-2 forms the amount of taxable and tax-exempt contributions to health insurance.
(9/7/93)
239
�Agency for Health Care Policy and Research (AHCPR) 43,141
Academic Health Centers
8,86,135,136
demonstration programs
131,140,160
Active duty personnel
205
Activities of Daily Living (ADLs)
152,162
Acute care
200
Administrative simplification 43,78-79,93,101,107,117,140
Adolescent and School-aged youth initiative 185
Adolescent health
137
Adult day-care services
153
Adult eyeglasses and contact lenses 32
Advance Practice Nurses
87,130
Adverse drug interactions
113
Aid to Families with Dependent Children (AFDC)
14,200-202
AIDS 138,148,180,182,187
Alcohol abuse 29,138,146,148
Fraud and Abuse Enforcement Program
172
Alternative Dispute Resolution (ADR)
76,166
Alzheimer's disease
137
Ambulance services
20,24-25, 35,37,40,119
Ambulatory detoxification
29,31
Ambulatory care
20
Ambulatory surgery 199
American National Standards Institute
118
American Medical Association Drug Evaluations
194
American Hospitad Formulary Service
194
Anti-fraud standards for electronic media claims
179
Antimicrobial-resistant infections
149
Antitrust reform
169,170,171
Automobile insurance 9,90,92
Average manufacturer price (AMP) 195
Balance billing
62,190,215
Bankruptcy
65,73,237
Barbiturates 195
Baseline budget
42,96
Behavioral aide services
31
Benefits, exclusions
32,68,219
Benzodiazepines
195
Biological products
20-21,24-25,194
Biostatistical analysis 149
Birth defects
137
Blood pressure check 22
Bone and joint diseases 137
Bonus payments
134
Brand name drugs
196
Breakthrough drugs 43
Budget inflation factor 98
Budget Development 42,52,93
Cancer
22,27,137,148
Cardiovascular disease 137
Case management
31,87,149,153-154,156,188
Categorical programs and formula grants
182
�Centers of excellence 52,88,92,198
Child and spouse abuse services
149
Child abuse and neglect
138
Child care (during clinic visits)
87,183,188
Child health 137,149,182
Chronic and recurrent illnesses
137
Civil False Claims Act
176
Civilian Health and Medical Program - Veterans Affairs (CHAMPVA) 207
Claims payments
118
Clinical preventive services
19, 21-22,180
Clinical practice guidelines
139-141
Clinical Laboratory Improvement Act (CLIA) 107-109
Clinical Laboratory Improvement Advisory Committee (CLIAC) 108
Co-insurance 33-34,54,80,153-154
Co-payments 34, 54,80,90,174,197,208,227
Code of Fair Information Practices
122-123
Commission on Health Benefits and Integration
"common working
file"
121
Communicable diseases
144
community rating
68,70,74,224
Community residential treatment 29
Community clinics
8,128
Community based health information systems 113
Community-based training 129
Computerized patient record 113
Computerized information
59
Conditions of participation (for health plans)
78,105
Confidentiality
78,110-111,114,122,238
Consumer Price Index (CPI) 94,97,196
Consumer surveys
101,105,116
Consumer Education 160
Consumer choice
93,137,140,142,153-154
Consumer Product Safety Commission 124
Consumer protection 44,78,145
Consumer complaints
78,104,161
Contraceptive devices 138
Contracting Requirements for health plans 60
Contributions for Health Coverage
221
Conversion of group policies 161
Cooperative agreements
143
Coordination of benefits
117-120,192
Corporate health alliance
5,14,65,72
Cost sharing 14,19,27,30-31,33-35,39-40,53,80-81, 93,120,153,200-201,208,
227,239
Counseling ssrvices
23
Criminal justice system 187
Custodial care
32
Cytology proficiency teat
109
Data Protection and Seosrity Panel 124
Data Management and Reporting
79
Decision-Making Research
142
Deductibles
34,54,90,194,197,200,208,227
Demographics 83,85,94,184,218,231
�Demonstration Study of Acute and Long-Term Care Integration 163
Demonstration training
131
Dental benefits
19-20,26-27,33,36,41,207
Department of Labor (DOL) 47,64-65,71-73,76,90,99,217,231,233,239
Department of Justice (DOJ) 169,170-172
Department of Defense (DOD)
2,13-14,33,118,124,204-205
Department of Veterans Affairs (VA) 13-14,33,118,124,206,208
Department of Health and Human Services (DHHS) 33,45-48,90,107,119,124,126,127,130,
136,147,152,154-155,160-164,167-168,172,177-178,184-185,187,189,208,217,219220,237-238
Detoxification services
29
Developmental disabilities
131,164
Diabetes
148
Diagnostic services
20-21,25,199
Disabled
4,6,151,157,199-201
Discounts for employers
223
Discounts for low-income families and individuals 222,227
Disease prevention
102,185
Diseases of childhood 137
Disenrollment 79
Disproportionate share payments
203
Drugs 6,20-21,24-25,29,36,38,41,45,146,194-195,196-197
DSM-IH-R
30
Durable medical equipment 20,26,119
Economic growth
7
Education and awareness programs 124
Elderly
6,138,156
Electronic Claims Management
197
Electronic networks
110
Electronic billing
72
Electronic records
113,115
Electronic data interchange
111,113
Electronic data transmission 110
Eligibility
14,30-31,118-120,136,152,154,156,158-159-160,162,164,197,205-206,209,211,227
Emergency services
19,35,40,63,76,163,200
Emotionally disturbed children
33,186
Employed recipients of AFDC or SSI 14,200-202
Employee Retirement Income Security Act (ERISA) 47,54,65,72-73,238
Employee Health Benefits Fund
213
Employer contribution 15,205,207,213,221-225,230-232,235,239
Employer contributions for part-time employees
232
Employer contributions for families with workers in multiple alliances
Employers in the new system
229
Enrollment
6,15,51-53,57-59,61-62,67,70,74,76,81,96-98,103,105,115,117-118,120,
164,175,184,192-194,206,211,224,226-227
Enterprise Liability Demonstration Project 167
Environmental health 138,188
Environmentally related diseases
148
Epidemics
145
Epidemiologic services
149
Essential community providers
73,77,184-185
Ethical Foundations 1,11
Extended-care services
19
�Failure to pay premiums
68,237
False claims 9,174,176
Family choice 228
Family planning clinics
182
Family planning services
19,23,149
Federal risk-adjustment system
84
Federal budget deficit 3
Federal Trade Commission
169-171
Federal Payments to alliances for subsidies 237
Federal Matching Rates
155
Federal Employee Health Benefits Plan (FEHBP)
2,210
Fee schedule 50,62,88-89,92,133,171,198
Fee-for-service
59,61-63,69-70,76-77,89,190,193,200,213
Fertility drugs
195
Fiduciary requirements
72
Financial regulation 49
Financial Reserve Requirements
72-73
Financing health coverage
15,221
Fire safety
106
First Year Bidding and Negotiation Process 95
Fiscal soundness
78
Fiscal oversight
52
Food and Drug Administration (FDA) 33,108,194
Fraud and abuse civil penalties
172
Fraud and abuse trust fund 73,172
Fraud and Abuse
4,9,119,172,179
Generic drugs
196
Genetics
139
Geriatric education centers 131-132
Graduate Medical Education 8,125-128
Grants 84,86,130,136,139-140,143,147,157,160,182-184,186,216
Grievance procedure 76
Gross Domestic Product (GDP)
3,6,134
Grown Rate of Health Care Spending
94
Guararctet-d National Benefit Package
19,80,81,135
Guaranteed Universal Access 86
Guaranty funds
53,73
HCFA 1500 form
117
Health Care Finance Administration (HCFA) 43,117,120
Health Workforce
85,87,125,188
Hesdtfe services research
43,130,137,139-140,143
Health education
20,27,87,130,185,187-188,210
Health care fraud statute
174
Health Professional Shortage Areas 134
Health promotion
102,137,185,210
Health and Wellness Promotion
138
Health Care Access Initiatives
136,180
Health Research Initiatives 137
Health networks
8,86,136
Health Maintenance Organizations (HMOs) 54,128,157
Healthy People 2000 147,185
Hearing aids 32
Heart disease 148
�High-risk patients
21
High-risk youth
138
HIV infection 138,146,180
Home health care
19,24,35,37,40
Home IV drugs
195
Homeless
148,180,182,187
Hospice
19,23,25,35,37,40
Hospital mergers
169
Hospital joint ventures and purchasing arrangements
169
Hospital Market Based Index (HMBI)
198
Hospital insurance tax
199
Dlness prevention research
140
Immunization 21,22,131,146,148
In vitro fertilization services 32
Indian Health Scholarship Program 188
Indian Self-Determination and Education Assistance Act
209
Indian Health Service
13,14,188,209-210
Industrial medicine
88
Infant morbidity
148
Infectious diseases
138,148
Information systems 43,78-79,101,105-106,110,112-114,116,141,149,164,181
Infrastructure
85-86,110,112,136,139,183,210
Infrastructure Resource Development 139
insulin 25,194
Insurance reform
193,217
Insurance premiums 16-17,104,135,203,210,216
Interactive media
59
Interim insurance regulations 217
Intermediate care facility for the mentally retarded 158
Internal medicine
125-126,129
Internal Revenue Service (IRS)
17,162,199,239
Investigational treatments
32,136
Laboratory and diagnostic services
20-21,25
Leg, arm, back and neck braces
26
Loan forgiveness
129
Long-term care
4,6,80,88-89,92,141,146,151,153,155-156,159-165,198,200
Long-term care insurance policies
159
Long-Term Care Insurance Advisory Council 160
Low-birthweight babies
148
Low-income individual
6,49,215
LTC System Performance Review
164
Malpractice reform
9,66
Mammogram 22
Managed care 131,192-193
Management of regional alliance funds and records 237
Marketing
59,78,82
Maternal and child health block grant
182
Maternal and child health
149
McCarran-Ferguson Act
171
Medicaid acute care 200
Medicaid
172,174,195-197,200-203,210,215,237-238
Medical records
78,105,141
Medical Treatment Effectiveness Program
140
�Medical research
7
Medical social work 176
Medical communications technology 130
Medical liability pilot program
168
Medicare 2,6-9,13-14,23-24,46,54,77,93-95, 107,117, 121,125,128,
133,135,151,153,159,164,172,174,176-177,184,189-199, 201,205,208,210-211,220,235
Medicare managed care
192-193
Medicare alternative payment methodologies 193
Medicare cost savings
198
Medicare outpatient prescription drug benefit
194
Medicare DUR program
197
Medicare Point-of-Service
193
Medicare-Technical Advisory Group on Hospital Administrative Issues
120
Medigap insurance
80,193
Mental disorders in the elderly and their caregivers 138
Mental Health 19,28,30-33,36,39,41,131,138,180,185-188
Mental disorders in children and adolescents
138
Mental retardation
152
Mental Health Systems Improvement Program
186
Migrant labor populations
17,180
Migrant health centers
182
Military health system
204
Military retirees
205
minorties
129-130,148,165
Multiple employer welfare arrangements (MEWAs) 217
Nation Board Review 95
National Highway Traffic Safety Administration
124
National Health Board 1,19-21,28,33,42-49,52,62,75,
78,80-84,94-95,97,99-101,104-105,111,116-119,121,124,166,175,192,215127
National health expenditures 155
National risk pool
219
National Conference of Commissioners on Uniform State Laws
167
National Health Corps Loan Repayments
National Information Infrastructure 110,112
National Institute of Standards and Technology in the Department of Commerce
124
National Per Capita Baseline Target 94-96
National enrollment
file
120
National Council on Graduate Medical Education
126
National Health Data Advisory Council
116
National Institute of Standards and Technology
118,124
National Practitioner Data Bank
167
National health security care 14,111
National inflation factor
94,96,99
National Institutes of Health (NIH) 33,43,137,139
National Council on Prescription Drug Programs
117
National loan programs
8
National quality management program
100-101,105-107,168
National Association of Insurance Commissioners (NAIC)
197,219
New drug code (NDC)
196
NIH intramural research
139
NIH Associate Director for Prevention
139
Non-medical case management
87,188
�Non-profit corporation
56
non-workers 234-235
Nurse practitioners
87,108,125,130
Nurse training
131
Nurse midwives
108,130
Nurse clinician
132
Nurse anesthetist
132
Nursing special projects
132
Nutrition
27,87,138,146,188
Occupational therapy 23,25,88
Office for Research and Demonstrations in the Health Care Financing Administration
Office of Management and Budget (OMB)
46
Office of Personnel Management (OPM)
211-214
Oral polio vaccine
22
Orthodontia
19,32,34,36,38,41
Orthotics
20,26,119
Out-of-network providers
34
Out-of-pocket payments
Outpatient Psychotherapy
30
Pap/pelvic exams
22
Part-time workers
232,234
Patient outcomes research teams (PORTs)
140
Patients rights
75,78,106,124
Payment transfer system
202
Pediatrics
125,129
Peer Review Organization (PRO)
100,107,121
Per-case capitation payments 91
Per-worker contribution
222-224
Performance reports 101-102
Performance evaluations
120
Perinatal health
13
Pharmaceutical companies
45,57, 197-198
Pharmacies
114,117,196
Phase-in of states
215
Physical or occupational therapy
23
Physician network joint ventures
170
Physician's Assistants 108
Point-of-Service system
114
Portability
63,219
Practice guidelines and research findings 103
Preemption of state laws
8,73
Pregnancy-related services
19,23
Premium inflation factor
97-98
Premium rates
52,68,74,218
Premium check-off system
103
Prescription drugs
6,20-21,24-25,36,38,41,194,197
Prevention
4,27,30,33,36,38,41,102,119,131,137-140,144,147,
148,185-188,210
Primary care physicians
8,69,87,129,133
Priority Health Problems
144,147
Priority Health Training Programs
131
Prisoners
18
Privacy
78,110-112,114,116,122-124,238
143
�Private room accommodations
32
Private sector health care spending 95
Prosthetic devices
26,95
Provider Advisory Board
57
Provider relations
119
Provider profiling
119
Provider fee schedule negotiation
117
Psychiatric rehabilitation
31
Psychotherapy
30,36,39
Public health training 132
Public health data systems
116,149
Public health 8,46,85-87,100,102,116
Quality Performance Report 43,60,69
Quality information and accountability program
100
Quality of care
100-101,104-105,107,113,139,142-143,189
Quality and outcome research
139
Rare diseases 136
Rates of reimbursement
133,208
Re-training of specialist physicians
Reconstructive surgery
34,38
Regional quality programs
Regional educational networks
32
Regional health alliances
14,32,47-48,50,56,65,93,127,147,
209-211,215,231
Rehabilitation services
20,25,80,156
Reinsurance 75,83
Remittance advice
118
Reproductive health 138
Requirement for Certificate of Merit 166
Research trial 32-33
Residency positions
87,125-127
Residential treatment centers 29,187
Retirees
15,205,235
Risk management
167
Risk adjustment
51,61,70,75,83,84,102,141,190,192,202,231
Risk behavior reduction
185
Rural health networks
86,136
Rural 4,8,14,65-66,68,70,84-87,108,130-131,134,136,165,180-181,187,199
Rural electric or telephone cooperatives
14,68
Rural health provider grant 130
Relative Value Units (RVUs) 133
Ryan White HIV/AIDS program
182
Sanitation and environmental health facilities
188
School-based clinics 8,183,185
Security standards
123-124
Self-employed
14,16,56,234
Self-funded health plans
73,219-220
Self-referrals 173
Service connected disabilities 206-207
Service delivery
42,142
Severe mental disorders
138
Sex change surgery and related services
32
Short-term voluntary cost containment
220
�Short-term inpatient care
23
Single rate manual
218
Single-payer option 54,65
Skin cancer prevention
27
Small business
6,230
Social services - medical
23-24,149,183
Social support and home visiting services
87
Solvency
52-53
Specialties
125-126
Speech-language pathology 23
Standard and unique identification numbers 117,119,232
Standard Health Insurance Claim Form
117
Standard enrollment form
118
State Systems Development Program 186
State maintenance of effort payments 238
State Administration 153,156
State certification
88,92
State regulation
51
State laws
8,73,76-77,88,90,164,167
Statistical and epidemiologic techniques
139
Student loan 87
Students
17,129,131-132,236
Substance-abuse
19,33,36,39,41,131,138,180, 186-188
Supplemental coverage
53,142,159
Supplemental Security Insurance (SSI) 14,156,164,200-202
Surgical professional services 20
Taft-Hartley Act
14,65-66,68-70
Targeted screening tests
21
Tax incentives 87,151,159,162
Teaching hospitals
128,135
Technical assistance 42,83,86,95,103-104,114,119,145,150,160,186,188,
210,216
Terminally ill 23-24,35,37
Terminated employees
15
Territories
17
The Jones Act
90
The Longshoreman's Act
90
The National Health Services Corps 182
The Universal Drug Claim Form
117
Therapeutic family or group homes 29
Tobacco
138,146,148
Tort Reform 166
Toxic environmental pollutants
144
Training
7-8,21,23,26-27,125-132,139,146,148,161,163,187,210
Training of underrepresented minorities
129
Transportation 24-25,51,87,146,148,181,183,201
Treasury Department 162
UB-92
117
Uncompensated care 95
Underserved populations
8,136
Undocumented persons
16,200
Unemployed workers 15
Unified data systems 145
�'
Uniform Health data sets
110
Uniform Periodic Pajnjient of Judgements Act
167
Uniform claims form 72
Unintenti9|jal injuries 137
Unique irfijfvidual identifier 123
United SiM'a Postal Service 14,65
United States Pharmacopeia 194
Urban charity hospitals
136
Urban neighborhoods 8,84
Urgent care 63,77
Utilization review
25,62-63,69,79,119,176
Vaccine development 138
Valuative sciences
103
Veterans Affairs revolving funds (VA)
Violence
131,138,145,148
Vision and hearing care
20,27
Vouchers
153,157
Vulnerable populations
44,116,138,181-184
Waiting periods
68,74,219
Waivers
120
Weighted-average premium 15-16,51,60,66,93,96-98,200,203,224,230,237
Welfare recipients
202
Well-baby checkup
35,37,40
Workers' Compensation Insurance
88-89
Workforce Development
85,87,99,125,129,132,188,231,233
Workgroup for Electronic Data Interchange (111,113) 118
�THIS DOCUMENT REPRESENTS A PRELIMINARY DRAFT OF THE
PRESIDENT S HEALTH REFORM PROPOSAL. THIS DOCUMENT WILL BE
REVISED TO REFLECT REFINEMENTS OF THE POUCY AS THE POUCY IS
REVIEWED.
THE NUMBERS PRESENTED IN THIS DOCUMENT ARE PRELIMINARY
AND ARE UNDER REVIEW BY THE WHITE HOUSE, THE OFFICE OF
MANAGEMENT AND BUDGET AND RELEVANT DEPARTMENTS.
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
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Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Security Act - Working Group Draft] [4]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621466" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
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William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
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5/7/2015
Source
A related resource from which the described resource is derived
17621466
12093636
42-t-12093636-20060885F-Seg5-008-006-2015
-
https://clinton.presidentiallibraries.us/files/original/187345a73894d8a402b63aac703973e6.pdf
9f9a1f10e075879c3bdfd2d5fe95b633
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [3]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�WORKING GROUP DRAFT
PRIVILEGED AND 'CONriDENTIAL
PUBLIC HEALTH INITIATIVE
The public health system and the reformed health care delivery system share a
common purpose: to improve the health of the American population at an affordable cost.
While health reform strengthens the personal care delivery system, an enhanced public
health system also plays an essential role to:
•
Protect Americans against preventable, communicable diseases, exposure to
toxic environmental pollutants, harmful products and poor quality health care.
•
Identify and control outbreaks of infectious disease and patterns of chronic
disease and injury.
•
Inform and educate consumers and health care providers about their roles in
preventing and controlling disease and the appropriate use of medical services.
•
Define and validate new prevention and control interventions.
The public health initiative builds on the capability of health alliances and plans to
reach out to their participants, providing them with information about prevention and
appropriate use of medical services. The initiative promotes readiness and flexibility in the
public health system by strengthening core functions at the local, state, and federal level. It
also focuses attention on specific health problems of regional and national significance to
consolidate categorical programs into an integrated health system, reducing administrative
burdens.
The public health initiative repairs, strengthens and consolidates essential federal, state
and local public health functions through three approaches:
•
Improving the performance of the core functions of public health.
•
Authorizing aflexiblepool of resources to address priority health problems of
regional and national significance.
(9/7/93)
144
�WORKING GROUP DRAFT
•
PRIVILEGED AND CONFIDENTfaMr—
Expanding federal support for unified data systems, technical assistance and
information networks.
Because dealing effectively with public health problems requires the coordinated
involvement of multiple parties, the initiative is designed to foster inter-agency collaboration
and public-private partnerships, including close working relationships between public health,
community groups, alliances, and plans.
CORE PUBLIC HEALTH FUNCTIONS
Health reform clears the way for the emphasis of public health activities to shift away
from the direct delivery of health services. It positions public health to maintain a strong
defense against preventable diseases and conditions that affect local communities and to work
with the health delivery system to address them. The following essential functions are
supported:
•
Health-related data collection, surveillance, and outcomes monitoring —
The basic tool for the health care system as a whole, providing for regular
collection and analysis of information on key dimensions to ensure timely
awareness, decisions, and interventions related to epidemics, emerging patterns
of disease and injury, prevalence of risks to health, and outcomes of personal
health services.
Protection of environment, bousing, food, and water — Enforcement
functions related to air pollution (including indoor air), exposure to high lead
levels, water contamination, handling and preparation of food, sewage and solid
waste disposal, radiation exposure, radon exposure, noise levels and abatement,
consumer protection and safety.
Investigation and control of diseases and iryuries — Identification,
containment and provision of appropriate emergency and treatment resources
for community-wide health problems, including emergency preparedness and
control of violence.
(9/7/93)
145
�WORKING GROUP DRAFT
PRIVILEGED AND^GONFIDENTIAL -
Public information and education — The mobilization of communities and
motivation of individuals to reducerisksto health, such as tobacco use, abuse
of alcohol and other drugs, sexual activity that increases vulnerability to HIV
infection and sexually transmitted diseases, inadequate nutrition, physical
inactivity, and childhood immunization.
Accountability and quality assurance — Enforcement functions to ensure
that providers, clinics, hospitals, long-term care facilities, laboratories, and
allied health providers meet established standards through licensure,
certification, and inspection.
Laboratory services — The provision of individual testing and pathology
services, including the system of state laboratories that screen for metabolic
diseases in newborns, provide toxicology assessments of blood lead levels and
other environmental toxins, diagnose sexually transmitted disease and
tuberculosis requiring partner notification, test for cholera and other infections
or food-bome diseases, and monitor the safety of water and food supplies.
Training and education — Ensuring adequate training with special emphasis
on public health professionals such as epidemiologists, biostatisticians, health
educators, public health administrators, sanitarians, and laboratorians.
Leadership, policy development, and administration — Public health's
responsibility to define health goals, standards, and policies that affect the
health of whole communities; to define health issues of major importance and
devise interventions to address them; to build coalitions with related public
sectors such as housing, public transportation, and agriculture; and to ensure
accountability for public resources devoted to health. Public health coordinates
closely with the leadership of alliances and plans, mobilizing community
support for public health policies and initiatives.
(9/7/93)
146
�WORKING GROUP DRAFT
PRIVILEGED ANDteONFtDENTlAir
Funds arc distributed to states using a formula based on three weighted factors that
take into account population (one-third), poverty rate (one-third), and years of productive life
lost (one-third). No state receives an allocation less than the State's grant in the last year
preceding enactment of this initiative. To receive funds under the formula, states are required
to maintain their current level of support for public health and prevention activities at no less
than the average of the past two years' funding level.
Funds are used to develop and strengthen public health core functions at the state and
local level, including county, district and municipality levels. Accountability for effective use
of state formula grant funds are monitored through reporting progress in achieving health
improvements using a common data set of health outcomes developed as a part of the Healthy
People 2000 initiative.
PRIORITY HEALTH PROBLEMS OF REGIONAL AND NATIONAL SIGNIFICANCE
Additional funds support a federal program to develop innovative strategics for
addressing priority health needs of regional and national significance. The purpose of this
program is to address specific issues in ways that are responsive to the needs of populations
served by alliances and plans and that consolidate rather than proliferate authorities,
management structures, and funding and reporting requirements.
Congress establishes some priorities for funding through dedicated appropriations. The
Secretary of the Department of Health and Human Services identifies other areas of priorities
relying on recommendations of a national advisory board representing the perspective of the
Public Health Service, states and local public health agencies, as well as regional health
alliances and plans.
The Secretary solicits proposals for innovative interventions that link public health
agencies and the delivery system to achieve measurable reductions in the incidence of illness
and injury. Grants are made through competitive awards to state and local government
agencies, not-for-profit organizations and research institutions. As effective interventions
from these projects are identified, information is disseminated to facilitate their adoption in
other communities.
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The following are examples of the types of regional and national priority health issues
to be addressed:
•
Infectious diseases
Immunization — Education and outreach to ensure the broadest possible
immunization coverage against childhood vaccine-preventable infectious
diseases, as well as influenza, pneumonia, hepatitis B, and tetanus among
adults.
HIV/AIDS — Education for prevention, confidential screening programs, and
partner notification programs particularly in urban areas with special focus on
minorities, women, children, and adolescents.
Tuberculosis — Case location, targeted education, and training for providers
regarding treatment and control measures, with special attention to its spread
among homeless people.
•
Chronic and environmentally related diseases
Diabetes — Community-oriented diabetes education and control programs,
directed especially to minority and low-income populations at highest risk,
appear to offer economics of scale to complement individually provided
medical services.
Violence and injury control — The leading cause of years of potential life
lost among Americans and the leading cause of death among children,
adolescents, and young adults, this category requires close collaboration among
several systems, including law enforcement, education, transportation, and
recreation and parks. It is linked to alcohol misuse and requires an integrated
multi-faceted set of interventions.
•
Health-related behavior and other priority issues
Tobacco prevention — The increasing incidence of smoking among
adolescents and women poses futurerisksfor heart disease and cancer, as well
as low-birthweight babies and infant morbidity.
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Comprehensive school health — Furthering development of links between
health and education in a nascent program of comprehensive school health
program.
Maternal, child health, and family planning — With continued special
attention is needed to provide education and outreach to prevent infant
mortality and morbidity. In addition, the persistent and intractable incidence of
adolescent and unwanted pregnancy calls for targeted education and outreach in
support of family planning services. Closely linked to social services,
interventions include targeted public education, programs of home visiting, case
management for children with special needs, and child and spouse abuse
services.
ENHANCEMENT OF FEDERAL CAPACITY TO SUPPORT PUBLIC HEALTH
In support of federal assistance for core public health functions and categorical
activities, additional funds improve direct federal capacity, including:
•
Federal surveillance and health statistics, laboratories, and epidemiologic
services — Whether fighting the "old" diseases such as tuberculosis and
cholera or "newer" ones such as Lyme disease or antimicrobial-resistant
infections, public health's basic tools are data collection and biostatistical
analysis, laboratory capacity, and epidemiologic expertise. An effective and
efficient central capacity at the Federal level provides for economics of scale in
addressing many of these health problems.
An essential part of reinventing public health is the consolidation of currently
fragmented public health data systems and the integration of these systems with
the regional and national data network described in the Information Systems
chapter. The need for separate public health data systems is minimized to the
extent that the elements included in the regional and national data network
support public health functions. The unified health information system
provides timely information to support health policy development, budget
formation, efficient program administration and general improvement of the
public's health and does so at the lowest cost and burden.
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Technical assistance and national health information networks — To
support the refocus of public health at local, State, and Federal levels and the
application of findings from priority health programs described above, technical
assistance and information networks are needed to link Federal, State, and local
public health agencies and various grant-supported programs carried out by
State, local, and not-for-profit agencies. Informationfromthese networks and
the health data system provide the basis for regular reports to the President and
the Congress for purposes of monitoring the effectiveness of this initiative.
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LONG-TERM CARE
A new long-term care program, created through Title XV of the Social Security Act,
encompasses five components:
Expanded home and community-based services.
Improvements in Medicaid coverage for institutional care.
Standards to improve the quality and reliability of private long-term care
insurance and tax incentives to encourage people to buy it.
Tax incentives that help individuals with disabilities to work.
A demonstration study intended to pave the way toward greater integration of
acute and long-term care.
HOME AND COMMUNITY-BASED SERVICES
The American Health Security Act increases federal authority to provide home and
community based services to individuals with severe disabilities without regard to income or
age.
The expanded home and community-based service program is a federal/state
partnership. The federal government provides most of the funding. The state contribution is
set roughly equal to current state Medicaid and some state-only spending on the severely
disabled. When fully implemented, federal funding is capped based on the estimated cost of
serving the eligible population.
The Home and Community Based Services program supplements other coverage for
care. It does not reimburse for services to which the individual is entitled under the
nationally guaranteed, comprehensive benefit package, Medicare or private insurance.
Each state submits for federal approval a plan outlining the implementation of
expanded home and community-based services.
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Eligibility: The Secretary of the Department of Health and Human Services issues
regulations establishing uniform eligibility criteria, which states implement using a standard
instrument developed by the Department. To be eligible, an individual meets one of the
following conditions:
•
Requires personal assistance, stand-by assistance, supervision or cues to
perform three or more of the following five activities of daily living (ADLs):
eating, dressing, bathing, toileting and transferring in and out of bed.
•
Presents evidence of severe cognitive or mental impairment as indicated by a
specified score on a standard mental status protocol developed by the Seaetary
of the Department of Health and Human Services or
A score specified by the Seaetary on the standard mental status
protocol described above, as well as evidence of the need for constant
supervision because the applicant poses a significant danger to self or
others, has multiple and significant behavior problems, or is unable to
administer prescribed medications, or
•
Has severe or profound mental retardation as indicated by a score of 36 or less
on a standard intelligence test.
•
For children under the age of six, is dependent on technology and otherwise
requires hospital or institutional care.
Benefits: At a minimum, States provide to each eligible individual a standardized
assessment and an individualized plan of care. Personal assistance services are available
throughout all states for every category of eligible participant. Personal assistance services
are defined as "assistance (including supervision, standby assistance, and cuing) with activities
of daily living". Both agency-administered and consumer-directed personal assistance
services are available. Consumer-directed services are those provided by individuals who are
hired, trained and managed by the person receiving the services.
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States have theflexibilityto design and define their community based services system
and to provide any other community based long term care service including: case
management, homemaker and chore assistance, home modifications, respite services, assistive
technology, adult day services, habilitation and rehabilitation, supported employment and
home health services not otherwise covered under Medicare, private insurance or through the
basic health plan. Room and board are not covered services.
Services other than those listed above may also be covered; they may be delivered in a
person's own home, a range of community residential arrangements, or outside the home,
except in licensed nursing homes or intermediate care facilities for the mentally retarded
(ICFs/MR).
States may also elect to offer vouchers or cash directly to eligible individuals or to
capitate benefits to health plans or other providers.
Consumer choice regarding services and providers is honored by states to the extent
possible.
Co-insurance: Eligible individuals pay co-insurance to cover a portion of the cost of
all services they receive according to a sliding scale. Income may be adjusted downward to
take medical expenditures into account.
•
Individuals with incomes between 150 and 249% of the federal poverty
standard contribute 10% of the cost of services; between 250 and 399% of the
federal poverty standard they contribute 25%, and over 400% of the federal
poverty standard individuals pay 40% of service cost.
•
States have the option of imposing nominal cost sharing on individuals with
incomes below 150% of the federal poverty standard.
•
Co-insurance is calculated based on the amount paid by the program.
Providers must accept the combined program reimbursement and co-insurance
as payment in full.
State Administration: To implement the program, the state plan:
•
Designates an agency or agencies to administer the program.
•
Specifics benefit and payment policies.
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•
Defines services included in the state program in addition to personal
care/personal assistance and any limits on those services.
•
Specifies how the state determines eligibility, develops care plans (including
responding to consumer choice), allocates resources, coordinates services
(including how case management will be used in the program and for whom),
administers co-insurance requirements, reimburses providers, administers
voucher/cash payments (including compliance with applicable Social Security
and unemployment insurance laws), ensures quality (including safeguarding the
health and safety of consumers), defines (as applicable) licensure or
certification requirements for provider agencies, obtains consumer input in
services monitoring (including measuring consumer satisfaction with services).
•
Specifies how states will comply with federal requirements for claims
processing and information to be specified by the Secretary of HHS.
•
Describes how the program will be managed and resources allocated during the
phase in.
States hold public hearings on the community services plan to solicit input from
individuals in the state with disabilities and their representatives. The state plan reflects input
from these hearings.
Administrative Costs: The costs of administering the program (including the
eligibility determination process and care planning) are included under the national budget
ceiling. The Secretary of HHS defines administrative costs and specifies limits on the
proportion of expenditures that may be used for such costs.
Funding: The Department of Health and Human Services allocates funds for the
program to the states.
The Department of Health and Human Services establishes a national budget for home
and community based services. States may claim federal matching funds up to maximum
budgeted amount, which is based on the average estimated cost of serving individuals eligible
for the program when the program is fully implemented.
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The maximum budgeted amount (or national expenditure ceiling) increases annually
consistent with the rate of increase allowed in the national budget for health care and changes
in the number of people over the age of 75. The Secretary determines a formula to allocate
funds to the states based on:
•
Estimated number of individuals with severe disabilities.
•
Age and gender distribution in the population.
•
Prevalence of poverty.
•
Average wage for individuals in service occupations in the state.
Federal Matching Rates: The Secretary of the Department of Health and Human
Services determines federal matching rates for allowable costs according to a formula that
reflects the total estimated cost of fully funding the program for the eligible population minus
the amount spent by states under Medicaid and state only programs on community long term
care services for the eligible population.
The federal matching rate is approximately 30 points higher than the current Medicaid
FMAP rate, but is in no case lower than 75% or higher than 95%.
States are prohibited from using other federal dollars to match the federal share under
the new program. Current restrictions under Medicaid on use of donations and taxes apply.
Funding phases in beginning in fiscal year 1996. In that year, states receive 20
percent of their allocation under the national budget, 40 percent in FY-1997, 60 percent in
FY-1998, 80 percent in FY-1999 and 100 percent in FY-2000. Minimum benefit
requirements do not take effect until the program is fully implemented. States specify how
they will phase in the program; however, income cannot be used as a criteria for allocating
resources during the phase in.
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TREATMENT OF MEDICAID COMMUNITY LONG TERM CARE
The new program of community based services for people with severe disabilities is
available to all people, regardless of income — including low income people previously
served under the Medicaid program. Some people now receiving Medicaid community LTC
services, however, do not meet the functional eligibility requirements of the new program.
To avoid reductions in service for this population, current Medicaid programs for those who
do not meet the eligibility criteria of the new program arc replaced with a new community
based LTC program for low income people.
The Medicaid community LTC services which are combined into the new low income
program are: personal care, home and community based waiver services,frailelderly,
Community Supported Living Arrangements, the long term care portions of Medicaid home
health, targeted case management, clinic services and rehabilitation services.
Eligibility: States must continue to serve all individuals currently receiving Medicaid
community LTC services. Beyond current recipients, states set functional eligibility standards
for the low income program and use the same intake and assessment process that is used for
the new program for people with severe disabilities. States set financial eligibility at a point
that is no lower than Supplemental Security Income (SSI) eligibility and no higher than the
federal poverty standard or the State Supplemental Payment level, whichever is higher.
•
States set resources limits, but they cannot be lower than $2,000 or exceed
$12,000 per individual.
•
States have the option to apply asset transfer prohibitions.
Benefits: Eligible individuals are assessed and receive a plan of care. There is no
further entitlement to community services. States define the services to be included in their
program and can incorporate at their discretion any community long term care services
previously funded under Medicaid.
State Administration: To implement the program, states develop a state plan which
is a component of the state plan for the new LTC program for people with severe disabilities,
addressing:
•
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the definition of functional and financial eligibility requirements.
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•
the designation of an agency or agencies to administer the program and
clarification of how the low income program will be integrated with the new
program for people with severe disabilities.
•
specification of the benefit and payment policies and definition of services.
•
specification of how the state develops care plans, allocates resources,
coordinates services and assures quality.
States may distribute grants through medical vendor payments to providers, through
vouchers or cash payments to individuals, or through capitated payments to providers such as
HMOs.
Funding: Funding for the low income program is based on each state's FY 1993
Medicaid expenditures. Until full implementation, this amount increases according to HHS
projections of the growth rate that, if Medicaid had been left unchanged, would have occurred
in Medicaid community based LTC expenditures on behalf of low income people who are
disabled but do not qualify for the new LTC program for people with severe disabilities.
At full implementation, expenditures under the low income program are pooled with
the funds for the new LTC program for people with severe disabilities and are subject to the
national budget ceiling.
Administrative Costs: Administrative costs for the low income component of the
program are treated in the same manner in which they are treated under the new LTC
program.
Match Rates: The current Medicaid FMAP rate applies to all expenditures for
eligible individuals served in the low income program.
Maintenance of Effort: In the combined program, states must continue to serve at
least the same number of low income individuals as they served in their FY 1993 Medicaid
community LTC program.
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OPTIONAL COMBINED CAP FOR COMMUNITY AND INSTITUTIONAL LTC
At state option, states may combine into a single capped program the new community
LTC program expenditures, former Medicaid community funding, and Medicaid institutional
expenditures for any or all categories of recipients of LTC, and create a new, separate
program.
If a state elects to operate this new combined capped community/institutional LTC
program, the state has increased flexibility to set financial or functional eligibility standards.
The Secretary of HHS will specify in regulation the formula for developing the cap for
this program, and the formula for growth rates in the cap.
IMPROVEMENTS TO MEDICAID COVERAGE FOR INSTITUTIONAL CARE
The American Health Security Act amends Title XIX of the Social Security Act to
provide the following improvements in coverage for institutional care under Medicaid:
•
States establish a medically needy program for all residents of a nursing home
or an intermediate care facility for the mentally retarded.
•
States permit residents of nursing homes and intermediate care facilities for the
mentally retarded to retain $100 per month as a living allowance.
That amount is excluded from calculation of an individual's
obligation to spend down private assets to qualify for Medicaid
coverage.
•
(9/7/93)
States allow single residents of nursing homes and intermediate
care facilities for the mentally retarded to retain up to $12,000 in
personal assets in determining eligibility for Medicaid coverage.
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REGULATION OF AND TAX INCENTIVES FOR PRIVATE LONG-TERM CARE
INSURANCE
A long-term care insurance policy is any insurance policy,rider,or certificate
advertised, marketed, offered, or designed to provide coverage for not less than 12
consecutive months for each covered person on an expense incurred, indemnity, prepaid, or
other basis for diagnostic, preventive therapeutic, rehabilitative, maintenance, or personal care
services provided in a setting other than an acute-care hospital.
Long-term care insurance policies include:
•
Group and individual annuities and life insurance policies,ridersor certificates
that provide directly or indirectly, or that supplement long-term care insurance
•
Policies,ridersor certificates that pay benefits based on cognitive impairment
or loss of functional capacity.
Long-term care insurance excludes any insurance policy,rideror certificate that
primarily offer supplemental coverage for Medicare, hospital expenses, medical and surgical
expenses, hospital confinement indemnity coverage, major medical expense coverage,
disability income or related asset protection, accident coverage, coverage in the case of
specified diseases or specified accidents, or limited health insurance coverage.
The definition of long-term care insurance also excludes life insurance policies that
provide accelerated payment of benefits and a lump-sum payment and in which neither the
benefits nor eligibility are based on the need for long-term care services or the standard
eligibility triggers.
Any other product advertised, marketed, or offered as a long-term care insurance
policy,rider,or certificate is considered a long-term care insurance policy subject to these
limitations.
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Consumer Education: The federal government establishes a grant program to states
and organizations for fiscal year 1996-98 provide grants for consumer information,
counseling and technical assistance to educate consumers about long-term care insurance.
Regulation: Minimum long-term care insurance product and business standards and
requirements for monitoring and enforcing insurance industry practices and state regulatory
systems are established. States may exceed these minimum standards. The Department of
Health and Human Services awards grants to states to establish demonstration programs to
improve enforcement of long-term care insurance.
A Long-Term Care Insurance Advisory Council is appointed by the Secretary of HHS
to advise and assist the Secretary on matters relating to long-term care insurance and to
monitor the development of the insurance market. The Council consists of five members
chosen for their expertise in provision and regulation of long-term care insurance.
The Secretary of the Department of HHS, after considering recommendations of the
Council, promulgates federal regulations for long-term care insurance offerings within two
years of enactment of the American Health Security Act. At a minimum, Federal regulations
require that policies:
•
Provide for nonforfeiture of benefits in the event of policy lapse.
•
Offer inflation protection at an annually compounded benefit rate.
•
Do not limit payment of benefits based on pre-existing conditions that are not
documented at the time of sale.
•
Require third party notification of pending lapse and reinstatement for up to
five months after termination if lapse was due to incapacitation.
•
Clearly define covered services, benefit eligibility triggers, premiums and
expected increases, and the tax treatment of the long-term care insurance
policy.
•
Define eligibility for benefits based on an independent professional functional
assessment.
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•
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Contain requirements concerning continuation and conversion of group policies
and other regulations for group policies.
Federal regulation of business practices related to long-term care insurance include,
but are not limited to:
Requirements for states to establish an appeals process for beneficiaries.
Mechanisms for timely resolution of consumer complaints.
Provisions regarding adequate responses to claim denials.
Training and certification of agents.
Limits on commissions paid to agents.
Requirements for premium approval and pricing assumptions.
Prohibitions against improper sales practices.
Association endorsement or sale of policies.
The Secretary of the Department of Health and Human Services also may regulate the
long-term care insurance aspects of Continuing Care Retirement Communities.
States implement and enforce standards for long-term care insurance. Within two
years of enactment of the American Health Security Act, states submit to the Secretary of the
Department of Health and Human Services a plan describing the implementation and
enforcement.
If a state fails to submit a plan or its plan is not approved, no long-term care
insurance policy may be sold in the state until it submits an acceptable plan. Penalties apply
for agents and insurers who fail to comply with these requirements.
States submit annual reports; the Department of Health and Human Services conducts
periodic audits of state performance.
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Tax Treatment of Premiums for Long-Term Care Insurance: The Internal
Revenue Code is amended to provide for:
•
The exclusion from taxable income of amounts paid for services or as cash
payments under a qualified long-term care policy.
Requirements for a policy to qualify for tax purposes, including
criteria that trigger eligibility for benefits, shall be developed by
the Secretary of HHS in consultation with the Treasury
Department.
•
The maximum daily benefit excluded is $110 in 1994 with annual adjustments
based on increases in the wage price index or an alternative selected by the
Treasury Department in consultation with the Department of Health and Human
Services.
•
The cost of qualified long-term care policies as defined in this section may be
included as an itemized medical expense deduction.
•
The definition of medical expenses is clarified to include qualified long-term
care services.
•
Employer-paid premiums for long-term care insurance are treated as
deductions for employers and excluded from taxable income for employees.
TAX INCENTIVES FOR INDIVIDUALS WITH DISABILITIES WHO WORK
Employed individuals who require assistance with activities of daily living and who
purchase personal care and personal assistance services may obtain a tax credit for S percent
O
of their costs, up to a maximum of $15,000 per year.
The Internal Revenue Service issues regulations defining personal care/personal
assistance services eligible for the tax credit, including:
•
Personal services, including, but not limited to, those appropriate to carrying
out activities of daily living in or out of the home.
•
Home services, including meal preparation and shopping.
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Assistance with life skills, including money management.
Communication services.
Security services, including monitoring alarms.
Mobility services.
Work-related support services.
Service coordination.
Assistive technology services, including evaluation and training of family
members.
Emergency services, including substitute services.
DEMONSTRATION STUDY OF ACUTE AND LONG-TERM CARE INTEGRATION
The Secretary of the Department of Health and Human Services conducts a
demonstration program for integrated models of acute and long-term care services for
individuals with disabilities and chronic illnesses. The demonstration:
•
Defines organizational arrangements to integrate models of acute and longterm care services.
•
Assesses the operational and financial viability of the integrated models
developed and tested.
•
Evaluates the impact of integrated models.
•
Determines the appropriateness of including these models as program options
in the managed competition structure.
The Secretary of the Department of Health and Human Services establishes minimum
benefit specifications. Sponsors of integration models include the following services:
•
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Comprehensive medical benefits.
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•
Specialized transitional benefits.
•
Long-term care benefits.
•
Specialized habilitation services for participants with developmental disabilities.
The Secretary of the Department of Health and Human Services establishes
eligibility criteria for the demonstrations including one or more of the following groups:
•
Individuals with disabilities covered under the basic health insurance program.
•
Medicare beneficiaries who qualify for Part A and participate in Part B.
•
Medicaid beneficiaries eligible for Medicare or otherwise eligible for long-term
care services under the SSI program.
The Secretary of the Department of Health and Human Services establishes criteria for
sponsor participation. The criteria assesses financial controls, commitment to the goals of the
demonstration, information systems and compliance with applicable state laws.
Demonstration sponsors provide enrollment services, client assessment and care
planning, simplified access to services, on-going integrated acute- and chronic-care
management, continuity of care across settings and services, quality assurance, grievance and
appeal procedures, member services and strong consumer participation.
LTC SYSTEM PERFORMANCE REVIEW
The overall performance of the new program will be assessed in terms of quality, access, and
availability of long-term supports for individuals with disabilities. Five yearsfromthe date
of implementation of the long-term care reform plan, or by the year 2000 (whichever is
sooner), the Secretary of HHS will submit to the Congress an interim assessment of the
effectiveness of the new package of long-term care reforms.
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The assessment will include the following components:
•
An evaluation of access to long-term care services (both community based and
residential) for individuals with disabilities of all ages representing diverse
disability groups, levels of disability, income levels, minorities, and rural areas.
•
A review of the quality of services.
•
An evaluation of the performance of the private sector in offering affordable
insurance products that provide adequate protection against the high cost of
nursing home care. This component of the assessment will also entail a review
of the adequacy of the standards for private long-term care insurance and an
assessment of how well the standards are being enforced.
•
An evaluation of the system's effectiveness in containing long-term care costs.
•
An evaluation of the impact of the program on individuals with lower incomes.
•
An evaluation of the system's performance with regard to coordination and
integration of services, and providing services in the least restrictive
environment to the degree possible.
•
The Secretary will submit afinalreport on the assessment to Congress by the
year 2002, or two years after the interim assessment, whichever is earlier.
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MALPRACTICE REFORM
Reform of the dispute resolution system for medical malpractice in the American
Health Security Act encompass both changes in tort law and the development of alternative
approaches to resolving patients' claims against providers. Reforms arc:
•
Creation of Alternative Dispute Resolution Mechanisms
Each health plan establishes an alternative-dispute resolution
process using one or more of several models developedby the_
&alMMialJjealthjtoard. Potential model systemTmctucIe early
offers of setUcnienrnJediation and arbitration.
Consumers who have a claim against a health-care provider are
\ ^
required to submit the claim through the alternative dispute
y Qjp~ i
system. At the completion of the alternative dispute system, if \^o\^ ^ ^ the consumer is not satisfied with the outcome, he or she is free
to pursue the complaint in court.
/
Requirement for Certificate of Merit
Lawsuits claiming injury from medical malpractice include
submission of an affidavit signed by a medical specialist
practicing in afieldrelevant to the claimed injury. The affidavit
must attest that a specialist examined the claim and concluded
that medical procedures or treatments that produced the claim
deviated from established standards of care.
Limits on Attorney Fees
Attorneys' fees for malpractice cases are limited to a maximum
of 33 1/3 percent of an award. States may impose lower limits,
as many have.
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Repeat Offenders
The Department of Health and Human Services establishes rules
for public access to information contained in the National
Practitioner Data Bank, which tracks health care providers who
incur repeated malpractice judgments and settlements.
^^malpractice awards and settlements must be reported to the
National Practitioner Data Bank, initiated in 1990 and
administered by the Department of Health and Human Services.
The Data Bank collects information concerning malpractice
awards, along with other information about adverse professional
actions, but the information is not available to the public.
Collateral Sources
New rules require reduction of the amount of any award in a
medical malpractice case by the amount of recovery from other
sources, such as health insurance payments, disability, workers
compensation, or any other programs that compensate an
individual for an injury.
Periodic Payment of Awards
Consistent with the relevant portions of the Uniform Periodic
Payment of Judgements Act proposed by the National
Conference of Commissioners on Uniform State Laws, either
party to a malpractice case may request that an award be made
payable in periodic installments as appropriate to reflect the need
for medical and other services.
Enterprise Liability Demonstration Project
Federal funds support states demonstration projects to establish
enterprise liability. Projects are designed to determine whether
substituting physician liability with liability on the part of the
health plan leads to improvements in the quality of health care,
reductions in defensive medicine and betterriskmanagement.
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Standards Based on Practice Guidelines
Based on afive-yearprogram underway to determine the effect
of using practice patterns in three specialty areas (anesthesia,
emergency medicine and gynecology), the Department of Health
and Human Services will develop a medical liability pilot
program based on practice guidelines adopted by the National
Quality Management Program.
Under such a system, a physician able to demonstrate that his
professional conduct or treatment complied with appropriate
practice guidelines is not liable for medical malpractice.
The Department of Health and Human Services has authority to
work with states to invest practice guidelines with the force of
law for physicians and other health care providers participating
in the pilot program. After thefirstpractice guideline is
available, the Department reports annually to Congress on the
results of the pilot program and makes recommendations about
whether changes in malpractice law should follow.
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ANTTTRUST REFORM
The antitrust laws serve an important function in the new health care system, enforcing
rules of competition critical to the efficient operation of the new system.
While the vigorous enforcement of the antitrust laws is important, in several areas
legitimate concerns exist about the need for greater clarity concerning enforcement policy and
the ability of some health care providers to be sure their conduct comports with antitrust
rules.
HOSPITAL MERGERS
Hospitals smaller than a certain size, as measured, for example, by number of beds or
patient census, require certainty that they will not be challenged by the federal government if
they attempt to merge. Such hospitals often are sole community providers that do not
compete with other hospitals.
The Department of Justice and the Federal Trade Commission publish guidelines that
provide safety zones for such mergers and an expedited business review or advisory opinion
procedure through which the parties to such mergers can obtain timely (i.e., within 90 days)
additional assurance that their merger will not be challenged. Guidelines also will provide the
analysis the agencies use to evaluate mergers among larger hospitals.
HOSPITAL JOINT VENTURES AND PURCHASING ARRANGEMENTS
Hospitals may enter into joint ventures involving high technology or expensive
equipment and ancillary services, as well as joint purchasing arrangements involving the
goods and services they need.
The Department of Justice and the Federal Trade Commission publish guidelines that
provide safety zones for such joint ventures and arrangements, examples of ventures that
would not be challenged by the agencies, and an expedited business review or advisory
opinion procedure through which the parties to joint ventures can obtain timely (i.e., within
90 days) advice and assurance as to whether ventures that do not fall with the safety zones
will be challenged.
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PHYSICIAN NETWORK JOINT VENTURES
Physicians and other providers require additional guidance regarding the application of
the antitrust laws to their formation of provider networks that would negotiate effectively with
health plans.
The Department of Justice and the Federal Trade Commission publish guidelines that
provide safety zones for physician network joint ventures that do not possess market power
(below 20 percent) and that share financial risk, examples of networks that would not be
challenged by the agencies, and an expedited business review or advisory opinion procedure
through which the parties to networks that do not fall within the safety zones can obtain
timely (i.e., within 90 days) advice and assurance as to whether their network will be
challenged.
Within the safety zones physicians may bargain collectively with health plans about
payment, coverage, decisions about medical care, and other matters without fear of federal
enforcement of the antitrust laws.
PROVIDER COLLABORATION
During the transition to the new health care system, physicians and other providers
may require some protection to negotiate effectively with health plans and to form their own
plans. To protect physicians and other providers from the market power of third party payers
forming health plans, providers are provided a narrow safe harbor to establish and negotiate
prices if the providers share financial risk. The financialriskmay not be simply fee
discounting.
Physicians who provide health services for the benefit package may combine to
establish or negotiate prices for the health services offered if the providers shareriskand if
the combined market power of the providers does not exceed 20 percent. This safe harbor
does not apply to the implicit or explicit threat of a boycott.
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STATE ACTION IMMUNITY
The Department of Justice and the Federal Trade Commission publish guidelines that
apply the "state action doctrine" where a state seeks to grant antitrust immunity to hospitals
and other institutional health providers.
If a state establishes a clearly articulated and affirmatively expressed policy to replace
competition with regulation and actively supervises the arrangements, the hospitals and other
institutional providers involved will have certainty that they will not face enforcement action
by the federal government.
PROVIDER FEE SCHEDULE NEGOTIATION
The Department of Justice and the Federal Trade Commission publish guidelines that
describe under existing law the ability of providers to collectively negotiate fee schedules
with the alliances.
Alliances, as established and supervised under state law, are required under federal law
to establish a fee schedule for fee-for service plans, and providers in order to participate in
the negotiation process need certainty that their actions will not violate the antitrust laws.
McCARRAN-FERGUSON
The current exemptionfromthe antitrust laws enjoyed by health insurers is repealed,
eliminating the ability of health plans to collectively determine the rates they charge, and
other terms of their relationship with providers.
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FRAUD AND ABUSE
The American Health Security Act establishes an all-payer health carefraudand
abuse enforcement program, increases funding for and coordinates activities of various
branches of government for enforcement againstfraudand abuse in the health care system.
IMPROVED COORDINATION
Thefraudand abuse enforcement program coordinates federal, state and local law
enforcement activities aimed at health carefraudand abuse. The Department of Justice and
the Department of Health and Human Services jointly direct the program.
TRUST FUND
Fines, penalties, forfeitures and damages (other than restitution) forfraudor abuse in
health care delivery are deposited in a trust fund to supplement federal efforts to combat
health care fraud and abuse.
Exceptions are made to the extent that current law directs that the money be given to
other parties (such as the states) or deposited in other trust funds (such as the Medicare Trust
Fund).
CONTROL KICKBACKS
The American Health Security Act expands the scope of the current anti-kickback
statute from covering only Medicare and Medicaid to covering all health payers. The new
provision calls for punishment for the payment or receipt of any item of value as an
inducement for referral of any type of health care business (subject to the exceptions
described below).
The federal government is authorized to seek civil remedies in U.S. District Court,
including: civil penalties, injunctive relief to halt kickback schemes and ability to secure
assets in appropriate cases. The statute provides a new administrative remedy involving civil
monetary penalties for kickback violations.
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Exceptions to the kickback provision include payments for items or services furnished
to patients paid for on an at-risk basis to that provider furnishing the items or service, such
as capitated payments. Also included are payments made on an "at risk" basis to a health
plan ("at risk" would include capitation, global fees, and perhaps other bundled payment
arrangements). The exception covers all "downstream" payments made to providers by such
an "at risk" plan, even fee-for-service payments. Similarly, if a provider network is paid by
a plan on an "at risk" basis, any downstream payments for ancillary items and services made
by the network are covered by the exception. In addition, the statutory and regulatory ("safe
harbor") exceptions under the current kickback statute apply to an expanded kickback statute
that applies to all payers.
END SELF REFERRALS
Payment to an entity for any item or service is prohibited (subject to the exceptions
discerned below) in which the physician ordering services has a financial relationship with the
entity and in which the physician does not render that item or service.
Self-referral limitations carry an exception in which items or services are paid for on
an at-risk basis to that provider, such as capitated payments. The exception to the Antikickback prohibitions for "at risk" payments to plans and networks, described above, also
applies to self-referral prohibitions. The exceptions in section 1877 are retained except that:
•
The exception for group practices is narrowed to prevent the creation of sham
groups.
•
Exceptions for investments by large entities require that the company hold
$100 million in shareholder equity.
TOUGHEN PENALTIES FOR WRONGDOERS
Current federal authority is amended to allow forfeitures of proceeds derived from
health care fraud. The forfeiture remedy allows the federal government to use either criminal
or civil remedies to seize assets derivedfromfraudulentor illegal activities.
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A new health carefraudstatute, modeled after existing mail and bankfraudstatutes,
sets penalties for schemes to defraud cither public or private health care programs. The
existing mailfraudstatute is amended to address schemes that use private delivery services in
addition to the United States mail system.
A new federal criminal statute prohibits deliberately making false statements to health
plans, health alliances or state health care agencies.
A new federal criminal statute prohibits the payment of bribes, gratuities or other
inducements to administrators and employees of health plans, health alliances or state health
care agencies.
The federal government is authorized to assess civil monetary penalties against
individuals who engage in any of the following prohibited activities:
•
False Claims
•
•
Submitting a false orfraudulentclaim for an item or service. (See
section 1128A(a)(l)(B).)
•
Submitting a claim for a physician's service provided by a
person who was not a licensed physician, whose license was
obtained through misrepresentation or who improperly
represented to a patient that he or she was a certified specialist.
(See section 1128A(a)(l)(C).)
•
The routine waiver of co-payments if co-payments are required
under a health plan.
•
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Submitting a claim for an item or service not provided as claimed. (See
section 1128A(a)(l)(A) of the Social Security Act. All references in
this section are to the Social Security Act unless otherwise specified.)
(Many of these actions are already the basis for civil monetary penalties
with respect to Medicare and Medicaid.)
Claiming a higher health-service code in order to obtain higher
reimbursement for a health service.
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•
Unbundling or fragmenting charges as part of a bundledpaymcnt scheme. (See section 1866(g).)
•
Engaging in practices such as unnecessary multiple admissions
to a hospital or other health care institution or engaging in other
inappropriate medical practices in order to circumvent a bundled
payment scheme.
False Statements
•
Failing to report information or reporting inaccurate information
that is required to be submitted to a data bank. (See section
421(c) of the Health Care Quality Improvement Act.)
•
Submitting false orfraudulentstatements to the National Health
Board, a health alliance or a plan. (See section
1876(i)(6)(A)(v).)
Violations Specific to Plans
•
•
Acting to cancel the enrollment of or refusing to enroll an
individual in violation of the law. (See section
1876(iX6)(A)(iii).)
•
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Failing substantially to provide medically necessary services,
items or treatments required (under law or contract) to be
provided to an individual. (See section 1876(i)(6)(A)(l).)
Engaging in any practice that reasonably could be
expected to have the effect of denying or discouraging
enrollment by eligible individuals whose medical
condition or history indicates a need for substantial future
medical services. (See section 1876(iX6)(A)(iv).)
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•
PRIVILEGED AND-GONRDENIIAL
Employing or contracting with any individual or entity excluded
from participation in the health care system for the provision of
services, utilization review, medical social work or
administrative services or employing or contracting with any
entity for the provision (directly or indirectly) through such an
excluded individual or entity of such services. (See section
1876(i)(6)(A)(vi).)
Miscellaneous
•
Failing to cooperate with quality program or utilization review.
•
Paying or receiving unlawful kickbacks (subject to exceptions).
•
Submitting a claim for an item or service submitted by an
excluded person. (Sec section 1128A(a)(l)(D).)
•
Failing to report violations of federal criminal law.
Whistleblowers are protected against adverse employment
actions through mechanisms similar to section 7 of the Inspector
General Act.
The penalty amount is $10,000 per item or service claimed (consistent with the Civil
False Claims Act (31 U.S.C. § 3729) and an assessment of no more than triple the amount
claimed. The law provides for pre-judgment interest or penalties and assessments imposed
by an administrative law judge.
The standard of knowledge in these cases is "knows and should know."
The basis for exclusion from Medicare and state health programs serves as the basis
for an exclusion from all other health programs.
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The following actions represent the basis for exclusion from health care programs.
The exclusion from the programs is mandatory:
•
Criminal conviction relating tofraud,theft, embezzlement, breach of
fiduciary responsibility or other financial misconduct in connection with
the delivery of a health care item or service. (See section 1128(a)(1) and
(b)(1).)
•
Criminal conviction relating to the neglect or abuse of patients in
connection with the delivery of a health care item or service. (See
section 1128(aX2).)
With respect to the following bases for exclusion, the Department of Health and
Human Services determines whether, given the facts of the case, an individual should be
excluded:
•
Criminal conviction relating to fraud, theft, embezzlement, breach of
fiduciary responsibility or other financial misconduct in connection with
an act or omission in a program operated by or financed in whole or in
part by any federal, state or local government agency. (See section
1128(b)(1).) (This would cover convictions forfraudagainst any nonhealth related government program.)
•
Criminal conviction relating to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance. (This would not
include convictions for simple possession.) (See section 1128(b)(3).)
•
Revocation, suspension, or loss of a license to provide health care for
reasons of professional competence, performance, or financial integrity
or the surrender of a license pending a formal disciplinary proceeding
for allegations of professional competence, performance or financial
integrity. (See section 1128(b)(4).)
•
ExclusionfromMedicare or other federal or state health care programs
(e.g., CHAMPUS, VA). (See section 1128(b)(5).)
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Furnishing or causing to be furnished items or services to patients that
fail to meet professionally recognized standards in a gross and flagrant
manner or in a substantial number of cases. (See section
1128(b)(6)(B).)
Commission of an act described in the federal criminal laws specifically
related to health care or civil monetary penalty laws specifically related
to health care. (See section 1128(b)(7).)
Entities controlled by an excluded individual. (See section 1128(b)(8).)
Individuals who have a majority ownership interest in or hold
significant control over the operations of an entity convicted of an
offense related to the delivery of a health care item or service.
Failure to disclose required information regarding ownership, controlling
interests or convictions of individuals with ownership or controlling
interests, officers, directors, agents or managing employees. (See
section 1128(b)(9).)
Failure to provide access to documentation or to provide documentation
related to the health care claims submitted to a health benefit plan, a
health alliance or the government. (See section 1128(bXll).)
Failure to grant physical access, with reasonable notice, to appropriate
authorities for on-site reviews and surveys. (See section 1128(b)(12).)
Defaulting on repayment of scholarship funds or loans in connection
with health professions education made or secured in whole or in part,
by the Secretary of the Department of Health and Human Services.
(See section 1128(b)(14).)
The current procedure under which the Department of Health and Human Services
may exclude an individual or entity prior to a hearing continues conditional on the prior
determination of another tribunal, such as a criminal conviction or action by a federal or state
administrative body.
*sip>
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All other exclusions take effect after a hearing and administrative law judge decision
regarding the exclusion.
ANTI-FRAUD STANDARDS FOR ELECTRONIC MEDIA CLAIMS
A requirement for standards to safeguard against fraud and abuse in an electronic
media environment (i.e., to assure the identity of those submitting claims electronically, and
impose provider responsibility for such claims) is included.
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HEALTH CARE ACCESS INITIATIVES
In the existing health care system, major financial and non-financial barriers reduce
access for a number of population groups in American society. Population groups that
particularly confront barriers to care include:
•
Low-income groups and individuals who have little education.
•
Members of certain racial, cultural and ethnic groups and those
who speak languages other than English.
•
Residents of central cities, rural and frontier communities.
•
Individuals who lack a stable residence, such as migrant workers
and homeless individuals or families.
•
Adolescents.
•
Individuals with certain severe health problems, such as HIV
infection, AIDS, chronic mental illness, substance abuse or
serious disability.
As a result, members of those population groups often experience reduced health status
and quality of life. Health care reform will significantly improve access to care by providing
all Americans with comprehensive coverage for treatment services, clinical preventive
services, mental health and substance abuse services.
However, universal insurance coverage and market reforms alone will not eliminate all
barriers to care or ensure quality. In order to meet their obligations to provide comprehensive
health care benefits, health plans will require assistance and financial incentives to expand
into low-population areas and to ensure that hard-to-reach populations have access to quality
care.
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In order to fulfill the promise of health reform, other inadequacies requiring attention
include: the supply of providers and health plans in both rural and low-income urban areas;
poor integration and coordination of care between primary care and specialized services;
cultural and linguistic barriers; transportation and hours of service; lack of understanding
among consumers about the availability of services; and resistance to the use of services.
Many health care providers who are skilled and committed to serving populations most
affected by access barriers also will require special assistance to prepare for and ensure their
effective participation in the reformed system.
GOALS AND STRATEGY OF THE PUBLIC HEALTH SERVICE ACCESS
INITIATIVES
The programs described in the following section are designed to reduce disparities in
health status by ensuring access to needed services for low-income, underserved, hard-toreach, and otherwise vulnerable populations. They build on the strengths of the reformed
delivery system, the expertise and experience of current public health providers, and the
enhanced capacities of state and local public health agencies.
The Public Health Service access initiatives are designed to:
•
Expand capacity by increasing the supply of practitioners, practice
networks, clinics, and health plans in underserved areas.
•
Assist alliances and health plans to deliver culturally-sensitive care to
vulnerable segments of their populations.
•
Achieve accountability by assuring that health plans enroll vulnerable
populations and meet their personal health care needs.
•
Assist organizations and professionals supported by public funding
to adapt to the reformed system. Integration of these providers into
practice networks or health plans will ensure that they receive payment
for covered services from plans. It will provide critical support services
(administration, information systems, telecommunications, specialty
services) to improve the delivery and coordination of care.
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•
PRIVILEGED AND CONFIDENTIAIr
Shift the emphasis of existing public funding away from the delivery
of services covered in the standard benefit package and toward:
Activities designed to enable, enhance and ensure access to care
by addressing persistent barriers, especially hard-to-reach
populations.
Services not covered in the benefit package but essential to
prevent morbidity and mortality among certain populations;
•
Integrate and coordinate current programs to provide the federal
government, states, health departments and community-based
organizations flexibility to tailor their activities to the varied health
needs and problems of different populations and geographic regions.
Reduce the current administrative burden of multiple grant
application procedures, management structures, funding
requirements, and reporting systems.
ACCESS INITIATIVE PROGRAMS
•
The National Health Service Corps expands to reduce the
shortage of primary care practitioners in underserved areas.
•
Categorical Programs and Formula Grants continue to pay
for personal health services for specific populations that confront
barriers to care (such as community and migrant health centers,
family planning clinics, health care for the homeless program,
and portions of the maternal and child health block grant)
continue.
However, as reform is implemented, with the exception of the
Ryan White HIV/AIDS program, funding shifts from clinical
services to expansion of health care capacity in underserved
areas in order to ensure access for vulnerable populations (see
discussion below).
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•
PRIVILEGED AND CONFIDENTIAL
New Grants and Loans support capacity expansion undertaken by a
new federal authority with the mission of ensuring adequate choice of
providers and health plans in underserved areas, supporting the
development of networks of care providers, and overseeing the
integration of federally funded providers into the new system.
Flexible grants provide start-up and operating funds and
guaranteed loans to community-based providers and public and
non-profit health care institutions. Funds also provide capital
infrastructure development to expand access in underserved areas
for low-income, hard-to-reach, or otherwise vulnerable
populations.
New funds allocated for this purpose are supplemented by
development and expansion funds transferredfromexisting
programs. The federal government determines the allocation of
funding among states and types of programs. A specific portion
supports initiatives such as school-based clinics. States have
expanded input into the decision-making process.
•
New Formula Grants to states provide funds to ensure access to health
care for low-income, underserved, hard-to-reach, and otherwise
vulnerable populations. Grants cover:
Outreach and enabling services (e.g. transportation,
translation/interpretation, child care).
Supplemental services.
The development of linkages between health plans and
providers through improved information and referred
systems.
Integration of health services with community
health and social services.
Advocacy and follow-up services.
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States become eligible for formula grants as they implement
reform, using funds to reduce disparities in access and health
status among population groups and monitor access for
vulnerable populations. (Programs designed to build state
capacity arc described in the section on public health initiatives.)
To assure accountability, state and local public health agencies
follow local indicators measuring access as well as health status
measures closely linked to access. To participate in the
formula-grant program, states must demonstrate improvement
over time.
State allocations are based on demographic and need factors. To
encourage states to implement reform and encourage enrollment
of vulnerable populations, the program will not include a
matching requirement other than maintenance of effort in state
and local funding for services to vulnerable populations. After
reform is fully implemented, a state matching formula will be
developed.
Designation of Essential Community Providers assures access
and continuity of care during the first five years of reform by
requiring health plans to contract with and reimburse established
community-based providers. Independent health professionals
and health care institutions operating in underserved areas may
apply to the Department of Health and Human Services for
designation as essential providers.
Plans are required either to contract with essential providers at a
capitated rate no less than that paid to other providers for the
same services or to reimburse them at rates based on Medicare
payment principles.
By the end of five years, providers either become integrated into
health plans or join together to create new, community-based
health plans. At that time, health plans must either demonstrate
their capacity to provide access for all participants or continue
contracting arrangements with essential providers.
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Adolescent and School-Aged Youth Initiative supports the delivery of
clinical services through school-based or school-linked sites (consistent
with goals of health reform and Goals 2000) and comprehensive health
education in high-risk schools.
Dedicated funds in the capacity expansion program (see above)
support school-based clinics targeted at middle schools and high
schools. Clinics provide physical and mental health services and
counseling in disease prevention and health promotion as well as
in individualized risk behavior reduction.
School-based clinics established under the program are
automatically designated as essential community providers.
Authorized as a formula grant to states funded jointly by the
Department of Health and Human Services and the Department
of Education, health education focuses on the reduction of risk
behaviors among adolescents and adults. The curriculum is
linked to Healthy People 2000 objectives and will target those
areas of healthriskwhere research suggests that health education
can reducerisk-takingbehavior and improve health outcomes.
Grantees have flexibility in determining what services and what service
delivery mechanisms are most appropriate for their community.
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MENTAL HEALTH AND SUBSTANCE ABUSE SERMCES
Mental health and substance abuse initiatives refocus existing formula grants to
encourage development of community-based programs by:
•
Restructuring Existing Formula Grants
As states implement reform, funding through Community Mental
Health and the Substance Abuse Prevention and Treatment
Formula Grant is required only for treatment in excess of the
comprehensive benefit. Funds shift from support for direct
treatment to service system development, supplemental services,
and population-based prevention services.
State Systems Development Program and Mental Health Systems
Improvement Program continue to be funded with the five
percent technical assistance set aside from formula grants.
•
Maintenance of Effort
States are required to maintain support for mental health and
substance abuse treatment activities, although they may obtain a
waiver to assist in the development of community-based systems
of care to promote the eventual integration of the public and
private systems for the treatment of mental and addictive
disorders.
•
Special Initiatives
Competitive project grants to states support pilot projects related
to integrating the private and public mental health and substance
abuse systems. Funds support linkage of treatment and
prevention for substance abuse with a broad array of health
services and systems management for seriously emotionally
disturbed children.
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Research and Demonstration Projects
Funds support the development of improved outreach strategies
for AIDS and HIV-infected drug abusers, the homeless,
individuals involved in the criminal justice system, and
populations with co-morbidity, including mechanisms for
sharing information about the applicability of promising
approaches to prevention within specific populations and
service-delivery settings and the effectiveness of prevention and
early intervention services in reducing health costs.
Funds also support development of systems that link substance abuse
and mental health treatment with primary care, target rural and remote
areas and culturally distinct populations, and facilitate the transfer of
knowledge.
Training and Staff Development
The Department of Health and Human Services expands its
curriculum development and health education efforts in clinical
prevention within schools of medicine, nursing, and social work
as well as its information services for current health
professionals and provides primary care professionals with
information and training to screen and identify mental health and
substance abuse problems andriskfactors.
Capital Assistance
Direct loan and loan-guarantee programs support the
development of additional non-acute, residential treatment
centers and community-based ambulatory clinics, particularly in
medically underserved areas.
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AMERICAN INDIANS AND ALASKA NATIVES
Supplemental financing and services provide access to health care for American
Indians and Alaskan Natives populations with diverse language and cultural needs, many of
whom live in remote and underserved reservation areas. Supplemental services include
transportation, outreach and follow-up, community health representatives, public health
nurses, non-medical case management, child care during clinic visits, health education,
nutrition, home visiting, and supplemental mental health and substance abuse prevention and
treatment services.
The Indian Health Service also expands population-based public health and prevention
activities. Under new authority, it covers all residents, Indian and non-Indian, living on
reservations in addition to populations living near reservations.
Population-based public health and prevention activities include surveillance and
monitoring of health status, medical outcomes, threats to public health, public health
laboratories, community- based control programs, community health protection and public
health information.
HEALTH WORKFORCE
To increase the recruitment, preparation, and retention of American Indians and Alaska
Natives into medical, nursing, public health and other health professions, existing programs
are expanded.
The Indian Health Scholarship Program and Loan Repayment . Program expands to
fund all eligible applicants under the current authorities of sections 104 and 108 of P.L. 94437. Additional financial assistance increases the number of American Indians and Alaska
Natives entering training programs under current authorities of sections 103 and 105 of P.L.
94-437.
SANITATION AND ENVIRONMENTAL HEALTH
Additional funding expands construction of water, sewer, and other sanitation and
environmental health facilities, as well as provide for training and technical assistance to
tribes that wish to operate tribal facilities under P.L. 86-121 and Section 302 of P.L. 94-437.
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MEDICARE
STATE INTEGRATION
The Secretary of the Department of Health and Human Services has authority to
permit states to integrate Medicare beneficiaries into health alliances under specified
conditions that ensure:
•
Beneficiaries have the same or better coverage as standard Medicare benefits
•
Federal financial liability is not increased.
Alliances must offer at least one fee-for-service option that offers the Medicare
benefit package at no greater cost to the beneficiary than traditional Medicare. If only an
enhanced benefit package is offered, the cost to the beneficiary still can be no greater than
under traditional Medicare.
TRANSITION
After a state establishes health alliances and enrolls its population in them, states can
request inclusion of Medicare beneficiaries in the population covered under health alliances.
States submit proposals to the Secretary of HHS describing:
•
The state plan for integration of Medicare and providing evidence regarding
compliance with standards related to access, quality of care and cost
containment
•
The state's capacity to ensure equity for Medicare beneficiaries and providers
•
Administrative capacity to carry out the option
•
Ability to ensure that the financial andfiduciaryinterests of the federal
government are served by the proposal.
States are permitted to discontinue a Medicare integration program at the end of any
fiscal year with sufficient notice to the federal government, beneficiaries and health providers.
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The federal government assumes administration of Medicare in a state if assurances
arc not met and the state is not operating an effective Medicare program.
ASSURANCES
To approve a waiver, the federal government requires assurance that Medicare
beneficiaries have:
•
Access to the same, or higher, level of benefits as standard Medicare.
•
Access to care that is substantially comparable to standard Medicare. The state
must demonstrate adequateriskadjustment methodologies to assure that plans
have sufficient compensation to provide appropriate access to care.
•
Assurance of at least one fee-for-service option with out-of-pocket expenses
no higher than under traditional Medicare program for comparable or better
benefit.
•
Assurance of equal, or better, protection against balance billing.
•
Protection under comparable, or better, quality assurance mechanisms.
•
Assurance of the same, or better, appealrightsin the event of disputes,
includingrightto an administrative law judge hearing and judicial review when
applicable.
States operate within a capitation rate consistent with budget limits on growth of
federal spending for Medicare. No cost-shifting to the Medicare program occurs as a result
of Medicare integration in a state. Savings accruing to the state are shared with the federal
government and/or Medicare beneficiaries (savings may be used to reduce the Medicare Part
B premium in the state).
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States assume additional administrative costs (e.g., special processing of claims by
out-of-state carriers and intermediaries for claims received from residents of states in which
Medicare is integrated). The federal government retains the right to evaluate, directly or
through contractors, the state's program and audit records to determine compliance with
assurances.
(9/7/93)
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PRIVILEGED AND-GQNFIDENT1AL
INDIVIDUAL ELECTION AT AGE 65 TO REMAIN IN THE HEALTH ALLIANCES
After establishment of health alliances, individuals have therightto elect to remain in
an alliance when they reach age 65. If they remain in the alliance, they continue to receive
the nationally guaranteed comprehensive benefit package with the full range of options
available to individuals younger than age 65.
Plans negotiate rates with alliances for participants over age 65 choosing to remain in
the alliances; these rates are separate from those covering younger participants. Any plan
providing coverage through an alliance must bid to cover the older population to continue
operating through the alliance.
Alliances makeriskadjustments to premiums among plans using methods prescribed
by the National Health Board. Medicare pays a fixed contribution to alliances equal to the
costs that Medicare would be projected to bear — under the new budget constraint — for the
same beneficiary population in the alliance. Beneficiaries pay the difference between
Medicare's payment and the plan's premium.
During the annual enrollment period, beneficiaries over age 65 may return to Medicare
or choose a new plan through the alliance.
MEDICARE MANAGED CARE
Changes in payment methodology improve and strengthen the Medicare managed care
program:
•
A research initiative focuses on the development and demonstration of healthstatus adjusters.
•
Interim measures improve the current payment methodology, including:
•
(9/7/93)
Making adjustments to reflect payments currently not captured in the
payment methodology because of coordination of benefits or services
received through VA or DOD.
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•
PRIVILEGED AND ^ONHOEN^Air
Seeking discretionary authority to establish a ceiling andfloorfor
payments and to create a special pool for high-cost cases.
For the longer term, demonstrations of alternative payment methodologies (such as
competitive bidding, new risk sharing arrangements and cost reimbursement subject to limits)
are implemented.
Coordinated open enrollment promotes managed care. Medicare establishes an annual
open enrollment period for Medicare managed care plans and Medigap plans. Medicare
develops and distributes comparative materials on all managed care and Medigap plans, with
the plans paying the cost. A third party coordinates enrollment to reduce the possibility of
favorable selection. One-year enrollment replaces current month-to-month commitment.
Medigap insurance practices conform with the new requirements for open enrollment
and other new insurance reform standards for supplemental insurance under health care
reform.
Medicare offers beneficiaries greater choice of managed care options through the
following changes:
•
Expanding choice of managed care plans: Within three years of enactment, all
health plans capable of qualifying for a Medicare contract arc required to enter
into a cost contract as a condition for participation in health alliances.
•
Medicare Point-of-Service option: A non-enrollment based Point-of-Scrvice
option is created within fee-for-service Medicare. Medicare contracts with for
the creation of comprehensive preferred provider networks in major
metropolitan areas. Beneficiaries not enrolled in a capitated health plan choose
whether to use the network of preferred providers on a service-by-service
basis.
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MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT
Two yearsfromthe date of enactment of the plan, but no later than July 1, 1996
benefits offered under the Medicare program expand to cover outpatient prescription drugs.
Thus, assuming enactment in December 1993, the new drug benefit would be in effect
beginning in January 1996.
Any Medicare beneficiary who elects to enroll in the Part B program (97 percent of
the Medicare population) automatically enrolls in the new prescription drug benefit.
As with other Part B benefits, the Medicare prescription drug benefit is funded by both
general revenues and beneficiary premiums. The Part B premium increases to cover the new
benefit. Premiums currentlyfinance25 percent of the cost for Part B coverage. Thus,
beneficiaries would pay 25 percent of the cost of the new drug benefit. Other rules related to
enrollment in Medicare Part B also apply to the prescription drug benefit.
COINSURANCE, DEDUCTIBLES AND CAPS
The new drug benefit carries a $250 annual deductible. Once the deductible has been
met, beneficiaries pay 20 percent of the cost of each prescription with an annual limit on outof-pocket expenditures of $1,000.
Both the annual deductible and out-of-pocket cap are indexed each year to assure that
the same percentage of beneficiaries continue to receive benefits as did with the initial $250
deductible and $1000 out-of-pocket cap.
COVERAGE
The Medicare drug benefit covers all drugs, biological products and insulin approved
by the Food and Drug Administration (FDA) for their medically accepted indications as
defined in at least one of the three compendia which are the American Medical Association
Drug Evaluations, the American Hospital Formulary Service and the United States
Pharmacopeia, or other authoritative compendia identified by the Secretary or as determined
by the carrier based on evidence presented in peer reviewed medical literature.
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The Medicare drug benefit includes coverage of home IV drugs. In addition, the
current limited coverage of outpatient drugs under Medicare such as immunosuppressive
drugs are incorporated into the drug benefit.
The Seaetary of Health and Human Services has the discretion not to cover certain
pharmaceutical products listed in Section 1927(d) of the Social Security Act. Examples
include fertility drugs, medications used to treat anorexia and drugs used for cosmetic
purposes. However, benzodiazepines and barbiturates would be covered under the Medicare
drug benefit. Further, the Secretary has the authority to establish maximum quantities per
presaiption or limit the number of refills in order to discourage waste.
The Seaetary may require physicians or pharmacists to obtain approval before
presaibing or dispensing certain medications based on evidence that they are subject to
clinical misuse or inappropriate use or because the Seaetary determines that they are not cost
effective.
COST CONTAINMENT
As a condition of participation in Medicare and Medicaid, drug manufacturers must
sign rebate agreements with the Secretary. Rebates are paid to the Seaetary on a quarterly
basis.
For single source and innovator multiple source drugs, manufacturers pay a rebate to
Medicare for each drug based on the difference between the average manufacturer price
(AMP) to the retail class of trade and the weighted average of the prices of the drug in the
non-retail market, or 15 percent of the AMP, whichever is greater. The Secretary has the
authority to verify the AMP.
For single source and innovator multiple source drugs, an additional rebate is required
on a drug-by-drug basis for manufacturers who inaease prices at a higher rate than inflation.
The baseline indexed price is the average manufacturers price from April through June 1993.
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PRIVILEGED AND-CONFIDENTIAL
In the case of new drugs that the Secretary determines are excessively or
inappropriately priced, the Secretary has the authority to negotiate a special rebate with the
manufacturer. Such a determination by the Secretary would be based on such factors as the
prices of other drugs in the same therapeutic class, cost information supplied by the
manufacturer to the Secretary, prices of the drug in other comparable countries, and other
relevant factors. If a manufacturer refuses to negotiate or the Secretary is unable to negotiate
a price that the Secretary determines to be reasonable, the Secretary may exclude the new
drugfromcoverage under Medicare.
In the case of dual eligibles, to prevent manufacturersfrompaying rebates to Medicare
and Medicaid, Medicare will be the recipient of the rebate.
A manufacturer is the entity holding legal title to or possession of the new drug code
(NDC) for the covered outpatient drug.
The new program provides incentives to encourage the use of generic drugs. The
benefit only covers generic drugs unless the physician indicates that a brand name medication
is required. The Secretary may require that physicians obtain prior approval before
prescribing specific brand-name products if a generic substitute is available.
REIMBURSEMENT
For brand name drugs, reimbursement is the lower of the 90th percentile of actual
charges in a previous period, or the estimated acquisition cost (EAC) plus a dispensing fee.
For generic drugs, Medicare pays the lower of the pharmacist's actual charge or the
median of all generic prices (times the number of units dispensed) plus a dispensing fee.
For participating pharmacies, the dispensing fee is $5, indexed to the Consumer Price
Index (CPI). Participating pharmacies arc required to accept assignment on all prescriptions.
Non-participating pharmacists receive $2 less per prescription.
(9/7/93)
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PRIVILEGED ANIVCONFIDEIfflAl^
CHANGES IN PRIVATE INSURANCE REQUIREMENTS
The National Association of Insurance Commissioners (NAIC) will be instructed to
make the necessary adjustments to Medigap policies to reflect the prescription drug coverage
under Medicare. Private insurance plans may cover Medicare deductibles and co-payments
for prescription drugs.
SUBSIDIES
Low-income Medicare beneficiaries receive the same financial assistance for out-ofpocket costs associated with the drug benefit as provided for other cost-sharing amounts.
REVIEWS
The Medicare DUR program parallels the program established in OBRA 1990 for
Medicaid. Participating pharmacists are required to offer counseling to Medicare customers
on the use of medications.
The Secretary establishes a national system of Electronic Claims Management as the
primary method for determining eligibility, processing and adjudicating claims, and providing
information to the pharmacist about the patient's drug use under the Medicare drug program.
EQUAL ACCESS FOR PURCHASERS TO PHARMACEUTICAL DISCOUNTS
As a condition of participation under Medicare and Medicaid, manufacturers of
prescription pharmaceutical products sold in interstate commerce would have to offer
discounts to all purchasers of pharmaceuticals on equal terms. This provision would not
prohibit pharmaceutical manufacturers from offering differential discounts to purchasers in
return for differential economic advantages realized by the manufacturer, such as volume
buying, prompt payment, prompt delivery, or other mechanisms that can influence physician
prescribing behavior.
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Undcr this provision, pharmaceutical manufacturers would be precluded from
providing discounts to purchasers based solely on the class of trade to which the purchaser
belongs. Sales to federal health care programs that directly purchase pharmaceuticals, such as
the Departments of Veterans Affairs and Defense, would be exemptfromthese provisions.
These provisions would become effective two years after the date of enactment
Medicare Cost Savings
MEDICARE COST SAVINGS
Growth in Medicare expenditures will be budgeted (Sec Budget Section). The
following changes in the Medicare program will reduce the rate of growth in the Medicare
program and allow Medicare to operate within the constraints of the budget:
Reduce the Hospital Market Basket Index (HMBI) update by a further 0.5% in
FY 1997 and 1 in FY 1998-2000.
%
Reduce IME Adjustment to 5.65% in FY 1995 and 3.0% in FY 1996 and
thereafter.
Reduce payments for hospital inpatient capital.
Phase down the Disproportionate Share Hospital (DSH) adjustment by 1998.
Establish cost limits (similar to SNFs) fee long-term care hospitals.
Expand centers of excellence
Lower home health cost limits to 100% of Median by July 1, 1999.
Delete volume and intensityfromthe Medicare volume performance standard
(MVSP) formula.
Establish cumulative expenditure goals for physician expenditures.
Reduce the Medicare fee schedule conversion factor by 3% in 1996, with
primary care services exempt.
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Establish prospective payment for hospital outpatient radiology, surgery, and
diagnostic services.
Contract competitively for all Part B Laboratory Services, except in rural
areas.
Competitively bid other Medicare Part B services.
Extend the Medicare Secondary Payor (MSP) data match with SSA and IRS.
Establish a threshold of 20 employees for MSP for the disabled.
Extend Medicare Secondary Payor Provisions for ESRD patients.
Improve HMO payment.
Increase Part B premiums for individuals with incomes above $100,000 and for
couples with incomes above $125,000.
Require a 10% coinsurance on home health visits for visits more than 20 days
after a hospital discharge.
Establish a 20% coinsurance for laboratory services.
Phase down the coinsurance paid by beneficiaries to 20% of the total payments
to hospitals for all outpatient surgery, radiology and diagnostic services.
Subject all state and local employees to hospital insurance tax.
Set Part B premium into law.
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MEDICAID ACUTE CARE
(Long Term Care Policy is Described in the LTC Chapter)
GUARANTEED BENEFITS FOR NON-CASH RECIPIENTS
•
Undcr-65 Medicaid recipients who are not receiving either AFDC or SSI cash payments
will no longer receive insurance through Medicaid. They will enter regional and
corporate alliances based on their employment status.
•
An exception to this policy is that undocumented persons will continue to receive
Medcaid coverage for emergency services.
GUARANTEED BENEFITS FOR RECIPIENTS OF AFDC AND SSI CASH PAYMENTS
•
The Medicaid program will continue to make payments on behalf of AFDC and SSI
recipients. For services covered in the comprehensive benefit package Medicaid will
make capitated payments to regional alliance health plans (instead of making fee-forservice payments directly to providers at Medicaid specific rates, as is currently the
norm).
•
Cash assistance recipients, just like other members of the alliance, will choose from
among plans participating in the regional alliance. Medicaid recipients can choose any
plan at or under the weighted average premium without making an additional payment.
Just like other members of the alliance, AFDC and SSI recipients with incomes below
150% of poverty will receive subsidies for copayments and deductibles if no plan with
low cost sharing is available at or below the weighted average premium.
•
In many regions of the country, organized delivery systems have little experience
providing care to severely disabled persons. During a transition period it is important that
disabled Medicaid recipients have access to a fee-for-service plan, and additional
subsidies will be made available to secure this access. If no fee-for-service plan is
available at or below the weighted average premium, an additional premium subsidy will
be provided for Medicaid disabled so that they can join the lowest priced fee-for-service
plan without additional payment. Further, deductibles and copayments will be subsidized
for disabled Medicaid recipients in fee-for-service plans.
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•
PRIVILEGED AND CONFIDENTIAL-
The National Board will assess the extent to which organized delivery systems are
capable of providing high quality care to disabled persons. At such time that the National
Board determines that access tofreedomof choice plans is not necessary to assure high
quality care for the disabled, these additional premium and cost sharing subsidies will be
phased out.
SUPPLEMENTAL SERVICES
•
Supplemental services for cash recipients (e.g., non-emergency transportation, vision care)
will remain as in current law. Under consideration is conversion of supplemental services
payments for cash and non-cash recipients into a block grant and providing states greater
flexibility in targeting and delivering these services.
•
Medicaid benefits and payments will continue to supplement Medicare as under current
law.
PAYMENTS TO PLANS
•
Per capita paymentsfromMedicaid to regional alliances for the coverage of AFDC and
SSI recipients will be equal to 95% of:
•
Each state's per capita Medicaid spending on behalf of the recipient group to pay
for services provided in the comprehensive benefit package;
•
In the year prior to implementation of reform;
•
With annual rates of increase subject to the national health care budget (see
chapter on budgeting).
•
The federal and state shares of these and other Medicaid costs continue as under current
law.
•
Health plans submit premium bids to alliances for the non-AFDC, non-SSI population.
Following negotiations with the alliance, as described in the budget chapter, premiums
are adjusted, if necessary, to comply with the requirements of the budget. Required
employer and employee payments are calculated based on the premiums negotiated
between alliances and plans.
(9/7/93)
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•
For each health plan and policy type, the alliance computes a 'blended premium'. The
blended premium for each plan is the weighted average of the plan's private sector
premium and the Medicaid capitations, where the weights are the alliance wide proportion
of private sector, AFDC and SSI persons. The blended premium for each health plan will
depend on the private sector premium for the plan, but will not vary with the proportion
of welfare recipients in the plan.
•
Employers and employees continue to make payments into the alliance based on the
private sector, not the blended rate.
•
Alliances pay health plans based on the blended premium for all enrollees. In other
words, a health plan receives the same payment for a person of a given risk class
regardless of that person's welfare status.
•
Payments from the alliance to health plans are risk adjusted, as described in the chapter
onriskadjustment. If theriskadjustment is sufficiently refined, theriskadjuster will be
blind to the welfare status of enrollees.
•
However, if the risk adjustment system is not sufficiently refined, payments to plans on
behalf of welfare recipients might actually be below the level of total dollars contributed
for such persons by the Medicaid program. To prevent such an outcome, the risk
adjustment system may include receipt of AFDC or SSI as ariskadjustment factor.
•
If the National Board determines that, even with theriskadjustment system, plans that
serve disproportionately large numbers of Medicaid recipients are paid less for the care
of these recipients than they would be paid if the same recipients were not AFDC or SSI
enrollees, then the Board creates a payment transfer system in which plans within an
alliance that serve disproportionately low numbers of SSI and AFDC enrollees pay money
to plans within the alliance with disproportionately high numbers of such enrollees.
EMPLOYED RECIPIENTS OF AFDC OR SSI
•
Employers of AFDC or SSI recipients make payments to the alliance as specified in the
financing chapter.
(9/7/93)
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STATE MAINTENANCE OF EFFORT
States maintain spending for the acute-care portion of health coverage under Medicaid
at a level equal to its share of total Medicaid spending for services covered in the nationally
guaranteed benefit package in the year prior to implementation of reform. That figure is
projected forward by the budgeted growth in the State's weighted-average premium for the state
population not covered by Medicaid.
These expenditures pay health insurance premiums in alliances on behalf of individuals
eligible for Medicaid and, if additional resources exist, other population groups. The Board makes
adjustments as necessary in the amounts required of individual states so long as the total
Medicaid maintenance of effort remains constant. The Board may increase the payments for
«low effort" states (i.e., those with spending that is substantially below their revenue base).
DISPROPORTIONATE SHARE PAYMENTS
Under health reform hospitals and other providers will receive insurance payments for
virtually all patients they serve, and the need for disproportionate share payments will be
eliminated. Therefore, DSH payments will be eliminated. The implementation schedule for this
proposal is
under review.
IMPLEMENTATION
With the possible exception of the elimination of DSH payments, provisions go into effect
on the same date that states implement health reform.
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GOVERNMENT PROGRAMS
DEPARTMENT OF DEFENSE
The Seaetary of Defense supports coordinating the military health system with national
health reform, and the Department will develop a plan for implementation.
The Department of Defense maintains the readiness capabilities of the military health care
system as its critical priority and carries out commitments to beneficiaries in the military health
care system at the time that national health reform is enacted.
To develop and implement the specific elements of a plan for the military health care
system, the Seaetary establishes on-going consultation with the branches of the armed services
and with appropriate committees of Congress.
Chapter 55 of Title 10 is amended to permit implementation when the Secretary decides
to coordinate the military system with national health reform.
•
Establishment of Plans
The Secretary may establish military health plans covering broad regions in which
military medical treatment centers play a central role. Military health plans may
contract with civilian health providers to deliver services to military beneficiaries.
Military health plans conform to requirements and standards for all health
plans. Military plans may be offered within the regional alliance in which
the military medical center is located.
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Since military plans may also be subject to federal regulation under
Chapter 55, however, military plans may not be rejected from
participation in regional alliances because of a conflict between
health plan requirements and federal law or regulations applicable
to military health plans.
•
Eligibility
In areas in which a military health plan is established, active-duty personnel
automatically enroll in the military health plan. Under current rules for priority
described in Chapter 55 of Title 10, dependents of active-duty personnel, military
retirees, dependents of retirees and survivors are eligible to enroll. Individuals
who are not currently eligible for care iiTthe military system, are not eligible to
enroll in a military health plan.
Benefits
Military health plans provide the nationally guaranteed benefit package. Under
regulations issued pursuant to section 1112(a), supplemental services may be
provided.
Appropriations and Reimbursement
Payment responsibilities of the Department of Defense, military beneficiaries and
others are established by regulations issued pursuant to section 1112(a).
Regulations provide that each category of enrolled beneficiaries
who have continuously been bcpffiHarirQ under sections 1079 or
1086 (without regard to the exclusion of subsection (d) of section
1086) since December 31,1993, do not pay higher costs than under
the current military system.
Employers of all military beneficiaries enrolled in a military health plan pay the
employer contribution to the plan. Military health plans may receive capitated
payments from Medicare for services to Medicare beneficiaries enrolled in military
plans, (under review)
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PRIVILEGED ANETCONFIDENTIAL-
Each military health plan establishes a financial account for receipts from military
beneficiaries and others on behalf of military beneficiaries enrolled in the plan.
These funds are used for the delivery andfinancingof care under the plan.
VETERANS AFFAIRS
The Department of Veterans Affairs may organize its health centers and hospitals into
health plans or allow them to function as heaith providers contracting with health plans or other
providers to deliver services.
Health plans organized within the VA system conform to the requirements and standards
for all other health plans. If the VA plan meets requirements for health plans, it is offered as an.
enrollment choice within theregionalhealth alliance that serves the area in which the VA plan
is based.
Because VA health plans may also be subject to federal regulation under Title 38 of the
United States Code, however, health alliances may not reject VA health plans from inclusion
within the alliance because of a conflict between health plans requirements and federal law or
regulations applicable to VA health centers.
ELIGIBILITY
All veterans are eligible to enroll in a VA health plan if one exists in their area. If
capacity in the health plan is limited, veterans are eligible to enroll in the following order of
priority:
0 .
®
Veterans with service-connected disabilities
Veterans meeting the income criteria set forth in 38 U.S.C. §
1722(b) ("low-income veterans")
Veterans with higher incomes who do not have service-connected
disabilities ("higher-income veterans").
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PRIVILEGED AND-GONHDENIIAL
Americans who arc not veterans are not eligible to enroll in a VA health plan or to
receive services on a contract basisfroma VA health plan. However, dependents of veterans
cuncntly eligible under the Civilian Health and Medical Program - Veterans Affairs
(CHAMPVA) may receive care through a VA health plan. The Secretary of Veterans Affairs
may determine if a VA health plan offers family coverage to the dependents of veterans.
BENEFITS
VA health plans provide the nationally guaranteed comprehensive benefit package to every
eligible person who enrolls. VA health plans may contract with other VA health centers or nonVA health providers or health plans to deliver the comprehensive benefit package.
Veterans who enroll in non-VA health plans may not receive care at VA centers for
services in the comprehensive benefit package, except that non-VA health plans may contract
with the VA to proviHp <:prvir<»g the comprehensive benefit package to veterans enrolled in
non-VA_Elans>
•
Veterans with service-connected disabilities and low-income veterans will continue to
be eligible for supplemental benefits not included in the comprehensive benefit package, such as
treatment for post-traumatic stress disorder and certain dental services, at no cost to those
individuals. The VA may offer these supplemental benefits to higher-income veterans at an
additional premium.
APPROPRIATIONS AND REIMBURSEMENT
Federal appropriations for the VA health system cover actual costs of delivering the
comprehensive benefit package for which the VA health plan is not reimbursed by other sources
of revenue on behalf of veterans with service-connected disabilities and low-income veterans
who enroll in a VA plan. Appropriations also cover the actual cost of supplemental benefits for
veterans with service-connected disabilities and low-income veterans.
Higher-income veterans who select the VA plan pay their share of the premium and any
applicable co-payment or deductible. Employers of all employed veterans enrolled in a_VA
health plan pay the employer contribution.
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PRIVILEGED AND CONFIDENTIAL
The VA has therightto retain all premiums, deductibles, co-payments or other cost
sharing paid to the VA by individuals or employers as well as revenue obtained as reimbursement.
by third-party payers.
Medicare may reimburse VA health plans and centers for services to higher-income
veterans eligible for Medicare. The Secretary of the Department of Veterans Affairs and the
Secretary of the Department of Health and Human Services will undertake negotiations to
determine the application of Medicare rules and rates of reimbursement for VA services, (under
review)
VA centers that provide health services on a contract basis to veterans and their
dependents enrolled in other health^lans have therightto retain reimbursement from these plans.
REGULATORY AND MANAGEMENT CHANGES
Restrictions on the Secretary's authority to contract for services are eliminated if
contracting is more cost effective than providing services at VA centers. Redundancies in
oversight activities also arc removed.
The Secretary may waive current requirements capping travel funds and restricting use
of personnel funds.
TRANSITION
The provisions of Chapter 17 of Title 38 governing VA health care remain in effect at
any VA health center not functioning as a health plan.
National health reform establishes a revolving fund (with an appropriation to seed the
fund) for investment in the start-up costs of VA health plans. VA health plans may borrow
funds from the revolving fund and obtain multi-year authority to re-pay the fund with interest.
The fund continues without fiscal-year limitations.
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PRIVILEGED AND-€ONFIDEITTIAL
INDIAN HEALTH SERVICE
Indian Health Service clinics and hospitals, tribal health centers and urban Indian
prograrasopgiatf, ontsidr rrginnal hralth alliances. National healthtt-fcrmHnes not limit options
currently available to tribes to control and operate health facilities under the Indian SelfDetermination and Education Assistance Act. Public Health Service programs for American
Indians and Alaska Natives continue and expand as described under public health programs
ELIGIBILITY
American Indians and Alaska Natives and their dependents currently eligible to receive
services at Indian Health Service are eligible to enroll. All eligible American Indians/Alaska
Natives choosing to receive care through the Indian Health Service must enroll.
American Indians and Alaska Natives may enroll in a health plan offered through the
alliance but receive no federal subsidies for health care costs on the basis of their status as. an
American Indian nj A'^ka Natjve American Indians and Alaska Natives , whether enrolled in
ajiealth plan in an allianrr nr rnrolleH with tb Indian Health Service, are eligible for financial
subsidies on the same basis as other Americans. American Indians and Alaska Natives who
enroll in a health plan in the alliance may receive care through the Indian Health Service if the
health plan contracts with the Indian Health Service.
e
An Indian Health Service center mav serve non-Indians enTOlkd in Hpalth plane in th/»
regional alliance on a contract basis.
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�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTlAL-
BENEFITS
After afive-vcartransition during which the Indian Health Service renovates and expands
its clinics, Indian Health Service centers begin to deliver the full array of services guaranteed in
the comprehensive benefit package. Indian Health Service centers mav contract with other
providers or health plans in order to provide tire comprehensive benefit package!
Indian Health Service centers continue to provide the broadrangeof supplemental benefits
currently available, such as public health nursing and health education, outreach services,
environmental surveillance, health promotion and injury prevention, technical assistance, training
and construction of sanitation infrastructure.
APPROPRIATIONS AND REIMBURSEMENT
The portion of premiums paid by employers on behalf of individual American Indians and
Alaska Natives enrolled in an Indian Health Service center is paid into a fund that supplements
appropriations to the Indian Health Service. If the employer is a tribal government, the employer
is exempt from contributing the employer portion of [hr prrmiypi
American Indians and Alaska Natives enrolled in an Indian Health Service center are not
required to pay individual contributions for health insurance premiums.
These provisions do not alter the authority of the Indian Health Service to bill Medicare,
Medicaid and other third-party payers for services provided in Indian Health Service clinics and
permit the Indian Health Service to bill those payers for contract care delivered outside the Indian
Health Service.
An Indian Health Service clinic receives reimbursement for non-Indians enrolled in a
health plan in the regional alliance.
FEDERAL EMPLOYEE HEALTH BENEFITS PLAN
As health reform is implemented, federal employees purchase coverage through regional
health alliances that serve the area in which they live, choosing from among health plans offered
by the alliance much as they choose among Federal Employee Health Benefit Plans in the current
system.
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�WORKING GROUP DRAFT
PRIVILEGED ANB-CONriDENTIAL
Coverage of federal employees and their dependents under FEHBP ends as regional health
alliances begin operation in the area in which a beneficiary resides. The transition to new
coverage occurs on a specified date or the last day of the first pay period beginning after January
1 of the first full year that a regional health alliance is fully operational in the area in which the
federal employee resides.
If any covered family member resides outside the health alliance area, family enrollment
may continue in FEHBP until all covered family members live in an area served by a health
alliance and reciprocal arrangements to provide coverage outside the area are in place.
Enrollees who move out of the enrollment area of an FEHBP plan into an area served by
a regional health alliance change their enrollment to a health plan offered through the health
alliance. The transition occurs as a non-open season FEHBP enrollment change.
ELIGIBILITY
Enrollees and covered family members arc no longer eligible for FEHBP on the date that
transfer to the new system is complete in the region in which they reside. Temporary employees
retain existing eligibility rights.
Restored employees and survivor or disability annuitants retain therightsthey had until
such time as they become eligible for coverage through a health alliance.
Any person losing coverage under the FEHBP, except for voluntary cancellation by them,
gross misconduct, or because they are eligible for coverage through a health alliance is entitled
to continued coverage under the FEHBP. Enrollees covered under this provision pay the entire
premium plus a 2 percent administrative fee.
Coverage continues for federal employees working abroad. Annuitants without Medicare
obtain insurance through regional alliances; annuitants with Medicare obtain coverage through
an OPM-administered Medigap plan. In both cases, OPM pays a premium contribution sufficient
to prevent an increase in annuitants' costs over current fees.
(9/7/93)
211
�WORKING GROUP DRAFT
PRIVILEGED AND CONriDENTIAL
TRANSITION
During phase-out, health plans offered on the date of repeal are offered as long as a
contract continues between the Office of Personnel Management and the sponsoring carrier. The
office continues to conduct annual open seasons and makes plan information available to
individuals covered by the FEHBP to the maximum extent feasible.
Carriers continue to offer the same scope of benefits being offered on the effective date
of repeal. Benefit levels are subject to annual negotiations until the FEHBP phases out entirely.
The office may continue to contract with carriers that have a signed contract in place on
the effective date of repeal. Contract provisions in effect for the contract term ending on the date
of repeal remain in effect unless OPM and the carrier agreed to modifications during the annual
negotiations for the new contract term and signed contract amendments are in place.
The office may not enter into contracts during the phase-out period with carriers not
already participating in the FEHBP on the effective date of repeal.
The Office of Personnel Management may terminate contracts at the end of a contract
term at the convenience of the government. Generally, decisions to terminate are based on
significant loss of enrollment resulting in a non-viable risk pool or other such phase-out
problems. Enrollees and covered family members in terminated plans are automatically enrolled
in the Standard Option of the government-wide Service Benefit Plan.
(9/7/93)
212
�WORKING GROUP DRAFT
PRIVILEGED ANErCONriDENTlAL
CONTRIBUTIONS DURING TRANSITION
During the phase-out period, the employer contribution continues at current levels.
Employees pay the remainder of the premium. Postal employees eligible for a higher employer
contribution than the new system requires continue to receive that benefit.
Both the employer and the participant contribution are funded, collected and distributed
in accordance with existing mechanisms.
The phasing-out of FEHBP occurs on a state-by-state basis, as regional alliances take
over FEHBP's function and role. When phase-out is complete, the FEHBP office continues to
receive annual appropriations, to be made available until expended to pay the required employer
contribution to premiums for annuitants as provided under provision of national health reform
legislation.
The employer contribution for federal enrollees covered through a health alliance arc
made directly by the employing office to the health alliance. The Office of Personnel
Management has no further functions relative to the health insurance coverage of federal
enrollees covered through health alliances.
EMPLOYEE HEALTH BENEFITS FUND
The Employee Health Benefits Fund continues to operate as a reserve fund until phaseout is complete. When phase-out is complete, and all allowable claims for covered services are
provided, any funds held in accounts held by participating carriers, , except for monies in the
contingency reserve accounts of community rated plans, are divided in the ratio of 72 percent to
the employer and 28 percent to individuals enrolled in a fee-for-service plan on the date of
repeal of federal employee health insurance.
Funds remaining in the contingency reserve accounts of community rated plans will be
pooled and distributed in the same proportion as above to the government and those enrolled in
community rated plans on the date of repeal.
(9/7/93)
213
�WORKING GROUP DRAFT
PRIVILEGED AND-GONODENTtAt
ADMINISTRATION
Regulations prescribed by the Office of Personnel Management to carry out Chapter 89
of Title 5 of the United States Code remain in effect unless amended or unless they conflict with
the provisions of this statute. In addition, the federal office may prescribe any regulations
necessary to implement the provisions of this statute.
The Office of Personnel Management and the General Accounting Office retain the rights
to audit provided in prior statute and under regulation and the provisions of the carrier contracts.
(9/7/93)
214
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Security Act - Working Group Draft] [3]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621465" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
5/7/2015
Source
A related resource from which the described resource is derived
17621465
12093636
42-t-12093636-20060885F-Seg5-008-005-2015
-
https://clinton.presidentiallibraries.us/files/original/55f59ac8285c3dc7224a25f718434635.pdf
8cb3b3ac7523dd3350e9cf0296c7e70b
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
3313
OA/ID Number:
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [2]
Stack:
Row:
Section:
Shelf:
Position:
s
52
7
7
3
�WORKING GROUP DRAFT
PRIVILEGED AND-eONFf&ENTlAt,
ERISA
The American Health Security Act amends the Employee Retirement Income Security
Act of 1974 (ERISA) to create a new chapter goveraing employee health benefit plans and
modifying the current ERISA preemption section.
REQUIREMENTS RELATED TO EMPLOYEE HEALTH BENEFIT PLANS
A new chapter or title of ERISA establishesfiduciaryand enforcement requirements
for employers and others sponsoring health benefit plans in corporate alliances. Current
provisions of ERISA do not apply to health benefits except by specific reference. Provisions
address:
•
Ensuring that everyone enrolled in corporate health alliances obtains coverage
providing at least the nationally guaranteed benefit package
•
Establishingfiduciaryrequirements for employers, plan sponsore and plan
fiduciaries
•
Setting requirements related to information and notification made available to
employees
•
Ensuring compliance with national standards with respect to uniform claims
form, data reporting, electronic billing and other areas
•
Applying grievance and benefit dispute procedures to self-funded health
benefit plans
•
Establishing financial reporting requirements for self-funded health benefit
plans and for corporate alliances
•
Settingfinancialreserve requirements for self-funded health benefit plans.
The new title or chapter also setsfiduciaryrequirements for employers in regional
alliances governing the withholding of employee contributionsfromwages. The Department
of Labor may enter into agreements with states to enforce these requirements.
(9/7/93)
72
�WORKING GROUP DRAFT
PRIVILEGED AND -eONFIDElTTIAL
FINANCIAL RESERVE REQUIREMENTS
New requirements forfinancialreserves apply to self-funded health plans. Selffunded health plans establish a trust fund that is maintained at a level equal to the estimated
amount that the plan owes providers at any given time. The plan pays claims from the trust
fund. Trust funds are protected by special status in bankruptcy proceedings if the sponsoring
employer fails.
Reserve requirements may be met through letters of credit, bonds or other appropriate
security rather than establishing the trust fund.
A new national guaranty fund for self-funded health plans provides financial
protection for health providers in case offinancialfailure of a plan. The Department of
Labor oversees the national guaranty fund; it operates in a manner similar to state insurance
guaranty funds.
The Department of Labor may inspect the books and records of self-funded health
plans and assume control over plans if they fail to meet reserve requirements. Health benefit
plans notify the Department of Labor if they fail to meet requirements.
PREEMPTION OF STATE LAWS
The ERISA preemption provision is modified to:
•
Apply the preemption only with respect to employers and health benefit plans
in corporate alliances.
•
Permit taxes and assessments on employers or health benefit plans in corporate
alliances if the assessments are nondiscriminatory in nature.
•
Permit states to develop all-payer hospital rates or all-payer rate setting.
•
States also may require all payers, including health benefit plans
in corporate alliances, to reimburse essential community
providers.
(9/7/93)
73
�WORKING GROUP DRAFT
PRIVILEGED AND 'CONFIDENTIAL
HEALTH PLANS
Health plans provide coverage for the nationally guaranteed comprehensive benefit
package through contracts with regional or corporate alliances. Only state-certified health
plans are allowed to provide health insurance and benefits in regional alliances.
ENROLLMENT
Health plans accept every eligible person enrolled by an alliance without regard to
individual characteristics, health status, anticipated need for health care, occupation, affiliation
with any person or entity (except affiliation with a corporate alliance or health plan).
Health plans may not terminate, restrict or limit coverage for the comprehensive
benefit package for any reason, including non-payment of premiums. They may not cancel
coverage for any individual until that individual is enrolled in another health plan.
Health plans may not exclude participants because of existing medical conditions or
impose waiting periods before coverage begins. Riders that serve to exclude certain illnesses
or health conditions also are prohibited.
With the approval of the state, health plans may limit enrollment because of
restrictions on the plan's capacity to deliver services or to maintainfinancialstability.
COMMUNITY RATING
Health plans use community rating to determine premiums establishing separate rates
to reflect family status.
Beginning in August of each calendar year, alliances negotiate premium rates with
each health plan contracting for coverage through that alliance. Negotiations set individual
and family premiums for each health plan within the alliance. During an annual open
enrollment period, alliances publish the negotiated rates for all health plans.
(9/7/93)
74
�WORKING GROUP DRAFT
PRIVILEGED AND CONTIDENTIAL-
Employcrs and employees pay a community-rated premium. However, payments to
health plans by alliances are adjusted to account for the level ofriskassociated with
individuals enrolled in plans. The adjustment is made using a formula developed by the
National Health Board.
REINSURANCE
Health plans may purchase reinsurance to cover disproportionate costs beyond those
predicted byriskadjustment formulas.
INFORMATION
Each health plan provides to the alliance and makes available to consumers and health
care professionals information concerning:
x
»
N
Costs
*
Qualifications and availability of providers
^
Procedures used to control utilization of services and expenditures
\
Procedures for assuring and improving the quality of care
•
Rights and responsibilities of consumers and patients.
Health plans are responsible for the accuracy of information submitted and may be
disqualified from participating in an alliance if information is inaccurate.
In keeping with the overall goal of increased consumer knowledge about health care
issues and choices, health plans are expected to encourage patients to participate in decisions
about treatment options and to offer consumers up-to-date information regarding potential
benefits,risks,and costs of various medical and surgical procedures.
(9/7/93)
75
�WORKING GROUP DRAFT
PRIVILEGED AND-eeNFffiENTtAfc
Health plans in states that allow advance directives and surrogate decision making
related to medical treatment are required to provide information about those legal options at
the time of enrollment in the plan.
GRIEVANCE PROCEDURE
Health plans offering coverage through both regional and corporate alliances are
required to establish a benefit claims dispute procedure. The new health care system relies on
the development of alternative dispute resolution procedures to reduce costs and increase the
efficiency of the grievance process by setting specific deadlines for resolution and providing
for early review of disputes by neutral third parties. If the grievance procedure fails to
resolve a complaint, consumers have the option of pursuing the issue with the alliance
ombudsman or pursuing other legal remedies.
The Department of Labor will ensure that both regional and corporate alliance health
plans establish grievance procedures and monitor the performance of such procedures.
HEALTH PLAN ARRANGEMENTS WITH PROVIDERS
Health plans enter into agreements with health care providers to deliver services. Not
withstanding state laws to the contrary and except for services provided under a fee-forservice component, a health plan is authorized to:
•
Limit the number and type of health care providers who participate in the
health plan.
•
Require participants to obtain health services other than emergency services
from participating providers or from providers authorized by the health plan.
•
Require participants to obtain a referral for treatment by a specialized physician
or health institution.
•
Establish different payment rates for participating health providers and
providers outside the plan.
•
Create incentives to encourage the use of participating providers.
(9/7/93)
76
�WORKING GROUP DRAFT
•
PRIVILEGED AND-GONFTDFNTl AL
Use single-source suppliers for pharmacy, medical equipment and other health
products and services.
In addition, state laws related to corporate practice of medicine and to provider
ownership of health plans or other providers do not apply to arrangements between integrated
health plans and their participating providers.
Health plans cover emergency and urgent care provided to members outside of its
service area. Reimbursement is based on the fee-for-service rate schedule in the alliance
where the services are provided.
During a transitional period, health plans must cover services provided to their
members by designated essential community providers. Payments to essential providers are
based on the Medicare method for community health centers.
A state has the authority to waive the obligation to reimburse essential community
providers for a particular health plan operating in a particular area. To obtain a waiver, a
health plan demonstrates that it has the capacity to deliver a comparable range and level of
services to consumers in the area served by the essential community provider.
Health plans may not discriminate against providers on the basis of race, ethnicity,
gender, religion, mix of health professionals or patient population.
PROVIDER PARTICIPATION IN PLANS
Each health plan in each regional alliance has an advisory board composed of
providers participating in the health plan. The providers will select the membership of the
advisor)- board.
The health plan consults frequently with the advisory board, and must respond to
concerns raised by the advisory board. The advisory board has access, under rules established
by the National Board, to health plan information that relates to the delivery of health care by
that health plan.
(9/7/93)
77
�WORKING GROUP DRAFT
PRIVILEGED AND-eQNHPENTLAI
LOANS TO COMMUNTTV BASED HEALTH PLANS
A loan program will be established in HHS to assist the development of community
based health plans. The program may provide direct loans to health plans or guarantee loans
made by privatefinancialinstitutions.
ADDITIONAL REQUIREMENTS FOR PLANS
In addition to the requirements discussed above, health plans must meet national,
uniform Conditions of Participation established by the National Health Board, including:
Fiscal soundness, including minimum standards forfinancialreserves, and disclosure
of financial condition to all purchasers.
Truth in marketing, including standards for fair marketing practices and disclosure to
consumers of all material information regarding the plan and its performance.
Verifying credentials of practitioners and facilities, including bi-annual checks of
providers against national databases, investigating and resolving consumer complaints
and dropping providers who consistently fail to meet quality standards or are
responsible for fraud or mismanagement. Health plan must ensure that all practitioners
and health institutions meet state licensing standards.
Consumer Protection, including disclosure of all material information regarding the
plan and theirrightsand responsibilities, providing due process for patients to appeal
denial, termination or reduction of coverage and resolving appeals of complaints.
Confidentiality, including maintaining a policy for protecting patient privacy and
confidentiality in compliance with law and allowing patients to obtain copies of their
medical records upon request. (See "Administrative Simplification and Information
Systems")
Complaints, including investigating and attempting to resolve complaints about
practitioners, providers, treatments, access to care and health plan policies and
procedures.
(9/7/93)
78
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL-
DisenroIlmeDt for cause, including permitting consumers to resign from health plans
at any time for good cause.
Utilization Management, including disclosure of protocols for controlling utilization
and costs.
Methods used to manage the network of providers, such as the selection criteria
and internal performance standards.
Compensation methods for providers, such as capitation;
Incentives to providers to control utilization;
Utilization review criteria - criteria by which health care services are
determined to be inappropriate; and
Protocols for managing the care of high-cost patients.
Data Management and Reporting, including maintaining encounter data and required
quality data electronically and reporting the data to the national network. (See
Information Systems and Administrative Simplification, and Quality Management and
Improvement)
(9/7/93)
79
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
SUPPLEMENTAL INSURANCE
Supplemental insurance to cover both cost sharing and additional health benefits is
allowed.
A supplemental benefit policy may cover all or some portion of benefits not included
in the comprehensive package, such as long-term rehabilitation services and cosmetic surgery.
A policy covering cost sharing might pay a portion of co-payments and co-insurance
required by a health plan.
Any entity that offers supplemental policies must abide by the rules for supplemental
insurance. However, the following types of insurance policies are not subject to these rules:
Long-term care insurance
Insurance against specific diseases
Hospital or nursing home indemnity insurance
Medigap insurance
Insurance against accidents.
COST SHARING
The National Health Board develops two standard, supplemental cost-sharing policies.
One model provides standard coverage; the other maximum coverage. Once developed, only
the mode] policies may be offered, and every health plan that uses the high cost sharing
model (described under Guaranteed National Benefit Package) is required to offer both.
Limitations on pre-existing medical conditions are prohibited, and supplemental
policies must be available to every participant in a health plan at the same price. Policies
may not exclude cost-sharing coverage for specific diseases or conditions.
(9/7/93)
80
�WORKING GROUP DRAFT
PRIVILEGED AND CONFtDEI^mAtr
Only qualified health plans with the high cost sharing option (see section on
Guaranteed National Benefit Package) may offer supplemental insurance for cost sharing
under the comprehensive benefit package. A member of a health plan may purchase
supplemental insurance for cost sharing only during the annual enrollment period.
The price of any insurance policy covering cost sharing includes the cost of additional
benefits plus any expected increase in utilization caused by the insurance.
No plan may sell coverage for cost sharing at a price that results in a loss-ratio less
than 90 percent. (The loss ratio is the ratio of the premium returned to the consumer in
payout relative to the total premium collected.)
The National Health Board develops rules for the coverage of cost sharing in corporate
alliances. The rules may require that only one standard, supplemental policy is offered, or
that no policy is offered if an employer already substantially covers cost-sharing.
ADDITIONAL BENEFITS
No health plan, insurer, or any other person may offer anyone eligible for the
guaranteed benefit package a supplemental insurance policy that duplicates coverage in the
national benefit package.
Any health plan that sells duplicate coverage is disqualified from participating in
alliances. Any firm or individual who offers such policies is subject to loss of the license to
sell insurance.
No policy covering additional health services may fail to cover for a period longer
than 6 months, limit or restrict coverage for any illness, disease, or other condition that
existed prior to the purchase of the policy. All policies covering additional benefits must be
offered at a single price to all individuals in a alliance.
Insurance policies providing coverage for additional benefits must be available to any
purchaser, subject to the capacity and financial limits of the insurer. Coverage available only
through membership infraternal,religious, professional and other organizations and policies
sold to employers to cover benefits for their employees are exceptions.
(9/7/93)
81
�WORKING GROUP DRAFT
PRIVILEGED AND CONI'IDEN'nAL
The National Health Board develops, in consultation with the states, minimum
standards that prohibit marketing practices by insurance companies and agents that involve:
•
Tying or otherwise conditioning the sale of supplemental
insurance to the purchase of the comprehensive benefit package.
•
Providing compensation to an agent selling supplemental benefits for
promoting or otherwise encouraging the purchaser of supplemental
benefits.
•
Using or disclosing to any party information about the health status or
claims experience of participants in the plan for the purpose of
marketing supplemental benefits.
(9/7/93)
82
�WORKING GROUP DRAFT
PRIVILEGED AND-eONMBbN 1 lAL"—'
RISK ADJUSTMENT
Alliances adjust premium payments to health plans to reflect the level of risk assumed
for patients enrolled in comparison to the average population in the area. The adjustment
mechanism takes into account factors such as age, gender, health status and services to
disadvantaged populations.
DEVELOPMENT OF FEDERAL MODEL SYSTEM
Nine months before the date on which states first enroll consumers in regional
alliances, the National Health Board promulgates a risk-adjustment system.
Regional alliances arerequiredto use the risk-adjustment system unless an alliance
obtains a waiver from the National Health Board. The Board provides technical assistance to
states and alliances in implementing the federal system.
The federal system takes into account the following:
•
Appropriate compensation for health plans that enroll individuals
with higher or lowcr-than-average health costs.
•
Variations in health costs and utilization such as demographic
characteristics and health status.
•
Factors that impede access to health care, such as geographic location,
prevalence of poverty, language and cultural barriers.
•
Factors related to the unique problems of mental illness.
The risk adjustment system uses prospective adjustment of payments to health plans
and reinsurance to protect health plans that have a disproportionate share of high cost cases.
Greater reliance may be placed on reinsurance in the first years, until a more sophisticated
risk adjustment system is fully implemented.
(9/7/93)
83
�WORKING GROUP DRAFT
PRIVILEGED AND-GONHDENTIAL
INCENTIVES TO ENROLL AND SERXT DISADVANTAGED GROUPS
Certain population groups face barriers to care due to their geographic location (rural
or inner city), to poverty, or to other factors such as language or cultural differences. States
may determine thatfinancialincentives are needed to insure that health plans enroll
disadvantaged groups and provide appropriate outreach services for them.
ADVISORY COMMITTEE
The National Health Board creates an advisory committee to provide technical advice
and recommendations regarding the development of therisk-adjustmentsystem. The
advisor}' committee is composed offifteenrepresentatives of health plans, alliances,
consumers, experts, employers and health providers. Once it is adopted, the committee makes
recommendations for updating therisk-adjustmentsystem.
The National Health Board may conduct research and undertake demonstration
projects to support the development of the system.
RISK ADJUSTMENT SYSTEM REQUIRED
States are required to assure that alliances use the federal risk-adjustment system.
A state that wishes to modify the system or substitute another risk-adjustment
mechanism applies to the National Health Board. The Board grants a waiver if the alliance
demonstrates that its proposed system is at least as effective and accurate as the model
system.
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RURAL COMMUNITIES IN THE NEW SYSTEM
Economic and demographic characteristics of many rural communities result in a
larger number of uninsured and underinsured citizens in rural areas. Under the American
Health Security Act, access to care is ensured for Americans who live in rural areas through:
Alliance requirements to serve rural areas
Investment in infrastructure
Creation of incentives to expand rural community-based networks and plans
Investments for the development of the health workforce
Expansion of the rural public health system.
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AND 'CONFIDENTIAL
GUARANTEED UNIVERSAL ACCESS
Alliances have the capacity to ensure adequate health services in rural areas by:
Creating alliance-sponsored plans
Fostering cooperative relationships among rural and urban
providers
Requiring urban health plans to serve rural areas in the alliance
Developing an information and referral infrastructure to link academic health
centers and rural health providers
Offering long-term contracts to health plans serving rural areas.
INFRASTRUCTURE DEVELOPMENT DURING TRANSITION
As described in the section on Public Health Service Access Initiatives, qualifying
community-based organizations in rural areas have access to federal loan guarantees for
capital improvements.
RURAL COMMUNITY-BASED NETWORKS AND PLANS
Federal funding and technical assistance become available to support local planning
and development of primary care systems in areas with inadequate health services, such as
rural areas. Grants support the development of telecommunications capacity to link rural
providers with health care centers and institutions as well as continuing education and
professional support. In addition, grants to Academic Health Centers assist in the
development of an information and referral infrastructure to support rural health networks.
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WORKFORCE
The National Health Services Corps and related programs expand to reduce the
shortage of health care providers in rural areas. Incentives are provided to attract and retain
health professionals in rural areas.
Tax incentives encourage practice in rural areas. Incentives include:
•
A non-refundable personal tax credit of $1,000 per month that can be
recaptured during thefirstfiveyears of practice by a physician in a rural area
with a shortage of health professionals ($500 for physician assistants and nurse
practitioners).
•
The exclusionfromgross income of National Health Service Corps Loan
Repayments received under section 338B.
•
An allowance of up to $10,000 annually (depreciation not required) for the
purchase of medical equipment used in areas with a shortage of health
professionals.
•
Deductibility of up to $5,000 in annual student loan interest for physicians,
physician assistants, advanced practice nurses and registered nurses performing
services under agreements with rural communities.
The allocation of residency positions in new health care systems involves special
attention to geographic factors.
Increased relative compensation for primary care physicians also encourages practice
in rural areas. (See section on Creating a New Health Workforce)
PUBLIC HEALTH SYSTEM
To assure access to health care in rural areas, supplemental services are provided for
low-income populations. These services include: transportation, outreach, non-medical case
management, translation, child care during clinic visits, health education, nutrition, social
support and home visiting services. (See section on Public Health Service Access Initiatives)
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INTEGRATION OF WORKERS' COMPENSATION INSURANCE
Health plans provide treatment for individuals with work-related injuries covered
under workers' compensation insurance.
Workers' compensation insurers (including self-funding employers) continue to be
responsible for the costs of treatment based on current law and reimburse health plans for
services provided. Reimbursement is based on a fee schedule or on an alternative
arrangement established by alliances or negotiated between workeis' compensation insurers
and health plans.
To obtain state certification, a health plan demonstrates its ability to provide or
arrange for comprehensive medical benefits for work related-injuries and illnesses, including
rehabilitation and long-term care services.
•
Health plans employ or enter into contracts with specialists in industrial
medicine and occupational therapy.
•
Health alliances are responsible for coordinating access to specialized health
providers or centers of excellence in industrial medicine and occupational
therapy.
•
Alliances may designate as subcontractors health care professionals and
institutions that provide specialized services for the treatment of work-related
injuries and illnesses on behalf of all health plans serving the alliance region.
Individuals enrolled in health plans within the alliance receive treatment for workrelated injuries or illnesses from their health plans, although emergency treatment may be
obtained from any provider.
State laws regarding choice of provider for workers' compensation cases are
overridden with respect to individuals covered through health alliances. Exceptions may be
necessary in cases of disputes.
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Each health plan designates a workers' compensation case manager to coordinate the
treatment and rehabilitation of injured workers. The case manager ensures that:
•
The plan of treatment for an injured worker meets appropriate protocols and is
designed to assure rapid return to work.
•
The plan of treatment is coordinated with the workers' compensation insurance
carrier and/or the employer to facilitate rapid return to work.
•
The health plan complies with medical and legal requirements related to
workers' compensation.
•
If the health plan is unable to provide a needed service to treat a work-related
injury or illness, the workers' compensation case manager, in consultation with
the workers' compensation carrier, refers the worker to an appropriate provider.
Health plans are reimbursed by workers' compensation insurance carriers or selffunded employers for work-related medical benefits in accordance to the fee-for-service
schedule in the alliance.
•
Alliance fee schedules include rehabilitation, long-term care and other services
commonly used for the treatment of work-related injuries and illnesses.
•
Alliances are permitted to adopt varying arrangements with health plans for
providing work-related medical benefits, including negotiating per case
capitation payments.
•
Health plans are permitted to negotiate fees that vary from the fee-for-service
rate schedule with workers' compensation insurers and employers.
Information related to provider and health plan performance in treating work-related
injuries and illnesses (including the health plan performance in facilitating injured workers'
returning to work) are included in reporting information about the quality of care provided by
the health plan.
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Nothing in this policy alters or diminishes the effects of state workers' compensation
laws as the exclusive remedy for work-related injuries or illnesses. Disputes related to
whether an injury or illness is work-related are resolved in accordance with existing state
laws.
Health benefits for work-related injuries and illnesses continue to be defined by states.
Health plans and providers are not allowed to balance bill patients with work-related injuries
or illnesses for additional charges beyond those covered by the health plan. Workers will not
be subject to requirements for co-payments and deductibles related to medical services as a
result of workplace illness or injuries.
For regional alliances, the federal requirements related to workers' compensation
become effective two years after implementation of the state health reform program. For
corporate alliances and federal workers' compensation programs, the federal requirements
become effective in 1998.
Compensation programs under FECA, the Jones Act and the Longshoreman's Act are
subject to similar requirements.
A Commission on Health Benefit and Integration is created to study the feasibility and
appropriateness of transferring the financial responsibility for all medical benefits (including
those now covered under workers' compensation and automobile insurance) to the new health
system. The Department of Labor and Department of Health and Human Services provide
staff support to the Commission. The commission reports to the President and present a
detailed plan for integration if it is recommended, on or before July 1, 1995.
The Department of Health and Human Services and the Department of Labor are
authorized to conduct a demonstration program in one or more states related to treatment of
work-related injuries and illnesses.
•
The Department of Health and Human Services and the Department of Labor,
in consultation with states and experts on work-related injuries and illnesses,
develop protocols for the appropriate treatment of work-related conditions.
•
The Department of Health and Human Services and the Department of
Labor enter into contracts with one or more alliances to test the validity
of protocols.
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Thc demonstration may include the development of per-case
capitation payments to health plans for the treatment of workrelated injuries and illnesses.
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INTEGRATION OF AUTOMOBILE INSURANCE
Individuals receive treatmentfromhealth plans for injuries sustained in automobile
accidents.
In cases in which an automobile insurance carrier is responsible for the costs of
treatment (based on current law), the automobile insurer reimburses the health plan for
services provided. Reimbursement is based on a fee schedule or on an alternative
arrangement established by the alliance or negotiated between the automobile insurer and the
health plan.
To obtain state certification, a health plan demonstrates its ability to provide or
arrange for (through contracts with appropriate health care providers) medical benefits for
automobile injuries.
•
Health plans provide or arrange for the full range of services commonly
reimbursed by automobile insurance carriers for the treatment of automobile
injuries, including long-term rehabilitation and long-term care services.
•
Health alliances may enter into contracts with centers of excellence or with
certain specialists for the purpose of providing all health plans with access to
providers of specialized treatments for automobile injuries.
Health providers may not bill patients injured in automobile accidents for charges in
excess of payments made by health plans. Health plans may negotiate different fees with
automobile insurance caniers.
For regional and corporate alliances, the federal requirement for automobile insurance
is effective two years after the state health reform program is implemented.
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PRIVILEGED AND-CONHDENTUl
BUDGET DEVELOPMENT AND ENFORCEMENT
The American Health Security Act organizes the market for health care and creates
mechanisms to control costs through enhanced competition, consumer choice, administrative
simplification, and increased negotiating power through health alliances. A national health
care budget serves as a backstop to that system of incentives and organized market power.
The budget ensures that health care costs do not rise faster than other sectors of the economy.
The national health care budget centers on the weighted average premium for the
nationally-guaranteed benefits package in regional health alliances, establishing a target for
how much that average premium may increase each year. The federal government assumes
responsibility for enforcing alliance budgets.
COVERED EXPENDITURES
Health care expenditures covered by the budget include premiums paid to cover the
guaranteed comprehensive benefit package whether paid by employers, employees, or
individuals. Medicare and Medicaid expenditures are included under separate budgets.
Supplemental benefits beyond the comprehensive benefit package, as well as workers'
compensation and auto insurance benefits, are not included in the budget. Premiums for
insurance policies providing coverage for cost sharing are not included.
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ANNUAL INCREASES
Allowed increases in Medicare and Medicaid spending are described in the table called
Growth Rate of Health Care Spending at the end of the plan. The growth in premiums in
regional alliances is also limited through a national inflation factor. Regional alliance
inflation factors are as follows:
•
Projected increase in the Consumer Price Index (CPI) plus 1.5 percentage
points for 1996
•
Projected 1997 increase in the CPI plus 1.0 percentage points
•
Projected increase in the CPI plus 0.5 percentage points in 1998
•
Projected increase in the CPI for each year thereafter
Health expenditures for the guaranteed benefits package increase at these rates plus
increases in population.
Projected inflation factors are detailed in the table called Growth Rate of Health Care
Spending at the end of the plan.
The National Health Board adjusts the inflation factor for each alliance to reflect
unusual changes in the demographic and socio-economic characteristics of the population
covered by the alliance. The National Health Board develops a methodology for making such
adjustments using commonly accepted actuarial principles. Demographic changes considered
include, at a minimum, age and gender.
The Board consults with states and alliances prior to the establishment of the annual
inflation factor.
NATIONAL PER CAPITA BASELINE TARGET
The National Health Board calculates a national per capita premium target based on:
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�WORKING GROUP DRAFT
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•
Current per capita health expenditures for the guaranteed benefits package
trended forward to 1996 based on projected increases in private sector health
care spending.
•
With adjustments for expected increases in utilization by the uninsured and
under-insured and to recapture currently uncompensated care.
FIRST YEAR BIDDING AND NEGOTIATION PROCESS
In the year prior to implementation, each alliance conducts a bidding and negotiation
process with health plans. The Board provides alliances with information and technical
assistance to aid in the bidding process. The bidding is conducted either by providing plans
with the alliance's budget target prior to bidding, or by inviting blind bids followed by
negotiations and re-bidding.
Once an alliance is satisfied with the negotiated health plan premiums, it submits them
to the National Health Board for review. The first-year bidding process occurs earlier than in
subsequent years to allow time for a more thorough review by the National Health Board and
possible re-negotiation of premiums.
NATIONAL BOARD REVIEW
The Board calculates for each alliance a per capita premium target, using the national
per capita baseline target as a reference point. For each alliance, the Board adjusts the
national target for current regional variations in health care spending and for rates of underinsurance and underinsurance. To measure regional variations in health care spending, the
Board uses such factors as:
•
Variations in premiums across states based on surveys and other data.
•
Variations in per capita health spending by state, as measured by the Health
Care Financing Administration.
•
Variations across states in per capita spending under the Medicare program.
•
Area rating factors commonly used by actuaries.
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PRIVILEGED AND- CONITDENTIAL •
The Board establishes the premium targets for alliances so that the weighted average
of the alliance targets equals the national per capita baseline target.
In states establishing regional alliances after 1996, alliance targets increase annually by
the national inflation factor. Targets are not, however, enforced until alliances are formed.
The Board calculates an estimated weighted-average premium for each alliance, using
the proposed premiums submitted by the alliance and a projection of the distribution of
enrollment across plans. If the estimated weighted average premium for an alliance is greater
than the alliance's premium target, then the Board notifies the alliance and allows it to renegotiate premiums. If an alliance chooses to re-negotiate premiums, it submits the revised
premiums to the Board and proceeds with enrollment.
FIRST YEAR BUDGET ENFORCEMENT
The Board calculates an estimated weighted-average premium based on thefinalbids
submitted by the alliance. If the estimated weighted-average premium for the alliance
exceeds the alliance's premium target, an assessment is imposed on each plan whose bid
exceeds the target, and on the providers receiving payment from that plan. Revenues from
assessments on plans are used to reduce required employer premium contributions. The
assessment on the plan is equal to a portion of the percentage amount by which the alliance
target is below the bid. The "portion" is calculated so that the weighted average of premiums
after assessments equals the alliance's premium target. Payments to providers by that plan are
assessed at the same percentage, with revenues from the assessment retained by the plan.
ESTABLISHING A BASELINE BUDGET FOR EACH ALLIANCE
Following thefirstopen enrollment period, the Board calculates for each alliance the
weighted average premium, using actual premiums and enrollmentfigures.Thefirstyear
weighted average premium becomes the baseline per capita budget for the alliance.
In each subsequent year, an alliance's per capita budget equals its budget for the
previous year, increased by the inflation factor.
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ADJUSTING THE PREMIUM INFLATION FACTOR
In general, as described above, the premium inflation factor is the increase in the
Consumer Price Index. If, however, an alliance's actual weighted-average premium in a
given year exceeds its premium target, then the inflation factor for that alliance is reduced for
the following two years to recover excess spending.
PROCESS FOR MAKING ADJUSTMENTS IN TARGETS OVER TIME
The National Health Board appoints an advisory commission to recommend
adjustments to the methodology for calculating premium targets. The Board provides states
and alliances with information about regional differences in health care costs and practice
patterns. The commission explores methods to reduce variations in budget targets across
states due to differences in practice patterns, physician supply, population characteristics, and
other appropriate factors. Adjustments to targets may not be made without Congressional
action.
ENFORCEMENT OF THE BUDGET
The federal government is responsible for enforcing the health care budget. By
October 1 of each year — beginning in 1996 — alliances submit to the National Health
Board for approval their proposed health plan premiums.
Based on proposed premiums, the Board calculates the anticipated weighted average
premium for each alliance. The anticipated weighted average premium is the average of the
proposed premiums weighted by current enrollment in each plan, with special rules in cases
of plans entering or leaving the alliance.
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If an alliance's anticipated weighted-average premium exceeds its per capita budget
target, an assessment is imposed on each plan whose premium increase (adjusted upward to
reflect the previous year's assessment) exceeds the alliance's premium inflation factor.
Revenues from assessments on plans are used to reduce required employer premium
contributions. The same assessment is imposed on providers receiving payment from that
plan. The assessment on the plan is equal to a portion of the difference between the plan's
premium increase and the alliance's budget inflation factor (adjusted upward to reflect the
previous year's assessment). The "portion" is calculated so that the weighted average of
premiums after assessments equals the alliance's per capita budget target. Payments to
providers by that plan are assessed at the same percentage, with revenue from the assessment
retained by the plan.
TOOLS TO MEET PREMIUM TARGETS
In addition to creating a well-structured marketplace for health coverage, alliances
have the ability to control costs through premium negotiations and the authority to refuse
contracts with health plans whose premiums are too high. Tools available to states to contain
costs include:
•
Premium negotiation and regulation.
•
Limiting enrollment in high-cost plans by:
•
Freezing new enrollment in high-cost plans.
•
Surcharging high-cost plans or paying rebates to consumers who enroll
in low-cost plans.
•
Setting rates for health providers.
•
Controlling health care investments through planning.
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ANI>€ONFIDENTIAfc-
BUDGETS FOR CORPORATE ALLIANCES
A large employer may operate a corporate alliance rather than purchasing health
coverage through a regional alliance, provided it complies with cost-containment goals.
Large employers whose health plans do not meet national spending goals are required to
purchase coverage through regional alliances.
The allowed rate of growth for corporate alliance premiums is the same as the national
inflation factor for regional alliances.
The National Health Board develops a methodology for calculating an annual premium
equivalent within a corporate alliance. Beginning after the third year of implementation of
health reform, each corporate alliance annually reports its average premium equivalent for the
previous three years to the Department of Labor.
If the increase in the premium equivalent exceeds the allowed rate of growth during
two of any three years, the Department of Labor shall require the employer to purchase health
coverage through a regional alliance. An employer may petition the Department of Labor for
an adjustment in its inflation factor to compensate for unusual changes in the risk profile of
its workforce.
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PRIVILEGED AND "CONriDENTIAL
QUALITY MANAGEMENT AND IMPROVEMENT
Health reform transforms the current prescriptive quality assurance program into a
quality-management system focused on performance measures and continuous improvement.
Quality assurance programs in the current system rely on external checks, forms and
process manuals. Insurance carriers, peer review organizations, state and federal inspection
agencies audit the work being done in hospitals, doctors' offices and laboratories, and penalize
the providers if they fail to follow rules. Patients play a minor role, lacking reliable
information upon which to compare the quality of health plans, providers or treatments.
Under the American Health Security Act, customer-focused continuous improvement
assures quality improvement.
NATIONAL QUALITY MANAGEMENT PROGRAM
The National Quality Management Program develops the quality information and
accountability program. An advisory council under the National Health Board, appointed by
the President, oversees the program.
The council consists of IS members representative of the population, including
representatives of consumer groups, health plans, states, purchasers of care and experts in
public health and quality of care and related fields of health service research.
The National Quality Management Program:
•
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Develops the core set of quality and performance measures and consumer
survey questions and updates them over time to reflect changing goals for
quality improvement in health care.
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•
PRIVILEGED AND CONFIDE? mAL-
Conducts consumer surveys that measure access to care, use of health services,
outcomes and satisfaction.
As part of that effort, the program develops sampling strategies to ensure that
performance reports reflect populations difficult to reach with traditional
consumer-sampling methods, including consumers who fail to enroll in a
health plan or resign from plans.
Sets national goals for performance on selected quality measures.
Establishes minimal standards of access and quality for plans on selected
measures.
Supports research, technology assessment and development of reliable tools for
measuring health outcomes.
Evaluates the impact of health reform on the quality of care.
Reports annually on performance of the health care system.
Reviews and recommends changes to the quality measures annually and
establishes a five-year priority list for measures to be included in the future.
Uses the national network of regional centers to obtain quality management
data. (See section on "Information Systems and Administrative
Simplification")
PERFORMANCE REPORTS
The National Quality Management Program under the National Health Board develops
a core set of measures of performance that apply to all health plans, institutions and
practitioners. It publishes annual performance reports outlining the results of those measures
for each health plan, creating a public system of accountability for quality and providing
consumers with meaningful information.
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It also provides annual reports to the states on the comparative performance of health
plans and state quality programs. Quality reports include information on the performance of
alliances and health plans on as many as 50 measures of access to care, appropriateness of
care, health outcomes, health promotion, disease prevention and satisfaction with care.
It provides the results of a smaller number of quality measures for health care
institutions, doctors and other practitioners if the available information is statistically
meaningful. State performance reports include trends, performance on national quality
measures and on goals for national performance on access, appropriateness and health
outcomes.
The following criteria determine the selection of national measures of quality
performance:
•
The measures reflect important aspects of care in terms of
prevalence of illness, morbidity, mortality or cost.
•
The set is representative of the range of services provided to consumers
by the entities in question.
•
Measures are reliable and valid and data needed for calculation can be
obtained without undue burden.
•
Performance on measures included in the set vary widely among the
entities on the performance report.
•
When the measures are rates of process of care, these processes are
linked by strong scientific evidence to health outcomes.
•
When the measures are outcomes of care, performance lies within the
control of providers and adequateriskadjustment can be accomplished.
•
The measures incorporate minimal standard for meeting public
health objectives.
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STATE ROLE
As part of the Quality Management Program, states assume responsibility to:
•
Develop and implement plans to meet enrollment, access and quality standards
established by the federal government.
•
Assure that plans and providers meet essential national standards through
licensure and certification procedures.
•
Monitor the extent to which plans make the full range of benefits covered in
the guaranteed package accessible to all population groups.
•
Prepare comparative reports on the performance of alliances, plans, providers
and practitioners.
•
Establish in each alliance a premium check-off system at enrollment where an
annual amount— up to $1 per participant — can be designated for the purpose
of supporting a consumer advocacy program.
•
Establish a program of technical assistance administered through either a nonprofit foundation or another organization dedicated to that purpose.
Eligible organizations may include public-private partnerships, consortia
led by academic medical centers or other forms.
Technical assistance may include a variety of activities such as:
fostering collaboration among health plans and providers; disseminating
information about successful quality-improvement programs, practice
guidelines and researchfindings;and providing educational courses and
other forums for providers to exchange information on the valuative
sciences and quality improvement activities and providing information
to encourage the adoption of employee participation committees and
other high-performance work practices.
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Technical assistance is targeted at improving quality management
practices and not designed to regulate or interfere with the
administration of plans and providers.
A per capita levy on insurance premiums, with the amount established
by the National Health Board, funds the program.
Providers and health plans are not required to use technical assistance
resources as a condition of participation in the new health care system,
although health plans are accountable for improving performance on
national quality measures.
ROLE OF ALLIANCES
As part of the quality management program, health alliances:
•
Resolve consumer complaints, grievances and requests to leave a health plan.
•
Disseminate to consumers information related to quality and access to aid in
their selection of plans.
•
Prepare comparative reports on the quality of health plans, providers and
practitioners and assure through their negotiations with plans that performance
and quality standards are met.
•
Conduct education programs to assist consumers in using quality and other
information in choosing health plans.
ROLE OF HEALTH PLANS
As part of the Quality Management Program, health plans:
•
Measure and disclose performance on quality measures.
•
Report on, maintain and improve the quality of care delivered by providers and
practitioners.
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•
PRIVILEGED AND CONFIDENTIAL
Meet national, uniform Conditions of Participation established for health plans
by the National Health Board (See "Health Plans").
DEVELOPING INFORMATION FOR QUALITY MANAGEMENT
An electronic network of regional centers containing enrollment,financialand
utilization data is created, as outlined in the section on Information Systems. Health plans,
providers and alliances report information required for the national Quality Management
Program through the regional network; information required includes data related to
enrollment, clinical encounters, consumer satisfaction and specific quality measures.
Regional centers electronically link state-level quality programs, health alliances and
plans, providing quality and utilization information for each health plan and provider as well
as comparative information on other health plans and states. Regional centers audit samples
of data to ensure integrity.
To supplement routinely collected information, health plans gather clinical data
specified by the national Quality Management Program from samples of medical records. To
assure coordination with other information-gathering activities, consumer satisfaction surveys
are conducted as described in the section on Information Systems. Resultsfromconsumer
surveys, in combination with other information, will gauge access to health care, use of
service, outcomes and satisfaction.
DISSEMINATION OF KNOWLEDGE TO IMPROVE THE QUALITY OF CARE
To enhance the practice of medicine and promulgate information about best practices
and effective treatment approaches, the National Quality Management Program:
•
Surveys statistically valid sample populations to gather information related to
consumer satisfaction, access to care and health outcomes. Survey samples
include representation of populations considered to be at risk for inadequate
health care. The national quality program administers the survey; states may
add quality measures of local interest.
•
Develops practice guidelines that assist providers in achieving quality standards
and underpin national measures of quality.
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•
Develops methodology standards for practice guidelines, an evaluation and
voluntary certification process for guidelines developed by the private sector.
•
Operates a clearinghouse and dissemination program for practice guidelines.
•
Disseminates information documenting clinically ineffective procedures and
treatments.
•
Supports research on topics central to quality management and improvement,
including outcomes research, dissemination methods, ways of measuring quality
and design of electronic information systems and new ways of organizing work
systems.
•
Establishes scientific standards and procedures for evaluating the clinical
appropriateness of protocols used to manage health service utilization.
•
With the advice of the national quality advisory committee, defines priorities
for health-care evaluation research and recommends projects. The priorities
will target diagnoses with the highest level of uncertainty in treatment
decisions, widest variation in practice patterns, significant costs and incidence.
STREAMLINING REGULATORY ACTIVITIES
Minimum Standards for Health Care Institutions. The National Quality
Management Programs develops uniform standards for licensing of health care institutions
that focus on essential performance requirements related to patient care. As they are
developed, those standards replace current regulations except in areas offiresafety, sanitation
and patientrightsand without undermining recent reforms in nursing home care.
When the new standards are in place, agencies charged with certifying health
institutions focus their attention on institutions with problematic records, responding to
complaints and randomly selected validation sites.
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By January 1, 1996, the National Quality Management Program completes
demonstration projects for new performance standards and revises standards according to the
findings. Demonstration projects evaluate the impact of these standards in assuring quality of
care, reducing cost and burdens on providers.
Current standards are retained until new ones are tested, promulgated, evaluated and
implemented. In the interim, government agencies responsible for licensing and certifying
health care institutions coordinate inspections, reduce paperwork and control the number of
inspections.
Medicare Peer Review Organizations. The peer review organization system under
Medicare continues until the new quality system is implemented and the Secretary of the
Department of Health and Human Services determines that Medicare enrollees are protected
adequately through National Quality Management Program. PROs will end at that time.
During the interim, the PRO program is streamlined. (See Administrative
Simplification)
The Clinical Laboratory Improvement Act. Regulations of clinical laboratory
testing are refocused to emphasize quality protection while reducing administrative burdens.
Regulation will continue for labs that:
a) perform a comprehensive menu of tests; or
b) perform a large volume of tests (50,000 or greater); or
c) engage in critical testing (a test is critical if an answer is needed
quickly or an error can result in serious harm to an individual); or
d) conduct testing to monitor care while it is being delivered.
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Easc regulatory burden on laboratories performing simple tests
Exempt laboratories performing waived tests and microscopyfromall
requirements under CLIA, including registration and payment of fees to the
DHHS. Approximately 79,000 labs will be exempted, (under review)
Add more simple tests to the list of waivered tests.
In accordance with recommendations by the Clinical Laboratory Improvement
Advisory Committee (CliAQ, the physician-performed microscopy category
will be expanded to include those tests performed by midlevel health care
providers (e.g. nurse practitioners, physician's assistants, nurse midwives, etc.).
Ease regulatory burden on laboratories performing moderate complexity tests
Create a new category of moderately complex tests that are performed using
FDA-approved, highly reliable equipment that would be subject to less
stringent inspection requirements.
By January 1, 1996, the Secretary of the DHHS issues a report on the extent to
which regulation of laboratories performing moderate complexity tests should
continue. Within six months, the Seaetary determines, based on the report,
where continued regulation for these laboratories is necessary.
Revise personnel standards to provide needed relief in urban and rural areas
In accordance with recommendations by the CLIAC, all individuals who are
currently engaged in laboratory testing or supervision will be able to continue
to perform such testing (in the absence of evidence of demonstrated poor
performance).
To address the concerns of rural and underserved areas, the DHHS will modify
personnel requirements for certain laboratory positions.
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Focus proficiency testing primarily on education
DHHS will only take proficiency-related enforcement actions where a
laboratory's performance is extremely poor or it has failed to take corrective
action when proficiency testing problems are identified.
DHHS will work with Congressional committees to develop a modified
approach to cytology proficiency testing.
Streamline inspections
DHHS will target on-site inspections at high-volume, high-risk labs, and they
will be announced, (under review)
Expand information and education activities
To eliminate confusion and misinformation with respect to CLIA requirements,
DHHS will work with professional groups to expand activities in information
and education.
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INFORMATION SYSTEMS
Timely and reliable information represents a critical element in efforts to reform the
health care system and to protect and improve the health of the nation.
Health care reform establishes a newframeworkfor health information. Using
standard forms, uniform health data sets, electronic networks and national standards for
electronic data transmission, the informationframeworksupports:
The development of clear and useful information for consumers.
Measurement of health status.
Monitoring and evaluation of the health care system.
Issuance of Health Security Cards.
Development of links among health care records to improve patient care.
Analysis of patterns of health care.
Streamlined and simplified administration with associated cost savings.
Identification offraudulentactivities.
The new information system features:
Strong privacy, confidentiality and security protection.
The formation of partnerships between the public and private sectors.
National standards for clinical and administrative data.
Appropriate links to the National Information Infrastructure programs.
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Electronic network to ensure the timely availability of reliable
information.
DATA AND INFORMATION FRAMEWORK
Every American receives a national health security card to assure access to needed
health services throughout the United States. Much like ATM cards, the health security card
allows access to information about health coverage through an integrated national network.
The card itself contains a minimal amount of information.
Hie National Health Board, in consultation with state and private entities and other
relevant organizations, develops and implements uniform national standards for administrative,
clinical, financial and other health care related information. Standards include:
•
Uniform minimum health data sets with standard data items and definitions.
•
Electronic data interchange standards for transfer of information.
A comprehensive health care information privacy framework is established based on
federal legislation, applicable to all states, alliances, health plans and providers. Provisions
include mechanisms for management and oversight of privacy and security. Principles of the
framework include:
•
Uniform privacy and confidentialityrightswith special emphasis on protection
of highly sensitive data.
•
Appropriate security measures and technology.
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•
Enforcement mechanisms and penalties.
•
Coordination with policies established under the National
Information Infrastructure.
•
Creation of a national privacy panel focusing on privacy
protection as applied to health care information (see discussion
below).
The Board establishes national, unique identifier numbers for plans, providers and
patients, selecting an identification number system at the conclusion of a process that include
public hearings and formal notice and comment procedures.
INFORMATION SYSTEMS
Health plans implement and maintain core discrete electronic documentation of all
clinical encounters with health providers using current information system technology as the
foundation for the system. Encounter records are captured, retained and transmitted as a
byproduct of the routine provision of care.
•
Records may be based on insurance claims or clinical encounters (depending
on the type of health delivery system).
•
The record may be plan or community-based, or shared among several plans.
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Encounter records conform to the uniform minimum
administrative and clinical data sets developed by the board and
transmitted as appropriate to the national network (see discussion
below).
Emphasis is placed on the goal of electronic records and
electronic data interchange with associated economic efficiencies.
A phase-in period, with incentives, is planned to achieve this
goal. During the phase-in period, standard forms may be used.
Current information systems technology readily supports the capture, retention
and electronic data interchange of encounter records as a byproduct of the
provision of care and with favorable benefit cost efficiencies.
Development of regional encounter data systems in this fashion will also
support analysis of utilization and treatment patterns, as well as quality and
outcome monitoring and research as a basis for improving health care.
Within this framework, plans are encouraged to make innovations:
•
It is not the intent of health care reform to mandate explicit approaches to this
requirement. Rather, flexible, local solutions to local needs and conditions will
be fostered. Within the broad framework of national uniform standards, health
plans and alliances are free to collect data and patient-care information
according to their own local needs and conditions.
•
This requirement does not call for implementation of a costly, full-scale
computerized patient record. It calls for using today's technology to provide
information to providers.
•
The framework promotes the formation of community based health information
systems that improve the quality of care and reduce cost by minimizing
duplicate procedures, tests and adverse drug interactions.
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Plans, providers, states and health alliances receive federal technical assistance
to enable timely conformance with these requirements and to select cost
effective technical solutions.
Federal assistance is focused on long-term goal of developing a Point-ofService system.
A POINT-OF-SERVICE INFORMATION SYSTEM
The long-term strategy for health care information envisions creation of a Point-ofService information system that brings valuable information to consumers, health providers,
payers and policy makers. The envisioned system offers significant potential for more
effective, continuing quality improvement. In such a system, clinical, administrative and
payment data move electronically among employers, health plans, physicians' offices,
hospitals, laboratories, pharmacies and other providers. The system:
•
Collects information as a by-product of the delivery of care.
•
Protects the privacy, confidentiality and security of information.
•
Provides ready access to information for appropriate uses.
The national system will evolve from information systems established by health plans,
alliances and regional centers. Accelerating its development requires additional funding from
the federal government to support technology development and regional demonstration
projects in health plans, communities, alliances and federal health centers.
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FEDERAL, STATE, ALLIANCE AND HEALTH PLAN DATA NETWORK
An electronic network of regional centers containing enrollment,financial,and
utilization data is created. The network receives standardized enrollment, encounter, and
related data from plans for aggregation, analysis and feedback to plans, alliances, states and
the Federal Government. The network will be pilot tested before full scale implementation.
•
The network supports analytic needs, such as monitoring of budgets, measuring
access and state accountability, assessing quality, among states, health plans,
health alliances and the federal government.
•
States and alliances could operate their own regional centers and serve the
switch function as part of the national network.
•
Federal funds will assist infinancingthe network, which is built in
collaboration with private sector, state and existing federal programs.
•
Required data is entered once and is a by-product of routine
administration and provision of care by health plans and
alliances.
•
Health plans maintain uniform electronic records of encounters or claims.
•
Plans transmit encounter data, in the form of a uniform
minimum data set, to the network on a regular basis. The
uniform encounter data set is designed to meet a variety of data
needs.
•
The network records national enrollment information. Health alliances and
plans maintain detailed local enrollmentfilesand submit at least a portion of
thosefilesto the network on a regular basis.
Creation of the network does not inhibit plans and health and health alliances from
being innovative in meeting the information needs discussed above.
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CONSUMER SURVEYS AND PUBLIC HEALTH SURVEILLANCE
Consumer surveys of satisfaction, access to care and related measures are conducted
on a plan-by-plan and state-by-state basis. The National Health Board approves a
nationally standard design for the survey.
Surveys will monitor the implementation of health care reform and assess its impact
on the general population, potentially vulnerable populations, states and the health care
system. The integration of survey data with administrative and public health data systems
provides better measures of health status, risk factors and performance measures for
consumers to use in choosing health plans.
Certain public health surveillance and data systems will continue to be needed to
monitor the health status of the population and to identify and address emerging threats to the
public health. Public health data systems, involving the federal government, states, and local
governments are strengthened and more closely integrated within the overall information
systems framework.
GOVERNANCE
A National Health Data Advisory Council is established. The Council, reports to the
Board and oversees the information and data activities, including standard setting and privacy
protection, of the federal government under health care reform. Membership includes
consumers, users and providers of data developed by plans, alliances, states, public-health
agencies and the federal government.
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ADMINISTRATIVE SIMPLIFICATION
The National Health Board enters into contracts for the development and
implementation of:
•
Standard forms to record enrollment, clinical encounters and insurance
reimbursement.
•
Automation of insurance transactions and industry-wide adoption of standard
forms.
•
Simplified coordination of benefits.
•
The creation of "standard and unique" identification numbers for all health care
providers, health plans, employers and enrolled consumers.
•
Steps to streamline the administration of the Medicare program.
STANDARD FORMS
After consultation with providers, plans, employer groups, and others, standard forms
for insurance reimbursement, health plan enrollment and to record clinical encounters are
adopted. Standard information requirements include coding, content and data elements.
By January 1, 1995, all health plans adopt a single, standard form for reimbursement
according to the following classes of providers:
•
The UB-92 for institutional providers
•
The Standard Health Insurance Claim Form (similar to the HCFA-1500) for all
non-institutional providers except pharmacies and dentists
•
HCFA 1500 for dentists
•
The Universal Drug Claim Form developed by the National Council on
Prescription Drug Programs for pharmacies that seek reimbursement.
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The standard claim form serves the secondary purpose of collecting information
required for state monitoring, accountability and the measurement of quality outcomes.
All health plans and employers also adopt a national, standard enrollment form. In
conjunction with standard claim reimbursement and encounter information, enrollment data is
used for monitoring accountability and performance.
INSURANCE TRANSACTIONS
The National Health Board oversees the development of standards for the automation
of insurance transactions, including claims payments and status reports, remittance advice,
eligibility, coordination of benefits and utilization management.
Standard coding and content requirements eliminate multiple, conflicting requirements
on health providers for information, formats and definitions.
The National Health Board identifies and consolidates existing standards in the health
care industry, working from prototypes developed by the American National Standards
Institute.
The Board reviews standards in consultation with groups such as the Workgroup for
Electronic Data Interchange, the American National Standards Institute, the National Institute
of Standards and Technology.
Within one year of enactment, the National Health Board designates national standards
that providers, plans, alliances and employers adopt as a condition of participation in the
health system. The Board establishes requirements related to content, definitions and a
strategy for implementation no less than six months before the requirement for standardized
transactions takes effect.
All government health programs, including the Department of Defense, CHAMPUS,
Department of Veterans Affairs, Medicare and Medicaid adopt national standards
immediately. All private payers, including purchasers of health insurance through regional
and corporate alliances, adopt national standards for electronic transactions after January 1,
1995.
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Major public and private payers, hospitals, major employers and corporate alliances, as
well as clinics and group practices of 20 or more professionals automate the core transaction
set within six months of adoption. States may deny payments to plans that have not
automated transactions by that date.
To speed implementation, the National Health Board provides technical assistance to
health alliances and plans.
UNIQUE IDENTIFICATION NUMBERS
The National Health Board undertakes a process to determine, adopt and enforce
unique identification numbers for consumers in health plans.
STREAMLINING MEDICARE
The Medicare program participates in the implementation of standard forms, uniform
billing, electronic claims submission, remittance notices, coordination of benefits, unique
identification numbers and streamlining of utilization review as required under health reform.
In addition, the Medicare program consolidates current roster of 80 insurance
companies that act as contractors; it contracts separately for different functions (e.g. claims
processing using a common system across contractors, provider profiling, provider relations,
audit, fraud and abuse prevention).
Medicare eliminates extra billing for Part B providers such as durable medical
equipment providers, orthotic and prosthetic suppliers and ambulances. The program
simplifies its claims processes by:
Deleting information related to Medicare as a secondary payerfromclaim form
and incorporating into national eligibility file.
The Department of Health and Human Services develops and
mandate model coordination of benefit rules immediately for
Medicare, workers' compensation, auto insurance and other nonalliance health coverage.
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Additional coordination of benefits reforms occurs when the
national enrollment file is developed and operational (January 1,
1996) After the enrollment file is operational, insurers are
required to forward coordination of benefits claims to
appropriate insurers, through the enrollment file if necessary.
Deleting Medigap reportingrequirementfrom the claim form; supplemental
insurance becomes part of the national eligibility file.
The Health Care Financing Administration also:
•
Gives physicians presumptive waiversfromcollecting orfilingfor beneficiary
cost sharing in cases where the cost sharing would pose afinancialhardship on
the beneficiary or in cases of professional courtesy.
•
Incorporates evaluationsfromphysicians and theirrepresentativesinto annual
performance evaluations of carriers, expanding the currentfive-statepilot
project nationally.
•
Eliminates complexities caused by dual funding sources and rules for Medicare
Part A and Part B claims.
Efforts already underway by HCFA eliminate some complexities.
In 1996, the Health Care Financing Administration begins to
implement national, standard, integrated claims processing
system for all Medicare claims, with the goal of full
implementation by 1998.
•
Streamlines the process for settling costreports,working through the
Medicare-Technical Advisory Group on Hospital Administrative Issues.
•
Eliminates the requirement for physicians to sign an acknowledgement of
awareness of penalties associated with falsifying claims information on an
annual basis and replaces with a single acknowledgement when granted
hospital privileges.
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Eliminates pre-billing requirement for attestation by physician of diagnoses and
major procedures performed in the hospital.
Simplifies the "Important Letter to Medicare Patients" in consultation with the
Medicare-Technical Advisory Group.
Repeals legislation requiring review of at least ten surgical procedures.
Improves upkeep of data in "Common Working File."
Limits system changes for Medicare and Medicaid programs to once every six
months and notifies health care providers 120 days in advance of any major
change in billing procedures.
Consistent with the 4th Scope of Work, the PRO program will continue to
move toward analysis and improvement of patterns of health care and
outcomes, and away from individual case review, as appropriate.
The National Health Board explores developing standards for a single annual
inspection of health care institutions to replace multiple inspections performed by federal,
state, local and private accreditation, survey and certification agencies.
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PROTECTION OF PRIVACY
To assure the protection of privacy, security and confidentiality in the new health care
system, the federal government undertakes to:
•
Establish national privacy safeguards covering all health records, based
on a Code of Fair Information Practices, including
•
Uniform and comprehensive privacy and confidentiality
protection for individually identifiable health care information.
A uniform national standard simplifies compliance for
organizations that operate nationwide and provide protection for
data that are linked or potentially linked to other data systems.
•
Protection for all types of health care information:
•
•
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With the same level of protection for all illnesses and
diseases.
•
•
Whether it is part of the new health care system or exists
outside it.
Regardless of the form in which records are kept (paper,
microfilm or electronic), location (storage, transit,
archive), owner, user or repository (government, health
provider, private organization).
Establish effective mechanisms for enforcement, including significant penalties
for breach of legal requirements.
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Establish a national privacy framework is founded on a Code of Fair
Information Practices stipulating, for example, that individuals who are the
subject of data collected:
•
Have therightto know about and approve the
uses to which the data are put.
•
Are assured that no secret data systems are
permitted to exist.
•
Have therightto review and correct data about
themselves.
•
Have adequate assurance that data may be
collected and used only for legitimate purposes.
Establish a system of universal identifiers for the health care system:
•
A unique individual identifier for participants in health plans.
The unique identifier may be the Social Security
Number or a newly created number limited to the
health care system. (See discussion of selection
under Information Systems)
•
In either case, the national privacy policy
explicitly forbids the linking of health care and
other information through the identification
number.
Issue effective security standards and guidance for health care
information.
Currently, no uniform, comprehensive privacy standards related
to health care information exist.
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The National Health Board develops and periodically revises
health care information security standards with active
participation by other relevant federal agencies (e.g. Department
of Health and Human Services, Department of Defense,
Department of Veterans Affairs, National Highway Traffic
Safety Administration, Consumer Product Safety Commission,
and National Institute of Standards and Technology in the
Department of Commerce).
Establish a Data Protection and Security Panel under its direction. The
panel oversees and manages privacy and security by, for example:
•
Setting privacy and security standards through interpretive rules
and guidelines.
•
Monitoring and evaluating the implementation of standards set
by statute, regulations and guidelines.
•
Sponsoring or conducting research, studies and investigations.
•
Supporting the development of fair and comprehensible consent
forms governing the disclosure and re-disclosure of information
to authorized persons, for authorized purposes, at authorized
times.
•
Developing the technology for implementing security standards
and sharing information in the health care setting.
•
Working with health care providers to foster development of
security practices.
Establish an education and awareness program to train personnel with
access to health care information as well as to inform consumers of
theirrightswith respect to the collection and disclosure of personal
information.
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CREATING A NEW HEALTH WORKFORCE
Ensuring quality health care and access for all Americans requires adjustments to the
focus of investments in health care training and education in the following areas:
•
Shifting the balance in the graduate training of physicians from specialties to
primary care.
•
Increasing investments in the training of nurse practitioners and physician
assistants.
•
Recruiting and supporting the education of health professionals from population
groups under-represented in the field.
•
Supporting workforce planning for health professions at the state level.
•
Adjusting Medicare payment formulas to increase reimbursement for primary
care.
DEVELOPMENT AND SUPPORT FOR GRADUATE MEDICAL EDUCATION
Legislative authority establishes a new system to manage the supply of specialty
training for physicians, encompassing several initiatives:
Managing the number of post-graduate training positions for physicians: After a
five-year phase-in period, at least 50 percent of new physicians are trained in primary care
rather than in the specific specialtyfieldsin which an excess supply currently exists. Primary
care includes family medicine, general internal medicine and general pediatrics.
To achieve the goal of bringing primary care and specialty training into balance, the
number offilledprimary care residency positions increases by approximate!)' 7 percent each
year over thefive-yearperiod. During the same period, the number offilledspecialty
training positions in specialties in which excess supply exists decline by approximately 10
percent each year.
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The total number offirst-yearresidency positions available continues to exceed the
number of graduates of U.S. medical and schools in the new system. The new system also
encourages the location and focus of physician training to more closely reflect community
medical practice.
Determination of approved residency positions: The Secretary of the Department of
Health and Human Services determines the number of training positions in each specialty
acting on the recommendations of the National Council on Graduate Medical Education and
allocated to regional councils. Regional councils distribute positions to individual residency
programs within each area of the country.
The Secretary appoints the National Council on Graduate Medical Education, which
includes medical educators, practicing physicians, consumers, hospital administrators, nurses
and others.
The Council recommends the total number of training positions for each medical
specialty, based on the national need for new physicians in specific specialties. The national
Council apportions residency positions to regions taking into account:
•
Current regional distribution and quality of training programs.
•
The need to maintain access to a range of primary care and specialty training
positions for members of under-represented minority groups.
•
Other factors relating to specific specialties and training programs
In developing its recommendations, the Council seeks the views of professional
medical, hospital and educational associations and other appropriate organizations. Positions
are allocated for each post-graduate year to account for differences among specialties in the
point of training when residents enter specialty training. For example, family medicine
training begins in thefirstyear of post-graduate training, while training in internal medicine
specialties begins in the fourth year.
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Bccausc the integrity and success of the Graduate Medical Education system depends
on commitment to it by all programs and training institutions, programs operating in
institutions that continue training slots not covered in the allocation under the Graduate
Medical Education system become ineligible for GME funding.
Allocation of residency positions: The Secretary of the Department of Health and
Human Services appoints ten regional councils to allocate training slots among individual
residency training programs.
Regional councils include representatives of academic institutions training physicians
in the region, as well as representatives of regional health alliances and health plans,
consumers and others.
Regional councils receive applicationsfromtraining institutions in each area for
residency positions in each specialty. Positions are allocated to accredited residency programs
based on such factors as:
•
Program quality.
•
Relevance of the training program curricula to the future practice
of physicians.
•
Participation of under-represented minority groups.
•
Participation of locally coordinated education programs.
The Seaetary of the Department of Health and Human Services reviews regional
council decisions and retains therightto amend allocations for good cause. To ensure
continuity, allocations to program are available for periods of up to three years and are made
at least one year in advance of the residency training year.
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Funding for residency training: Funds to support graduate medical education are
pooled from all insurers to reflect the benefits that all patients and health plans receive from
graduate medical education and training. Residency programs receive funds for each
approved training position. Payments are based on a formula which considers the national
average for resident salaries and the costs of faculty supervision and other related teaching
expenses.
Fundsfromtwo sources are pooled (estimated at $6 billion for FY 1994):
•
Medicare contributes to the direct medical education fund based on the
percentage of hospital bed days its patients use^(dfcpMCcat-in^992).
•
Other payers contribute through a surcharge on health plan premiums.
Currently, Medicare pays explicitly for graduate medical education, based on historic
costs. In FY-1992, Medicare payments for Graduate Medical Education totalled $1.5 billion.
(Other payers currently support Graduate Medical Education implicitly through elevated
hospital charges.)
Allocation of payments: Funding is provided directly to training programs approved
for residency training positions, encouraging the development of non-hospital based training,
particularly programs that provide a greater portion of their training in ambulatory and
primary-care settings, such as Health Maintenance Organizations and community clinics.
Transition payments: Transition payments are provided to teaching hospitals which
are required to reduce their residency training programs. Hospitals receive transition
payments to offset a portion of the costs associated with hiring replacement staff and
maintaining services.
Payments phase out over a five-year period, beginning at the rate of 150 percent of
the national average for direct medical education payments for an equivalent position under
the new payment system. Payments decline by 25 percent each year.
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LOAN FORGIVENESS PROGRAM FOR PRIMARY CARE
A national "loan forgiveness" program for medical students is established to encourage
physicians to devote theirfirstyears of practice to primary care.
RE-TRAINING PHYSICIANS IN PRIMARY CARE
In order to further expand the availability of primary care physicians, support are
provided for the development of programs to re-train mid-career specialists to serve as
primary care physicians. Areas to be explored include the use of incentives, the type and
length of effective retraining programs and the development of certification criteria.
COMMUNITY-BASED TRAINING OF PRIMARY CARE PHYSICIANS
Health reform supports community-based undergraduate and graduate medical
training, continuing education and faculty development in primary care, broadening the impact
of existing public support, which is limited to programs at the pre-doctoral and residency
levels in family medicine and general internal medicine and general pediatrics.
SUPPORT FOR TRAINING OF MINORITIES AND DISADVANTAGED PERSONS
To increase the diversity of the health care workforce, support is provided to programs
that increase the number of health professionals among racial minority groups and
disadvantaged persons. The goal of these programs is to double the level of underrepresented minorities enrolled in thefirstyear of medical school to a level of 3,000 students
by the year 2000.
Strategies include:
•
Continuingfinancialassistance for under-represented minorities and
disadvantaged students entering health professions training programs.
•
Increasing support for recruitment and retention of under-represented minority
and disadvantaged students in medicine, dentistry, nursing, public health and
other health professions.
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Maintaining efforts to foster interest in health careers among under-represented
minorities at the pre-professional and professional levels.
•
Supporting programs to increase the number of minority faculty in the health
professions, minority health services researchers and minority basic scientists.
TRAINING FOR NURSE PRACTITIONERS, NURSE MIDWIVES AND PHYSICIAN
ASSISTANTS
Expanded training: Current funding for training of nurse practitioners, and physician
assistants, will be amended to
•
Increase current funding levels to double the number of graduates produced
annually, giving priority to the expansion of existing programs, and
•
Establish long-term goals and a funding strategy to maintain the supply of
practitioners.
A similar program is implemented to support nurse midwives.
Barriers to practice: To remove inappropriate barriers to practice, the Secretary of
the Department of Health and Human Services develops and encourages the adoption of
model professional practice statutes for advanced practice nurses and physician assistants.
RURAL HEALTH PROVIDER GRANTS
A rural health provider grant program supports a wide range of activities, including
new community training programs for rural practitioners, the development of rurally oriented
health education curricula, and the improvement of medical communications technology.
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PRIORITY PROJECTS
A health professions special projects and demonstration training authority is
established to support the transition to the new health system, including support for the
following new projects:
•
Training of providers in mental health, substance abuse treatment and
prevention, geriatrics, and developmental disabilities.
•
Training for school-based health providers in immunization, reduction of
substance abuse, dealing with teen pregnancy, control of violence, and linking
students and families with the community health system.
•
Students in baccalaureate-level nurse training programs preparing for careers in
teaching, community health service, and specialized clinical care.
•
Training related to managed care, cost-effective practice management,
continuous quality improvement practices, and provision of culturally sensitive
care.
Training of lower-level administrative and clerical workers in
the health carefieldfor higher-wage, higher-skill positions as
technicians, nurses and physician assistants.
Demonstration programs to develop more open occupational
career ladders in health care institutions.
Programs also support Priority Health Training Programs designed to improve the
supply, distribution, and quality of providers, including those in areas with inadequate health
systems, especially rural areas and inner-city areas.
(9/7/93)
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Support expands for:
•
Service-linked regional educational networks; e.g., AHECs, geriatric education
centers
•
Health administration, public health training positions, special projects and
preventive medicine
•
Professional nurse clinician and nuise anesthetist training positions and nursing
special projects
Primary care loans are provided for students in nursing and targeted allied health
professions; e.g., occupational health and physician therapy.
Federal support for development of information related to the health care workforce
expands, including research on primary care training practices in such areas as: relationship
between education and practice patterns, effective use of practitioners and development of
skills to meet future needs in health care.
(9/7/93)
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INCENTIVES FOR PHYSICIANS TO PROVIDE PRIMARY CARE
In addition to rcfocusing federal support for physician education to focus on primary
care, the Medicare programs increases its rates of reimbursement for primary care physicians.
RATE INCREASES
Reduce rates for office consultations to equal office visits and use savings to
increase fees for all office visits: Office consultations are reduced to the same level as other
office visits. The relative values for office consultations are redistributed to office visits
without increasing total spending.
Because office consultations currently pay more than office visits, the change has the
effect of increasing fees for office visits. Because primary care physicians perform
consultations less often than sub-specialists perform them, it increases payments for primary
care without increasing Medicare spending.
Increase the relative value of allowances for office visits to reflect time spent
before and after visits: Cuncntly, the relative values for procedures, including medical
visits, account for physician time spent immediately prior to an office visit for preparation
and immediately after an office visit for chart work, patient instructions, etc.
Increasing the work component under primary care services by 10 percent increases spending
for those services; the increase is offset by reducing relative values for all non-primary care
services.
Establish a resource-based method to pay for the physician overhead component
of the physician fee-schedule: The Secretary develops a methodology and data sets for
implementing a resource-based system for determining practice expense relative value units
for each physician's service. In addition, primary care practice expense RVUs increase 10
percent.
The current physician-fee schedule includes a work component that accounts for the
physician's activities and a practice expense component that accounts for overhead (other than
malpractice). The work component is based on resources used; the practice expense
component is based on historic charges.
(9/7/93)
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Because primary care services occur more often in office settings, actual overhead
costs are higher than for surgical services. Under the current system, surgical services are
assigned a higher overhead fee than primary care services. Collecting data on actual overhead
costs and developing an allocation method for assigning overhead to individual procedures
increases the relative value primary care services and decreases it for many non-primary care
services.
Provide a higher expenditure target rate of growth for the separate primary care
services target: Increasing the target for primary care services to GDP per capita plus 5
percentage points for FY-1995 decreases the target for other services.
Bonus Payments: The 10 percent bonus payment for non-primary care services in
urban Health Professional Shortage Areas will be eliminated. This will increase the bonus
payment to 20 percent for primary care services in rural and urban HPSA's.
Reduce Outlier Intensity Procedures: Reducing the work component of services with
"outlier intensity" values allows the application of savings to increase the work component of
the relative value of primary care services.
(9/7/93)
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ACADEMIC HEALTH CENTERS
The American Health Security Act creates a national pool of funds to support costs
associated with the institutional costs of research, development of new medical technology,
treatment of rare and unusually severe illnesses and provision of specialized patient care.
Medicare payments and a surcharge on private health insurance premiums flow into
the pool (estimated at $6 billion for FY 1994). Funds are allocated to academic health
centers and affiliated teaching hospitals through afixedpercentage added to hospital
payments.
Academic health centers, including affiliated teaching hospitals, receive a new,
separate payment as reimbursement for costs incurred over and above the cost of routine
patient care. Only institutional costs not covered by typical fees for patient care, and which
can be analytically justified, are included in the formula.
This approach represents a revision of the cunent Medicare indirect medical education
payment formula to factor in the impact of universal health insurance coverage. The revised
system reduces Medicare payments to teaching hospitals for the cost of caring for uninsured
patients and disproportionate share of low-income patients because such payments will no
longer be required once universal coverage exists.
In Fiscal Year 1992, Medicare Indirect Medical Education payments totalled $3.6
billion, including the cost of bad debts, charity care and other costs not related to medical
education. As these costs decline, Medicare IME costs arc reduced accordingly, and
Medicare payments reflect the program's proportionate share of the total remaining costs.
All private payers also contribute explicitly to the national fund on a proportionate basis.
FINANCING CLINICAL RESEARCH
The American Health Security Act expands investment in clinical investigations and
research related to the delivery of health services and outcomes. Health plans also are
required to provide coverage for routine patient care associated with approved clinical trials.
(See Guaranteed National Benefit Package.)
(9/7/93)
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ENSURING ACCESS TO ACADEMIC HEALTH CENTERS
To ensure that all patients receive the specialized services available through academic
health centers when appropriate (see Health Care Access Initiatives):
•
The Department of Health and Human Services, in cooperation with states and
health alliances, identifies rare diseases, specialized procedures and treatments
for which health plans are required to establish contractual relationships with
academic health centers.
•
Health alliances monitor contractual relationships between health plans and
academic health centers to assure appropriate coverage for severity of illness
and to prevent anti-competitive pricing.
•
Health alliances oversee quality management and patient grievance mechanisms
to ensure appropriate detection, referral, morbidity and mortality of illnesses
eligible for referral and specialized treatment.
•
Health alliances provide health professionals and consumers with information
regarding potential eligibility for clinical trials of relevant investigational
treatments.
ENSURING RURAL AND URBAN ACCESS TO ACADEMIC HEALTH CENTERS
To secure appropriate access to academic health centers for patients in rural and urban
areas with inadequate health care systems:
•
Grants to academic health centers assist in the development of an information
and referral infrastructure to support rural health networks.
•
Grants to establish health-care networks in inner-city areas build on existing
urban charity hospitals and affiliated neighborhood clinics.
•
Health alliances institute additional protection to ensure access by rural and
urban underserved populations to special services.
(9/7/93)
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HEALTH RESEARCH INITIATIVES
The American Health Security Act encourages cost-conscious choices on the part of
consumers and health care providers through explicit financial incentives. At the same time,
expanded investments in health research represent integral features of cost control and quality
goals under health reform. The assessment of costs and effectiveness of new procedures and
technologies will be increased through expanded funding and rcfocusing of clinical trials on
more common conditions, high cost procedures, and highly variable treatment patterns.
Advances in medical science, development of new medications and technology, as
well as innovations in the organization and delivery of personal and public health services
hold the promise of increased efficiency in the health care system, longevity and improved
quality of life.
New funding for health research focuses on two areas:
•
Prevention research related to biomedical and behavioral aspects of health
promotion and prevention of disease.
•
Health services research related to the development of quality and outcome
measures, access andfinancingand cost effectiveness, as well as research
related to consumer choice and decision making, primary care and evaluation
of health reform.
PRIORITY AREAS FOR PREVENTION RESEARCH
The National Institutes of Health expands prevention research in priority areas
including:
•
Child health, including perinatal health, birth defects and diseases of
childhood, unintentional injuries, learning and cognitive development,
and adolescent health.
•
Chronic and recurrent illnesses, including research on Alzheimer's disease,
cancer, cardiovascular diseases, bone and joint diseases, and other chronic
diseases and conditions.
(9/7/93)
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Rcproductivc health, including contraceptive development and use, sexually
transmitted diseases, adolescent pregnancy, and pregnancy-related
complications.
Mental health, including 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.
Substance abuse, including targeted research related to vulnerable populations,
such as high-risk youth, the development of medications and prevention of
dependence on tobacco, alcohol, and drugs.
Infectious diseases, focusing on new and emerging infectious diseases, vaccine
development and basic vaccine research, as well as infectious diseases
including:
HIV infection and AIDS - Research on behavior, vaccines, transmission
of HIV, and prevention of disease progression to AIDS.
Tuberculosis - Research on new vaccines to prevent TB, early
diagnosis, and preventing disease progression.
Health and Wellness Promotion including:
Nutrition - Includes defining optimal diets, dietary links to disease, and
obesity.
Physical activity - Includes an emphasis on fitness for all ages, and
fitness and aging.
Environmental health - Includes an emphasis on identifying health
hazards and their effects, and disorder-specific research.
(9/7/93)
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•
Prevention Research and Infrastructure Resource Development including basic
science development providing foundations for prevention efforts across a
range of diseases and disorders, encompassing behavioral and social
approaches, and genetics.
•
Resource development including support for prevention research training and
enhancement of statistical and epidemiologic techniques.
COORDINATION AND FUNDING OF PREVENTION RESEARCH
The National Institutes of Health distributes funds using three mechanisms: grants,
contracts, and NIH intramural research.
The NIH Associate Director for Prevention coordinates the prevention research
programs of the national research institutes and will report annually to the NIH Director and
the Secretary on the status and progress of prevention research activities.
In consultation with the national research institutes, the NIH Associate Director will
develop an ongoing plan for prevention research activities conducted by the NIH.
Prevention researchfindingsare translated into, or appropriately integrated with,
personal health services and public health programs to maximize the impact of prevention
research on disease reduction and improved health status.
PRIORITY AREAS FOR HEALTH SERVICES RESEARCH
This research provides the knowledge to increase the cost effectiveness,
appropriateness and quality of care in a reformed health care system. The health services
research program includes research designed to improve the effectiveness and appropriateness
of clinical practice through several interrelated activities, including:
•
Effectiveness research
•
Quality and outcomes research
•
Development and dissemination of clinical practice guidelines
(9/7/93)
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•
Research and evaluation related to administrative simplification under health
care reform
•
Research on consumer choice and information resources
•
Evaluation of health care reform
•
Workplace injury and illness prevention research and demonstration programs
A new generation of health services research intended to answer critical questions on
the effectiveness of treatments for common clinical conditions is initiated. Patient-outcomes
research and the development of clinical practice guidelines form a central part of the health
services research agenda.
Examples of specific areas of health services research:
•
Effectiveness research which examines the appropriateness and effectiveness of
alternative strategies for the prevention, diagnosis, treatment, and management
of clinical conditions, in terms of patient outcomes. The Medical Treatment
Effectiveness Program research focuses on conditions that meet one of more of
the following criteria:
Large number of individuals are affected.
Uncertainty or controversy regarding effectiveness of treatment exists.
Associated risks and/or costs of treatment are high.
•
(9/7/93)
Patient outcomes research teams (PORTs) are 5-year grants that include
elements of formal literature synthesis, data acquisition and analysis,
development of clinical recommendations, dissemination of findings, and
evaluation of the effects of findings on change in clinical practice.
140
�WORKING GROUP DRAFT
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•
The development of clinical practice guidelines improves the quality,
appropriateness, and effectiveness of health care. The guidelines also represent
standards of quality, performance measures, and medical review criteria
through which health care providers may assess or review the provision of
health care. Guidelines assist in the determination of how diseases, disorders,
and other health conditions can most effectively and appropriately be
prevented, diagnosed, treated, and managed clinically.
•
Research and evaluation regarding computerized medical records and
information systems simplifies the administration of health care.
•
Studies assess the impact of barriers to access, utilization, and continuity of
health care services on health care reform.
•
Research and analytic work contributes to efforts to devise, implement,
maintain, and evaluate the new system of health care budgets, at the national,
state and alliance levels.
•
Expanded research into risk adjustment facilitates efficient measurement of
health care needs.
•
Long-term care research and demonstrations focused on new program models
expand the range of financing and administration for those services.
•
Research into service organization and structure include examination of the
relationship of continuity, accessibility, and comprehensiveness of primary care
to cost, quality, and access.
(9/7/93)
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EVALUATION OF HEALTH CARE REFORM
The introduction of comprehensive health reform affects every aspect of American
health care. To support implementation of the American Health Security Act, evaluation
research includes:
•
Short-term research - Evaluate the responsiveness of the system to health care
reform, including its effects on institutions, health care professionals, and
specific population groups.
•
Long-term monitoring - Examine the effect of reforms on cost, quality and
access. Longitudinal studies using databases developed through the
augmentation of national and regional surveys and analyses of secondary data
are needed.
•
Demonstrations and evaluations - Address critical issues in health care reform,
such as quality assurance and medical liability.
CONSUMER CHOICE AND DECISION-MAKING RESEARCH
Research aimed at improving information resources that enable purchasers to make
health care choices based on their relative value and quality assumes top priority. This
research contributes to improved decision making by consumers, resulting in more costeffertive service delivery and health plan selection. Prospective research efforts include:
•
Consumer awareness of benefit plans, availability of supplemental coverage,
cost-sharing, and utilization.
•
Effect of consumer knowledge on the selection of health plans including the
relationship between health status and choice of plan.
•
Types of information and form of media most effective in assisting consumers
in selecting health plans and providers, including information on costs and
quality of care.
(9/7/93)
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•
Impact of improved information on consumer satisfaction, access to care,
quality of care and cost of services.
•
Patient choice and decision making related to treatment alternatives.
COORDINATION OF HEALTH SERVICES RESEARCH
The Agency for Health Care Policy and Research in the Public Health Service and the
Office for Research and Demonstrations in the Health Care Financing Administration assume
administrative responsibility for research related to the impact of health care reform.
Research activities are conducted through intramural and extramural programs using the
mechanisms of grants, contracts, and cooperative agreements.
(9/7/93)
143
�
Dublin Core
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Title
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Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
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2006-0885-F
Text
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Paper
Dublin Core
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Title
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[Health Security Act - Working Group Draft] [2]
Creator
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
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2006-0885-F Segment 5
Is Part Of
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Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621464" target="_blank">National Archives Catalog Description</a>
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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5/7/2015
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17621464
12093636
42-t-12093636-20060885F-Seg5-008-004-2015
-
https://clinton.presidentiallibraries.us/files/original/24dc2f6df5c109bb74bf449b6e337af5.pdf
7db312aed82fcf5f325f6977dd7a58ec
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
3313
OA/ID Number:
FolderlD:
Folder Title:
[Health Security Act - Working Group Draft] [1]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�WORKING GROUP DRAFT
PRIVILEGED AND-CONriDEHnAL.
TABLE OF CONTENTS
1.
2.
Coverage
4.
Guaranteed National Benefit Package
5.
National Health Board/National Administration..Page 42
6.
State Responsibilities
7.
Regional Health Alliances
8.
Corporate Alliances/ERISA
9.
Health Plans
10.
Risk Adjustment
11.
Rural Communities in the New System
12.
Workers Compensation and Automobile Insurance-Page 88
13.
Budget Development and Enforcement
Page 93
14.
Quality Management and Improvement
Page 100
15.
Information and Administrative Simplification..Page 110
16.
Protection of Privacy
17.
n / 0
Ethical Foundations of Health Reform
3.
'( 9 / 7 / , 3 )
v
9
Introductory Overview
Page 3
Creating a New Health Workforce
Page 11
Page 13
Page 19
Page 49
Page 56
Page 65
Page 74
Page 83
Page 85
Page 122
,
1
Page 125
DETERMINED TO BE AN
ADMINISTRATIVE MARKING
I I I L: J^L-DATE: fcffi^?
NTA S
�WORKING GROUP DRAFT
PRIVILEGED AND^CONHBENTlSL
TABLE OF CONTENTS (CONTINUED)
18.
Academic Health Centers
19.
Health Research Initiatives
20.
Public Health Initiatives
Page 144
21.
Long-Term Care
Page 151
22.
Malpractice Reform
Page 166
23.
Antitrust Reform
Page 169
24.
Fraud and Abuse
Page 172
25.
Health Care Access Initiatives
26.
Medicare
•
Page 135
Page 137
Page 182
Page 192
Medicare Prescription Drug Benefit
27.
Medicaid
28.
Government Programs
•
•
•
•
29.
Page 200
Page 204
Department of Defense
Veterans Affairs
Indian Health Service
Federal Employee Health Benefits Plan
Transition
Page 215
•
•
30.
(9/7/93)
State Phase-In
Insurance Reforms
Financing Health Coverage
Page 221
�WORKING GROUP DRAFT
PRIVILEGED AND^CONHDENflAU
THE PROBLEM
All Americans, those who have health insurance and those who do not, understand that
serious problems exist in the health care system:
•
Americans lack security — One out of four people — or 63 million people - will lose health insurance coverage for some period during the next two
years. Thirty-seven million Americans have no insurance and another 22
million lack adequate coverage.
Losing or changing a job often means losing insurance.
Becoming ill or living with a chronic medical condition can
mean losing insurance coverage or not being able to obtain it.
•
Health care costs arerisingfaster than other sectors of the economy —
Precipitous growth in health care costs robs workers of wages, fuels the growth
of the federal budget deficit and puts affordable care out of reach for millions
of Americans.
Left unchecked,risinghealth care costs will consume almost
two-thirds of the increase in Gross Domestic Product for each
American for the rest of the decade.
Health care costs will grow from 14 percent of GDP to 19
percent even without an expansion of coverage to insure all
Americans.
•
Bureaucracy overwhelms consumers and health providers — Excessive
paperwork confuses and frustrates doctors, nurses, patients and their families.
Bureaucracy also drives up costs. Studies document that
administrative costs contribute a steeplyrisingportion of the
expenses involved in running a typical doctor's office or hospital.
(9/7/93)
�WORKING GROUP DRAFT
PRIVILEGED AND CUNUDLNl'lAL
-
•
Quality is uneven — Because no dear standards define best medical practice,
lack of information and inadequate attention to prevention make the quality of
health care across America uneven. Consumers have no reliable information
with which to measure the quality of their health care or coverage.
•
Coverage for long-term care Is inadequate — Many elderly and disabled
Americans enter nursing homes and other institutions when they would prefer
to remain at home. Families exhaust their resources trying to provide for
disabled relatives.
•
Many Americans cannot obtain quality care — In many rural and inner-city
areas, shortages of doctors, clinics and hospitals form barriers to care.
•
Fraud and abuse cheat everyone — Many Americans believe that exorbitant
charges, fraud and abuse undermine both quality and access to care.
(9/7/93)
�WORKING GROUP DRAFT
PRIVILEGED AND^CGNFIDENnAL
THE AMERICAN HEALTH SECURITY ACT OF 1993
OVERVIEW
The American Health Security Act guarantees comprehensive health coverage for all
Americans regardless of health or employment status. Health coverage continues without
interruption if Americans lose or change jobs, movefromone area to another, become ill or
confront a family crisis.
Through a system of regional and corporate health alliances that organize the buying
power of consumers and employers, the American Health Security Act stimulates market
forces so that health plans and providers compete on the basis of quality, service and price.
Under the Act health plans must meet national standards on benefits, quality and
access to care but each state may tailor the new system to local needs and conditions. Thus
the program encourages local innovation within a national framework.
Itfreesthe health care system of much of the accumulated burden of unnecessary
regulation and paperwork, allowing doctors, nurses, hospitals and other health providers to
focus on providing high-quality care.
CREATING SECURITY
The American Health Security Act enhances the security of the American people by
extending universal coverage in a environment that improves quality and controlsrisingcosts:
•
All employers contribute to health coverage for their employees,
creating a level playingfieldamong companies.
•
Everyone shares the responsibility to pay for coverage.
(9/7/93)
�WORKING GROUP DRAFT
PRIVILECJED
AND 'CONTIDENTIAL
Umits on out-of-pocket payments protect American families
from catastrophic costs, while subsidies ease the burden on lowincome individuals and small employers.
A comprehensive benefit package with no lifetime limits on
medical coverage guarantees access to a full range of medically
necessary or appropriate services.
Elderly and disabled Americans receive coverage for outpatient
prescription drugs under Medicare for thefirsttime.
Guaranteed choice of health plans and providers enhances choice
for many Americans.
No health plan may deny enrollment to any applicant because of health,
employment orfinancialstatus or may they charge some patients more
than others because of age, medical condition or other factors related to
risk.
All health plans meet national quality standards and provide
useful information that allows consumers to make valid
comparisons among plans and providers.
Separate programs increase federal support for long-term care
and improve the quality and reliability of private long-term care
insurance.
CONTROLUNG COSTS
The American Health Security Act brings growth in health care costs in line with
growth in Gross Domestic Product by 1997. It accomplishes this goal by increasing
competition in health care, reducing administrative costs and imposing budget discipline:
•
(9/7/93)
A standard, universal package of health benefits and reliable information about
the price and performance of health plans encourages informed choices.
�WORKING GROUP DRAFT
PRIVILEGED AND-€ONriDENTIAL
Consumers pay less for low-cost plans and more for high-cost plans, creating
incentives for cost-conscious choice.
Health plans receivefixedpremiums based onriskcharacteristics of
their patients. Working under afixedbudget, they have incentives to
spend resources cost effectively.
If savings attained through effective competition and reductions in administrative costs
do not achieve the spending goals, the national health care budget provides a backstop,
ensuring that health care spending is in line with economic growth.
Like the private sector, major government programs, including Medicare and
Medicaid, also operate under a budget restraining the growth of federal and state spending for
health care.
ENHANCING QUALITY
The American Health Security Act improves the quality of health care by creating
standards and guidelines for practitioners, reorienting quality assurance to measuring
outcomes rather than regulatory process, increasing the national commitment to medical
research and promoting primary and preventive care.
Explicit quality goals and standards shape the health care system.
Health plans are held accountable for quality improvement.
Regular publication of accessible information about quality and cost allows
consumers to make informed choices among health care plans.
Increased investment in research advances medical knowledge.
A special funding mechanism ensures that academic health centers continue
their vital role in research, training and specialty care.
(9/7/93)
�WORKING GROUP DRAFT
PRIVILEGED AND "CONHDENHAL
New investments support training for primary care physicians and other health
professionals; federal action helps remove artificial barriers to practice that
hinder nurses and other non-physicians.
Investments in public health enhance the level of protection for all Americans.
Changes in Medicare rate schedules and in the allocation of
federal funds supporting graduate medical education provide new
incentives for primary care physicians.
Preemption of state laws limiting the scope of practice and new
funding for the education of health professionals who are not
physicians enhance opportunities for nurses, social workers and
other non-physician providers.
EXPANDING ACCESS TO CARE
The American Health Security Act invests in the development of an adequate health
care system in areas with inadequate service. Those investments hold the promise of
improving the availability and quality of health care in rural communities and urban
neighborhoods.
•
Health alliances assume responsibility for building health networks in rural and
urban areas with inadequate access.
•
National loan programs support the efforts of local health
providers to develop community-based plans.
•
Investments in new health programs such as school-based clinics
and community clinics expand access to care for underserved
populations.
•
Financial incentives attract health professionals to areas with inadequate care.
(9/7/93)
8
�WORKING GROUP DRAFT
PRIVILECJED
ANE^-CONFIDENTiAL—
REDUCING BUREAUCRACY
The American Health Security Act reduces the burden of paperwork and
administration; regulatory, billing and reporting requirements decline, and consumers
experience a streamlined and simpler system:
•
A single, comprehensive benefit package that covers every eligible
person eliminates confusion about coverage.
•
Administrative costs caused by multiple policies with different benefits and risk
selection disappear.
•
Standard forms for insurance reimbursement, the submission of claims and
clinical encounter records simplify paperwork and reduce administrative costs.
•
The cost of administering coverage in small companies declines because they
purchase through health alliances that benefit from economies of scale.
•
Federal regulatory requirements for Medicare, Medicaid and other programs arc
simplified.
•
Health care services covered by workers' compensation and automobile
insurance merge into the new health system, reducing duplication and waste.
•
Malpractice reform reduces incentives in the current system to
perform excessive tests or unnecessary procedures.
REDUCING FRAUD AND ABUSE
The American Health Security Act cracks down on health care providers and
institutions that impose excessive charges or engage infraudulentpractices, setting tough
standards and imposing stiffer penalties including:
•
New criminal penalties forfraudrelated to health care and for the payment of
bribes or gratuities to influence the delivery of health services and coverage.
New civil monetary penalties against providers who submit false claims.
(9/7/93)
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTIAL-
•
Tighterrestrictionseliminate referral "kickbacks" in the private sector,
and new standards prohibit physicians from prescribing services
delivered at institutions in which they holdfinancialinterests.
•
Accountability standards make providerfraudand other misbehavior automatic
grounds for exclusionfromall health plans.
(9/7/93)
10
�WORKING GROUP DRAFT
PRIVILEGED AND -eONFIDENnAtr
ETHICAL FOUNDATIONS OF HEALTH REFORM
The values and principles that shape the new health care system reflect fundamental
national beliefs about community, equality, justice and liberty. These convictions anchor
health reform in shared moral traditions.
UNIVERSAL ACCESS: Every American citizen and legal resident should
have access to health care withoutfinancialor other barriers.
COMPREHENSIVE BENEFITS: Guaranteed benefits should meet the full
range of health needs, including primary, preventive and specialized care.
CHOICE: Each consumer should have the opportunity to exercise effective
choice about providers, plans and treatments. Each consumer should be
informed about what is known and not known about therisksand benefits of
available treatments and be free to choose among them according to his and
her preferences.
EQUALITY OF CARE: The system should avoid the creation of a tiered
system providing care based only on differences of need, not individual or
group characteristics.
FAIR DISTRIBUTION OF COSTS: The health care system should spread
the costs and burdens of care across the entire community, basing the level of
contribution required of consumers on ability to pay.
PERSONAL RESPONSIBILITY: Under health reform, each individual and
family should assume responsibility for protecting and promoting health and
contributing to the cost of care.
INTER-GENERATIONAL JUSTICE: The health care system should
respond to the unique needs of each stage of life, sharing benefits and burdens
fairly across generations.
WISE ALLOCATION OF RESOURCES: The nation should balance
prudently what it spends on health care against other important national
priorities.
(9/7/93)
11
�WORKING GROUP DRAFT
PRIVILEGED AND-eeNFIDENTTAfc—
EFFECTIVENESS: The new system should deliver care, and innovation that
works and that patients want. It should encourage the discovery of better
treatments. It should make it possible for the academic community and health
care providers to exercise effectively their responsibility to evaluate and
improve health care by providing resources for the systematic study of health
care outcomes.
QUALITY: The system should deliver high quality care and provide
individuals with the information necessary to make informed health care
choices.
EFFECTIVE MANAGEMENT: By encouraging simplification and
continuous improvement, as well as making the system easier to use for
patients and providers, the health care system should focus on care, rather than
administration.
PROFESSIONAL INTEGRITY AND RESPONSIBILITY: The health care
system should treat the clinical judgments of professionals with respect and
protect the integrity of the provider-patient relationship while ensuring that
health providers have the resources to fulfill their responsibilities for the
effective delivery of quality care.
FAIR PROCEDURES: To protect these values and principles, fair and open
democratic procedures should underlie decisions concerning the operation of
the health care system and the resolution of disputes that arise within it.
LOCAL RESPONSIBILITY: Working within the framework of national
reform, the new health care system should allow states and local communities
to design effective, high-quality systems of care that serve each of their
citizens.
(9/7/93)
12
�WORKING GROUP DRAFT
PRIVILEGED AND^egETOENTlAL
COVERAGE
All Americans and legal residents are guaranteed access to health services in a
nationally defined, comprehensive package of benefits with no lifetime limits on coverage.
Categories of eligible individuals:
•
American citizens
•
Nationals
•
Citizens of other countries legally residing in the United States
•
Long-term non-immigrants.
SOURCES OF HEALTH COVERAGE
A health security card provided to each eligible person entitles him or her to obtain
coverage through a health plan that delivers services covered in a nationally defined,
comprehensive benefit package.
Eligible individuals enroll in a health plan through a health alliance unless they are
covered under government-sponsored health programs that continue, including:
•
Medicare
•
Military personnel covered by the Department of Defense
•
Department of Veterans Affairs
•
Indian Health Service
(9/7/93)
13
�WORKING GROUP DRAFT
PRIVILEGED AND -GONFIBENTKL
Individuals eligible for those programs continue to receive care through them, although
the Department of Defense, Department of Veterans Affairs and the Indian Health Service
may gradually integrate some of their services into the new health care system. (See section
on Government Programs)
Individuals eligible for Medicaid receive coverage through regional health alliances.
(See Medicaid Section)
All employed persons choose a health plan through a corporate or regional health
alliance. Employees offirmswith 5000 or fewer workers become members of a regional
alliance established to serve the area in which they reside. Employees offirmswith more
than 5000 employees obtain coverage through a corporate alliance established by their
employer unless the employer chooses to purchase coverage through regional alliances.
Members of Taft-Hartley plans with more than 5000 covered workers obtain coverage
from an alliance formed by the Taft-Hartley plan. Employees of rural electric and telephone
cooperative plans that include more than 5000 covered workers may receive coverage through
a corporate alliance formed by the cooperative.
Employees of government, including federal, state, local and special-purpose agencies
obtain coverage through the regional alliance where they live. All individuals who are selfemployed or not employed obtain coverage through regional alliances unless they are eligible
for Medicare. The United States Postal Service may operate as a corporate alliance.
OBTAINING COVERAGE
Individuals obtain health coverage by enrolling in a plan through a regional or
corporate health alliance. The national health security card serves as proof of eligibility.
An individual eligible for cash assistance (AFDC or SSI), whether employed or
unemployed, has coverage purchasedfromthe regional alliance by the Medicaid program.
Individuals over age 65 continue to enroll in the Medicare program. The Medicare
secondary payer program remains for Medicare eligible individuals who continue to work.
Individuals over the age of 65 but not eligible for Medicare receive coverage through regional
alliances, into which they pay premiums. Depending on income, they may be eligible for
subsidies to pay all or part of the cost of premiums and required cost sharing. Individuals
who are eligible for Medicare because of disability continue to receive Medicare coverage.
(9/7/93)
14
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
Retired workers under 65 are eligible for health care coverage through regional
alliances, and pay only the 20% share they would have paid if employed. Retirees who
receive health coverage through former employers or through pension funds continue to be
eligible for payment for their share of the premiumfromthose sources.
ASSURANCE OF COVERAGE
It is the obligation of every eligible individual to enroll in a health plan.
Anyone who does not meet the established deadline for enrollment automatically is enrolled
in a health plan when he or she seeks medical care. Regional alliances assign patients who
do not seek enrollment to a health plan; they automatically assign any newborn infant who is
not enrolled through his or her parents to a plan.
No health plan may cancel an enrollment until the individual enrolls in another plan.
EMPLOYER OBUGAHON
All employers contribute to the purchase of health coverage for their employees.
All employers pay 80 percent of the weighted-average premium for health insurance coverage
in the regional alliances which serve their employees or in their corporate alliance. The
required employer contribution in regional alliances is capped at a percentage of payroll, with
lower caps for small and low-wage employers. (Sec section on Financing Health Coverage)
Firms that employ more than 5000 workers ensure that their employees are enrolled in
health plans that meet federal guidelines and report information about enrollment. Employers
with more than 5000 employees that choose to operate corporate alliances may be required to
continue to pay for health insurance coverage for their terminated employees for six months
following termination or may have to pay 1 percent of payroll to cover unemployed workers.
Large employers may fulfill their obligation to provide coverage by operating a
program of self-insurance through a corporate alliance, contracting with a certified health
plan or joining the regional alliance. If a large employer merges with afirmin the regional
alliance, it may continue as a corporate alliance. If the number of employees falls below
4800, the employer joins the regional alliance.
INDIVIDUAL OBLIGATIONS
(9/7/93)
15
�WORKING GROUP DRAFT
PRIVILEGED AND'CONFIDEffHAir
Families and individuals pay 20 percent of the weighted-average premium for an
average cost health plan chosen through an alliance. An individual or family who chooses a
less expensive plan pays less, and someone who chooses a more expensive plan pays more.
An employer also may elect to pay some or all of the employee's portion of the
premium.
Self-employed and unemployed individuals are responsible for paying the family share
of the premium as well as the employer share, unless they are eligible for assistance based on
income.
ENFORCEMENT
The Secretary of Labor ensures that all employers fulfill the obligation to make
contributions or provide coverage through a qualified health plan.
COORDINATION OF COVERAGE
When an individual obtains necessary medical services outside the geographic area
served by his or her regional or corporate alliance, the plan pays for care under arrangements
established among alliances.
UNDOCUMENTED PERSONS
Undocumented persons are not eligible for guaranteed health benefits. However,
employers are required to pay health insurance premiums for all of their employees,
regardless of immigration status.
Alliances do not share information related to health insurance premiums paid by
employers with the Immigration and Naturalization Service.
(9/7/93)
16
�WORKING GROUP DRAFT
PRIVILEOED AND CONFIDENTIAL
Individuals living in the United States without proper documentation may continue to
use emergency and other health services as provided under current federal law. Health care
institutions that serve a large number of patients who are not eligible for coverage continue to
receive federal funding to compensate for their care.
Any individual not eligible for the national benefit package may purchase coverage
from a private insurance plan to the extent such plans are available.
TERRITORIES
Individuals who reside in territories of the United States receive the comprehensive
benefit package through their existing health care systems.
OTHERS
States with migrant labor populations are required to address the needs of migrant
workers and their families in state plans for the implementation of health reform. States may
extend coverage to migrant workeis through regional alliances or propose alternative
programs tailored to the specific needs of the migrant population.
Students who are dependents are covered by their parents' health policies, but may
obtain coverage through the regional alliance where they attend school. Students who are not
dependents enroll in the regional alliance where their school is located.
Employees are defined to include not only those workeis defined as employees under
Internal Revenue Service rules but broadly enough to discourage employersfromdesignating
employees as independent contractors in order to avoid payment of health insurance
premiums. For purposes of health insurance, independent contractors who earn more than 80
percent of their annual incomesfromone employer are covered as an employee of that
employer.
Employers make contributions toward health care premiums for part-time employees
(generally individuals working more than 10 hours but less than 30 hours per week) on a
pro-rated basis.
(9/7/93)
17
�WORKING GROUP DRAFT
PRIVILEGED AND-CONriDENTIAL~
Prisoners remain the financial responsibility of the various prison systems.
(9/7/93)
18
�WORKING GROUP DRAFT
PRIVILEGED AND SONHBENTMr
GUARANTEED NATIONAL BENEFIT PACKAGE
The health benefits guaranteed to all Americans provide comprehensive coverage,
including mental health services, substance-abuse treatment, some dental services and clinical
preventive services.
The guaranteed benefit package contains no lifetime limitations on coverage, with the
exception of coverage for orthodontia.
MEDICAL SERMCES COVERED
Each health plan must provide coverage for the following categories of services as
medically necessary or appropriate with additional limitations and cost sharing only as
specified in the American Health Security Act of 1993 or by the National Health Board.
Covered health services are:
Hospital services
Emergency services
Services of physicians and other health professionals
Clinical preventive services
Mental health and substance abuse services
Family planning services
Pregnancy-related services
Hospice
Home health care
Extended-care services
(9/7/93)
19
�WORKING GROUP DRAFT
PRIVILEGED AND-GQNHDENTIAL
Ambulance services
Outpatient laboratory and diagnostic services
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.
DEFINITION OF SERVICES
Hospital services:
•
Inpatient hospital, including bed and board, routine care,
therapeutics, laboratory, diagnostic and radiology services and
professional services specified by the National Health Board
when furnished to inpatients.
•
Outpatient hospital services
•
24-hour a day emergency department services
•
Definition: A hospital is an institution meeting the requirements of
§1861(e) of the Social Security Act.
Services of physician and other health professionals:
•
(9/7/93)
Includes inpatient and outpatient medical and surgical professional services,
including consultations, delivered by a health professional in home, office, or
other'ambulatory care settings, and in institutional settings.
20
�WORKING GROUP DRAFT
•
PRIVILEGED AND CONnDENTIAL-
Definitions
•
A health professional is someone who is licensed or otherwise
authorized by the State to deliver health services in the State in which
the individual delivers services.
•
Covered services are those that a health professional is legally
authorized to perform in that state. No state may, through licensure
requirements or other restrictions, limit the practice of any class of
health professionals except as justified by the skill or training of such
professional.
The benefit package does not require any plan to reimburse any particular
provider or any type or category of provider. However, each plan is expected
to provide a sufficient mix of providers and specialties and appropriate
locations to provide adequate access to professional services.
Clinical preventive services:
•
Specified in Table I.
•
Limitation: Must be provided as consistent with the periodicity schedule
specified in Table I or as specified by the National Health Board in regulations.
•
Targeted screening tests and immunizations required for highrisk patients, as defined by the National Health Board, are
covered under outpatient laboratory and diagnostic services and
outpatient prescription drugs and biologicals.
•
Periodic medical examinations: every 3 years for individuals ages 20 to 39,
every 2 years for adults ages 40 to 65, and annually for adults ages 65 or more.
(9/7/93)
21
�WORKING GROUP DRAFT
PRIVILEGED AND-€ONFIDENTlAfc-
TABLE I — COVERED CLINICAL PREVENTIVE SERVICES
Age
Immunizations
Tests
0-2
4 DTP, 3 OPV, 3-4 HiB, 1
MMR, 3 HBV
1 Hematocrit, 2 Lead', 7 Clinician visits'"
3-5
1 DTP, 1 OPV, 1 MMR
1 Urinalysis, 2 CUnician visits*"
6-19
1 Td
Pap/pelvic" every 3 years after menarche, 5
Clinician visits"*"
20-39
1 Td every 10 years
Cholesterol every 5 years; Pap/pelvic" every 3
years
4
40-49
1 Td every 10 years
Cholesterol every 5 years; Pap/pelvic" every 3
years *
50-64
1 Td ever)' 10 years
Cholesterol every 5 years; Pap/pelvic and
Mammogram** every 2 vearsS
65 +
1 Td every 10 years
Pneumococcal - once
Annual influenza
Cholesterol every 5 years
Mammogram** every 2 years')
***
DTP
OPV
HiB
HBV
MMR
Td
= For children at highriskfor lead exposure only.
= Papanicolaou smears and pelvic exam for females who have reached childbearing
age and are at risk of cervical cancer.
= Once three annual negative smears have been obtained.
= For females of childbearing age atriskfor sexually transmitted disease, an annual
Pap smear and screening for chlamydia and gonorrhea.
= Females only.
= Visits for tests and immunizations include blood pressure check,riskassessment and
appropriate health guidance.
s Diphtheria, tetanus, pertussis vaccine
= Oral polio vaccine
= Haemophilus influenzae type B vaccine
= Hepatitis B vaccine
= Measles, mumps, rubella vaccine
= Tetanus diphtheria toxoid
(9/7/93)
22
�PRIVILEGED ANDlCeNFEDEflTlAL
WORKING GROUP DRAFT
(Continuation of covered services)
Family planning services
Pregnancy-related services
Hospice care:
•
Covered services (as under Medicare):
Nursing care provided by or under the supervision of a registered
professional nurse.
Medical social services under the direction of a physician.
Physicians' services.
Counseling services for the purposes of training the individual's family
or other caregiver to provide care and for the purpose of helping the
individual and those caring for him or her to adjust to the individual's
death.
Short-term inpatient care, although respite care is provided only on an
occasional basis and may not be provided for more than 5 days.
Medical supplies and the use of medical appliances for the relief of pain
and symptom control related to the individual's terminal illness.
Home health aide and homemaker services.
Physical or occupational therapy and speech-language pathology.
Limitations
Only for terminally ill individuals
Only as an alternative to continued hospitalization.
Definition:
(9/7/93)
23
�WORKING GROUP DRAFT
•
PRIVILEGED AND TONFEDENTTAir
An individual is considered terminally ill if the
individual has a medical prognosis of a life
expectancy of 6 months or less if the terminal
illness runs its normal course.
Home health care:
•
Same services as under the current Medicare program (including skilled
nursing, physical, occupational and speech therapy, prescribed social services)
with the addition of prescribed home infusion therapy and outpatient
prescription drugs and biologicals.
•
Limitations
•
Only as an alternative to institutionalization (i.e., inpatient treatment in
a hospital, skilled nursing or rehabilitation center) for illness or injury.
•
At the end of each 60 days of treatment, the need for continued therapy
is re-evaluated. Additional periods of therapy are covered only if the
risk of hospitalization or institutionalization exists.
Extended care services:
•
Inpatient services in a skilled nursing or rehabilitation facility.
•
Limitations
•
Only after an acute illness or injury as an alternative to continued
hospitalization.
•
Maximum of 100 days per calendar year.
Ambulance services:
•
Ground transportation by ambulance; air transportation by an aircraft equipped
for transporting an injured or sick individual.
(9/7/93)
24
�WORKING GROUP DRAFT
PRIVILEGED AND-GONHDENTIAE
limitations
•
Ambulance service is covered only in cases in which the use of an
ambulance is indicated by the individual's condition.
•
Air transport covered only in cases in which other means of
transportation are contra-indicated by the patient's condition.
Outpatient laboratory and diagnostic services:
•
Prescribed laboratory and radiology services, including diagnostic services
provided to individuals who are not inpatients of a hospital, hospice or
extended care facility.
Outpatient prescription drugs and biologicals:
•
Drugs, biological products, and insulin.
•
limitation:
•
Must be prescribed for use in an outpatient
setting.
•
No frequency or quantity limitations other than
reasonable rules for amount to be dispensed and number
of refills. Health plans are permitted to establish
formularies, drug utilization review, generic substitution,
and mail order programs.
Outpatient rehabilitation services:
•
(9/7/93)
Outpatient occupational therapy, outpatient physical therapy, and outpatient
speech-pathology services for the purpose of attaining or restoring sp>eech.
25
�WORKING GROUP DRAFT
PRIVILEGED AND-CONFIDENTIAL
Limitations
•
Coverage only for therapies used to restore functional capacity or
minimize limitations on physical and cognitive functions as a result of
an illness or injury.
•
At the end of each 60 days of treatment, the need for continued therapy
isre-evaluated.Additional periods of therapy are covered only if
function is improving.
Durable medical equipment, prosthetic and orthotic devices:
•
Covered services:
•
•
Prosthetic devices (other than dental) which replace all or part of an
internal body organ
•
Leg, arm, back and neck braces
•
Artificial legs, arms and eyes (includingreplacementsifrequireddue to
a change in physical condition)
•
•
Durable medical equipment
Training for use of above items.
Limitations
•
•
(9/7/93)
Items must improve functional abilities or prevent further deterioration
in function.
Does not include custom devices.
26
�WORKING GROUP DRAFT
PRIVILEGED ANB-eGNFfDENTlAJ—
Vision and bearing care:
•
Covered services:
•
•
Diagnosis and treatments for defects in vision
•
•
Routine eye exams, including procedures performed to determine the
refractive state of the eyes
Routine ear examinations.
Limitations
•
Eyeglasses and contact lenses limited to children under the age of 18.
•
Routine eye examinations limited to one every 2 years for persons 18
years of age or more.
Preventive dental services for children:
•
For children under age eighteen, treatment for prevention of dental disease and
injury, including maintenance of dental health, and emergency dental treatment
for injury.
Health education classes:
Participating health plans are permitted to cover health education or training for
patients that encourage the reduction of behavioralriskfactors and promote healthy
activities. Such courses may include smoking cessation, nutritional counseling, stress
management, skin cancer prevention, and physical training classes. Cost sharing is
determined by the plan.
(9/7/93)
27
�WORKING GROUP DRAFT
PRIVILEGED AND €ONriDENTlAL
MENTAL HEALTH AND SUBSTANCE ABUSE
Mental health and substance abuse services form an integral component of a national
system of health care. Scientific evidence and societal attitudes have coalesced to support a
benefit structure that represents a significant departure from past approaches.
A comprehensive array of services, along with theflexibilityto provide such services
based on individual medical and psychological necessity through effective management
techniques, produces better outcomes and better cost controls than traditional benefits. By the
year 2001, a comprehensive, integrated benefit structure with appropriate management
replaces prescribed limits on individual services.
That change of direction requires a phase-in period to allow health plans time to
develop the service system capacity to deliver and manage a more comprehensive mental
health and substance abuse benefit. The phase-in allows states, health alliances, and health
plans sufficient time to develop appropriate quality assurance programs essential to a managed
comprehensive benefit.
It also provides incentives for states to implement a fully comprehensive, integrated
system by combining state and local funds now supporting the separate public system with
health care reform to reduce duplication and inefficiency, assure cost savings and maximize
resources. During the phase-in of the more comprehensive mental health and substance
abuse benefit, the federal government supports state demonstrations to prove the efficacy of a
comprehensive, integrated system of care with improved benefits.
By the year 2001, all states are required to submit to the National Health Board a plan
detailing steps it is undertaking to move from the traditional two-tier structure for separate
public and private mental health and substance abuse services and develop an integrated,
comprehensive managed system of care.
(9/7/93)
28
�WORKING GROUP DRAFT
PRIVILEGED AND-CONnDENTIAL
DEFINITION OF BENEFIT
Inpatient and residential treatment:
•
Inpatient hospital, psychiatric units of general hospitals, therapeutic family or
group homes or other types of residential treatment centers, community
residential treatment and recovery centers for substance abuse, residential
detoxification services, crisis residential services, and other residential treatment
services.
•
Limitations
•
By the year 2001, management of benefit determines lengths of stay.
Initially, a maximum of 30 days per episode of inpatient or residential
treatment, with 60 days annually for all settings in this category. Health
plans upon special appeal may grant an exception waiver of the episode
maximum (but only up to the annual limit) for the limited number of
individuals for whom hospitalization or continued residential care is
medically necessary because the patient continues to make or is at
seriousriskof making an attempt to harm him- or herself.
By the year 1998, the annual maximumrisesto 90 days.
•
•
•
Inpatient hospital substance abuse treatment covers only medical
detoxification as required for the management of psychiatric or medical
complications associated with withdrawalfromalcohol or drugs.
Inpatient hospital care for mental and substance abuse disorders is
available only when less restrictive nonresidential or residential services
are ineffective or inappropriate.
Definitions:
•
(9/7/93)
A hospital is an institution meeting the requirements of §1861(e) or (f)
of the Social Security Act.
29
�WORKING GROUP DRAFT
•
•
PRIVILEGED AND •SONTIDENTbtt-
A residential treatment facility is one which meets criteria for licensure
or certification established by the state in which it is located.
Eligibility
Individuals are eligible for mental health and substance abuse services other
than screening and assessment and crisis services if they have, or have had in
the past year, a diagnosable mental or substance abuse disorder, which meets
diagnostic criteria specified within DSM-III-R, and that resulted in or poses a
significantriskfor functional impairment in family, work, school, or
community activities.
•
These disorders include any mental disorder listed in DSM-III-R or
their ICD-9-CM equivalents, or subsequent revisions, with the
exception of DSM-III-R "V" codes (conditions not attributable to a
mental disorder) unless they co-occur with another diagnosable
disorder.
•
Persons who are receiving treatment but without such treatment would
meet functional impairment criteria are considered to have a disorder.
Family members of an eligible participant receiving mental or substance abuse
services may receive medically necessary or appropriately related services in
conjunction with the patient (so-called collateral treatment).
Professional and outpatient treatment services:
•
•
Professional services, diagnosis, medical management, substance abuse
counseling and relapse prevention, outpatient psychotherapy.
Limitations
•
(9/7/93)
By the year 2001, limits on outpatient treatment and cost sharing are
eliminated, making this benefit comparable to other health services;
management of the benefit determines availability of services.
Initially, a limit of 30 visits per year for outpatient psychotherapy visits
(and variation in cost sharing described later). Medical management,
crisis management, evaluation and assessment, and substance abuse
counseling are not limited.
30
�WORKING GROUP DRAFT
•
PRIVILEGED AND CONFIDEimAfc-
Licensed or certified substance abuse treatment professionals must
provide substance abuse and relapse counseling.
•
Eligibility criteria specified above for inpatient mental health and substance
abuse treatment services apply, except that all persons are eligible for screening
and assessment and 24-hour crisis services.
•
Definitions for services of physicians and other health professionals apply.
•
Coverage for case management with no cost sharing.
Intensive non-residential treatment services:
•
Partial hospitalization, day treatment, psychiatric rehabilitation, ambulatory
detoxification, home-based services, behavioral aide services.
•
Limitations
•
By the year 2001, benefit limits are replaced by management of the
comprehensive benefit to determine availability of benefit.
Initially, a limit of 120 days per year apply.
•
•
(9/7/93)
Provided only for the purpose of averting the need for, or as an
alternative to, treatment in residential or inpatient settings, or to
facilitate the earlier return of individuals receiving inpatient or
residential care, or to restore the functioning of individuals with mental
or substance abuse disorders, or assist individuals to develop the skills
and access the supports needed to achieve their maximum level of
functioning within the community.
Eligibility: As specified for inpatient mental health and substance abuse
treatment services.
31
�WORKING GROUP DRAFT
PRIVIIJECJED
AND-eONHDENHAt
INTEGRATION OF PUBLIC AND PRIVATE MENTAL HEALTH CARE SYSTEMS
Through the end of this decade, the structure of the mental health and substance abuse
benefit package requires continuation of the existing public system that provides mental health
and substance abuse treatment. It also requires maintenance of the existing block grant
program to the states, which supplements spending on mental and addictive disorder
programs.
To promote the eventual integration of the public and private systems, states are
encouraged to use the flexibility allowed under health reform to fold their expenditures for
public mental health and substance abuse programs into funding available to regional health
alliances to require integrated care for all health needs, including mental and addictive
disorders. States adopting this direction may obtain a waiver from limits in the benefit
package and are eligible for federal matching funds to develop integrated service systems.
EXCLUSIONS
The benefit package does not cover services that are not medically necessary or
appropriate, private duty nursing, cosmetic orthodontia and other cosmetic surgery, hearing
aids, adult eyeglasses and contact lenses, in vitro fertilization services, sex change surgery and
related services, private room accommodations, custodial care, personal comfort services and
supplies and investigational treatments, except as described below.
COVERAGE OF INVESTIGATIONAL TREATMENTS
The comprehensive benefit package includes coverage for medically necessary or
appropriate medical care provided as part of an investigational treatment during an approved
research trial. The intention of this provision is to cover routine medical costs associated
with an investigational treatment that would occur even if the investigational treatment were
not administered.
•
(9/7/93)
An investigational treatment is a treatment the effectiveness of which has not
been determined and which is under clinical investigation as part of an
approved research trial.
32
�WORKING GROUP DRAFT
PRIVILEGED AND-eONFlDbN 11AL~
An approved research trial is a peer-reviewed and approved research program,
as defined by the Secretary of the Department of Health and Human Services,
conducted for the primary purpose of determining whether or not a treatment is
safe, efficacious, or having any other characteristic of a treatment which must
be demonstrated in order for that treatment to be medically necessary or
appropriate.
Coverage is automatically available if the research trial is
approved by the National Institutes of Health, the FDA, the
Department of Veterans Affairs, Department of Defense or a
qualified non-governmental research entity as identified in NTH
guidelines.
EXPANSION OF OTHER BENEFITS
The initial benefit plan provides comprehensive preventive coverage for all patients
and focuses comprehensive dental, mental health and substance abuse coverage on priority
concerns including preventive dental services for children and treatment for seriously mentally
ill adults, seriously emotionally disturbed children and individuals with substance-abuse
disorders.
The National Health Board has discretion to introduce additional benefits earlier if
savings from reform and budget resources permit. Additional benefits included in planned
expansion include:
Dental Services:
•
Preventive dental care extended to adults
•
Restorative services
•
•
(9/7/93)
Low Cost Sharing — $20 per visit
High Cost Sharing — 40 percent co-insurance, $50 deductible, and
$1500 annual maximum benefit for prevention and restoration
33
�WORKING GROUP DRAFT
•
PRIVILEGED AND CONriDErmAl:
Orthodontia in cases in which it is necessary to avoidreconstructivesurgery
•
Low Cost Sharing — $20 per visit
•
High Cost Sharing — 40 percent co-insurance, $50 deductible, and
$2,500 lifetime maximum benefit.
COST SHARING
Consumer out-of-pocket costs for health services in the comprehensive benefit
package are limited, to ensurefinancialprotection, and standardized to ensure simplicity in
choosing among health plans.
Health plans use standard consumer cost sharing requirements. Health plans may offer
consumers one of three cost sharing schedules:
•
Low cost sharing: $10 co-payments for outpatient services; no co-payments
for inpatient services; may offer point of service option with 40 percent
coinsurance.
•
Higher cost sharing: $200 individual/$400 family deductibles; 20
percent coinsurance; $1500/3000 maximum on out-of-pocket spending.
•
Combination: Plan provides low cost sharing if participants use
preferred providers and higher cost sharing (20 percent coinsurance) if
they use out-of-network providers.
(9/7/93)
34
�WORKING GROUP DRAFT
PRIVILEGED AND-€eNFIDENTlALLOW COST SHARING
Cost-sharing
Overall
- Deductible
- Coinsurance
- Out-of-pocket max
Individual
Family
Limitations
None
$10 per visit
$1,500
$3,000
Inpatient Hospital
Full coverage
Professional services, outpatient
hospital services.
$10 per visit
Emergency services
$25 per visit
Waived in emergency.
Preventive services, including
well-baby, prenatal
Full coverage
Services limited to
periodicity in Table 1.
Hospice
Full coverage
As hospital alternative for
terminally ill.
Home health care
Full coverage
As inpatient alternative;
coverage reassessed at 60
days; added coverage only
to prevent institutional
care.
Extended care facilities (SNFs,
rehab facility)
Full coverage
As hospital alternative;
100 day limit.
Outpatient physical, occupational,
speech therapy
$10 per visit
Only to restore function or
minimize limitations from
illness or injury;
reassessment at 60 days;
additional coverage only if
improving.
DME, outpatient lab, ambulance
Full coverage
(9/7/93)
35
Private room only when
medically necessary
�PRIVILEGED ANIVeGNFIDENTIAL-
WORKING GROUP DRAFT
Routine eye and ear exams,
eyeglasses
Dental services
-Initial: Prevention
$10 per exam or
1 set glasses
$10 per visit
-Additions in 2001:
Eyeglasses limited to
children only
For <18 only
Remove age limit on
prevention
Restoration
$20 per visit
Orthodontia
$20 per visit
Prescription drugs
$5/prescription
Only to avoid
reconstructive surgery
Mental health / substance abuse
Initial
Inpatient services:
Full coverage
30 day/episode; 60
day/year max
Hospital alternatives:
Full coverage
120 days maximum
Brief office visits for medical
management:
$10 per visit
no limits
Psychotherapy:
$25 per visit
30 visits maximum
2001
Inpatient services:
Full coverage
Hospital alternatives:
Full coverage
Outpatient ind. 1-12
psychotherapy visits:
$10 per visit
(9/7/93)
36
no limits
�PRIVILEGED AND^ONHBENTlAir
WORKING GROUP DRAFT
HIGH COST SHARING
Cost-sharing
Overall
- Deductible
- Coinsurance
- Out-of-pocket max
Individual
Family
Limitations
$200/400
indiv/family
20%
$1,500
$3,000
Inpatient Hospital
20% co-ins
Professional services, outpatient
hospital services including
emergency.
20% co-ins
Preventive services, including
well-baby, prenatal
Co-ins and
deductible does
not apply
Private room only when
medically necessary
Services limited to
periodicity in Table 1.
Hospice
20% co-ins
As hospital alternative for
terminally ill.
Home health care
20% co-ins
As inpatient alternative;
coverage reassessed at 60
days; added coverage only
to prevent institutional
care.
Extended care facilities (SNFs,
rehab facility)
20% co-ins
As hospital alternative;
100 day limit.
Outpatient physical, occupational,
speech therapy
20% co-ins
Only to restore function or
minimize limitations from
illness or injury;
reassessment at 60 days;
additional coverage only if
improving.
DME, outpatient lab, ambulance
20% co-ins
(9/7/93)
37
�WORKING GROUP DRAFT
Routine eye and ear exams,
eyeglasses
Dental services
-Initial: Prevention
PRIVILECJED
20% co-ins
Eyeglasses limited to
children only
20% co-ins
For <18 only
-Additions in 2001:
Restoration
Orthodontia
Prescription drugs
(9/7/93)
AND-CONFIDENTIAL.
Remove age limit on
prevention
$50 deduc +
40% co-ins
40% co-ins
$250/year deduc
20% co-ins
oop max applies
38
$1500 annual max
Only to avoid
reconstructive surgery;
$2500 lifetime max
�PRIVILEGED AND-GQNFIDENT1AL
WORKING GROUP DRAFT
Mental health / substance abuse
Initial
Inpatient services:
20% co-ins; oop max
applies
Non-residential intensive
services:
20% co-ins
All outpatient:
30 day/episode; 60
day/year max
20% co-ins
120 days maximum
no limits
Psychotherapy:
50% cost sharing
30 visits maximum
2001
Inpatient services:
20% co-ins; oop max
applies
Non-residential intensive
services:
20% co-ins
Outpatient including
psychotherapy visits:
20% co-ins
(9/7/93)
39
no limits
�PRIVILEGED AND"eQNFIDENT1AL
WORKING GROUP DRAFT
COMBINATION COST SHARING
Services (with same limitations as
above)
In network
Out of network
Overall
- Deductible
None
- Coinsurance
$10 per visit
$200/400
indiv/family
20%
$1,500
$3,000
$1,500
$3,000
Inpatient Hospital
Full coverage
20% co-ins
Professional services, outpatient
hospital services.
$10 per visit
20% co-ins
Emergency services
$25 per visit
20% co-ins
Preventive services, including
well-baby, prenatal
Full coverage
Full coverage
Hospice
Full coverage
20% co-ins
Home health care
Full coverage
20% co-ins
Extended care facilities (SNFs,
rehab facility)
Full coverage
20% co-ins
Outpatient physical, occupational,
speech therapy
$10 per visit
20% co-ins
DME, outpatient lab, ambulance
Full coverage
20% co-ins
$10 per exam or
1 set glasses
20% co-ins
- Out-of-pocket max
Individual
Family
Routine eye and ear exams,
eyeglasses
(9/7/93)
40
�WORKING GROUP DRAFT
Dental services
-Initial: Prevention
PRIVILEGED AND-CONHDENBAL-
$10 per visit
20% co-ins
Restoration
$20 per visit
$50 deduc +
40% co-ins
Orthodontia
$20 per visit
40% co-ins
Prescription drugs
$5/prescription
$250/year deduc
20% co-ins
oop max applies
-Additions in 2001:
Mental health / substance abuse
Initial
Inpatient services:
Full coverage
20% co-ins; oop max
applies
Full coverage
20% co-ins
$10 per visit
20% co-ins
Full coverage
20% co-ins; oop max
applies
Non-residential intensive
services:
Full coverage
20% co-ins
Outpatient:
$10 per visit
20% co-ins
Hospital alternatives:
All outpatient:
2001
Inpatient services:
(9/7/93)
41
�WORKING GROUP DRAFT
PRIVILEGED ANP-CONFIDENTIAL
NATIONAL HEALTH BOARD
The American Health Security Act creates an independent National Health Board
responsible for setting national standards and overseeing the establishment and administration
of the new health system by states.
The National Health Board and existing executive agencies divide responsibility for
administration of the new health care system at the national level.
AUTHORITY OF THE NATIONAL HEALTH BOARD
The Board undertakes the following functions:
•
Oversight of the state system
The Board establishes requirements for state plans, monitors compliance with
those requirements, provides technical assistance, and ensures access to health
care for all Americans.
•
Comprehensive benefit package
The Board interprets and updates the nationally guaranteed benefit package and
issues regulations. The Board may recommend to the President and Congress
appropriate adjustments to the nationally guaranteed benefit package to reflect
changes in technology, health care needs and methods of service delivery.
•
Budgets
The Board issues regulations concerning implementation of the national budget
for health care spending and enforces the budget.
The board establishes baseline budgets for alliances by allocating
national spending among alliances to reflect regional variations.
The Board certifies compliance with the budget. (See section
entitled "Budget Development and Enforcement")
(9/7/93)
-rr
42
�WORKING GROUP DRAFT
•
PRIVILECJED
r
ANP CONFff)E?<TIAL
National quality management system
The Board establisiiefc ^d^nana^pa performance-based system of quality
managemen^ana^p^oveme^^^described in the section entitled "Quality
Management and Improvement". The Board develops measures reported in the
annual quality performance report of health plans. In developing these
measures, the Board consults with appropriate parties, including providers,
consumers, health plans, states, purchasers of care, and experts in law,
medicine, economics, public health, and health services research including
appropriate agencies such as AHCPR, NIH and HCFA.
To measure quality, the Board develops and implements standards to establish
a National Health Information System as described in the section on
Information Systems and Administrative Simplification.
Breakthrough drug committee
To encourage reasonable pricing of breakthrough drugs, a committee of the
National Health Board has the authority to make public declarations regarding
the reasonableness of launch prices.
The committee could address new drugs that represent a breakthrough or
significant advance over existing therapies. The comminee could also address
all drugs subject to a "reasonable price" clause in a contract with the National
Institutes of Health.
The committee could investigate drug prices only in those cases where
available evidence suggests that the price may be unreasonable. The committee
could make an initial determination about the reasonableness of a drug price
based on a comparison of prices for therapeutically similar drugs in the United
States and seven other industrialized countries.
If the drug price exceeds what the committee thinks to be reasonable based on
the information available, or if there is insufficient data, the committee would
have the authority to obtain informationfromthe company about the drug's
price. The committee could then issue a report regarding the reasonableness of
the drug price. The committee would have no authority to set or control drug
prices.
(9/7/93)
43
�WORKING GROUP DRAFT
PRIVILEGED AND CUNI IDLNTIAL
National Health Board decisions related to benefits, standards of performance and
accountability apply to health plans operating through both regional and corporate alliances.
MEMBERSHIP
The National Health Board consists of seven members appointed by the President by
and with the advice and consent of the Senate. At least one of the members represents the
interests of states.
The President designates one member as chairman. The chairman serves a term
concurrent with that of the President and serves at the pleasure of the President. The
chairman may serve a maximum of three terms.
The other members serve staggered four year terms. These members may be
reappointed for one additional term. The President may remove a member for neglect of duty
or malfeasance in office.
When a vacancy occurs, the President appoints a successor to serve the remainder of
the term. A vacancy in the membership of the Board docs not impair the right of the
remaining members to exercise all powers of the Board. The Board designates a member to
act as chairman during any period when no chairman is designated by the President.
Upon expiration of a term of office, a member continues to serve until a successor is
appointed and qualified. The President has the power to fill all vacancies that occur during
the recess of the Senate by granting commissions that expire with the next session of the
Senate.
QUALIFICATIONS
The President nominates Board members on the basis of their experience and expertise
in relevant subjects, including health carefinanceand delivery, state health systems, consumer
protection, business, law or delivery of care to vulnerable populations. Membere of the
National Health Board must be citizens of the United States.
(9/7/93)
44
�WORKING GROUP DRAFT
PRIVILEGED AND-CQNTIDENTIAL
During the term of appointment, Board members serve as employees of the federal
government and may hold no other employment. A member of the Board may not have a
pecuniary interest in or hold an official relation to any health care plan, health care provider,
insurance company, pharmaceutical company, medical equipment company or other affected
industry. Before assuming an appointment to the National Health Board, the prospective
member must certify under oath that he or she has complied with this requirement.
After leaving the Board, former members are subject to post-employment restrictions
applicable to comparable federal employees.
OPERATION OF THE BOARD
The National Health Board appoints and sets the compensation of an executive
director. The Board also appoints additional officers and employees, subject to applicable
civil service rules, as necessary to cany out its functions. The Board hires sufficient staff to
carry out the functions described above.
The Board establishes advisory committees that include representatives of states,
health providers, employers, consumers and affected industries.
The Board may contract with the Department of Health and Human Services and other
governmental and nongovernmental bodies to conduct research and analysis as required to
execute its responsibilities. The Board has access to all relevant information and data
availablefromappropriate federal departments and agencies. It coordinates its activities,
particularly the conduct of original research and associated studies, with the activities of
appropriate federal agencies.
The Board prepares and sends to the President and Congress an annual report
addressing the implementation of the health care system, including federal and state action,
data related to quality improvement and other issues. The annual report includes
recommendations for changes in the administration, regulation and laws related to health care
and coverage, as well as a full account of Board decisions and activities during the previous
year.
(9/7/93)
45
�WORKING GROUP DRAFT
PRIVILEGED AND-eeNFEDENTKr
The Office of Management and Budget reviews the Board's budget, which is submitted
to Congress in conjunction with the President's budget. The Office of Management and
Budget does not reviewregulationsissued by the Board or its annualreportto Congress prior
to publication.
The General Accounting Office conducts periodic audits of the Board.
RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES
The Department of Health and Human Services continues to administer existing
programs, such as Medicaid, Medicare and the Public Health Service. The Department of
Health and Human Services also administers and implements those aspects of the new health
care system not delegated to the National Health Board or any other federal department.
(9/7/93)
46
�WORKING GROUP DRAFT
PRIVILEGED ANETeONFIDENTtAt-
NATIONAL ADMINISTRATION
The National Health Board reviews plans submitted by the states for the
implementation of the new health care system. Corporate alliances are supervised through
ERISA and the Department of Labor. (See Corporate Alliances/ERISA)
In the event that a state fails to meet the deadline for establishing regional health
alliances or fails to operate the alliance system in compliance with federal requirements, the
National Health Board ensures that all eligible individuals have access to services covered in
the comprehensive benefit package.
To induce a state to act, the National Health Board informs the Secretary of the
Department of Health and Human Services of a state's failure to comply. The Secretary has
the authority to order the withholding of federal health appropriations.
If a state persists in its failure to comply with federal requirements, the National
Health Board informs the Secretary of Health and Human Services. The Secretary is required
to take one of the following actions to ensure that all eligible individuals have access to
nationally guaranteed health benefits:
•
Dissolve an existing health alliance and establish one or more regional
alliances in compliance with federal requirements.
•
Contract with private parties or others to establish and operate regional
alliances.
•
Order regional alliances or health plans to comply with specific federal
requirements.
•
Take other steps as needed to assure coverage.
When the National Board notifies the Secretary of Health and Human Services that a
state has failed to comply with federal requirements, the National Board shall also notify the
Secretary of the Treasury. The Secretary of the Treasury will impose a payroll tax on all
employers in the state. The payroll tax shall be sufficient to allow the federal government to
provide health coverage to all individuals in the state and to reimburse the federal government
for the costs of monitoring and operating the state system.
(9/7/93)
47
�WORKING GROUP DRAFT
PRIVILEGED ANITCONHDhN 1 lAT
An alliance operating under the supervision of the Secretary of the Department of
Health and Human Services is responsible for meeting all requirements imposed on regional
health alliances.
When a state demonstrates to the National Health Board that it is prepared to resume
its statutoryresponsibilities,the state may establish its own alliances or take over
management of alliances established under federal supervision.
(9/7/93)
48
�PRIVILEGED AND^CeNFSENTKir
STATE RESPONSmiLITIES
States assume primary responsibility for ensuring that all eligible individuals have
access to a health plan that delivers the nationally guaranteed comprehensive benefit package.
STATE PLANS
Each state submits to the National Health Board a plan for implementation of health
reform, demonstrating that its health care system meets requirements under federal law.
States periodically update their plans, as required by the National Health Board.
State plans designate an agency or official to coordinate the state responsibilities under
federal law and delegate those responsibilities to state agencies or entities.
The plan also describes how the state intends to perform each of the following
functions:
Administration of subsidies for low-income individuals, families and
employers.
Certification of health plans.
Financial regulation of health plans.
Administration of data collection and quality management and
improvement program.
Establishment and governance of health alliances, including a
mechanism for selecting members of the boards of directors and
advisory boards for alliances.
(9/7/93)
49
�WORKING GROUP DRAFT
PRIVILEGED
ESTABLISHMENT OF ALLIANCES
No later than January 1, 1997, each state must establish one or more regional health
alliances responsible for providing health coverage toresidentsin every area of the state.
The state ensures that all eligible individuals enroll in aregionalalliance and that all
alliances offer health plans that provide the comprehensive benefit package. The state also
ensures that each alliance enrolls all eligible persons in the geographic area covered by the
alliance.
ALLIANCE SIZE AND POPULATION
The geographic area assigned to eachregionalalliance must encompass a population
large enough to ensure that it controls adequate market share to negotiate effectively with
health plans. States may establish one, and only one,regionalalliance in each area.
States may not establish boundaries for health alliances that concentrate racial or
ethnic minority groups, socio-economic groups or Medicaid beneficiaries. An alliance may
not subdivide a primary metropolitan statistical area, but an alliance that covers a
Consolidated Statistical Metropolitan Area within a state is presumed to be in compliance
with these requirements.
An alliance may not cross state lines, but two or more contiguous states may
coordinate the operation of alliances. Coordination may include adoption of joint operating
rules, contracting with health plans, enforcement activities and negotiation of fee schedules
with health providers.
(9/7/93)
50
�WORKING GROUP DRAFT
PRIVILEGED ANB-GGNFfBENHAfe-
RISK ADJUSTMENT
States ensure that each alliance establishes arisk-adjustmentmechanism that meets
federal standards and accounts for differences in patient populations related to age, gender,
family size and health status. (See section on "Risk Adjustment")
INCENTIVES TO SERVE DISADVANTAGED GROUPS
States may determine thatfinancialincentives are needed to ensure that health plans
enroll disadvantaged groups and provide appropriate extra services, such as outreach to
encourage enrollment, transportation and interpreting services to ensure access to care for
certain population groups that face barriers to access because of geographic location, income
levels, racial or cultural differences.
STATE REGULATION OF PLANS
States qualify health plans to participate in alliances. Each state establishes a
mechanism to assess the quality of health plans, theirfinancialstability and capacity to
deliver the comprehensive benefit package to the proper geographic market of each plan.
States will disclose the criteria that each health plan must satisfy to become qualified. Health
plans which satisfy those criteria shall be qualified. Only plans qualified by the state may
offer health coverage through regional alliances.
States define requirements related to levels and geographic distribution of services
required of health plans to ensure adequate access for all eligible participants, including
residents of low-income areas and areas in which the health care system is inadequate.
States must ensure that all consumers have the opportunity to purchase coverage under a
qualified health plan at a price equal to or less than the weighted-average premium. To
fulfill that obligation, states may either require at least some plans to cover the entire alliance
area, or sub-alliance service areas, or may provide a subsidy that allows consumers to pay
only the weighted-average premium.
Where no plan applies, the state must assure that at least one health plan is available
for every eligible individual residing within an area.
(9/7/93)
51
�N
WORKING GROUP DRAFT
PRIVILEGED AND €QNFIDENTIAfc'
States may establish requirements for health plans to assure access to services,
including the requirement to reimburse or contract with designated specialty providers and
centers of excellence.
States may not discriminate against health plans on the basis of their domicile.
A state may not regulate premium rates charged by health plans, except when
necessary to meet budget requirements or to ensure plan solvency. (See section on Budget
Development and Enforcement)
SOLVENCY AND FISCAL OVERSIGHT
Each state establishes capital standards for health plans that meet federal requirements
established by the National Health Board in consultation with the states.
The minimum capital requirement consists of $500,000. Additional capital may be
required for factors likely to affect thefinancialstability of health plans, including:
•
Projected enrollment, number of providers and rate of growth.
•
Market share and strength of competition.
•
Degree and approach torisksharing with providers and financial
stability of providers.
•
Structure of the plan and degree of integration.
•
Prior performance of plan,riskhistory and liquidity of assets.
Each state definesfinancialreporting and auditing requirements and requirements for
fund reserves adequate to monitor thefinancialstatus of plans.
States designate an agency that assumes control if a health plan fails. Procedures
established by states to handle the failure of health plans assure continuity of coverage for
consumers enrolled in the plan.
(9/7/93)
52
�WORKING GROUP DRAFT
PRIVILEOED AND-
GUARANTY FUNDS
Each state operates a guaranty fund to providefinancialprotection to health care
providers and others if a health plan becomes insolvent. States may use existing guaranty
fund arrangements provided that the arrangement meets national standards.
Guaranty funds pay health providers and others if a health plan is unable to meet its
obligations. Guaranty funds cover liability for services rendered prior to health plan
insolvency and for services to patients after the insolvency but prior to their enrollment in
other health plans. Guaranty funds are liable at least for payment of all services rendered by
a health plan for the comprehensive benefit package, including any supplemental coverage for
cost sharing provided by the health plan.
If a health plan cannot meet itsfinancialobligations to health care providers, providers
have no legal right to seek payment from patients for any services covered in the
comprehensive benefit package other than the patients' obligations under cost sharing.
If a health plan fails, health providers are required to continue caring for patients until
they are enrolled in a new health plan.
All health plans must participate in a guaranty fund, and the fund is liable for all
claims against the plan by health care providers, contractors, employees, governments or any
other claimants. The guaranty fund stands as a creditor for any payments made on behalf of
a plan.
If a health plan fails, the state may assess payments of up to 2 percent of premiums on
other plans within the alliance to generate sufficient revenue to cover outstanding claims
against the failed plan. The failure of a health plan is defined as the imminent inability to
pay legitimate claims.
A guaranty fund has the ability to borrow funds against future assessments in order to
meet the obligations of the failed plan.
(9/7/93)
53
�WORKING GROUP DRAFT
PRIVILEGED AND-CONnDENTIAL-
ADDITIONAL BENEFITS
Any state may provide health benefits in addition to those guaranteed under the
comprehensive national package. However, in order to expand benefits, a state must
appropriate revenue from sources other than those established by the American Health
Security Act to support delivery of the nationally guaranteed benefit. A state may not rely on
a payroll mandate on employers or another revenue source applicable solely to corporations or
payroll.
SINGLE-PAYER OPTION
A state may establish a single-payer health care system rather than an alliance system
offering multiple plans. A state may establish a single-payer alliance that serves a portion of
the state.
A single-payer system is one in which the state or its designated agency makes all
payments to health care providers with no intermediaries, health plans or other entities
assumingfinancialrisk.However, providers, such as HMOs, networks of physicians and
hospitals may assume risk by accepting capitated payments to cover the health needs of
individuals.
A single-payer system provides, at a minimum, the health services defined in the
comprehensive benefit package and imposes requirements for co-insurance, co-payments,
deductibles and out-of-pocket limits no greater than those charged by regional alliance health
plans. Single-payer systems also must comply with requirements for quality management
and improvement, the collection of health data and other guidelines for health plans and
alliances.
If a state chooses to establish a single-payer health system, the federal government
may waive any of the following requirements under the alliance system:
•
ERISA rules governing corporate alliances
•
Rules delineating participation in regional and corporate alliances
•
Rules continuing Medicare as a separate program outside the alliance
structure consistent with requirements for the protection of Medicare
beneficiaries
(9/7/93)
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�WORKING GROUP DRAFT
•
PRIVILEGED AND 'CONFIDENTlAfc—
Guaranty fund rules
A single-payer system established by a state may eliminate cost-sharing requirements;
however, a state must appropriate revenue from sources other than those established by this
Act to support deliver)' of the benefits equal to or in excess of the nationally guaranteed
benefit package.
(9/7/93)
55
�WORKING GROUP DRAFT
PRIVILEGED AND-CONTIDENTb^Lj
REGIONAL HEALTH ALLIANCES
Regional health alliances assume the following responsibilities:
•
Representing the interests of consumers and purchasers of health care services.
•
Structuring the market for health care to encourage the delivery of high-quality
care and the control of costs.
•
Assuring that all residents in an area who are covered through the regional
alliance enroll in health plans that provide the nationally guaranteed benefits.
OPERATION OF ALLIANCES
A regional alliance may operate as a non-profit corporation, an independent state
agency or an agency of the state executive branch. A board of directors, composed of
representatives of consumers and employers who purchase coverage through the alliance,
governs alliances that are non-profit corporations. States establish a mechanism for selecting
members of alliance boards.
The board of each alliance includes an equal number of employer and consumer
representatives, plus one additional member to serve as chairman. The board must include
the following:
•
Employers who purchase health coverage through the alliance.
•
Employees who purchase through the alliance.
•
Self-employed individuals who purchase through the alliance.
•
Other individuals who obtain coverage through the alliance.
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND-GGNFfBENTTAL
The board of an alliance may not include members of the following groups or their
immediate families:
•
Health care providers or their employees, owners of health plans or their
employees, or other persons who derive substantia] incomefromhealth
plans or the provision of health care.
•
Members of associations, lawfirmsor other institutions or organizations
that represent the interests of health care providers, health plans or
others involved in the health carefield,or who practice as a
professional in an area involving health care.
•
Owners, employees, board members or individuals who derive
substantial incomefrompharmaceutical companies and suppliers of
medical equipment, devices and services.
To ensure that alliances are accountable to consumers and employers, states may
establish statewide councils composed of representatives of employer and consumer
organizations to prepare lists of nominees for alliance boards.
States require each alliance to provide an ombudsman to assist consumers in dealing
with problems that arise with health plans and the alliance. States may also permit consumers
at annual enrollment to check off a $1 contributionfromtheir premium payment to support
the office of the ombudsman or other consumer representatives.
In addition to a Board of Directors or Advisory Board, each regional alliance
establishes a Provider Advisory Board made up of representatives of health care professionals
who practice in health plans administered by the alliance.
In the case of a health alliance that is a state agency or an independent state entity
administered by a state-appointed authority, an advisory board consisting of representatives of
the same groups is appointed to provide advice to the agency.
(9/7/93)
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PRIVILEGED AND^WRDENTIAL-.
ENROLLMENT
Each regional alliance enrolls all eligible persons, including low-income and nonworking persons, who reside in the geographic area it serves into a health plan that provides
the comprehensive benefits.
Alliances hold an annual open enrollment period during which each individual and
family participating in the alliance has the opportunity to choose among health plans offered
through the alliance. Enrollments made during the annual open season become effective on a
date established by law.
Alliances also provide a mechanism for promptly enrolling individuals and families
who become eligible for coverage between open-enrollment periods. Individuals and families
who move into the region served by an alliance notify the alliance within 30 days. If the
individual is employed, the employer notifies the alliance. If the individual is not employed,
he or she notifies the alliance.
Within 10 days of receiving notification that an eligible person has moved into its
service area, regional alliances provide enrollment materials. Within 30 days of receiving
enrollment materials, eligible individuals are responsible for choosing a health plan and
applying to the alliance for enrollment.
An application for coverage submitted by thefifteenthday of any month becomes
effective on thefirstday of the following month. An application made after thefifteenthof
the month becomes effective on thefirstday of the second month following application.
Alliances establish a mechanism for enrolling individuals who have not chosen a
health plan or purchased insurance when they seek health services. The point-of-servicc
mechanism follows these guidelines:
•
Within 10 days of enrollment at a point of service, the alliance provides an
individual with materials describing health plans.
•
If the individual does not choose a health plan within 30 days, the alliance
assigns the individual to the lowest-cost plan available.
(9/7/93)
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�WORKING GROUP DRAFT
•
PRIVILEGED AND-CONFIDEimAk
Using the fee-for-service schedule adopted by the alliance, the health plan to
which the patient is assigned reimburses the provider who brought the
uninsured individual into the system for services rendered prior to enrollment.
MANAGING ACCESS TO PLANS
In the event that more consumers apply to enroll in a particular health plan than its
capacity allows, alliances develop a process of random selection for use in determining which
new applicants may enroll. Consumers already enrolled in the plan continue their coverage
without interruption.
MARKETING
Alliances control direct marketing to consumers by health plans. Marketing rules
include at least the following requirements:
•
The alliance must approve marketing materials used by health plans.
•
If a health plan uses direct marketing, it may not limit distribution to an area
smaller than the geographic area it serves within the alliance.
•
Health plans and their agents are prohibited from attempting to influence an
individual's choice of plans in conjunction with the sale of any other insurance.
INFORMATION
Alliances publish (or otherwise make available to consumers) easily understood, useful
information, including brochures, computerized information and interactive media, that allows
them to make valid comparisons among health plans. The following information must be
included:
•
Cost to consumers, including premiums and average out-of-pocket expenses.
•
Characteristics and availability of health care professionals and institutions
participating in the plan.
(9/7/93)
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PRIVILEGED AND •GONPIDENTIAL
•
Anyrestrictionson access to providers and services.
•
The annual Quality Performance Report, which contains measures of quality
presented in a standard format.
INSURANCE RISK
An alliance may not bear insurance risk.
RELATIONS WITH PLANS
Each regional alliance negotiates with health plans to provide the comprehensive
benefit package to all eligible persons in the alliance area through a choice of plans. Only
health plans that enter into contracts with the appropriateregionalor corporate alliance are
authorized to provide the guaranteed benefit package.
Alliances contract with health plans on at least an annual basis but may enter into
multi-year contracts. Multi-year contracts may not specify premium increases for future
years in excess of the projected inflation factor for the alliance budget.
CONTRACTING REQUIREMENTS AND EXCLUSION OF PLANS
Alliances write uniform contracts with health plans, including all certification
requirements imposed by federal or state law. Alliances must offer a contract to each
qualified health plan seeking to serve its area unless:
•
The proposed premium exceeds the weighted-average premium within the
alliance by more than 20 percent.
•
The health plan's quality of service or care are unsatisfactory as determined by
the state.
•
The plan engages in practices that have the effect of discriminating against one
or more classes of persons based on race, ethnicity, gender, income or health
status.
•
The plan fails to comply with contract requirements.
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND CONnDENTIAL
The plan is a fee-for-service plan that is not a successful bidder.
Through a competitive bidding process, an alliance may limit to
three the number of plans that pay any willing provider on a
fee-for-service basis and have no network of providers
operating under a contract with the plan.
An alliance may decline to enter into a contract with a health plan if the health plan's
proposed premium would cause the alliance to exceed its budget target.
Alliances may not discriminate against health plans or providers on the basis of race,
gender, ethnicity, religion, mix of health professionals or organizational arrangement.
AREAS WITH INADEQUATE HEALTH SERVICES
Alliances may use financial incentives to encourage health plans to expand into areas
that have inadequate health services.
Alliances may organize health providers to create a new health plan targeted at such
an area, providing assistance with setting up and administering the plan. An alliance may not
assumeriskon behalf of a new health plan but may arrange favorablefinancingto encourage
a health plan to operate in an area with inadequate health services.
RISK ADJUSTMENT
Alliances use a risk-adjustment mechanism to account for variations in enrollment
across health plans with respect to the health status andriskof participants and access to
basic health services. (See section on Risk Adjustment)
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEOED ANI>€0NFIDENI1AL
FEE-FOR-SERVICE PLANS
Each Alliance includes among its health plan offerings at least one plan organized
around a fee-for-scrvice system. A fee-for-service system is one in which patients have the
option of consulting any health provider subject to reasonable requirements. Reasonable
requirements may include utilization review and prior approval for certain services but do not
include a requirement to seek approval through a gatekeeper.
Under certain conditions, with approvalfromthe National Health Board, a state may
waive the requirement for each alliance to offer a fee-for-service health plan if the alliance
demonstrates that:
•
A fee-for-service plan is not financially viable in the area.
•
There is insufficient provider interest in participating in a fee-for-service plan.
•
There is insufficient enrollment to sustain a fee-for- service plan.
Each alliance, after negotiations with providers, establishes a fee schedule for the feefor-service component of health plans in that alliance. Each health plan uses the same
schedule and must reimburse health providers under its fee-for-service option up to the level
of the fee schedule. Providers may collectively negotiate the fee schedule with the alliance.
A state may choose to adopt a state-wide fee schedule.
BALANCE BILLING
A provider may not charge or collectfroma patient a fee in excess of the fee schedule
adopted by an alliance. A plan and its participants are not legally responsible for payment of
any amount in excess of the allowable charge.
PROSPECTIVE BUDGETING OF FEE-FOR-SERVICE
States have the authority to impose prospective budgeting on fee-for-service plans
offered through health alliances.
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEGED ANDreONFTBENTIAir
Under prospective budgeting:
•
The alliance chooses or develops one fee-for-service plan as the designated
plan for its service area. The alliance negotiates with health providers annually
to develop a budget for the plan.
•
The negotiated budget establishes spending targets for each sector of health
expenditures.
•
The fee-for-service plan periodically reviews service utilization and adjusts
payments to providers to assure compliance with the negotiated budget.
•
Provider groups may establish fee-for-service plans. A board composed of
representatives of providers may manage fee-for-service plans, developing a
utilization review system and other procedures to assure thefinancialviability
of the plan.
PORTABILITY
Health plans pay for urgent care delivered outside the plan's service area.
An eligible individual who intends to establish residence in an area for longer than six months
registers with the local health alliance.
An eligible individual who establishes residence in an area for more than three months
but less than six months may choose to:
•
Continue coverage through the regional alliance and health plan in which he or
she is enrolled, limiting the use of health care to emergency services and urgent
care.
•
Register with the alliance serving the temporary residence and choose a local
health plan.
•
Enroll in a health plan with a fee-for-service component that covers care
provided outside the alliance service area.
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND tPNTIDENTIAfc-
ENFORCEMENT
The Department of Labor oversees thefinancialoperations of the alliance. The Department
of Labor conducts audits of management andfinancialsystems, and may recommend to the
National Board that remedial action is required.
(9/7/93)
64
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PRIVILEGED AND "GONFfDENTIAL
CORPORATE ALLIANCES
The following organizations andfirmsmust either form corporate health alliances or
join regional health alliances:
•
Employers with more than 5000 employees.
•
Existing plans formed pursuant to collective bargaining with
more than 5000 covered employees, (or a group of plans within
the same union structure) such as Taft-Hartley plans, although
certain limitations apply to the ability of such plans to provide
coverage to associate union members.
•
Plans formed by rural electric and telephone cooperatives with more than 5000
covered employees.
The term employer is defined as it is under the ERISA statute.
The threshold of 5000 employees is applied by calculating the number of workers
employed by afirmnationally. The common control test determines whether separate trades
or businesses are treated as a single employer.
Employers whose primary occupation is employee leasing are required to participate in
regional health alliances regardless of the number of employees. Federal, state, local and
special purpose units of governments are required to participate in regional alliances
regardless of their size. The United States Postal Service may operate as a corporate alliance.
Afirmor organization that is certified as a corporate alliance must discontinue as a
corporate alliance if the number of full-time employees of thefirmor the number of fulltime employees covered by the organization falls below 4800.
The Department of Labor regulates employers and determines whether a corporate
alliance may continue to operate in the case of mergers, acquisitions and bankruptcies.
A state adopting a single payer approach may require all employers and individuals to
participate in the single payer system.
(9/7/93)
65
�WORKING GROUP DRAFT
PRIVILEOED AND gONnDENTtAL
ELECTION TO FORM A CORPORATE ALLIANCE
Large employers eligible to form corporate alliances elect to exercise that option or to
purchase health coverage through a regional alliance.
During the implementation of the new health system, a large employer has a one-time
opportunity to enroll in regional alliances at community rates workers residing in regional
alliances where less than 100 of the employer's workers reside.
Large employers periodically have the opportunity to switch to regional alliances,
according to the following terms:
•
The employer pays arisk-adjusted,weighted-average premium for a period of
four years, after which the rates charged to that employer adjust to obtain a
community rate over four years.
•
The election applies to all employees of the employer, nationwide.
•
Employers or establishments that join regional alliances must continue to
purchase coverage through them.
TAFT-HARTLEY PLANS AND RURAL COOPERATIVES
The board of directors of an existing Taft-Hartley plan or rural cooperative elects
whether to form a corporate alliance. If it elects not to form a corporate alliance, its member
employers purchase health coverage through regional alliances like any other employer.
These new rules regarding Taft-Hartley plans do not affect and are in addition to current
rules governing the collective bargaining process.
If an employer that participates in a Taft-Hartley plan or rural cooperative leaves the
arrangement, it purchases coverage through the regional alliance like any other employer.
(9/7/93)
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PRIVILEGED AND CONTIDENTIAL
ENROLLMENT
Each corporate alliance offers all eligible persons health plans that provide the
nationally guaranteed comprehensive benefits.
Corporate alliances hold annual open enrollment periods during which individuals and
families choose among health plans. The open enrollment period for the corporate alliance
coincides with the enrollment period for regional alliances.
ENROLLMENT OF NEWLY ELIGIBLE PERSONS
Corporate alliances provide a mechanism for promptly enrolling individuals and
families who become eligible for coverage between open enrollment periods.
OVER-SUBSCRIPTION IN A PLAN
A health plan may become over-subscribed, meaning that the plan does not have
sufficient capacity to serve everyone who wants to enroll. When a plan is over-subscribed,
existing members of the plan have preference to continue in the plan. In determining which
new members join an over-subscribed plan, a corporate alliance uses a process of random
selection.
HEALTH PLANS
Corporate alliances provide health benefits to eligible employees and dependents either
through a certified self-funded employee benefit plan or through contracts with state-certified
health plans.
Contracts between health plans and corporate alliances comply with the following
requirements:
(9/7/93)
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�WORKING GROUP DRAFT
•
PRIVILEGED AND eONHBENHAtr
Premium rates charged to the corporate alliance may be based on community
rating, adjusted community rating or experience rating.
For corporate alliances composed of more than one employer, such as TaftHartley plans and rural electric or telephone cooperatives, premium rates
charged to individual employers must be community rated.
•
Health plans that contract with corporate alliances must accept all eligible
employees and their dependents, regardless of individual characteristics, health
status, anticipated need for health services, occupation, affiliation with any
person or entity (except for affiliation with another alliance or health plan).
•
Health plans may not terminate, restrict or limit coverage for the nationally
guaranteed comprehensive benefit package.
•
Exclusions for existing medical conditions and waiting periods or riders
that exclude certain individuals are prohibited.
•
Health plans may not cancel coverage for eligible employees and
dependents until they enroll in another health plan.
FAILURE TO PAY PREMIUMS
If a corporate alliance fails to make premium payments to a health plan, the plan may
terminate coverage after reasonable notice. If coverage is terminated, the corporate alliance is
responsible for providing coverage to individuals previously insured under the contract.
A health plan that notifies a corporate alliance of its intention to terminate coverage
also sends a copy of the notice to the Secretary of Labor.
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND-GONF^EI^TL^L
INFORMATION
Corporate alliances assure that employees have ready access to comparative
information about health plans. Information is obtained through a brochure published
annually. At a minimum, the brochure must include the following information about health
plans:
•
Cost to consumers, including premiums and average out-of-pocket expenses.
•
Characteristics and availability of health providers.
•
Restrictions on access to providers and services.
•
The annual Quality Performance Report for each health plan containing
measures of quality presented in a standard format.
Corporate alliances are responsible for assuring that employees are aware of
information they may obtainfromparticipating plans.
CHOICE OF PLANS
Each corporate alliance contracts with at least one fee-for-service health plan. A
corporate health plan has a fee-for-service component if a participant has the option of
consulting any health provider, subject to reasonable plan requirements.
Reasonable plan requirements include utilization review and requirements to obtain
approval for certain service before they are obtained but does not involve primary care
physicians or networks acting as gatekeepers.
A corporate alliance may be excusedfromthe requirement to offer a fee-for-service
option in a geographic area in which the regional alliance obtains a waiverfromthe
requirement.
(9/7/93)
69
�WORKING GROUP DRAFT
PRIVILEGED AND tX)^ff^DE^mAfe^
In addition to a fee-for-service plan, a corporate alliance contracts with at least two
other health plans offering the comprehensive benefits. A corporate alliance may be excused
from this requirement if an insufficient number of state-certified plans exist in a particular
geographic area, or if the plans are unwilling to contract with the corporate alliance.
CONTRACTS WITH HEALTH PLANS
Corporate alliances contract with health plans on at least an annual basis but may enter
into multi-year contracts.
Contracts include certification requirements outlined in federal and state law, as well
as a statement regarding the maximum capacity the plan is willing to serve. A corporate
alliance may set additional requirements for contracting health plans.
RISK ADJUSTMENT
A corporate alliance may, but is not required to, use ariskadjustment system to
account for variations in enrollment among health plans with respect torisksand access to
basic health services among participants.
PAYMENTS AND RATINGS
A corporate alliance makes direct payments to health plans.
A corporate alliance has the option of using any type of rating arrangement with
health plans, including full or partial self-funding, prospective or retrospective experience
rating, adjusted community rating, community rating by class, or community rating. In a
Taft-Hartley plan or a rural cooperative, participating employers are charged on a community
rated basis within the plan.
Employees covered in all corporate alliances pay a community rate for their portion of
premiums, however.
(9/7/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND CONHDENTlftfc
PLAN OF OPERATION
Corporate alliances submit plans of operation to the Department of Labor. The
Secretary of the Department of Labor determines whether the plan meets all statutory and
regulatory requirements.
(9/7/93)
71
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Security Act - Working Group Draft] [1]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621463" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
5/7/2015
Source
A related resource from which the described resource is derived
17621463
12093636
42-t-12093636-20060885F-Seg5-008-003-2015
-
https://clinton.presidentiallibraries.us/files/original/bc7484cad88b0900f206c4bdccc307ef.pdf
9fe2ba5c0b6e1d4ab87a77d6c8d1b72d
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task. Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Care Reform] [4]
Stack:
Row:
Section:
Shelf:
Position:
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�HEALTH REFORM ~ STATE BY
STATE BREAKDOWNS
�Alnharpa
Factors Impacting Health Care Reform:
1.
Over 700,000 Alabama residents (about 20%) had no health
Insurance In 1991. In 1993, it is estimated that more than 1
million Alabamians will be without insurance at some point during
the year.
2.
In 1992. the premium for an average family without employersponsored health insurance was $3,780 a year, even if they
remained healthy.
3.
The cost of health care in Alabama has risen by about 421 percent
since 1980. with the average family's payments increasing 200
percent faster than wages.
4.
Similarly, businesses have experienced a cost increase of about
214 percent in the last decade. It is projected that total
expenditures will rise from the current figure of $2.6 billion to over
$5.6 billion by the year 2000. which would produce a 578 percent
Increase in health costs since 1980.
5.
As of 1990, 32.6% of Alabama's population lived in rural areas.
6.
Also as of 1990. 19.2% of the population lived below the poverty
level.
7.
As of 1989. Alabama was distinctly above the national average for
infant mortality, low birth weight babies, and percentage of
children under the age of twelve who were hungry.
Legislation:
1.
Rural Services Task Force / Created 1989
A.
2.
Established a task force to study and make
recommendations on the crisis in rural obstetrical care and
the survival of rural hospitals.
Physician Task Force / Created by the Alabama Medicaid Agency,
1989
The Task Force was designed to involve physicians in decisions
regarding management issues that effect their practices.
�3.
Division of Maternal and Child Health / Created by the Alabama
Medicaid Agency, March 1990
The primary aim of the program was to begin the reform process
by targeting special populations, in this case children and
pregnant women. The basic initiatives of the Division are as
follows:
A.
B.
Enhancing EPSDT services and expanding participation in
the Maternity Waiver program (a managed care program
providing primary care services to Medicaid eligible pregnant
women).
C.
4.
Increasing reimbursement rates for obstetrical services.
Creation of" Healthy Beginnings " (1990), a program
designed to enroll all pregnant women in early prenatal care.
Family Practice Rural Health Board / House Bill 177 / Passed
1990
A.
B.
5.
Allocates funds for the recruitment of physicians to practice
in underserved areas.
Provides for rotations in rural residency programs as well as
periodic tracking of medical students enrolled in such
programs.
Rural or Small Hospitals / House Bill 170 / Signed into law by
Governor Folsom, May 4. 1993
A.
6.
Certificate of Need Review / House Bill 165 / Signed into law by
Governor Folsom, May 6, 1993
A.
7.
Provides state income tax credits for physicians choosing to
practice in rural and underserved areas.
Exempts rural hospitals from previously established
certificate of need review procedures, giving them more
opportunity and incentive to improve their facilities.
Group Health Insurance / Senate Bill 8 / Signed into law by
Governor Folsom. May 13, 1993
A.
Establishes the Insurance Board, which negotiates with
insurers to provide low group health rates for Alabama
�residents who are not covered by large insurance companies,
HMOs, or other managed care organizations.
The Alabama legislature adjourns its 1993 session on Monday, May 17
and will decide the fate of several additional health care proposals before
the close of business.
A.
Physician Task Force / Created by the Alabama Medicaid
Agency, 1989
The Task Force was designed to Involve physicians In
decisions regarding management issues that effect their
practices
�Arizona
Characteristics Impacting Health Care Reform:
1.
As of 1992. 16% of Arizona's population was uninsured, a figure
which places it above the national average. Also, it is estimated
that close to 1 million residents (26%) will be without insurance
at some point during 1993.
2.
Arizona has large rural areas that are severely underserved for
primary care.
3.
Arizona has a relatively high concentration of small employers.
4.
The political climate in Arizona has traditionally been conservative
and. since it now has both a Republican Governor and Republican
majorities in the House and Senate, that trend is likely to
continue.
5.
The budgetary constraints under which Arizona must operate
could adversely affect the course of pending health legislation.
Health Care System Characteristics:
1.
Arizona has nine HMO-style organizations (Health Care Service
Organizations) which attract about 25% of the health care
market.
2.
Arizona's Medicaid program. (AHCCCS). provides for delivery of
services through an HMO model.
3.
Also administered by AHCCCS is a program called Health Care
Group, a subdivision of Medicaid formed to address the needs of
small businesses. It enables employers with 40 or fewer
employees to obtain coverage under an AHCCCS managed care
plan which protects them from medical underwriting and limits
pre-existing conditions to 12 months for inpatient care.
Legislation:
1.
House Bill 2027 / Passed-1991
A.
Prohibits employers from cancelling or not renewing
coverage except in the event of nonpayment of premiums,
fraud or misrepresentation.
�B.
C.
D.
2.
Reduces the uninsured period from six months to
days.
Establishes new criteria for " bare bones " packages, to
include maternity and well-child
benefits.
Expands eligibility requirements to groups of 40 or fewer
employees.
Accountable Health Plans / Senate Bill 1109 / Passed by the
legislature. May 1993
A.
Establishes the Health Benefit Plan Committee appointed by
the Governor. The Committees duties include:
-Developing a Basic Health Benefit Plan (BHBP)
-Recommending benefit and cost-sharing levels as well as
any exclusions and limitations.
-Determining the list of licensed health providers who would
be eligible for reimbursement under the BHBP.
B.
Requires the certification of all health plans offered by
insurers in Arizona. Accountable Health Plans (AHP) would
operate under the following guidelines:
-AHPs must offer the BHBP to all qualified small employers
with 25 to 40 employees. As of July 1996. AHPs must offer
insurance to all small employers regardless of the number of
employees. Employersfilingfor such coverage must not
have provided an HBP to their employees for 90 days prior to
applying for coverage with the AHP.
-An AHP may refuse to insure a given group If it can show
that inclusion of this group would adversely affect its
financial capacity to serve previously enrolled members.
-AHPs must guarantee issue, except in cases where eligible
employees are located outside the AHP's service area.
-AHPs must guarantee renewabillty. except in cases of fraud
or misrepresentation or when an enrollee has failed to pay
his/her premium.
�-An AHP may elect not to renew the HBP. but It will be
prohibitedfromselling insurance in Arizona for five years
following the termination of said plan.
-The maximum pre-existing condition exclusion is 12
months prior to the effective date of the plan.
-An AHP may vary premium rates by as much as 60% from
the prescribed community-rating of an HBP due to the
presence of high-risk circumstances.
-AHPs are required to use standard formats for billing and
data collection.
-Quality Assurance and Utilization Reviews must be filed
with the Department of Insurance to monitor the quality of
services being provided by participating physicians and to
gauge the satisfaction of enrolled individuals.
C.
Provides for the creation of a Small Employer Reinsurance
Program, which would pool the collective resources of small group
carriers to protect against unexpected claims.
�California
Factors Impacting Type and Bredth of Reform Initiatives:
1.
California has an unusually large number of uninsured residents.
5.75 million residents (18.7% of the population) were without
insurance in 1991, and an estimated 8.6 million (29% of the
population) will be uninsured at some point in 1993.
2.
The cost of purchasing health insurance for employees has become
prohibitive, particularly for small businesses. The average cost of
health care for California businesses was $35 billion in 1991 and
is projected to reach over $81 billion by the year 2000. If costs
continue unchecked, the trend would represent an increase of
810% in the twenty years between 1980 and 2000.
3.
The average California family spent $1,666 for health care in 1980;
by 1991, that figure had increased to $4,433 and, at the current
rate of growth, would reach $9,765 by the year 2000. This would
represent a 486% increase over the twenty year period.
4.
There is a large percentage of people working in occupations that
normally do not provide insurance (agriculture, forestry, retailing,
etc.)
5.
There is a large number of immigrants (54% of the nation's
Immigration Reform and Control Act immigrants, 40% of the its
refugees, and more than 50% of the its undocumented
immigrants) who traditionally do not have access to adequate
health coverage.
Health Care System Characteristics:
1.
The CALpers program provides insurance for both active and
retired state employees through managed care organizations. The
CAlpers governing board has created a $1.3 billion purchasing
pool through which it can negotiate with particpating HMOs for
lower rates. It plans to standardize benefits for its members so
they can choose plans based solely on service, quality, and price
instead of level of benefits. The program has proven to be popular
among state employees, and California has added a PPO system
called PERScare for those who prefer a wider range of provider
choices.
2.
Medi-Cal (California's Medicaid program) has a portion of its
membership enrolled in managed care organizations. It has plans
�to expand the number of recipients from 600,000 to 2.5 million, or
about half the elligible population.
Legislation:
1.
Small Insurance Reform / Assembly Bill 1672 / Passed by the
Assembly, 1992
A.
B.
Guaranteed issue is required, but only if a small employer
has chosen to insure 100% of its employees and the
employer agrees to pay the required premium payments.
C.
Renewabillty is guaranteed unless premiums are not paid or
in cases of fraud or misrepresentation. Renewabillty is not
guaranteed if the carrier chooses to exit the small insurance
market.
D.
Pre-existing conditions clauses are limited to six months
following the effective date of coverage. Any carrier choosing
not to adhere to the pre-existing conditions rules may
impose a waiting period of no longer than 60 days before
coverage becomes effective.
E.
Carriers must disclose available plans and premiums as well
as standard employee risk rates and any adjustments that
might be made to an individual's premium.
F.
A reinsurance fund (The California Small Group
Reinsurance Fund) for small insurers has been created to
guard against high-risk groups which incur excessive
medical bills.
G.
2.
Small insurance carriers must issue premiums on a
community-rated basis; they may vary rates according to
age, family size, geographic location, etc.. but premiums may
not exceed the community-rating by more than 20%. After
July 1, 1996. rates may not vary by more than 10%.
A purchasing pool to assist small employers in obtaining
low-cost insurance for their employees has also been
created.
Cost Containment Initiatives / Several passed by Governor Wilson.
1992
�A.
B.
3.
A federally acceptable uniform billing procedure is mandated
for health providers.
The concept of coordinating general health insurance with
worker's compensation will be tested in four new pilot
projects. It is expected that costs will be reduced through
elimination of duplicative coverage, and an overall reduction
of administrative costs.
Managed Care Initiatives / Several passed by Governor Wilson.
1992
A.
B.
4.
As mentioned previously, California will Increase the number
of Medicaid recipients who are enrolled in managed care
plans by expanding existing contracts and making new ones.
Managed care programs will be introduced in ten new
counties throughout the state, bringing the total number to
28.
The California Health Care for the Twentieth Century (The
Garamendl Plan) / Passed by the legislature in 1992, Vetoed by
the Governor / Reintroduced in 1993 as Senate Bill 38
A.
The proposal calls for a government sponsored plan using
Health Insurance Purchasing Cooperatives (HIPCs) focusing
on managed competition through managed care. All existing
insurance plans would be eliminated and their members
would be incorporated into a single system, which would
also seek to include those presently without coverage.
B.
The plan will be financed by employer / employee payroll
based premiums for large businesses and exclusive employer
premiums for small groups. The cost is estimated to be
about $34.4 billion.
�Connecticut
Characteristics Impacting Health Care Reform:
1.
Relatively small number of uninsured individuals (Connecticut
ranks 1st or 2nd in the country in lowest percentage uninsured).
Still, an estimated 495.000 residents (15%) will be without
insurance at some point In 1993.
2.
High cost of insurance. The typical Connecticut family spent
$2,015 on health care in 1980 and $5,420 Just eleven years later
in 1991. If current trends continue, the same family will pay
$12,100 by the year 2000. This produces an increase of over
500% in twenty years.
3.
When compared to per capita income, health payments rose 114
percent faster between 1980 and 1991.
4.
Though Connecticut has a relatively low number of uninsured,
figures indicate that the percentage of uninsured adults with fulltime/full-year employment is significantly higher than the
national average (47% vs. 35% nationally). This points to a large
number of Connecticut businesses that do not offer coverage for
their employees.
Health Care System Characteristics:
1.
Connecticut has a number of large HMO's (Aetna, Cigna, US
Healthcare) and PPO networks.
2.
State employees are covered by an insurance plan, but it is not
structured like a purchasing cooperative (Connecticut is currently
considering the merits of forming at least one such cooperative).
3.
Connecticut has a pilot program that provides for children's health
insurance through a managed care system; the program is
supported with funds from the state's uncompensated care pool.
Legislation:
1.
Availability of Health Care Services and Insurance / Passed 1990
A.
The proposal provides for two health plan options for small
employers who do not currently offer insurance: one to be
�implemented by HMO's, the other by small insurance
companies.
B.
Both plans are required to include several basic criteria:
benefits, deductibles, coinsurance, exclusions, and
limitations considered appropriate for the small group
market by the state's reinsurance pool board.
C.
To market and sell the policies, insurance companies had to
agree to a number of conditions:
-Limits on the duration and scope of pre-existing condition
clauses.
-Mandatory renewabillty, except in cases of non-payment,
fraud, or non-compliance with the terms of the plan.
-Limits on premium increases (they may not exceed 200%
of the base premium amount).
2.
Connecticut Small Employer Health Insurance Program
The program requires all insurers and HMOs offering small group
insurance to adhere to the following guidelines:
A.
Guaranteed issue of a statutory plan with an option to issue
alternate plans containing traditional medical underwriting.
In the event that an insurer rejects a group for the alternate
plan, it must offer the prescribed statutory plan.
B.
Renewabillty is guaranteed for both statutory and alternate
plans.
C.
Rate increases are limited by using the established
community-rating and a demographicfigureto determine an
appropriate adjustment.
D.
In order to insure high-risk groups with some measure of
confidence, insurers may form and participate in a
reinsurance pool funded by the industry. Provisions
Include:
-Reinsurance premiums
-Assessments on small group premiums (up to 5%)
�-Assessments on all other health premiums
E.
2.
A special statutory plan has been developed for employers
who have not offered insurance for two years. It targets low
income individuals (those who fall below 200% of poverty)
and requires health care providers to accept 75% of the
established Medicare reimbursement rate.
Health Insurance for Low Income Children / Established,
September 1992
A.
A pilot program has been established to provide subsidized
insurance for children in families with incomes between
133% and 200% of poverty.
B.
The program also incorporates managed care initiatives for
school age children.
C.
An expanded version of the program is currently under
consideration in which children age 1-5 would enter the
same managed care system and complete coverage would be
provided for those in families living between 133% and
185% of poverty.
�Delaware
Factors Impacting Health Care Reform:
1.
In 1991, 94,000 Delaware residents (13.2%) were uninsured.
Projections for 1993 indicate that 150.000 Delawareans (21.7%)
will be uninsured at some point during the year.
2.
The average Delaware family spent $1,913 on health care in 1980.
By 1991. costs had risen to $4,393. They are expected to reach
$9,055 by the year 2000, for a total increase of 373 percent In
twenty years.
3.
In the last ten years, health care payments for Delaware families
rose 165% faster than their wages.
4.
Delaware businesses spent $164 million on health care in 1980
and about $667 million in 1991. That figure could reach as high
as $1.3 billion by the year 2000. producing an overall increase of
693 percent.
5.
Interestingly, the percentage of Delaware residents living in rural
areas is a full eleven points higher than the national average
(33.7% vs. 22.5%). This may indicate a need for increased
access in these areas.
Legislation:
1.
Children's Health Care Initiative / Passed 1992
A.
Under a collaborative effort between the state and the
Nemours Foundation. Delaware will establish children's
health care clinics throughout the state; emphasis will be on
opening new centers in notably underserved areas.
B.
The program will provide state-funded health coverage to all
children ages 0-18 living in poverty.
C.
Medicaid elligibility will be extended to allow pregnant
women and infants up to 185% of the federal poverty level
to receive the benefits provided therein.
D.
Coverage will be extended to children ages 0-18 who are
living below 175% of the federal poverty level.
�E.
2.
Children above the 175% level will be offered coverage on a
sllding-scale basis.
Health Care Delivery / Passed 1992
A.
B.
3.
Provides for development of a managed care pilot project
targeting the needs of the working uninsured; based on the
success of the program, subsequent recommendations can
be made to provide more effective coverage for working
people, as well as for other special populations.
Allows for an increase in Medicaid reimbursement fees for
physicians. This, combined with the establishment of a
Voluntary Initiative Program by the Medical Society of
Delaware, encourages doctors to treat Medicaid patients and
otherwise indigent populations.
Small Group Insurance Reform / Passed 1992
A.
B.
Establishment of rating bands to limit premium increases.
C.
Establishment of standard benefits package.
D.
4.
Provides for guaranteed Issue regardless of age or health
status.
Complete portability of coverage in case of a change In Jobs
or unemployment.
Cost Containment Committee / Passed 1992
A.
The Committee will recommendation ways to control health
care costs and is scheduled to release its initialfindingsby
December 31. 1993.
�Eloridfi
Factors Impacting Health Care Reform:
1.
Approximately 2.5 million Floridians (18% of the population) are
uninsured. Many of these people are young, unskilled workers,
retired persons, or migrant farmers.
2.
Almost 75% of this 2.5 million are workers and their dependents,
and nearly 23% are children.
3.
There are 2 million Floridians who work but whose earnings place
them below the federal poverty level; accordingly, about 1/2 of the
uninsured are below poverty and cannot afford the rising cost of
health care.
4.
Florida has a large number of small businesses, with 95%
employing 25 or fewer. 32.3% of those employed in businesses
with 5 to 9 employees are without insurance. Firms with fewer
than 5 employees generally leave 60% of their employees
uninsured.
5.
Workers in the service industries or in retail tend to be uninsured,
and statistics show that nearly 49% of the state's workforce falls
into this catagory.
6.
Florida ranks second only to California in Medicare spending, with
total expenditures reaching $32 billion in 1990. It is projected
that spending will hit $90 billion by the year 2000 without a
comprehensive plan for health care reform.
Legislation:
1.
Florida Health Care Reform Act / Enacted March 24. 1992
A.
Ensures universal access to Florida residents regardless of
age, employment, health condition, or economic status.
B.
Ensures coverage for those unable to afford insurance as a
result of chronic illness.
C.
Provides for a mandatory health insurance program for all
employees and their dependents by December 31. 1993,
with employers covering those who are left behind after the
prescribed target date.
�D.
2.
Ensures an appropriate number and distribution of health
care facilities throughout the state by January 1, 1996, with
particular emphasis on rural and underserved areas.
Florida Health Care and Insurance Reform Act / Enacted
April 1993
A.
Requires small insurance carriers to offer a standard
benefits package to all businesses employing 1-50
people and prohibits discrimination on the basis of
age, sex. health status, or claims history.
B.
Allows for modified community rating of small
business policies where factors such as age. gender,
tobacco usage, and geographic location are concerned.
C.
Establishes Community Health Purchasing Alliances
(CHPA's) for the purpose of pooling the purchasing
power of small business; membership is also offered to
state employees, their dependents, and Medicaid
recipients.
D.
Requires hospitals to collect patient outcome data by
diagnosis and forward it to the Agency for Health Care
Administration (AHCA) beginning in June of 1994.
AHCA will evaluate the effectiveness and cost of care
for each diagnosis and develop reports for public use
beginning in December 1994.
E.
Creates rural health networks that coordinate health
service planning among providers and link newly
constructed rural facilities with urban health centers.
Also provides certificate of need preferences and a
rural hospitalfinancialassistance program if federal
funding is not available.
F.
Creates the MedAccess Program for Floridians with
incomes up to 250% of the federal poverty level. The
program will be funded soley by the individual or the
individual and the employer, and providers will be
compensated at the Medicaid reimbursement rate.
G.
Creates a physician fee schedule based on a resourcebased relative value scale.
�Factors prompting health care reform:
1.
A large number of uninsured Georgians (approximately 1.2
million).
2.
Rigid underwriting practices of insurers, which often exclude those
with pre-existing conditions.
3.
An increase in health spending from $1,666 in 1980 to $4.159 in
1991 for a typical Georgia family, with an estimated cost of $8,880
by the year 2000. This represents a 433 percent increase.
4.
Payments for a typical family have risen 168 percent faster than
wages in the last decade.
Health Care System Characteristics:
1.
Georgia has established successful managed care programs
through a variety of HMO's, PPO's. and Blue Cross/Blue Shield.
These managed care systems can now be used to implement the
newly passed health care legislation.
2.
Georgia state employees are currently covered under a benefit plan
administered by the State Merit System.
3.
In the Georgia Reform Insurance Plan passed by the Georgia state
legislature in 1993. insurers will be required to use their combined
enrollments to obtain the best prices for medical care, equipment,
and services.
Legislation:
1.
The Georgia Reform Insurance Plan (GRIP) / Passed by the Georgia
State Senate. 1993
A.
The GRIP can only be provided through existing managed
care plans which meet the qualifications established by the
Commissioner of Insurance.
B.
Price controls will be negotiated and agreed upon by health
care providers and may not be exceeded under any
circumstances.
�C.
Coverage of newly born or adopted children, handicapped
children beyond the limiting age, and mammograms, Pap
smears, and prostate-related procedures is guaranteed.
D.
The legislation provides for a "guaranteed issue" clause,
which extends full coverage to all Georgia residents up to
age 65 regardless of age, sex, past health experience, or
occupation.
E.
There are no pre-existing condition limitations in the GRIP
with the exception of a mandatory 12 month period following
the effective date of coverage: this measure was deemed
necessary to guard against indivduals who suddenly claim a
pre-existing condition, receive treatment, and then
discontinue coverage.
F.
Portability of coverage is guaranteed regardless of changes in
employment or terms of policy.
G.
Qualified insurers must offer at least three plans which
reflect differences in an individual's ability to pay, Including
a low cost, mid-range, and higher cost plan. Also, insurers
are required to offer a basic, minimum benefits package for
those whose annual income places them below 250% of the
federal poverty level.
H.
All plans must Include substantive primary and preventive
care measures.
I.
Community rating will be established so that all insureds In
the same class will pay comparable premiums.
J.
The legislation also includes provisions for the
standardization of billing and claims forms in an effort to
reduce administrative costs.
�KansAs
Factors Prompting Health Care Reform:
1.
Large number of small employers.
2.
Prohibitively high cost of health care services / rising cost of
health insurance; (during the last decade, the typical Kansas
family's insurance costs rose 263 percent faster than wages and,
while Kansas businesses experienced a rise in corporate profits of
about 130 percent, they also saw an Increase In health payments
of nearly 215 percent.
3.
Over 300,000 non-elderly Kansas residents (12.6 percent) had no
health insurance in 1991.
Health Care System Characteristics:
1.
Kansas has several managed care networks, including Kaiser
Permanente. Humana, and Blue Cross/ Blue Shield of Kansas.
2.
Kansas state employees are eligible for coverage under the State
employees group health insurance plan.
3.
Kansas currently has no programs to address the health concerns
of specific populations such as children and/or the elderly.
Legislation:
1.
Small Employer Health Benefit Plan / House Bill 2610 / Passed
1990
A.
Designed to encourage small businesses to offer health
insurance to their employees.
B.
Permits 2 or more small employers to pool their risk.
C.
Exempts plans from any mandated benefits established In
subsequent reform initiatives.
D.
Provides credit for state income taxes based on premium
payments.
E.
Limits amount the employer must pay / mandates copayments for employees.
�2.
Group Health / House Bill 2001 / Passed 1991
A.
B.
Requires that group health insurance rates be filed with the
Commissioner of Insurance and that they not be
unreasonable, excessive, or discriminatory.
C.
Prohibits the creation of rating classifications based on
medical condition.
D.
Prohibits rate increases of more than 75% in any one year
for group insurance.
E.
3.
Prohibits exclusion or restriction of coverage for specific,
pre-existing medical conditions.
Guarantees portablility of health coverage.
Guaranteed Issue for Small Employer Groups / Senate Bill 561 /
Passed 1992
A.
B.
Mandates a discrepancy of no more than 25% between the
highest rates charged a given group and the lowest rates
charged a given group.
C.
4.
Establishes a reinsurance pool so that insurers may evenly
distribute the risk presented by small groups which would
not normally be insurable at reasonable rates.
Prohibits forcing an employer to transfer from one rating
classlfcation to another.
Individual Health Risk Pool / House Bill 2511 / Pending
A.
Establishes a health risk pool for the purpose of extending
coverage to those who would not otherwise be eligible for
basic health insurance.
B.
Requires that providers be reimbursed at the same rate they
receive for those in the Medicaid program.
C.
Permit insurers to take a credit against premium taxes equal
to 80% of the difference between premiums paid for
coverage and the claims incurred by those Insured In the
pool.
�D.
Mandates co-payments for each service In the plan so that
the individual takes parUal responsibility for making rational
medical choices.
E.
Plan is exempt from mandated benefit provisions.
�Kentucky
Factors Prompting Health Care Reform:
1.
Between 1980 and 1991. health care payments for a typical
Kentucky family Jumped from $1,524 to over $3,200, an increase
which is about 197% more than the average increase in wages for
the same period.
2.
Over 500.000 non-elderly Kentuckians (15.6%) had no health
insurance as of 1991.
Legislation:
1.
Health Care Reform Plan for Universal Access / Proposed by
Governor Brereton Jones. September 1992 / Pending in Kentucky
legislature
A.
Establishes a Mega-Pool Insurance Plan which could
potentially cover 2 million uninsured residents. Elligible
individuals include:
-Public Employees. Uninsured and Unemployed Individuals.
Individual and Business Participants, Medicare Recipients.
Prison Inmates, Wards of the State, and Worker's
Compensation Recipients.
-The Medicaid program would be kept in tact and would
continue to cover those who meet the proper criteria.
-Payment options for the pool were also discussed and
include competitive bidding, capitation, and modified fee for
service.
B.
Establishes mandatory employer-sponsored health
insurance, with the state providing a subsidy for small
businesses. If the Reform Plan is not passed, a play or pay
system would take effect in which employers refusing to offer
health insurance would pay an estimated $120 per month
per employee.
C.
Provides state financial assistance for children in families
with incomes below 200% of the poverty level and partial
assistance for unemployed adults below 200% (sliding-scale
basis).
�D.
Proposes establishment of a Health Care Authority to
administer reform initiatives.
E.
Provides for health insurance reform with the following proposals:
-Community-rated insurance.
-Standardized billing and a single insurance card.
-Assured portability.
-Assured renewabillty.
-No pre-existing condition limitations.
-Financial incentives for rural practitioners.
-Recruitment of rural practitioners through the Kentucky
Health Services Corps.
F.
Proposes Regional Health Care Delivery System consisting
of:
-One full-service regional hospital.
-Several primary and emergency care facilities per region.
G.
-County health departments.
Proposes physician extender clause which grants presciption
authority to physician assistants and nurses in underserved
areas.
�Louifiiana
Factors prompting health care reform:
1.
Large number of uninsured residents; estimates indicate the
nearly 25% of the state's population (963.000 people) is
uninsured. This Is the third highest percentage in the country
behind New Mexico and Texas (26%).
2.
Large portion of population (10%) living in rural areas which are
generally severely underserved.
Health Care System Characteristics:
1.
Louisiana has a State Employees Group Benefits Program similar
to a group purchasing cooperative, but it is currently having
problems neutralizing rising health costs and must find a way to
balance claims costs with premium payments.
2.
The Louisiana Health Care Authority has established a charity
hospital system, which ensures the availability of acute and
primary care services for the uninsured and underinsured.
3.
Louisiana currently has very few sophisticated managed care
organizations, and virtually all of them located in the cities of
Shreveport, Baton Rouge, and New Orleans.
Legislation:
The following are recommendations of the Louisiana Health Care
Commission, which was formed by Legislative Act 1068 in July of 1992.
1.
Creation of Health Insuring Organizations (HIO)
A.
2.
Louisiana is proposing the use of HIO's to affect an
expansion of the Medicaid program. The expansion would
cover an additional 500,000 people through the
implementation of managed care initiatives authorized and
controlled by HIO's.
Basic Health Plan
A.
Attempts to provide universal access to health services in
Louisiana through the negotiation (with insurers) of low-cost
�Insurance options for those currently below the poverty level
and without any form of insurance.
3.
Assured Portability of Coverage
4.
Community Rating of Insurance Premiums
5.
State Mandate Justiflcation
A.
This provision would require that all state legislation
outlining health care reform initiatives have a detailed
benefit cost analysis to prove its merits and necessity.
6.
Restrictions on Physician Self-Referrals
7.
Elimination of Administrative Waste
A.
Proposes the creation of a Department of Insurance, which
would be responsible for standardizing claims and billing
procedures and substantially reducing the costliness and
inefficiency of excessive paperwork.
�Factors impacting health care reform:
1.
Large number of uninsured (406,000 individuals, or 9.3% of the
population); it is estimated that 1/3 of this group had outstanding
medical debts averaging $826.
2.
As of 1989. roughly 366.000 Minnesotans had Individual health
insurance policies which had high premiums or deductibles and
sometimes excluded significant health conditions.
3.
Also as of 1989, 11.000 people were refused medical care because
they lacked insurance, and an additional 50,000 postponed
necessary medical attention because of what they perceived to be
prohibitive costs.
4.
Rural health care has surfaced as a primary point of contention,
with those in rural areas being 38% less likely to have insurance
than those in urban centers.
5.
It was also found that rural residents paid 60% more In out-ofpocket expenses than did urban residents,
6.
Generally, those who had some form of insurance were more
concerned about securing coverage for catastrophic conditions,
while those who had no insurance emphasized the need for
primary care.
Health Care System Characteristics:
1.
Minnesota has developed a Children's Health Plan which, at the
time of initial passage in July of 1988, provided coverage to
children ages 1-18 living in families with incomes below 185% of
the poverty level. The plan, which is financed through a
restructuring of Medicaid eligibility requirements, has since been
expanded as follows:
A.
As of October 1, 1992. the Children's Health Plan was
expanded to include outpatient benefits for families of the
children enrolled.
B.
As of January 1993. the Plan was further expanded to
include outpatient benefits for families with children at or
below 275% of poverty.
�C.
In July 1993. Inpatient benefits will be covered for the
aforementioned low-income populations.
D.
Finally, by January 1. 1994, single adults and families with
incomes up to 275% of poverty will be eligible for coverage
under the Children's Health Plan.
2.
The Minnesota State Employee Insurance Program covers state
workers under a managed care system and is currently the model
for a new health purchasing cooperative for private-sector
employers set to take effect In July 1993. The plan will feature
voluntary participation with a two year minimum and guaranteed
issue for all applicant groups. Like the program for state
employees, it will be sponsored by the state government.
3.
One unique feature of Minnesota's pending health care reform
legislation has been the proposed development of Integrated
Service Networks. The networks would be similar to HMO's in that
they involve cooperation among groups of providers and/or
insurers to provide an established set of health services at a fixed
price. The primary difference would involve moreflexibilityin the
nature of the partnerships, so that providers and insurers, just
providers, or Just insurers could form an alliance whose only
requirement would be to share the risk of extending care to a given
group of individuals.
Legislation:
1.
Minnesota Health Care Commission / HealthRight Act / Passed
1992
A.
The HealthRight Act charges the Commission with
developing a plan to slow the growth in health care spending
by at least 10 percent a year for each of the next five years.
B.
The Commission will also become involved with issues
related to access, quality, and affordablllty following the
implementation of the initial cost containment phase.
C.
Cost Containment Measures
-Integrated Service Networks have been developed to provide
a continuum of services for a fixed price through networks of
providers. ISNs would compete on the basis of cost and
quality, operating much the same way HMOs do, except that
�there would be increasedflexibilityin choosing providers
and forming health care partnerships.
-Global budgeting will be used to control all public and
private expenditures without interfering directly In the
financial matters of providers and health plans.
-A balance of competition and collaboration will be used
induce ISNs to provide better quality services at lower prices.
Data collection and distribution will be vehicle through
which competition is spurred and, in the event that
competition becomes counterproductive, the plan facilitates
collaboration of providers and networks.
2.
MinnesotaCare / House File Number 2800 / Signed into law by
Governor Carlson, 1992
A.
All uninsured low-income families with children and
Individuals will be phased into the plan in accordance with
their respectivefinancialstanding starting on October 1,
1992.
B.
Enrollees will contribute to the cost of health care on a
sliding-scale based on income.
C.
Financing will be achieved through additional taxes on
cigarettes and health providers. Taxes include:
-A 2 percent tax on gross patient revenues In hospitals
beginning in January 1993
-A 2 percent tax on gross revenues of all other providers.
-A 2 percent tax on the wholesale price of prescription drugs
-A 1 percent tax imposed on non-profit health Insurers
(such as Blue Cross/Blue Shield and HMOs)
D.
Small Employer Insurance Reforms Include:
-Insurers must offer two small employer plans.
-Guaranteed issue and renewabillty.
-Insurers must require the contribution of at least 50% of
the premium for small employer plans.
�-Twelve month pre-existing conditions clauses.
-Eliminates medical underwriting for such reasons as
gender and family medical history.
�Maine
Factors prompting health care reform:
1.
Maine has substantial rural areas which have not developed the
kind of sophisticated facilities necessary to provide comprehensive
care to residents living there.
2.
Rising costs have become excessive for all state residents, and
prohibitive to those with lower incomes.
3.
Maine is currently experiencing fiscal difficulties. which prohibit
the use of state funds to fuel an expansion of health benefits.
4.
Lack of practitioners in rural areas.
Health Care System Characteristics:
1.
Maine's state employees are currently covered by a conventional
Blue Cross plan, but will begin receiving coverage through a newly
conceived primary care, point of service plan in April of 1993. The
new plan will continue to be administered by Blue Cross/Blue
Shield.
2.
The Rural Medical Access Program provides malpractice insurance
assistance to doctors offering obstetric services in rural areas.
3.
General health services are provided by an array of small
Community Health Centers.
4.
Maine currently has two HMO's operating in several of its major
cities.
Legislation:
1.
Medicaid Elligibility Reform / Passed 1988
A.
2.
Medicaid expanded to include incomes of up to 185% of the
poverty level for pregnant women and chUdren; expanded to
100% for older persons and those with disabilities.
Maine Health Program / Passed 1989
A.
Established to provide coverage to low income Individuals
who do not qualify for Medicaid.
�-To Implement the program. Maine obtained two federal
demonstration grants from the Health Care Financing
Administration which provide federal matching funds for all
children in families below 125% of poverty and a limited
number of adults with Incomes up to 100%.
3.
MaineCare Program / Passed 1989
A.
Assists small businesses by offering sliding-scale premiums
to individuals in firms with 15 or fewer employees who
previously lacked any form of insurance coverage.
-Employers must pay 50% of the premium, and all
employees not covered under an alternate plan must
participate. Program is administered by a Maine based
HMO.
-Program originated as a pilot project under the Robert
Wood Johnson Foundation and is currently being
implemented in two target areas.
4.
Rural Medical Access Program / Passed 1990
A.
5.
Medicaid Reimbursement Initiative / Passed 1990
A.
6.
Provides for a resource-based relative value scale for
physician fees, so that Medicaid reimbursement for primary
care doctors is balanced with that of specialty providers.
Community Health Program / Passed 1990
A.
7.
Provides malpractice insurance subsidies of $5,000 to
$10,000 to physicians providing pre-natal and obstetrical
care in medically underserved regions. The program is
funded by savings achieved in the Collateral Source Reform
Initiative, which prohibits plantlffs from collecting from
multiple sources in malpractice cases (also enacted in 1990).
Provides funding for rural community health centers.
Assured Continuity / Passed 1990
A.
Provides most group policy-holders with a three month
transition periodfromone policy to another without preexisting condition limitations.
�8.
Medicaid Expansion / Passed 1991
A.
9.
Medical Liability Demonstration Project / Passed 1991
A.
10.
Introduced mandatory community rating for Insurers as well
as guaranteed issuance and renewal In the small group
market.
Standard Benefits Package / Passed 1993
A.
12.
Established to reduce the practice of defensive medicine by
devising a prescribed set of guidelines which, if adhered to
by providers, protects themfromunreasonable medical
liability.
Insurance Reform Package / Passed 1992
A.
11.
Medicaid expanded to Insure those children living below
125% of poverty who were previously covered under the
Maine Health Program of 1989.
Bureau of Insurance established both a comprehensive
package of services and a lower cost, basic package for the
small group market.
L.D. 182 - An Act to Implement the Recommendations of the Joint
Committee to Study the Feasibility of a Statewide Health Program
/ Pending
A.
B.
13.
Extends community rating to groups of 50 (from 25) and to
individual health policies.
Provides for guaranteed issue for individuals and greater
portability for both groups and individuals.
L.R. 16 - An Act to Provide Family Security Through Quality,
Affordable Health Care / Pending
A.
14.
Establishes the Maine Health Plan and Maine Health Fund
to set spending and price controls.
Governor's Health Care Reform Proposal / Pending
Details Not Final.
�Missouri
Legislation:
1.
Revision of House Bill 564 / Passed March. 1993
A.
Establishes a State Legal Expense Fund to protect from
malpractice claims those physicians who choose to provide
primary or preventive care in a city or county health
department, a non-profit medical facility, or public
elementary and secondary schools. Coverage will pay up to
$500,000 for any one claim, and doctors may purchase
additional insurance for claims which may exceed said
amount.
B.
Encourages physicians to practice in underserved areas by
providing financial incentives drawnfroma "Health Access
Incentive Fund". The fund may be used for loan
repayments, professional liability insurance, practice
subsidies, annuities, technical assistance, and start-up
grants. Doctors receiving such financial support must agree
to treat all patients regardless of their ability to pay.
C.
Medical School loans may be granted by the Missouri
Department of Health up to $7,5000 per student per
academic year. Repayment of the loan may be reduced by
11A for every year a physician practices in an underserved
area.
D.
Permits physicians to delegate to a registered professional
nurse the authority to dispense presclptions and administer
appropriate medical care under established collaborative
practice arrangements.
E.
Permits public schools to contract with health care providers
to provide primary care and childhood screenings to children
In Medicaid families who may not otherwise receive adequate
health care services.
F.
As of July 1, 1995. the Department of Social Services may
offer a health insurance policy through the Medicaid
program. Those elligible for the plan include: surviving
spouses unable to afford continuation of previously
purchased group coverage, adults over 21 who are not
pregnant and reside in households with incomes up to
c.
�185% of poverty, and dependents of an insured person
residing in households with incomes up to 185% of poverty.
G.
As of July 1. 1994. Missouri will implement a pilot project to
provide a special set of benefits for the treatment of chemical
dependency. The plan will be voluntary (because it will
Involve additional cost on the pjart of the insured individual)
and will be evaluated as to the relative costs and benefits of
alternative coverage.
H.
Requires that employers identify employees who are elligible
for a federal earned income credit and assist them In
completing the forms necessary to ensure processing of the
credit. Additional income accrued as a result of the credit
may be used for the purpose of purchasing health insurance
for children in elligible families.
I.
Permits Missouri residents to claim a state income tax
deduction of up to $2000 for amounts deposited in an
Individual Medical Account. Money drawn from the account
must be used exclusively for the purchase of medical care
and will be subject to a 10% penalty in case of withdrawal
for other purposes. Accrued interest will not be subject to
state income tax.
J.
Initiates a pilot project providing funds for the purchase of
health benefits for up to 1000 residents currently receiving
unemployment compensation.
K.
As of January 1, 1994, physicians, dentists, chiropractors,
and podiatrists will be required to post notices indicating the
ten services most frequently provided and the corresponding
fees for said services.
�New Mexico
Factors Prompting Health Care Reform:
1.
A large percentage of New Mexico's population (51.6%) resides in
rural areas.
2.
New Mexico has the highest percentage of people unserved for
primary care in the country with 16.8%
3.
In 1990. 20.9% of the population was living below the federal
poverty level, as compared to 13.5% nationally. Currently. New
Mexico ranks about 46th in both p>er-caplta Income and
population above poverty.
4.
26.4% of non-elderly New Mexicans are without health insurance;
this is the highest percentage of uninsureds in the country.
Health Care System Characteristics:
1.
The University of New Mexico's Medical Center has been the focal
point of an effort to strengthen the quality of emergency services
for all state residents. Its key components include a Lifeguard
helicopter and specialized centers for trauma situations and
burns.
2.
In addition to the hospital run by the University. Alburquerque
has three other large hospitals which feature a Level III trauma
center, a Neonatal Intensive Care Unit, several cardiac
catherization labs and transplant units, and about a dozen MRIs.
Again, these facilities have been designed to transport and serve
even those residents who may not live in the immediate vicinity.
3.
The northeastern portion of the state has a strong network of
primary care clinics as a result of close-knit communities
inhabited by Hispanic families. Primary care in other pxarts of the
state is more sparse and therefore less effective.
4.
New Mexico's three largest cities (Alburquerque, Snata Fe. and Las
Cruces) have well established HMOs with reasonably high
participation.
5.
Purchasing cooperatives are in place for public employees and
public school employees.
�6.
New Mexico was the first state to establish a policy of peer review
for physicians, and one of the first to have a statewide Medicaid
Primary Care Network.
Legislation:
1.
The New Mexico Health Policy Commission / Passed by the State
Legislature. 1991. Since its creation in 1991. the Commission has
developed the New Mexico Health Care Initiative, a proposal which
includes a statewide Health Cooperative designed to phase in
universal access. Elements of the plan are as follows:
A.
State and local employees will be members from the start.
B.
The Cooperative will apply for Medicaid and Medicare
waivers so that persons currently covered under those
programs can be Incorporated.
C.
The Cooperative will also try to include other programs, such
as the Veterans Administration, the Indian Health Service
and CHAMPUS, through contracts.
D.
Employers must provide coverage for their employees, either
through the Cooperative or private insurance.
E.
Unemployed individuals not qualifying for Medicaid will
automatically be covered by the Cooperative.
F.
The Cooperative will eliminate medical underwriting and
exclusions for pre-existing conditions. It will also consider
the merits of a single community rating system vs. regional
rating.
G.
The plan will be financed through a number of sources,
including:
-premiums payed by employers and employees
-federal funds now used for Medicaid and Medicare
-additional state funds to cover those who do not qualify for
assistance under any of the aforementioned programs
�2.
New Mexlcare / Not passed by the 1993 Legislature
New Mexlcare would have introduced a radical, single-payer plan
administered by the state. It would have imposed an 8 income
%
tax charge on all state residents and an additional 3.5% payroll
tax on businesses. The public reaction to these tax increases
resulted in the death of the proposal in committee.
�New York
Characteristics impacting health care reform:
1.
2.
3.
4.
5.
6.
Cost of health care tends to be high
Population density is high, therefore utilization is high
Litigation is greater
Incidence of fraud is greater
Corporations can move to near-by states fairly easily in event that
health care costs become too high
Presently, few commercial companies are writing
individual coverages; costs are high for individual / small group
coverages
Health Care System Characteristics:
1.
New York has specific proposals designed to Improve services and
delivery for Medicaid recipients and small groups and individuals
in a commercial setting
2.
New York has thirty-one (31) HMO's. 30 of which will be offering
open enrollment for small groups and individuals
Legislation:
1.
Children's Health Insurance Program (CHIP) / Passed 1990.
Effective 1991
A.
2.
Provides primary and preventive health insurance to
children without family insurance or with inadequate
coverage up to the age of 13
Community Rating-Open Enrollment / Passed July 1992.
Effective April 1, 1993
A.
Requires insurers offering coverage to individuals and
small groups to accept all applicants regardless of age, sex,
occupation, or health status
B.
Rates are based on insurer's aggregate experience in a given
area
�3. Standardized Policies / Pending
A.
B.
Also ensures the creation of competing plans that are truly
comparable, allowing the consumer to make meaningful
decisions
C.
For insurers offering individual or small group insurance,
pre-existing condition exclusions cannot extend beyond
twelve months from the effective date of coverage
D.
Individuals who lose their insurance due to termination or
exclusion from a particular class may, without evidence of
insurability, continue coverage for himself or herself and his
or her family
E.
4.
Establishes standard Insurance policies designed to
adequately cover those who are at greater risk of incurring
claims (eliminates underwriting)
Individuals may also convert insurance policies without
evidence of insurability if he or she has been covered
continuously for more than two years
Long-Term Care Security Demonstration Program /
Passed 1989. Effective Spring 1993
A.
Proposes long-term care insurance that guarantees access
to Medicaid without forcing individuals to "spend down"
their assets in the event that long-term benefits are
exhausted
5. UNYCARE / Proposed 1989
A.
Proposes a single-payer authority which would control costs
through development of uniform reimbursement schedules
and reduce and simplify administrative procedures
�Factors Prompting Health Care Reform:
1.
Oklahoma has a large rural population (40.6% vs. a national
average of 22.5%) and contains only two major metropolitan
areas.
2.
While the percentage of the population unserved by primary care
physicians is only slightly lower than the national average (4.0%
vs. 4.8%), there appears to be an uneven distribution of primary
care facilities.
3.
High percentage of small businesses unable to provide insurance.
4.
15.6% of Oklahoma's population lives below the poverty level (vs.
13.5% nationally), with the average per-caplta income standing at
$14,154 as of 1989 (vs. $17,596 nationally).
5.
27% of all Oklahomans working full-time year round were
uninsured as of 1988 (vs. national average of 35%). The total
number of uninsured residents is about 600.000.
Health Care System Characteristics:
1.
Oklahoma has several large HMOs located in the metropolitan
areas of Oklahoma City and Tulsa; they insure a relatively low
5.8% of the state's population (compared to a 14.6% average
nationally).
2.
There is a program currently in existence which provides coverage
for over 70,000 state employees and teachers; members may
choose from an Insurance plan offered by the state or one of
several HMOs.
Legislation:
1.
The Oklahoma Health Care Authority / House Bill 1573 / Pending
A.
The Authority would be required to submit
recommendations and proposals to the Governor on each of
the following issues:
-a standardized benefits package to be offered by insurers
�-a plan for more even distribution of health care services
and facilities
-cost containment, including certificates of need and global
budgeting proposals
-parameters for physician practice guidelines based on
outcomes research
-a health services rate schedule based on a Resource-Based
Relative Value System
2.
The Health Care Benefits Reform Act / Senate Bill 525 / Dormant
for this legislative session
The bill calls for several standard insurance reform measures
designed to shift the focus from defensive insurance practices to
cost containment and quality of services. Theoretically, such a
shift would benefit both consumers and insurers. The proposed
reforms include community rating, guaranteed Issue, portability,
and a general standardization of policies to ensure competition
based solely on price and quality.
2.
Medicaid Managed Care / Senate Bill 76 / Pending
A.
3.
The bill proposes a managed care delivery system for current
Medicaid recipients to induce cost savings while maintaining
an appropriate level of care.
Individual Medical Account Act / House Bill 1436 / Committee
report submitted
A.
Establishes a system in which individuals, employers, and
the government would deposit pre-tax dollars into Family
Health Accounts for the purchase of health insurance.
B.
Individuals would choose their own health plans based on
cost and quality of service and would deposit their share of
the premium into the Health Account; this would provide
incentives for both consumers and insurers to control costs.
C.
The creation of a standard benefits package, uniform claims
and billing procedures, and the elimination of pre-existing
condition measures would Increase competitiveness in the
�market and provide further Incentive for insurers to control
the cost of their policies.
D.
E.
Income or interest that accumulated on the accounts would
be used by the State to expand eligibility for Medicaid, assist
small employers with their contributions to the Accounts of
their employees, and provide basic coverage for those who
cannot afford insurance and do not qualify for public
assistance.
F.
4.
After an individual's premiums are paid, any remaining
funds in the account could be used to purchase benefits not
covered by the basic benefits package.
The accounts would be maintained and administered by the
Oklahoma Health Care Authority.
Guaranteed Portability / House Bill 1302 / Signed by Governor
David Walters. April 18. 1993
A.
5.
Uniform Claim Forms / House Bill 1570 / Pending
A.
6.
Requires uniform standards and procedures for processing
claims, including electronic claim form submission, to
produce administrative cost savings.
Health Insurance Assigned Risk Pool Act / House Bill 1585 /
Pending
A.
7.
Provides for guaranteed portability of health coverage when
an employee changes Jobs.
All Insurers providing Insurance in Oklahoma are required
to participate in the pool, which serves to cooperatively
assume risk for heavy medical claims. Premiums equal
200% of the average standard risk.
Long Term Care / Senate Bill 50 / Signed by Governor Walters.
May 4. 1993
�Oregon
Factors Prompting Health Care Reform:
1.
450.000 Oregonlans were uninsured prior to the implementation
of the Oregon Health Plan in 1993.
2.
Many of Oregons businesses are small businesses employing
between 3-25 people.
3.
Oregonlans Just above the poverty level have problems accessing
basic health insurance because of the general increase in the cost
of health services and insurance.
Health Care System Characteristics:
1.
Oregon has nine HMOs which provide managed care for almost
27% of the population.
2.
There are also pre-paid health plans called PCOs which cover a
specialized package of services exclusive of inpatient hospital
treatment.
3.
A community based plan is in place to address the needs of senior
citizens and people with physical disabilities. The Home and
Community Based Waiver permits 11.000 of the 19.000 people
with physical hardships to live in their own homes or residential
care facilities.
4.
There have also been efforts to expand services for people with
serious mental and developmental deficiencies. Successful
implementation of the Oregon Health Plan will provide preventive
screenings for mental illness and chemical dependency.
5.
Oregon also has a plan to increase the number of managed care
facilities throughout the state and especially in extremely rural
areas where populations are generally underserved.
Legislation:
Oregon has recently received the long-sought Medicaid waiver it needs
to implement the Oregon Health Care Plan (Senate Bill 27, first proposed
and signed into law in 1989). A summary of the Oregon Health Plan's
three main components follows:
1.
Medicaid Expansion
�A.
2.
High Risk Pool
A.
3.
Combines the purchasing power of individuals who are
currently without insurance because of pre-existing
conditions or costly medical history and ensures more
affordable premiums.
Employer Mandates
A.
4.
Proposes changing Medicaid elligibility requirements to
enable an additional 120,000 individuals to qualify for
assistance. The expansion will be financed through savings
from the implementation of managed care procedures and
prioritizing services to create a basic benefits package.
Institutes a "play or pay" system in which employers provide
insurance for all full-time employees (17.5 hours per week)
or pay a payroll tax which would support their workers in a
state insurance pool.
Small Employer Program
A.
Creates a benefits plan for small business employees similar
to the Medicaid package; plan must be offered by all small
group insurers, with provisions for rate banding, limited
pre-existing conditions exclusions, and guaranteed issuance
and renewal.
�Pennsylvania
Factors Prompting Health Care Reform:
1.
Pennsylvania has the largest rural population in the nation, which
creates the usual problems concerning the lack of primary care
physicians and full service health clinics in these areas.
2.
The number of uninsured Pennsylvanians is currently 1.3 million.
3.
It is estimated that about 402.000 children in Pennsylvania (1 in
5) lack health insurance; of this number, four of ten live in
households where at least one parent is employed on a full-time
basis and an additional four have at least one parent who works
part-time.
4.
19% of the state's businesses employ 50 or fewer employees.
5.
Only 12.9% of Pennsylvanians were enrolled in HMOs as of 1990.
Health Care System Characteristics:
1.
There are currently no purchasing cooperatives in Pennsylvania to
defray the cost of Insurance. Employers generally purchase
insurance individually, with large employers possessing a distinct
advantage. State employees receive benefits through a trust
arrangement with insurers and HMOs.
2.
Pennsylvania has numerous programs which target special
populations. They include: a network of EPSDT providers for low
Income residents, state health clinics that emphasize
immunization and screening services for low Income residents, a
health insurance program for children of working, uninsured
adults, and a program initiated by the state's insurers to provide
low cost, basic benefits packages on a sliding-scale.
3.
There are currently 18 operational HMOs in Pennsylvania serving
about 1.5 million residents, as well as numerous PPO
arrangements.
Legislation:
1.
Pennsycare / Introduced by the Health Care Reform Committee,
November 1992 / Pending
�A.
A Health Care Policy Board would establish a Basic Health
Care Package to be offered by competing Managed Care
Networks.
B.
MCNs would be organized to suit the needs of residents in
the region of operation and would be certified by the Policy
Board on that basis.
C.
MCNs would be authorized to design their own benefit plans
emphasizing certain services but would be required to offer,
as part of each option package, the prescribed Basic Health
Care Package.
D.
MCNs in each region would compete to offer the BHCP at the
lowest rate. The low bidder would be selected to offer the
BHCP at that rate. Persons wishing to subscribe to other
MCNs offering a larger array of services could do so, but
they would pay out-of-pocket for services beyond the BHCP.
E.
Payments for the plans would be made by individuals,
employers, and. when applicable, the government. They
would be made on a capitated basis, so that a fixed price is
established for each individual regardless of the extent of
care received.
�Rhode Island
Factors Prompting Health Care Reform:
1.
In 1990. Rhode Island spent $2,707 per person, or 3.3% of all
state and local expenditures, on health care. The average cost
nationwide stood well below that figure at 2.5%.
2.
The average Rhode Island family spent 13% of its income or about
$2,363 on health care (vs. 11.7% or $2,101 nationally).
3.
In 1990. 13.9% of Rhode Island's population was without health
Insurance and 11.2% was found to be medically underserved.
4.
Virtually all of Rhode Island's medically underserved population
(112.080) is located in Providence County.
Legislation:
The initiative proposed by Governor Sundlun is designed to provide
comprehensive health coverage all uninsured pregnant women and uninsured
children up to age 6. It would be jointly implemented and administered by the
Departments of Health and Human Services and would begin no later than
Jan 1. 1994.
1.
Rhode Island Health Care Initiative / Introduced by Governor
Bruce Sundlun. October 1992 / Pending
A.
Children in families with incomes below 250% of poverty
would qualify for the same services now offered by Medical
Assistance. Those above this level would qualify for a basic
set of primary care services as well as special "at-risk"
services when necessary.
B.
Pregnant women below 250% of poverty would receive the
same services provided by Medical Assistance. Those above
that level would be elligible for coverage under an expanded
RITE start program. At-risk women would also receive
enhanced services.
C.
The plan would use managed care concepts to ensure
efficient delivery and would develop community health care
networks to provide sufficient access and uniform quality to
all parts of the state.
D.
The plan would also be used as a model to expand health
�coverage to the entire population.
�South Carolina
Factors determining type and bredth of health care reform:
1.
There are currently 491,000 South Carolina residents without any
form of health insurance.
2.
An April 1990 census has yielded the following statistics
concerning South Carolina's health care shortcomings:
-South Carolina ranked 1st in the nation in percentage of low
birth weight babies and 3rd In infant mortality rate
-It ranked 8th in percentage of residents below the poverty level
and 21st in percentage receiving public assistance
-Finally, it ranked 28th in Medicare enrollment
These figures indicate that because many South Carolinians live
below the federal poverty level and cannot afford health insurance,
a large portion of them should be elligible for public assistance.
Health officials suspect that there may also be socioeconomic and
educational factors which make health coverage elusive.
Health Care System Charactersitics:
1.
An insurance program for state employees is in place and is
administered by Blue Cross/Blue Shield.
2.
Another plain sponsored by Blue Cross/Blue Shield addresses the
specific problem of low birth weight and infant mortality by
providing financial incentives for expectant mothers to visit a
physician on a monthly basis. The incentives come in the form of
discounts on consumer items.
3.
There are currently four HMO's in South Carolina with a total
enrollment of 98,220.
Legislation:
1.
South Carolina Health Insurance Pool / Passed
�A.
2.
Pool was formed to provide health Insurance to individuals
who cannot obtain coverage from an Insurance company
because of past or current medical history.
Small Group Insurance Reform / Passed by the South Carolina
General Assembly. 1991
A.
B.
Restricts the amount by which small group premiums can
Increase each year.
C.
Places limits on cancellation and/or nonrenewal of small
group policies.
D.
Ensures portability.
E.
Requires small group insurers to offer a pre-determined
basic benefits package to small employers (50 employees or
less) wishing to purchase it.
F.
3.
Requires that if insurance is issued to a small group (25 or
less), all members of the group must be accepted and
covered.
Requires small group insurers to participate as either riskassuming insurers or reinsuring insurers.
Health Services Cost Review Commission / House Bill 4244 / Not
Passed. 1992 *
A.
Would have created uniformity and cost containment
measures for the health care delivery system in South
Carolina. The provisions under consideration included:
-Global Budgeting
-Uniform, all-payor rates
-Regulation of medical procedures, equipment, and
technology so as to affect appropriate cost savings.
*(A similar bill known as the Certificate of Need and Health
Licensure Act was passed on July 10. 1992. See attached material
for detailed description of provisions.)
�4.
Health Care Reform Package / Presented by the Joint Legislative
Health Care Planning and Oversight Committee, March 1993 /
Pending
A.
Calls for the creation of a health insurance purchasing
cooperative in which state employees and Medicaid
recipients would participate; smalland large groups could
join the organization in 1995. and individuals would be
elligible in 1996.
B.
Establishes a data collection center where all providers and
purchasers would be required to submit period reports on
costs and services.
C.
Prohibits the practice of self-referral.
D.
Mandates non-binding arbitration for all medical
malpractice claims before proceeding to a court of law.
E.
Establishes practice guidelines for providers as a protection
against malpractice claims.
�Texas
Legislation:
1.
Texas Health Policy Task Force / Created by proclamation by
Governor Ann Richards, November 1991
The recommendations of the Task Force have been structured so
as to introduce new initiatives for cost containment and universal
access while simultaneously preserving many aspects of the
current system.
The first step in initiating comprehensive health care reform was
to introduce a proposal providing universal access to all children
ages 0-18 through an expansion of Medicaid elligibility.
Provisions for the program are as follows:
A.
A Children's Health Board in the Health and Human
Services Commission would administer the program; it
would include children ages 0-18 as well as pregnant
women.
B.
The freedom to choose providers would be preserved.
C.
Uniform rates would be negotiated with providers, with the
state playing an active role in the process.
D.
Standardized billing would be established and
administrative costs would be limited to 10% through
extensive data collection and utilization review procedures.
Additional recommendations offered by the Task Force to address
the needs of individuals and small businesses include:
A.
Establishing a non-profit corporation to help small groups
purchase in pools.
B.
Insurance reforms similar to those being enacted in other
states, including:
- Guaranteed coverage, regardless of age, health
status, or industry
- Creation of a reinsurance pool to spread risk
�- Standardized pre-existing condition limits
- Standardized caps on premium rate increases
- Setting insurance rates using a modified community
rating model which prohibits underwriting but allows
for limited variations according to industry, age, and
gender
C.
Establishing a state health care human resource plan to
improve primary care and identify needed providers In
different areas. This would include:
- Enlisting the help of educational institutions to
encourage individuals in under-represented groups to
enter the health profession; these efforts would
emphasize the need for rural residents and minorities
to become health care professionals who recognize the
importance of practicing In the underserved areas in
which they were raised.
- Programs providing substitutes to allow rural
doctors time off
- Loan forgiveness programs to increase financial
incentives
- Community /Provider matching in a state
clearinghouse
- Increased use of non-physician personnel
- More equitable reimbursement for all providers,
regardless of location
- Subsidizing the construction of new primary care
clinics in typically underserved areas
- A program requiring hospitals to provide levels of
charity care based on the economic benefits accrued
through tax exemptions; private, non-profit hospitals
would file estimates for charity care with their annual
financial statements
�D.
Reducing administrative costs by standardizing health
benefit packages and claims forms and by Implementing
utilization review systems.
E.
Establishing a system of negotiated rate regulation to control
costs, with extensive data collection and full participation of
providers in determining appropriate expenditure limits.
�Vermont
(
Factors Prompting Health Care Reform:
1.
76% of Vermont's population live in rural areas.
2.
In 1980, Vermont families spent an average of $1.329 on all its
health care. As of 1991, that figure had more than tripled to
$3,649 and by the year 2000, it is projected to be more than
$7,970; this would represent a 500 percent increase in the twenty
year period.
3.
During the period 10 year period between 1980 and 1990. the
average Vermont family's health payments rose 200% faster than
its wages.
4.
The percentage of uninsured adults with full-time, full-year
employment stood at 44% as of 1989 (vs. 35% nationally).
5.
Vermont businesses spent an average of $135 million on health
care in 1980. By 1991. this figure had increased by more than
225% to $483 million. By the year 2000. it is expected to eclipse
the $1 billion mark, which would represent a 20 year Increase of
635%.
6.
It is estimated that 110.000 Vermonters (19.5%) will have no
health insurance at some point during 1993.
Legislation:
1.
Act 160-An Act Relating to A Health Care Authority / Passed by
the General Assembly. 1992
The Vermont Health Care Authority is comprised of a three
member Authority Board appointed by the Governor and
confirmed by the Senate. It effectively combines and oversees the
functions of the Department of Health, the Hospital Data Council,
and the Health Policy Council. Its mandate is as follows:
A.
Control the growth in health care expenditures through the
use of global budgets, the certificate of need program,
hospital budget review, and a health resource management
plan (to be drafted every three years for the purpose of
assessing the supply and appropriate distribution of health
resources).
�B.
Design a Health Care Purchasing Pool which would negotiate
with insurers to produce lower insurance rates. The pool
would initially cover state employees and would be extended
any employer, group, or association that wishes to
participate beginning in October 1993.
C.
Design comprehensive plans for both a singje-payer system
and a regulated multiple-payer approach, both of which
would ensure financial access to health care for all
Vermonters. The plans will be submitted to the legislature
in November 1993 and must contain the following elements:
-a uniform set of health benefits offered without income or
employment status restrictions
-an integrated system of health care delivery
-incentives to control costs
-reimbursement mechanisms for health care providers
-global budgeting and centralized planning that is
consistent with the budget
D.
E.
Develop guidelines for insurer cost management plans,
require that every insurer submit a cost management plain
adhering to these guidelines, and analyze the plans to
ensure the release of health insurance policies that are both
comprehensive and affordable.
F.
Reduce administrative burdens through the standardization
of claims and billing procedures.
G.
2.
Develop a health care data base to improve public awareness
of the cost and use of health care resources in Vermont.
Increase incentives for medical residents to serve on a
rotating basis in underserved areas.
Act 52-An Act Related To Small Group Insurance / Passed by the
General Assembly, 1991
A.
Requires that participating small group carriers offer one or
more health plans, each of which must be in compliance
with standards established by the insurance commissioner.
�B.
Requires guaranteed acceptance for all members of an
Insured group.
C.
Requires that small group carriers devise a rate structure
which differentiates between single person, two person, and
family rates.
D.
Allows insurers to establish a 12 month pre-existing
condition clause for condiUons which existed during the 12
month period prior to the effective date of coverage.
E.
Requires that policy premiums be established on a
community-rated basis. One or more risk classifications
may be used to lower the insurer's risk, but the premium
charged cannot exceed the prescribed community-rating by
more than 20%.
�Wnshfngton
Factors Impacting Health Care Reform:
1.
As of November 1992. Washington estimated that between
550.000 and 680.000 residents were without health insurance at
any point in time. This represents 11 to 14 percent of the state's
population.
2.
There is a conspicuous lack of health care providers and
hospitals/clinics in Washington's rural areas.
3.
Demographic and cultural difTerences appear to present problems
with regard to the delivery of services. For example, African
Americans are at high risk for infant mortality compared to most
other groups in Washington. The Hispanic population does poorly
in many areas, but is at a much lower risk for infant mortality
than is considered normal. Appropriate service delivery for these
ethnic groups is not universally available.
4.
Access may be impeded as a result of Insufficient information on
elligibility, providers, and services.
5.
About 27% (148,000 to 184.000) of the uninsured population are
children.
6.
About 55% (302.000 to 374.000) of the uninsured have incomes
less than 200% of the poverty level.
7.
Almost half of the uninsured (46% or 253.000 to 313.000) are
employed.
8.
65% of the uninsured work for small businesses (1-99
employees).
9.
Per capita expenditures for health care rose at an annual rate of
9.7%. from $1,081 in 1980 to $2,737 in 1990. This ten year
increase is more than twice the increase in per capita income for
the same period.
Legislation:
1.
Health Services Act of 1993 / Passed by state legislature. May
1993
�A.
Creates permanent five member Health Services Commission
to do the following:
-Design a Uniform Benefits Package (UBP) which provides a
minimum level of coverage to all Washingtonians. The
package must be offered by all Insurers and must be
purchased by all state residents by 1999.
-Establish a maximum amount that can be charged for the
UBP and reduce the rate of premium Inflation by 2% each
year until it matches the rate of general inflation.
-Set standards for managed competition and competing
certified health plans.
B.
Consolidates state health care purchasing under a single
agency, the Washington State Health Care Authority, by
1997.
-Saves money by streamlining and standardizing
administrative procedures and eliminating unnecessary
duplication.
-Saves money by grouping the buying power of state
workers, public school employees, and low-income residents
currently enroUed in state program. In addition to the above
categories, the following groups will participate in a single,
community-rated pool by 1997:
-Basic Health Plan beneficiaries
-Medicaid and Medicare recipients (federal waivers
required)
-Worker's Compensation recipients
-Small businesses and non-profit agencies (through a
Washington State Health Insurance Purchasing
Cooperative developed within the HCA)
-As in all other phases of Washington's proposal, managed
competition will be a feature of the state health care
purchasing plan. Efforts to this end will include:
-Developing a standard benefits package
�-Soliciting bids from managed care organizations
-Limiting the state's contribution to a percentage of
the lowest priced plan
C.
Provides access to health Insurance for an additional
210.000 people by:
-Expanding the Washington Basic Health Plan, which
provides basic health services to residents who fall below
200% of the poverty level. Until now. the program has been
limited to 24.000 people.
-Expanding Medicaid to cover children in households with
incomes up to 200% of poverty.
-Allowing all Medicare recipients to purchase supplemental
coverage by 1995.
-Increasing the number and quality of primary care
physicians and clinics in underserved areas.
-Allowing private employers to provide insurance In one of
the following ways:
-Self-insure under their own certified health plan if
they have more than 7000 employees
-Contract directly with certified health plans
-Purchase Basic Health Plan coverage at full cost if
they do not already have more comprehensive
coverage
-Join one of four regional HIPCs
-Requiring insurers to be certified by the Health Services
Commission. Certification is dependent on the insurer's
willingness to provide guaranteed issue, guaranteed
renewabillty. community-rating, portability, and preexisting conditions clauses limited to six months from the
effective date of coverage.
�D.
Distributes Costs Fairly
-Employers are required to pay at least 50% of the UBP premium
for each employee and their dependents. The requirement will be
phased in over a three year period (beginning in 1995) depending
on how many employees a company has.
-Small businesses will be granted short-term subsidies to help
them purchase coverage in thefirstseveral years of
implementation.
-Various tax increases will raise an estimated $251 million in the
next two years tofinancethe plan. They include increases in the
cost of hard liquor, beer, and tobacco products, as well as charges
imposed on non-profit hospitals and HMOs.
��GLOSSARY OF HEALTH CARE
TERMS
�GLOSSARY OF HEALTH CARE TERMS
The Clinton plan will provide security and peace of mind to American families,
so that you don't have to worry about losing your insurance when you switch
Jobs or being denied coverage because you're sick. The proposal will control
rapidly rising health costs, and guarantee Americans a comprehensive benefits
package. And the plan will maintain the highest quality care in the world and
the right to choose your doctor.
Below are definitions of some of the terms often used in talking about health
care. We provide a comprehensive explanation followed by a simple
explanation that people can relate to.
COMMUNITY RATING:
Setting health insurance premiums based on the average cost of paying for
services for all covered people in a geographical area, regardless of their history
of (or potential for) using health services. Although this was the system used
successfully by Blue Cross & Blue Shield for years, insurance companies do
not currently cover people this way.
Translation: Everyone who lives in the same area pays an equal amount for
health insurance. Instead of letting insurance companies make a lot of money
off a small number of people, they will make a little money off a lot of people —
doing business like a supermarket. Moving insurance companies toward
community rating is one option being discussed for inclusion in the Clinton
plan.
COINSURANCE (COPAYMENT):
The portion of the bill for a medical service that must be paid by the patient
(coinsurance refers to a percentage; co-payments are stated as flat amounts).
Translation: What you pay for each medical service you get.
COMPREHENSIVE BENEFITS PACKAGE:
The health care services that will be covered by every American's insurance.
Translation: The Clinton plan will guarantee a comprehensive benefits package
for every American.
�COST-SHIFTING:
The practice by which a seller of a health service, such as a hospital, makes up
for charging a particular payer less than normal — usually because of that
payer's bargaining power — by charging other customers more. This also
applies to sellers who provide services to those with no way of paying, such as
the uninsured poor.
Translation:
If you have good insurance, hospitals and doctors will charge you more to
make up for the costs of caring for your neighbor, who works for a small
business and can't get good insurance. The Clinton plan will limit this by
asking all employers to take responsibility for covering their employees.
DEDUCTIBLE:
The amount that the patient must pay to the provider directly (usually each
year) before the insurance plan begins paying for benefits. An example is the
$100 annual deductible for doctor's services under Medicare.
Translation: What you have to pay out of your pocket each year before your
insurance kicks in — like auto insurance.
FEE-FOR-SERVICE:
A way of paying a health-care provider — i.e. a physician — an amount (fee)
for each service rendered. Under this arrangement, spending rises with more
services, higher-priced services or increased fees.
Translation: Paying for each service or visit separately; encourages doctors to
see more patients, do more tests and perform more procedures. This will still
be an option for payment under the Clinton plan.
HEALTH ALLIANCE:
Organization set up to act as a collective purchasing agent for employers and
individuals.
Translation: A local group of businesses and individuals who band together to
negotiate for high-quality care at an affordable price.
MANAGED CARE:
General term for any system of health care delivery — such as an HMO —
organized to enhance cost-effectiveness. Managed care networks — different
types of providers that agree to provide services to those covered under the
�plan — are usually organized by insurance carriers, but also can be organized
by employers, hospitals or hospital chains. Payment is made on a fixed basis,
which provides incentives to control costs.
Translation: A system that gives everybody the care they need, keeps cost
down and improves quality. More integrated networks are likely to appear
under the Clinton plan.
MANAGED COMPETITION:
An economic theory that organizes health care delivery and financing in an
attempt to combine the best elements of government regulation and freemarket competition. Those paying for care are organized into large groups, and
providers then compete for their business.
Translation: A way to put people in the driver's seat so that they can get the
care they want at an affordable price. This idea is influential in the Clinton
plan.
PAY-OR-PLAY:
An approach to increasing insurance coverage by requiring employers to make
a contribution toward covering workers and their families. They may choose
either to "play" — buy private insurance for their workers — or "pay" a set
amount, usually a percentage of payroll, to help pay for covering the workers
in a government-sponsored plan like Medicare. This is one form of an
employer mandate.
Translation: Not the Clinton plan — this tells employers they must either cover
the employees or pay the government to do it for them. Makes employers pay
more without controlling costs.
PRE-EXISTING CONDITION:
A medical condition of an insured individual that first becomes known before
the policy is issued. Insurers often choose not to cover such a condition, at
least for a period, or may raise rates because of it. Pre-existing conditions
include such conditions as asthma, mental illness or allergies.
Translation: A medical problem that insurers often use as an excuse to deny
you coverage under the current system. The Clinton plan is likely to include a
way to prevent people from being denied coverage because of pre-existing
conditions.
�PREMIUM:
The money paid for your insurance. Often, both employers and employees pay
a premium. And there are different kinds of premiums — a per-person
premium, which is a fixed amount of money paid by employers and employees
for insurance, or a wage-based premium, which is a percentage of payroll paid
by employers and employees for insurance.
Translation:
What you pay for your insurance; and what your employer pays for your
insurance.
SINGLE PAYER:
A health system — like Canada's — that would designate one entity (usually
the government) to function as the only purchaser of health care services.
Translation: Not the design of the Clinton plan. This is health care paid for and
supervised by the government; the Clinton plan is based in the private sector.
However, states that wish to experiment with this approach may well have the
option to do so.
�10
�How You Get Coveragu. The Current System
1 HOSPITAL 1
N
o
Coverage
Emergency Room
*
H
i
Hospitals & Doctors
Government
A
A
A
Medicaid
A
II
0
1
iliU PiiRlira p i i
Insurance Companies
I
II
Employer Chooses
Benefits Department
Employees
Elderly
Poor
Insured through Employer
Self-Insured
Uninsured
�•
How You Get Coverage: The New System
Health Plan A
Health Plan B
Health Plan C
Health Plan D
F e for Service
e
.
•
1 HBSWAI
1_
• •I
Jf You Choose j |
Medicare
Health Alliance
52
BE
Big Business
Small Business
Indivkftials/FamiRes
All members of a community are part of the Health Alliance
Older Americans
�*
Health Plan A
How You Get Cover^: The New System
Health Plan B
Health Plan C
Health Plan D
Jf You Choose j |
*
F e for Service
e
Medicare
Health Alliance
All members in a community are part of the Health Alliance
Older Americans
�How You Get Coverage: The New System
Health Plan A
Health Plan B
Health Plan C
Health Plan D
F e for Service
e
IIIIII
AA
Jf You Choose j |
Medicare
Health Alliance
All members in a community are part of fhe Health Alliance
1
I—I
a.
iq Business
Small Business
Individuals/Families
Older Americans
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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[Health Care Reform] [4]
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
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2006-0885-F Segment 5
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Box 8
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Clinton Presidential Records: White House Staff and Office Files
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https://clinton.presidentiallibraries.us/files/original/1d6ebf5fd898d5dd9c08464a3a1db457.pdf
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This is not a textual record. This is used as an
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Health Care Task. Force
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Alice Dunscomb
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3313
FolderlD:
Folder Title:
[Health Care Reform] [3]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�#4
�ISSUE-SPECIFIC TALKING POINTS
�CONTROLLING COSTS
�CONTROLLING COSTS
The Clinton plan will control skyrocketing health care
costs, while maintaining high-quality care, fostering
innovation, and improving consumer choice.
Administrative Savings: One health dollar In five, nearly $200 billion,
is spent on administration (Lewin-VHI). By streamlining and
standardizing regulations, forms, and billing, doctors' offices and
hospitals will devote fewer resources to paperwork, which means lower
costs for us.
•
Competition Between Plans: The Clinton plan will force insurers and
health plans to compete to provide the best value for the price rather
than seek to avoid risk.
Increased Efficiency: The health care dollar of small employers and
individuals doesn't go very far in today's system — as much as 40 cents
pays for administration when it could go toward services. A health
alliance will pool their purchasing power so they get more value for the
dollar. Plans competing for consumers on price will have an incentive to
lower their prices and provide better service.
Cost Control Safety Net: The new plain will provide market-based
incentives to reign in costs. Additional savings will come from increased
efficiency and decreased bureaucracy. But controlling costs is of such
critical importance to our economy that the President's plan calls for
further guarantees— an iron-clad national budget.
Short-Term Cost Controls: While this system is established, health
care providers will be called upon to hold down increases in their rates.
If providers fail to meet targets for holding down fee Increases,
mandatory price controls would be enforced.
�CONTROLLING COSTS
QUESTIONS AND ANSWERS:
Q:
Will there be a freeze on doctors and hospitals fees?
A:
Freezing prices is a harsh measure which often does not work to control
costs. Instead, the President's plan calls on doctors, hospitals and other
health providers to do their part to help control our skyrocketing health
care costs on a voluntary basis. But if voluntary cost controls don't
work, the federal government will put controls in place to hold the
growth in health care expenditures to within a certain percentage of
inflation.
Q:
Will the national budget cause my health care to be rationed?
A:
Special interests and opponents of health reform often raise fears of
rationing to undermine any attempt at reform. The truth is that we
spend more than we should on health care right now. The United States
spends more per person and a higher percentage of gross national
product on health care than any other nation in the world. Billions of
dollars are wasted in administrative expenses and unnecessary tests and
procedures. The national health care budget will impose some discipline
on our health care spending and insure that appropriate care is provided
as efficiently as possible so that we are getting the best value possible for
our health care dollars.
Q:
Will the budgets be allocated to the states based on their historical
health care spending?
A:
In the current health care system; health care costs vary widely from
state to state. The cost of insuring those currently without coverage will
also differ in each state. The Clinton plan will ensure that states have
the resources to insure all their citizens; the federal government will
make investments in underserved areas, especially rural and urban
centers. Differences due to the way providers practice health care will be
smoothed out over time. We can't do that overnight. Once the system
has been operational for a few years and states have had the chance to
get a handle on spending, the Clinton plan will eliminate those
imbalances.
�Q:
How will the budgets be enforced?
A:
The States will be responsible for meeting a budget and will be given a
range of tools to guarantee they can meet their goal. If states want to
spend more, they can, up to a point. But, if they spend more than their
budget, they can't ask employers and employees to pick up more of the
tab. If a state can't meet the budget on its own, the federal government
will step in to make sure the budget is met.
9:
How can you be sure that voluntary controls will work and that we
will see real savings?
A:
The American people understand that the problems with our health care
system did not develop overnight and that everyone must do their part to
set things right. Health care providers, as much as anyone, know that
we cannot afford business as usual. The President is confident that
those involved in the health care industry are willing to sacrifice in the
near term to pave the way for a long-term system that controls costs,
covers everyone, eliminates red tape and bureaucratic hassles. If they
don't, price controls will be imposed to ensure that targets are met.
�COSTS / FINANCING
�LONG TERM CARE
�LONG-TERM CARE:
The Clinton Plan
Increasing options for long-term care is an essential part of
a comprehensive health reform package.
While it is not
possible to solve all the challenges of long-term
care
immediately,
we will begin right away to reduce the burdens
on families now coping with elderly parents or children
with
disabilities.
The Clinton plan addresses the need for greater
flexibility for home and community-based
services.
More options for home care:
e
Our system today is biased towards expensive institutional care, even
though people prefer to receive care in their homes and communities.
We are committed to expanding opporunities to enable people who would
otherwise be institutionalized to remain at home with their families and
maintain their independence.
e
The Clinton plan will make home and community-based care more
available and affordable by establishing the Federal Home Care Program.
This will Increase funding and options for home care for chronically ill
Americans — young and old.
Prescription drug benefit:
e
Since the vast majority of medications taken by older Americans treat
chronic conditions, the prescription drug benefit provided under the plan
will help older Americans live independently and stay healthy over the
long term.
Added security for older Americans entering long-term care institutions:
e
Older Americans will no longer be stripped of their dignity, forced to
"look poor" and impoverish themselves to qualify for long term care.
Under the Clinton plan, the amount of their lifetime savings the elderly
are allowed to keep and still qualify for federally funded long-term care
will be raised — from only $2,000 per individual today to $12,000.
e
We will restore the dignity of long-term care by raising the allowance
nursing home residents receive for their personal needs from $30 to
$100 each month.
•
We will encourage and regulate the market for private long-term care so
that it is more affordable and accessible for all American families as they
begin to plan for a future of independence, dignity, and choices.
�LONG-TERM CARE:
Questions and Answers
Q:
Why do we need yet another program that primarily benefits the
elderly, financed mostly by the non-elderly?
A:
The elderly are not the only people needing long-term care — as much
as half of the community-based disabled population is under age 64. In
addition, younger people bearing the burden of family members needing
long-term care will benefit from the increased options that our plan
offers. Today's younger generation will also benefit, both In the short
term — with the added security of knowing that their parents and
grandparents have the choices and the peace of mind they deserve —
and over time — as they are likely to live longer than today's generation
of elderly.
Q:
How will your long-term care plan help young people with
disabilities?
A:
The President is committed to improve the quality of life for all people
with disabilities. We will provide a broad range of personal assistance
services to people of all ages with severe disabilities. Our plain is
particularly sensitive to the desires of young people with disabilities to
be independent.
Q:
How does your plan encourage private long-term care insurance?
A:
Our health reform plan recognizes the need for all Americans to begin
today to protect themselves against the catastrophic costs of long-term
care. Many people today are not even aware that private long-term care
insurance is available. We will provide consumer education to increase
individual awareness of the risks and costs of long-term care and how
they cam prepare themselves for the future. Our plan will also make this
insurance more available aind affordable through tax incentives. The
government will ensure that private insurance is maindated accurately
amd protects the consumers.
�Q:
Why haven't you included nursing home coverage in your plan?
A:
We've tried to address what we've heard from the elderly across the
country—that they want to be able to stay at home with their families
when they become sick. That's why our plan focuses on expanding
access to home and community-based services, including personal
assistance. People want to retain their independence and dignity. By
making more services available in the home, our plan facilitates the
development of a variety of residential arrangements for people with
disabilities that will offer them many more choices about where to live
independently and economically.
While nursing home protection is desirable in the long-run, it is simply
too expensive to include In this package. Our plan does provide
additional resource protection for individuals qualifying for Medicaid
nursing home coverage, increasing the maximum amount of assets an
individual may have from $2,000 to $12,000 and raising the personal
needs allowance from $30 to $100 each month.
�LONG-TERM CARE:
The Current System
Long term care is not just for the elderly:
e
Overall, 12.6 million Americans — or five percent of the U.S. population
— need long-term care, including one quarter of all people with
disabilities.
e
Over forty percent of those who need long-term care are under 65. All
together, 500,000 children, 4.8 million non-elderly adults and 7.3
million older Americans need long-term care. [1990 Survey of Income
and Program Participation, 1990 Census]
The current system places undue burden on family members:
e
Three quarters of people with disabilities living in the community rely
solely on family members, who are often overburdened and financially
strained, for long-term care.
The public financing system is highly fragmented and poorly coordinated:
e
Long-term care services are financed today through a patchwork of
multiple programs. People in need of these services have a limited
understanding of how these programs work, who is eligible and how they
can access these services.
Our current national long-term care policy is based on a welfare model:
e
Public financing is dominated by Medicaid, which accounts for over
three fourths of public spending for long-term care and is available only
to low-income people.
e
People who have been financially independent throughout their lives are
stripped of their dignity, dependent on "welfare" at the end of their
lives. Many don't ever return home, even if they are able, because all
their savings have been depleted.
•
A welfare-oriented system forces the elderly to impoverish themselves —
creating perverse incentives for people to "look poor" — to qualify for
public assistance. As a result, long-term care is the largest o u t - o f pocket health care expense faced by older Americans. [HCFA]
�Public funding is biased toward expensive, institutional care:
•
Two thirds of the $108 billion that will be spent in 1993 for long-term
care — $75 billion — will go to nursing home and other institutional
care, in spite of the fact that people prefer in-home and community
services.
The public long-term care system is not responsive to consumers:
•
Today, professionals make almost all decisions on behalf of others —
despite the fact that younger people with disabilities and older
Americans want to make their own decisions about what services they
need and where they want them delivered.
�FRAUD AND ABUSE
�FRAUD AND ABUSE:
The Clinton Plan
ROOT OUT FRAUD AND ABUSE AND RESTORE CONFIDENCE ...
The Clinton plan will root out the fraud and abuse which is adding costs to the
current health care system, depleting our resources, and eroding the public's
confidence. We will simplify a system whose very complexity encourages fraud
and abuse. The plan will increase enforcement efforts and crack down hard on
those who have gotten rich exploiting the system.
HOW IT WORKS ...
•
Simplify Payment: We will simplify payment by using a standard form
and a uniform set of rules for payment. This will prevent those who
defraud health care payers from exploiting the myriad of payment
methodologies, inconsistent rules and codes that exist under the current
system.
•
Fraud and Abuse Enforcement: The Clinton plan will establish a Health
Care Fraud and Abuse Enforcement Program to coordinate law
enforcement activities aimed at health care fraud and abuse, facilitate
communication and complement investigative resources.
e
Anti-Kickback Laws: Anti-kickback laws will be expanded to cover all
payers.
e
Physician Self-Referral: Physicians won't be able to refer patients to
labs and clinics where they have a financial stake.
e
Seize Assets from Fraudulent Activities: We will change current law so
that proceeds derived from health care fraud are subject to federal
forfeiture authorities giving the government the ability to seize assets
derived from fraudulent or otherwise illegal activities.
e
Enact A New Criminal Health Care Fraud: The new statute will
specifically penalize schemes to defraud either public or private health
care programs.
e
Abusers Excluded: Providers, who have committed fraud or tried to
abuse the system, will be excluded from participation in the new system.
e
Put fee-for-service under a budget: fee-for-service providers will have
to meet a budget just as other health plans do. There'll be less incentive
to perform unnecessary tests and procedures that drive up costs.
�FRAUD AND ABUSE:
Questions and Answers
Q.
How much fraud is there?
A.
It is impossible to measure all the fraud and abuse In the system, but
current estimates are astounding. All knowledgeable authorities agree
the figure is in the tens of billions of dollars a year with estimates
starting as $80 billion and ranging to $200 billion a year. [GAO.
Washington Post]
Q.
Do we really need so much Big Brother looking over the shoulders of
health care providers in order to have meaningful reform?
A.
The great majority of health care providers in this country are honest,
hardworking people who want to care for their patients. The intent of
the anti-fraud program is to come down hard on the greedy minority
who feed off the current system by exploiting its vulnerabilities.
Q.
Will health reform s anti-fraud program convert a simple mistake
into a federal offense?
A.
No. The Program will not penalize people for simple billing errors or other
innocent mistakes.
Q.
Will anti-fraud penalties inhibit quality of care by making providers
fearful of straying from the "lowest common denominator" of care?
A.
Obviously there is a balance to be drawn. Rooting out fraud and abuse
should not inhibit legitimate decisions about a patients care.
�FRAUD AND ABUSE:
The Current System
Health care fraud depletes resources, erodes public confidence in the
operation of the health care system and government in general. The
sheer volume of money spent on health care system makes it
particularly vulnerable to fraud and abuse. Worse yet, health care fraud
is often directed at those least able to protect themselves: the elderly, the
sick, the disabled, and needy families with children.
Estimates of fraud and abuse are put at 10 percent of health care
expenditures or over $80 billion in 1992 to over $200 billion per year.
[GAO; Washington Post, 5/4/93]
The structure of the current fee for service system invites abuse by
creating incentives to increase the number of services and encouraging
paying physicians and others for referrals.
The complexity of the current system also encourages abuse. It is
estimated that over 1,000 payers process over 4 billion claims per year.
Each uses different forms, procedures, reimbursement schedules. For
example, each year Medicare processes an estimated 700 million claims,
with 48 intermediaries, 34 carriers, and 82 contractors who use 22
different processing systems.
Health care providers submit false or improper claims to private health
plans. [Blue Cross/Blue Shield]
�MALPRACTICE
�MEDICAID
�MEDICARE
�MEDICARE:
The Clinton Plan
We are committed to preserving the
fundamental
contract between older Americans and the
government.
The Clinton plan will protect all
Medicare beneficiaries.
Older Americans will
continue to receive their Medicare benefits as they
do today, with no new costs or penalties. In fact,
they are likely to have more choices after reform.
They will also benefit from the added security of a
prescription drug benefit and increased
long-term
care options.
NOTHING CHANGES FOR MEDICARE BENEFICIARIES IN THE NEW
SYSTEM:
e
In the new system, Medicare will remain a distinct federal program and
Medicare beneficiaries can continue to receive their Medicare benefits as
they do today.
HEALTH REFORM OFFERS INCREASED BENEFITS:
e
The Clinton plan will give Medicare beneficiaries the security of a
prescription drug coverage and will phase in options for home and
community based long-term care services.
REFORM OFFERS OLDER AMERICANS MORE CHOICES:
e
One of the goals of reform is to give older Americans, along with all other
Americans, increased choices for their health coverage.
Short term . . .
e
The government will improve and enhance the managed care
benefit plans now offered to Medicare beneficiaries.
•
These plans may offer a richer benefits package or lower copayments than people now receive under fee-for-service Medicare.
Under no circumstances will plans be able to offer fewer benefits
to Medicare beneficiaries.
c.
�Long term . . .
•
In time, states that have their new system up and running may
want to bring all their citizens — including Medicare beneficiaries
— into a comprehensive state program.
•
States who wish to integrate Medicare will have to meet strict
federal standards and clearly demonstrate to the federal
government that their program will provide the same, or better,
coverage, quality, services, and access as Medicare beneficiaries
currently receive.
�MEDICARE:
Questions and Answers
Q:
Is it true that you will force people on Medicare into the new
system?
A:
No. Health care reform will protect all people receiving Medicare.
Medicare will remain a distinct federal program and older Americans will
still be able to receive their Medicare benefits as they do today. In fact.
Medicare beneficiaries are likely to have more choices after reform —
they can continue to get care the way they do today or they may be able
to get increased benefits through the enhanced managed care plans
offered through the reformed and improved Medicare program.
Q:
How would I benefit by joining a plan in the new health system?
A:
If you decide to, you will be able to choose from a wide variety of plans
beyond the managed care and fee-for-service options you now have.
These plans are likely to offer a richer benefits package, and/or lower
co-payments, than you currently receive under your traditional Medicare
policy.
Q:
If Medicare remains outside of the new system, how will health
reform affect me at all? Will I get any benefit from it?
A:
As part of overall health reform, you will see an increase in your benefits.
The program will be expanded to finally provide for an outpatient
prescription drug benefit. In addition, an unprecedented expansion of
home and community-based long-term care services will be provided.
Q:
Will I have to pay more in the new system?
A:
In fact, health reform will decrease the growth of health care spending in
the Medicare program by offering providers new incentives to hold down
costs. The Medicare program will operate under its own budget,
controlling increases in out-of-pocket costs health care costs for
beneficiaries as well as the government.
�Q:
Will I still be able to choose my own doctor?
A:
Absolutely. Medicare beneficiaries can continue to choose their own
providers with no additional costs or penalties. They will have an
increased opportunity to enroll in different plans under the new system
and receive more for their money — including increased benefits and/or
lower out-of-pocket costs — but the decision to enroll will be left
entirely to the individual.
9:
Will states have the flexibility to incorporate Medicare into their
new program?
A:
In time, in special cases where states have implemented programs that
have proven that they can maintain quality while achieving cost savings,
Medicare may participate in the state's health alliances. In order for
Medicare to participate, the state would be required to provide
guarantees and demonstrate that the beneficiaries and the federal
government will not be disadvantaged in any way. Beneficiaries must be
able to receive the same level of benefits, pay no additional money, and
maintain access to needed services.
9:
Will savings from my Medicare program be used to pay for health
care coverage for the uninsured?
A:
Medicare savings are likely to be used for enhancements in the Medicare
benefits package such as prescription drugs and some long-term care.
�MEDICARE:
The Current System
35 MILLION PEOPLE DEPEND ON MEDICARE:
•
Medicare was enacted in 1965 and now covers 35 million people —
including 32 million elderly and 3 million disabled individuals.
OLDER AMERICANS ARE VERY SATISFIED WITH MEDICARE:
•
According to a poll, over three fourths of all Americans — the elderly
and the general public — were very satisfied with the Medicare program.
Only about one fourth of older Americans expressed a desire for major
change in the health care system. [Advisory Council on Social Security]
•
According to a 1991 survey, overall satisfaction with Medicare is very
high: 79 percent find the program understandable; 90 percent can get
the information they need; 93 percent were satisfied with Medicare's
claims processing; and 84 percent who called their carrier were satisfied
with the service they received. [Office of the Inspector General,
Department ofHealth and Human Services. 1991]
ADMINISTRATIVE COSTS LOWER UNDER MEDICARE:
•
In 1991. Medicare spent just 2 percent of its funds for administration —
8 times lower than private health insurance as a percent of benefit
payments.
MEDICARE IS BETTER AT COST CONTROL THAN PRIVATE INSURERS:
•
Medicare's cost containment has been more successful than private
insurance. From 1984 - 1991, Medicare expenditures per enrollee rose
by 7.2 percent annually compared to 9.3 percent for private health
insurance.
MEDICARE OFFERS INCOMPLETE, INADEQUATE BENEFITS:
•
Today Medicare offers neither an outpatient prescription drug benefit nor
any significant coverage for home and community-based long-term care.
As a result 64 percent of the elderly have no drug insurance coverage.
[EBRI, January 1992]
MEDICARE COSTS CAUSING INCREASED FEDERAL SPENDING:
•
In 1991, the federal government spent $120.2 billion dollars — or 16
percent of the national personal health care bill — on Medicare. This
cost has risen to $145 billion this fiscal year and is expected to grow
12.3 percent annually over the next 5 years — reaching $265 billion by
1998.
�MENTAL HEALTH
�MENTAL HEALTH AND SUBSTANCE ABUSE
The Clinton Plan
The Clinton plan is based on several principles:
Providing access to a broad array of services for individuals
with serious and persistent mental and substance abuse
disorders, with the flexibility to provide the appropriate care based
upon medical and psychological need.
Encouraging alternatives to hospitalization, Including homeand community-based treatment, and ensure that services are
delivered in the least restrictive environment appropriate to the
needs of the individual.
•
Eliminating the fragmented system of care that causes costs
and responsibilities to be shifted to the public sector.
Encouraging early intervention by using incentives to initiate
mental health and substance abuse treatment.
�MENTAL HEALTH AND SUBSTANCE ABUSE
Questions and Answers
Q:
Aren't mental illnesses and substance abuse disorders very different
than other conditions? If these aren't real medical problems, we
shouldn't cover them in health care reform.
A:
No, MH/SA disorders are not different than other conditions. MH/SA
disorders cause disability and dysfunction. Medical treatments are
available that reduce distress and dysfunction, and prevent disability.
Left untreated, MH/SA disorders lead to other health care problems and
lost productivity.
The majority of private insurance plans now cover MH/SA treatment, as
do Medicaid, Medicare, and CHAMPUS. Insurance companies have
recognized the legitimacy ofthe suffering and disability that MH/SA
disorders cause.
Q.
Won't everyone see a therapist if insurance will pay for it?
A:
No, everyone will not want to see a therapist under health care reform.
In a given year, only 10-11 percent of the American people seek care for
a MH/SA problem from a health provider. Only 6 percent of the
population currently seek specialty MH/SA services.
Q.
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 love life.
A:
Individuals with mental illness are not the "worried well" — they
have a treatable disease. Everyone will be evaluated if they
perceive a need for MH/SA treatment, but no one will get care
unless they have a diagnosed disorder. People will still be free to
pay out-of-pocket for services they may desire outside the health
plan.
Q:
Aren't mental health and substance abuse treatments open-ended,
without clear cut goals or endpoints?
A:
Not at all. When people feel better and their symptoms resolve, they stop
treatment. And medications now offer help for many who previously
required hospitalization because of mental illness. Scientific advances
promise to improve treatments even more in the future.
�Q:
Why should we cover substance abuse in this plan?
A:
Right now, we are spending much more in this country to deal
with the consequences of substance abuse than we are on treating
the problem itself. 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.
�MENTAL HEALTH AND SUBSTANCE ABUSE
The Current System
MENTAL HEALTH COSTS ESTIMATED AT $273 BILLION:
•
The estimated annual economic cost to society of mental illness and
substance abuse is $273 billion, including direct care, lost productivity,
social welfare and the criminal justice system (Rice, DP, et al. (1990),
Economic Costs of Alcohol and Drug Abuse and Mental Illness: 1985).
•
Mental and addictive disorders account for $80.7 billion, or about 12
percent of total health costs (Rice et al.. 1990).
•
Health care spending on mental health and substance abuse (MH/SA)
disorders amounts to about $300 per person (including nursing homes)
per year in the current system, after subtracting research and education
costs.
•
Inpatient care accounts for slightly more than 60 percent of the costs,
even though 72 percent of care is delivered on an outpatient basis. (Rice
etal., 1990; NIMH. 1992)
MENTAL DISORDERS LIKE OTHER COMMON DISORDERS:
•
Mental disorders are treated as a group similar to other common
disorders, such as cardiovascular diseases, with substance abuse
disorders occurring at rates similar to physical disorders such as chronic
bronchitis (NIMH, Report to Senate Appropriations Committee. 1993).
TRADITIONAL INSURANCE DISCRIMINATES AGAINST MENTAL HEALTH:
•
In addition to excluding pre-existing conditions, traditional insurance
coverage discriminates against mental health and substance abuse
disorders relative to general medical care. Coverage for MH/SA
disorders is often subject to arbitrary annual limits on days of inpatient
care and number of outpatient visits, lifetime caps on total benefits
payable, and restrictions on types of services, settings and providers.
e
Individuals and families face significant financial risks if they develop a
serious mental or substance abuse disorder. For these disorders, the
current insurance system does not protect against financial disaster —
defeating the entire purpose of insurance.
e
The structure of traditional insurance coverage (e.g., deductibles and
copayments) create financial barriers to early intervention in MH/SA
disorders.
e
Limitations on insurance benefits for MH/SA disorders have resulted
in shifting both the responsibility for and the costs of care onto the
public sector.
�AMERICAN INDIANS AND ALASKAN
NATIVES
�AMERICAN INDIANS AND ALASKA NATIVES AND HEALTH CARE:
The Clinton Plan
Health reform initiatives that affect Native American
people
will proceed within the framework of government to
government relationships with over 500 sovereign Native
Amertcan nations. Under the Clinton plan, the federal
government will continue to pay costs of health care. And
tribal governments will have the autonomy and flexibility
to
devise a health care system which is right for them.
•
A Comprehensive Benefits Package: The Clinton plan will ensure that
the comprehensive package of benefits is delivered to American Indians
and Alaska Natives.
e
End Rationing: The plan will end the de facto rationing of health care
that results from limited funding and availability of services for Native
American people living on and off reservations.
e
Supplemental Assistance: Supplemental services provided by the
Federal government to Native American people — such as environmental
assistance, translation services, and outreach services — will continue
as an appropriated program.
e
Indian Health Service (IHS) and Tribal Health Programs (THPs) may
participate in the new health care system as health plans or providers of
health care, obtaining payments from health plans that contract for their
services; or remain independent ofthe new system
e
Choice: Individual Native Americans may enroll in the IHS or THP plan
or in any plan offered by the health alliance.
e
Flexibility and Assistance: To accommodate some tribes' objections to
state control, IHS and THPs may operate outside the health alliance and
will receive the necessary funding to provide the comprehensive benefit
package.
e
Reimbursement for Individuals other than Native Americans: The
IHS or THP may choose to serve residents who are not Native Americans.
However, unlike today's system, IHS will be reimbursed for these
services.
e
Barriers Removed: Regulatory and organizational barriers — such as
limits on ability to hire and assign staff, cumbersome federal
procurement rules, financial systems not designed to bill for services,
�and restrictions on providing services to individuals other than Native
Americans — will be gradually removed in order to phase in the new
system.
�AMERICAN INDIANS AND ALASKA NATIVES AND HEALTH CARE:
Questions and Answers
Q.
Can a tribe choose to operate outside of the health alliance?
A.
Q.
How will Indian Health Service and Tribal Health Plans be able to
deliver the comprehensive health benefits package with current
limited funding levels?
A.
Q.
Yes. The IHS or THP will receive the standard employer payment,
Just as other plans do.
In an employer-based system will Native Americans living on
reservations with chronic unemployment enter the new system?
A.
Q.
The health alliance will reimburse the IHS or THP Just like any
other plan.
Will tribes be able to receive employer contributions?
A.
Q.
Additional resources will be appropriated to enable IHS and THPs
to provide the comprehensive benefits package.
How will IHS or THPs be reimbursed for services if they do decide to
operate as a plan?
A.
Q.
Yes. The tribe will be given the choice to join the new system as a
plan or a provider. The tribe will be given the opportunity to
remain outside the system if it decides that is the most preferable
course of action.
Premiums for unemployed Native Americans will be covered like
those for all other unemployed Americans.
If my tribe chooses not to participate in the new system, will I be
able independently to join the health alliance?
A.
These are decisions which the individual tribal leadership will have
the flexibUity to decide.
�AMERICAN INDIANS AND ALASKA NATIVES AND HEALTH CARE:
The Current System
Rural problems: Approximately 60 percent of IHS programs are located
in rural and remote areas. Many facilities are old and in poor condition
and have very limited capacities for delivering specialized care and serve
small scattered communities with no other source of health care. They
confront problems common to all rural settings, including financial
barriers and shortages and high rates of turnover among providers.
•
Budget Constraints/Rationing: Per capita spending for the Indian
Health Service and Tribal Health Program delivery system is lower than
the nation as a whole. Because of limited, fixed budgets for the delivery
system, many Indian people feel the effects of de facto rationing.
•
Poor Health Status: Native American people have, on average, poorer
health status than the nation as a whole. Thirty one percent live below
the poverty level. Distressed economic, social and environmental
conditions under which Native American people live place them at high
risk of disease, injury, and premature death. Excessive rates of poverty
and unemployment among Native Americans intensify health problems
and erect barriers to necessary health care services.
•
Insufficient Benefits: IHS benefits are limited and vary widely by
location.
�CHOICE OF PROVIDER
�PHYSICIAN CHOICE AND THE CLINTON PLAN
The Clinton Plan assumes that choice of provider is highly
valued by Americans and, therefore, sustains this ability to
select a caregiver. In many cases, the new plan will provide
more choice than is currently available to many
consumers.
The ability to follow your physician: The Clinton Plan recognizes that many
Americans have long-standing and important pre-existing relationships with
personal physicians. Consumers will be able to sustain these critical
relationships by "following" their physician's choice of plans.
The ability to change plans: Once the new system is operational, as
physicians change plans, so may patients who wish to stay with that provider.
It is also likely that physicians will affiliate with more than one plan, so
sticking with your doctor won't mean you are stuck with only one choice of
plan.
Significant flexibility will be built into the system so that individual family
members may even select different plans.
Traditional fee-for-service: All alliances will support at least one fee-forservice plan so that people will be able to see whatever doctor they like.
Managed care, "HMO" type practice settings will be required to allow people to
choose between doctors within their own systems. They won't be locked into
seeing only one doctor.
NOT JUST CHOICE OF PROVIDER, BUT MORE CHOICE FOR MANY AND
MORE INFORMED CHOICE FOR MOST PEOPLE.
e
Alliances help make quality health plans more available in areas that are
currently underserved or unserved.
e
Many employers currently offer very limited choice of plain or provider to
their employees; the new system will open up the process to all
consumers within the alliance.
e
People will be able to choose among all approved plans in their
community.
e
Individuals, not employers, will choose the plan they want.
�For the first time, Americans will experience Informed choice, since
alliances will each year be providing "consumer-friendly" information
about the performance of all available plains. This information will, in
part, cover issues like cost and efficiency of services, but will also
provide useful feed-back on how plans are doing in terms of patient
satisfaction and medical quality.
�PRESCRIPTION DRUGS
�PRESCRIPTION DRUGS:
The Clinton Plan
The Clinton health care plan will protect Americans
from
excessive prescription drug prices by instituting strong cost
containment provisions and guaranteeing insurance
coverage
for pharmaceuticals.
In so doing, the plan will assure that
there continue to be adequate incentives for drug
manufacturers
to invest in research and development on
cost-effective
prescription
drugs.
Prescription Drug Prices Held To Inflation:
e
During the transition to a competitive health care market, the new
system will assure that prescription drug prices will not increase above
the general inflation rate.
New Drugs Subjected To Public Review:
e
The new system will establish a pharmaceutical review commission for
new drugs. While this commission will not regulate the price of drugs, it
will provide invaluable information to the purchasers (employers,
employees, and health plans) of these medications about the new
product's relative value. (For example, information on the product's
value compared to other treatment choices will be evaluated, as well as a
comparison to what other industrialized nations are paying for the same
drug will be required.) In so doing, manufacturers will be forced to
become more sensitive to their "launch" prices of new drugs in the
United States.
Prescription Drug Coverage For All Americans:
e
The new system will guarantee that all Americans, young and old alike,
will have prescription drug Insurance. To achieve coverage, the
comprehensive benefit plan for all Americans not eligible for Medicare
will be required to cover prescription drugs. Likewise, Medicare will be
expanded to finally cover the costs of outpatient medications.
End Inequitable Treatment Towards Community Pharmacists:
e
The new program will ensure that community pharmacists who form
large buying groups can have access to the same type of discounts other
purchasers now receive. This will help ensure that consumers, most of
whom purchase their medications at these pharmacies, will benefit from
�these discounts as well.
PRESCRIPTION DRUGS:
Questions and Answers
Q:
Won't the plan's cost containment initiatives stifle research and
development?
A:
No. We spent a great deal of time developing an adequate balance
between the need to retain adequate incentives for investment in R&D,
while still assuring that prescription drugs are more reasonably priced.
Rather than establishing permanent price controls and regulating the
price of new drugs, the Clinton plan incorporates a balanced model that
moves the market into more of a competitive mode, while still assuring
that cost increases are stabilized.
Q:
Why do we need prescription drug price inflation caps? Haven't
companies already said that they would not increase prices faster
than inflation?
A:
It is true that several drug manufacturers have pledged to keep prices
increases to inflation. However, not all companies have taken this
pledge, and not all have taken pledges that result in meaningful
prescription drug price cost containment for the average American
buying medications. We hope, and will give the Industry the
opportunity, to comply voluntary with the proposal's price inflation
protection provision. We expect that many will do just that, but we must
make sure that all comply. Some probably won't. That is why we have
"fall-back" enforcement provisions.
Q:
Prescription drugs are only a small part of the health care pie. Why
are we placing so much emphasis on containing drug costs here?
Shouldn't we look more at doctors and hospitals?
A:
We are looking to contain costs all sectors of the health care system, not
Just pharmaceuticals. While drugs are a small part of total health care
spending — about 8 percent — we are spending well over $800 billion
on health care each year. That's about $64 billion just on prescription
drugs. That's no small chunk of change. In addition, during the phase
in to the new system and universal drug coverage. Americans will still be
paying for most of their drugs out-of-pocket, which means that we have
to be particularly sensitive to making sure that they are protected
against unfair price increases.
�Q:
A few months ago, my mother had to be admitted to the hospital
because she had a reaction to two drugs she was taking. What
will your plan do to assure me this kind of thing won't happen
again?
A:
Your mother's problem isn't uncommon. The elderly sometimes have
to see a number of different doctors to treat heart problem,
arthritis, diabetes, and impaired vision. Sometimes doctors don't
know what drugs another doctor has prescribed; sometimes the patient
doesn't remember all the different instructions to follow. In the new
system, pharmacists will be able to pull up information on their
computers that tell them what's been prescribed for that patient by
each different doctor. That way, the pharmacist will see iif there's
a potential problem ahead of time and take the necessary steps.
Q:
I am an older American who already has private drug coverage
through my previous employer. Why should I have to pay for a drug
benefit that I don't need?
A:
Under the Clinton plan, private insurance plans that offer drug coverage
to older Americans would have to adjust their policies to meet the
coverage provided under the Medicare benefit. That is, any savings to
the plan from eliminating drug coverage from the private insurance plan
would have to be passed on to the consumer in the form of lower
premium costs. As an alternative to lowering the premium, the plan
could offer another health care benefit that equals the value of the drug
plan. For example, the private plain could fill in the "gaps" in the
Medicare drug benefit's coverage.
Q:
Is it fair for Medicare beneficiaries to have higher deductibles and
copayments for their drug benefit as compared to the under 65
population?
A:
The average older American uses about $800 in prescription drugs each
year, while the average person under 65 has much lower average annual
drug costs — about $230. Therefore, the average annual dollar value of
the Medicare drug benefit for older Americans will be equal to or greater
than the dollar value of the benefit for the person who is under 65. even
though the cost sharing for the Medicare beneficiary is higher.
Q:
Won't this plan encourage the overutilization of prescription drugs
and increase costs?
�A:
Anytime you provide insurance coverage for a health care service, there
is a risk that there will be inappropriate or unnecessary utilization.
Under the proposal, the Medicare drug benefit will have a program of
drug use review that is designed to protect against these very problems.
Most managed care plans have similar programs in place today, and
because of the tremendous pressure on these plans to contain drug
costs, it is likely that they will use these plans to assure appropriate and
necessary utilization of medications in the under 65 population. Lastly,
while drugs can be very expensive, when used appropriately, they
frequently are much more cost effective than any other service available.
While we may see a rise in some drug costs, we also may well see a
decrease in unnecessary and much more expensive surgical alternatives.
�PRESCRIPTION DRUGS:
The Current System
Pharmaceuticals Are Generally Cost-EfTective Treatments:
•
The value of pharmaceuticals in the treatment, prevention, and
diagnosis of disease is irrefutable.
Prescription Drug Prices Are Forcing Unacceptable Burdens:
•
Over 8 million Americans over 55 say that they have to make choices
between buying food and paying for medications. (AARP Survey, Summer
1992).
Drug Inflation Tripled General Inflation From 1980 to 1992:
•
Between 1980 and 1992, while the inflation rate of products produced
by all other manufacturers averaged about 22 percent, the inflation rate
at the prescription drug manufacturer's level was more than 6 times
this. 132 percent. (Bureau of Labor Statistics).
Prescription Drug Insurance Coverage Is Totally Inadequate:
•
Largely because Medicare does NOT cover outpatient prescription drugs.
64 percent of medications purchased by older Americans are not covered
by insurance. For the under 65 population, about 55 percent of total
prescription drug costs are paid out-of-pocket. (Employee Benefits
Research Institute. January 1992).
Americans Pay Higher Drug Prices Than Other Nations:
•
Americans pay 32 percent more for their prescription drugs than do
Canadians. (General Accounting Office Report. October, 1992).
Pharmaceutical Companies Still The Most Profitable:
•
In 1992, the pharmaceutical industry's return on sales quadrupled
(12.4% vs. 3.1%) the average Fortune 500 industry. (Fortune
Magazine. April 23. 1993).
Drug Companies Spend More On Advertising Than on R&D:
•
Pharmaceutical manufacturers spend more on marketing and
advertising (22%) than they do on research and development (16%).
(Report ofthe Office of Technology Assessment, February. 1993).
�RURAL HEALTH CARE
�RURAL AMERICANS AND HEALTH CARE:
With fewer health care providers, a dearth of preventive
care,
a growing population of uninsured, and rapidly rising costs,
rural Americans — a quarter of the nation's population —
experience some of the worst flaws in our current health care
system.
•
Providing Universal Coverage: More rural Americans lack health
insurance than Americans in other parts of the country. Without
coverage, many can't pay for care even if they have a doctor close by.
Under reform, all Americans will have coverage under the comprehensive
benefits package.
e
Attracting Doctors to Practice i n Rural Areas: Many rural Americans
truly know what it is to not be able to choose their own doctor. Rural
doctors and providers are discouraged by high numbers of uninsured
patients, the lack of medical support services, and the difficulty involved
in operating a practice in a remote area. Reimbursement levels are often
low and payments delayed. All of these problems lead to a high rate of
doctor turnover. A study in North Carolina found that almost half of
rural physicians left their rural practices within three years of practice.
The Clinton health care plan provides real access, not just a promise and
a piece of paper. The reform will provide economic incentives to doctors
who practice in rural locations.
e
Expanding Emergency Services: For people with serious health
conditions, choosing to live in a rural area may represent a "death
defying" act, given the scarcity of health care services. Our plan will
break the isolation which is so discouraging to rural providers, by
setting up links with hospitals and other providers and health networks;
coordinating rural health care providers; and enhancing emergency
support services.
e
Expanding Preventive Care: The shortage of health care professionals
and lack of access to pre-and post-natal care can lead to serious
problems for pregnant women and their children. The Clinton plan will
build on existing rural health systems by investing more in community
and migrant health centers and investing in prevention initiatives.
�RURAL AMERICANS AND HEALTH CARE:
The Clinton Plan
REAL REFORM NOT JUST A PROMISE AND A PIECE OF PAPER ...
Rural Americans are hit hard by the current health care system. The Clinton
health care plain provides real reform not Just a promise and a piece of paper.
We will help provide a more stable economic base for providers — putting
rural communities in a better position to get and keep providers.
•
The Clinton plan will secure a comprehensive benefits package for
America's rural communities — farmers, small business owners, and
families. We will end insurance underwriting practices that discriminate
against people based on whether they're young or old, sick or healthy,
married or single. We will ensure greater stability in premiums from
year to year.
•
Rural small business owners and farmers will get the advamtages of
being part of a large group — gaining leverage to buy wholesale not
retail and the safety in numbers that comes from being part of a large
group including stable premiums.
•
Rural Americans will have alliances working to get them good coverage
aind protect them from bad insurers.
HOW IT WORKS ...
•
The plan maikes rural settings more attractive for doctors aind other
providers by:
Removing the heavy burden of uncompensated care paid by
providers and reduce paperwork
Making sure providers are paid on time by reliable aind efficient
insurers
Breaking the isolation, by setting up links with hospitals, other
health networks and providers to increase rural access to the
latest and best information.
Coordinating rural health care providers, hospitals, and home care
services.
Providing emergency service support
e
The Clinton plain will train and recruit providers for rural aireas by
building strong financial incentives into student loam prograims,
providing rural medical school residency locations, and building links
between rural physicians and regional medical schools. We will expamd
the National Health Service Corps.
�Improve the Public Health Infrastructure: The Clinton plan will build
on existing rural health systems by investing more in community and
migrant health centers and investing in prevention initiatives.
�RURAL AMERICANS AND HEALTH CARE:
The Current System
•
22.5 percent of the Americans live in rural areas. Many are isolated by
economics as much as by distance. Small communities may not be able
to support a physician practice — and few young physicians are
interested in taking over the solo practices of the many physicians who
Will retire i n the next decade. [Bureau ofthe Census]
•
32 percent of rural Americans did not have health care for at least one
month over a two year period ending in 1987. About 40 percent of all
agricultural workers and their families have no health insurance at all.
[Office of Rural Health]
•
Rural Americans with insurance coverage typically have policies which
cover less and cost them more out-of-pocket. [Working Group Paper]
•
Rural areas have less than one half the number of doctors as urban
areas. Twenty-eight percent of rural residents live in areas which have a
shortage of primary care physicians compared to only 9.5 percent in
urban areas. [Office of Rural Healthl
•
In 1988, 68 percent of rural counties did not have enough doctors. In
fact, 111 rural counties had no physician at all. [Office of Rural Health]
�RURAL AMERICANS AND HEALTH CARE:
Questions and Answers
Q.
How will managed competition work in a rural area when there are
no providers to compete?
A.
The Clinton reform provides secure coverage to all Americans regardless
of where they live. Rural Americans will be able to choose to go to their
local doctor through traditional insurance plan or an integrated health
plain. Rural hospitals and providers will develop community-based
health plans in rural areas linked to regional medical centers. In some
cases, urban health plans will expand to cover rural areas.
Q.
How will the plan help rural areas?
A.
The biggest help for rural areas is providing secure coverage. That
means that all rural Americans — regardless of where they work — cam
get secure coverage to a good benefit package for a fair price. By
building in economic incentives for doctors to practice in rural areas and
encouraging community-based networks to form, rural Americans will
be able to get the high quality care they need. Providers won't have to
continue to provide even more uncompensated care than urban
providers. They will get paid amd paid on time.
Q.
How will reform work in rural America?
A.
State flexibility is a dominant feature of the Clinton health reform. The
President, as a former governor, is fully aware of the tremendous
differences among the states. That's why this plan encourages states to
find the solution that's best for them — it may mean alliances in one
state and a single-payor model in another. We don't want to
micromanage what states do so long as they meet the federal guarantees
of universal coverage, access, quality amd cost containment.
Q.
Anti-trust and other state anticompetitive laws seem to be
hampering rural network development. What does the plan do to
alleviate this problem?
A.
The proposes that the federal government develop model legislation,
which can be adopted by states, to protect developing networks from
federal amti-trust laws.
Q.
How will rural health interests be represented and assured?
A.
Rural residents will be members of the governing board of the alliance in
�direct proportion to the percentage of rural residents who are members
of the alliance.
�S T A T E / F E D E R A L ROLE
�STATE / FEDERAL PARTNERSHIP AND HEALTH CARE
The Clinton Plan
States no longer have to go it alone:
•
For twelve years, states have taken the lead on reforming the health care
system — developing innovative solutions to the health care crisis.
Several states have enacted comprehensive laws aimed at providing
health security to more Americans and controlling health care costs.
The Clinton Plan establishes a state/federal partnership:
•
States alone cannot solve this country's health care crisis. Controlling
costs, providing security and guaranteeing all Americans a
comprehensive package of benefits are challenges our entire nation must
solve. That's why the Clinton plan will establish a state /federal
partnership that allows the state and federal government to take on this
challenge together.
•
Under our health reform proposal, the federal government will establish
a broad framework within which states will have the flexibility to design
the health care system that works best for them. This framework will:
- define the comprehensive benefits package guaranteed to all
Americans;
- set high standards for quality;
- reform malpractice laws;
- and set national goals for controlling costs.
States will have flexibility:
e
The solutions that work well in one state may not work as well in
another. That's why each state will have flexibility on how the system is
implemented as long as states work to:
- set up health alliances to replace the fragmented insurance
market;
- guarantee affordable coverage;
- assure high-quality care;
- and aggressively control costs.
e
The system won't be perfect, and this is one of the reasons why state
flexibility is so important: states can learn from each other the best ways
to make the system work.
�STATES/FEDERAL PARTNERSHIP AND HEALTH CARE
Questions and Answers:
Q:
Right now state budgets are overrun by the explosive growth in
Medicaid spending. What will your program do to bring Medicaid
costs in line?
A:
Medicaid has been the culprit behind most state budget deficits in recent
years. As employers begin to cover their workers who currently receive
Medicaid, and as Medicaid is folded into the new system, health care
costs will be more predictable and grow at slower rates.
Q:
How much state money will we have to contribute to the new
system?
A:
The states will be asked to maintain their current level of spending on
health care, indexed to some negotiated level (perhaps inflation and
population); this is frequently called "maintenance of effort."
Understanding that some states will have greater financial needs
(because they have, for example, much higher levels of uninsured), there
will be financial assistance made available to help ease the transition
into an universal covered system.
Q:
What works in California won't necessarily work in Maine; we're
wary of a "one size fits all" approach. Can we adapt your program to
the needs of our state?
A:
The whole philosophy behind this Clinton plan is that the key to a
successful and responsive health reform initiative is that states must
have the flexibility to respond to their own needs and priorities. Inherent
in this philosophy is the understanding that there is no "right" answer
for health care that can be applied universally to all 50 states. For
example, there are wide differences in opinion as to what constitutes the
most appropriate approaches to health care technology and personnel
distribution. Within the Federal framework, meeting the Federal criteria,
states will be able to adapt the national program to the needs of their
state.
�INNER CITIES
�INNER CITIES AND HEALTH CARE REFORM:
The Clinton Plan
ENSURING HEALTH CARE IN LOW-INCOME URBAN AREAS . . .
Suffering from an isolation caused by poverty and violence rather than
distance, many cities have been unsuccessful in battling back the AIDS
epidemic, a terrHying outbreak of tuberculosis and homelessness aind poverty.
We must ensure that health reform meets the needs of our nation's cities,
especially the children of the inner cities — the disenfranchised and neglected
— by making sure they have health caire.
HOW IT WILL WORK ...
•
Comprehensive Benefits Package: Our plan will provide the security of
a comprehensive package of benefits to all Americans. We will provide
headth care coverage to the millions of Americans who live in inner cities
who currently don't have insurance.
•
Financing Care/Ensuring Access:
Medicaid: Medicaid, the State-Federal program for low-income
people, is the heailth care insurer for many living in the inner city.
However, for many who depend on it, delayed payments, low
reimbursement and complicated regulations have limited choice of
provider and rendered the program ineffective in ensuring access
to care.
The Clinton plain will incorporate Medicaiid so that all Americans
have the security of the same health care system.
Working Americans: Eight-five (two?) percent of the uninsured
are working Americans. For those working Americans who
currently do not have health care, our system will require that
their employers provide coverage.
The Unemployed: For those who aire unemployed, the Clinton
plan will extend subsidies to ensure that all Americams have the
security of health care when they need it.
�•
Expand Availability of Primary Care: Our plan will expand access to
primary care physicians, and provide incentives for medical students to
set up practice in urban areas through financial incentives. The plan
will enhance the National Health Service Corps to reach urban
communities and improve the definition of medically underserved to
ensure that all areas receive the resources they need.
•
Encourage Family Practices: The reform will stabilize the economic
base and encourage providers to locate with the promise of an insured
population and timely and consistent payment.
•
Outreach/Immunization: The Clinton plan will enhance outreach
services and encourage preventive and primary care. The
Administration has already proposed an unprecedented campaign to
immunize all infants and toddlers.
•
AIDS: The new Administration has already made an unprecedented
commitment towards fully funding the Ryan White Act which provides
needed AIDS money to cities across the country. Reform will expand
home-care services for the chronically ill to allow them to remain in
communities.
•
The Homeless: The plan, which will finally provide non-discriminatory
coverage for mental illness, will go a long way towards addressing the
complex problems of homelessness.
e
Prevention: The reform will begin to refocus our health care system on
preventing illness and injury, rather than just on treating them.
With the advent of universal coverage for personal health services, state
departments will be able to refocus on prevention. As preventive
services such as immunizations and substance abuse become
reimbursable under the new system, many will feel a burden lifted.
•
Essential Providers: The plan will increase investment in essential
community providers such as public hospitals and community health
centers, to Improve the quality and range of services to vulnerable
populations.
•
Public Health Services: The plan will make sure that reform does not
neglect or impede activities of the public health service. Certain public
health functions targeted at whole populations — such as T.B. control.
AIDS prevention, reduction of infant mortality, infrastructure system
support and national health promotion — will remain under federal
control.
�INNER CITIES AND HEALTH CARE REFORM:
The Current System
•
Approximately 37 million Americans lack health insurance. Eighty five
(two?) percent of the uninsured are working Americans. [Employee
Benefit Research Institute]
•
Forty-five million Americans live in medically underserved communities
that, by definition, lack sufficient resources to effectively and efficiently
deliver health care.
•
Availability of services and low-insurance rates are complicated by
complex social problems such as substance abuse, homelessness,
communicable diseases.
•
State and local health departments have been overburdened as they
have become "safety net" deliverers of health care services for the
uninsured, underserved, and vulnerable populations. As a result, their
abUity to provide core public health and preventive services has been
limited.
•
In many cases, the emergency room is the sole source of treatment for
the uninsured. Here people do not receive primary care or preventive
care.
•
Forty-three percent of the 99 million patients seen in emergency rooms
in 1990 had minor ailments that could have been treated elsewhere.
[Robert Wood Johnson Foundation]
•
In inner cities, lack of insurance and access to primary care —
especially pre- and post-natal care — leads to higher infant mortality
and morbidity rates as well as high costs for preventable illnesses.
•
Americans spend $10 in avoidable health care costs for every $1 of
immunization.
�ADMINISTRATIVE SIMPLIFICATION
�ADMINISTRATIVE SIMPLIFICATION
The Clinton Plan
Jn today's system, paperwork in hospitals and doctors' offices
consumes time and money — time that could be better spent
caring for patients. The Clinton Plan will cut paperwork,
decrease the regulation that drives up administrative costs,
and create a single insurance form to replace the thousands
offorms that currently exist. Most importantly, simplifying
the system will free doctors and nurses to concentrate on
providing patients ivith responsive, high-quality care.
THE CLINTON PLAN WILL CUT PAPERWORK BY:
e
Creating a single, uniform set of rules for getting paid, cutting away the
red tape hospitals and physicians have to go through today to get paid
by different plans.
e
Eliminating insurance underwriting — the practice of insuring only
those who are good risks and charging more to those who are sick.
e
Creating a single insurance form so that doctors don't have to deal with
thousands of insurance forms.
e
Eliminating "dual eligibility" so that doctors and nurses don't have to
waste time figuring out which insurance company is responsible for a
given claim.
e
Creating a system of "24-hour coverage" — so people are covered at all
times in all places by one plan.
e
Banding small businesses and individuals together in health alliances
that negotiate for high-quality care at an affordable price — this will
eliminate the excess paperwork involved when each individual or small
business deads separately with an insurance company.
THE CLINTON PLAN WILL EASE FEDERAL REGULATION BY:
e
Modifying the Clinical Laboratory Improvement Act (CLIA) regulations
that currently micromanage doctor' offices aind labs.
e
Cutting the budget of the Peer Review Organization and reinforcing its
new role to review outcomes rather than being a checklist regulator.
e
Coordinating the inspections hospitals have to undergo and eliminating
�redundant inspections.
�•
Requiring that all payers let physicians know up front what criteria they
use to determine payment. Plans must respond to requests in a timely
manner so that treatment can be provided when it's needed.
•
Replacing "over-the-shoulder" quality review with an outcomes based
report card on quality.
THE CLINTON PLAN WILL MAKE IT EASIER FOR CONSUMERS BY:
•
Simplifying and standardizing the benefit package so that consumers
can decide between health plans and know how much they'll have to
pay.
•
Publishing information about a plan's quality of care in a way that
consumers can understand.
�ADMINISTRATIVE SIMPLIFICATION
The Current System
Nearly $200 billion, or one health dollar out of every five health care dollars, is
now spent on administration — much of it duplicative, wasteful and
unnecessary. (Lewin-VHI)
WHAT CAUSES THE HIGH ADMINISTRATIVE BURDEN:
•
•
•
•
Excessive regulation — particularly by Medicare
1500 different insurance companies
Hundreds of different benefits packages, which means time spent
figuring out what's covered and what's not
Different kinds of health coverage for each employee — health
insurance, auto insurance and workers' compensation
HOSPITALS FACE A MAZE OF REGULATION AND REIMBURSEMENT:
•
Hospitals have to meet the requirements of half a dozen different groups
just to open their doors and keep them open — the fire marshall, OSHA,
the Joint Commission on Accreditation of Healthcare Organizations, the
College of American Pathologists, state departments of health, and other
state and private organizations.
•
To get paid, hospitals have to make sure that the patient meets the
insurer's sickness test, fill out the necessary forms, follow the billing
rules and use the right codes. If they treat a patient but make a mistake
on a form, payment will be delayed or may be denied.
HEALTH PROFESSIONALS SPEND TOO MUCH TIME DOING PAPERWORK:
•
Nurses may have to complete as many as 19 different forms that trace a
patient's stay in the hospital. If the patient has a complicated condition,
a nurse's day can get quickly swallowed up filling out charts.
•
The AMA estimates that the average doctor's office devotes 80 hours per
month pushing paper.
OVERREGULATION MAKES IT HARDER TO GIVE CARE:
•
Some doctors have closed their labs because they can't afford the
inspections, the paperwork and the daily administrative hassles that
result from regulation.
MEDICARE REGULATION CREATE UNNECESSARY COSTS:
�•
Medicare patient expenses go through layers of checkers before a
payment is made — three hospital departments get involved —
utilization review, coding, billing. Once it leaves the hospital, the bill
goes to the insurer on contract with the Health Care Financing
Administration for review and payment. The insurer sends copies of the
bills to the Peer Review Organization and the regional HCFA office.
These organizations check the hospital's accuracy. Other groups — the
Super-PRO in California and the national HCFA office ~ check the work
of the checkers.
•
Over 1000 payers process over 4 billion claims per year. For example,
each year Medicare processes an estimated 700 million claims, with 48
intermediaries, 34 carriers and 82 contractors who use 22 different
processing systems. (HHS, Inspector General)
THE CONFUSING SYSTEM OVERWHELMS CONSUMERS:
•
Health insurance, especially Medicare and Medicaid, constantly changes.
In many cases, consumers aren't made aware of these changes. The
programs are so complicated that when they ask their doctor or nurse or
social worker, the answers they get may be wrong.
•
All the different rules and conflicting information about health plans
make it nearly impossible for consumers to make informed decisions
about the health plan that's right for them. It's hard to choose between
plans that cover different services, for different amounts of money, for
different periods of time.
•
The challenge of filling out complicated forms when a person's ill and in
need of help can make an already stressful and frightening experience
worse.
�ADMINISTRATIVE SIMPLIFICATION:
Questions and Answers
Q:
How is it possible that the government will get more involved in our
health care system but there will be less paperwork?
A: The Clinton plan recognizes that running the country's health care system
from Washington only creates more regulation — that's why this plan builds
on state and local flexibility. It puts employers and employees in the driver's
seat.
Q:
Won't these "health alliances" create more bureaucracy and
paperwork?
A: Not at all. The health alliances are merely a way that businesses and
individuals can band together to get the same bargaining power as big
companies — so they can go to insurance companies and negotiate for highquality care at an affordable price. This will reduce the paperwork created
when small businesses and individuals each deal separately with insurance
companies.
Q:
Without forms, how can we assure quality?
A: There is no evidence that filling out 10 different forms improves quality.
Freeing up doctors and nurses to concentrate on practicing medicine is the
way to improve quality. A quality report card will let consumers measure how
well a health plan delivers care. With this information, consumers can "vote
with feet".
Q:
Won't cutting the paperwork mean cutting the jobs of the people
that do the paperwork?
A: Cutting paperwork will free doctors, nurses and other health care providers
to do what they do best — provide high-quality care to patients. Some people
who only do paperwork in the current system may switch jobs after reform —
when there are more people providing care and less people filling out forms.
�UNDOCUMENTED PERSONS
�UNDOCUMENTED PERSONS
Undocumented persons would not be eligible for
guaranteed benefits under the reform plan.
Services
provided currently, however, ranging from care at
community to clinics to hospital services, would be
preserved.
In addition, through investments in our
public health infrastructure,
the availability
and
variety of health care services to undocumented
persons
will be improved.
Q:
Will the undocumented be covered in the Clinton plan?
A:
There has been a fear among certain groups that the reform plan would
take away services from certain populations currently receiving care.
The current system protects undocumented persons; under the reform
plan those protections would continue. Services ranging from care at
community clinics to hospital services would still be available.
Moreover, these safety net programs that this population relies upon
would be enhanced to improve the availability of services. However,
coverage for guaranteed benefits will be limited to legal residents and
American citizens.
Q:
Will undocumented children be covered?
A:
Services now available for undocumented children will also be preserved.
Q:
Will counties and states receive uncompensated care funding to
cover the undocumented and other disenfranchised populations?
A:
The Clinton Plan will continue and strengthen investments in our public
health institutions and programs. Under the President's plan, health
promotion and health care delivery will be Improved by assuring that
providers have the resources they need to provide services to targeted
populations.
Q:
Will there be a universal health security card?
A:
We understand your concerns about using a universal card for
enrollment in the health care plan. We look forward to working with you
in developing guidelines for ensuring confidentiality and eliminating the
risk of discrimination.
Q:
Will the health security card become a model for a national
�identification card that would allow Federal programs to
discriminate against certain individuals because of their
immigration status?
A:
We are sensitive to this issue and have met with interested individuals
and organizations, including the Congressional Hispanic Caucus and the
Congressional Border Caucus, to ensure that appropriate safeguards are
developed and instituted.
��CHARTS AND GRAPHS
�i-
* « ' r » ^ •. *•
0)
'
:
• Fir ; :
'i
>
Employer Premiums Per Worker '•: \^fl
By Industry; AH Firm Sizes - ^ ' i ; ^ ^
• 1 .UUlflil HL... n p i P P i
Agri
m
Ma'nuf
:
| $3669 ;
Tech,/Ciericj^^
$2737
Wholesale^
n
$2057
Fin:/lnSi/Real EsQMiWit $2636
$2558
13 2 9
State & Local G69.«M^ $ 7 4
Fed* G o v . ^ ^ w ^ ^ ^ ^ ^ $3161
Source: The Urban Institute (1993), based on
the March 1992 C S and TRIM2
P
. . . . . . . .
J
�mmmv,,,,\mnm t ill. I ,l» *m\m>m < n m*\ '
V
U 11 II' I P f - T ^ ^ " " ^ ^
Premiums as percent of payffili; 1994 artd 2000 ,with6uih^lth^
f
"•
11.96%
m
nop./ ^ t e ^ ^ ^ s ^ j ^ i i l S B ^ j
run/
.... •
•
11.24%
v
:••' .'
,,11.41%
I
i
I
j
<
:
I.
i
25-99
<25
1994
21
100-499
500-999
X000 +
Size of Firm
Source: HHS analysis of Urban Institute Tabulations ofthe March 1992 CPS.
•
•
:V :
>^
�Who AreJhf Uninsure(i'?;;I|ii
e uninsured by family he^d^^;2
work status/ Size of employer^S ^^lS ^
500-999
»0/
1000 +
2%
0
NohWork^rs
26%
Source: The Urban Institute (1993), based on the
March 1992 CPS and TRIM2. Numbers are in thousands.
�OT mcurrea wamsm^M
30%
••
25%
16%
»* • .
If
10-19
20-49
50-99
m
Number of Employees
Source: Hay/Huggins Company, Inc.
mmm
100-499 500-2,499 , 2,500g qqq
'
10,000 +
.
�Percentage of Firms Offering ^
Health Insurandlbv Siftft'SB8 ^
:
• . •.; ••• .
Allfirms
.: • • '•••»•••.y.\:.i' •.->>
li^HBIsS^-'SR
1-24
o
25-99
83.1%
CO
100-499
500 +
Source: Department of Labor, based on
Small Business Admin. Calculations
of May 1988 CPS Survey Data.
91.9%
94.5%
�»y| t
Workers in Small - — are^ostLikely.td.bft^ninSuredl^l^
Firms
:
0S
its who arfe uninsured, by size ofiirm ^
^
25.45%
St'.-
• : ' .. • • • • • • • . ' • • \ £ . . • ... *
•
.
20.06%
m
v_
13
CO
. 'to - •
.. .. .
... •• . : • • •• •• .'A.
•
••
12.97%
CD
O
CL.
i
<25
25-99
100-499
500-999
.1,000 +
Size of Firm
Source: The Urban Institute (1993), based on the March 1992 C S and TRIM2.
P
�500-999,
6%
-•A^^^dod#:f'
.' •i '
' « . I-.-
!
Source: The Urban Institute (1993), based on the
" i
March 1992 CPS and TRIM2. Numbers are in thousands.
�19 19 19 19 19 19 20
94 95 96 97 98 99 00
Year
Source: Office of the Actuary, H F
CA
�(9>
NationaLHealth Spending
(billiiihs)'
r-u'••
; ;
•'^;':"V.J-:• • . '•.•'.••i•-, •
SI,462.3
• iVi,^-''^:^ 51 #739.8^; ^v-; '']
,
pp^ppf
$1,335.3
$1,215.2
$1,101.9
$996.7
•mm
!-;•:.til
1994
1995
1996
1997
Year
Source: Office of the Actuary, H F
CA
1998
1999 i t
2000
�w asJ ^ s g ^ ;
Worker's Comp|hsation
Percent of Total Compensation ; - ^ ^
All
2.2%
'A
03
M
CO
2.7%
1-99
..
100 +
#'
. -• . t -y
1.9%
Source: Bureau of Labor Statistics, March 1992
Employment Cost Index
>.J
�Working FamiliesaWhat Are Thei^;, )
Sources of Helth InsiJrarfSSii
Medicaid
5%
Public
1
%
i
Private
6%
Source: The Urban Institute (1993), based on the
March 1992 C S and TRIM2. Numbers are in thousands.
P
��HEALTH CARE POLICY
DEVELOPMENT PROCESS
�HEALTH POLICY DEVELOPMENT PROCESS:
DESCRIPTION
The Task Force:
President Clinton established the Task Force on National Health Care Reform
on January 25, 1993 to develop a proposal to fundamentally reform America's
health care system. Heis charge: prepare health care reform legislation to give
American families the security they need and bring spiralling health care costs
under control. The President set a 100-day schedule for this policy
development, emphasizing in his "Joint Address to Congress" that there is
urgent need for action: "... all of our efforts to strengthen the economy will fail
unless we also take this year — not next year, not five years from now, but this
year — bold steps to reform our health care system."
Demonstrating his level of commitment to solving this complex problem, the
President appointed First Lady Hillary Rodham Clinton to chair the Task Force
— citing both the First Lady's experience and her ability to "bring people
together around complex and difficult issues to hammer out consensus and
get things done."
The President's policy development structure has two tiers: first is the Task
Force itself, which includes representatives from the highest levels of the
government — including the Secretaries of Health and Human Services. Labor,
Treasury, Commerce. Defense, and Veterans Affairs — as well as senior White
House officials. The second level is comprised of 34 working groups — whose
members include federal, state and Congressional employees, health
professionals, and outside experts — which were set up to advise the Task
Force and develop health care policy within the "Tollgate" system.
Policy Development:
The "Tollgate" Process: The policy evaluation effort of the Task Force is being
coordinated by the President's Senior Adviser for Policy Development, Ira
Magaziner, and is based on the "Tollgate" system — a research and evaluation
process commonly used in the business world for large-scale projects that
need to be completed quickly. To advise the Task Force, Mr. Magaziner formed
34 working groups — involving health professionals. Congressional staff,
health care experts, officials from various agencies, and White House
personnel. These working groups — which are divided into health policy
subject areas such as Rural Health and Administrative Simplification —
guided their research efforts through a series of tests, or "tollgates". before
presenting a comprehensive set of options to the Task Force for consideration.
�In the first series of tollgates — the broadening phase — each working group
was asked to put all options "on the table" — ensuring that all issues were
considered, all questions discussed, and that correct methodology was used.
In the second phase, this broad group of options was narrowed, and research
and assumptions were again revisited to assure accuracy.
The Final Decisions: After the tollgate process had refined the options, the
working groups made draft recommendations which were synthesized into a
comprehensive set of proposals. Working group members begem a series of
meetings with the President, the First Lady and Task Force members to
present their proposals and outline the final decisions. The President is
currently reviewing these proposals and making the final decisions.
At the same time, a legislative drafting group has been working to accurately
capture the full intent of the policy proposals and turn the plan into legislation
that can be introduced to Congress.
Outside Auditors: A series of independent auditors, from outside the Task
Force process, are being brought in to challenge all assumptions and question
the final conclusions.
A Health Professionals Review Group of more than 40 doctors, nurses
and other practicing health professionals has been conducting an
intensive, critical review of working groups proposals in light of their
real-world applications. A review team of experts from Academic
Health Centers includes Deans from the most prestigious medical
schools in the country.
Diverse panels of consumers — many selected from letters they sent to
the Task Force — were brought in regularly to advise the working
groups as they developed their recommendations and are now examining
the final proposals and making suggestions.
An Administrative Simplification Review Group, which includes
innovative health care leaders who have run major health plans and
hospitals, has been formed to ensure that the recommendations meet
the test of those who will have to implement them.
Financial auditors will check to ensure that all cost and savings
projections are sound and that all assumptions are both accurate and
clearly laid out.
Legal auditors will ensure that all questions of regulatory authority,
jurisdiction, and interaction with existing laws have been addressed.
Finally, a group of "Contrarians", both health policy experts and average
i.
�Americans, who have not been involved with the process, will be brought
in to serve as "devil's advocates" to the Task Force's recommendations.
They have been asked to critically examine all proposals and expose any
possible weaknesses or oversights.
An Inclusive Process:
To ensure that this process was open and inclusive, the President structured
the system to encourage participation from the American people, all categories
of health care providers, the business community, and all levels of government.
In the most open policy making process i n history, more than 500 people
from all over the country were directly involved in developing policy within the
working groups.
Health Care Providers and Consumers Closely Involved: In an attempt to
make health care reform respond to the concerns both of those who receive
health care and those who provide health care, more than 100 health care
professionals — including 60 doctors, 20 nurses and 6 social workers — were
members of the working groups developing policy options for the Task Force.
In addition, the Health Providers Review Groups and the Consumers Review
Group, described above, have been closely involved throughout this process.
Exhaustive Outreach Process: The White House is actively reaching out for
advice from the American people, members of Congress, representatives from
small and large businesses, state and local officials, and organized health care
interest groups. All groups have been encouraged to submit written proposals
and more than 400 [???! groups have been brought into the White House to
meet personally with the President, the First Lady, Ira Magaziner and/or
working group members. In turn, their written proposals have been
distributed to each applicable working group and have formed the basis for
debate and policy development.
The Task Force operates an intake room to receive the thousands of speaking
requests, policy papers, letters and phone calls from Americans concerned
about the health care crisis. Since the Task Force was formed in January,
more than 200,000 letters have been received and read. From a hospital
administrator's treatise on malpractice reforms to a widow's handwritten letter
expressing outrage at her skyrocketing prescription drug costs, each inquiry is
taken seriously and channeled to the appropriate working groups.
The First Lady, Secretary Shalala and Tipper Gore — who has been advising
the Task Force on mental health issues — have been travelling throughout the
nation talking to the American people about their health care concerns. Over
the past few months, they have attended several roundtable discussions across
the country to discuss the recommendations of all those eager to contribute to
�health care reform.
The Task Force met for the first time on Monday, March 29. Over the course
of 13 hours, the Task Force members listened to more than 65 organizations - representing diverse groups of consumers, health care providers, and
businesses — present their ideas on health care reform. These groups have
continued to be closely consulted as policy options were narrowed and
recommendations prepared.
Congressional Consultation: In developing its health care reform proposal,
the Health Care Task Force has based its research and policy options on the
significant foundation of work that many Members of Congress have laid in the
last 20 years. In order to benefit from this expertise — and build strong,
bipartisan support — the Task Force has regular, broad-based, and
substantive consultation with Members of Congress, including an extensive
bipartisan outreach effort.
Senate Majority Leader Mitchell, House Majority Leader Gephardt,
Senate Republican Leader Dole, and House Republican Leader Michel
have been appointed Congressional Liaisons to the Health Care Task
Force;
There have been virtually daily meetings with the House and Senate
Members and staff since the Task Force was formed. The First Lady
herself has discussed health care reform with more than 90 Senate
Democrats and Republicans, and well over 160 House Democrats and
Republicans — including meetings with the members of the Black,
Hispanic, and Women's Caucuses;
The First Lady, Ira Magaziner, and Judy Feder, ofthe Department of
Health and Human Services, have established a close cooperative
relationship with the Committees that have primary legislative
jurisdiction over health care — holding numerous one-on-one and
group meetings with the House Ways and Means Committee, the Senate
Finance Committee, the House Energy and Commerce Committee, the
Senate Labor and Human Resources Committee, and the House
Education and Labor Committee; and
Working group leaders have briefed Members and Congressional staff
from both parties on specific components of the health care options
currently being proposed and analyzed.
�• s of 4/21/93
CONSULTATIVE HEALTH CARE MEETINGS
(Organizations)
AARP
Abbotsford Clinic Community Health Centers
Abbott Laboratories
ACU
ACTWU
Actuaries Association
ADATT
ADAPT
ADAPT of Texas
Aetna Life and Casualty Group
AFL-CIO
American Federation of State, County and Municipal Employees
AHCPR
AIDS Action Council
AIDS Action Foundation
Alan Guttmachar Institute
Alliance for Aging Research
Alliance for Continuing Medical Education
Alliance of American Insurers
Alzheimer Association
American Academy of Child and Adolescent Psychiatry
American Academy of Dermatology
American Academy of Family Physicians
American Academy of Ophthalmology
American Academy of Pediatrics
American Association for Respiratory Care
American Association of College of Osteopathic Medicine
American Association of College of Podiatric Medicine
American Association of Colleges of Nursing
American Association of Colleges of Pharmacy
American Association of Critical Care Nurses
American Association of Homes for Aging
American Association for Medical Colleges
American Association of Nurse Anesthetists
American Association of Preferred Providers Organizations
American Association of Partial Medicine
American Association of University Women
American Business Conference
American Cancer Society
American Coalition for Citizens with Disabilities
American College of Emergency Physicians
American College of Preventive Medicine
American College of Cardiology
American College of OBGYN
American College of Physicians
American College of Surgeons
American Counseling Association
American Express
�American Family Life Assurance Company, Inc.
American Federation of Home Health Agency's
American Federation for Clinical Research
American Foundation for AIDS Research
American Group Practice Association
American Health Care Association
American Health Care System
American Health Insurance Agents
American Health Policy Association
American Heart Association
American Home Products
American Hospital Association
American Insurance Association
American Lung Association
American Managed Care & Review Association
American Medical Association
American Medical Student Association
American Medical Women's Association
American Nurses Association
American Occupational Therapy Association
American Osteopathic Hospital Association
American Pharmaceutical Association
American Protestant Health Association
American Psychiatric Association
American Psychological Association
American Public Health Association
American Public Welfare Association
American Society for Healthcare Education & Training
American Society for Internal Medicine
American Society of Consultant Pharmacists
American Society of Hospital Pharmacists
American Speech-Language-Hearing Association
AMI
APGA
ARCO
Arkansas Able
Arthur G. James Cancer Hospital & Research Institute
Arthritis Foundation
Association for Care of Children's Health
Association for Hospital Medical Education
Association for Practitioners in Infection Control
Association of Academic Health Centers
Association of Academic Surgeons
Association of American Medical Colleges
Association of American Universities
Association of Maternal & Child Health Programs
Association of Medical School Pediatric Depaament Chairmen
Association of Minority Health Profession Schools
Association of Operating Room Nurses
Association of Private Pensions & Welfare Plans
Association of Professors of Medicine
Association of State & Territory Health Officials
ASTHO
AT&T
A2 Physician IPA
Ball State University, School of Nursing
Bankers Life
Bass & Howes
Bazelon Center for Mental Health Law
Black Psychiatric Association
�Black Psychiatrists of America
Blue Cross/Blue Shield Association
Blue Cross/Blue Shield of Ohio
Boston Federal Reserve
BPHC
Brigham and Women's
Bristol-Myers Squibb
Brookings Institute
Brooklyn Hospital Center
Brotherhood of Teamsters
Bureau of Health Professions
Business Roundtable
California Children's Hospitals
California Department of Health
California Group - MICRA
Catholic University, School of Nursing
Coalition for Women's Health
Carl C. Icahn Foundation
Carter Center
Charles R. Drew University of Medicine & Science
Child Care Action Campaign
Child Welfare League of America
Children's Defense Fund
Children's Hospital, Wash., DC
Children's Mental Health Research Group
Chiropractic Coalition of America
Chrysler Corporation
Church Women United
CIGNA Corporation
CIS
Citizen Action
City of Hope
Clagett Memorial Hospital
CliniCorp-Northeast, Inc.
Coalition of Voluntary Mental Health Agencies
Coalition on Smoking OR health
College of American Pathologists
Columbia University
Commission for Hospitals & Health Care
Commission on Immigration Reform
Commonwealth Foundation in New York
Communication Workers of America
Communicating for Agriculture
Congressional Budget Office
Consortium for Citizens w/ Disabilities
Consumer Federation of America
Consumer/Survivor Mental Health Research and Policy Work Group
Consumers Union
Cooperative Healthcare Network
Dana-Farbar Cancer Institute
Davis (CA) Community Clinic
Delta Dental Plans Association
Department of Education
Depression After Delivery
Disability Rights Education Defense Fund
District of Columbia, Commerce & Regulatory Affairs
Eastern Tennessee State University, School of Nursing
EDS
Eli Lilly and Company
Employee Benefit
�9
Emergency Room Nurses Association
Emory University. Neil H. Woodruff School of Nursing
Epilepsy Foundation of America
ERISA Industry Committee
Families USA
Family Services America
Family Voices
Federation of American Health System
Federation of Nurses & Health Prof. (AFT)
Federal Legislative Associates
Federation of American Health Systems
Feldesman, Tucker, Leifer, Fidell, Bank
Fenwick Center (Immunization)
First Hospital Corp.
Florida Legal Services
Ford
Ford Foundation
Fox Chase Cancer Center
Fred Hutchinson Cancer Research Center
General American Life Insurance
General Electric
General Motors
Generations United
Generic Pharmaceutical Industry Association
German Delegation
George Washington University
Georgia Legal Services
Georgia Southern University, Department of Nursing
Glaxo
GMHC
Grady Memorial Hospital
Grambling State University, School of Nursing
Grant Memorial Hospital
Graphic Artists Guild
Group Health Association of America
Group Health Cooperative of Puget Sound
Group Health Northwest
Group of Pharmaceutical Companies
Hartford Foundation
Harvard Medical School
Harvard University
Hawaii Child and Adolescent Mental Health Division of the Department of Health
Health Care Delivery Advisory Group
Health Care Financial Management Association
Health Care Financing Association
Health Care Management Alternatives
Health Care Purchasers Association
Health Industry Manufacturers Association
Health Insurance Association of America
Health Plus, Inc.
Health Policy & Strategy Association
Healthcare Fin. Management Association
HealthCare Compare Corporation
Henry Ford Hospital
Hispanic Health Care Leaders
HOSPICE Association of America
Hospital Corporation of America
Howard University
Human Rights Campaign Fund
Humana, Inc.
�Hunter Colleoe of CUNY, Hunter-Bellevue School of Nursing
IBM Corporation
Illinois Wesleyan University, School of Nursing
Independent Insurance Agents of America
Indiana University
International Chiropractic Association
Inova Health System
Institute for Medical information & Technology
Institute for Quality Improvement
Intermountain Health Care
Intermountain Systems
International Communications Industries Association
(Systems, Inc.
ITT Hartford
IVAX
Jackson Hole Group
Jewish Hospital Representatives
John Hancock
Johns Hopkins Oncology Center
Johns Hopkins University
Johnson & Johnson
Julia Norrell & Associates
Kaiser Foundation
Kaiser Permanente
Kalamazoo Center for Medical Studies
Keck, Mahin, & Cate
Kemper National Insurance Company
Kennesaw State College, Department of Nursing
Kids Count-Cent for Study of Social Policy
Konrad Adenauer Group
Laurel Health System
Legal Action Center
Legal Aid Society of San Diego
Legal Services Homelessness Task Force
Legal Services of Greater Miami
Lifeplans
Loma Linda University, California, School of Nursing
Long Term Care Home Health Care Coalition
Los Angeles County
Lutheran Medical Center
Managed Care Association of Pennsylvania
Managed Health Care Association
Managed Health Care Inc.
Managed Health Care System
March of Dimes Birth Defects Foundation
Marion Merrell Dow, Inc.
Mariposa Community Health Center
Massachusetts League of Community Health Centers
Massachusens Mutual Life insurance Co.
Mayo Clinic
Medco Containment Services
Medicare Advocacy Project
Medical College of Ohio, School of Nursing
Meharry Medical College
Memorial Sloan-Kettering Cancer Center
Mental Health Law Project
Mental Health Liaison Group (representing more than 30 mental health organizations)
Mental Health Research Group
Merck & Co., Inc
Mercy Clinic System
�Metroplex Health Care Systems. Inc. (subsidiary of Ramsey Corporation)
Metropolitan Life
MGH Institute of Health Professions, Nursing Program
Michigan Medicaid
Migrant Legal Action Program
Montefiore Medical Center
Morehouse School of Medicine
Mutual of Omaha Companies
NAPNAP
NARAL
National Rural Health Association
National Academy of Social Insurance
National Alliance for the Mentally III
National Alliance of State AIDS Directors
National Association for Home Care
National Association for the Mentally Retarded
National Association of Addiction Treatment Providers
National Association of Chain Drug Stores
National Association of Child Advocates
National Association of Child Care Research & Referral Agencies
National Association of Children's Hospitals & Related
National Association of Community Health Centers
National Association of Counties
National Association of County Health Officials
National Association of County Officials
National Association of Developmental Disabilities Councils
National Association of Future Consumers
National Association of Health Career Schools
National Association of Health Service Executives
National Association of Health Underwriters
National Association of Insurance Commissioners
National Association of People with AIDS
National Association of Pharmaceutical Manufacturers
National Association of Private Psychiatric Children's Treatment Centers
National Association of Private Psychiatric Hospitals
National Association of Professional Insurance Agents
National Association of Protection & Advocacy System
National Association of Psychiatric Hospitals Systems
National Association of Public Hospitals
National Association of Rehabilitation Facilities
National Association of Retail Druggists
National Association of Small Business Investment Company
National Association of Social Workers
National Association of State Alcohol and Drug Abuse Directors
National Association of State Mental Directors
National Association for State Health Policy
National Association of Women Business Owners
National Black Caucus of Health Workers
National Black Child Development Institute
National Black Dental Association
National Black Women's Health Project
National Catholic Charities
National Center for Youth Law
National Child Abuse Coalition
National Coalition of Cancer Research
National Coalition of Hispanic Health & Human Services Organizations (COSSMHO)
National Commission on Children Summit
National Commission to Prevent Infant Mortality
National Committee on Quality Assurance
National Conference of State Legislators
�National Consumers League
National Council of Churches
National Council of Community Hospitals
National Council of Senior Citizens
National Council of State Legislatures
National Council on Addiction
National Council on Aging
National Council on Alcoholism and Drug Dependence
National Council on Compensation Insurance
National Council on Independent Living
National Committee to Preserve Social Security & Medicine
National Depressive/Manic Depressive Association
National Easter Seal Society
National Farmers Union
National Federation for Specialty Nursing Organizations
National Federation of Independent Business
National Federation of Societies for Clinical Social Work
National Governors' Association
National Head Injury Foundation
National Head Start Association
National Health Law Project
National Health Policy Council
National Hemophilia Foundation
National Hispanic Council on Aging
National Immigration Law Center
National Institute on Adult Day Care
National Insurance Consumer Organization (NICO)
National Leadership Coalition for Health Care Reform
National Leadership Coalition on AIDS
National League of Cities
National Medical Association
National Mental Health Association
National Minority AIDS Council
National Minority Health Association
National Moving and Storage Association
National Nurse Practitioner Coalition
National Pharmaceutical Alliance
National Pharmaceutical Association
National Prevention Coalition
National PTA
National Public Health and Hospitals Institute
National Retail Federation
National Small Business Legislative Council
National Small Business United
National Task Force on AIDS Prevention
National Women's Health Network
National Women's Law Center
National Commission on AIDS
NCLR
NEIC
Nelson A. Rockefeller Institute of Government, SUNY Albany
New York City
New York Department of Rnance
New York Department of Taxes
New York University
New York Lawyers for the Public Interest
New York Life Insurance Company
NFPRHA
North Carolina A&T State University, School of Nursing
Northwestern University School of Management
�Office of Minority Health, HRSA
Office of Women's Health, U.S. Public Health Service
Ohio Psychiatric Association
Ohio State University, School of Nursing
Oil, Chem. & Atomic Workers Int. Union
Older Women's League
Oregon Health Plan
Oregon Health Science University, School of Nursing
Pan American Health Organization
PAR Pharmaceutical
Partnership for Prevention
PCS
Penn State, Milton S. Hershey Med. Center
PEPCO
Pfizer Inc.
Pharmaceutical Manufacturers Ass.
Phoenix Home Life Mutual Insurance Company
PHS, Office of Population Affairs
Physician for a National Health Program
Physicians Who Care
Planned Parenthood Federation of America
PPOs
Preferred Health Care
Premier Hospitals Alliance, Inc.
President's Committee on Employment of People w/ Disabilities
Price Waterhouse
Princeton University
Prudential Life Insurance
Public Citizen
Public Health Service
Rainbow Babies Children's Hospital, OH
Rainbow Coalition
Regional Insurers
Regional Medical Center, Memphis
Rockefeller Foundation
Roswell Park Cancer Institute
Rutgers, College of Nursing
Saint Louis University. School of Nursing
Save the Children
Schering-Plough
Screen Actors Guild/AFTRA
Searle
SEIU
Select Narcotics Subcommittee
Self Help for the Hard of Hearing
Self Insurance Institute of America
Seminar Group of Experts
Shering Plough
Shriners
Siegel Company
SmithKline Beecham
SMS
Society of Thoracic Surgeons
Society on Gen. Internal Medicine
South Carolina Depaament of Mental Health
South Main Center Association, Houston
Southern California Healthcare Network
St. Agnes Community Medical Center
State Farm Insurance
Stanford University
�PHYSICIANS ADVISORY GROUP AND WORKING GROUP MEMBERS MET WITH THESE PEOPLE
ACEVEDO, JAMES
ALCORN, MERRIT, MD
ALUM. JEROME, MD
BENDIXEN. HENDRICK. MD
BENNET, ALAN
BENSON, JOHN. MD
BUM, DONALD, MD
BOSNAK, ROSEMARIE
BOWEN. JOHN. MD
BOXER, RICHARD, MD
BRISTOW, LONNIE, MD
BURCIAGA, RAUL,
BUTLER, ROBERT, MD
CAREY, WILLIAM. MD
CARPENTER, CHARLES, MD
CASSEL. CHRISTINE, MD
CHUCKER, FRANK, MD
CLAGHORN, DEAN, EDD
COHN, DEBRA, ESQ.
CONNERTON, PEGGY
COPELAND, ROBERT, MD
CORUN, RICHARD, MD
COYLE, JOSEPH, MD
DE LA TORRE, ADELA, MD
DELGADO, JANE
DIAZ. JOE, MD
DICKEY, NANCY. MD
DOZORETZ, RONALD, MD
ECKSTAT, STEVE R.. DO
EDWARDS, ADRIAN, MD
EHRAT, KAREN S., PH.D
ElSENBERG, JOHN, MD
ELLIOT. LARRY P.. MD
FALCON, ANTONIO. MD
FASTWOLF, STEPHEN, RPT
FREEDMAN, PAUL
GAFFNEY, TERRY, RN
GALLIN, PAM, MD
GREELY, HENRY. MD
GRIEF, PAUL, MD
GUICE, KAREN, MD
GUTIERREZ, NILSA, MD
HACHTEN, RICHARD, MHA
HANSON. JIM, MD
HARTMANN, MARLENE
HEGARTY, STEVE, MD
HENION, JULIA
HEYSSEL, ROBERT, MD
HILL, LAWRENCE, DDS
HILL, HUGH F., MD, JD
HOCKSTETTER, SUSAN
HOPKINS, SUE
HOUPT, JEFFREY. MD
HOWLEY, JOHN
KLIMBERG, V. SUZANNE
KOHRMAN, ARTHUR
KYLE, REGINA, MD
�LANSTEIN. JOEL
LEVIN, MICHAEL S.
LEVINE, HOWARD, JD
LEVY, RICHARD, JD
UERMAN, TERRY
LOH, IRV, MD
LOPEZ, OSVALDO
MARGOLAS, ROBERT, MD
MAYNARD, DOUGLAS. MD
MCDONALD, JOHN
MCKANE, STEVE URANGA, DDS
MORALES, SUSAN, MD
NETTLESHIP, MAE, MD
NORTON, MEG. RN
ODEN, CLYDE, DO
OFFIT, KENNETH. MD
PAROLY, WARREN, MD
PIERCE, PHILLIP, PHD
REYNA, ROBERT, MD
SAVINO, PETER, MD
SCHETTMAN, MARY ELLEN, MD
SCHEUR, BARRY, JD
SCHLACKERMAN, NEIL, MD
SCHNEIDER, DON
SLAVEN, JOHN, MD
SOLOMONT, ALAN, MD
SPAETH, GEORGE L , MD
STRINGER, MIKE
TAKEY, CHRIST, MD
TANGALOS, ERIC
VOLLA, STEVE
WARD, JANET. RN
WATERS, ROBERT
WESTBROOK, KENT
WESTBROOK. KENT, MD
�4/19/93
WORKING GROUP MEMBERS MET WITH THESE CONSUMERS
ALLEN, ELIZABETH
ALLEN, KARIN
ALLEN, JOHN
APPLETON, MILES
APPLETON, MRS.
ARIO, JOEL
ARNOLD, JENNIFER
BAKR. SADDIQ
BENN, RICHARD
BENN, MINDY
BIDDLE, CORNELIA
BIDDLE, MR.
BLACKFORD, ALLEN
BLAISDELL, CARMI T.
BOBO, YANCEY
BORELLI, MARYANNE
BRADEN, RON
BREWER, TOM
BROOKTER, MARIE
BROWN, MARRISA
BRUBAKER, RACHEL
BURKHOLDER, DIANE
BUTTERWORTH, MEG
BYRNE, ROBERT
CAIN. ELIZABETH
CALDAGHAN, LAURIE
CAPLINS. KATHY
CAVANAUGH, CAROL
CHRISTCH, KAREN
CICLER, BONNIE
CLEGHORN. STEVEN
COXON, EUNICE
CROSS, EASON
CULBERTSON. CHARLES
CURRIE, JIM
DE'ALLESANDRO. OLYANDA
DERATTO, PATRICIA, A.
DEW1ND, ELLEN
DOBBUNS, JUDITH
DORSEY, CAROL
ECONOMOU. KATINA
ELKIND, EDWARD
ESBHEACH,SHERYL
EWELL, STACY
FALL, PENNY
FINNELY, CAROL
FISHER, DANIEL
FLANAGAN MONTGOMERY. DIANE
FRANCO. CAROL
CITIZEN ACTION
CITIZEN ACTION
•ON OUR OWN'
INTAKE
INTAKE
CONSUMER FEDERATION
INTAKE
CCNV
INTAKE
INTAKE
INTAKE
INTAKE
INTAKE
INTAKE
CCNV
HOMELESS NURSE
INTAKE
INTAKE
INTAKE
INTAKE
INTAKE
AARP
WHITE HOUSE VOLUNTEER
R.I. SCHOOL NURSE
INTAKE
INTAKE
CALLED AFTER HCTF HEARING
FAMILIES USA
JOBS FOR HOMELESS PEOPLE INC.
INTAKE
INTAKE
INTAKE .
INTAKE
INTAKE
INTAKE
CONSUMER FEDERATION
COALITION FOR THE HOMELESS
INTAKE
CITIZEN ACTION
HOMELESS LEGAL FUND
FAMILIES USA
INTAKE
INTAKE
CCNV
PSYCHIATRIST
PRIVATE INDUSTRY COUNCIL
INTAKE
�GALLO, TONY
GARZA, ANDY
GEARHART, CHARLIE
GENRICH, CHUCK
GEUARTER, MARY L.
GLENDENING, ANNE
GOTCHUS. JANELLE
GURUK. CHERYL
HALF1LL, MARY
HARLAN, JOHN
HAWKINS, EDITH
HOLBROOK, TERI
HUDSON. WINSON
HUFF, BARBARA
JACKSON, SYLVIA
JAEGER. SUSAN
JEHLE, CARLYN
JOHNSON. EARLANE
JOHNSON, CONCHA
JONES, RICHARD
KACHANIS, ANNE MARIE
KRANZ, SHIRLEY
KRANZ, HARRY
LACEY, DR. BERNADINE
LAWHICZAK, JOHN
LEECH. IRENE
LIGHT, JANIS
LONGA, BARBARA
LUCKHARD, BILL
MARLAN, HOPE
MAST, DAVID
MAST, SUZANNE
MATEER. SUSAN
MATEER, RON
MAWER, MARTHA
MAYS, KATHY & FRIEND
MCCALL, ELLA
MCELDOWNEY, KEN
MCKENNA, THERESA
MCLEOD. ANNE
MCNABB, WANN
MEIU, STEVE
MILLER, LINDA
MITCHELL. KEITH
MITCHELL. LOIS
MITCHELL. REGENE L.
MOEHRLE, GEORGE
MONTGOMERY, DOROTHY
MOORE, TERRY
MUNDELL, MR.
MUNDELL, PAMELA
NAULT. LORRAINE
NELSON, DAVID
NEWELL, BETTY
NEWELL, KATHLEEN
OBRACHTA. CAROL
OLINICK, JULIAN
OLINICK, MR.
ONWUCHUKEWA, DIANE
PACHECO. GUADELUPE
FAMILIES USA
CCNV / NEW WAY RECOVERY, INC.
CITIZEN ACTION
INTAKE
INTAKE
DC HEALTH CARE FOR THE HOMELESS
CONSUMER FEDERATION
INTAKE
FAMILIES USA
GREEN DOOR
BALTIMORE COUNTY SCHOOL NURSE
HEAD START - MISSISSIPPI
INTAKE
INTAKE
R.I. SCHOOL NURSE
INTAKE
NATIONAL COUNCIL OF SENIOR
INTAKE
R.I. SCHOOL NURSE
NATIONAL COUNCIL OF SENIOR
NATIONAL COUNCIL OF SENIOR
CCNV
NATIONAL COUNCIL OF SENIOR
CONSUMER FEDERATION
INTAKE
R.I. SCHOOL NURSE
AARP
CITIZENS
CITIZENS
CITIZENS
CITIZENS
FAMILIES USA
FAMILIES USA
INTAKE
INTAKE
INTAKE
INTAKE
SOCIAL WORKER
CONSUMER FEDERATION
NATIONAL COUNCIL OF SENIOR CITIZENS
NATIONAL COUNCIL OF SENIOR CITIZENS
INTAKE
CONSUMER FEDERATION
INTAKE
CCNV
CCNV
CONSUMER FEDERATION
CITIZEN ACTION
INTAKE
INTAKE
INTAKE
INTAKE
R.I. SCHOOL NURSE
INTAKE
FAMILIES USA
FAMILIES USA
INTAKE
INTAKE
INTAKE
PAUL JACKSON
�PARKE. ANNE
POWERS, SHERYLE
QUINUN. MARY JO
REES, BEVERLEY
RESSALLOT. JUDY
ROADS. DAVID
ROBERTS. MR.
ROBERTS, LOIS
ROBINSON. VIRGINIA
ROBINSON, BRENDA
ROGAN, SUSAN
ROURKE. JOSEPH
RUSSO. TONY
SCHULER. MELINDA
SEARLE-WHITE. LISBET
SEGU. MARY & DAUGHTER
SIMONTON, THOMAS
SMITH. SHIRLEY
STAFFORD, THOMAS
STARKWEATHER, LYNNE
STARKWEATHER, MR.
STEWART, SARAH JANE
SUMMERS, ROBERT
TAYLOR. SISTER CAROL
THOMAS, JACKIE
THURMAN, RANDY
VEIDT. CYNTHIA
WALKER, JANICE
WALLA CH, FRANKLIN
WAYMAN, ROSA LEE
WEDGE. SYLVESTER
WEINSTEIN, CAROLE
WHEYNNERY, MARIE
WILLIAMS, FRANCENE
WINANS. JEFFREY
WOODY. WILLIAM
WRIGHT, OLGA
WYATT. HUGH
NATIONAL COUNCIL OF SENIOR CITIZENS
INTAKE
R.I. SCHOOL NURSE
INTAKE
INTAKE
INTAKE
INTAKE
INTAKE
INTAKE
INTAKE
CONSERVE
INTAKE
INTAKE
SEGU
AARP
INTAKE
INTAKE
INTAKE
FAMILIES USA
CENTER FOR CLINICAL BIO-ETHICS
AARP
INTAKE
HARTFORD SCHOOL NURSE
NATIONAL COUNCIL OF SENIOR CITIZENS
CCNV
INTAKE
CCNV
GREEN DOOR
INTAKE
NATIONAL COUNCIL OF SENIOR CITIZENS
WILLIAM RAMSEY SCHOOL NURSE
PAUL JACKSON
�THE HEALTH CARE TASK FORCE VISITS
ACROSS THE COUNTRY
Scheduled through June 1993
Arizona
Phoenix
Scottsdale
Tuscon
Arkansas
Little Rock
California
Anaheim
Long Beach
Los Angeles
Manhattan Beach
Pebble Beach
San Diego
San Francisco
San Jose
Santa Cruz
Whittier
Colorado
Denver
Connecticut
Hartford
District of Columbia
Washington
Florida
Miami
Orlando
St. Petersburg
Tampa
Georgia
Atlanta
As of 05/13/93
�Illinois
Chicago
Iowa
Des Moines
Kentucky
Louisville
Louisiana
New Orleans
Maryland
Baltimore
Bethesda
Rockville
Massachusetts
Boston
Michigan
Dearborn
Detroit
Minnesota
Duluth
Minneapolis
Missouri
Kansas C i t y
St. Louis
Montana
Billings
Nebraska
Lincoln
New Jersey
Newark
Trenton
New York
Ithaca
New York City
North Carolina
Raleigh
As of 05/13/93
�North Dakota
Bismarck
Fargo
Grand Folks
Ohio
Columbus
Oklahoma
Tulsa
Pennsylvania
Philadelphia
Pittsburgh
Harrlsburg
South Carolina
Charleston
Hilton Head
Tennessee
Memphis
Nashville
Texas
Austin
Dallas
San Antonio
Virginia
Alexandria
Arlington
Richmond
Washington
Puget Sound
Seattle
West Virginia
Charleston
Morgan town
Wheeling
Wyoming
As of 05/13/93
�Jackson Hoie
As of 0 5 / 1 3 / 9 3
�HEALTH CARE EVENTS
Scheduled through May 1993
LOCATION
DATE
EVENT
Tucson
05/13/93
Council of Presidents
Scottsdale
05/24/93
U.S. Public Health Service
Professional Association
04/20/93
Center for Substance Abuse
Treatment
Los Angeles
04/19/93
Surgeon General's Hispanic/Latino
Regional Health Meeting
Los Angeles
04/20/93
National Council on Aging
Whittier
04/25/93
Mark Twain Democratic Club
San Jose
05/08/93
National Health care for the
Homeless
Pebble Beach
05/14/93
CA Assoc. of Prepaid Dental Plans
San Francisco
05/17/93
Society for Academic Emergency
Medicine
San Francisco
05/17/93
Leadership Institute
Manhattan Beach
05/19/93
Hemophilia 2000
Ukiah
05/22/93
Rep. Hamburg's Town Hall Meeting
Arizona
Arkansas
Little Rock
California
As of 05/13/93
1
�LOCATION
DATE
San Francisco
05/24/93
EVENT
American Psychiatric Association
Colorado
05/03/93
Denver
National Indian Health Board
Connecticut
Stamford
05/21/93
WEB of CT Health Care Symposium
Washington
03/08/93
American Psychological Association
Washington
03/12/93
Small Businss Legis Council
Washington
03/12/93
National Conference of State
Legislators
Washington
03/15/93
American Psychiatric Association
Washington
03/18/93
National Rural Health Board
Meeting
Washington
03/23/93
American Association of Colleges of
Nursing
Washington
03/30/93
National Association of Childrens
Hospitals and Related
Institutions
Washington
03/30/93
American Business Conference
Washington
04/01/93
American College of Physicians
Washington
04/06/93
National Wholesale Druggists
Association Meeting
District of Columbia
As of 0 5 / 1 3 / 9 3
�LOCATION
DATE
EVENT
Washington
04/07/93
League of Women Voters Meeting
Washington
04/07/93
Richard Schrushy Meeting
Washington
04/07/93
American Farm Federation Meeting
Washington
04/12/93
Older Women's League Campaign for
Women's Health
Washington
04/12/93
Center for the Advancement of
Health
Washington
04/13/93
National Managed Health Care
Washington
04/13/93
Center for National Policy
Washington
04/14/93
National Federation of Mental
Health
Washington
04/14/93
Prevention Intervention and
Treatment for Health & Wellness
Coalition Meeting
Washington
04/15/93
Federated Council for Internal
Medicine
Washington
04/15/93
Greenbrier Study Group Meeting
Washington
04/15/93
Wine Institute Meeting
Washington
04/16/93
Public Relations Society of America
Washington
04/16/93
American College of Cardiology
Washington
04/17/93
Association of American
Universities and Nat'l Assoc of
Land Grant Colleges
Washington
04/17/93
Alzheimer's Association
Washington
04/19/93
Health Industry Distributors
Association Meeting
As of 05/13/93
�LOCATION
DATE
EVENT
Washington
04/19/93
National People's Action
Washington
04/19/93
Teachers of Preventive Medicine
Washington
04/20/93
Blue Cross/Blue Shiled of VA
Washington
04/20/93
Health Executives Roundtable (MGMA,
AMA, AHA, PMA, WBGH, AARP, Chamber,
AAMC)
Washington
04/22/93
Association of Schools of Public
Health Meeting
Washington
04/22/93
National Grocers Association
Meeting
Washington
04/23/93
Congressional Youth Leadership
Council
Washington
04/25/93
National Association of Psychiatric
Treatment Centers
Washington
04/26/93
Foster Higgins Meeting
Washington
04/28/93
American Federation of Home Health
Agencies Meeting
Washington
04/28/93
National Council of Senior Citizens
Meeting
Washington
04/28/93
PITCH
Washington
04/28/93
National Association for Home Care
Washington
04/29/93
National Association of
Manufacturers
Washington
04/29/93
AHA, Congress of Hospital Trustees
As of 05/13/93
�LOCATION
DATE
EVENT
Washington
04/29/93
National Association of Managed
Care Physicians
Washington
04/30/93
Academy of Nurse Practitioners
Washington
04/30/93
Health Care For All
Washington
05/02/93
National Coalition of Hispanic
Health and Human Services
Organization
Washington
05/02/93
American Academy of Dermatology
Washington
05/03/93
National Medical Association
Washington
05/03/93
American College of OB-GYN's
Washington
05/05/93
Lehman Brothers
Washington
05/05/93
Combined Jewish Philanthropies of
MA
Washington
05/07/93
World Conference of Mayors Meeting
Washington
05/07/93
Conference Board
Washington
05/10/93
International Foundation of
Employee Benefit Plans
Washington
05/11/93
National Women Business Owners
Meeting
Washington
05/11/93
Small Business United Meeting
Washington
05/11/93
Direct Market Institute Meeting
Washington
05/11/93
Business Roundtable
Washington
05/12/93
National Manufacturers Association
Washington
05/12/93
Nurses of America
As of 05/13/93
�LOCATION
DATE
EVENT
Washington
05/12/93
Howard University Hospital Nurses
Week
Washington
05/12/93
National Health Policy Forum
Washington
05/13/93
National Pediatric AIDS Resource
Center
Washington
05/13/93
National Tooling and Machine
Meeting
Washington
05/13/93
Chamber of Commerce Meeting
Washington
05/14/93
National Association of
Rehabilitation Centers
Washington
05/14/93
Public Officials Spouses from Rep.
Fingerhut's district (D-OH)
Washington
05/14/93
Church Alliance Meeting
Washington
05/14/93
Legal Review Group
Washington
05/14/93
American Psychiatric Association at
St. Elizabeth Hospital
Washington
05/15/93
American College of Radiation
Oncology
Washington
05/15/93
National Multiple Sclerosis Society
Washington
05/17/93
American Managed care & Review
Association
Washington
05/17/93
CEO Institute, * Carol Rasco
Washington
05/17/93
Brookings Institution, "Inside DC"
Washington
05/18/93
Coalition for Health Funding
As of 05/13/93
�LOCATION
DATE
EVENT
Washington
05/19/93
American Medical Peer Review
Association
Washington
05/20/93
National Health Policy Council
Washington
05/20/93
Interhealth
Washington
05/20/93
National Health Lawyers Association
Washington
05/20/93
Congress on Ministries Meeting
Washington
05/21/93
National Academy of State Health Policy
Washington
05/22/93
American Federation of Teachers
Washington
05/23/93
National Wellness Coalition
Washington
05/23/93
Society for Human Resource Management
Washington
05/24/93
SEIU Legislative Conference
Washington
05/24/93
American Physical Therapy Association
Washington
05/24/93
American Academy of Pediatrics briefing
Washington
05/26/93
Association of Private Pension and Welfare Plans
Washington
05/26/93
Health Care Leadership Conference
Washington
05/26/93
Women in Government Relations
Washington
05/27/93
President's Executive Exchange
Washington
05/27/93
National Council on Chain Restaurants
Washington
05/28/93
Howard University Town Hall Meeting
As of 05/13/93
�DATE
EVENT
Orlando
04/14/93
Visiting Nurses Association
Miami
04/29/93
Miami Chamber of Commerce
05/29/93
Coalition of Black Trade Unionists
Chicago
04/25/93
HIAA Annual Meeting
Chicago
(via telephone)
05/10/93
Illinois Senate Democratic HCTF
04/29/93
American Association of Health Executives
Bethesda
05/03/93
National Council of Community Mental Health
Centers
Baltimore
05/24/93
National Association of Boards of Pharmacy
05/04/93
National Association of Attorneys General
05/20/93
University of Minnesota Health Sciences
LOCATION
Florida
Georgia
Atlanta
Illinois
Louisiana
New Orleans
Maryland
Massachusetts
Boston
Minnesota
As of 05/13/93
8
�DATE
EVENT
St. Louis
05/10/93
American Infomatics Association
Kansas City
05/12/93
National Rural Health Association
LOCATION
Missouri
New Jersey
Governor Florio's Event (MEG)
Newark
New York
New York City
04/14/93
National Conference of Black Mayors
Ithaca
04/24/93
Cornell Journal of Law and Public
Policy Forum
New York City
04/26/93
City University of New York Lunch
Series
New York City
05/17/93
Rep. Maloney's Town Hall Meeting
New York City
05/24/93
Rep. Maloney's Town Hall Meeting
05/06/93
North Carolina Dept. of
Administration
Grand Folks
03/30/93
Indians Into Medicine
* location
unspecified
04/24/93
Women's Democratic Association of
North Dakota
North Carolina
Raleigh
(via satellite)
North Dakota
As of 05/13/93
�DATE
EVENT
05/07/93
Growing Healthy
Pittsburgh
04/22/93
Blue Cross Blue Shield of Western
Pennsylvania
Pittsburgh
05/04/93
National Urban League
Hilton Head
05/12/93
Computers in Healthcare
Charleston
05/20/93
South Carolina Home Care Association
Nashville
(via satellite)
04/19/93
National Conference on Public
Employee Retirement Systems
Nashville
04/20/93
National Conference on Public
Employees Retirement Systems
Memphis
04/23/93
National Black Caucus of State
Legislators
Nashville
05/01/93
American College of Health Care
Administrators
San Antonio
04/22/93
Medical Records Institute Symposium
Austin
05/18/93
American Urological Association
LOCATION
Oklahoma
Tulsa
Pennsylvania
South Carolina
Tennessee
Texas
As of 05/13/93
10
�LOCATION
DATE
EVENT
Arlington
03/22/93
Association of Academic Health
Centers
Arlington
03/25/93
National Association of Residential
Care Facilities
Arlington
04/22/93
Council for Affordable Health Care
Arlington
05/19/93
National Hospice Organization
Richmond
05/19/93
Virginia Health Council
04/16/93
Group Health Cooperative
04/19/93
West Virginia Primary Care
Association
04/20/93
West Virginia University Law School
Panel
05/21/93
West Virginia Human Resources Association
05/25/93
World Health Organization
Virginia
Washington
Seattle
West Virginia
Wheeling
Morgantown
Morgantown
Europe
Luxembourg
As of 05/13/93
12
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
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Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Care Reform] [3]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 8
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621461" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
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5/7/2015
Source
A related resource from which the described resource is derived
17621461
12093636
42-t-12093636-20060885F-Seg5-008-001-2015
-
https://clinton.presidentiallibraries.us/files/original/3b8882c1c950dc5e666711d4f33b54aa.pdf
4d351c5a8e3244ef8269861621aba1e4
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Care Reform] [2]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
��CONSTITUENCY-SPECIFIC TALKING
POINTS
�CONSUMERS
�CONSUMERS AND HEALTH CARE:
The Clinton plan offers a bold new direction for
health
care in America and provides health security to all
Americans. The plan will overhaul the system
fundamentally,
controlling costs and improving
access
to care while maintaining the high quality and choice
of doctors Americans
expect.
Controlling Costs: The President's plan will tackle the growth of health
care costs that threaten to place health insurance protection beyond the
means of a growing number of Americans. It will ensure that the cost of
health care never rises faster than the cost of inflation.
Security: The Clinton plan will guarantee health security to every
American. No longer will the protection of health insurance depend on
your job, your health, your income or your age. Exclusions for preexisting conditions will be eliminated. Health plans will enroU all
applicants within a community — whether they're healthy or sick — at
the same rate.
Comprehensive Benefits: All Americans will receive a card that
represents their right to a guaranteed comprehensive benefit package,
including preventive services, well-child checkups and mental health
services.
Choice of Health Plans: Consumer choice is the cornerstone of the
Clinton plan. Americans, not their employers nor insurance companies,
will choose their health plans through local alliances. These group
purchasers also will monitor plans for quality and provide consumers
with information they need to make good decisions.
Choice of Doctors: The right to choose your own doctor is a hallmark
of American medicine. Preserving this right for all Americans is at the
center of the Clinton plan.
e
Simplicity and Affordability: People will know what coverage they are
getting, how much it will cost, and how to use it.
�CONSUMERS AND HEALTH CARE:
The Clinton Plan
Under the new system all Americans will be guaranteed
health insurance coverage for a comprehensive
benefit
package.
The Clinton plan will improve access to care,
control costs, and maintain the high quality
Americans
expect.
How it Works:
e
Offering Insurance: Consumers will obtain insurance through health
alliances, group purchasers that will offer a choice of plans to people in a
community. Each state will design its alliances to best meet the needs of
the people of that state. Plans wishing to offer coverage for the
comprehensive benefit package must enroll everyone in the community
at the same price. Alliances will negotiate with insurance companies
and health plans to set appropriate prices. Prices may vary from plan to
plan depending on how efficient they are in providing care.
e
Choosing a Plan: All Americans will receive a health security card that
represents their guarantee of access to a comprehensive benefit package.
Consumers, not employers, will choose their health care plan, from a
variety offered by alliances ranging from traditional fee-for-service to
HMOs. The alliances will provide consumers with information so that
they can make an informed decision about the plan which is right for
them.
e
Choosing Your Doctor: Once consumers have selected their health
plan, they will choose their doctor according to the rules of the plan —
just as they do now. If they select an HMO or preferred provider
arrangement, they will select their doctor from the list of physicians who
participate. Consumers can select a physician outside of the plan if they
are willing to pay more. If they choose a fee-for-service approach, they
can see any provider they want.
e
Paying for coverage: Consumers will pay a share of the cost of their
coverage with the balance paid by their employer. Employers may
choose to pay a larger share than they are required to pay. Individuals
who cannot afford their share of the premium will be eligible for
government subsidies based on income.
e
Paying for care: The plan will pay for services guaranteed in the
comprehensive benefit package, with reasonable cost-sharing
arrangements on their own or through negotiating with their employers
�and limits on the amount out-of-pocket expenses charged to the
consumers.
�CONSUMERS AND HEALTH CARE:
Questions and Answers
Q:
Will I still be able to see my own doctor?
A:
Yes. Allowing people to choose their own doctor is a hallmark of
American medicine. The Clinton plan preserves this right and expands
it by giving consumers a broader range of health plans from which to
choose. Under the Clinton plan, consumers will no longer be restricted
to a single health plan offered by their employers. Instead, they will
choose from a variety of plans that will provide them access to a greater
selection of doctors.
Q:
Will health reform reduce my current benefits?
A:
No. The guaranteed comprehensive benefits package will be modeled on
the best of today's insurance plans. These benefits will be guaranteed to
all Americans. No longer will workers face the tradeoff between health
benefits and higher wages. No longer will retirees have to worry about
losing their negotiated health benefits — benefits they plan and depend
on. In fact, most Americans will face a broader range of choices for
health care plans covering a greater variety of services than they do
today. For workers with contracts that provide more costly coverage
than the guaranteed benefit packages, the coverage will continue for the
duration of the contract.
Q:
Will my care be limited in any way?
A:
No. Those who oppose reform often raise the specter of health care
rationing to scare consumers and undermine prospects for reform. The
truth is that health plans competing on the basis of service and quality
to attract and retain patients, there will have every incentive to provide
necessary care on a timely basis. In addition, health alliances will
protect consumers and ensure that health plans provide appropriate
high-quality care.
Q:
Will I still obtain my health insurance through work?
A:
Yes, most Americans will continue to receive their insurance through
their jobs. Under the President's plan, employers will continue to
contribute to the cost of employees' health insurance. In fact, many
more people, including those who work for small businesses, now will be
�insured through their Job. Under the new system, rather than employers
choosing the insurance plan available to employees, employees will
choose their own plans through the health alliances.
9:
What happens if I lose or change my jobs?
A.
You will still be covered. Health insurance coverage will no longer
depend on whether you work or where you are employed. Employees
will choose their health plans through local health alliances and once
they are covered, they will always be covered. Even if they change or
lose their job. workers who become unemployed will receive assistance to
help pay their premiums until they find a new Job.
9:
Can I be denied insurance coverage because of a pre-existing
condition?
A:
No. Excluding individuals from coverage because of so-called preexisting conditions is one of the major failings of our current health
insurance system. A primary reason why so many Americans do not feel
secure in their health care coverage. All health plans will be required to
take all applicants, regardless of health status, and change the same
rate they charge others in the community.
9*'
Does my coverage extend to my family?
A:
Yes, and, with a greater range of health plans to choose from, you will be
better able to meet the health needs of your family.
9:
Will all plans cost the same?
A:
The cost of plans may vary but all will deliver the guarantee
comprehensive benefit package. Rates will vary. Each plan will
negotiate with alliances to set the price at which they will provide the
comprehensive benefit package. Plans will compet ont he basis of
quality, service, and price. Plans that streamline administration and
privide efficient care will charge less fo the same package.
9:
Will I pay more for health care?
A:
People who have insurance now are already paying for people who do not
have insurance. It is not that the uninsured do not get care, they delay
seeking care until their condition becomes more expensive to treat and
�then seek care in more expensive settings such as hospital emergency
rooms. By covering all Americans and stressing primary and preventive
care, the President's plan will end cost-shifting from the uninsured to
the insured. If you currently have insurance, the President's plan will
provide a broader range of choices, many of which will be more cost
effective than today's plans. If you do not have insurance, you will be
asked to contribute to the cost of your coverage, but your contribution
will be based on your ability to pay.
Q:
How will quality be assured?
A:
The federal government will create a national system of quality
assurance that will be enforced by the states. In addition, health
alliances will provide information about on customer satisfaction with
health plans. Armed with this information, consumers will be able to
take their business to plans that do the best job of providing care.
Q:
Will I have to wait a long time for care?
A:
No. Those who oppose reform often raise the specter of rationing of
health care to scare consumers and undermine reform. The truth is that
with health plans competing on the basis of service and quality, to enroll
and keep patients, they will have every incentive to provide care on a
timely basis.
�CONSUMERS AND HEALTH CARE:
The Current System
RISING HEALTH CARE COSTS PUT PINCH ON CONSUMERS:
e
Over the last decade, the amount the average American family spent on
health care more than doubled (from $1,742 to $4,296) and is projected
to double again by the year 2000 if nothing is done to control costs.
[Families USA]
CURRENT SYSTEM FAILS GROWING NUMBER OF CONSUMERS:
e
100.000 Americans lose their health Insurance each month. [Washington
Post 1/26/93]
e
57 million Americans will be without health insurance for some period
this year. [Families USA]
CONSUMERS ARE AT RISK FOR PRE-EXISTING CONDITION EXCLUSIONS:
e
Pre-existing condition rules, which bar or limit insurance coverage to
those with health conditions, are included in 69 percent of employer
provided health insurance policies. [Foster Higgins Survey, 1991]
LACK OF INSURANCE CHOICES LIMITS JOBS OPPORTUNITIES:
e
Nineteen percent of workers say they or their families face "job lock"
because new jobs offer limited or no health insurance or because they
have health problems that would be considered "pre-existing"
conditions. [Henry J. Kaiser/Louis Harris and Associates survey, Oct. 2 4, 1992]
Under our current system, purchasing insurance and filing claims for benefits
can be a major headache for consumers. Policies contain different levels of
benefits, co-payments and deductibles. Comparisons are confusing even for
the most informed consumer. Objective information on quality and service is
difficult to find.
Filing claims is also difficult and time-consuming due to complicated
reimbursement schemes and lengthy forms. Claims forms vary from company
to company and form policy to policy. Those with more than one insurance
policy can often confront a mountain of paperwork.
�DISABLED AMERICANS
�PEOPLE WITH DISABILITIES AND HEALTH CARE:
The Clinton plan will promote independence and
empowerment for disabled Americans by ensuring them
health insurance protection, guaranteeing them a
comprehensive benefit package including
prevention
and long-term care and preserving their right to choose
their own doctor.
Insurance Reform: With health reform. Americans who have disabilities
will no longer be denied health insurance protection because of health
status. The President's plan will eliminate exclusions for so-called preexisting condition. Health plans will be required to enroll all applicants,
including people with disabilities. Individuals will be charged the same
rate, regardless of whether they're healthy or sick, young or old.
Security and Independence; The Clinton plan will build on the
foundation laid by the Americans with Disabilities Act to empower
persons with disabilities to live productive and independent lives.
Disabled Americans no longer be limited in their choice of where they
work or where they live because of concerns over insurance coverage.
All Americans will have guaranteed access to the same comprehensive
benefit package.
Long-Term Care: Long-term care services, particularly, home and
community-based care, are critical to the independence of persons with
disabilities. Home and community-based care are an integral part of the
Clinton reform package.
Choice of Doctors: The right to choose your own doctor is a hallmark
of American medicine and matter of particular concern for people with
disabilities. The Clinton plan preserves this right for all Americans. In
addition, the Clinton plan will foster better coordination between health
providers so that people will receive the care they need when they need
it.
Single Claim Form: Under the Clinton reform, all plans will use the
same easy-to-understand claim form.
�PEOPLE WITH DISABILITIES AND HEALTH CARE:
The Clinton Plan
Under the new system all Americans,
Americans, will be guaranteed health
with a comprehensive benefit package.
right to choose your own doctor while
of care. Disabled Americans will also
the cost of long-term
care.
including
disabled
insurance
coverage
It will preserve the
improving
coordination
be protected
against
How it Works:
Health Care Services: Disabled Americans will have access to the same
high-quality medical care delivered through the same system and at the
same price as for other Americans. (See description of Clinton Plan
under Consumers and Health Care).
Long-Term Care Services: Home and community-based long-term
care, including personal assistance services, will form an integral part of
the benefit package, providing many disabled Americans with the
freedom to live productive and independent lives.
�PEOPLE WITH DISABILITIES AND HEALTH CARE:
Questions and Answers
Q:
Will I get personal assistance services?
A:
Yes. some expanded access to personal assistance services will be
included in the long-term care package. These services build on the
foundation laid by the Americans with Disabilities Act and aid people
with disabilities to lead independent and productive lives.
Q:
Will I still be able to see my own doctor?
A:
Yes. allowing people to choose their own doctor is a hallmark of
American medicine. We understand how important this right is to all
Americans but particularly to persons with disabilities. The Clinton plan
preserves this right and ensures that disabled Americans will be able to
choose a doctor who understands the special health needs of people with
disabUities.
Q:
Will my current benefits be reduced?
A:
No. The comprehensive benefits package in the Clinton plan is based on
the best of today's plans. These benefits will be guaranteed to all
Americans. Disabled Americans will no longer have to choose between a
job and health care coverage. No longer will people with disabilities be
locked into jobs because changing Jobs could jeopardize their insurance
coverage. In fact, most Americans will face a broader range of choices
for health care plans covering a wider array of services than they do
today.
Q:
Will the program cover long-term care?
A:
We understand the importance of long-term care services for disabled
Americans of all ages. The Clinton reform package includes expanded
coverage for home and community-based care to help people with
disabilities lead independent and productive lives. In addition, the
federal government will set national standards for private long-term care
insurance to improve quality of policies and ensure they provide value.
Q:
Will my care be limited in any way?
A:
No. Those who oppose reform often raise the specter of rationing of
health care to scare consumers and undermine attempts at reform. The
�truth is that health plans competing on the basis of service and quality
to attract and retain patients, will have every incentive to provide
necessary care on a timely basis.
Q:
Will I lose any of the services I currently receive under Medicaid?
A:
The comprehensive benefit package will cover most of the services you
now receive under Medicaid. Any additional services will continue to be
provided by the Medicaid program.
Q:
Will I have to join a managed care plan?
A:
No. Over the years, concerns have been raised that managed care plans
may have financial incentives to delay or withhold care, a particular
concern for people with disabilities. Under the Clinton plan, Americans
will be able to choose between traditional fee-for-service plans and
managed care plans. All plans will be monitored for service and quality
to ensure that whatever plain you choose, you will receive the care you
need when you need it.
Q:
Will I still get my health insurance through work?
A:
Yes, most Americans will continue to get their insurance through their
Jobs and, employers will continue to contribute to the cost of their
employees' health insurance. In fact, many more people, including those
who work for small businesses, will now be insured through their job.
Under the new system, rather than employers choosing the insurance
plan, employees will choose their own plans from those offered through
the health alliance.
Q:
What happens if I lose my job or change my job?
A:
You will still be covered. Health insurance coverage will no longer
depend on whether you work or where you are employed. Employees
will choose their own health plan through their local health alliance.
Once they are covered they will always be covered even if they change or
lose their job. Assistance to help them pay their premiums will be
provided to those who become unemployed.
Q:
Can I be denied coverage because of a pre-existing condition?
A:
Absolutely not. Since people with disabilities experience exclusions at a
�much higher rate them other Americans, their insurance status is much
more tenuous. Under the President's plan, all health plans will be
required to enroll all applicants, regardless of health status, at the same
community rate.Excluding individuals from coverage because of a preexisting medical condition is one of the major fallings of our current
system. It is a primary reason why so many Americans do not feel
secure in their health care coverage.
Q:
Will all plans cost the same?
A:
Rates will vary. Each plan will negotiate with alliances to set the price at
which they will provide the comprehensive benellt package. Plans will
compete on the basis of quality, service and price. Plans that streamline
administration and provide efficient care will be able to charge less for
the same package.
9^
How will quality be assured?
A:
The federal government will create a national system of quality
assurance that will be enforced by the states. In addition, the health
alliances will provide information to consumers on customer satisfaction.
Armed with this information, consumers will take their business to plans
that do the best Job of providing high quality care.
9:
Will I have to wait a long time for care?
A:
No. Those who oppose reform often raise the specter of rationing of
health care to scare consumers and undermine at reform. The truth is
that health plans competing on the basis of service and quality to enroll
and keep patients, there will have every incentive to provide care on a
timely basis.
�PEOPLE WITH DISABILITIES AND HEALTH CARE:
The Current System
PRIVATE INSURANCE UNAVAILABLE TO MANY DISABLED AMERICANS
•
Disabled Americans are presumed to be high health care users. Despite
the fact that most are not sick, many are charged higher premiums,
subjected to pre-existing condition exclusions or rejected as
"unacceptable risks."
DISABLED AMERICANS ARE MORE LIKELY TO FACE JOB LOCK
•
When looking for work, people with disabilities face a more limited range
of job choices since smaller businesses are less likely to provide them
with insurance. When they are employed, disabled Americans are more
likely to be locked into a job fearing loss of their insurance if they change
jobs.
INSURANCE PRACTICES FOSTER DEPENDENCE FOR DISABLED
•
Insurance practices threaten not only the security of people with
disabilities but their independence, as well. The ongoing need for care in
the face of limited insurance choices can force people with disabilities
out of work to obtain coverage through Medicaid. In addition, disabled
Americans are more likely to exhaust insurance benefits, reaching the
lifetime limit set on their policies.
DELIVERY SYSTEM PROBLEMS POSE BARRIERS TO SPECIALTY CARE
REQUIRED BY DISABLED AMERICANS
•
Gaps in the health care delivery system — the lack of coordination
between health care providers, and the lack of coverage for preventive
services and long-term care — make it difficult for disabled Americans
to get specialized care.
•
While many think of long-term care as a problem only for older
American, as many as one-third of those in need of long-term care
services are under age 65.
GOVERNMENT PROGRAMS PROMOTE INSTITUTIONALIZATION NOT
INDEPENDENCE
•
Currently, the only government programs that provide assistance.
Medicare and Medicaid, emphasize on nursing home care rather than
home and community-based care. These programs undermine rather
than support efforts of people with disabilities to live independent and
productive lives.
�LARGE EMPLOYERS
�LARGE EMPLOYERS AND HEALTH CARE:
Major American employers have carried the
burden of excessive health care costs for too long,
depressing profits and undermining
competitive
position.
We must solve the health care cost crisis
to improve our major employers'
competitive
position. The Clinton plan will guarantee
that
innovative companies that have led the way in
developing new approaches to health care no
longer pay excessive premiums to compensate for
companies that don't provide coverage and for
under-funded government
programs.
•
Rising Health Costs: The cost of health insurance for businesses'
health costs have risen at an annual rate of almost 15 percent. Some
estimate that if costs to provide health coverage continue to climb at
current rates, employers will pay as much as $20,000 per employee by
the end of the decade.
•
Eroding Competitive Position: Rising health costs undermine
the competitive position of American business and products. The
American health care system adds over $1,100 to the cost of every
automobile made in the U.S. — almost twice as much as
competitor nations.
•
Reforming workers' compensation: Under the current system,
employers pay more than they should for medical care under workers'
compensation. Providers charge about twice as much for these patients
as they do for others; there's double billing; and we're adding to the
unnecessary tests and procedures by requiring them before we'll pay.
Under the Clinton plan, a worker's health insurance will cover workers'
compensation claims to reduce waste in the system.
e
Administrative Simplification: The Clinton plan will cut dramatically
the administrative waste and paperwork that drive up the cost of
insurance for businesses.
•
Self-Insured Health Plans: Many large businesses have led the way In
the movement for health reform by implementing innovative approaches
to the delivery of care for their employees. The Task Force is currently
exploring ways to permit these companies to retain these programs
within the framework of the national reform.
�Consumer Driven System: In a reformed system, the government will
set broad standards and allow plains to compete for members on the
basis of quality and cost. The government will not micro-manage the
system: Health plans will have flexibility to decide how to deliver care
and be held accountable to their members.
�LARGE EMPLOYERS AND HEALTH CARE:
The Clinton Plan
THE CLINTON PLAN WILL HELP BUSINESSES CONTROL COSTS:
Recognizing the need to protect leading businesses from spiralling health care
costs, the Clinton plan will:
Aggressively control the rising costs of health care.
Reform workers' compensation so that businesses don't pay for
duplicate benefits and waste in the current system.
Dramatically cut administrative hassle and paperwork that drive up
the cost of insurance.
Reform the malpractice system to reduce costs while protecting
consumers from poor quality care.
Absorb the medical cost component of automobile insurance to
simplify the system and avoid duplication.
THE CLINTON PLAN WILL PROTECT BUSINESSES FROM COST SHIFTING:
Companies that insure will no longer pay for companies that don't
e
We are going to ask all employers to contribute toward paying for health
insurance for their employees. This approach will reduce costs for
businesses already covering their employees because they will no longer
pay for companies that do not provide coverage.
Large employers will no longer the bear burden of uncompensated care
e
In today's system, large employers pay higher premiums to cover the
cost of uncompensated care for patients who have no insurance. Over
time, costs will go down for these companies in a system that provides
comprehensive coverage for all.
�LARGE EMPLOYERS AND HEALTH CARE:
Questions and Answers
Q:
My company already offers health insurance that provides low cost,
affordable care. Will it be able to continue and will I be able to
remain outside of the health alliance?
A:
The Task Force is working to devise an approach that will allow large
businesses successfully managing comprehensive health plans to
continue to do so within the framework of the reformed health system.
No final decision has been made.
Over time health alliances will prove their value by controlling
costs, creating incentives for all employers to participate.
Q:
I'm afraid that the new system will not really control costs. How
can I know this approach will control costs?
A:
In the last 5 years, health care costs for employers have risen almost 15
percent every year. That's why a tough approach to controlling costs is a
cornerstone of the Clinton plan. Providing universal coverage and a
comprehensive benefit package will cut uncompensated care costs.
Insurance reform, streamlining administration, and folding in workers'
compensation and auto insurance health coverage will dramatically
reduce paperwork and other administrative costs. In addition, the whole
system — including Medicare and Medicaid — will operate under a
budget as a backstop to contain costs.
Q:
How will this plan end cost-shifting that drives up health costs?
A:
Today, large businesses pay for the many weaknesses in the health care
system. They pay higher premiums to cover the cost of treating patients
who do not have insurance and for public health care programs, such as
Medicaid. Major employers also purchase Insurance for their workers'
spouses, who often work at companies that don't provide health benefits.
That creates a system that isn't fair. The Clinton plan for health reform
will ask all employers to contribute to providing health insurance for
their employees. All Americans will receive a guaranteed, comprehensive
benefit package. Businesses will no longer pay extra to make up for the
uninsured. Under our plan, all businesses will pay a fair price to insure
their employees.
�Q:
Will the federal government micro-manage the new health care
system?
A:
No, the government will not run the reformed health care system.
Consumers will. Competing health plans will form at the local level, with
each plan making its own decisions about how to control costs. Since
costs and conditions differ in each region of the country, the government
will leave much of the design of the new system to the states and local
health plans. If plans do a good job — and deliver high-quality care at
affordable prices — more people will choose to enroll in those plans. If
quality suffers or costs rise for any particular plan, consumers will
switch to more successful health plans.
Q:
My company operates in a number of different states. Today, I
provide health benefits for my employees through one system.
Under reform, will I have to change the way my employees get
coverage?
A:
We understand the concerns of multi-state employers and are
considering special arrangements to meet those concerns.
�LARGE EMPLOYERS AND HEALTH CARE:
The Current System
COMPANIES THAT PROVIDE INSURANCE PAY FOR THOSE WHO DON'T:
•
Companies that provide insurance to their employees paid $11.5 billion
in 1991 to cover spouses and other dependents of their employees who
worked for companies that did not provide insurance. [National
Association of Manufacturers in Washington Post. 5/13/93]
RISING HEALTH CARE COSTS EAT UP BUSINESS PROFITS:
•
For the first time in American history, health care costs exceed business
after-tax profits. [Health Care Finance Review. Winter 1991]
•
American Telephone and Telegraph spends $3 million a day on
employee health benefits. [Christian Science Monitor, 11/21/91]
•
Employers would have saved $1,015 per insured worker in 1992 if
health care costs had grown at the rate of the overall economy from 1980
to 1990. [Robert Wood Johnson Foundation]
IF WE DO NOTHING, COSTS WILL CONTINUE TO EXPLODE:
e
In 1992, American businesses paid almost $4,000 for health care for
each employee — more than twice as much as they paid eight years
before. If the current pace continues, some estimate that this amount
could rise to $20,000 a year for each employee by the year 2000.
[Robert Wood Johnson; Christian Science Monitor, 11/21/91]
e
Health benefits consume an average of 8 percent of payroll today.
Without reform, they will consume as much as 17% by the year 2000.
[Karen Davis. Johns Hopkins University. 1992]
HEALTH COSTS THREATEN U.S. COMPETITIVE POSITION:
e
In 1990, General Motors spent $3.2 billion for medical coverage for its
1.9 million employees and retirees. This was more than the company
spent on steel. Health care costs add $1,100 to the price of every car
made in America — double the cost added to Japanese imports.
[University of Michigan, 1990; TIME, 11/25/92]
�HEALTH CARE DISPUTES ARE THE MAJOR CAUSE OF LABOR DISPUTES:
•
In 1989, reductions in health benefits were a major cause of labor
disputes, accounting for 78 percent of all strike activity — a fourfold
increase since 1986. [Christian Science Monitor]
�SMALL EMPLOYERS
�SMALL EMPLOYERS AND HEALTH CARE:
The Clinton plan for health reform will protect
small business from rapidly rising costs. For
small businesses that provide comprehensive
insurance benefits, the plan will reduce costs —
and gradually phase in coverage for those who do
not now provide benefits. It will bring small
businesses together, giving them the buying power
of large groups to bargain with insurance
companies.
Current System Discriminates: Small businesses are being driven into
bankruptcy by a health insurance system stacked against them. For
many small businesses, insurance practices make it impossible for
owners to purchase health coverage for themselves and their families or
their employees. We can no longer afford to let skyrocketing health care
costs stifle the most vibrant sector of our economy.
Make I t Easier for Small Businesses to Insure: Despite rapidly rising
premiums, most workers are employed in businesses that offer
insurance for their families and employees. The Clinton plan will reduce
health costs for small businesses that provide comprehensive
coverage, and it will provide financial assistance to make it possible
for all small businesses to cover their families and employees.
Insurance Company Reform Will Cut Costs: Under our plan, small
business owners will no longer have to go without insurance and risk
their families' health to avoid bankruptcy. Insurance reform will end the
practice of charging higher rate to small businesses than insurers charge
Exxon or General Electric. Health reform will prohibit insurance
underwriting schemes that send small business premiums through
the roof.
Small businesses will combine their purchasing power to negotiate
with insurance companies for high-quality care at affordable prices.
Reform Workers' Compensation and Cut Waste: Our plain will reform
workers' compensation to cut administrative waste and paperwork
that drive up the cost for small businesses.
Protect Small Businesses: Special interests are already gearing up to
charge that the Clinton plan for health reform will drive small firms out
of business. That's not true. In fact, the Clinton plan will protect small
�businesses, while it controls their costs and helps them provide
adequate health coverage for their families and employees. President
Clinton recognizes the vital role that small business plays in the
American economy and offered an unprecedented set of investment
incentives for small business in his economic package.
�SMALL EMPLOYERS AND HEALTH CARE:
The Clinton Plan
HEALTH CARE REFORM PROTECTS SMALL BUSINESSES
Every business — small and large — will be protected under health reform.
The Clinton plan protects small businesses through these specific steps:
•
Take on insurance companies by preventing them from charging small
businesses more than they charge Exxon or General Electric. The plan
prohibits insurance underwriting schemes that pushes premiums for
small businesses through the roof.
In today's system, if an employee of a small business gets sick,
insurance companies charge exorbitant rates or cancel coverage
altogether. Health reform will ensure that no insurance company can
tell an employer whom to fire or hire because of medical conditions.
•
Phase-in coverage for employees of small businesses that do not now
provide insurance in order to give companies time to adjust to the new
requirement to contribute to coverage.
e
Provide financial assistance to help small businesses insure their
employees.
THE CLINTON PLAN FOR HEALTH CARE REFORM HELPS SMALL
BUSINESS CONTROL COSTS
The Clinton plan will help cut costs for small businesses with these specific
steps:
e
Aggressively control the rising costs of health care.
e
Reform the insurance market to consolidate small businesses in large
purchasing pools that give them the same bargaining power as large
companies. For the first time, small businesses will be able to obtain
high-quality care at affordable prices — like big companies do today.
e
Reform workers' compensation eliminate duplication in the system.
e
Cut administrative waste and paperwork that drive up the cost of
insurance.
•
Increase the tax deduction for health insurance premiums for selfemployed workers to 100 percent.
�SMALL EMPLOYERS AND HEALTH CARE:
Questions and Answers
Q:
I have heard that health reform will drive thousands of small
companies like mine out of business. How will you protect me?
A:
The Clinton plan includes several mechanisms designed to protect small
businesses and help them make the transition to a system that
guarantees their families and employees the health security they
deserve. Small businesses will not be required to begin providing health
coverage immediately. The reforms will be phased in gradually over
time. The federal government also will provide financial assistance for
small businesses that need help in making the transition.
Q:
I am a small business owner who now buys insurance for my family
and my employees. What will your reform do for me?
A:
Health care reform will lower costs for most small businesses that now
provide comprehensive insurance to their employees. Each year your
premiums go up by 50 percent more than premiums paid by large
employers. Our plain will control costs, cut administrative waste and
paperwork that drive your premiums up, and make insuring your
employees easier and more affordable. Small employers and others will
join a health alliances to have more bargaining power in dealing with
health plans. In addition, you and your family will gain the security of
knowing that you will never lose your insurance coverage.
I own a small business and can't afford to give my employees health
insurance. What will your plan do to me?
Q:
A:
Small business owners already risk enough; they shouldn't have to go
without health insurance coverage, risking their families' health security.
Most small businesses today provide their employees with health
coverage. Most of the rest would like to provide that benefit but find it
impossible in a health insurance system that works against their
interests. The Clinton plan will help small businesses provide insurance
to employees at affordable prices through these steps: controlling costs
and making insurance more affordable, regulating insurance companies
and prohibiting discriminatory pricing against small firms, helping small
business gradually move toward covering their employees.
�Q:
I'm afraid that you will not really control my costs. How tough is
your plan?
A:
You're right to worry about rising health costs. Small business
premiums have increased between 25 and 50 percent each year. That's
why a tough approach to controlling health costs is a cornerstone of the
Clinton plan. Under health reform, a national budget will control the
rising costs of health care and dramatically cut the paperwork that
drives up insurance costs for small businesses today.
�SMALL EMPLOYERS AND HEALTH CARE:
The Current System
MOST SMALL BUSINESSES CURRENTLY PROVIDE HEALTH INSURANCE:
•
Despite rising health insurance premiums, about 75 percent of
businesses with fewer than 100 employees provide coverage. [Employee
Benefit Research Institute; New York Times. 5/3/93]
SMALL BUSINESSES' HEALTH COSTS RISE FASTER THAN LARGE
COMPANIES':
•
A survey by the National Association of Manufacturers reported that
premiums for small employers continued to rise at a rate 50 percent
higher than for all other employees. [National Small Business United]
•
Small businesses experience annual health insurance premium
increases as high as 50 percent in recent years. In one recent year, a
third of small business owners saw their premium costs increases more
than 25 percent. FWashington Post. 1/26/93; Arthur Andersen. 7/92]
ADMINISTRATIVE COSTS BURDEN SMALL BUSINESS:
•
Small employers pay substantially higher administrative costs than large
companies. Administrative costs consumed 40 cents of every dollar paid
in total health premiums for businesses with less than five employees.
Administrative costs for large companies often are as low as 5 percent.
[CBO. 10/92]
INSURANCE COMPANIES DISCRIMINATE AGAINST SMALL BUSINESS:
•
Insurance companies "blacklist" large sectors of the small business
market and refuse to sell these small businesses insurance at any price.
[New York Times, 2/5/90]
THE SMALLEST COMPANIES ARE HARDEST TO INSURE:
•
The fewer employees a business has. the less likely it is to find affordable
coverage. More than a third of workers in companies with fewer than 10
employees have no insurance. [EBRI in New York Times. 5/3/93]
�INSURANCE INDUSTRY
�THE INSURANCE INDUSTRY AND HEALTH CARE:
The Clinton Plan
Guarantees security. Under health reform, if you get sick, you can't lose
insurance coverage. Insurance companies will not be able to limit your
coverage because of illness.
Eliminates pre-existing condition. Everyone is guaranteed coverage.
Insurance companies will not be allowed to refuse to cover people
because they're ill or have an on-going medical condition.
Helps small business. Small businesses and individuals will band
together in large groups that have the same bargaining power as big
companies. They will be able to negotiate effectively for high-quality
care at an affordable price.
Puts consumers i n the driver's seat. Under the Clinton plain, the
power to control access and care shifts from the insurance companies to
consumers. Consumers can choose from a variety of health plans. If
you're unhappy with your coverage, you can drop your insurance
company — but your insurance company can't drop you.
Community rating. Insurance companies will use a community rating
system to set prices— charging everyone in a certain region the same
rate whether healthy or sick, young or old, married or single.
Risk-adjustment. Reform will remove incentives only to insure healthy
people. Health plans that enroll more sick people will receive more
money to provide their care.
�THE INSURANCE INDUSTRY AND HEALTH CARE:
Questions and Answers
Q:
How will the role of insurance companies change?
A:
They will change the way they do business from avoiding risk to
managing risk. Many of them will run health plans. Instead of figuring
out how to avoid covering sick people, they will figure out the best way to
provide high quality care to everyone.
Q:
Under the Clinton plan, won't a lot of insurance companies go out of
business?
A:
Not necessarily. The companies that are efficient will flourish by
managing superior health plans. Those that aren't efficient probably will
shift to other lines of insurance.
Q:
Aren't you subjecting the insurance industry to excessive
government regulation?
A:
Not at all. Under reform, an insurance company will not be able to deny
you coverage because of a pre-existing condition, drop you from a plan if
you're sick, or charge you a higher rate. But that's not excessive
regulation — it's Just fairness.
Q:
What about the insurance agents and underwriters who will lose
their jobs under reform?
A:
They won't lose their Jobs, but they will do different types of work.
Underwriters that currently spend time trying to avoid risk will figure
out how to manage risk. Some people may work for health alliances
negotiating to obtain high-quality care at an affordable price.
Q:
If insurance companies are running health plans, won't they be
telling doctors what to do?
A:
No. Some insurance companies will manage health plans, but their role
will be limited to enrolling patients and organizing networks of doctors
and hospitals. Doctors and hospitals also can form their own health
plans, if they want.
�THE INSURANCE INDUSTRY AND HEALTH CARE:
The Current System
Covering Only Healthy People: Insurance companies focus exclusively
on giving very low premiums to healthy individuals, and increasing
premiums when people get sick.
Most insurance companies won't even accept people unless they're
healthy. In some cases, insurance companies will drop people from a
plan if they become sick.
Insurance companies often refuse to cover a pre-existing medical
condition. For example, if you have a particular disease, they're likely to
accept you on the condition that they don't have to cover any costs
associated with that disease.
Discriminating Against Small Business: If you're an employer with an
mid-sized or small firm or an individual, it's nearly impossible to
purchase real comprehensive health coverage at an affordable price.
If you're a small employer and one of your employees gets sick, your
premium will rise much faster than the premium for a large employer.
Insurance Companies Are I n the Driver's Seat: Insurance companies
are in control. If they don't want to cover you, they don't have to. If they
don't want to cover the cost of treating a particular illness, they don't
have to. If they want to inflate your premiums, they do. There's usually
nothing a consumer or individual small business can do about it.
�AMERICAN WORKERS
�AMERICAN WORKERS AND HEALTH CARE:
American workers and employers will benefit by
reform of a health care system in crisis.
Workers
will no longer see money that should go toward
wages go to increased health costs.
Americans
workers will have the choice to remain in their
current health plans — many of which have been
negotiated in collective bargaining
agreements.
Retired workers will have the peace of mind of
guaranteed health care coverage.
•
Wage Loss: American workers who have seen wages consumed by ever
increasing costs of health care will gain from a reform plan that ends the
tradeoff between health benefits and wage increases.
e
Strikes: Health care cutbacks cause tension between labor and
management and have been a major issue in strike activity. The Clinton
plan reforms a health care system at the root of so many labormanagement disputes.
e
Job Lock: American workers will no longer fear that changing Jobs or
losing jobs will mean losing their health coverage. The Clinton plan will
ensure continuation of coverage and stop the insurance underwriting
practices that refuse to cover pre-existing conditions or refuse coverage
to people who cire ill.
e
Comprehensive benefits package: The comprehensive benefit package
will incorporate the best elements of today's health plans. Federal
standards will ensure that all plans offer the guaranteed comprehensive
package of benefits at an affordable price.
e
Choice: Workers will have the choice to keep their current benefits,
many of which were won in collective bargaining.
e
Retirees: As hard economic times cut profit margins, many employers
have reduced health care benefits to employees and retirees, leaving
millions of Americans vulnerable. Under the Clinton reform, retired
workers will have the security of knowing they will have guaranteed
coverage.
e
Competitiveness and Jobs: Workers and businesses are hurt when
health care costs, burden industry in a highly competitive global
economy. When American products can't compete, American workers
lose jobs. The Clinton plain will help businesses and workers compete
and win again.
�Single Payer: While some labor leaders might prefer a single payer
system, our plain follows a different method toward the same goal
providing all Americans with security of knowing they will have health
care when they need it. Ours is a state-run system. But state aren't
locked into amy rigid formula — if it maikes more sense to adopt a
single-payer system, a state cam choose to do so.
�AMERICAN WORKERS AND HEALTH CARE:
The Clinton Plan
OUR HEALTH CARE PLAN PROVIDES SECURITY FOR AMERICAN
WORKERS
American workers deserve a health care system that gives them the security of
coverage when they need it. The Clinton reform plan will expand coverage to
all American's workers and ensure that workers who have coverage today still
have it tomorrow. The Clinton plan will:
HOW IT WORKS ...
•
Provide security of coverage to American workers.
•
Guarantee a comprehensive benefit package that will be available to
every American, incorporating the best elements of today's plans.
•
Allow workers the choice to remain in their current health plans, many
of which have been negotiated in collective bargaining agreements and
expand the number of plans available to workers.
•
Ensure retired workers the peace of mind that they will always have
coverage and safeguard the long-term economic survival of America's
largest industries.
•
Free up resources for wage and salary increases stymied by rising health
costs.
�AMERICAN WORKERS AND HEALTH CARE :
Questions and Answers
Q.
I am the employee of a large business. Will my employer be allowed
to remain out of the new system?
A.
That decision has not yet been made.
Q.
Will I be allowed to join the health alliance even if my employer
remains out of the health alliance?
A.
Your employer will be encouraged to become part of the new system.
Regardless, you will be guaranteed the same comprehensive benellt
package and pay no more than the 20% employee share of the
premium. Whatever plan you have meet national quality standards.
Q.
Will I have to pay taxes on my health care benefits if they exceed a
certain limit?
A.
Workers who receive an expansive benefit package that includes such
things as elective plastic surgery and private hospital rooms may have to
pay for them with after-tax dollars.
Q.
Will I lose the benefit package I currently receive?
A.
No. Employers who provide more comprehensive benefit packages —
some of which were won through collective bargaining — may continue
to do so.
Q.
Will retirees be covered under the Clinton plan?
A.
Yes. Obligations under current contracts will be honored and retirees
will receive guaranteed coverage just like other non-working Americans.
�AMERICAN WORKERS AND HEALTH CARE:
The Current System
In 1989, health care cutbacks were a major issue in 78 percent of all
strike activity. Large companies such as GM are at a "significant
competitive disadvantage" because of huge pension and health care
obligations to retirees. [Standard and Poors] In the last two years, twothirds of the nation's employers made or intended to make changes to
retiree health plans. [RWJ]
Retiree health obligations make up 70% of the book value of GM; 54%
of Chrysler; 38% of AT&T; 29% of Ford; 14% of Boeing; and 8% of
General Electric. [RWJ]
Workers have lost 58 percent of wage increases since 1980, and will lose
100 percent in coming years because of rising health benefit costs for
employers. [Henry Aaron, Brookings Institution, 1992; President's
Advisory Committee on Social Security]
From June 1980 to June 1992, average weekly wages of production and
non-supervisory workers adjusted for inflation, fell from $235 to $218.
Rising health care costs were a central reason. [Bureau of Labor
Statistics]
Both Ford Motor Co. and GM spend more money on health care than
they do on steel. [Ford Motor Co.] In 1990, GM spent $3.2 billion in
medical coverage for its 1.9 million employees and retirees. ["Condition
Critical." Time, 11/25/92]
Ford Motor Company's health care costs have tripled as a percentage
of payroll — from 6% in 1970 to nearly 20% percent in 1991.
Health care costs add more than $1100 to the price of every car made in
America; that's more than double what the Japanese spend. [Ford]
�HOSPITALS
�HOSPITALS AND HEALTH CARE:
Hospitals serve as focal points for integrated,
communitybased health care in the Clinton plan for health reform.
Hospitals will no longer need to provide expensive
emergency
care to uninsured people, knowing they'll never receive
payment.
Under the Clinton plan, all Americans will have
coverage. Hospitals will operate in a system with new
incentives that promote and ensure quality by measuring
results, not by micromanaging care. Health reform will
streamline billing procedures, insurance claims and
paperwork.
It won't add new layers of bureaucracy or create
more
paperwork.
e
Today hospitals bear the burden of caring for Americans who don't have
health insurance. Hospitals come out ahead i n a system of universal
coverage — when every American has health insurance, every hospital
will have the security of knowing that they will be paid for their services.
e
Today insurers control costs by arbitrarily ratcheting down doctor and
hospital payments. Under the Clinton plan, hospitals will have budgets
to meet but will exercise more local authority.
e
Reform of the medical malpractice system will guarantee hospitals
increased protection against frivolous lawsuits and reduce the costly
practice of defensive medicine.
e
Bureaucracy strains American hospitals, many of which now employ as
many people to deed with billing and administration as to care for
patients. The Clinton plan will reduce administrative burdens on
hospitals and doctors by standardizing and streamlining billing and
claims forms and reducing unnecessary regulation.
e
Recognizing that teaching hospitals play a unique role i n advancing
health research and treating the most difficult cases, the new system
will continue support for advanced care innovation and the evaluation of
new clinical approaches.
�HOSPITALS AND HEALTH CARE:
The Clinton Plan
Hospitals at the Center of Community Care
Hospitals have always carried the primary responsibility for caring for
the seriously ill and played a leadership role In health care problems. In
a new system of community-centered health plans, hospitals will
continue to play a pivotal role.
Health Providers Working Together
Health plans will bring hospitals together with area doctors, nursing
services, pharmacies and other health care providers to provide the
comprehensive, guaranteed benefits to everyone enrolled in the plan.
Hospitals Working Together
Under health reform, hospitals will work more cooperatively, and share
services where it makes sense.
Streamline Administration
Reductions in bureaucracy will allow hospitals to redirect resources
away from administrative tasks such as billing and toward patient care.
�HOSPITALS AND HEALTH CARE:
The Current System
CARING FOR UNINSURED IS A FINANCIAL DRAIN
Hospitals form a safety-net that serves the nation's uninsured
population in emergency rooms. Caring for the uninsured causes a
financial drain on many American hospitals, particularly those located in
rural communities and inner-city neighborhoods.
PAPERWORK STIFLES HOSPITALS
Among all health care providers, hospitals are most burdened by
requirements of the bureaucracy that's built up within the health care
industry. Under the weight of peer review organizations, government
inspectors, industry regulators, reviewers, and coders, and all their
accompanying forms, today hospitals treat as many pieces of paper as
patients.
DEFENSIVE MEDICINE DRIVES UP COSTS
The tensions caused by physicians practicing defensive medicine are
played out in hospitals under the current system. It's in hospitals that
countless tests and procedures are performed not because they are
necessary to improve patient health, but in order to avoid lawsuits.
c.
�HOSPITALS AND HEALTH CARE:
Question and Answers
Q:
Hospitals are hit hard by the growing ranks of uninsured
people who show up at our doors for care. How soon will you
achieve universal coverage?
A:
We are committed to insuring all Americans as quickly as possible. This
is not only an economic imperative, as well as a societal one: The longer
we take to cover everyone, the more it will cost. On the other hand,
phasing in the new system should cause as little disruption to
businesses and individuals as possible. The goal is to provide coverage
for everyone by January 1, 1997. We will give states financial incentives
to move more quickly if they can.
Q:
It is important that the guaranteed benefit package be
comprehensive enough to cover a full range of hospital-related
services. How much will the national benefit package cover?
A:
The Clinton plan will guarantee a broad and comprehensive benefit
package, covering a full range of hospital care. The package also will
stress preventive and primary care to help ensure that hospital
admissions that can be avoided occur less often.
Q:
Teaching hospitals care for some of the country's sickest patients
with the most complicated conditions, and perform a number of
teaching and research functions. These programs cost money. Will
academic medical centers be compensated adequately in the new
system?
A:
We recognize that teaching hospitals serve a unique role in the health
care system. Public and private funding for teaching and clinical
research will be maintained so that academic medical centers can
continue to advance medical practice and search for new treatments and
cures. To keep them competitive in the new system, teaching costs will
be separated when plans that include teaching hospitals bid to provide
care.
�PHYSICIANS
�PHYSICIANS AND HEALTH CARE:
The President's health security plan will allow doctors to
return to the business of practicing medicine. It will reform
malpractice and reduce bureaucracy to help physicians
provide responsive, effective patient care.
The Clinton plan will maintain the best of the American health care
system— the highest quality care and an individual's right to choose a
doctor.
But the existing health care system has grown so large and so
overregulated and bureaucratic that doctors spend more and more time
filling out forms and less and less time with their patients.
The Clinton plan will reduce paperwork by standardizing forms and
reducing micromanagement by insurance companies. By making the
system simple, the Clinton plan will drastically reduce the burdens of
bureaucracy, and turn attention away from paperwork and back to
patient care.
Malpractice reforms are essential to giving physicians back their
professional autonomy, promoting trust in the doctor-patient
relationship and lowering health care spending caused by "defensive
medicine".
By guaranteeing a fee-for-service network in every alliance, doctors
who want to keep their private practices i n an individual office will
be able to do so and still participate in the new system.
Our plan will provide incentives for more medical students to become
primary care physicians. By guaranteeing a benefit package that
emphasizes preventive health services, the plan will place increased
importance on the family physician.
�PHYSICIANS AND HEALTH CARE:
The Clinton Plan:
PROMOTING AN INDIVIDUAL'S RIGHT TO CHOOSE THEIR DOCTOR
The Clinton plan will take a number of steps to guarantee Individuals
Increased choice. Health alliances will offer a wide variety of plans, in most
cases more choices than employers typically offer today. Individuals will
choose the plan that makes the most sense for them— in terms of
convenience, participating hospitals, and doctors affiliated with the plan.
Doctors may choose to take part in more than one plan. In order to let
independent doctors continue their private practice, each health alliance also
will offer a fee-for-service plan, a loosely formed network that will allow
doctors autonomy while holding the group responsible for a budget.
REDUCED BUREAUCRACY AND PAPERWORK
Health reform will focus on simplicity, including a drastic reduction in the
paperwork and regulatory requirements that currently consume time and
money in physician's offices. The national health board, through an advisory
committee on administrative simplification, will standardize reimbursement
and clinical encounter forms; automated insurance transactions; and
utilization review. It will also streamline Medicare.
The advisory committee will consult with providers, health plans, employer
groups, consumer groups and others to adopt common forms and set
standards. By January 1995. all plans will report reimbursement on a single
form for different classes of providers.
REAL MALPRACTICE REFORMS
The Clinton plan will reform malpractice laws. Enterprise liability will result in
health plans taking collective responsibility for quality, rather than leaving
each doctor out on his or her own. Alternative dispute resolution will give
doctors and patients the opportunity to resolve disagreements amicably,
outside the courtroom. Practice guidelines will establish national parameters
for defining best-practice medicine. This will protect doctors providing
thorough and responsive care to their patients.
Tort laws also will be reformed under the Clinton plan. Lawyers fees will be
limited to one-third of the award. Damages will be reduced by any payments
from other sources including health plans. Lump-sum payments will be
replaced with periodic payments. (States may be required to limit
�noneconomic damages.)
COMPREHENSIVE BENEFITS PACKAGE
The Clinton plan will ensure that every American is covered by a
comprehensive benefits package that stresses primary care and preventive
medicine. Primary care doctors and other health professionals have
contributed to defining a benefit package that is truly preventive.
INCREASED INCENTIVES TO PRACTICE PRIMARY CARE MEDICINE
To improve the geographic distribution of physicians and the mix of primary
and specialist care, the federal government will redirect its support for health
training and education to include a variety of practice settings.
Health reform will also address the imbalance between primary-care and
specialist physicians by:
•
Establishing a national limit, phased in over 5 years, of 50 percent on
the number of specialty training positions with the balance reserved for
general internal medicine, general pediatrics and family practice.
•
Set the number of training positions each year for each medical specialty
based on recommendations by a subcommittee of the national health
board.
•
Allocate positions to individual residency training programs through a
process similar to the National Institutes of Health's grant review
process.
•
Remove Graduate Medical Education (GME) restrictions on training in
ambulatory care, and community-based sites.
•
Authorize programs to retrain specialist physicians for primary care
careers.
�PHYSICIANS AND HEALTH CARE:
Question and Answers
Q:
Will the patients in my practice still be able to see me in the new
system?
A:
Of course. All Americans will be able to follow their doctor— they will
simply sign up for one of the plans their doctor joins. If you as a doctor
decide to change plans, your patients will always have the choice of
switching, too.
Q:
As a doctor, I'm concerned that budgeting will lead to rationed care
and poor quality medicine. How can we be sure that won't happen?
A:
People often raise the concern that greater attention to health care costs
will result in reduced quality in the system. Not true. Much of the cost
in today's system can be removed without affecting service delivery or
quality. Unnecessary tests and procedures, paperwork and duplication
can be reduced, freeing up resources to pay for care. Throughout the
United States, innovative corporations, group practices, and health care
institutions have proven that cost-effective care does not reduce quality;
in fact, it increases it.
Q:
When it comes to bureaucracy and regulation, the government has
traditionally been part of the problem. Why should I believe that
you're now part of the solution?
A:
It's true that government has been as much to blame as the private
sector for creating overgrown bureaucracy and excessive rules. But
health care reform will result in less paperwork and regulation. Here's
how: the government will streamline reimbursement by instituting a
single claims forms, replacing the thousands of different forms used by
over 1,500 different insurance plans today. Peer review will be
simplified and inspections coordinated. Washington will not
micromanage the health care system. The federal government will
establish a national framework and standards for quality. Those who
purchase and deliver health care will be free to make decisions that suit
individual needs and preferences.
�9:
Defensive medicine drives up my costs, and my malpractice
premiums are a further burden. What will your plan do for me?
A:
Defensive medicine and frivolous lawsuits are certainly part of the health
care problem, and any viable solution has to address malpractice reform.
By focusing on enterprise liability, individual doctors don't need to worry
that they're out on their own. By instituting practice guidelines and
methods for alternative dispute resolution, doctors will be freed from
practicing based on the fear of ending up in a courtroom.
Tort reform will accompany malpractice reform. To minimize the
incentives to bring frivolous cases to court, The Clinton plan will limit
contingency fees and collateral source recovery. Payments will be made
when services are necessary, not in one lump sum. States may be
required to impose caps on noneconomic damages.
c..
�PHYSICIANS AND HEALTH CARE:
The Current System
A SYSTEM RULED BY PAPERWORK
One of the greatest frustrations in today's health care system is the burden of
paperwork. Paperwork In hospitals and doctors' offices consumes time and
money — resources better spent providing patients responsive, high quality
care. We have created a system ruled by regulation, a system in which
checkers check other checkers who check on the work of doctors they've never
met, and the care given patients they've never seen.
"DEFENSIVE MEDICINE"
Multi-million dollar lawsuits have come between doctors and their patients
and have driven up medical costs due to "defensive medicine." These
pressures have resulted in unnecessary tests and procedures performed not to
protect patients' health but to protect against malpractice suits.
A SHORTAGE OF PRIMARY CARE DOCTORS
Our nation's health care system is threatened by a serious shortage of primary
care and generalist physicians. Yet each year, medical schools churn out more
specialists and sub-specialists and too few primary care doctors.
Part of the problem is that we don't pay primary care doctors — those who
focus on early detection, health education, and prevention — enough. From
the private sector to Medicare, today's flawed financing system puts less value
on early intervention and more on specialist treatment.
Primary care physicians should be at the center of our nation's health care
system — preventing disease, promoting wellness, and keeping people healthy
and out of the hospital. In today's system, too many Americans lack access to
primary care doctors, because they don't have insurance. When people lack
access to health care, they pass up cost-effective care of primary care doctors
and wind up in emergency rooms, in need of expensive care.
�NURSES AND OTHER HEALTH CARE
PROFESSIONALS
�NURSES AND HEALTH CARE:
The Clinton Plan
The Clinton plan will place nurses on the front
line of primary and preventive care. It will reduce
professional barriers for nurses and cut the
paperwork, that forces them to spend as much
time at a desk as a bedside.
Increase nurses' roles in providing primary, preventive, mental health
and long-term care. Advanced practice nurses — registered nurses who
have met advanced educational and clinical practice requirements —
will play a crucial role in guaranteeing that every American receives
high-quality care. Nurses in community and primary care settings will
see people when they first need care.
Reduce barriers and move toward a level playing field among health
professionals. Nurses will be able to contribute on the basis of their
skills and work to the full scope of their training. Nurses will work in
partnership with other health providers to ensure high-quality care.
e
Cut paperwork so that nurses can concentrate on providing care to
patients — not filling out forms.
Provide incentives for nurses to work in underserved rural and urban
areas.
Rely on nurses to provide home-based and community care for older
Americans, persons with disabilities, the chronically ill and other
vulnerable populations, such as the mentally ill and children with
special needs.
e
Increase racial and ethnic diversity among nurses, so that patients
will be served by nurses who have roots in those communities.
�NURSES AND HEALTH CARE:
Questions and Answers
Q:
Will the Clinton plan make me see a nurse when I want to see
a doctor?
A:
No, but under reform, nurses will play a much greater role in giving
primary and preventive care — a role in which they have proven
effective. Health plans will ensure that patients have a choice of whom
to see for care.
Q:
Will nurses be thrown out of work under the Clinton plan?
A:
No. Reform will help nurses return to doing what they were trained to
do — caring for people in need. The Clinton plan will increase the
number of nurses practicing in community settings.
Q:
How will the Clinton plan make sure that nurses are located in
areas where they are needed?
A:
The Clinton plan will make funding available for training programs that
target current and projected needs for care in underserved areas and
increasing the number of nurses who come from those communities.
Q:
Won't the Clinton plan pit nurses against physicians as it
moves to make nurses more independent?
A:
No. The Clinton plan will enable nurses to perform to the full scope of
their skills and training in partnership with other health providers.
Nurses will not assume the role of the physician. Reform will set the
stage for improved relations within teams of providers. It will eliminate
the difficult and costly process of states making case-by-case changes
in practice guidelines for advanced practice nurses. It will mean higherquality, affordable care for more Americans.
�NURSES AND HEALTH CARE:
The Current System
NURSES ARE THE BACKBONE OF THE HEALTH CARE SYSTEM
•
Our nation's 1.8 million working nurses form the backbone of our health
care system, the largest group of health care providers in America.
•
Nurses work on the front lines of medicine. They are the professionals
that people turn to first when they walk into the hospital or clinic.
NURSES PROVIDE PREVENTIVE AND PRIMARY CARE
•
Nurses make an important contribution to preventive and primary care - getting people the care they need before they become seriously ill.
•
Nurse practitioners, nurse mid wives and certified registered nurse
anesthetists have a record of delivering high-quality, cost-effective care,
particularly in rural and urban areas.
UNNECESSARY BARRIERS PREVENT NURSES FROM GIVING CARE
•
Unnecessary barriers prevent nurses from giving all the care they are
trained to provide. In today's system, nurses are often not allowed to
work to the full scope of their practice and prevented from receiving
direct payment for their services. Those restrictions make it difficult to
practice in underserved areas.
PAPERWORK TAKES UP TOO MUCH OF NURSES' TIME
•
The burden of paperwork forces nurses to turn their attention away from
patients.
NURSES NEEDED IN UNDERSERVED AREAS
•
More nurses are needed in rural and urban areas where people often
have trouble obtaining the care they need. Many of these nurses can
work in primary care and community-based settings, such as public
health, schools and home health.
•
Although the ranks of nurses traditionally have included more members
�of ethnic and racial minorities than other health professionals, the
number of nurses from minority groups still must be increased to more
closely reflect the populations they serve.
�OLDER AMERICANS
�OLDER AMERICANS AND HEALTH CARE:
The Clinton plan will protect older Americans,
maintaining health benefits they now receive
while adding coverage for prescription drugs and
increasing options for long-term care,
particularly for services based in the home and
community.
Under the current system, older Americans are squeezed between fixed
incomes and rising health care costs, especially for expensive
prescription drugs. The Clinton plan will offer older Americans a
prescription drug benefit and preserve the coverage they now have.
Maintaining Medicare: We are committed to preserving the
fundamental contract between older Americans and the government
— including maintaining the Medicare benefits that they depend on.
More Health Care Choices: All Americans, including Medicare
recipients, will have more choices under the President's health reform
plan. Medicare beneficiaries can continue to receive care under their
current Medicare system or choose among the different health plans
offering richer benefit packages and lower co-payments.
Prescription Drug Benefit: Pharmaceutical prices have been
skyrocketing, driving up health care costs for older Americans and
forcing millions to choose between buying food and filling prescriptions.
Our plan will guarantee a prescription drug benefit to older Americans
and crack down on pharmaceutical price gouging.
Long-term Care Services: Most older Americans want to receive long
term care in their homes and communities but today must contend with
a system that encourages institutional care. The Clinton plan will
provide increased opportunities for people to receive the health care they
need where they need it, at home with their families.
Protection Against Long-Term Care Costs: Older Americans are
forced to impoverish themselves today so they will be poor enough to
qualify for long-term care benefits under Medicaid. The Clinton plan
will begin to change these incentives and restoring dignity to patients
who need long-term care.
�OLDER AMERICANS AND HEALTH CARE:
The Clinton Plan
MEDICARE BENEFITS WILL NOT BE AFFECTED
•
In the new system, Medicare will remain a distinct federal program and
Medicare beneficiaries can continue to receive their benefits as they do
today with no new costs or penalties.
INCREASED CHOICES FOR MEDICARE RECIPIENTS
•
Medicare beneficiaries are likely to have more choices after reform —
they can continue to receive care the way they do today or they may be
able to get increased benefits through the different health plans
offered through the health alliances.
SENIORS WON'T HAVE TO CHOOSE BETWEEN DRUGS AND FOOD
e
The Clinton health care plan will provide insurance coverage for
prescription drugs and protect older Americans from escalating drug
prices by controlling costs.
INCREASED OPTIONS FOR LONG-TERM CARE OPTIONS
e
People want to receive health care at home with their families. The
Clinton plan will offer greater flexibility to provide long-term care at
home and in the community. While a comprehensive long-term care
program may take several years to phase-in, older Americans will receive
increased financing options through improvements in private long-term
care insurance.
e
Older Americans will no longer be forced to "look poor" and impoverish
themselves to qualify for long term care. Under our health care plan, the
amount of lifetime savings the elderly are allowed to keep but still qualify
for Medicaid coverage will rise — from $2,000 to $12,000.
e
The Clinton plan will make private long-term care insurance more
accessible and improve the quality of policies. Under reform, tax laws
will be changed to treat long-term care insurance like other health
insurance.
�OLDER AMERICANS AND HEALTH CARE:
Questions and Answers
Q:
Is it true that you will require people on Medicare to obtain coverage
through the new system?
A:
No. Seniors will still be able to receive their Medicare benefits as they do
today, with no new costs or penalties. In fact, people with Medicare are
likely to have more choices after reform. They will be able to choose to
receive increased benefits through the different health plans the new
system will offer.
Q:
Will I have to pay more in the new system?
A:
Over time, you will probably pay less, as cost controls limit the growth in
your out-of-pocket costs under Medicare and make prescription drugs
affordable for all older Americans. You also will likely see increased
funding and service options for long-term care, which is the largest outof-pocket health cost for older Americans.
Q:
I am a Medicare beneficiary. Will I still be able to choose my own
doctor under the new plan?
A:
Absolutely. Medicare beneficiaries can continue to choose their own
doctors with no additional costs or penalties. They will have an
increased opportunity to enroll in different plans under the new system
and receive more for their money — increased benefits and /or lower
out-of-pocket costs — but the decision to enroll will be left to the
individual.
Q:
What long-term care benefits does your plan provide?
A:
We will begin immediately to address the need for greater flexibility for
patients to receive care in home and community-based settings. Older
Americans will benefit from increased funding and options for home care
in the short-term although a comprehensive long-term care program
may take several years to phase-in.
Q:
I am often forced to choose between drugs and food. How will your
plan help?
A:
Prescription drugs represent the largest cost of dally living for 3 out of 4
�older Americans; yet 64% of older Americans have no outpatient
prescription drug insurance. The Clinton plan will provide security to
older Americans by guaranteeing a prescription drug benefit and
eliminate the need to choose between necessities.
�OLDER AMERICANS AND HEALTH CARE:
The Current System
OLDER AMERICANS SPEND MORE ON HEALTH CARE THAN EVER
BEFORE:
•
More than 10 percent of the average older American's income was spent
on health care services in 1990, compared to 7 percent ten years before.
I n fact, persons over age 65 now spend more of their incomes on
health care than they did before Medicare began i n 1966. [Robert
Wood Johnson /Alliance for Health Reform]
OLDER AMERICANS ARE FORCED TO CHOOSE BETWEEN FOOD AND
DRUGS:
•
Because nearly two thirds of Americans over the age of 65 have no
insurance for drugs, more than 8 million Americans over age 55 say they
have to choose between buying food and paying for medication. [EBRI,
1/92; AARP Survey, Summer 1992]
•
Prescription drugs — the cost of which has grown 10 to 15 percent
faster than the rapid rate health care costs as a whole — represent the
largest single cost of dally living for 3 out of 4 older Americans. [USA
Today, 1991]
LONG-TERM CARE IMPOVERISHES OLDER AMERICANS:
•
Medicare will only help pay for nursing home care for persons who aire
poor or who have impoverished themselves. Unmarried individuals may
keep only $2,000 in assets other than their home and must contribute
almost all of their income toward the cost of care.
•
Nursing home care is the largest out-of-pocket health care expense of
the elderly, accounting for 42 percent of all out-of-pocket health care
payments. [HCFA]
•
Paying for nursing home care costs almost $36,000 per year — about
the same as an average family's annual income — and is estimated to
rise to $46,000 by the end ofthe decade. [Robert Wood Johnson
Foundation]
�CURRENT SYSTEM IS BIASED TOWARD INSTITUTIONAL CARE:
•
Most long-term care expenditures are for institutional care. Two thirds
of the $108 billion that will be spent in 1993 — or $75 billion — will
pay for nursing homes and other institutional services.
•
Aetna Life and Casualty reported a $78,000 per case savings from its
Individual Care Management Program which provided care for accident
victims in their homes. [Robert Wood Johnson Foundation]
�VETERANS
�VETERANS' HEALTH
The Clinton Plan
The Clinton plan will honor the nation's
commitment to provide health care to veterans,
give veterans more choices about how and where
they receive care and preserve the VA health
system.
THE VA SYSTEM WILL HAVE ITS OWN HEALTH PLANS:
e
The Department of Veterans Affairs will have the option of organizing its
hospitals and clinics into health plans that will compete with other
health plans to enroll veterans.
VETERANS WILL HAVE INCREASED CHOICES:
e
In areas where VA health plans exist, all veterans will have the option of
enrolling in them to receive the nationally guaranteed, comprehensive
benellt package.
e
If veterans choose another health plan, they will pay the same portion of
their premiums as other Americans pay. Higher-income veterans who
choose to enroll in the VA health plan also will pay a portion of
premiums.
e
Veterans who enroll in a fee-for-service health plan may obtain care
through the VA system. Under that arrangement, veterans will be
responsible for any contribution required.
VETERANS BENEFITS WILL BE PRESERVED:
e
Veterans with service-connected disabilities and those with low incomes
who enroll in the Veterans Administration health plan will not pay for
services.
VA HEALTH SYSTEM WILL HAVE INCREASED FLEXIBILITY:
e
The VA health system will undergo some changes to enable it to compete
effectively as a plan. Current law will be amended to:
�•
Permit the VA to retain funds recovered from third-party payers
for the cost of veterans' care.
•
Provide broad authority for VA hospitals and clinics to enter into
contract with other health plans to provide services to veterans.
•
Allow VA managers to control budgets without the traditional
restrictions of line items or earmarked funds and delegate to
managers of VA clinics and hospitals flexibility in hiring.
•
Eliminate excessive and unnecessary reporting requirements and
inspections.
SPECIALIZED SERVICES FOR VETERANS WILL BE MAINTAINED:
•
Under health reform. Congress will continue to fund specialized services,
such as treatment for post-traumatic stress disorder. Low-income
veterans and those with service-connected disabilities will have access
to these specialized services whether or not they enroll in a VA health
plan.
�VETERANS' HEALTH
Questions and Answers
Q:
Don't these changes drastically alter the VA system?
A:
No. Change will occur in the structure and financing of the VA
system, but it won't have much an effect on how a veteran receives
care. However, these changes will improve the efficiency of the VA
system and give veterans more health care choices.
Q:
What will be done to improve the deteriorating quality of the
VA hospitals?
A:
The Clinton plan removes regulatory barriers such as procurement
and personnel rules that have prevented VA hospitals from
operating at top efficiency. Also, VA hospitals will become more
competitive because they will have to compete to give veterans
care.
Q:
Can non-veterans join a VA health plan or go to VA hospitals?
A:
No but VA hospitals will be open to veterans who previously have
been unable to receive care because of limited capacity.
Q:
Will supplemental benefits, such as treatment for posttraumatic stress disorder still be available?
A:
Yes, even if a veteran joins a health plan other than the VA plan.
�VETERANS' HEALTH
The Current System
THE VA OPERATES ITS OWN HEALTH SYSTEM:
•
The Department of Veterans' Affairs currently serves 2.6 million veterans
a year, about 10% of all veterans. The Department operates 171
hospitals. 358 outpatient clinics and 132 nursing homes. It employs
over 200,000 people and trains over 100.000 health care professionals
annually.
VETERANS GET COMPREHENSIVE BENEFITS:
•
Health care benefits are very comprehensive. In addition to hospital and
physician services, the VA provides nursing home care, home care,
extensive psychiatric services, prescription drugs and prosthetics.
CAPACITY IS LIMITED IN THE VA SYSTEM:
•
Because funding is limited, many veterans are unable to receive care in
the VA system. Veterans with disabilities that resulted from active duty
have first priority, veterans with annual incomes less than $20,000 have
second priority, and all other veterans have third priority. Veterans with
service-connected disabilities and low-income veterans do not pay for
services.
�MILITARY PERSONNEL
�MILITARY PERSONNEL
The Clinton Plan
Under the Clinton plan, the Department of Defense
will maintain the unique
readiness
responsibilities
of military medicine, and fulfill
health care commitments to current
beneficiaries.
Any changes to the military health care system
will occur after a year-long internal review
process and consultation with the Armed Services
and Appropriations
Committees of the Senate and
House of
Representatives.
The Department will consider the following proposal during a year-long
internal review process and after consultation with Congress with the
exception of active-duty personnel, the Department of Defense gradually will
coordinate its health care programs with the new system.
REFORM OFFERS MILITARY PERSONNEL MORE CHOICES:
•
Current beneficiaries of CHAMPUS will continue to pay no premiums.
Current beneficiaries who join a civilian health plan will pay the same
premiums as civilians. The Department of Defense and Congress will
determine the cost for beneficiaries who choose a military health plan.
DOD MAY RUN ITS OWN HEALTH PLAN:
•
If fully implemented, the Department of Defense health care system will
have the following features:
•
The Department will operate military health plans that serve each
geographic region in which military medical centers are located.
•
The military health plans will compete with civilian health plans to
enroll military beneficiaries.
•
The Department will require that beneficiaries enroll for military
health care, ending space-available care for those who do not
enroll.
•
Military beneficiaries will receive the comprehensive benefit
package and pay a portion of costs on the same basis as other
citizens.
�•
Private employers will pay the employer's standard share of
premiums for Department of Defense beneficiaries employed
elsewhere.
The Department would receive money from Medicare for beneficiaries
who use the military health care system.
MILITARY HEALTH PLAN MAY HAVE MORE FLEXIBILITY:
•
To enable military health plans to compete, the Secretary of Defense may
consider enacting regulations to increase the flexibility and autonomy of
managers of military plans.
�MILITARY PERSONNEL
Questions and Answers
Q:
Does this mean that anyone can join a military health plan?
A:
No. Only military personnel will be able to Join under this
recommendation.
Q:
What happens to military hospitals? Can anyone go?
A:
No, only military personnel will be able to receive care from
military hospitals.
Q:
How would benefits change?
A:
Military personnel will receive better benefits because they will be
guaranteed the comprehensive benefit package.
Q:
Will DOD have to pay more to become a health plan?
A:
No. In fact, DOD will get an influx of money to pay for military
health care from the employer contributions for dependents of
military personnel who are employed elsewhere.
�MILITARY HEALTH
The Current System
DOD HAS ITS OWN HEALTH CARE NETWORK:
•
The Department of Defense provides direct service through a network of
18 medical centers, 124 community hospitals and 561 medical clinics.
•
Dependents of active-duty personnel and retired military personnel and
their dependents under age 65 may use the Civilian Health and Medical
Program of the Uniformed Services (CHAMPUS) to pay some costs of care
delivered by civilian providers.
•
Retired military personnel and their dependents age 65 and older are
eligible for Medicare.
HEALTH SPENDING CLAIMING MORE OF DOD BUDGET:
•
Just as health care has consumed an ever larger percentage of GDP, so
too has health care been claiming an ever larger share of the Department
of Defense budget. Spending on health care has climbed from less than
3 percent of the department's budget in 1984 to more than 5 percent in
1993.
BENEFICIARIES' COSTS VARY DEPENDING ON WHERE THEY LIVE:
•
Beneficiaries' out-of-pocket expenses for health care depend on where
they live and their ability to obtain care form military hospitals. Those
who gain access to the direct care system pay very low out-of-pocket
costs. Those who do not — because of overcrowding or because there is
no nearby hospital — must pay higher out-of-pocket costs under
CHAMPUS or Medicare.
�CHILDREN AND FAMILIES
�CHILDREN AND FAMILIES AND HEALTH CARE:
The Clinton health plan will provide security to all
American families.
All Americans will be guaranteed
access to a comprehensive benefit package
including
prenatal care as well as coverage of preventive
services
and immunizations for children. The Clinton plan will
invest in children and families by reigning in health
care costs and ending the strain they place on family
budgets.
Controlling Costs: The Clinton plan will tackle health care costs that
threaten to place health insurance protection beyond the means of a
growing number of American families. It will ensure that the cost of
health care never rises faster than inflation.
Security: The Clinton plan will guarantee health security to every
American family. No longer will health insurance protection depend on
your job, your health, your income or your age.
Insurance Reform: Pre-existing condition exclusions will be eliminated.
Health plans will take all applicants, healthy or sick, charging the same
rate for everyone in the community.
Comprehensive Benefits: All Americans will receive a card that
ensures their right to a comprehensive benefit package, including
prenatal care for pregnant women, as well as coverage for immunizations
and preventive services for children.
Choice of Health Plans: Consumer choice lies at the foundation of the
Clinton plan. Americans, not their employers or insurance companies,
will choose own plans from local health alliances. These group
purchasers also will monitor quality and provide consumers with the
information they need to pick the right plan for themselves and their
families.
Choice of Doctors: The right to choose your own doctor is a hallmark
of American medicine. Preserving this right for all Americans is central
to the plan.
�CHILDREN AND FAMILIES AND HEALTH CARE:
The Clinton Plan
Under the new system all Americans will be guaranteed health insurance
coverage with a comprehensive benefit package. The Clinton plan will
improve access to care, control costs, and maintain the high quality
Americans expect. Preventive and primary care will be the centerpiece of
health care in America, especially for children.
The proposal will be based on the following principles:
•
Security: The Clinton plan will provide all Americans with the security
of knowing that wherever they move or whenever they change jobs,
coverage will continue for themselves and their families. American
families also will have the security of knowing that their health
insurance premiums will never grow beyond their means.
•
Access for All: Americans will receive a card that guarantees access to
the same high quality coverage regardless of where they live, how much
they earn, whether and where they are employed, and whether they have
a so-called pre-existing medical condition.
•
Comprehensiveness: The Clinton plan will guarantee a comprehensive
benefit package and support community-based delivery systems.
•
Continuity: The Clinton Plan will maintain the best of the current
system and improve it. Americans will continue to be able to choose
their own doctors but also have greater choice among high quality,
affordable health care plains.
•
Simplicity and Affordability: People will know what coverage they
have, how much it will cost them, and how to use it.
�CHILDREN AND FAMILIES AND HEALTH CARE:
Questions and Answers
Q:
My spouse, my children and I all have our own doctors. Under the
new system will we still be able to see different doctors?
A:
Yes. Allowing people to choose their own doctor is a hallmark of
American medicine. The Clinton plan preserves this right and expands
it by giving consumers a broader range of health plans from which to
choose. Under the President's plan, no longer will consumers be
restricted to a single plan offered by their employer. Instead, they will
choose form a variety of health plans with access to a selection of
doctors. Those wishing to see doctors outside their plan can do so, but
will have to pay more.
Q:
Will my benefits or my family's benefits be reduced?
A:
No. The comprehensive benefit package in the Clinton plan will be based
on the best of today's plans and will be guaranteed to all Americans.
Most Americans will see a broader range of choices among health care
plans covering a greater variety of services than they have today.
Q:
Will my family's health care be limited in any way?
A:
Those who oppose reform often raise the specter of rationing of health
care to scare consumers and undermine reform. The truth is that
health plans competing on the basis of service and quality to attract and
retain patients, will have every incentive to provide necessary care on a
timely basis. In addition, the alliances will protect consumers and
enforce quality standards.
Q:
Will I still receive my health insurance through work?
A:
Most Americans obtain their insurance through their Jobs. Under the
Clinton plan, employers will continue to contribute to the cost of their
employees' health insurance. Under the new system, rather than the
employer choosing an insurance plan, employees will choose their own
plans from among those offered through health alliances.
Q:
What happens if I lose my job or change my job?
A.
You'll still be covered. You family's health insurance coverage will no
�longer depend on whether you work or where you are employed. Once
you are covered, you will always be covered. Employees will choose their
own health plans through their local health alliance. Assistance will be
provided to those who become unemployed to help them pay their
premiums.
Q:
Can we be denied coverage because of a pre-existing condition?
A:
No. Excluding individuals from coverage because of a so-called preexisting medical condition is one of the major failings of the current
system. It is a primary reason why so many Americans do not feel
secure in their health coverage. All health plans will be required to
enroll all applicants, regardless of their health status, charging the same
community rate for premiums.
Q:
Does my coverage extend to my family?
A:
All American will be covered.
9:
Will all plans cost the same?
A:
Plans will negotiate with the health alliance to set the price at which they
will provide the comprehensive benefit package. Plans will compete on
the basis of quality, service and efficiency. Plans that are able to
streamline administration and provide care more efficiently will be able
to charge less for the same benefit package.
9:
Will I pay more for health care for my family?
A:
People who have family coverage now are already paying the cost of
people who do not have insurance. It is not that the uninsured do not
get care, they delay seeking care until their condition worsens and
becomes more expensive to treat and they get their care in more
expensive settings like hospital emergency rooms rather than outpatient
clinics and doctor's offices. By covering all Americans and stressing
primary and preventive care, the Clinton plan will end this cost-shifting
from the uninsured to the insured. If you currently have Insurance, the
Clinton plan will give you a broader range of choices, many of which will
be more cost effective than today's plans. If you do not have insurance
or you currently have only individual coverage, you will be expected to
contribute toward the premium but the government will provide
assistance if you cannot afford it.
�Q:
How will quality be assured?
A:
The federal government will create a national system of quality
assurance enforced by the states. In addition, the health alliances will
provide information to consumers about customer satisfaction with
various health plans. Armed with this information, consumers will be
able to take their business to plans that do the best job of providing high
quality care.
Q:
Will we have to wait a long time for care?
A:
Those who oppose reform often raise the specter of rationing of health
care to scare consumers and undermine attempts at reform. The truth
is that with health plans competing on the basis of service and quality to
attract and retain patients, will have every incentive to provide care on a
timely basis.
�CHILDREN AND FAMILIES AND HEALTH CARE:
The Current System
MILLIONS OF AMERICAN CHILDREN ARE BEING BORN AT RISK
e
25% of all American children, 40 % of African American children, are
born to mothers who have received inadequate prenatal care. These
children are three times as likely to be low birth weight, the leading
cause of infant death or disability. [National Commission on Children]
e
The United States ranks 22nd out of all industrialized nations in infant
mortality, with a rate twice as high as Japan and 50% higher than
Canada. [National Commission on Children]
FEWER EMPLOYERS OFFER FAMILY COVERAGE
e
Employer-sponsored health plans are less likely to cover dependents
than they did a decade ago. In 1990, 33 percent of employers paid for
dependent coverage in full, compared to 40% in 1980. [National
Commission on Children]
LACK OF INSURANCE KEEPS CHILDREN FROM RECEIVING NEEDED
HEALTH CARE:
e
8.3 million children are uninsured — nearly one quarter of all the
uninsured in the United States. [National Commission of Children]
e
20% of American children had no contact with a doctor in the previous
year and therefore did not receive the routine pediatric care necessary to
improving children's long-term health. [National Commission on
ChUdren]
e
30% of all children, 50% in some inner city areas, have not been fully
immunized by age 2. Lack of immunization has contributed to recent
outbreaks of measles and mumps [National Commission on Children]
SKYROCKETING HEALTH CARE COSTS PUT PINCH ON FAMILY BUDGETS:
e
Over the last decade, the amount the average American family spent on
health care more than doubled (from $1,742 to $4,296) and they are
projected to double again by the year 2000 if nothing is done to control
costs. [Families USA]
•
When hidden health care spending being channelled through
government and employers is taken into account, it is estimated that the
average household spends $8,060 per year on health care. [Alliance for
Health Reform]
�
Dublin Core
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Health Care Task Force Records
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White House Health Care Task Force
Is Part Of
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<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
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William J. Clinton Presidential Library & Museum
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2006-0885-F
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[Health Care Reform] [2]
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
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2006-0885-F Segment 5
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Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621460" target="_blank">National Archives Catalog Description</a>
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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5/7/2015
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17621460
12093636
42-t-12093636-20060885F-Seg5-007-008-2015
-
https://clinton.presidentiallibraries.us/files/original/540263d57817d53d9d324c54db2352e9.pdf
eed5745b1f3f5af5b136011b0918dcc5
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
3313
OA/ID Number:
FolderlD:
Folder Title:
[Health Care Reform] [V
Stack:
Row:
Section:
Shelf:
Position:
s
52
7
7
3
�2
THIS ARCHIVE BOX CONTAINS 10 BINDERS
HEALTH CARE ECONOMIC NOTEBOOK DATED 12/3/93
HEALTH CARE ECONOMIC BINDER DATED 1/4/94
CONVERSATIONS ON HEALTH, TAMPA, FLORIDA, 3/12/93
CONVERSATIONS ON HEALTH, DES MOINES, IOWA, 3/15/93
CONVERSATIONS ON HEALTH, WASHINGTON, DC
3/26/93
HEALTH SECURITY ACT WORKING GROUP DRAFT DATED
8/6/93
PRELIMINARY DRAFT OF THE PRESIDENT'S HEALTH REFORM
PROPOSAL DATED 9/7/93
HEALTH CARE THAT'S ALWAYS THERE - NATIONAL HEALTH
CARE CAMPAIGN'S SURROGATE MATERIALS
THE NEED FOR REFORM - OVERVIEW OF CLINTON PLAN
HEALTH CARE BRIEFING BOOK FROM COUNCIL OF ECONOMIC
ADVISORS DATED 10/21/93
fo* tizficnl CAKE freiweKy f(
$$M
�TABLE OF CONTENTS
I.
THE NEED FOR REFORM
Principles
Insecurity
Rising Costs
Quality Threatened
Diminishing Choices
Growing Complexity and Inefficiency
The History of Health Reform in the U.S.
The Cost of Doing Nothing
II.
OVERVIEW OF HEALTH REFORM
•
e
e
e
III.
Description
Graphic Depiction of the Current System and
the New System
Questions and Answers
Draft Speech
ALTERNATIVE OPTIONS
Single Payer
Medicare for All
Managed Competition
Play or Pay
Health Vouchers
Medical IRAs/Medisave Accounts
German System
Canadian System
British System
Experimental State-Based Plans
Pilot Program
IV.
CONSTITUENCY-SPECIFIC TALKING POINTS
Consumers
Disabled Americans
Large Employers
Small Employers
Insurance Industry
American Workers
Hospitals
Physicians
�Nurses and Other Health Care Professionals
Older Americans
Veterans
Military Personnel
Children and Families
ISSUE-SPECIFIC TALKING POINTS
Controlling Costs
Costs / Financing
Long-Term Care
Fraud and Abuse
Malpractice
Medicaid
Medicare
Mental Health
American Indians and Alaskan Natives
Choice of Provider
Prescription Drugs
Rural Health Care
Inner Cities
Administrative Simplification
State/Federal Partnership
Undocumented Persons
VI.
CHARTS AND GRAPHS
VII.
HEALTH CARE POLICY DEVELOPMENT PROCESS
e
e
•
e
e
e
Description
Consultative Health Care Meetings - Organizations
Physicians Advisory Group and Working Group Met with
These People
Working Group Members Met with These Consumers
Health Care Task Force Visits Across the Country
Health Care Events
VIII.
HEALTH REFORM — STATE BY STATE BREAKDOWNS
IX.
GLOSSARY OF HEALTH CARE TERMS
��THE NEED FOR REFORM
�THE NEED FOR REFORM:
PRINCIPLES
Five principles must underlie health reform: security, cost control,
quality, choice, and simplicity. Today's system falls short of these goals and
fails to give the American people the security and protection they deserve.
Security: Health reform will be guarantee all Americans health
security no matter where they work, what they earn, where they
live, how old they are or whether or not they are healthy.
The current system denies health security to millions of
Americans. They are rejected as "uninsurable," frozen out
because of the job they hold, or forced to continue in jobs
because they have illnesses that insurers don't want to
cover. If not covered by insurers, one illness can wipe out
the resources of a family.
Cost Control: Health reform must bring down the rapidly rising
cost of health care to make it more affordable for consumers and
businesses.
The amount the average American family spent on health
care doubled over the last decade and will double again by
the year 2000 if nothing is done to control costs. For
businesses, health care costs have been rising by almost
15% every year — for small business at much greater rates.
This has caused wages to be depressed and the U.S. to lose
its competition in the world economy.
Quality: Health reform must assure American consumers of the
highest quality medical services and the system must encourage
greater emphasis on primary and preventive care as well as
innovation in treatment and technology.
Today, insurers compete to insure the healthy and avoid the
sick, rather than competing on quality and service.
Consumers cannot compare doctors and hospitals because
information about quality is not available. Too little is
invested in preventive care and research into lifesaving
treatments.
�Choice: Health reform will ensure that Americans have the right
to choose their own doctors and to select a health plan that suits
them best.
With a growing number of insurers using exclusions for
preexisting conditions, arbitrary cancellations and hidden
benefit limitations, consumers have few choices for
affordable policies that provide real protection. [Workers
who have coverage through their job increasingly are offered
a single, employer-chosen plan.
Simplicity: The system will be simple enough for consumers to
understand their health plan, how much it costs and how to use
it. It will also free doctors from burdensome paperwork and allow
them to focus on treating patients.
The complexities of reimbursement, fragmented coverage
and care, and case-by-case cost control produce a
paperwork nightmare and ballooning administrative
expenses that confound consumers and providers alike.
Over 20% of payments to doctors go to cover administrative
expenses.
�THE NEED FOR REFORM:
INSECURITY
Working Americans face a growing threat to security from the
uncertainties created by the health insurance system. Even people with
good health insurance coverage cannot count on protection if they lose
or change Jobs, especially if someone in their family has a pre-existing
health condition.
The number of Americans who are uninsured has been growing
dramatically. At any one time in 1988, 33.6 million Americans had no
insurance; now the number is closer to 40 million.
As a result of rising premiums, many small and mid-size firms have
been forced to cut back or eliminate coverage. Nearly one of every three
small employers say they expect that rising costs will soon force them to
stop offering health care, according to a 1991 Harris survey.
A 1993 survey conducted for the Kaiser Family Foundation asked lowincome Americans to name their biggest worries. Their top concern was
paying doctors' bills; five of their ten biggest worries involved health care
costs.
OBJECTIVES OF REFORM: Provide Health Security for all Americans. No
American will lose insurance coverage because of preexisting conditions,
because of sickness or health conditions. Complete portability: no gaps in
coverage because of unemployment, change of jobs, change of family status, or
change of residence. Provide family security when facing expensive long-term
health care needs.
�THE NEED FOR REFORM:
RISING COSTS
•
Rising health costs mean lower wages, higher prices for goods and
services, and higher taxes. Yet few Americans realize how much they are
affected. The average worker today would be earning $1,000 more a year
if the cost of health insurance had not risen faster than wages over the
previous 15 years. If the cost of health care continues at the current
pace, by the year 2000, wages may go down smother $650 [OMB].
•
The practice of "experience rating" drove up rates for employee groups
with older and less healthy workers.
•
Small firms also pay an exorbitant amount for insurance administration.
For firms with fewer than five workers, 40 cents out of every premium
dollar pays for administration.
•
Health costs create a major burden for American business, particularly
manufacturing companies with older workers and large numbers of
retirees. National health reform will strengthen American
competitiveness.
•
Rising health costs have become the principal threat to the long term
fiscal health of the federal and the states. Without reform, rising health
costs will force the elimination of other programs and raise the federal
deficit. Projections are that health spending will consume 111 percent of
the real increase in federal tax revenues cofiected over this decade.
•
Since 1980, health care has consumed an additional 1 percent of gross
domestic product every 35 months. Between 1980 and 1992, health
expenditures shot up from 9.1 percent to 14 percent of GDP; under
current policies, they will hit 18.6 percent by the year 2000. [OMB]
•
Other industrialized countries spend, on average less than 8 percent of
their GDP on health care. U.S. health costs are nearly twice high and
are growing at a faster rate compared with major European countries
with comparable medical standards. Over the last decades, health costs
grew more than twice as fast here as they did in Germany.
OBJECTIVES OF REFORM: Control rising health costs to a level the
economy can sustain. Health reform will create incentives for greater
efficiency so that overall health care costs increase no faster than the rest of
the economy.
�THE NEED FOR REFORM:
QUALITY THREATENED
Attempting to assure quality has resulted in a bloated insurance
bureaucracy that has become an oppressive regulatory nightmare for
providers with mountains of forms, numerous levels of review, yet
provides little useful information to consumers about quality.
•
The system is biased toward specialty care, rather than more costeffective preventive and primary care.
Innovation in the delivery of health care revolves around "gaming" the
system — shifting costs, cutting corners or self dealing — rather than
improving quality of care or controlling costs.
OBJECTIVES OF REFORM: Assure quality of care and promote
innovation. Health reform will create a competitive market that rewards
quality and innovation. It will empower consumers to enforce quality providers
and health plans by providing them with information on performance and
patient satisfaction. Enhance investment in biomedical research to develop
less costly and more effective alternatives for diagnosis and treatment.
�THE NEED FOR REFORM:
DIMINISHING CHOICES
As insurance companies have increased the use of preexisting condition
exclusions and other limitations on coverage, individuals and small
businesses have had with fewer choices among affordable health
insurance policies that provide good benefits and offer real protection.
Small businesses that provide insurance to their workers have a difficult
choice to make when an employee becomes seriously ill. They can retain
their policy but pay huge premium hikes each year; drop the policy and
try to find other coverage, exclude the sick worker from the policy; or go
without insurance.
Individuals who purchase insurance outside a large group face
essentially the same unsatisfactory choices as small businesses.
•
Insurance coverage for most Americans is not a matter of choice at all.
In most cases, they are limited to whatever policy their employer offers.
OBJECTIVES OF REFORM: Preserve choice of providers and increase
choice of health plans. Health reform will restructure the insurance market
to create a competitive environment which rewards service and efficiency and
eliminates competition based on avoiding risk. It will provide choice of high
quality health plans to deliver comprehensive benefits to individuals and small
businesses. It will preserve the right of all Americans to choose their own
doctors.
�THE NEED FOR REFORM:
GROWING COMPLEXITY AND INEFFICIENCY
Insurers have responded to rising health costs by imposing restrictions
on what doctors and hospitals do. A system that was complicated to
begin with has become incomprehensible, even to experts. Each health
insurance plan includes different exclusions and limitations. Even the
terms used in health policies do not have standard definitions.
Purchasing insurance can be overwhelming for consumers. With
different levels of benefits, "co-pays," "deductibles" and a variety of
limitations, trying to compare policies is confusing and objective
information on quality and service is difficult for consumers to find. As
a result, consumers are vulnerable to unfair and abusive practices.
Small business owners face the same difficulties working through the
insurance maze. For firms with fewer than five workers, 40 percent of
health care premiums go to pay administrative expenses.
Doctors and other providers are frustrated by growing interference with
their decisions about medical care. A bloated administrative system has
developed in which checkers check checkers on work done by doctors
they have never met, and care given to patients they've never seen. Time
and money that could be devoted to treating patients is spent pushing
paper instead.
Administration has become increasingly complicated. No standard forms
exist for enrollment, reimbursement, and other functions. The typical
hospital bill might as well be written in hieroglyphics. Not even the
hospitals' computers can talk to each other.
OBJECTIVES OF REFORM: Simplify administration and reduce paperwork
and red tape. Health reform will provide a universal health security card
which guarantees a standard, comprehensive benefit package for all
Americans. It will create simple standard enrollment and claim forms, expand
the use of computer information systems for medical records, claims and
billing, while protecting patient confidentiality. It will develop results-oriented
methods to assure quality and replace micromanagement of providers.
�THE HISTORY OF HEALTH REFORM IN THE UNITED STATES
Health care reform has been on the American agenda for nearly a century.
Since the early 1900s, commissions, committees, groups and organizations have put
forth proposal after proposal to overhaul the way the nation delivers and pays for
medical care. Over time, the forces of opposition have shifted, somewhat, as have
their arguments against change. Remarkably, the solutions to the American health
care problem have been clear from nearly 75 years. What has eluded us is the
political will to tackle the health care problem once and for all.
Early Attempts at Reform
A group called the American Association for Labor Legislation made the first
large scale proposal for health care reform in 1915, starting a national discussion
on reforming the way health care was paid for and delivered. The group put forth
nine principles for reform. Its recommendations: employers, employees and
government should share in the cost of an integrated health care system;
the system should focus on prevention rather than cure; and people should
have protection against bankruptcy if they become disabled.
1
Early opposition came from insurers, who, although they didn't sell health
insurance, said they hadn't been included in formulating the plan and who feared
loss of business. In the wake of American involvement in World War I , opponents
of national health insurance associated reform with Germany, which had begun a
system of national health insurance in the late 1800s.
2
Continued pressure from the insurance industry, coupled with anti-German
sentiment, pushed national health insurance to the back burner for more than a
decade.
l
A Chronology of Health Insurance and Health Care Financing' Reform. The
Alliance for Health Reform, November 1992
2
In 1883 Germany's Prince Bismarck launched the world's first social insurance
program, which included health coverage.
�The Roosevelt Era
As the Great Depression took hold, more and more Americans found
themselves unable to pay for needed medical care. Hospitals took the lead in
sponsoring pre-paid health care plans.
In 1932, blue-ribbon commission called the Committee on the Costs of
Medical Care urged comprehensive reform. Its proposal: create a national
network of community care centers to replace the fee-for-service system of
individual doctors i n separate practice. Around the same time, President
Roosevelt began his own push for national health insurance. His landmark social
legislation, the Social Security Act, was to include provisions for national health
insurance shaped largely by the committee's report. But the AMA attacked the
proposal, and President Roosevelt was faced with the choice between abandoning
his plans for national health insurance or risking defeat of the entire Act. FDR
decided not to include the health reform provisions, vowing to fight for national
health insurance in his second term. But when Congressional elections weakened
the original New Deal coalition in 1938, Roosevelt abandoned her plans for reform.
During World War I I , as wage and price control policies led more employers
to compete for workers by offering health insurance benefits not subject to controls,
Congress introduced a bill to create a national government health insurance
program within Social Security. FDR pledged to make passage a top priority after
the war.
The Truman Era
After the President's death in April 1945, President Truman vowed to
continue FDR's fight for national health reform. In November he introduced a large
scale plan. His proposal: federal aid to build new hospitals, increased
federal support for public, maternal and child health, and— for the first
time— universal, compulsory federal health insurance. In response to
questions about the programs high costs, President Truman noted that the U.S.
spent only 4 percent of its gross national product on health care and "we can afford
to spend more."
For several years, President Truman fought for passage of his national
health reform bill. Initially, public support was strong, but opposition brought
together organized medicine, big business and the media to sway public opinion.
Pieces of the plan were broken off and passed, such as the Hill-Burton Act, which in
1946 increased federal funding for new hospital construction, and federal aid for
maternal and child health.
1~
�The Truman plan was re-introduced in 1948, and legislative inaction caused the
President to rail against the "do-nothing Congress." The opposition was well
organized and effective, labeling reform "socialism." The Cold War and anticommunist mood ofthe country, along with foreign upheavals distracted Americans
and their leaders. The movement lost momentum, and the coalition that had
pushed for reform disintegrated.
Another factor that dampened the push for national health reform after the
war was that increasing numbers of Americans had health insurance through work.
Though health coverage was increasingly common through work, changes in the
insurance market sowed the seeds for many of the most devastating inequities in
today's health insurance market. Commercial insurance companies- those that
sold fire and home and life insurance- entered the health insurance market,
challenging the Blue Cross and Blue Shield plans that traditionally provided health
insurance.
The Blues had traditionally set premiums based on a "community ratingsspreading the health costs of an entire community evenly and fairly among all
members. They also offered "open enrollment" taking all applicants who wanted to
buy insurance regardless of their health status.
Commercial insurers competed by using different practices. They adopted
"experience rating," basing premiums on a group's claims history, and "medical
underwriting" using the age and health status of a groups' members to anticipate
the risk of future claims. This change in approach to rating and underwriting
practices allowed the commercial insurers to undercut the "Blues" by offering firms
with young, healthy workers lower rates, a practice now known as "cherry picking".
This process increasingly left the Blues and other community-rated insurers with
fewer healthy members until they began to abandon community rating and play by
the new rules.
Health care costs began to rise during the 1950s, making health care services
increasingly inaccessible to the two groups least likely to have coverage through a
job- the poor and retirees. In 1958, legislation was introduced to help extend
coverage to these groups. That movement would eventually lead to the passage of
Medicare and Medicaid.
President Kennedy advanced the health reform cause in the early sixties,
and the AMA again bitterly opposed what they "socialized medicine". Despite
opposition from organized medicine, President Johnson signed Medicare and
Medicaid into law on July 30, 1965. Medicare extended health insurance coverage
to people over 65 and those with disabilities. Medicaid expanded and reorganized
federal assistance to the states to care for the poor. These laws were seen as
important first steps toward national health insurance for populations at most risk.
Working Americans were perceived to be less vulnerable because employers
2.
>
�provided adequate health benefits.
A shortage of doctors, nurses and other health professionals in the mid1960s produced laws that began federal financial help for training health
professionals.
3
The Nixon Era and Bevond
Until the 1970s, health costs were not a major focus of refonn. In fact, most
reformers argued in favor of more on health care. A number of factors -- high rates
of inflation, slow economic growth, an explosion of medical technology, an
increasing number of specialized health providers and the Medicare program ~
pushed the total economy spent on health care increasingly higher. With the
election of 1968, the push for national health insurance was revived for the fourth
time. For the first time, the focus shifted from expanding services to controlling
costs.
President Nixon embarked on a health reform agenda aimed at: expanding
managed care to change incentives in which "doctors and hospitals benefit
most from sickness, rather than health" establishing universal coverage by
requiring all employers to provide at least a minimum health benefit and
establishing a federal insurance program for the working poor and
unemployed. The administration's legislation all introduced by Senator
Bob Packwood and Representative Wilber Mels.
President Nixon's health reforms almost passed with bi-partisan support.
The public had grown increasingly alarmed about the crisis in health care.
However the oil shock of 1973, the political demise ofthe Ways and Means
chairman, and the Watergate scandal sidetracked the issue. Major labor unions
had supported of the bill withdrew, hoping to help a more expansive package with a
more liberal Congress in the wake of Watergate.
Costs continued to climb for the next twenty years, with government,
businesses and insurers piecemeal at reform. Lacking a unified approach, the
effect on access or costs was minimal. In the absence of an overall national
framework, many of the piecemeal reforms skewed the system and added to the
problem: America has an excess number of hospital beds, a shortage of primary care
doctors, an insurance system that specializes in avoiding risk rather than
managing it. ERISA led to large companies playing by a different set of insurance
3
Just as the Truman's Hill-Burton Act led to a sharp increase in the number of
hospitals, these laws served to greatly increase the supply of health care providers.
Many now argue that the increased supply itself created increased use of doctors
and hospitals, and in turn increased health care spending.
�rules. Reduction in Medicaid weighed on state budgets and added to the "costshifting" problem.
Today's Challenge
Throughout the late eighties and early 1990s, an increasing number of
legislators introduced comprehensive reform proposals, and health reform rose
again in the public consciousness. The approaches vary- "play-or-pay," "single
payer," "managed competition"-- but an increasing number of elected officials tried
to respond to the public's deafening call: do something,
So why has nothing been done? It is not because the answers eluded us. We
knew in 1915 that employers, employees and the government should contribute to
the costs of health care, and that the system should focus on prevention.
We knew in 1935 that we should encourage doctors and hospitals to form
networks and share responsibility for high quality, cost-effective care.
President Truman proclaimed in 1946 that health care should be considered a
right, not a privilege. President Nixon told the American people in 1972 that the
only way to insure universal access was to ask employers to take responsibility for
their workers* coverage.
It is up to President Clinton and this Congress to decide whether the 1990s
will become yet another decade in which the leaders of this nation almost did
something about health care. The stakes rise each time. As the problems become
worse, tackling them becomes more difficult. As costs have risen higher, the cost of
doing nothing has also risen. We can no longer afford to delay.
�THE NEED FOR REFORM:
THE COST OF DOING NOTHING
Ever since President Roosevelt was forced to abandon his national health
insurance proposal, America's health care crisis has grown. Yet we have failed
to act to guarantee American families the security they deserve. We have
undertaken innumerable studies, reports, commissions, pilot projects, and
piecemeal attempts at reform. For too long we have treated the symptoms, not
the disease, while the patient got sicker.
The time to act is now. If we choose to do nothing, we threaten the future
security of every American family and business — and the long-term health of
our economy.
American Families:
If we continue to do nothing, tens of thousands of Americans will lose their
health insurance each month, joining the ranks ofthe uninsured. American
families will continue to be denied coverage because of preexisting health
conditions. Workers will continue to be locked in Jobs they want to leave
because they're afraid to take the risk of losing the insurance company.
If we do nothing, experts estimate that the annual cost of health care will more
than double — to $14,000 for each American family — by the end of the
decade. At the same time, by the end ofthe decade, Americans workers will
lose $655 i n income each year if health care costs continue to eat up wage
increases, as they have over the past decade. Workers have lost 58 percent of
wage increases since 1980, and will lose 100 percent in coming years due to
the rising cost of health benefits to employers. [Families USA. OMB]
American Business:
If we do nothing, small businesses will continue to face the pressure of
escalating premiums from insurance schemes designed to discriminate against
them. Companies will be forced to cut benefits or drop coverage altogether.
If we do nothing, large employers' rising health care costs — which some
estimate could amount to $20,000 a year for each employee by end of the
decade — will continue to erode their profits. U.S. competitiveness will
continue to decline, as rising health care costs are passed on as higher prices
for American goods, fChristian Science Monitor. 11/21/91]
�American Economy:
If we do nothing, all the sacrifices we are making today to reduce the deficit
will be not control it. Health care cost increases will eat up more than half of
$738 billion in new federal revenue expected over the next four years. Health
care spending will rise from 14% of GDP to 18% by the year 2000. Seven
years f r o m today, almost $1 out of every $5 earned by Americans will go
to health care spending. [OMB]
[This section needs to be much stronger. It is vague and doesn't really
dramatize the risks of the status quo. — IM]
��OVERVIEW OF HEALTH REFORM
�OVERVIEW OF HEALTH REFORM:
DESCRIPTION
Today's System:
The existing health insurance system fails to provide Americans with security
when they need it.
Most Americans' access to health insurance and care depends on where they
work and how much money they have, but even well-insured Americans
increasingly fear that adequate protection won't be there when they need it.
Millions of Americans — including many employed full-time — go without
health insurance or with incomplete coverage either because their employers
do not provide it or because they are caught in a small-group market that is
expensive and excludes many people or conditions.
The cost of health care has risen faster than prices for other goods and
services for more than a decade. Incentives within the system reward
providers for performing costly tests and procedures, and attempts to control
spending amount to creating more bureaucracy and paperwork. Hospitals and
other health providers shift the cost of treating uninsured patients onto those
with insurance, further increasing their costs.
Under Health Reform:
Under the Clinton plan, every American will be guaranteed access to a
comprehensive benefit package. No one will be denied insurance because of a
pre-existing medical condition, a sudden illness, a change of jobs or any other
life event. Employers will provide insurance to all employees. Individuals and
families will choose their own doctors and health plans within a streamlined
system that will provides high-quality care.
The federal government will establish and oversee the over-all framework of
the American health care system. Federal law will:
e
Define the guaranteed benefit package
e
Prohibit discrimination in health insurance based on medical
conditions or other individual characteristics
e
Establish and enforce a national budget to control health
expenditures.
�•
Set standards for assuring quality and consumer protection.
Within the federal framework, states will establish and oversee the system,
tailoring its design to the needs of each community.
A system of consumer health alliances will provide individuals, families and
employers with a choice of health plans, creating an organized market through
which plans will compete to provide the best care at the lowest price. Some
states may elect to operate health alliances themselves, while others will
oversee non-profit alliances.
Health plans, including HMOs, fee-for-service plans and innovative new
delivery systems will enroll any American, assuming responsibility for
providing quality care at a negotiated price. Every alliance will include among
its offerings a plan based on the traditional fee-for-service approach.
Physicians and other providers can elect to participate in more than one health
plan. Patients can choose to follow their physician into a plan, which may
differ from their current insurance arrangement, or they can choose a new
plan and a new doctor.
�HOW WILL PEOPLE OBTAIN HEALTH INSURANCE COVERAGE?
TODAY:
Whether Americans have health insurance depends on many
factors outside their control: Whether and where they work,
pre-existing medical conditions and economic
circumstances. Close to 40 million Americans have no
health insurance, and millions of others are locked into jobs
because they fear losing health insurance.
In most cases, companies, not employees, choose the health
plans through which workers obtain coverage.
REFORM: All Americans will have guaranteed access to a
comprehensive benefit package at a predictable price,
regardless of where they work, how much money they earn,
or whether they've ever been sick.
Individuals — not employers — will choose from a variety of
health plans. Patients satisfied with their current health
plans and physicians can continue with their current
arrangement. Others can choose a different approach to
care, with choices ranging from HMOs to a fee-for-service
plan.
WHERE DO PEOPLE GO TO GET HEALTH INSURANCE?
TODAY:
Most people obtain insurance from their employers. Some
purchase individual policies from insurance agents or
agencies. Federal, state and local governments all provide
care to specific categories of people, including the elderly
and some low-income people. Nearly forty million
Americans do not have any form of health insurance.
REFORM: Consumers will have the right to enroll in a health plan
offered through a health alliance, choosing from among a
variety of plans. Alliances will provide consumers with
information about coverage, costs and the quality of plans.
Employers will also make information about alliances and
health plans available. Some large employers may decide to
offer their own plans.
Individuals who are unemployed will be able to continue in
their current health plan or obtain coverage through the
alliance in their area.
�HOW WILL THE INSURANCE MARKET CHANGE?
TODAY:
Small firms and individuals are at a disadvantage in
negotiating with large insurance companies and end up
paying higher premiums or not obtaining coverage.
More than a thousand of health insurance companies add
inefficiency to the system and creating administrative
burdens for consumers and providers.
REFORM: Firms and individuals will band together into health
alliances, putting consumers and employers in control to
negotiate with health plans to deliver quality and price.
One standard form will replace thousands of different
insurance claim forms. Problems arising from the
coordination of benefits between insurers will disappear.
Fewer, insurance pools will spread risk over a larger group
and reduce administrative costs.
WHERE WILL PEOPLE GO FOR HEALTH CARE?
TODAY:
People with insurance go to doctors, hospitals, pharmacies,
HMOs, or other providers covered by their insurance.
People without insurance often don't get care or go to
hospital emergency rooms, community clinics or doctors
willing to provide uncompensated care. That drives up costs
for other patients.
REFORM: Patients will have the option of continuing to use the same
doctors, hospitals, pharmacies, HMOs, or other providers.
Providers may organize into "networks" through which they
will coordinate the care of their patients and control costs.
All Americans will be have guaranteed coverage.
HOW WILL HEALTH PLANS CHANGE?
TODAY:
Health insurance plans select the healthiest people to enroll.
Plans avoid taking risk and discriminating against
individuals based on health status and the size of the group
through which they purchase coverage. Often insurance
won't pay for treatment for health problems diagnosed
�before a patient Joined the plan. Many insurers refuse
coverage to individuals because of pre-existing medical
conditions.
In many underserved areas, including both rural areas and
inner-city neighborhoods, patients do not have access to
health plans or providers.
REFORM: All plans will enroll all applicants and charge premiums
based on a community rate negotiated with the alliance.
While prices may vary between plans, health plans will
charge everyone enrolling the same price for the guaranteed
benefit package.
States and health alliances will see that health plans are
available in all areas.
WHAT HEALTH CARE SERVICES WILL PEOPLE RECEIVE FROM
THEIR PLANS?
TODAY:
Benefits vary widely. Some provide mental health services;
others do not. Some pay for prescription drugs, and other
do not. Some pay for preventive care.
REFORM: Every American will have the security of a guaranteed,
comprehensive package of benefits, including a full range of
medical services. The benefit package will include
preventive services such as immunizations, and
mammograms not offered in many existing plans.
HOW WILL COSTS BE CONTROLLED?
TODAY:
Rapidly rising health costs driven by:
•
Administrative waste:
High claims processing and billing costs resulting from
the fact that more than 2,400 entities pay for health
care in the U.S. Each imposes its own reporting
requirements.
High administrative costs (as much as 40 cents of
each $ 1 in premiums) particularly for small
businesses and individual policyholders.
�High insurance administration costs associated with
underwriting practices.
•
Providers and consumers who use excessive or
unnecessary services because they Eire insulated from
cost considerations.
•
Fee-for-service medicine that encourages providers to
perform excessive tests and procedures.
•
Use of high-cost settings, such as hospital emergency
rooms, by patients who don't have access to other
care.
REFORM: Controls costs by:
•
Eliminating insurance underwriting.
•
Streamlining claims and reimbursement by moving to
simple payment systems and developing a standard
billing form.
•
Reducing costs for small groups and businesses that
will gain the purchasing power of a large group.
•
Health alliances will hold plans accountable for
delivering the guaranteed benefit package for a fixed
rate, creating incentives to deliver cost-effective care.
•
Technology assessment and research into health
outcomes will assist providers in Judging the
effectiveness of treatment, enhancing cost conscious,
quality and innovation.
�•
Operating within a budget, plans will avoid
unnecessary duplication of expertise and
equipment, leading to more prudent investment
in technology.
•
Through price competition and consumer information,
patients will be able to distinguish among plans to
make cost-conscious choices.
As a safety net to control costs, a national health care
budget will limit growth in spending each year.
�OVERVIEW OF REFORM:
QUESTION AND ANSWERS
Q:
Will I still be able to choose my doctor?
A:
Yes. You can see any doctor you want. However If you choose a doctor
outside of your plan, you may have to pay a little more to do so.
Q:
How it is possible that the goveniment will get more involved in our
health care system but there will be less paperwork?
A:
The government is getting less — not more — involved in the health
care system. Under the Clinton plan, the government role will change
dramatically. These reforms will simplify and standardize administrative
procedures not add levels of complication and regulation but rather. A
single forms will be developed for filing claims and reporting
reimbursement. Transactions will be streamlined through increased use
of computerized billing. Automated systems will also be used for
keeping patient records with safeguards to protect privacy. Utilization
review will be revamped to eliminate government micromanagement of
medicine.
Q:
Won't these health alliances create more bureaucracy and
paperwork?
A:
Not at all. The health alliances are a way that businesses and
individuals can band together to get the same bargaining power as big
companies — so they can go to insurance companies and negotiate for
high-quality care at an affordable price. They are also are way to make
competition in the insurance market work in a positive and constructive
way for consumers. Under the Clinton plan, insurance companies will
compete on efficiency and service, not on avoiding risk. By leveling the
playing field and providing a central point of contact for purchasing
insurance paperwork hassles will be reduced.
Q:
I have decent insurance. Why should I pay to insure others?
A:
You won't. Most people without insurance are employed. These workers
and their employers will pay for their health coverage. For those with
health insurance, any increases provide you with health security. It
ensures that you always have insurance protection and controls costs so
that your wages won't continue to be eroded by rising health care costs.
�Q:
How are you going to control costs?
A:
The Clinton plan is based on establishing a competitive insurance
market that competes on the basis of efficiency, service and price. It
would reward health plans which did the best job providing quality care
at an good price. Small businesses, employees and other individuals
would join together In health alliances to negotiate for affordable prices.
Simplified and standardized claims and reimbursement procedures will
drastically reduce paperwork and bureaucracy, cutting administrative
costs.
While this new system is being established, providers will be called upon
to voluntarily hold the line on health care costs. A national health
budget will also be imposed as a safety net to ensure that costs don't
rise out of control.
Q:
Why are we changing so much about health care?
A:
Because the system is seriously flawed, comprehensive reform is the
only approach that will work. All Americans will gain the security if
guaranteed coverage. Most people will not see major changes In how to
get health care. They will still have the option of continuing with their
same doctor. They will obtain care in the same way as they do now —
and they'll still have the highest-quality care in the world.
9:
Isn't it true that managed competition is untested?
A:
The Clinton plan is not managed competition. It draws on elements of
the theory of managed competition, but the Clinton plan combines the
best of several ideas from different models to design a system that will
work for all Americans.
Q:
Won't this plan kill small business?
A:
No, it will help small business. The Clinton plan stops insurance
companies from discriminating against small businesses, aggressively
controls costs, and pools small businesses and individuals to give them
the same bargaining power in purchasing insurance that big companies
have. The plan will be gradually phased-in to ensure that small
businesses that don't currently provide insurance can afford to cover
their employees.
�Q:
How can you have a comprehensive health reform package that
doesn't comprehensively cover long-term care?
A:
This package does address the need for long-term care. It takes vast
strides toward covering home- and community-based care with a special
emphasis on creating ways for older Americans to continue to live in
their own home and communities with dignity and Independence.
[This section needs beefing up — IM]
�OVERVIEW OF HEALTH REFORM:
DRAFT SPEECH
Security for you and your family. That's what the President's health care
plan is all about.
Now a lot of you may be perfectly happy with the health care you have
today. But even if you are, look around this room.
Every one of you here knows somebody who can't get health insurance - or can't afford it. You probably know someone who's lost a job and ended up
without any coverage for their family. Or somebody who came down with a
terrible illness — and all of a sudden discovered hidden limits buried in the
fine print of their insurance policy. And everybody knows somebody who lives
in fear that a parent or a child will need longterm care, and they won't even be
able to choose whether their loved one ends up in a nursing home.
Today every one of you is probably paying more for a lot less health care.
Take a look at how much you're charged every year for your share of
insurance. Or at the terrible prices you're charged for prescription drugs. The
fact is that even the best, most generous businesses in our nation are trading
pay hikes for benefits that, a few years ago, seemed rock solid — or they're
being forced to just cut back the benefits to almost nothing.
�And that's just what you can see. Every day, every hour, exploding
health care costs are picking all our pockets and handbags. Right now — as
you sit here — you're paying for someone who's been forced to go into an
emergency room because he or she doesn't have insurance. So the next time a
hospital charges you $35 for a towel, remember that you're paying for the 35
patients in the emergency room who will never see a bill — and couldn't pay it
if they did.
Most of us don't see that, here, in the richest country in the world,
millions simply go without. And I'm not talking about the 40 million uninsured
people we hear so much about.
I'm talking about families In rural America who can't afford to get sick
because the closest doctors Is 300 miles away. I'm talking about pregnant
women who should see an obstetrician — but can't because high malpractice
fees forced that doctor to close down shop. I'm talking about children who live
10 miles from a hospital that's got plenty of subspecialists — but can't get
them an appointment with a pediatrician.
So here's what the President's plan is going to do.
It's going to give you security — give you the peace of mind you deserve.
It's going to get hold of costs and make the mess make sense. It's going to
�make sure that the best parts of our health care system stay the same — that
if you want to stay with the doctor you've got now, you'll be able to. And it's
going to improve the quality of treatment that you get.
We're going to stop this crazy system of putting the insurance company
in charge — and put all of you in charge instead. We're going to guarantee
benefits and provide more choices — and then go on to give you simple
information about them. Instead of them dumping you, you'll be able to dump
them.
When the new health care plan is up and running, you're going to get a
health security card. You carry that card with you. That card will guarantee
you access to a comprehensive package of benefits. And that package will
include a lot of things you're probably not getting right now. Not just care if
you wind up in the hospital or have terrible trouble. But the kind of care that
will keep you and your children from getting sick in the first place.
Here's how it will work. You'll be able to choose from a variety of health
plans — and follow your doctor. Stick with the same arrangement you have
now if you like, where you go to a doctor and hospital and get charged each
time. Or join a network of doctors and hospitals and pay a little less. Or you
can decide to pay a flat fee that covers all your services for the year. And
�whatever you decide, if you're unhappy with your choice, you'll be able to vote
with your feet.
And remember this: if you lose your job, nobody will be able to take your
health care away from you. You won't have to worry about what happens if you
or your child or your parents get sick. No more preexisting conditions. No more
staying in a job because you're worried about what might happen next. No
more losing your health care just when you need it most.
The next thing we're going to do is to bring your costs under control.
We're going to force the insurance companies and the drug companies and
everyone else to live within a budget — just like you have to. And when we do
that, we're going to help bring down the deficit — and find money to invest in
our children and our communities again.
We're also going to take the paperwork mess and clean it up. We're going
to get rid of the 1,500 separate insurance forms and replace them with one
form — a form that you can understand. And we're going to free doctors and
nurses and hospitals from the bureaucratic hassles that take them away from
you, their patients.
If you're a small business and you're covering your employees right now,
we're going to bring your costs down. We will stop the insurance schemes that
�discriminate against you and drive your premiums through the roof. We're
going to let you team up with other small businesses and negotiate for the
same rates that insurance companies give the big guys. And if you're not
covering your employees now, we're going to help you take responsibility for
your employees' coverage.
[paragraph on rural access and more primary care physicians]
Now there are a lot of people out there who are going to tell you that we
don't need to change. They're going to try to scare you by making up all sorts
of stories about terrible things. Then they'll tell you that they agree we need
some reform — but only on their terms. What they won't tell you is that
they're the ones who have been lining their pockets in this system while the
rest of us have had our pockets emptied.
But, together, we're not going to let the lobbyists and the special
interests win this one. Because what should really scare you most is more of
the same.
Every day, more American families lose their health insurance — and
even if you're one of the lucky ones who likes what you've got, the odds that
you'll have it next year aren't very good. Every day, health care costs keep
rising out of control — and eating up your incomes and the future of our kids.
�And every day the special interests back in Washington keep telling us that
nothing can or should be done.
You and I know that they're wrong. We need the change. And we need it
now.
��ALTERNATIVE OPTIONS
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
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<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
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William J. Clinton Presidential Library & Museum
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2006-0885-F
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[Health Care Reform] [1]
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
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2006-0885-F Segment 5
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Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621459" target="_blank">National Archives Catalog Description</a>
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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5/7/2015
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17621459
12093636
42-t-12093636-20060885F-Seg5-007-007-2015
-
https://clinton.presidentiallibraries.us/files/original/9e8b5adf078c4f81678a82af65837f97.pdf
64f5c15ad47d7b21f2b48089dd1096e0
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
3313
OA/ID Number:
FolderlD:
Folder Title:
[Health Care Economic Binder - Draft] [3]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�UJ
t l ^ V •• - ' J ' l
ana A a r t / t i r
Overview of Medicaid Under the Health Security Act
ETDOi
�12/13/93
18:25
© 2 0 2 401 7321
HHS ASPE/HP
01003
Alliance Coverage of Medicaid Recipients
All those who would be eligible for Medicaid under current law will be enrolled in
regional alliances.
Medicaid-eligible individuals who receive AFDC or SSI (cash recipients) will not
contribute towaid the premium if the chosen plan's premium is at or below the
weighted avenge premium for the alliance. If the plan's premium is above the
regional alliance's weighted average premium, therecipientmust pay the additional
cost.
Medicaid-eligible individuals who do not receive AFDC or SSI (non-cash recipients)
will make a premium contribution. As for other low-income groups, the premium
contribution will be discounted if family income is below 150 percent of the federal
poverty line.
12/13/93
�Premium Payments for Medicaid Cash Recipients
for Alliance-Covered Services
States and the Federal government will make premium contributions to regional
alliances, according to the existing Medicaid matching formula, on behalf of cash
recipients.
Per capita premium payments for AFDC and SSI recipients will be determined by:
(1)
Calculating 95 percent of the state's FY 1993 spending for AFDC and SSI
recipients, respectively, for the services included in the comprehensive benefit
package.
(2)
Trending the 1993 per capita amounts forward through the year before the
state's first year of refonn by the lesser of: the national growth rate for cash
recipients specified in the Act, or actual growth in per capita spending in the
state over the same period. (Different national growth rates apply for AFDC
and SSI payments.)
(3)
Updating per capita payments through the state's first year of reform and
annually thereafter by budgeted rates of increase based on national health
mflation.
12/13/93
�i^-xo
»o
iti-.zo
&jtV£ 4U1_7321
HHS ASPE/HP
Payments for Medicaid Non-Cash Recipients
for Alliance-Covered Scrrices
States will be required to make maintenance-of-effort payments to regional alliances
on behalf of non-cash recipients.
Payments for non-cash recipients for alliance covered services will be determined by:
(1)
Calculating the state's FY 1993 spending (state share only) for non-cash
recipients, for the services included in the comprehensive benefit package.
(2)
Trending the 1993 expenditures forward through the state's first year of
refonn by a national growth rate for non-cash recipients, specified in the Act.
(3)
Updating payments for each year following the first year by budgeted rates of
increase based on national health inflation.
12/13/93
1^1005
�12/13--93
18:28
© 2 0 2 401 7321
HHS ASPE/HP
Long-Term Care
o
Current Medicaid policies regarding nursing home care, ICF/MR, and
community-based long-term care continue, with three exceptions:
(1)
(2)
12/13/93
Personal needs allowance: Federal coverage will beraisedfrom $30 to
$50; the Federal government will pay 100% of the difference in the
costs incurred by raising the allowance.
(3)
o
Assets: States have the option of raising allowable assets from $2,000
to $12,000.
Medically needy: All states will be required to have a medically needy
program.
A new community-based long-term-care program will be available for the
severely disabledregardlessof income.
01008
�iZTToTTTo
TXTTT
'ffZO^ 401 7321
HHS ASPE/HP
IfilOOT
Disproportionate Share
o
The disprqpoitionate share program will be eliminated when a state
implements health care reform.
A new Federal program for vulnerable populations will be fttfahlidiArf
Hospitals that serve a high proportion (over 25% of total utilization) of lowincome individuals will receive Vulnerable Population Adjustment (VPA)
payments directly from the Federal government forfiveyears.
A state's maintenance of effort payment to regional alliances will include an
amount based on a state's disproportionate share spending attributable to noncash recipients. This amount will be determined by:
(1)
(2)
Trending this amount forward through the state'sfirstyear of
refonn by a national growth rate for disproportionate share
specified in the Act.
(3)
12/13/93
Calrcilating each state's spending for disproportionate share
attributable to non-cash recipients.
Updating payments for each subsequent year by the budgeted
rates of increase based on national health inflation and national
population growth.
�mis A i f t / i i r
1£]UU0
Payments for Medicaid Services Not Covered in the Basic Benefits
(Wrap-Around Services)
o
Financing and coverage of services not included in the comprehensive benefit package
but currently covered by Medicaid (" wrap-around" services) will depend on an
individual's cash or non-cash Medicaid status and age.
Financing of Medicaid Services Not Covered by Alliances (Wrap-Around Services)
Group
Eligibility Status
Cash
Children
Non-Cash
Capped Federal program
State maintenance-of-effort
payments to alliances
Adults
Capped Federal program
No state contribution (1)
Medicaid continues
Medicaid continues at state
option
Federal-State matching
payments
Dual Eligibles
o
No Federal matching
payments
Medicaid continues
Medicaid continues
Federal-State matching
payments
|
|
Federal-State matching
payments
All cash and non-cash children will receive wrap-around services under a new Federal
program.
Adult non-cash recipients may continue to receive wrap-around services as a state
option. However, no Federal matching payments will be available for this
population.
Adult cash recipients will continue toreceivewrap-around services. The states and
the Federal government will continue to share the cost of these benefits as under tbe
current Medicaid program.
(1)
States not using 1902(r)(2) as of October 1, 1993 in determining income and
resources for children may not do so.
12/13/93
�The Health Security Plan
MEDICAID
Medicaid, the joint federal-state program that provides health coverage to lowincome Americans, is a mixed blessing for those it serves. Medicaid coverage can
serve as a disincentive to join the workforce. Employment typically means giving up
Medicaid benefits but entry level positions increasingly do not include health
coverage.
A Medicaid card, however, does not guarantee care. Low reimbursement rates
and the stigma attached to the program have caused many providers to not accept
Medicaid patients.
For States, Medicaid has proved to be nothing short of a fiscal monster,
gobbling up revenues once directed to education, public safety and highway
maintenance. The nation's governors and state legislators are caught in a bind:
growing health insecurity leaves residents with no choice but to apply for Medicaid,
but the state's burden is astronomical. And Medicaid costs - both Federal and state
-- are rising with no end in sight. In 1992, for the first time, states reported spending
more on health care than education.
The Health Security plan will integrate Medicaid beneficiaries into the new
system - and help relieve pressures on state capitals, physicians, and those who need
care but simply cannot afford it.
Integration of Medicaid Beneficiaries
•
Current, Medicaid recipients will carry the same Health Security card that
provides a comprehensive package of benefits that can never be taken away.
•
Medicaid patients will choose among health plans offered by their local
alliances, just as all other Americans will choose.
•
The Health Security plan will remove the stigma and risk of being denied
treatment attached to obtaining health coverage through Medicaid today.
Medicaid Contributions to Alliances
•
Under the Health Security plan, Medicaid will continue as a separately
funded program for persons receiving cash assistance (either AFDC or SSI).
•
Just as private sector employers will make payments for the health coverage
costs of their employees, the Medicaid program will make payments to
alliances to cover the costs of providing benefits to cash assistance recipients.
�Medicaid
Page 2
•
Because health plans will receive the same payment from the alliance
regardless of an enrollee's Medicaid status -- Medicaid patients will be
treated like all others; this will help end today's two-tier medical system.
Preserving Medicaid Benefits
•
Medicaid will continue to pay for additional ancillary health services not
covered in the comprehensive benefits package for cash assistance recipients
-- such as transportation, language interpretation and child care during clinic
visits.
Ends "Medicaid Lock"
•
The plan will also benefit Medicaid recipients and public sector budgets by
reducing welfare lock - the fear that one will lose health care coverage by
simply going to work. Guaranteeing seamless coverage and outlawing
current insurance practices will free today's welfare recipients to pursue work
and economic independence.
Relief to States
•
Integration of Medicaid into the new health care system will provide
substantial fiscal relief to state and local governments. Current non-cash
assistance Medicaid recipients will no longer rely on Medicaid for their
health coverage. They will be provided coverage through the alliances based
on their employment status, like everyone else.
•
Medicaid will make payments to health plans on behalf of AFDC and SSI
cash recipients based on prior levels of spending for these populations in a
state. Payments to alliances will be tied to the rate of growth ofthe budget
rather than higher levels currently projected. This will free up state
resources for other pressing concerns.
October 8, 1993
�•2,
IV. MIDICAIO
•
MadiCAid Policies
Detain on Medicaid savinga
• Spending for Medicaid Population
Potential Advantages and Dlsadvantagea to States
Effect of Moving Acute Services to Alliances
• Medicaid DSH Program Savings
• Payments to DSH
Medicaid! Currant System vs. N w Syatem
e
Coverage for Medicaid Eligibles
• Medicaid Premium Payments to Alliances
Wrap Around--Eligibillty and Covered Services
— W r a p Around Services--Financing
-f • Long-Terra Care
-? • Medicaid Premium Payments to Alliances
-f • Medicaid Premium Payments--Blended Premiums
• Medicaid Payment Rates (Boren Ammendment)
• Puerto Rico and U.S. Territories
• Undocumented Residents
• Evaluation of Medicaid Changea Under H A
S
r
V
�'
HEALTH CARI RIFORM POLICY!
f«)&*&
SfXNCING FOR THI NIDICAIO POPUIATIOH
N N C S WCIPIINTS, ACUTE CARE
O-AK
Alliance •ervieai - States will make maintananca-of-sffort (MOE)
payments to the alliance on behalf of non-cash recipients. The
payment will be the state's 1993 Medicaid spending for alliance
services for the non-cash population, trended forward by a
national growth factor for non-cash spending through the state's
first year of reform. The specific growth rate applied depends
on the date of Implementation. Following the first year of
implementation/ the MOE amount will be updated annually by
budgeted rates of Increase based on inflation and population.
This payment is one component of atate maintenance of effort
(MOE) paid to the alliances.
WgflP-ttrgUnti mvlCga for flSfrits and ^ A l lllglbltf - wrap-around
services are acute-care services not covered by the alliance but
covered under the state's Medicaid plan, states will have the
option to continue or terminate these services to the non-cash
adult and dual eligible population. However; a state will
receive federal matching payments only for wrap-around services
for the dual eligiblea. Thus, if a state opti to provide wraparound services to non-cash adults, i t will incur new costa
equivalent to the federal ahare for this population, In addition
to its current coata for wrap-around services.
wrap-around services for children - Wrap-around services for noncash children under age 6 and below 133 percent of poverty, and
under age 19 and below 100 percent of poverty if born after
9/30/83, will be covered under a new federal program, states
will have to pay a maintenance of effort (MOE) for theae benefits
for their non-cash children.
piaproportlonate • i r - states will make MOE payments to the
f*«
alliance for the portion of their DSH costs attributable to the
non-cash population. Thia portion is defined aa the ahare of a
atate'a total Medicaid payments for acute and mental hoapltal
services that la attributable to the non-cash. Thia DSH amount
ia the other component of state MOE payments to alliances.
The MOE payment for DSH will be the state'a 1993 non-cash DSH
spending, trended forward by a national growth factor for DSH
through the state's first year of reform. The orowth factor ia
conceptually like the one described above for alliance services,
but the rate Itself will be different. Once again, the apeclfic
growth rate applied depends on the year of implementation.
Likewise, following the first yaar of Implementation, the MOE
in
fOlAft
, „
�'•if
amount will bt updated annually by budgeted rates of increase
based on inflation end population.
CASH RXCIPZENTS, ACUTE CARE
Alllanea servicaa - States will make per capita premium payments
to the alliances on behalf of cash recipients for alliance
services covered under the state plan.
The par capita payments will be calculated aa follows. An amount
equal to 95 percent of the state's 1993 per capita Medicaid
spending for this population for alliance services for the cash
population, trended forward by a national growth factor for cash
spending up
the state's first year of reform. Once more, the
specific growth rate applied depends on the year of
implementation. This amount will then be updated annually by
budgeted rates of increase based on inflation and population.
Wrap-around services for adults and dual allglbles - There will
be no change in state Medicaid spending for cash adults and dual
eligibles under health care reform.
wrap-around services for children - Wrap-around services for cash
and non-caah children will be covered under a new federal
program. However, states will make a MOE payment to the federal
government for these services for cash children. The state MOE
payment will be the state's 1993 Medicaid spending for wraparound aervlces for cash children, trended forward by the
national growth factor for cash spending through the first year
of reform. Thereafter this amount will be updated annually by
budgeted rates of increased based on inflation and population.
Disproportionate ahare - Under health care reform, states will no
longer pay that portion of DSH attributable to their cash
recipients.
11
�TBS HIALTH SICURITY ACT
POTINTZAL AOVANTAGZS A D DISADVANTAGES FOR STATES
N
PfyPENTIAL AD VAWT ACE 8
Effect! on State h t *
•
lth
budaeta.
The Preaident's plan will reduca the burden on State programs
that now f i l l gaps in health covsrage for the uninaured and
underinsured.
Federal subsidies for the purchase of health plans by lowincome persons will make i t unnecessary for them to turn to
publicly-funded health care programs when they become sick.
This will reduce pressures in State spending on:
- Medicaid
- General Aasistanca/General Relief insurance-style programs
- State support for uncompensated care.
e The Preaident's plan will allow States to enact reforms of
their own deaign, provided they meet certain conditiona euch
aa extent of coverage and coat neutrality.
e Expansions in coverage for aubatanca abuse and mental health
aervlces under alliance plane will reduce the costs of such
care now borne directly by states.
e The new Federal wraparound program for children will ensure
that most children currently eligible for Medicaid will
receive a l l medically necessary services through either
alliance coverage or wraparound services.
a N w public health initiatives will provide additional support
e
for health care for vulnerable populetione.
e Grants will be provided to States to provide apecial
assistance to rural and inner city areas.
e savings arise from setting per capita payments to alliances
for AFDC end SSI recipients at 95% of current fee-for-service
levels. States will also realize on-going savinga because
growth in these payments will be constrained by premium caps.
e states' share of Medicaid payments to dlaproportionate share
hospitals would be reduced. States would include DSH spending
in their maintence of effort payments for non-cash Medicaid
eligibles, but not for cash recipients.
e state spending on drugs for Medlcara-Medicald dually eligible
12
�individuilf, at wall aa thoae receiving aaelatance from Stateonly drug programa/ will be picked up by the new Medicare drug
program.
e Expanalona of long-term care inaurance in response to new tax
incentives will relieve pressure on Medicaid payments for
long-term care.
e A new community-based long-term care program for the disabled
will pay for some care n w covered under county and local
o
programs aa well as Medicaid.
e The increase in the personal needs allowance for nursing h m
oe
patients will be fully Federally funded.
Effect on health providers funded by States.
e Providers that rely on State funding for free care that they
provide will particularly benefit. Alliance plana will
provide inaurance payments for individuals that are now free
care cases.
e State supported providers of substance abuae and mental health
aervlces will have access to payments from Alliance plana.
e The market position of essential community providers will be
orotected. Alliance plana will be required to contract with
essential providera, including many State-tunaea provia'ere.
e The new Vulnerable Population Adjustment program will provide
additional funds to hospitala -- including public hoapitals
serving high proportions of low-income persons and providing
uncompensated care.
Effects on States aa employers:
e Federal subsidies for early retirees will produce large
savings for State employee health benefit programa.
a
Increases in State apending for employee health benefita will
be controlled under the premium capa. V
Per capita apending on former Medicald-eligiblea would be
capped. Initial capa would be based on historical trends,
perpetuating State-by-state apending variations. Stata with
generous Medicaid programa will be locked into
diaproportionately higher apending than leaa generous States
.i__Itates and localities remain exposed for coats of care to
^JSj^m
�group* that will lack coverage, e.g., undocumented aliens,
Inmates, unemployed persons or others who fail to enroll in a
plan.
States will need to pay at least 80% of the community-rated
average premium in each alliance for State employees,
including pro-rated contrlbutiona for part-time workers. This
may be more (or less) than States pay today.
States will continue to determine Medicaid eligibility for
Medicaid long term care.
Liberalizations in the continuing, long-term care side of
Medicaid may require additional funding. Liberalizations
include«
- Mandating medically needy programa for peraona in
institutions. Only approximately half the States now run
medically needy programs.
- increasing the amount of assets that States must permit
institutionalized persons to retain from $2000 (typical) to
$12,000.
�NIDZCAZDi CUWUNT iYSTBM V8 NJW SYSTEM
QI Explain to m« how indlviduali now ••zv«d by th« Medicaid
program will ba batter aervad under the Preaident'a plan.
At Because Medicaid recipients will be covered by the regional
health alliancea, they will receive the comprehensive standard
benefits package, children who are currently eligible for
Medicaid and, at the states' option, duel eligibles and adult
Medicaid recipients will also be covered for some
intarY^s^tces. They will have a choice of plana, and
will receIvi7subsidies\toward their premiums i f they are
unemployed, imder-fcherpresident's plan, Medicaid recipients
will finally be able to participate in mainatream medicine.
, the great variations among Medicaid programa in
o ia covered, the services included, and the
ent rates would be eliminated.
i e
�COVIJUGE FOR MEDICAID ELIGIBLES
QUZSTION
How will Medicaid aligibl* individual! racaiva sarvicai under the
Health Security Act?
ASE
NWR
a Medicaid caah racipienta (AFDC/SSI) will choote between haalth
plana offered by alliance!. Thay may chooae any plan with
premium! agual to^r_^le!ati\«n theweichted-AX^ra^
for the aliIW5«^Xthout paylrig--i~prerolunr^ar^
they
chooaenr^aJT^tth premium! above the weighted average, they
will be responsible for the additional cost.
Other Medicaid recipient! will alao chooae between health
plana offered by alliances. Like other low-income groups,
they will make a premium contribution baaed on a sliding scale
related to Income.
Cost-sharing will be subsidized for AFDC/SSI recipients
enrolled in low cost sharing plans. Cost sharing will be
reduced to 20 percent of the low coat aharlng schedule (i.e.,
from $10 to $2 per visit). Emergency room co-paymenta would
remain at $25 to deter inappropriate ER use. If a low coat
sharing plan is not available at or below the weighted average
premium, cost sharing for Medicaid recipients will be
subsidized to the low or combination coat aharlng level.
Many Current Medicaid recipients will be able to receive
supplemental services through a "wraparound" program.
Children who currently qualify for Medicaid will qualify for
the Federal children'a wraparound program. In addition,
states may chooae to cover adults for supplemental services,
with Federal matching funda available for services provided to
adults on caah aasistance and dual Medicare eligiblea.
�W A A O N 3IRVICSS—ILIGIBILITY A D COVERED SERVICES
RP RUD
N
QUESTION
Will Medicaid reclpiantf lot* acceti to tervlces over and above
tha comprehtniive benefits package, services that they currently
j^eclev^
ASE
NWR
e Many Current Medicaid recipients will be able to receive
supplemental services through a "wraparound" program.
Children who currently qualify for Medicaid will qualify for
the Federal children's wraparound program. In addition,
states m y choose to cover adults for supplemental services,
a
with Federal matching funda available for services provided to
adulta on caah assistance end dual Medicare eligibles.
a The Secretary will define covered services and develop the
program's administrative design for the Federal children'a
program.
�WRAP AROUND SSRVICE8-FINANCING H^j
Qi H w will wrap-around atrvices ba flnancad?
o
ANiWtR
a Financing for wraparound sarvlcas variaa by type of racipient.
(Raquirad by Fadaral law)
-- Children: Through payment• to the Federal government/
states will maintain their effort for wraparound aervlces
for Medicaid-eligible children. Theae M E payments win be
O
determined under the same methodology as states' premium
payments for AFDC racipienta.
(State options)
-- Adults: Wraparound services for cash-recipient adults will
be financed through current State/Federal matching
arrangementa. servicaa for non-cash adulta will be
financed on a state-only basis.
•- Dual Medicare eligibles: Wraparound services for caah and
non-caah dual eligibles will be -ti^nted-through^e^rrejit^
-
Children
Cash
Federal w
/
State M E
O
(note-the
financing of
theae services
may change to
eliminate
atate MOE]
Adults
FA
MP
other
1902(r)<2)
kids Federal;
other groups
State option,
no natch
State option,
no match
FA
MP
FA
MP
Dual Eligiblea
Non-Cash
Federal w
/
atata M E
O
State option,
no match
State option,
no natch
Before 1998, apending for the Federal program for children*a
wraparound services will be limited to Medicaid apending for
these services in States which have implemented health reform,
adjusted for the number of qualified children (Cenaua and CPS
data), adjusted by growth rates applied to non-caah premiums,
and adjusted to account for calendar year program operations.
For 1998 and later years, spending for the Federal program for
children's wraparound aarvicaa will be limited to Medicaid
apending for theae aervicea in a l l Statea. The soma
adjustments will apply.
21
�L N - E M CARE
OGTR
QUESTION
Medicaid currantly paya for a larga ptrcantaga of long tarm cara
coitl in the U < ftbCJ i l l thaaa ••rvicaa ba financed after
S»
enactment of the Health Security Act?
e The current Medically Needy program for inatitutional programs
will be mandated for a l l States.
e The personal needs allowance (PMA) will be increased from the
current $30 per month minimum. The incremental increase win
be completel? federal; State/Federal matching will continue
for States' current PNA level. The new minimum PNA is under
review.
e States will have the option to increase the lona term care
asset limit from the current $2,000 limit to $12,000.
�NXDICAZD PREMIUM PAYMENTS TO ALLIANCES
QUESTION
H w will th« State, Federal Government, and employerf ahare the
o
coats for the Medicaid program?
.
^
SKORIUANSWl^/
.
StateS/ind the Federal government will make payments to
ices to finance health coverage for groups they have
covered through Medicaid under current law. Employers will
make premium payments for a l l employees, Including those who
would have been Medicaid eligible under current law.
LN ASE
OG NWR
a statea and the Federal government will make a "Medicaid"
premium payment to alliancea on behalf of Medicaid eligibles
who receive caah assistance. (State DSH payments will not be
Included in the premium for AFDC and SSI recipients.) Total
Federal premium payments on behalf of AFDC and SSI recipients
will be capped for fiscal years 1996 through 2000 at the
levels specified in legislation. After flacal year 2000,
growth in Federal capa will be limited to adjustments for
Inflation, U.S. population change and change in real GDP per
capita. Congressional action will be required to breach capa.
For AFDC eligiblea, thla payment will be baaed on 95 percent
of 1993 atate per capita Medicaid spending for services
provided in the comprehensive benefita package trended forward
by national growth rates through the first year after
implementation of reform. After implementation, annual
increases will be limited to budgeted ratea of increase based
on general health Inflation.
For SSI recipienta, thia payment will be baaed upon 95 percent
of 1993 atate per capita Medicaid apending (National SSI
atandardda will apply for a l l atatea) for services provided in
the comprehensive benefits package trended forward by national
growth ratea through the firat year after implementation of
reform. After Implementation, annual increases will be
limited to budgeted rates of Increase based on general health
nflation.
tates will make payments to alliances on behalf of non-caah
Medicaid recipienta. Theae payments will be baaed on 1993
State apending for services covered in their Medicaid benefit
package for the non-caah group trended forward by national
growth ratea through the firat year after implementation of
reform. After implementation, annual ratea of increase will
be limited to budgeted ratea of increaae baaed on general
�WDICAID PREMIUM PAYMENTS--BLINDED PREMIUMS
QUESTION
H w will AiUancti pay health plam for Medicaid enrolleai?
o
ASE
NWR
t
Following the conclusion of premium negotiations with health
plans, alliancea will compute a "blended premium" for each
health plan and category of policy baaed on family
arrangement.
e The blended premium will be the weighted average of the
premium the health plan charges to private enrollees and the
Medicaid capitation rate. Weights will adjust for the
distribution of private enrollees, AFDC recipients and SSI
recipients in the allianca, but adjustments will not be made
to reflect actual enrollment within any spedrfic plan.
a Alliances will pay haalth plans to cover the cost of
discounts which enable caah racipienta and families with
ineomea below 150 percent of poverty to pay low coat aharlng
rates although a low cost sharing plan is not available below
the weighted average premium. Health plana will not receive
extra funds to cover the additional 80 percent cost-sharing
discounts for caah recipienta. i t la assumed that the premium
payments are already sufficient to cover this cost.
26
�httlth cart inflation and population grwyu
Stato DSH paymentt will bt includtd inrmaintanc^f affort
paymtnta for non-caah Medicaid tligibru^JWrliOE will bt
baatd on Statt DSH txptnditurts in P 1993, trtndtd forward
Y
baatd on national growth rataa.
Employara of Mtdicaid-tligiblt traployata will pay pramiuma to
tht allianca baatd on privatt eactor ratta.
�govarnaant.
o Payment Lag from conversion
$8
"Close out costs" from the current Medicaid program will
naad to be covered ae final billa come in from States.
Alliance premium payments, children'a wraparound services
and 08K payments will a l l incur these costs.
o Cost Sharing Discounts
$ 2
Caah assistance recipients and low-income families will
receive cost-sharing discounts to enable them to enroll in
low and combination cost sharing plana. Theae discounts
will ba made available if the alliance does not have
sufficient low cost sharing plans below the average premium
price. Caah assistance recipients will also receive an 60
percent diacount off of the low cost sharing ratea (i.e.,
from $10 to $2).
Interaction wtth-Mtdicare
j.
Medicaid coats for dual eligiblea will increaae as Medicare
program savings are realised through higher costs to
beneficiaries.
Fofcel-coetnr
(Total savings) - (Total cost*)
$21
$65
�MEDICAID SAVINGS UNDER REFORM
Under reform, the Medicaid program will be restructured, and savings will be
achieved.
1.
The first area of savings comes from reducing the extra payments that
currently go to hospitals that care for a large percentage of low-income
and uninsured people, and therefore have a great deal of
uncompensated care. These payments, called Disproportionate Share
or "DSH" payments, will be less necessary under reform since there
will be no American or legal resident without insurance.
Savings: $55 billion over 5 years
2.
The second area of savings comes from integrating many current
Medicaid beneficiaries into alliance plans, since they will no longer end
up on Medicaid- for example people who now fall into the "medically
needy" category would never be in a situation where they faced
insupportable health care costs, and many of the children now covered
under Medicaid who aren't on welfare would be covered through the
alliance system and paid for through employer and subsidy payments.
In addition, continuing Medicaid spending would grow at a capped rate
of increase, as with the rest ofthe health care system.
Savings: $22 billion over 5 years
3.
Other savings come from reduced Medicaid spending for elderly
prescription drugs, since under the President's plan Medicare will
begin paying for prescription medications for Medicare/Medicaid
recipients, and from administrative savings to the Medicaid program.
�Nov«rab«r 18, 199 3
DETAILS O MEDICAID SAVINGS
N
The $65 billion in Medicaid aavinga over tha five yeara (19963000) .r. m.d. up of th. rouowlng fUc:
fy^^
Savinga (in billiona):
o
o
o
o
Discontinuation of DSH
$55
Capitation/alliance growth, cash $22
Offset for Medicare Drug Benefit $ 6
Administrative savings
Total aavinga
$87
Coats (in billions):
o
o
o
o
o
N w Federal kids wraparound
e
N w VFA Program
e
Payment Lag from Conversion
Coat Sharing Subsidies
Interaction with Medicare
Total coata
(Total aavlngs) - (Total coats)
$6
$4
$8
$2
i-i
$21
$65
�11/19>93
t
17:31
©202 690 5673
HHS-PLBLIC AFFAI
DEPARTMENT OF HEALTH & HUMAN SERVICES
Washington. D.C. 20201
STATEMENT OF
BRUCE C. VLADECK
ADMINISTRATOR
HEALTH CARE FINANCING ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT
COMMITTEE ON ENERGY AND COMMERCE
UNITED STATES HOUSE OF REPRESENTATIVES
NOVEMBER 19, 1993
�1119.93
17;31
© 2 0 2 690 5073
HHS-PLBLiC AFFAI
Mr. Chairman, Members of the Subcommittee, I am pleased to h?v<=\ yet another
opportunity to continue our discussions of the President's pror
alth Security
Act. Today, I will explain what health care reform means for o.
me citizens,
the changing role of States in administering health care for this
n, and how
we will achieve savings by integrating Medicaid into the mainstream ^ jr health
care system.
For nearly three decades, the Federal government and States have pre ded medical
assistance through the Medicaid program. Today, more than 32 millio Americans
benefit from Medicaid. In recent years, Congress has expanded MedKMd to include
individuals beyond traditionally defined eligibility groups. States, too, ,ave initiated
improved coverage and care by serving greater numbers of "me' ical'/ needy"
individuals and by implementing effective managed care prograr s for certain
targeted underserved populations.
Now, with the President's comprehensive health care reform plan, all Americans,
young and old, poor, working and retired will be ensured the security of basic health
care coverage. The current system bases eligibility for health c -e on income,
resource, and categorical criteria, leaving millions without basic .lealth care benefits.
Under the President's plan, no American will be excluded from 'asic health care
benefits.
!
HEALTH CARE REFORM AND LOW INCOME CITIZENS
The President's Health Security Act proposes universal coverag J through the shared
contributions of individuals, States, alliances, the Federal government and employers.
Individuals will be able to select the coverage that best serves their needs. Choice
will extend to everyone, from the most destitute to the most economically advantaged
individuals.
Medicaid, the program which has traditionally served many of our neediest citizens,
will be largely absorbed into the mainstream of our Nation's health care system.
Health care coverage will no longer favor certain individuals wnose income, age or
sex makes them needier than other individuals. Health care coverage will not
exclude young, healthy males because they do not have children, or married couples
because the primary wage earner has a minimum wage job.
Furthermore, under the Health Security Act, no provider will be reimbursed for acute
care services at a lower rate of payment just because a patient is covered by
Medicaid. Providers will be blind to an individual's status as a Medicaid recipient.
The Health Security Act will establish a system whose time is long overdue. This
Administration intends to replace fragmented coverage and services with uniform
coverage and comprehensive benefits, without regard for medical condition or ability
�1M9-93
17:32
© 2 0 2 690 5673
HHS-PLBLIC AFFAI
to pay.
We are going to achieve this goal through a number of mechanisms designed to
maximize the best aspects of private insurance and publicly funded programs. This
effort will produce a system that is simple, efficient, secure, cost effective, quality
driven, and choice oriented.
THE CHANGING ROLE OF THE MEDICAID PROGRAM
The Medicaid program is a jointly funded Federal/State program administered within
broad Federal guidelines by the States. States currently receive Federal matching
payments based upon a State's ability to share in program costs as measured by per
capita income.
Under the HeaJth Security Act, States will continue their shared Federal partnership in
the Medicaid program, but will benefit from redirected Federal funding and savings
from a new relationship with the private sector through alliance health plans.
Recipients will benefit from participation in an integrated health care system that
leaves no one without coverage and assures that everyone's coverage will be the
same throughout the country. And, providers of acute care services will benefit from
more uniformly applied payment rates that treat all patients equally.
Coverage In Alliance Plans
The Health Security Act will integrate Medicaid acute care services into alliance plans.
The most vulnerable poor will receive full coverage while maintaining the ability to
choose among health plans. Low-income individuals receiving cash assistance may
choose any alliance plan with premiums at or below the weighted average premium
for all plans in their alliance, without paying a premium. If they choose a plan with
premiums above this average, they will be responsible for the additional cost.
The State and the Federal government will pay a premium to the alliance for Medicaid
individuals receiving cash assistance based on 95 percent of current State per capita
Medicaid spending on alliance-covered services, trended forward by national growth
rates.
Other low-income individuals who do not receive cash assistance will also receive
health care coverage through alliance health plans. These individuals will make a
premium contribution based on a sliding scale related to income. Employers of lowincome employees will pay premiums to the alliance based on private sector rates, as
they do for all employees.
�11/ 19/93
17:32
© 2 0 2 690 5673
HHS-PLBLIC AFF.Al
^005
State Maintenance of Effort
States will continue to support the provision of health care to those low-income
individuals who participate in Medicaid but do not qualify for cash assistance by
making "maintenance of effort" payments to the alliance, based on 1993 spending for
Medicaid services that will be covered by alliance health plans. Maintenance of effort
payments will be used to help finance the costs of Federal discounts to individuals
with incomes below 150 percent of the federal poverty level.
Cost Sharing
Cost-sharing for low income individuals will be subsidized if a low cost-sharing plan,
such as an HMO, is not available. And, cost-sharing for individuals receiving cash
assistance will be reduced to 20 percent of the HMO cost sharing schedule, or $2 per
office visit.
Supplemental Services
Additionally, the Health Security Act will create a new Federal program that will
provide uniform supplemental benefits to low-income children. This will ensure that
most children who would have been eligible for Medicaid will continue to have access
to services such as transportation to health care providers, hearing aids, outpatient
therapies and other medically necessary services not covered under the alliance's
comprehensive benefit package or under the Medicaid long term care benefit.
States may also continue to provide optional Medicaid services to adult recipients of
cash assistance, as under current law. States will continue to pay for elderly
Medicare beneficiaries who qualify to have their out-of-pocket expenses paid by
Medicaid.
Serving Vulnerable Populations
A portion of State payments intended for hospitals serving a disproportionate share of
low income patients will be counted toward State maintenance of effort payments for
Federal matching purposes. States will not have to continue disproportionate share
hospital payments associated with cash assistance recipients, and these payments
are not built into the premium payment to the alliances.
A new Vulnerable Population Adjustment program will provide Federal payment
adjustments to hospitals. Hospitals will qualify for these payments if at least 25
percent of their patients have low incomes. The adjustment will include payments for
hospitals in States with .large numbers of undocumented persons. Annual funding for , ^
the' Vulnerable Population Adjustment program will be $1 billion once the alliances
are fully implemented.
�11.19.-9J
17:33
© 2 0 2 690 5673
HHS-PLBLIC AFFAI
Long-Term Care Benefit
In addition to mainstreaming current Medicaid recipients into alliance health plans,
the Health Security Act will make other improvements to the Medicaid program.
Medicaid long-term care benefits will continue for eligible patients in nursing facilities,
intermediate care facilities for the mentally retarded and community-based long-term
care, regardless of whether they receive cash assistance. These benefits will be
improved in several ways. The monthly allowance permitted for institutionalized
Medicaid patients to meet personal needs will be increased. Further, States may opt
to increase the asset standard for institutional long-term care eligibility from the
current $2,000 limit to $12,000.
MEDICAID SAVINGS
The Health Security Act will produce net Medicaid savings totaling approximately $65
billion .
Medicaid savings will result from:
•
Discontinuing Medicaid payments to hospitals serving a disproportionate share
of low-income individuals as States enter the alliance system. These payments
were established to help hospitals with large uncompensated care burdens.
Since universal coverage will virtually eliminate this problem, disproportionate
share hospital payments would be discontinued. The Vulnerable Population
Adjustment program will help those hospitals that continue to require some
assistance.
•
Lower payments to alliances based on 1993 Medicaid spending, adjusted to reflect health care inflation and population growth. Under a complete reform of
the health care system, plans will be able to provide better coverage for less
cost, and increases in spending will, therefore, be substantially lower than
Medicaid growth rates expected under the current system.
e
Reducing State Medicaid administrative responsibilities in enrollment,
oversight, rate-setting, and claims processing by including Medicaid recipients
in the alliance and by providing supplemental services to children through a
separate program.
e
Replacing some Medicaid spending for prescription drugs for the low-income
elderly with the new Medicare drug bcrofit. • MLdxaid will cover premiurr.s and
cost sharing for low-income Medicare beneficiaries for this benefit.
�11.19.93
17:34
'QZQZ 690 5673,
HHS-PLBLIC AFFA!
CONCLUSION
Mr. Chairman, a new era in the way we provide basic health care services to our
underserved and low-income citizens is about to be realized. What the President
envisions is a system that not only includes every individual in this nation, but a
system that also provides quality care at an affordable price.
We have designed a program that combines the best of what America has to give private sector innovation with public sector initiative.
I look forward to working with you and this Committee as we proceed in the coming
months to forge a plan that not only will benefit this generation but future generations
of Americans as well. Together, we can accomplish what has eluded all of us for so
long - uniform, basic health care for all.
i:0C
�SXPLANATXON OF SAVINGS>
o Discontinuation of DSH
A/)d^
U ^
. „ f^
4
$55
Ths Medicaid payments to hospitals serving a
dlaproportionate share of low-income individuals will be
k discontinued as States enter the Alliance ayatem. Because
DSH paymenta were established to help hospitals with large
v X V uncompenaatecUcare burdens, and universal Alliance coverage
t
ain«nr« ^^-^-^
will^liminate_t§is problem, D H payments should be
S
disconttnued-;—
o Capitation/Alliance growth, Cash $22
The caah aasistance (AFDC/SSI) recipienta who were on
Medicaid will receive their care in the Alliance like
everyone else. Federal and State payments to the Alliance
for this coverage will be; (1) baaed on 95 percent of 1993
Medicaid spending; and (2) tied to health care inflation
and population growth. Increases will therefore be
substantially lower than historic Medicaid growth rates.
o Offset for Medicare Drug Benefit
$ 6
The new Medicare drug benefit will replace Medicaid
apending for prescription drugs for the low-income elderly.
Medicaid will cover the premium and coat sharing for the
low-Income Medicare beneficiaries for this benefit.
o Administrative Savings
$ 4
Since the non-caah Medicaid eligibles will be included in
the Alliance, the States will no longer be required to
determine their eligibility for Medicaid.
Total aavinga
$87
XX7LANATI0N OF COSTSt
o N w Federal kida wraparound
e
$ 6
Wrap-around aervlces for non-cash children will be fully
federally financed, with a new Federal coat.
o N w VPA program
e
$ 4
Hoapitals which serve a high proportion of low-income
patients (more than 25 percent of patient load) will
receive a Vulnerable Population Adjustment. Eligible
hoapitals will receive payments directly from the Federal
8
�Overview of Medicaid Under the Health Security Act
11/7/93
�Alliance Coverage of Medicaid Recipients
All current Medicaid recipients will be enrolled in an regional alliance.
Current Medicaid recipients who do not receive AFDC or SSI (non-cash
recipients) will make a premium contribution. The premium contribution will be
discounted if family income is below 150 percent of the federal poverty line, as
with other low-income groups.
o
11/7/93
Current Medicaid recipients who receive AFDC or SSI (cash recipients) will not
contribute toward the premium if the chosen plan's premium is at or below the
weighted average premium for the alliance. If the plan's premium is above the
regional alliance's weighted average premium, then the recipient must pay the
additional cost.
�Premium Payments for Medicaid Cash Recipients
for Alliance-Covered Services
o
States and the Federal government will make premium contributions to regional
health alliances based according to the existing Medicaid matching formula on
behalf of cash recipients.
o
Premium payments for both AFDC and SSI eligibles will be determined by:
(1)
(2)
Trending the 1993 expenditures forward to the year before
implementation by national growth rates for cash recipients.
Different national growth rates will be used for the AFDC and SSI
payments.
(3)
11/7/93
Calculating 95 percent of each state's total per capita spending for
the services provided in the comprehensive benefit package in FY
1993 for AFDC and SSI recipients, respectively
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation.
�Payments for Medicaid Non-Cash Recipients
for Alliance-Covered Services
States will be required to make maintenance of effort payments to regional
alliances on behalf of non-cash recipients.
o
Payments for non-cash recipients for alliance-covered services will be determined
by:
(1)
(2)
Trending the 1993 expenditures forward through the year of
implementation by a national growth rate for non-cash recipients
(3)
11/7/93
Calculating each state's FY 1993 spending (state share only) for
the services provided in the comprehensive benefit package for
non-cash recipients
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation
�Payments for Medicaid Services Not Covered in the Basic Benefits
(Wrap-Around Services)
Coverage for services not included in the basic benefits package but currendy
covered by Medicaid will depend on an individual's:
o
(1)
Eligibility for Medicaid (cash or non-cash)
(2)
Age group, poverty status, and disability status
Financing of Medicaid Services Not Covered by Alliances (Wrap-Around Services)
Group
Eligibility
Cash
Non-Cash
Non-Medicaid
Below 150% FFL
Children
Federal program with State
maintenance of effort
Federal program with State
maintenance of effort;
1902(r)(2) recipients and
other State option recipients
are also in the Federal
program with State
maintenance of effort (1)
State option; no
Federal match
Adults
Federal-State match
State option; no Federal
match
State option; no
Federal match
Federal-State match
Not applicable
Dual Eligibles
Federal-State match
|
o
o
11/7/93
Adult non-cash recipients may continue to receive wrap-around services as a state
option. However, no Federal matching payments will be available for this
population.
o
(1)
All cash and non-cash children will receive wrap-around services.
Adult cashrecipientswill continue to receive wrap-around services. The states
and the Federal government will continue to share the cost of these benefits as
under the current Medicaid program.
This box reflects legislation and may not reflect current policy.
�Disproportionate Share
The disproportionate share program will be eliminated once a state has
implemented health care reform.
o
A new Federal program for vulnerable populations will be established. Hospitals
that serve a high proportion (over 25 % of patient load) of low-income individuals
will receive Vulnerable Population Adjustment (VPA) payments directly from the
Federal government.
A state's maintenance of effort payment to regional alliances will include an
amount based on a state's disproportionate share spending for non-cash recipients.
This amount will be determined by:
(1)
(2)
Trending the 1993 expenditures forward through the year of
implementation by a national growth rate for disproportionate
share
(3)
11/7/93
Calculating each state's spending for disproportionate share in FY
1993 attributable to non-cash recipients
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation and
population growth
�Long-Term Care
o
Current Medicaid policies regarding nursing home care, ICF/MR, and
community-based long-term care continue, with three exceptions:
(1)
(2)
11/7/93
Personal needs allowance: Federal coverage will be raised from $30 to
$70; the Federal government will pay 100% of the difference in the costs
incurred by raising the allowance
(3)
o
Assets: States have the option of raising allowable assets from $2,000 to
$12,000
Medically needy: A spend-down will be required for all states
A new community-based long-term-care program will be available for the
severely disabled regardless of income.
�MEDICAID UNDER HEALTH CARE REFORM
CONTENTS
Page
The Current System
• AFDC/SSI Recipients
• Poverty-level and near-poverty children
• "Medically Needy" individuals
• Low-Income Elderly
1
Medicaid Savings Under Reform
• DSH
• Integrating beneficiaries into alliance system
• Reduced spending for prescription drugs
2
Appendix 1
Overview of Medicaid Under the Health Security Act
Alliance Coverage of Medicaid Recipients
Premium Payments for Medicaid Cash Recipients
Payments for Medicaid Non-Cash Recipients
Payments for Medicaid Services Not Covered in the Basic Benefits
Disproportionate Share
Long-Term Care
Appendix 2
Details on Medicaid Savings
Spending for Medicaid Population
Potential Advantages and Disadvantages to States
Current System Vs. New System
Coverage for Medicaid Eligibles
Wrap Around Service - Financing
Long-Term Care
Medicaid Premium Payments to Alliances
Medicaid Premium Payments - Blended Premiums
Appendix 3
Bruce Vladeck Statement
Subcommittee on Health and the Environment
Committee on Energy and Commerce
November 19, 1993
�MEDICAID UNDER HEALTH CARE REFORM
Medicaid will be restructured and will play a significantly reduced role
in the reformed health care system.
The Current System:
Today, there are several categories of people who get their health care
through Medicaid:
AFDC/SSI RECIPIENTS:
•
Pregnant women and children who receive Aid to Families with
Dependent Children (AFDC, or welfare) also receive Medicaid. I n
addition, people who qualify for Supplemental Security Income (SSI)
receive Medicaid as well. These beneficiaries are sometimes called
"cash recipients", because they qualify for Medicaid by virtue of their
participation in AFDC or SSI, programs that provide direct income
support.
P O V E R T Y - L E V E L AND N E A R - P O V E R T Y C H I L D R E N :
•
I n recent years, the Federal government has expanded the Medicaid
program to include coverage of poor children, even i f they do not
receive welfare. Many of these children are in households where
someone works.
" M E D I C A L L Y N E E D Y ' INDIVIDUALS:
•
There are individuals who qualify for Medicaid because their health
care bills have outstripped their ability to pay them, either because
they encounter huge and recurring bills and have no insurance, or
because their insurance has reached an annual or lifetime limit, or
because their insurance did not cover their ailment or needed
treatment.
LOW-INCOME E L D E R L Y :
•
Elderly people who "spend down" to poverty qualify for Medicaid longterm care coverage, which is almost always provided in the nursing
home.
�MEDICAID SAVINGS UNDER REFORM
Under reform, the Medicaid program will be reduced, and savings will be
achieved.
1.
The first area of savings comes from the reducing the extra payments
that currently go to hospitals that care for a large percentage of lowincome and uninsured people, and therefore have a great deal of
uncompensated care. These payments, called Disproportionate Share
or "DSH" payments, will be less necessary under reform since there
will be no American or legal resident without insurance, and will
therefore be reduced.
Savings: $55 billion over 5 years
2.
The second area of savings comes from integrating many current
Medicaid beneficiaries into alliance plans, since they will no longer end
up on Medicaid- for example people who now fall into the "medically
needy" category would never be in a situation where they faced
insupportable health care costs, and many ofthe children now covered
under Medicaid who aren't on welfare would be covered through the
alliance system and paid for through employer and subsidy payments.
In addition, continuing Medicaid spending would grow at a capped rate
of increase, as with the rest ofthe health care system.
Savings: $22 billion over 5 years
3.
Other savings come from reduced Medicaid spending for elderly
prescription drugs, since under the President's plan Medicare will
begin paying for prescription medications for Medicare/Medicaid
recipients, and from administrative savings to the Medicaid program.
�Overview of Medicaid Under the Health Security Act
11/7/93
�Alliance Coverage of Medicaid Recipients
All current Medicaidrecipientswill be enrolled in anregionalalliance.
Current Medicaidrecipientswho do not receive AFDC or SSI (non-cash
recipients) will make a premium contribution. The premium contribution will be
discounted if family income is below 150 percent of the federal poverty line, as
with other low-income groups.
o
11/7/93
Current Medicaid recipients who receive AFDC or SSI (cashrecipients)will not
contribute toward the premium if the chosen plan's premium is at or below the
weighted average premium for the alliance. If the plan's premium is above the
regional alliance's weighted average premium, then the recipient must pay the
additional cost.
�Premium Payments for Medicaid Cash Recipients
for Alliance-Covered Services
States and the Federal government will make premium contributions to regional
health alliances based according to the existing Medicaid matching formula on
behalf of cash recipients.
Premium payments for both AFDC and SSI eligibles will be determined by:
(1)
(2)
Trending the 1993 expenditures forward to the year before
implementation by national growth rates for cash recipients.
Different national growth rates will be used for the AFDC and SSI
payments.
(3)
11/7/93
Calculating 95 percent of each state's total per capita spending for
the services provided in the comprehensive benefit package in FY
1993 for AFDC and SSI recipients, respectively
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation.
�Payments for Medicaid Non-Cash Recipients
for Alliance-Covered Services
States will be required to make maintenance of effort payments to regional
alliances on behalf of non-cash recipients.
Payments for non-cashrecipientsfor alliance-covered services will be determined
by:
(1)
(2)
Trending the 1993 expenditures forward through the year of
implementation by a national growth rate for non-cash recipients
(3)
11/7/93
Calculating each state's FY 1993 spending (state share only) for
the services provided in the comprehensive benefit package for
non-cash recipients
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation
�Payments for Medicaid Services Not Covered in the Basic Benefits
(Wrap-Around Services)
Coverage for services not included in the basic benefits package but currently
covered by Medicaid will depend on an individual's:
(1)
Eligibility for Medicaid (cash or non-cash)
(2)
Age group, poverty status, and disability status
Financing of Medicaid Services Not Covered by Alliances (Wrap-Around Services)
Group
Eligibility
Cash
Non-Cash
Non-Medicaid
Below 150% FPL
Children
Federal program with State
maintenance of effort
Federal program with State
maintenance of effort;
1902(r)(2) recipients and
other State option recipients
are also in the Federal
program with State
maintenance of effort (1)
State option; no
Federal match
Adults
Federal-State match
State option; no Federal
match
State option; no
Federal match
Dual Eligibles
Federal-State match
Federal-State match
Not applicable
o
o
11/7/93
Adult non-cashrecipientsmay continue to receive wrap-around services as a state
option. However, no Federal matching payments will be available for this
population.
o
(1)
All cash and non-cash children willreceivewrap-around services.
Adult cashrecipientswill continue to receive wrap-around services. The states
and the Federal government will continue to share the cost of these benefits as
under the current Medicaid program.
This boxreflectslegislation and may notreflectcurrent policy.
�Disproportionate Share
The disproportionate share program will be eliminated once a state has
implemented health care reform.
A new Federal program for vulnerable populations will be established. Hospitals
that serve a high proportion (over 25 % of patient load) of low-income individuals
will receive Vulnerable Population Adjustment (VPA) payments directly from the
Federal government.
A state's maintenance of effort payment toregionalalliances will include an
amount based on a state's disproportionate share spending for non-cash recipients.
This amount will be determined by:
(1)
(2)
Trending the 1993 expenditures forward through the year of
implementation by a national growth rate for disproportionate
share
(3)
11/7/93
Calculating each state's spending for disproportionate share in FY
1993 attributable to non-cash recipients
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation and
population growth
�Long-Term Care
o
Current Medicaid policies regarding nursing home care, ICF/MR, and
community-based long-term care continue, with three exceptions:
(1)
(2)
11/7/93
Personal needs allowance: Federal coverage will be raised from $30 to
$70; the Federal government will pay 100% of the difference in the costs
incurred by raising the allowance
(3)
o
Assets: States have the option of raising allowable assets from $2,000 to
$12,000
Medically needy: A spend-down will berequiredfor all states
A new community-based long-term-care program will be available for the
severely disabledregardlessof income.
�X
ZV. MIDZCAIO
•
Medicaid Policies
Details on Medicaid Savings
-? • Spending for Medicaid Population
Potential Advantages and Disadvantagea to States
• Effect of Moving Acuta servicaa to Alliancea
• Medicaid DSH Program Savings
• Payments to DSH
Medicaid: Currant Syatem vs. New System
— ? • Coverage for Medicaid Eligibles
• Medicaid Premium Payments to Alliancea
• Wrap Around--Eligibility and Covered Servlcee
— W r a p Around Services--Financing
• Long-Term Care
-? • Medicaid Premium Payments to Alliancea
a Medicaid Premium Payments--Blended Premiums
• Medicaid Payment Rates (Boren Ammendment)
• Puerto Rico and U.S. Territories
• Undocumented Residents
• Evaluation of Medicaid Changes under HSA
1
7
10
12
15
16
17
18
19
16
20
21
22
23
25
26
28
29
30
�November 18, 1993
DETAILS O MEDICAID SAVINGS
N
The $63 billion in Medicaid tavingf over the five years (1996
2000) are made up-of the following pieces:
Savinga (in billiona):
o
o
o
o
Discontinuation of DSH
$55
Capitatlon/elllence growth, caah $22
Offaet for Medicare Drug Benefit $ 6
Administrative Savings
Total savings
$87
Costs (in billions):
o
o
o
o
o
N w Federal kids wraparound
e
N w VPA Program
e
Payment Lag from Converalon
Coat Sharing Subsidies
Interaction with Medicare
$ 6
$ 4
$ 8
$ 2
% 1
Total coats
$21
(Total aavlngs) - (Total coats)
$65
�SXPLANATXON OF SAVINGS«
o Oltcontinuation of DSH
$55
Th* Medicaid payments to hospitals serving a
disproportionate share of low-income individuals will be
discontinued aa States enter the Alliance system. Because
DSH payments were established to help hospitals with large
uncompensated care burdens, and universal Alliance coverage
will eliminate this problem, D H paymenta should be
S
discontinued.
o Capitation/Alliance growth, Cash $22
Tha caah aasistance (AFDC/SSI) recipients who were on
Medicaid will receive their care in the Alliance like
everyone else. Federal and State paymenta to the Alliance
for thia coverage will be; (1) based on 95 percent of 1993
Medicaid apending; and (2) tied to health cere inflation
and population growth, increases will therefore be
substantially lower than historic Medicaid growth rates.
o Offset for Medicare Drug Benefit
$ 6
The new Medicare drug benefit will replace Medicaid
apending for prescription drugs for the low-income elderly.
Medicaid will cover the premium and cost sharing for the
low-income Medicare beneficiaries for this benefit.
o Administrative Savings
$ 4
Since the non-caah Medicaid eligiblea will be Included in
the Alliance, the Statea will no longer be required to
determine their eligibility for Medicaid.
Total aavinga
$87
EXPLANATION 07 COSTS>
o N w Federal kids wraparound
e
$ 6
Wrap-around aervlces for non-cash children will be fully
federally financed, with a new Federal coat.
o N w VPA program
e
$ 4
Hoapitals which serve a high proportion of low-income
patienta (more than 25 percent of patient load) will
receive a Vulnerable Population Adjustment. Eligible
hospitala will receive payments directly from the Federal
a
�government.
o Payment Lag from converalon
$ 8
"Cloae out costs" from the current Medicaid program will
need to be covered as final bills come in from States.
Alliance premium payments/ children'a wraparound services
and OSK payments will a l l incur these costs.
o Cost Sharing Discounts
$ 2
Caah assistance recipients and low-income families will
receive cost-sharing discounts to enable them to enroll in
low and combination coat sharing plana. Theae discounts
will be made available if the alliance does not have
sufficient low cost sharing plana below the average premium
price. Caah assistance recipients will alao receive an 80
percent discount off of the low cost sharing ratea (i.e.,
from $10 to $2).
o Interaction with Medicare
l _ i
Medicaid coats for dual eligiblea will increaae aa Medicare
program savings are realised through higher costs to
beneficiariee.
Total coats
(Total savings) - (Total costs)
$21
$65
�HIALTH CARI RIFORM POLICYl
SPENDING FOR THI MEDICAID POPULATION
N N C S RICIFIINTS, ACUTE CARE
O-AH
Alliance ••rvicaa - States will make maintenance-of-effort (MOE)
payments to the alliance on behalf of non-cash recipients. The
payment will be the state's 1993 Medicaid spending for alliance
services for the non-cash population, trended forward by a
national growth factor for non-cash spending through the state's
first year of reform. The specific growth rate applied depends
on the date of Implementation. Following the first year of
implementation, the MOE amount will ba updated annually by
budgeted rataa of Increase based on inflation and population.
Thla payment la one component of atate maintenance of affort
(MOE) paid to the alliances.
Wrao-around services for adults and dual eligibles - Wrap-around
aervicea are acute-care services not covered by the alliance but
covered under the state's Medicaid plan, states will have the
option to continue or terminate these services to the non-caah
adult and dual eligible population. However/ a state will
receive federal matching payments only for wrap-around aervicea
for the dual eligibles. Thus, i f a state opti to provide wraparound aervicea to non-caah adults, i t will incur new costs
equivalent to the federal share for thla population, in addition
to its current coata for wrap-around aervlces.
Wrap-around services for children - Wrap-around services for noncash children under age 6 and below 133 percent of poverty, and
under age 19 and below 100 percent of poverty i f born after
9/30/83, will be covered under a new federal program, states
will have to pay a maintenance of effort (MOE) for theae benefita
for their non-caah children.
disproportionate share - states will make MOE paymenta to the
alliance for the portion of their DSH costs attributable to the
non-caah population. This portion is defined as the ahare of a
state'a total Medicaid payments for acute and mental hoapltal
aervlces that la attributable to the non-cash. Thia DSH amount
la the other component of atate MOE paymenta to alliancea.
The MOE payment for DSH will be the atate'a 1993 non-caah DSH
spending, trended forward by a national growth factor for DSH
through the state's first year of reform. The orowth factor ia
conceptually like the one described above for alliance aervicea,
but the rate itself will be different. Once again, the apeclfic
growth rate applied depends on the year of implementation.
Likewise, following tha firat yaar of Implementation, the MOE
�'if
amount will b« updated annually by budgeted rataa of increase
baaed on inflation and population.
CASH RXCXPIENTS, ACUTE CARE
Alliance aervicea - States will make per capita premium payments
to the alliancea on behalf of cash recipienta for alliance
aervicea covered under the state plan.
The par capita payments will be calculated aa follows. An amount
equal to 95 percent of the state's 1993 per capita Medicaid
spending for thla population for alliance aervicea for the cash
population, trended forward by a national growth factor for cash
apending up £fi the state's first year of reform. Once more, the
specific growth rate applied depends on the year of
implementation. This amount will then be updated annually by
budgeted rataa of Increase based on inflation and population.
ifpap-around aervlces for adults and dual eliolbles - There will
be no change in state Medicaid spending for caah adults and dual
eligiblea under health care reform.
ffrap-around sarvlcea for ehildran - Wrap-around services for cash
and non-caah children will be covered under a new federal
program. However, states will make a MOE payment to the federal
government for these services for cash children. The state MOE
payment will be the state's 1993 Medicaid apending for wraparound aervicea for cash children, trended forward by the
national growth factor for caah spending through the first year
of reform. Thereafter this amount will be updated annually by
budgeted ratea of increased based on inflation and population.
Pi•proportionate share - Under health care reform, statea will no
longer pay that portion of DSH attributable to their caah
recipienta.
11
�TRS HIALTH SICURITY ACT
POTINTXAL AOVANTAGIB AND DI9ADVANTAOI8 FOR 8TATI8
POTENT I At. AD VANT ACE 8
Effect! on State health budaetB.
a The Preaident'a plan will reduce the burden on State programs
that now f i l l gaps in health covsrage for the uninaured and
underinsured.
Federal aubsidles for the purchase of health plana by lowincome persons will make i t unnecessary for them to turn to
publicly funded health care programs when they become sick.
This will reduce pressures in State apending on:
- Medicaid
- General Assistance/General Relief insurance-style programs
- state aupport for uncompensated care.
a The Preaident'a plan will allow statea to enact reforms of
their own deaign, provided thay meet certain conditiona such
as extent of coverage and coat neutrality.
e Expanalona in coverage for substance abuse and mental health
aervlces under alliance plana will reduce the coata of such
care now borne directly by States.
e The new Federal wraparound program for children will ensure
that most children currently eligible for Medicaid will
receive a l l medically neceasary services through either
alliance coverage or wraparound aervicea.
a New public health initiatives will provide additional aupport
for health care for vulnerable populations.
a Grants will be provided to States to provide special
assistance to rural and inner city areas.
e savings arise from setting per capita paymenta to alliances
for AFDC and 881 recipients at 95% of current fee-for-eervice
levels. States will also realize on-going aavinga becauae
growth in these paymenta will be constrained by premium caps.
• States' ahare of Medicaid paymenta to dlaproportionate ahare
hospitala would be reduced. States would include DSH spending
in their maintence of affort payments for non-cash Medicaid
eligiblea, but not for caah recipienta.
a State apending on druga for Medlcare-Medicald dually eligible
�individuals, aa wall aa those racalving aaalatanca from Statsonly drug programa, will ba picked up by tha new Msdicara drug
program.
•
Expanalona of long-tsrm cars inaurance in response to new tax
incentives will relieve preasure on Medicaid paymenta for
long-term care.
e A new community-based long-term cara program for the disabled
will pay for aome cara n w covered under county and local
o
programs aa well as Medicaid.
a The increaae in the personal needa allowance for nursing h m
oe
patients will be fully Federally funded.
Effect on health providers funded by States.
•
Providers that rely on State funding for free cara that they
provide will particularly benefit. Alliance plana will
provide inaurance payments for individuals that are now free
care casea.
a State supported providers of aubatanca abuae and mental health
services will have access to payments from Alliance plana.
•
The market position of essential community providers will be
protected. Alliance plana will be required to contract with
essential providers, including many State-tunaea provia'ere.
e The new Vulnerable Population Adjustment program will provide
additional funda to hoapitala — including public hoapitala —
aerving high proportiona of low-income peraona and providing
uncompensated care.
Effects on States aa emploverst
t
Federal subsidies for early retirees will produce large
aavlngs for State employee health benefit programa.
e
increases in State spending for employee health benefita will
be controlled under the premium capa.
^11, PT SAPVAMTAOK S
Per capita apending on former Medicald-eligiblea would be
capped. Initial capa would be baaed on historical trenda,
perpetuating State-by-State apending variations. State with
generous Medicaid programa will be locked into
diaproportionately higher apending than leaa generoua States.
i«
r * a 4 n exDoaed for coata of care to
-m
�e.g., undocumented aliens,
nmates, unemployed persons or
?roups that will lack coverag*,others who fail to enroll in a
plan.
Statea will need to pay at leaat 80% of tha community-rated
average premium in each alliance for state employeea,
including pro-rated contrlbutiona for part-time workers. This
may be more (or less) than states pay today.
States will continue to determine Medicaid eligibility for
Medicaid long term care.
Liberalizations in the continuing, long-term cara aide of
Medicaid may require additional funding. Liberalizations
include)
- Mandating medically needy programs for peraona in
inatitutiona. Only approximately half the Statea now run
medically needy programa.
- increasing the amount of assets that States must permit
institutionalized persons to retain from $2000 (typical) to
$12,000.
�IODICAIDJ
CURR1NT SYSTIM V8 N1W SYSTEM
Q: Explain to ma how indlviduala now a«zv«d by tha Medicaid
program will ba battar aervad under tha Preaident'a plan.
At Becauae Medicaid recipienta will be covered by the regional
health alliancea, they will receive the comprehenaive atandard
benefita package, children who are currantly eligible for
Medicaid and, at tha atatea' option, dual eligiblea and adult
Medicaid recipienta will alao be covered for aome
aupplementary aervicea. They will have a choice of plana, and
will receive aubaidles toward their premiums i f they are
unemployed. Under the President'a plan, Medicaid recipients
will finally be able to participate in mainatream medicine.
In addition, the great variations among Medicaid programa in
terms or who la covered, the aervicea included, and the
reimbursement rates would be eliminated.
�COVXXAGE FOR MEDICAID ELIGIBLES
QUXSTION
How will Medicaid eligiblt individuals racaivt strvicss under th«
Health Security Act?
ASE
NWR
a Medicaid caah racipienta (AFDC/SSI) will chooae between health
plana offered by alliancea. They may chooae any plan with
pramiuma equal to or leaa than the weighted average premium
for the alliance without paying a premium charge; if they
chooae a plan with premiums above the weighted average, they
will be responsible for the additional coat.
a Other Medicaid racipienta will alao chooae between health
plana offered by alliancea. Like other low-income groups,
they will make a premium contribution baaed on a sliding scale
related to Income.
a Cost-sharing will be subsidized for AFDC/SSI recipients
enrolled in low cost sharing plana. Coat aharlng will be
reduced to 20 percent of tha low coat aharlng schedule (i.e.,
from $10 to $2 per visit). Emergency room co-paymenta would
remain at $25 to deter Inappropriate ER use. If a low cost
sharing plan is not available at or below the weighted average
premium, coat aharlng for Medicaid recipients will be
subsidized to the low or combination cost sharing level.
e Many Current Medicaid recipienta will be able to receive
supplemental aervicea through a "wraparound" program.
Children who currently qualify for Medicaid will qualify for
the Federal children'a wraparound program. In addition,
atatea may chooae to cover adulta for supplemental aervlces,
with Federal matching funda available for services provided to
adulta on caah assistance and dual Medicare eligiblea.
�W A A O N SIRVICBS--ILIGIBILITY A D COVERED SERVICES
RP RUD
N
QUXSTION
Will Medicaid rtcipienti loae access to services over and above
the comprehensive benefits package, servicaa that they currently
recieve?
ASE
NWR
a Many Current Medicaid recipients will be abla to receive
supplemental aervlces through a "wraparound" program.
Children who currently qualify for Medicaid will qualify for
the Federal children's wraparound program. In addition,
statea m y choose to cover adulta for supplemental services,
a
with Federal matching funda available for aervicea provided to
adulta on caah assistance and dual Medicare eligiblea.
a The Secretary will define covered aervicea and develop the
program'a administrative design for the Federal children'a
program.
�W A A O N MRVICES-FINANCING
RP RUD
Qi H w will wrtp-around aarvicaa ba finanead?
o
ANIWXR
a Financing for wraparound aarvicaa variaa by type of racipient.
(Required by Federal law)
Children: Through paymenta to the Federal government/
atatea will maintain their affort for wraparound aervicea
for Medicaid-eligible children. Theae M E paymenta will be
O
determined under the same methodology aa atatea* premium
paymenta for AFDC recipienta.
(State optiona)
— Adulta: Wraparound aervicea for caah-reclpient adulta win
be financed through current State/Federal matching
arrangementa. Services for non-caah adulta will be
financed on a atate-only basla.
Dual Medicare eligiblea: Wraparound aervicea for caah and
non-caah dual eligiblea will be financed through currant
State/Federal matching arrangementa.
[
Children
Caah
Federal w
/
State M E
O
[note-the
financing of
theae aervicea
may change to
eliminate
atate MOE]
Adulta
FA
MP
Dual Eligiblea
FA
MP
Non-Caah
Federal w
/
atata M E
O
other
1902(r)(2)
kida Federal;
other groupa
State option/
no match
State option,
no match
FA
MP
State option/
no match
State option/
no match
Before 1998/ apending for the Federal program for children'a
wraparound aervicea will be limited to Medicaid apending for
theae aervicea in Statea which have Implemented health reform,
adjusted for the number of qualified children (Cenaua and CPS
data), adjusted by growth rates applied to non-caah premiuma,
and adjuated to account for calendar year program operations.
For 1998 and later years, spending for the Federal program for
children*a wraparound aervicea will be limited to Medicaid
apending for theae aervicea in a l l Statea. The aame
adjustments will apply.
�L N - E ! CAKE
OGTW
QUIITZON
MtdiCAld currently ptyi for a larga parcentega of long term c*r«
coata in tha US, how will theie a«rvic«i ba financed after
enactment of the Health Security Act?
a The current Medically Needy program for inatitutional programs
will be mandated for a l l states.
e The personal needa allowance (PNA) will be increased from the
current $30 per month minimum. The incremental increaae win
be completely Federal; State/Federal matching will continue
for States' current P A level. The new minimum PNA is under
N
review.
e States will have the option to increaae the long term care
asset limit from the current $2,000 limit to $12,000.
�WDICAID PRSNIUN PAYMENTS T ALLIANCES
O
QUXSTION
H w will th« Stat*, Fadaral Government, and employer! ahara tha
o
coats for tha Medicaid program?
SHORT A S E
NWR
a Stataa and the Federal government will make paymenta to
alliancea to finance health coverage for groupa they have
covered through Medicaid under current law. Employers will
make premium payments for all employeea, including thoae w o
h
would have been Medicaid eligible under current law.
LN ASE
OG NWR
a Statea and the Federal government will make a "Medicaid"
premium payment to alliancea on behalf of Medicaid eligiblea
who receive caah aasistance. (State D H paymenta will not be
S
included in the premium for AFDC and SSI recipienta.) Total
Federal premium payments on behalf of AFDC and SSI recipients
will be capped for fiscal years 1996 through 2000 at the
levels apeclfied in legialation. After flacal year 2000,
growth In Federal caps will be limited to adjustments for
Inflation, U.S. population change and change In real G P per
D
capita. Congresaional action will be required to breach capa.
For AFDC eligiblea, thla payment will be baaed on 95 percent
of 1993 atate per capita Medicaid apending for aervlces
provided in the comprehensive benefita package trended forward
by national growth rataa through the firat year after
implementation of reform. After implementation, annual
increaaaa will be limited to budgeted ratea of increaae based
on general health inflation.
For SSI recipienta, thla payment will be baaed upon 95 percent
of 1993 atate per capita Medicaid apending (National SSI
atandardda will apply for a l l atatea) for services provided in
the comprehensive benefits package trended forward by national
growth ratea through the firat year after implementation of
reform. After Implementation, annual increaaaa will be
limited to budgeted ratea of increaae baaed on general health
inflation.
a States will make paymenta to alliancea on behalf of non-cash
Medicaid recipienta. These payments will be baaed on 1993
State apending for aervicea covered in their Medicaid benefit
package for the non-caah group trended forward by national
growth ratea through the firat year after implementation of
reform. After implementation, annual ratea of increaae will
be limited to budgeted ratea of increaae baaed on general
24
�WDICAID MOMIUM PAYWNTS—BL1NDID PRSMIVN8
QUXSTION
H w will Alllanci* pay health plan* for Medicaid enrollees?
o
ASX
NWX
e Followina the conclusion of premium negotiations with health
plana, alliancea will compute a "blended premium" for each
health plan and category of policy baaed on family
arrangement.
a The blended premium will be the weighted average of the
premium the health plan charge* to private enrolleee and the
Medicaid capitation rate. Weights will adjust for the
distribution of private enrollees, AFDC recipients and SSI
recipients in the alliance, but adjustments will not be made
to reflect actual enrollment within any specrfic plan.
•
Alliancea will pay health plana to cover the coat of
discounts which enable caah racipienta and families with
Ineomea below 150 percent of poverty to pay low coat aharlng
ratea although a low cost sharing plan is not available below
the weighted average premium. Health plana will not receive
extra funda to cover the additional 80 percent coet-eharlng
discounts for caah recipients, i t is aaaumed that the premium
paymenta are already sufficient to cover this cost.
26
�htalth cara Inflation and population growth.
Stata DSH paymenta will ba included in maintance of effort
paymenta for non-caah Medicaid •ligiblee. DSH M E will be
O
baaed on Stata DSH expenditurea in PY 1993, trended forward
baaed on national growth ratea.
Employara of Medicaid-eligibla employeea will pay premiuma to
the alliance baaed on private sector rataa.
�11/19/93
17:31
©202 690 5673
HHS-PLBLIC AFFAI
DEPARTMENT OF HEALTH & HUMAN SERVICES
Washington. O.C. 20201
STATEMENT OF
BRUCE C. VLADECK
ADMINISTRATOR
HEALTH CARE FINANCING ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT
COMMITTEE ON ENERGY AND COMMERCE
UNITED STATES HOUSE OF REPRESENTATIVES
NOVEMBER 19, 1993
�11-19-93
17:31
© 2 0 2 690 5673
HHS-PLBLiC AFF.Vl
& G j
O
Mr. Chairman, Members of the Subcommittee. I am pleased to have, v t i another
opportunity to continue our discussions of the President's pro:
alth Security
Act. Today, I will explain what health care reform means for OL
me citizens,
the changing role of States in administering health care for this
rt, and how
we will achieve savings by integrating Medicaid into the mainstream , jr health
care system.
For nearly three decades, the Federal government and States have pre ded medical
assistance through the Medicaid program. Today, more than 32 millic Americans
benefit from Medicaid. In recent years, Congress has expanded Medi. - id to include
individuals beyond traditionally defined eligibility groups. States, too, ,ave initiated
improved coverage and care by serving greater numbers of "meIleal'/ needy"
individuals and by implementing effective managed care prograr s for certain
targeted underserved populations.
Now, with the President's comprehensive health care reform plan, aH Americans,
young and old, poor, working and retired will be ensured the security of basic health
care coverage. The current system bases eligibility for health c -e on income,
resource, and categorical criteria, leaving millions without basic ^ealth care benefits.
Under the President's plan, no American will be excluded from 'asic health care
benefits.
!
HEALTH CARE REFORM AND LOW INCOME CITIZENS
The President's Health Security Act proposes universal coverag a through the shared
contributions of individuals, States, alliances, the Federal government and employers.
Individuals will be able to select the coverage that best serves their needs. Choice
will extend to everyone, from the most destitute to the most economically advantaged
individuals.
Medicaid, the program which has traditionally served many of our neediest citizens,
will be largely absorbed into the mainstream of our Nation's health care system.
Health care coverage will no longer favor certain individuals wnose income, age or
sex makes them needier than other individuals. Health care coverage will not
exclude young, healthy males because they do not have children, or married couples
because the primary wage earner has a minimum wage job.
Furthermore, under the Health Security Act, no provider will be reimbursed for acute
care services at a lower rate of payment just because a patient is covered by
Medicaid. Providers will be blind to an individual's status as a Medicaid recipient.
The Health Security Act will establish a system whose time is long overdue. This
Administration intends to replace fragmented coverage and services with uniform
coverage and comprehensive benefits, without regard for medical condition or ability
�11-19.93
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© 2 0 2 690 5673
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to pay.
We are going to achieve this goal through a number of mechanisms designed to
maximize the best aspects of private insurance and publicly funded programs. This
effort will produce a system that is simple, efficient, secure, cost effective, quality
driven, and choice oriented.
THE CHANGING ROLE OF THE MEDICAID PROGRAM
The Medicaid program is a jointly funded Federal/State program administered within
broad Federal guidelines by the States. States currently receive Federal matching
payments based upon a State's ability to share in program costs as measured by per
capita income.
Under the Health Security Act, States will continue their shared Federal partnership in
the Medicaid program, but will benefit from redirected Federal funding and savings
from a new relationship with the private sector through alliance health plans.
Recipients will benefit from participation in an integrated health care system that
leaves no one without coverage and assures that everyone's coverage will be the
same throughout the country. And, providers of acute care services will benefit from
more uniformly applied payment rates that treat all patients equally.
Coverage In Alliance Plane
The Health Security Act will integrate Medicaid acute care services into alliance plans.
The most vulnerable poor will receive full coverage while maintaining the ability to
choose among health plans. Low-income individuals receiving cash assistance may
choose any alliance plan with premiums at or below the weighted average premium
for ail plans in their alliance, without paying a premium. If they choose a plan with
premiums above this average, they will be responsible for the additional cost.
The State and the Federal government will pay a premium to the alliance for Medicaid
individuals receiving cash assistance based on 95 percent of current State per capita
Medicaid spending on alliance-covered services, trended forward by national growth
rates.
Other low-income individuals who do not receive cash assistance will also receive
health care coverage through alliance health plans. These individuals will make a
premium contribution based on a sliding scale related to income. Employers of lowincome employees will pay premtums to the alliance based on private sector rates, as
they do for all employees.
41004
�11/ 19/ 93
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4j005
State Maintenance of Effort
States will continue to support the provision of health care to those low-income
individuals who participate in Medicaid but do not qualify for cash assistance by
making "maintenance of effort" payments to the alliance, based on 1993 spending for
Medicaid services that will be covered by alliance health plans. Maintenance of effort
payments will be used to help finance the costs of Federal discounts to individuals
with incomes below 150 percent of the federal poverty level.
Cost Sharing
Cost-sharing for low income individuals will be subsidized if a low cost-sharing plan,
such as an HMO, is not available. And, cost-sharing for individuals receiving cash
assistance will be reduced to 20 percent of the HMO cost sharing schedule, or $2 per
office visit.
Supplemental Services
Additionally, the Health Security Act will create a new Federal program that will
provide uniform supplemental benefits to low-income children. This will ensure that
most children who would have been eligible for Medicaid will continue to have access
to services such as transportation to health care providers, hearing aids, outpatient
therapies and other medically necessary services not covered under the alliance's
comprehensive benefit package or under the Medicaid long term care benefit.
States may also continue to provide optional Medicaid services to adult recipients of
cash assistance, as under current law. States will continue to pay for elderly
Medicare beneficiaries who qualify to have their out-of-pocket expenses paid by
Medicaid.
Serving Vulnerable Populations
A portion of State payments intended for hospitals serving a disproportionate share of
low income patients will be counted toward State maintenance of effort payments for
Federal matching purposes. States will not have to continue disproportionate share
hospital payments associated with cash assistance recipients, and these payments
are not built into the premium payment to the alliances.
A new Vulnerable Population Adjustment program will provide Federal payment
adjustments to hospitals. Hospitals will qualify for these payments if at least 25
percent of their patients have low incomes. The adjustment will include payments for
hospitals in States with .large numbers of undocumented persons. Annual funding for , ^
the' Vulnerable Population Adjustment program will be $1 billion once the alliances
are fully implemented.
�11'19-93
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Long-Term Care Benefit
In addition to mainstreaming current Medicaid recipients into alliance health plans,
the Health Security Act will make other improvements to the Medicaid program.
Medicaid long-term care benefits will continue for eligible patients in nursing facilities,
intermediate care facilities for the mentally retarded and community-based long-term
care, regardless of whether they receive cash assistance. These benefits will be
improved in several ways. The monthly allowance permitted for institutionalized
Medicaid patients to meet personal needs will be increased. Further, States may opt
to increase the asset standard for institutional long-term care eligibility from the
current $2,000 limit to $12,000.
MEDICAID SAVINGS
The Health Security Act will produce net Medicaid savings totaling approximately $65
billion .
Medicaid savings will result from:
•
Discontinuing Medicaid payments to hospitals serving a disproportionate share
of low-income individuals as States enter the alliance system. These payments
were established to help hospitals with large uncompensated care burdens.
Since universal coverage will virtually eliminate this problem, disproportionate
share hospital payments would be discontinued. The Vulnerable Population
Adjustment program will help those hospitals that continue to require some
assistance.
•
Lower payments to alliances based on 1993 Medicaid spending, adjusted to reflect health care inflation and population growth. Under a complete reform of
the health care system, plans will be able to provide better coverage for less
cost, and increases in spending will, therefore, be substantially lower than
Medicaid growth rates expected under the current system.
e
Reducing State Medicaid administrative responsibilities in enrollment,
oversight, rate-setting, and claims processing by including Medicaid recipients
in the alliance and by providing supplemental services to children through a
separate program.
•
Replacing some Medicaid spending for prescription drugs for the low-income
elderly with the new Medicare drug benefit. - Mtdicaid will cover premier is and
cost sharing for low-income Medicare beneficiaries for this benefit.
4006
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CONCLUSION
Mr. Chairman, a new era in the way we provide basic health care sen/ices to our
underserved and low-income citizens is about to be realized. What the President
envisions is a system that not only includes every individual in this nation, but a
system that also provides quality care at an affordable price.
We have designed a program that combines the best of what America has to give -private sector innovation with public sector initiative.
I look forward to working with you and this Committee as we proceed in the coming
months to forge a plan that not only will benefit this generation but future generations
of Americans as well. Together, we can accomplish what has eluded all of us for so
long - uniform, basic health care for all.
*;0C:
�MEDICARE UNDER HEALTH CARE REFORM
Virtually every serious health care proposal calls for slowing the growth
in spending on Medicare and Medicaid to help finance reform. Unlike
most of the other proposals, the President's plan reinvests that money in
new benefits for older Americans and the disabled. In addition, only
the President's plan combines Medicare changes with limits on private
sector spending, so that the savings from Medicare don't continue to
simply shift to the private sector. The changes we propose will be within
the framework of a thorough reorganization of the health care system in
which everyone stands to gain.
Medicare remains intact under President Clinton's plan, with minor
modifications and slower rates of growth in costs. Here's how the
Health Security Act achieves these savings:
SPECIFIC, SCORABLE
SAVINGS:
•
The Clinton plan identifies $124.4 billion in specific, scorable, line-byline savings in the Medicare program. That's $124.4 billion dollars to
redirect in the interest ofthe health of all Americans and in the
interest ofthe nation's economy.
•
•
•
•
•
•
Reduce payments to hospitals for the cost of treating the uninsured
(as a result of universal coverage)
Re-establish modest co-pays to diagnostic and home health services
Raise Medicare Part B premiums for individuals with incomes
above $100,000 and couples above $125,000
Limit Medicare payments to high-cost medical staffs
Reduce the cost increases, or "updates" of Medicare payments to
certain providers
While the amount of savings we are calling for may seem high today,
we must keep in mind they will be taken from a future base of $1.2
trillion in projected Medicare spending over the years 1995 to 2000.
What's more, the $124.4 billion will only reduce the growth in
Medicare spending from triple the inflation rate to double this rate.
�ALL SERIOUS PROPOSALS CALL FOR MEDICARE SAVINGS:
•
Nearly every credible health care proposal, including both Democratic
and Republican plans, rely on significant savings from Medicare to
helpfinancereform.
President Clinton's Health Security Act:
Republican Task Force (Chafee/Dole) Proposal:
Gramm/McCain "Medisave" Proposal:
"Managed Competition Act of 1993" (Cooper):
*
$124 billion
$111 billion
$61.5 billion
$40 billion*
this amount of Medicare savings would leave the Cooper plan with a $70 billion
deficit increase, according to CBO
ELIMINATES COST SHIFTING TO THE PRIVATE SECTOR:
•
One difference between the Clinton plan and the others is that we
achieve Medicare savings in the context of limits on private health care
spending. Medicare and other program cuts absent real
comprehensive health care reform would aggravate current cost
shifting problems -- pushing private health care premiums even higher
and making health insurance even less affordable for America's
employers and individuals.
•
For example, if Medicare payments were simply cut, so that a hospital
was paid $100 for a service that they used to get $150, the hospital
would likely charge everyone else $50 more.
•
Uncompensated care bills from government programs -- $14.4 billion from
Medicare and $8.1 billion from Medicaid -- shifted $22.5 billion to the
private sector in 1992.
•
In fact, private payers paid 128 percent of hospital costs in 1990 to
compensate for government underpayment of costs and uncompensated
care. [Lewin-ICF, April 1992; ProPac Report to Congress, June 1992.]
WE INVEST IN NEW BENEFITS FOR OLDER AMERICANS:
•
The President's plan preserves the Medicare program, and protects
Medicare beneficiaries by providing them with a new benefit -- coverage
for prescription drugs. It is reported that prescription drugs are the
largest cost of daily living for 45% of all people over 65.
1
l
D r u g Costs Under F i r e " , USA Today, 9/25/93.
�It also uses Medicare savings to begin funding a new home and
community-based long-term care program, which will provide needed
services to elderly and disabled Americans who would otherwise be at
risk for entering a nursing home.
Finally, it increases financial protection for seniors who do enter
nursing homes by increasing the asset protection limit so seniors don't
have to spend themselves to destitution before they can get help
paying for their care, and by increasing the amount of spending money
seniors in nursing homes have each month.
�11/19/93
j/Z
i
17:31
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HHS-PUBLIC AFFAI
.
DEPARTMENT OF HEALTH &. HUMAN SERVICES
C
Washington, D.C. 20201
STATEMENT OF
BRUCE C. VLADECK
ADMINISTRATOR
HEALTH CARE FINANCING ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT
COMMITTEE ON ENERGY AND COMMERCE
UNITED STATES HOUSE OF REPRESENTATIVES
NOVEMBER 19, 1993
(2)002
�11/19/93
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Mr. Chairman, Members of the Subcommittee, I am pleased to have yet another
opportunity to continue our discussions of the President's proposed Health Security
Act. Today, I will explain what health care reform means for our low income citizens,
the changing role of States in administering health care for this population, and how
we will achieve savings by integrating Medicaid into the mainstream of our health
care system.
For nearly three decades, the Federal government and States have provided medical
assistance through the Medicaid program. Today, more than 32 million Americans
benefit from Medicaid. In recent years, Congress has expanded Medicaid to include
individuals beyond traditionally defined eligibility groups. States, too, have initiated
improved coverage and care by serving greater numbers of "medically needy"
individuals and by implementing effective managed care programs for certain
targeted underserved populations.
Now, with the President's comprehensive health care reform plan, all Americans,
young and old, poor, working and retired will be ensured the security of basic health
care coverage. The current system bases eligibility for health care on income,
resource, and categorical criteria, leaving millions without basic health care benefits.
Under the President's plan, no American will be excluded from basic health care
benefits.
HEALTH CARE REFORM AND LOW INCOME CITIZENS
The President's Health Security Act proposes universal coverage through the shared
contributions of individuals, States, alliances, the Federal government and employers.
Individuals will be able to select the coverage that best serves their needs. Choice
will extend to everyone, from the most destitute to the most economically advantaged
individuals.
Medicaid, the program which has traditionally served many of our neediest citizens,
will be largely absorbed into the mainstream of our Nation's health care system.
Health care coverage will no longer favor certain individuals whose income, age or
sex makes them needier than other individuals. Health care coverage will not
exclude young, healthy males because they do not have children, or married couples
because the primary wage earner has a minimum wage job.
Furthermore, under the Health Security Act, no provider will be reimbursed for acute
care services at a lower rate of payment just because a patient is covered by
Medicaid. Providers will be blind to an individual's status as a Medicaid recipient.
The Health Security Act will establish a system whose time is long overdue. This
Administration intends to replace fragmented coverage and services with uniform
coverage and comprehensive benefits, without regard for medical condition or ability
12)003
�11/19,93
17:32
© 2 0 2 690 5673
HHS-PLBLIC AFFAI
to pay.
We are going to achieve this goal through a number of mechanisms designed to
maximize the best aspects of private insurance and publicly funded programs. This
effort will produce a system that is simple, efficient, secure, cost effective, quality
driven, and choice oriented.
THE CHANGING ROLE OF THE MEDICAID PROGRAM
The Medicaid program is a jointly funded Federal/State program administered within
broad Federal guidelines by the States. States currently receive Federal matching
payments based upon a State's ability to share in program costs as measured by per
capita income.
Under the HeaJth Security Act, States will continue their shared Federal partnership in
the Medicaid program, but will benefit from redirected Federal funding and savings
from a new relationship with the private sector through alliance health plans.
Recipients will benefit from participation in an integrated health care system that
leaves no one without coverage and assures that everyone's coverage will be the
same throughout the country. And, providers of acute care services will benefit from
more uniformly applied payment rates that treat all patients equally.
Coverage In Alliance Plans
The Health Security Act will integrate Medicaid acute care services into alliance plans.
The most vulnerable poor will receive full coverage while maintaining the ability to
choose among health plans. Low-income individuals receiving cash assistance may
choose any alliance plan with premiums at or below the weighted average premium
for ail plans in their alliance, without paying a premium. If they choose a plan with
premiums above this average, they will be responsible for the additional cost.
The State and the Federal government will pay a premium to the alliance for Medicaid
individuals receiving cash assistance based on 95 percent of current State per capita
Medicaid spending on alliance-covered services, trended forward by national growth
rates.
Other low-income individuals who do not receive cash assistance will also receive
health care coverage through alliance health plans. These individuals will make a
premium contribution based on a sliding scale related to income. Employers of lowincome employees will pay premiums to the alliance based on private sector rates, as
they do for"aii employees.
12)004
�11/19/93
17:32
© 2 0 2 690 5673
HHS-PLBLIC AFFAI
.
IgOOS
State Maintenance of Effort
States will continue to support the provision of health care to those low-income
individuals who participate in Medicaid but do not qualify for cash assistance by
making "maintenance of effort" payments to the alliance, based on 1993 spending for
Medicaid services that will be covered by alliance health plans. Maintenance of effort
payments will be used to help finance the costs of Federal discounts to individuals
with incomes below 150 percent of the federal poverty level.
Cost Sharing
Cost-sharing for low income individuals will be subsidized if a low cost-sharing plan,
such as an HMO, is not available. And, cost-sharing for individuals receiving cash
assistance will be reduced to 20 percent of the HMO cost sharing schedule, or $2 per
office visit.
Supplemental Services
Additionally, the Health Security Act will create a new Federal program that will
provide uniform supplemental benefits to low-income children. This will ensure that
most children who would have been eligible for Medicaid will continue to have access
to services such as transportation to health care providers, hearing aids, outpatient
therapies and other medically necessary services not covered under the alliance's
comprehensive benefit package or under the Medicaid long term care benefit.
States may also continue to provide optional Medicaid services to adult recipients of
cash assistance, as under current law. States will continue to pay for elderly
Medicare beneficiaries who qualify to have their out-of-pocket expenses paid by
Medicaid.
Serving Vulnerable Populations
A portion of State payments intended for hospitals serving a disproportionate share of
low income patients will be counted toward State maintenance of effort payments for
Federal matching purposes. States will not have to continue disproportionate share
hospital payments associated with cash assistance recipients, and these payments
are not built into the premium payment to the alliances.
A new Vulnerable Population Adjustment program will provide Federal payment
adjustments to hospitals. Hospitals will qualify for these payments if at least 25
percent of their patients have low incomes. The adjustment will include payments for
hospitals in States with .large numbers of undocumented persons. Annual funding for ....^
the Vulnerable Population Adjustment program will be $1 billion once the alliances
are fully implemented.
�11/19/93
17:33
© 2 0 2 690 5673
HHS-PUBLIC AFFAI
Long-Term Care Benefit
In addition to mainstreaming current Medicaid recipients into alliance health plans,
the Health Security Act will make other improvements to the Medicaid program.
Medicaid long-term care benefits will continue for eligible patients in nursing facilities,
intermediate care facilities for the mentally retarded and community-based long-term
care, regardless of whether they receive cash assistance. These benefits will be
improved in several ways. The monthly allowance permitted for institutionalized
Medicaid patients to meet personal needs will be increased. Further, States may opt
to increase the asset standard for institutional long-term care eligibility from the
current $2,000 limit to $12,000.
MEDICAID SAVINGS
The Health Security Act will produce net Medicaid savings totaling approximately $65
billion .
Medicaid savings will result from:
e
Discontinuing Medicaid payments to hospitals serving a disproportionate share
of low-income individuals as States enter the alliance system. These payments
were established to help hospitals with large uncompensated care burdens.
Since universal coverage will virtually eliminate this problem, disproportionate
share hospital payments would be discontinued. The Vulnerable Population
Adjustment program will help those hospitals that continue to require some
assistance.
•
Lower payments to alliances based on 1993 Medicaid spending, adjusted to reflect health care inflation and population growth. Under a complete reform of
the health care system, plans will be able to provide better coverage for less
cost, and increases in spending will, therefore, be substantially lower than
Medicaid growth rates expected under the current system.
e
Reducing State Medicaid administrative responsibilities in enrollment,
oversight, rate-setting, and claims processing by including Medicaid recipients
in the alliance and by providing supplemental services to children through a
separate program.
•
Replacing some Medicaid spending for prescription drugs for the low-income
elderly with the new Medicare drug benefit.- MLdicaid will cover premiurrtS and
cost sharing for low-income Medicare beneficiaries for this benefit.
(gooe
�11/19/ 93
17:34
© 2 0 2 690 5673
HHS-PLBLIC AFFAI
.
CONGLUSION
Mr. Chairman, a new era in the way we provide basic health care services to our
underserved and low-income citizens is about to be realized. What the President
envisions is a system that not only includes every individual in this nation, but a
system that also provides quality care at an affordable price.
We have designed a program that combines the best of what America has to give -private sector innovation with public sector initiative.
I look forward to working with you and this Committee as we proceed in the coming
months to forge a plan that not only will benefit this generation but future generations
of Americans as well. Together, we can accomplish what has eluded all of us for so
long - uniform, basic health care for all.
1^007
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
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2006-0885-F
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[Health Care Economic Binder-Draft] [3]
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
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2006-0885-F Segment 5
Is Part Of
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Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621378" target="_blank">National Archives Catalog Description</a>
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Clinton Presidential Records: White House Staff and Office Files
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5/7/2015
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17621378
12093636
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41002
DEPARTMENT OF HEALTH & HUMAN SERVICES
Washington. O.C. 20201
STATEMENT OF
BRUCE C. VLADECK
ADMINISTRATOR
HEALTH CARE FINANCING ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT
COMMITTEE ON ENERGY AND COMMERCE
UNITED STATES HOUSE OF REPRESENTATIVES
NOVEMBER 19, 1993
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Mr. Chairman, Members of the Subcommittee, I am pleased to h=v^ yu another
opportunity to continue our discussions of the President's pro:
alth Security
Act. Today, 1 will explain what health care reform means for OL
me citizens,
the changing role of States in administering health care for this
n, and how
we will achieve savings by integrating Medicaid into the mainstream „ jr health
care system.
For nearly three decades, the Federal government and States have pre ded medical
assistance through the Medicaid program. Today, more than 32 millic Americans
benefit from Medicaid. In recent years, Congress has expanded MednMd to include
individuals beyond traditionally defined eligibility groups. States, too, ,ave initiated
improved coverage and care by serving greater numbers of "me lical'/ needy"
individuals and by implementing effective managed care prograr s for certain
targeted underserved populations.
Now, with the President's comprehensive health care reform plan, all Americans,
young and old, poor, working and retired will be ensured the security of basic health
care coverage. The current system bases eligibility for health c -e on income,
resource, and categorical criteria, leaving millions without basic wealth care benefits.
Under the President's plan, no American will be excluded from 'asic health care
benefits.
HEALTH CARE REFORM AND LOW INCOME CITIZENS
The President's Health Security Act proposes universal coverag a through the shared
contributions of individuals, States, alliances, the Federal government and employers.
Individuals will be able to select the coverage that best serves their needs. Choice
will extend to everyone, from the most destitute to the most economically advantaged
individuals.
Medicaid, the program which has traditionally served many of our neediest citizens,
will be largely absorbed into the mainstream of our Nation's health care system.
Health care coverage will no longer favor certain individuals wnose income, age or
sex makes them needier than other individuals. Health care coverage will not
exclude young, healthy males because they do not have children, or married couples
because the primary wage earner has a minimum wage job.
Furthermore, under the Health Security Act, no provider will be reimbursed for acute
care services at a lower rate of payment just because a patient is covered by
Medicaid. Providers will be blind to an individual's status as a Medicaid recipient.
The Health Security Act will establish a system whose time is long overdue. This
Administration intends to replace fragmented coverage and services with uniform
coverage and comprehensive benefits, without regard for medical condition or ability
�11-19.93
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HHS-PLBLIC AFFAI
to pay.
We are going to achieve this goal through a number of mechanisms designed to
maximize the best aspects of private insurance and publicly funded programs. This
effort will produce a system that is simple, efficient, secure, cost effective, quality
driven, and choice oriented.
THE CHANGING ROLE OF THE MEDICAID PROGRAM
The Medicaid program is a jointly funded Federal/State program administered within
broad Federal guidelines by the States. States currently receive Federal matching
payments based upon a State's ability to share in program costs as measured by per
capita income.
Under the Health Security Act, States will continue their shared Federal partnership in
the Medicaid program, but will benefit from redirected Federal funding and savings
from a new relationship with the private sector through alliance health plans.
Recipients will benefit from participation in an integrated health care system that
leaves no one without coverage and assures that everyone's coverage will be the
same throughout the country. And, providers of acute care services will benefit from
more uniformly applied payment rates that treat all patients equally.
Coverage In Alliance Plans
The Health Security Act will integrate Medicaid acute care services into alliance plans.
The most vulnerable poor will receive full coverage while maintaining the ability to
choose among health plans. Low-income individuals receiving cash assistance may
choose any alliance plan with premiums at or below the weighted average premium
for all plans in their alliance, without paying a premium. If they choose a plan with
premiums above this average, they will be responsible for the additional cost.
The State and the Federal government will pay a premium to the alliance for Medicaid
individuals receiving cash assistance based on 95 percent of current State per capita
Medicaid spending on alliance-covered services, trended forward by national growth
rates.
Other low-income individuals who do not receive cash assistance will also receive
health care coverage through alliance health plans. These individuals will make a
premium contribution based on a sliding scale related to income. Employers of lowincome employees will pay premiums to the alliance based on private sector rates, as
they do for "all employees.
^004
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State Maintenance of Effort
States will continue to support the provision of health care to those low-income
individuals who participate in Medicaid but do not qualify for cash assistance by
making "maintenance of effort" payments to the alliance, based on 1993 spending for
Medicaid services that will be covered by alliance health plans. Maintenance of effort
payments will be used to help finance the costs of Federal discounts to individuals
with incomes below 150 percent of the federal poverty level.
Cost Sharing
Cost-sharing for low income individuals will be subsidized if a low cost-sharing plan,
such as an HMO. is not available. And, cost-sharing for individuals receiving cash
assistance will be reduced to 20 percent of the HMO cost sharing schedule, or $2 per
office visit.
Supplemental Services
Additionally, the Health Security Act will create a new Federal program that will
provide uniform supplemental benefits to low-income children. This will ensure that
most children who would have been eligible for Medicaid will continue to have access
to services such as transportation to health care providers, hearing aids, outpatient
therapies and other medically necessary services not covered under the alliance's
comprehensive benefit package or under the Medicaid long term care benefit.
States may also continue to provide optional Medicaid services to adult recipients of
cash assistance, as under current law. States will continue to pay for elderly
Medicare beneficiaries who qualify to have their out-of-pocket expenses paid by
Medicaid.
Serving Vulnerable Populations
A portion of State payments intended for hospitals serving a disproportionate share of
low income patients will be counted toward State maintenance of effort payments for
Federal matching purposes. States will not have to continue disproportionate share
hospital payments associated with cash assistance recipients, and these payments
are not built into the premium payment to the alliances.
A new Vulnerable Population Adjustment program will provide Federal payment
adjustments to hospitals. Hospitals will qualify for these payments if at least 25
percent of their patients have low incomes The adjustment will include payments for
hospitals in States with .large numbers of undocumented persons. Annual funding for
the' Vulnerable Population Adjustment program will be $1 billion once the alliances
are fully implemented.
21005
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Long-Term Care Benefit
In addition to mainstreaming current Medicaid recipients into alliance health plans,
the Health Security Act will make other improvements to the Medicaid program.
Medicaid long-term care benefits will continue for eligible patients in nursing facilities,
intermediate care facilities for the mentally retarded and community-based long-term
care, regardless of whether they receive cash assistance. These benefits will be
improved in several ways. The monthly allowance permitted for institutionalized
Medicaid patients to meet personal needs will be increased. Further, States may opt
to increase the asset standard for institutional long-term care eligibility from the
current $2,000 limit to $12,000.
MEDICAID SAVINGS
The Health Security Act will produce net Medicaid savings totaling approximately $65
billion .
Medicaid savings will result from:
•
Discontinuing Medicaid payments to hospitals serving a disproportionate share
of low-income individuals as States enter the alliance system. These payments
were established to help hospitals with large uncompensated care burdens.
Since universal coverage will virtually eliminate this problem, disproportionate
share hospital payments would be discontinued. The Vulnerable Population
Adjustment program will help those hospitals that continue to require some
assistance.
•
Lower payments to alliances based on 1993 Medicaid spending, adjusted to reflect health care inflation and population growth. Under a complete reform of
the health care system, plans will be able to provide better coverage for less
cost, and increases in spending will, therefore, be substantially lower than
Medicaid growth rates expected under the current system.
•
Reducing State Medicaid administrative responsibilities in enrollment,
oversight, rate-setting, and claims processing by including Medicaid recipients
in the alliance and by providing supplemental services to children through a
separate program.
•
Replacing some Medicaid spending for prescription drugs for the low-income
elderly with the new Medicare drug berefit. ML^.caid will cover premi'-r.s and
cost sharing for low-income Medicare beneficiaries for this benefit.
2100b
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CONCLUSION
Mr. Chairman, a new era in the way we provide basic health care services to our
underserved and low-income citizens is about to be realized. What the President
envisions is a system that not only includes every individual in this nation, but a
system that also provides quality care at an affordable price.
We have designed a program that combines the best of what America has to give -private sector innovation with public sector initiative.
I look forward to working with you and this Committee as we proceed in the coming
months to forge a plan that not only will benefit this generation but future generations
of Americans as well. Together, we can accomplish what has eluded all of us for so
long -- uniform, basic health care for all.
��SMALL BUSINESS
SUMMARY PAGE
CONTROL ESCALATING COSTS OF SMALL BUSINESS
•
Large purchasing pools enable stronger purchasing power
•
Administrative costs will be reduced
•
Employer mandate is a necessary part of the solution
HELP SMALL BUSINESSES
GROW
•
Small businesses that provide insurance are the fastest growing small
businesses in America
•
self-employment deduction on taxes will encourage formation of small
businesses
•
Those that provide health benefits today will most likely pay less
under reform
•
Employers can now afford a comprehensive package of benefits not a
bare bones package
200 PERCENT TAX DEDUCTION TO THE
SELF-EMPLOYED
•
Self-employed and independent contractors will be able to deduct all of
their health care costs vs. only 25% today
REFORM WORKERS
COMPENSATION
•
Injured workers will obtain treatment through their health plans
•
Workers' compensation insurers will provide coverage through the
health plan on a fee schedule
•
Presidential Commission will study financial integration
THE
•
•
•
•
•
•
PROBLEM
General Accounting Office ...."Comparable benefits cost 10-40 percent
higher for small employers"
National Small Business United ..."1980's estimate: employers with
fewer than 25 employees pay about 30% higher premiums
NFIB ..."Two out of three if employers who don't provide health
insurance would like to"
New York Times ..."large sectors of the small business community are
"blacklisted" by insurance companies selling insurance"
Wayne State University Study ..."39% of small businesses not offering
health insurance is due to the inability to "qualify" for coverage
NFIB ..."92% of small businesses agree that the cost of health
insurance is a serious business problem.
�SMALL BUSINESS AND HEALTH CARE
The Health Security Act
Today, small businesses -- the engine of America's economic growth •- are
threatened by a health care system that is stacked against them. Their health
care coverage costs more and offers less. Despite this, however, many small
businesses want to provide health care coverage to their employees and a
majority do. The businesses that provide insurance are paying for the ones
that don't. The Health Secunty Act will end this unfair "cost-shifting" -lowering costs for most small businesses and ensuring that no one gets a free
ride. The plan will give small businesses a better deal by eliminating the
abundant amount of paperwork, giving low wage employers substantial
discounts, and reforming today's complex and inefficient workers
compensation system. Small businesses will be able to get the security of rock
solid coverage for their employees and their families.
CONTROL ESCALATING HEALTH COSTS OF SMALL
BUSINESSES.
•
The Health Security Act will put small businesses and consumers in
the driver's seat -- creating large purchasing pools that enable small
businesses to have the same negotiating power that large companies
have today. Health plans will be forced to compete for business,
bringing down prices and improving the quality of care.
•
Administrative costs will be drastically reduced because the regional
health alliance will assume the administrative burden for the small
business -- managing benefits, enrolling employees, negotiating and
renewing coverage, and bargaining for prices with health plans.
•
That's why the Chamber of Commerce -- representing thousands of
small businesses across the nation -- endorsed President Clinton's
employer mandate: 'An employer mandate ... is a necessary part of the
solution, provided there is an acceptable subsidy (for small business) .''
["Business Group Backs CUnton Health Care Plan," Knight Ridder. 4/9/93]
HELP SMALL BUSINESSES
GROW:
•
The Health Security Act will help those firms that are creating the
most jobs and growing the fastest. The small businesses that provide
insurance today are the fastest growing small businesses in America.
New, more affordable coverage will help them expand even more,
leading to more jobs and higher wages. The Wall Street J o u r n a l
w r o t e : "For many s m a l l businesses, saddled w i t h escalating
h e a l t h care costs, President Clinton's health care package
comes as a n unexpected w i n d f a l l . " fWall Street Journal. "Small Business
Sees Burdens Getting Lighter", 9/13/93]
�•
Experience shows that the Health Security Act will create a better
climate for small businesses to grow and prosper. Since Hawaii asked
all employers to provide insurance for their employees in 1974, the
unemployment rate dropped to one of the lowest in the nation (2.8% in
1991); small business creation rates remained high (the number of
employers grew almost 200% from 1970 to 1991), and the rate of
business failures in Hawaii remained less than half the national
business failure rate. In addition, only 2% of Hawaii's "rainy day" fund
-- set up to assist the smallest businesses provide insurance -- has been
used. (The Hawaii Department ofHealth, June 8, 19931
•
When all small business employees are guaranteed a comprehensive
package of health benefits, employers will be able to retain a stable,
healthy, and high-quality workforce.
•
The Health Security Act will allow the self-employed to receive 100%
tax deductibility for their health care spending and will encourage the
formation of additional small businesses.
END
•
INSURANCE
INDUSTRY ABUSES OF SMALL
BUSINESSES
The Health Security Act will not allow health plans to raise premiums
if an employee gets sick. In today's system, small businesses often see
their premiums skyrocket when just one of their employees or someone
in their family gets sick.
•
Under the Health Security Act, health plans will charge small
businesses the same premium as big businesses in the same region
(based on family breakdown of employees) for the comprehensive
package of benefits. Low-wage small businesses will receive a
discount.
•
Insurance companies will have to accept all who apply for coverage.
This will end "occupational redlining," the practice where insurers
refuse to cover certain industries, such as hospitals, grocery stores, and
barber shops.
•
Many small businesses or self-employed individuals find it impossible
to purchase insurance due to pre-existing condition exclusions. Under
the Health Security Act pre-existing conditions will be removed
PROVIDE DISCOUNTS TO LOW-WAGE SMALL
BUSINESSES:
•
Small businesses with less than 75 employees and employees with an
average wage of less than $24,000 will receive substantial discounts.
�•
Small businesses that currently provide health benefits will most
likely pay substantially less under reform, due to falling
administrative costs and lower premium rates.
•
Small businesses who today are only able to provide bare bones
insurance will be able to provide a comprehensive package of benefits
to their employees and their own families at a reasonable price.
100 PERCENT TAX DEDUCTION TO THE SELF-EMPLOYED
•
Today, the self-employed are discriminated against by insurance
companies and the federal tax system. Insurance companies charge
small businesses the highest premiums, making it impossible for many
to buy insurance for their families. Currently, they are only able to
deduct 25% of health care costs from their taxes, rather than 100% as
all other businesses can. After reform, the self-employed and
independent contractors will be able to deduct 100% of the cost of the
comprehensive benefits package from their taxes.
REFORM WORKERS
COMPENSATION
•
Under the plan, injured workers will obtain treatment through their
health plans, just as they would for other injuries or illnesses. This
will stop duplication, help workers get back to work quickly, and
reduce costs for small businesses.
•
Workers' compensation insurers will continue to provide coverage and
reimburse the worker's health plan according to a fee schedule.
•
A Presidential Commission will be established to study the issues
involved in full financial integration and make detailed
recommendations, advisable to the President by July 1, 1995.
�SMALL BUSINESS AND HEALTH CARE
The Problem
SMALL BUSINESSES FACE HIGHER HEALTH COSTS:
•
For comparable plans and benefits, health plan costs are 10 to 40
percent higher for small employers. (GAO, May 19901
•
A survey from the late 1980s estimated that employers with fewer
than 25 employees pay about 30% higher premiums than large
e m p l o y e r s . (National Small Business United]
SMALL BUSINESS' HEALTH COSTS RISE FASTER:
•
Small businesses have experienced annual health benefit cost
increases of 20 to 50 percent recently. In 1991, one-third of small
business owners experienced health care cost increases of more than
25% and 77c experienced cost increases of 50 - 100% (Washington Post.
1/26/93; Arthur Andersen, 7/92|
•
During 1988, health care cost for firms with fewer than 25 employees
increased by 33 percent - a rate of increase 1-1/2 times the rate
experienced by the nation's largest firms. [GAO, July 1991]
ADMINISTRATIVE
COSTS BURDEN SMALL BUSINESS:
•
Small employers pay substantially higher administrative costs than do
large companies. Administrative costs consumed 40% of total health
costs for businesses with less than five employees, compared to just
over 5% for a company with 10,000 employees. [CBO, 10/92]
INSURANCE COSTS DISCRIMINATE AGAINST SMALL
BUSINESS.
•
Not all firms that want to provide insurance have the option to do so
Internal insurance documents confirm that insurance companies
"blacklist" large sectors ofthe small business market - such as
logging, mining, hairdressers, bartenders and medical offices - and
refuse to sell insurance to these small businesses at any price. (New
York Times. 2/5/90]
•
"Redlining [refusing to provide insurance to entire industries] and preexisting condition exclusions [rejecting certain employees because of
their medical history] constitute a major problem for many small
firms; approximately 15 percent of small firms fall into industries that
are routinely redlined. Pre-existing condition exclusion, particularly
excluding an entire firm because of one employee's health status - is a
practice almost exclusively reserved for small businesses."
[D.Stone, Chronic Disease and Disability: Beyond the Acute Medical Model, 1990)|
�Thirty-nine percent of small businesses not offering health insurance
is due to the inability to "qualify" for coverage at groups rates. The
inability to "qualify" included: Dfirms being to new 2) a particular
business type 3) pre-existing condition exclusions. [G.Jensen, R.
Morlock, J Gabel, SMALL BUSINESSES WANT TO PROVIDE INSURANCE:
"Two out of three of our members provide it (health insurance) today
and two out of three i f those who don't would like to do it." [John Motley.
NFIB Chief Lobbyist, MacNeil Lehrer Newshour, 4/8/931
A recent study prepared for the NFIB said that 64 percent of small
business owners would like to provide some or better insurance to their
workers. When asked why they do not offer insurance, the most
common reason - stated by 65 percent of small business owners — is
that premiums are too high. And 92 percent of small business owners
agree that the cost of health insurance is a serious business problem.
[Charles Hall and John Kuder, Small Business and Health Care: Results of A Surrey,
The NFIB Foundation. 19901
In a recent study by Wayne State University and KPMG Peat Marwick
42% of the small businesses surveyed support the principle that
employers should be required to contribute to the cost of health
insurance for their employees. Seventy-five percent favor a
restructuring of the health care system.
�From Boston Giobe Page 1
Small firms
get break in
health plan
fine-tuning
Bill going to Congress today
revises target for eost-amme
3, Peter G. GosoC-Lr. :ir.d R':r.a:r: A.
tee
Gi.CP •'•;"A: K
WASHINGTON* - In its health ca' p an >o i:e
•.:rvei!co today, the C'intor. zdv^r.iy.^-^ -.
v^siarCaUy expand a p:-o-.hs:c-. ;u'n : i -n - , n-.e
-.-^Icycr cons, rcpirg- tc race 'ea; i - 3 : i.-c••.•c>'-'.3ui -.vculo hutt srr.V.'. c'.i.-'.ri.-csei
7" e expansion is a^ong
e-'-s c-ar.eo.?.
'v:«c* o'thcm .w.a!!. in the 1.300-r.age le^sl-auv?
:. c-po^al. vhich thr adr.v.-.iir at: ?r. d: •;•«.• '.^
; ^."(ir-dav to biisf r.etnl-evs C o - ^ : - i » : e i '
v ouyi ar.u ^povte: s. A-24.5-pagG Jvatt'r.,? p'sn
•'• u?: sakcd rz the prejs ia.-t r.or.th.
r'r.ersir.g "tom niciztirgs -A-ith W'h/to Hciie
"5. '^aue^ rf;.'::»>rc.:t etoupi 5a->i the
^JnuristraUon plans VJ counter M-ticc-n-. ih-i':
-'•-a-.c-'a! projctio^s be; i-ui tre c'vpci-;! are
.rj -aliirc b; adding a 15 pert;-;:h:-;n t<: a p^!
,•' ney frr iubsidirirg 5mai; busir.fe.:.-^s und the
r ;
:0
T'-.e ir.Mi ost group leaders, xha apoke cn
c. r.iiition tr.oy not tder/jfted, said Whit* Hoi;?-?
crficiaLs in yesterday's bmt!ng desaibed a nur.oc:
cf other changes m its proposal. The amount that
.r.-iv-duaiS •Aouid have to contribute toward nealth
crverage tor therr.oelvc^ and their families wou.u oe
;.3nped at pei c-3nt of income.
Tr.e amount that states xould have to corn r :te
t.v.ra! d benenta for their empioyees would be nrped
a ^ 0 porcen". of pajToll. In the admimatrat^-. =
*
.
orivr.nai propwal. neither the individual noi suate
ar.O';nts ^6;-€ capped.
Ar.cng the biggest changes predicted between
rhe draft and thefinalpackage are the foUoumg• Scaling back a proposal that the gova-nr-.e'''.
; ;tk :p most medical costs of early retirees. T^e
crcposai was attacked as a sop to big business a- <l
".ore vcstly than administration estimates.
• Son'} reduction m the regulatory auth.^-.tv v.
ve".')nai n.eaith alliances, large purchasing
ati.-.--s thi-ough which most Artterlcars wouic
T e nicvti -.v-j^ij . -t - per haps tv rr.o-.-'i than S3'"
zet t.-f.' - .aith coverage under the Clinton p
,.
_ ••ic. p, 0; .-•.•trc amcur.t by -.vhi.-'r t'r>e pian
I-iura: locbyists, amorg otha-s, had ana- <ec -:
•
the •eci-rai fiefiut. WV.ite Hcuie
•-ir'a'.i .---Ina'.'.v cs'iioted their pi tcoial vouid eu: p:'op-:sed abliances as too po\rei-ful.
• Exvr.dirg ti-om nve to seven years t'-x ' .r-.e •h: '.icncit by $31 biibon overfiveyears.
^yi];i take the government tc begin cover.rg ;
I.oon P'lnetra. oij-cctor ofthe Office of
co3c ot :ong-tejTn caie. Th.e proposed bereft **•.,.'>'-:naeemfent and Budget, said last rj^irt the pian
v.-fiite Ho-ise ofricials originally es'imatto *y: >h. :rw
r-'/A- wouid cv.t the deficit by
bf.'.orv Ha iaid the
: • -posal a'so wowd take a year longer tc iT.p!enon: SC br uon before the end of the decade, -.s 4c«n u
.
In pc. tar.t for aia-acung the support of the eide- >
'.••T.":?-r,uaDby 1908. '
The reworked White House pi-oposai. o-t of :-c
The ot p.sld'Snt and h j ^-.re. HJ'a: y Rcc'-am
iavgest pieces of '.egtsiabon ever before Ccnpt. j ?
'.'"ir.t^r. 'A-I:' g? to Cayitoi H.!,' vx:ay tr- p.; ?;e: ; S-:espected *o be the centei-piece of a fei-ocou* pufiit
- a-.: rally ro Cong'-*ss. T'-e presi'.icnf. .-a-:!
uc-oat'j over how the nation should revamp ta $ 0 •
9C
-estc^'-a. that he hai " " ;"ir«5 to scai* back
bi'.lion-a-year health delivery system. I jvi-.a^e'a
.oviiayp iindovt'-e piopctai.
D;icuising '.-i-tJciSTn ny 'he \*a:::- J .Asc-x-iat; -n wii ciimoit ceiiainly change the adnun^tj acon c .
possibly '.vatej-mg It down, before voting on t'-e
. • M.-r.'rV.-ruv.?!-s that :s >•: -al -A-.-i v.j
"
racriage '.ometir.e nojet. yea?-.
^.'•'OJf '^sT Clinvjr, iaid, "M:;" ri-r'j-:':.; y.s . :«
«• >
'
In pnvate discussions and public corrme^'o
s-in.; to *% mon^y or. r>.:s. It .h-ry A a't'.' .*••'-: a
a3
'
'•<?ce-.-. -.vecks, administi-ancn officials ha\e rgr; e'i a
^t:t '".or--* :n th-t rout', ' - i t -.an c.
-••r•?:•:!'.
••eaciir.'is ro aitei• details to meet otjsc: :ns Bjt
^>.iu House aides said the overall prcp-tja!
^i^Cap'.Tv; Hi'wavj c-licuii the pac<i.;-; -A-- ^.n
retrain little charged fi om the lea/-.'ed ci) »^ *-ep<::r-Af.if] Pat'ick :43«--'.:h4n. .hairi i - " ' f a r r.ur^.'
r
,
v
r
;
1
-
v
1
;
�3^0 : :;.
'•i.i the president's Sept. 22 speech, to a joirt session
• f.'c-iip-esB.
Most FlftTuficantly, the admimstrtitcr continues
to te'ueve that it can pull in h'jndi eds of biuions of
•ioilars or the plan by catting e.\pected growth of
the Medicare and Medicaid pi cgitur.s and that it can
-aise mutt, ofthe rest of the ost by requir.rg
r-npioj-ers to pay >0 percent of the h jaith insurance
cvsts vf thet'v omplcyers. Coth elements cf the
proposa: have fira^n st^n; criticism ho:r. la-Arnaket?
y.\d 'obbyist?.
a-, e- -rt ro .-"Jrt irr.-n. o.-jir-is • i t ;
'v into d'j'Ji'i c.ans Ui •.'•c~i3.-i t.'r?. y.'r.•.•rr.paT»<?c o_«:;b'e for g.;.v.>: ::mert *-..&r.vU^ ? ".eip
ever health costs. Ir. ttie or'gina! propesa!. •:••.!>'
••Tige ilrr.s ?r>h 50 o; r'c-wer employee? we! > '.'igibie.
"'ndor the '.at«6t v, >?i:n, 'hat -variber - .ts h.-:n
' cier^'r'i tc 7).
The plan to require er.p.cyei-s tv .ovir ^0
pej'.-ert cf t-e cos^ of an aveiage health XM-XL anc-;coii ^" n.i; fj-ightc-r.-rd n-^ny in.all b :s:".eS5 c-"-.ers.
-s-h-i ji?:s-?it' the e^er-e co.:'/i ihve nem ur.ier.
The plan vr/a-d assess cctporatc aiiiar.cs.. that
.ct i.y rtay •.utiiii? e Ostein at: ecf.mau-i >24
hi'.L^tn o-e- tve VM.-I. t»"f:j.3i i>srim.iv;-c '.a:* r.-.gh*.
i*v-'r ii' ;. vfi'tously ar.rr-unc-'d '. p?-. cen*
Ti-i.-'p/t '."e ^maM Car..-:;
jc^T r - f
• •r-mp'ii.ir.r.- 'ror: specai ir.tv'-osr z-v-.z; an j
:-.rni: r:V of C;-^ ess. C'-mton's ? -p r : i . er.a::i.?
• 'r.-j'ir '0 iact moiuh s vurtire.
-'A'r.at is •.•?mar-arle 1 that vv:-- s.t'.i ha*
5
. h'ir^«d." -.ne >.or.cv?>-5:or.a'. health a.-ie si'u
• orteiia".'.
T".e basic stracttye is irtact: a system of
/- .-a -SM cvvca^e bwed on mar.iiato'-y
kplac;
r r.;e. A-th i'ipai ate provision fo< f e
-h'oy v: r'r.? eh:er:y s-ci the ;o v
f
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A nationally star
"1 oenefit package,
cl-riigned to make p
' .'n3 amvng health
pisni possible and •
'ppmg injard. is
5t:J a majoi feature
•;an >:r:rc^m .-.f
a "ore size nts ai." be
Similarly, the comept , . ..ra. -•'•.(Ealth
alliances." the major stViCui s ir.r.cvir:.^. m
Canton's plan, remains.
-dly u-oulu have
Although the alliances re^ rr i egulaton powers ove. alth p'.ars rrati
•-'.'.sr.:i.a:>.' er.visior.ed. these -. aifo-.cies would >cT:
LS :r.term.?i:aries b«-:r.vce c.ns'ir.ers an.i
• i-.-vountaDie h ra-.tn .ins at a,;uai!v del^vi th?
'-..'iicai -e'vices.
Sta'^s A-oVud disc e allowed to cptout .7 •m
Cinton proposai.wh: •,-) er.vts.c-:;.s mullipie '-sa th
plans. In favor of a s- -le-payer option. Under that
provision, a sUt* age. cy would -aise funds and pay
•ir. evtly for all medical sen-ices for its oit'^ne
T'-e single-payer 'prion is viewed as impoitant
bchr. subsranth-e id political reasons Fi-.-t,
mu.-h. of the nation, s .ch as notthei-n N-:^ En^iar.c.
does not have a cone Wrated population U' susta.n
r.ul'irie. competinw- aith plans, '-he nan .-ost*
•:<-r.rr'.v mechanism
ne Cintor. pvoposai.
Polliicaiiy. the a> 'ity of staws to dc^se sirg epayor syswms !s dv* i\ed to Imr Ifneial Deti••/Ct-Z
to C'rnfin'a^e. Se- Paul Wellstone. a Mm-!. 5 -ta
Domooi i t who leaQ. .ne siTisl«- «yeii ivluof-ir.-^ „••he Senare. said it is f critically imporunt" mat the
'Alirc ffou^c agreed last Thursday to ma^e 1 easier
1
•"c -taws to set up singie-piyer plans without r-.a - - v
:o -.x-r. multiple r'ederai waivors or suffei 'nar .-a.
:,
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s
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-
'.fes.
��ALTERNATIVE HEALTH CARE REFORM PROPOSALS
CRITERIA TOEVAL UA TE AL TERN A TIVE PLANS:
Any plan that fails to provide the security of a comprehensive package of benefits for all
Americans that can never be taken away -- while at the same time containing costs, improving
quality, reducing waste and inefficiency, and preserving what works in the American health care
system ~ falls short of acceptable comprehensive health care reform. No alternative proposal
meets all of these criteria to the same extent as the Health Security Act. although some proposals
meet one or more criteria.
HEALTH ACCESS AND QUALITY REFORM TODAY ACT OF 1993:
Republican Health Care Task Force Plan (Sens. Chafee and Dole)
Description:
• The Republican Health Care Task Force has proposed a health care plan based on an
individual mandate to purchase health insurance. Universal access to health care coverage
would be gradually phased-in, if the savings they project from the Medicare and Medicaid
programs ~ about $213 billion ~ are met. A national board would establish two benefits
packages - a standard package and a catastrophic package with a high deductible.
Government vouchers, paid for with Medicare and Medicaid savings, would be provided to
help poor people buy insurance. The availability and amount of the vouchers would depend
on the savings generated from Medicare and Medicaid. If health care costs grow faster than
anticipated, the level of benefits could be reduced.
•
The main methods offinancingfor this bill are significant Medicare and Medicaid savings,
and new tax revenue from the tax cap set to the lowest cost plan. Any of this new revenue
would be used to provide government vouchers to low income individuals.
•
The plan would establish purchasing cooperatives within each state to help small businesses
and individuals purchase coverage. The health cooperatives would be small and voluntary It
would continue to permit - but would not require -- that employers contribute toward
coverage for their employees.
•
The Republican Health Care Task Force plan would control costs by encouraging
competition among plans within the alliances and by taxing individuals and employers that
buy benefits that cost more than an established cap. The plan also includes measures to
reduce administration and bureaucracy, and reforms malpractice laws.
Analysis:
• The Chafee plan does not provide the security of a comprehensive package of benefits. It
keeps in place the current system in which insurers can "risk select" by finding employers
with healthy employees and offering them lower rates than they could find through the health
alliances. This leaves individuals who work for small firms and the currently uninsured
potentially worse off than individuals who can purchase insurance outside of the alliance
�system, because it is likely that the insurers will charge higher prices to the less healthy pool
of people who are forced to obtain coverage through the alliance. There is no guarantee that
these prices will be affordable for these individuals.
•
The Chafee plan also does not guarantee universal access until the year 2000 at the earliest.
This will occur only if the savings projected under the plan materialize - leaving the
uninsured without a true guarantee of ever obtaining insurance.
•
While the Chafee plan would encourage cost containment through insurance market reform
and would encourage competition among health plans to provide a basic benefits package,
the plan lacks system-wide incentives to control the cost of health care.
•
Participation in the health alliances would be voluntary, and the growth of spending on public
health care programs would be capped. The voluntary nature of the alliances would
significantly weaken their bargaining power and would not solve the adverse selection
problem — placing the highest risks in the smallest pools. This approach pools vulnerable
small businesses and the poor and uninsured, and may lead to higher premiums in alliances
than would exist outside the alliances.
•
The cap on public program spending, in combination with limited cost controls of the private
side, could encourage the same cost-shifting that is occurring in the current system: where
prices go up more slowly in the Medicare and Medicaid programs, and providers raise prices
faster in the private sector to make up the difference.
THE MANAGED COMPETITION ACT OF 1993:
Congressman Cooper
Description:
• Congressman Cooper's plan, the Managed Competition Act of 1993, would reform the health
insurance market, by creating risk-bearing Accountable Health Plans (AHPs) ~ which
combine the functions of insurance companies and health care providers. These AHPs
would be prohibited from excluding individuals with pre-existing conditions, from setting
premiums based on health status, or establishing premium rates on a person by person basis
(medical underwriting). Health Plan Purchasing Cooperatives (HPPCs) would be established
by the states and would organize individuals and small group purchasers into risk pools.
•
A national health board would be established to oversee the creation of the AHPs and
HPPCs. The board would also be in charge of specifying a uniform set of health benefits,
and setting standard deductibles and cost-sharing levels. Standards for reporting prices,
health outcomes, and measures of consumer satisfaction would also be established by the
board, and only plans that met these standards would be certified as AHPs.
•
The Managed Competition Act would modify the tax code in several ways. First, it would
allow business deductions only for board-certified AHPs, not other health plans. Second, tax
deductibility for businesses and individuals [?] would be limited to the cost of the least
�expensive AHP in the region. There would be no tax deductibility for use of plans not
certified by the board. Medicaid would be replaced by a new Federal program that would
assist low income individuals in purchasing health care insurance through the HPPCs.
•
The main methods offinancingfor this bill are significant Medicare and Medicaid savings,
and new tax revenue from the tax cap set to the lowest cost plan. This new revenue would be
used to provide vouchers for low-income individuals.
•
The bill also contains provisions to improve access to rural and underserved populations,
increase programs to promote preventive health care, simplify the paperwork involved in the
administration of health insurance, and reform malpractice laws.
Analysis:
• The Cooper bill does not evenfinanceitself. In fact, the CBO estimates that it will add $70
billion to the federal deficit over 5 years.
•
The Cooper plan does not provide the security of a comprehensive package of benefits. It
offers no provision for universal coverage and has no guarantee that coverage can never be
taken away. While it contains beneficial insurance market reform that should make health
insurance available to some individuals who currently cannot purchase care, it certainly does
not provide security to all Americans.
•
All incentives in the program are aimed at moving people into a low-cost health maintenance
plan without regard for quality of care. This plan does not specify a comprehensive set of
benefits, nor does it protect individuals from high out-of-pocket costs. The plan also does not
eliminate lifetime limits, so that there is no guarantee that insurance coverage will never run
out.
•
The plan also does not have an employer or an individual mandate, which means that
millions of Americans could remain uninsured under the plan. Failing to provide universal
coverage means that the uninsured will continue to use expensive, inappropriate care, and
the insured will continue to pick up the bill. This plan relies on competition through the
alliances to create savings in the health care system, but does not require anyone to purchase
their care through the alliance, which diminishes the alliance's ability to encourage
competition and control costs. On the individual level, cost savings may occur only if an
individual chooses the lowest cost plan, if savings occur at all.
•
Participation in the health alliances would be voluntary, and the growth of spending on public
health care programs would be capped. The voluntary nature of the alliances would
significantly weaken their bargaining power and would not solve the adverse selection
problem ~ placing the highest risks in the smallest pools. This approach pools vulnerable
small businesses and the poor and uninsured, and may lead to higher premiums in alliances
than would exist outside the alliances.
•
The cap on public program spending, in combination with limited cost controls of the private
�side, could encourage the same cost-shifting that is occurring in the current system: where
prices go up more slowly in the Medicare and Medicaid programs, and providers raise prices
faster in the private sector to make up the difference.
THE COMPREHENSIVE FAMILY HEALTH ACCESS AND SA VINGS ACT: Senators
Gramm and McCain:
Description:
• The Gramm-McCain bill eliminates state requirements for minimum insurance benefits in
order to create a market for health insurance that would cover only catastrophic medical
expenses. Tax incentives and government assistance would encourage the purchase of such
plans.
•
The bill would also create "Medisave" accounts with tax favored status much like Individual
Retirement Accounts (IRAs), which individuals would use to pay most medical bills.
Individuals would pay for routine care and deductibles out of their Medisave accounts, and
would only use their insurance for serious or costly care. All Medisave funds not used for
routine treatment could be retained by the individual for future medical expenses, creating
incentives to limit health care spending.
•
In addition, employers who currently provide health insurance would be required to offer, but
not contribute to, the following options: a Medisave account; enrollment in an HMO; and the
option to continue their current coverage. The self-employed and uninsured would be
allowed to exclude from their income the percentage of medical insurance coverage costs
equal to the national average of employer contributions to health care coverage.
•
Under the Gramm-McCain bill, health insurance companies would be prohibited from
excluding from coverage individuals with pre-existing conditions, but insurers would be
allowed to charge these individuals higher rates. There would be no limit on how much
higher these charges could be, but Federal subsidies would be available for some people if
the cost exceeded a certain percent of family income. Insurance discounts would be offered
to individuals who engage in activities determined to constitute a "healthy" lifestyle. Federal
assistance would be reduced for individuals who engage in "unhealthy" activities.
Analysis:
• The Gramm-McCain proposal does not provide the security of a comprehensive package of
benefits. The bill makes no promise of universal coverage, andftirthermore,it leaves the
current insurance system and its abuses in place. It allows insurers to continue to "experience
rate" their premiums, leaving millions of Americans to remain without health insurance, and
millions more unable to afford insurance, even though they are often the ones who need it
most.
•
The plan has no quality standards, and, in fact, it eliminates basic protections for insurance
plans and provides no information to consumers on the quality of plans or the effectiveness of
treatments. Excluding these provisions encourages the continuation of the waste and
�inefficiencies that pervade our current health care system -- leading to inappropriate care and
excessive costs.
•
The Gramm-McCain proposal seeks to contain costs by encouraging consumers to assume as
much of the cost of their care as possible. The proposal does not encourage competitionamong providers, nor does it create large purchasing groups so that individuals and small
employers can achieve the same affordable insurance currently available to many large
employers. By allowing the current system to remain essentially unchanged, many ofthe
cost-increasing practices that exist under the current system will continue into the future.
•
The Gramm-McCain proposal discourages cost-effective preventive care by allowing
individuals to roll over the money in their Medisave accounts. The proposal encourages
individuals to purchase only catastrophic coverage, and discourages the purchase of
comprehensive benefits packages. Both of these incentives encourage people to wait until
they have costly, serious medical conditions before they seek care — which often means
seeking more expensive treatment than if they had sought care in the early stages of their
illnesses.
THE "AFFORDABLE HEALTH CARE NOW" BILL
Representatives Michel and Hasert
Description:
• Under the Michel proposal, employers would be required to offer — but not pay for - at least
one catastrophic insurance plan, one standard insurance plan and one tax free medical savings
account to their employees. Insurance companies that sell to small employers would be
required to offer both kinds of plans. Benefits targets (actuarial targets) would be established
by the National Association of Insurance Commissions (NAIC). Small companies (from 2 to
50 employees) would have the flexibility to offer a smaller or different benefits package than
the one set by the NAIC. The proposal would limit higher insurance rates for individuals
with pre-existing conditions, but would not eliminate experience rating completely.
•
The Michel plan would allow regional purchasing cooperatives to be formed, but would not
require anyone to join the cooperatives. The plan would limit variation in premiums for
small businesses.
•
Employers would face the same tax treatment for contributions to employee health insurance
as they do under current law under the Michel proposal. The self-employed would be able to
deduct 100 percent of health insurance costs. Medical savings accounts would be tax free,
and would have a maximum contribution level of $2,500.
Analysis:
• The Michel/Hasert proposal does not provide the security of a comprehensive package of
benefits. The focus on the proposal is on enhancing access to coverage, but not ensuring that
coverage will be available and affordable. We could argue that everyone today has acc^iS.
but many cannot afford to purchase insurance. Some individuals may find health insurance
�more affordable through the alliances under the Michel/Hasert plan than the insurance that is
currently available to them. Many others, however, may still be priced out of the health
insurance market under the Michel/Hasert plan.
•
The voluntary nature of the alliances would significantly weaken their bargaining power and
would not solve the adverse selection problem ~ placing the highest risks in the smallest
pools. This approach pools vulnerable small businesses and the poor and uninsured, and may
lead to higher premiums in alliances than would exist outside the alliances.
•
The Michel/Hasert proposal attempts to control costs by encouraging competition among
health plans and limiting premium costs for small businesses. While the proposal takes steps
in the direction of encouraging competition, the lack of any requirement to purchase
insurance or to join the alliances limits the ability of the alliances to bargain with insurance
companies for lower prices.
•
Furthermore, insurers can continue to cost shift to small businesses and other individuals
who have no alternative but to join the alliance, while they continue to offer lower prices to
large employers with healthy employees. Offering additional tax advantages for individual
contributions to health insurance premiums encourages additional utilization of services by
the insured, which also may increase costs under the Michel proposal.
SINGLE PA YER PROPOSALS:
Senators McDermott and Wellstone
Representative Stark
Description:
• Under the McDermott-Wellstone single payer proposal the government would take full
responsibility as the sole purchaser of health care services for all legal residents. The
government would replace all other public and private health care coverage. The plan would
be administered by the states as a fee-for-service program. States would also have the option
of enrolling their residents, through capitated managed care, in health service organizations
that meet Federal requirements.
•
The program would be funded through increased taxes on individuals and businesses,
including payroll taxes and income taxes. A trust fund would be established by combining
new taxes with funds from existing Federal programs (except the Indian Health Service and
the Veterans Administration).
•
The government would establish payment rates for all physicians and other providers. The
Secretary ofHealth and Human Services would establish annual state and national budgets.
In order to contain costs, total spending would be strictly limited by this national health
budget and would grow no more rapidly than the annual percent increase in GDP. Providers
would not be able to bill their patients for covered services.
�Analysis:
• Single payer proposals rely on a government system of financing and direct government
control of costs. Many worry about the feasibility of putting one-seventh of America's GDP
under government control. Others question the political practicability of raising half a trillion
dollars in new taxes on individuals, employers and providers.
The fee schedules and rate setting encourage waste and inefficiency. If the government fails
to accurately set a price, it could encourage excessive use of a certain procedure, or,
alternatively, insufficient use of such a procedure. Proposals that encourage competition
allow the market to set prices that reflect relative values of procedures, and encourage
providers to use appropriate, cost-effective forms of care.
•
The single-payer plan inarguably provides security for all Americans. This plan controls
costs by setting fee schedules for physicians and other health care providers. Under this
approach, faced with lower prices but still getting paid for each service, providers have
incentives to increase the volume of services that they provide. Experience in other countries
has shown that such payment systems increase utilization of services. This system ignores
the potential for competition to control costs, and actually eliminates many of the competitive
forces that exist in today's health care system.
i/data/healthcare/plans.kon
12/3/93
�ECONOMIC EFFECTS OF HEALTH CARE REFORM
Comprehensive health care reform is a necessary element in an overall strategy to increase
long-term economic growth, lower interest rates, reduce the deficit, and create jobs. Today,
the rising cost of health care is a hidden tax on employers - hurting businesses, depressing
wages, limiting job creation and threatening our competitiveness. The bottom line is this:
health care reform will lower business costs, raise wages, and increase opportunities for
workers.
I. THE HEALTH SECURITY PLAN WILL LOWER COSTS FOR MANY
BUSINESSES, FREEING UP MONEY FOR NEW JOBS, HIGHER WAGES,
AND MORE INVESTMENT.
Most businesses provide health care, and the Health Security plan will lower their
costs by slowing the rate of growth of health care costs, eliminating "free riders," and
lowering the markup for uncompensated care. This will make it easier to hire future
workers and to give wage increases to existing workers.
H. SMALL BUSINESSES WHO NOW PROVIDE COVERAGE WILL
PARTICULARLY BENEFIT.
Most small businesses provide health care to their workers and have to pay up to 35 %
more for health care than their big business competitors. The Health Security plan
will lower health care costs for these small businesses, giving thesefirmsmore money
to hire more workers and pay their existing workers higher wages. As the Wall
Street Journal said, "for many small businesses, saddled with escalating health care
costs, President Clinton's health care package comes as an unexpected windfall."
Accessible, reasonably priced insurance makes it easier for people to form new
companies and for small business to attract and keep workers.
HI. THE HEALTH SECURITY PLAN WILL REDUCE "JOB LOCK" AND
INCREASE PEOPLE'S ABILITY TO FIND BETTER JOBS.
Up to 30% of people report that they are afraid to leave their current jobs because
they could lose their health insurance. The guaranteed security of the Health Security
plan means that people will be free to switch jobs or start a small business.
IV. THE HEALTH SECURITY PLAN WILL REDUCE "WELFARE LOCK."
One of the reasons people do not leave welfare is the loss of Medicaid benefits.
Studies suggest that as many as one million of the four million welfare recipients
would take jobs if they were guaranteed health care.
�V. HEALTH CARE REFORM WILL "LEVEL THE PLAYING FIELD" AMONG
SMALL BUSINESSES, AND BETWEEN LARGE AND SMALL BUSINESSES.
Small businesses that provide insurance currently pay more for labor than their
competitors that do not insure, and pay more for insurance than their large business
competitors. They also must bear the cost, in the form of higher premiums, to
finance care for the uninsured.
VI. THE HEALTH SECURITY PLAN WILL INCREASE HEALTH CARE JOBS IN
THE SHORT RUN AND INCREASE EFFICIENCY IN THE HEALTH CARE
SECTOR IN THE LONG RUN.
By 1996, as many as 400,000 jobs will be created in the health care industry. As
cost savings begin to accrue, employment growth in the health care sector will slow.
Improved efficiency in the health care sector will lower the price of care to families
and businesses.
VH. MINIMUM WAGE - LOOK AT REAL WORLD EVIDENCE.
Real world evidence from Harvard and Princeton studies of small businesses and
restaurants shows thatrecentminimum wage increases did not hurt job growth, and in
fact, can make it easier to hire people. Health carereformis equivalent to a small
increase in the minimum wage for thosefirmsthat currently do not provide health
insurance. The increase in health care costs under the Health Security plan for
currently uninsured low-wage workers in smallfirmsis equivalent to only a very
modest minimum wage increase of $. 15 to $.35 per hour.
VHI. HAWAH - LOOK AT REAL WORLD EVIDENCE.
Real world experience from Hawaii, which imposed an employer health insurance
mandate in 1974, shows that from the I970's until now, Hawaii's private non-farm
employment increased by 90% (compared to 54% in the U.S.) andretailand
wholesale trade employment grew by more than in the U.S.
�Economic Effects of Health Care Refonn
by
Robert Reich, Secretary of Labor
and
Laura D'Andrea Tyson, Chair, Council of Econorr - Advisers
October 6, 1993
�I.
Manv features ofthe plan work to lower employer costs, increase iob opportimiHre,
and improve economic efficiency.
A.
The Health Security plan lowers business spending on health insurance and
thus frees up money for increased wages and salaries or for additional hiring.
1.
The slower growth rate of health care costs means that aggregate business spending falls over time.
While the business sector as a whole will initially pay more for health insurance because of the expansion to universal coverage, the reduction in
health care cost growth lowers premiums over time. By the end of the
decade, businesses in aggregate will pay less for health care than they
otherwise would have, even with the increase in coverage (Chart 1).
•
2.
By the year 2000, aggregate business spending on covered services
alone will fall by $10 billion. This is about 4 percent of baseline
spending in that year. In 1989 dollars (the peak of the business
cycle), this is about 3 percent of total business profits and about 6
percent of net investment in fixed, non-residential plant and
equipment.
.
Many employers who currently offer health insurance will see their
costs drop, freeing up resources for increased wages or additional
hiring.
•
Businesses that currently provide insurance pay more than true cost
since providers overcharge them to make up for care to the uninsured. This "uncompensated care tax" amounts to over 10 percent
of premiums. Under the Health Security plan, every busmess and
individual must contribute something to the cost of their health
care. Ending this cost shifting will lower costs for businesses that
now provide insurance.
•
Employers now providing insurance will benefitfromspreading
the costs over all workers. Currendy, about 20 million workers are
insured through a spouse's policy. By eliminating corporate "free
riders", the Health Security plan will lower costs for many firms.
•
Small businesses will see additional price reductions, since the load
on their insurance premiums ~ the amount by which the price
exceeds the expected benefits - will fall by up to 25 percent.
�Many currently insuring firms will receive discounts on their
premiums.
3.
Insuring firms can respond to cost reductions by:
Hiring more workers.
Raising wages of their existing workers or providing better pension
or other benefits.
Investing more in plant, equipment, education and training, and
research and development.
Increasing dividends to shareholders.
Lowering prices, thereby leaving consumers with more income to
spend on other goods.
Each of these outcomes has a stimulative effect on the economy and will
increase employment. Economic research has not reached clear
conclusions about how to apportion these effects. Almost all models
suggest that wage increases are a likely response, but they differ about
whether all of the savings will result in wage increases, or whether some
of the savings will be allocated to additional investment or new hiring.
B.
Small businesses benefit from other features of the plan as well.
•
Small businesses, particularly those with low average wages, receive the
largest discounts.
•
Small businesses will see the largest reductions in their administrative
costs.
Many small businesses will benefit from the movement to community
rating. Small businesses have the most variability in insurance premiums,
because of the small size of their groups. This variability contributes to
the difficulty smallfirmshave in attracting and keeping highly skilled
workers. If costs were independent of each group's risks, small
businesses mightfindit easier to attract and keep workers.
Health care reform will "level the playing field" among small businesses,
and between large and small businesses.
•
Small businesses that provide insurance currently pay more for
labor than their competitors that do not insure. They also must
bear the cost, in the form of higher premiums, tofinancecare for
the uninsured.
�•
Small businesses that insure currently pay up to 35 percent more
than their large business competitors for the same set of benefits.
Many small businesses would like to provide health insurance but cannot.
According to a recent study prepared by Charles Hall of Temple
University for the NFIB:
•
•
When asked why they do not offer insurance, the most common
reason (65 percent) is that premiums are too high.
•
C.
64 percent of small business owners would like to provide some or
better insurance for their workers;
92 percent of small business owners agree that the cost of health
insurance is a serious business problem.
The reform will result in greater health care employment in the short run
and a more efficient health sector in the long run.
•
•
As the health sector becomes more producUve, the economy will be able
to produce more output than it could before reform. This productivity increase will raise living standards.
•
D.
By 1996, as many as 400,000 net new jobs will^be created in the health
sector. This net job increase consists of a significant expansion of employment of health care providers and a decrease in employment of health
administrators and insurance workers. As the cost savings begin to
accrue, employment in the health sector will level off. By the end of the
decade, he<dth care employment will grow more slowly, although there
will be no absolute decline in the number of employees.
Prohibiting pre-existing condition exclusions and the ability of insurers to
drop coverage will improve efficiency. While any one insurer benefits
from having these screens, those excluded are ultimately covered by
someone, or receive uncompensated care. The resources spent "passing
the buck" are thus a loss to society.
Health care reform will end one reasonfirmsdiscriminate among types of
workers.
•
Firms currently have an incentive to favor workers who have other health
insurance coverage, particularly working spouses in two earner families,
�part-time workers, and temporary workers. In most cases, firms can hire
these workers without providing health insurance.
•
E.
The Health Security plan will eliminate incentives to hire people
on the basis of their health care costs as opposed to their job
qualifications.
By providing health care security, the Health Security plan will improve the
efficiency of the economy.
1.
The reduction in "job lock" will increase people's ability to find better
jobs.
Up to 30% of people report that they are afraid to leave their current job
due to the risk of losing health insurance. Research by Brigitte Madrian
at Harvard has found that mobility rates for married men are depressed by
25 percent because of job lock. This effect impedes the ability of workers
to move to jobs where they are more productive.
Reducing job lock may also affect employment. Firms may be more
willing to hire qualified workers with pre-existing conditions when they
cannot be charged more for them. On the other hand, some workers may
decide to leave the labor force if affordable health care is no longer tied
to staying at a particular job. Evidence suggests that about 350-600,000
people will decide to retire early following health care reform. The
increase in voluntary retirement is likely to increase employment
opportunities for younger workers.
2.
Lower costs for small businesses and the self-employed may make it
easier for people to form new companies.
The difficulty of self-employed workers and small businesses today in
purchasing health insurance creates large disincentives for individuals to
leave covered jobs to start up new businesses.
Reform may thus
stimulate new business formation, particularly for small businesses. There
is little economic research on this subject to date.
3.
Eliminating the link between welfare and health insurance will reduce
"welfare lock".
One of the barriers to leaving welfare is the loss of Medicaid benefits.
�Having universal insurance coverage will end
on welfare, for example, will get to keep abc
any additional earnings as a result of health
, typical mother
percent more of
Several studies estimate that eliminating weltaK x k could - have
substantial employment effects among the welfare p 'pulation. Robert
Moffitt at Brown University and Barbara Wolfe at the University of
Wisconsin suggest that as many as 1 million of th
million welfare
recipients would take jobs if there were continuous 1 1th care benefits.
Aaron Yelowitz of MIT alsofindsthat more Medic? '. recipients would
work if they could keep more of their income and still receive health
insurance.
�II.
Existing studies fail to analyze accurately the Health Security plan.
There are two commonly cited studies of the economic impacts of the President's health
care reform proposal: "The Impact of a Health Insurance Mandate on Labor Costs and
Employment", by June and Dave O'Neill for the Employment Policies Institute; and
"The Employment Impact of Proposed Health Care Reform on Small Business", by The
CONSAD Research Corporation. These studies do not adequately analyze the economic
effects of the President's health care reform proposal:
A.
The studies make several fundamental errors in characterizing the Health
Security plan.
•
They completely excluded from their analysis the discounts to small and
low-wage businesses that the Health Security plan provides.
The lack of discounts - coupled with the questionable assumption that
firms cannot shift any costs to workers earning less than $25,000 per year
— lead directly to the massively overstated claims of job loss.
•
They incorrectly calculate the cost for part-time employees working 20 or
more hours per week.
In the O'Neill study, employers are assumed to pay the full premium for
all workers who work more than 20 hours per week. In the Health
Security plan, however, employers pay a much smaller, pro-rated
premium for part-time workers.
•
They use a benefit package that costs much more than the
Administration's package.
The O'Neill study assumes that employers pay $5,310 per worker with a
family and $2,160 per single worker. Estimates for the Health Security
plan are that employers will pay about $2,500 per worker with a family,
and about $1,500 per single worker. The cost that employers pay for a
family policy is adjusted to take into account that many families will have
two adults in the labor force. In these cases, both employers will
contribute to the cost of health insurance.
B.
The assumption about how firms change their employment in response to cost
changes is three to six times higher than most conventional estimates.
The O'Neill study assumes that firms will lay off 3% of their workforce if
�compensationrisesby 10%.
•
Summary estimates in the economic literature, for example by Charles
Brown and Allison Wellington, suggest that the responsiveness of firms
to cost changes for low-wage workers is only one-sixth to one-third of the
O'Neill assumption.
C.
Neither study accounts for job gains from businesses whose costs fall under
the reform.
D.
Real world evidence suggests that mandates do not have major adverse
employment effects.
1.
Hawaii imposed an employer health insurance mandate in 1974. From the
1970s until now.
•
•
Retail and wholesale trade employment grew by more in Hawaii
than in the United States as a whole.
•
2.
Total private non-farm employment in Hawaii increased by 90
percent, compared to 54 percent in the United States as a whole.
Within the health care sector, total health services employment in
Hawaii grew more rapidly than it did in the United States as a
whole. In contrast, health insurance employment grew less rapidly
than it did in the United States as a whole.
The increase in health care costs for currently uninsured low-wage
workers in small firms is equivalent to only a very modest minimum wage
increase of $. 15 to $.35 per hour. An increase of this magnitude will still
leave the real compensation cost for minimum wage workers below its
average level in the 1980s.
•
E.
Evidence by Lawrence Katz at Harvard and Alan Krueger and
David Card at Princeton suggests that recent increases in the
minimum wage have had minimal or even positive effects on
employment.
These studies do not focus on the many beneficial aspects of the Health
Security plan discussed in Part I.
�There is no denying that some firms will pay more after reform than they did
prior to reform. The vast majority of Americans, however, will benefit from the
reduction in health insurance costs, the portability of coverage, the lower
administrative costs, the reduction in job lock, the lower costs for small
businesses and the self-employed, and the reduction in welfare lock. Any study
which ignores these effects cannot be a complete analysis of the employment
effects of health care reform.
HI.
There are manv factors in the health care reform that will tend to increase
employment. There are some factors that will tend to decrease employment. And
there are several factors that will change the composition of employment. Overall,
the net effect on employment is likely to be small. Over time, the beneficial effects
on employment are likely to strengthen.
A.
Existing models do not allow us to quantify the net effect on employment.
Estimating these effects would require precise ans^$rs to a wide range of
questions, including:
•
How will individuals respond to the incentives in the plan, particularly
those affecting small business formation, job mobility, welfare reduction,
and retirement?
•
Willfirmsrespond to reductions in health care costs by increasing wages
dollar-for-dollar, or in part by increasing employment, increasing investment, or reducing prices?
•
Will decreased uncertainty in the growth of health care costs encourage
firms to hire more workers or encourage more individuals to become selfemployed?
There are no existing models that can address all of the relevant issues. The
range of uncertainty is too great to use precise numbers. For this reason, we will
not present specific estimates of the employment effects of the Health Security
plan.
�References
Charles Brown, "Minimum Wage Laws: Are They Overrated?" Journal of Economic
Perspectives. Summer 1988.
Charles Brown, Curtis Gilroy, and Andrew Kohen, "The Effect of the Minimum Wage on
Employment and Unemployment" Journal of Economic Literature. June 1982.
Charles Brown, Curtis Gilroy, and Andrew Kohen, "Time Series Evidence on the Effects of the
Minimum Wage on Youth Employment and Unemployment", Journal of Human Resourcps,
Winter 1991.
David Card and Alan B. Krueger, "Minimum Wages and Employment: A Case Study of the Fast
Food Industry in New Jersey and Pennsylvania", Working Paper #315, Industrial Relations
Section, Princeton University, April 1983.
David Card, "Do Minimum Wages Reduce Employment? A Case Study of California, 1987-89",
Industrial and Labor Relations Review. October 1992.
„
David Card, "Using Regional Variation in Wages to Measure the Effects of the Federal
Minimum Wage", Industrial and Labor Relations Review. October 1992.
Charles P. Hall, Jr. and John M. Kuder, Small Business and Health Care: Results of A Survey.
The NFIB Foundation, 1990.
Lawrence F. Katz and Alan B. Krueger, "The Effect of the Minimum Wage on the Fast-Food
Industry", Industrial and Labor Relations Review. October 1992.
Brigitte Madrian, "Employment-Based Health Insurance and Job Mobility: Is There Evidence
of Job Lock?", forthcoming in Quarterly Journal of Economics. February 1994.
Robert Moffitt and Barbara Wolfe, "The Effect of the Medicaid Program on Welfare
Participation and Labor Supply", Review of Economics and Statistics, November 1992.
Aaron S. Yelowitz, "The Medicaid Notch, Labor Supply, and Welfare Participation: Evidence
from Eligibility Expansion", September 1993.
Allison J. Wellington, "Effect of the Minimum Wage on the Employment Status of Youths: An
Update", Journal of Human Resources. Winter 1991.
�Testimony
of
Dr. Laura D'Andrea Tyson
Chair
Council of Economic Advisers
before
the
House Committee on Ways and Means
Subcommittee on Health
Thursday, November 4, 1993
11:00 a.m.
THE ECONOMIC EFFECTS OF HEALTH CARE REFORM
Thank you, Mr. Chairman, for the opportunity to come before
your Committee to discuss the economic effects of health care
reform.
The United States i s facing a health care c r i s i s . The
rapidly r i s i n g cost of health care hurts businesses,
wages, and contributes to f i s c a l imbalance.
depresses
The lack of health
security makes many individuals afraid to leave t h e i r current
jobs, discourages others from working for small businesses or
becoming self-employed, and keeps people on welfare instead of
working.
Reforming health care i s a d i f f i c u l t challenge, but one that
we must face.
Let me f i r s t outline the problems that force us to
take action, and then I w i l l discuss the economic effects of the
Health Security Act.
�Whv Reform Health Care?
There are f i v e reasons why urgent h e a l t h care a c t i o n i s
needed.
The f i r s t problem i s that our health care system does not
provide security to individuals. When people get sick, the cost
of their insurance can increase dramatically, or they can be
dropped from coverage completely.
This situation i s a result of
r i s k selection practices on the part of insurers.
Insurers spend
large amounts of money trying to select good health r i s k s , and
avoid bad r i s k s .
This practice i s profitable for any one insurer
but i s s o c i a l l y wasteful.
After a l l , someone must cover the
costs incurred by people who get sick.
The r e s u l t i s that many
people cannot get coverage, and many more fear for their a b i l i t y
to get coverage i n the future.
The second problem with our health insurance system i s that
i t interferes with the employment decisions of individuals.
Almost 40 percent of insurers exclude pre-existing conditions
from t h e i r coverage of newly insured people, thus locking many
people into t h e i r current insurance p o l i c i e s and jobs.
Surveys
show that up to 30 percent of employees f e e l "locked" into t h e i r
jobs. Some do not form small businesses or become self-employed
because of the d i f f i c u l t y of obtaining insurance.
F i n a l l y , many
people remain on welfare because they w i l l lose t h e i r Medicaid
�coverage i f they take a job.
I f we are t o adapt t o changing
domestic and i n t e r n a t i o n a l economic circumstances, we must not
penalize i n d i v i d u a l s every time they change or lose a j o b .
The t h i r d problem w i t h our health care system i s t h a t the
number of people who do not have access t o a f f o r d a b l e insurance
i s large and increasing.
health insurance.
unemployed.
Over 37 m i l l i o n people do not have
And t h i s i s not a predicament unique t o the
Three-quarters of a l l uninsured people are i n
working f a m i l i e s , and over one-third o f the uninsured are i n
f a m i l i e s w i t h a t least one f u l l - t i m e year-round worker.
We have
a system i n which m i l l i o n s o f people, many o f them i n working
f a m i l i e s , cannot a f f o r d the r i s i n g costs of h e a l t h care coverage,
and they face the r i s k of being f i n a n c i a l l y c r i p p l e d by events
beyond t h e i r c o n t r o l .
I t i s a myth that insured people do not need to worry about
the uninsured.
Under our current system, when the uninsured
catastrophic costs, the insured pick up the b i l l .
face
Currently, the
uninsured pay only 20 percent of the health care costs they
incur, while the privately insured pay 130 percent of t h e i r
actual health care costs.
The uninsured receive more costly care
than the insured, because they seek treatment i n emergency rooms
when they have acute problems, rather than seeking treatment from
a physician at an early stage of t h e i r i l l n e s s e s .
preventive actions reduce health care costs.
We know that
For example, a
�recent study a t the U n i v e r s i t y of C a l i f o r n i a a t San Diego found
t h a t h o s p i t a l care f o r babies born w i t h no prenatal care cost an
average of $2,200 more than corresponding care f o r babies whose
mothers received adequate prenatal care.
The cost of the
prenatal care was only about $1,000 per pregnancy.
The f o u r t h problem w i t h the health care system i s t h a t
health care costs are high and r i s i n g .
No other country i n the
world spends more than 10 percent of i t s GDP on h e a l t h care. The
United States spends 14 percent.
American consumers spend more
on health care than on f u e l o i l , e l e c t r i c i t y , n a t u r a l gas, other
household operations, o i l and gasoline, l o c a l t r a n s p o r t a t i o n ,
f u r n i t u r e , and other household equipment combined.
The f i f t h problem with our health care system i s that i t i s
riddled with market f a i l u r e s , excess supply, and i n e f f i c i e n c i e s .
These distortions are the inevitable consequence of i n s u f f i c i e n t
competition: many consumers have l i t t l e or no choice i n the
health insurance they receive; and many providers have l i t t l e or
no incentive to control costs.
Despite our massive commitment of
resources to health care spending, the United States ranks 19th
out of 26 countries i n infant mortality and 18th i n l i f e
expectancy.
abuse.
We lose an estimated $80 b i l l i o n a year to fraud and
Over 5 percent of our t o t a l health care spending—
conservatively $45 b i l l i o n i n 1992—covers administrative
expenses and paperwork.
As many as one-third of common medical
�procedures may be unnecessary and inappropriate.
Hospital prices
continue t o r i s e even though h o s p i t a l beds are i n excess supply
i n many parts of the country.
HMO experience i n d i c a t e s t h a t the
cost of medical care can be cut by as much as 10-2 0 percent
without reducing the q u a l i t y of care.
These diverse i n d i c a t o r s p a i n t a compelling p i c t u r e of the
m i s a l l o c a t i o n of resources i n our current health care system.
Perhaps the most important economic reason f o r reform i s t o
improve the e f f i c i e n c y of t h i s system.
This i n t u r n w i l l make
resources a v a i l a b l e t o cover the uninsured and t o address other
pressing economic and s o c i a l needs.
The Economic E f f e c t s of Reform
The Health Security Act addresses these fundamental problems
in the current system.
I t w i l l lower costs, provide security,
increase job opportunities and increase the efficiency of the
economy. Many businesses w i l l see their costs f a l l , and many
others w i l l have access to coverage previously denied them.
Slower cost growth w i l l allow workers to enjoy faster growth in
t h e i r r e a l wages, and reduced job lock w i l l increase t h e i r
a b i l i t y to find better jobs.
Let me describe what I believe to
be the important economic effects of health care reform.
�F i r s t , many employers who c u r r e n t l y o f f e r h e a l t h insurance
w i l l see t h e i r costs f a l l immediatelv.
Under the Health Security
plan, every i n d i v i d u a l w i l l receive health insurance.
E l i m i n a t i n g uncompensated care i n the current system w i l l lower
costs t o businesses t h a t provide care, thereby making resources
a v a i l a b l e f o r increased wages or a d d i t i o n a l h i r i n g .
Eliminating
corporate "free r i d e r s " w i l l also reduce spending by companies
t h a t c u r r e n t l y provide health b e n e f i t s f o r t h e i r employees and
for t h e i r spouses who are not covered by t h e i r own employers.
Second, the Health Security Act gradually lowers aggregate
business spending on health insurance.
Although the business
sector as a whole w i l l i n i t i a l l y pay more for health insurance,
the reduction i n health care cost growth lowers the growth of
premiums over time.
I n fact, by the end of t h i s decade, we
estimate that aggregate business spending on mandatory services
covered by the Health Security plan w i l l f a l l by over $10
billion.
Businesses can do many things with the r e s u l t i n g cost
savings.
They can: hire more workers; r a i s e wages or provide
better benefits for existing workers; invest i n more plant,
equipment, education and training, and research and development;
increase dividends to shareholders; or lower p r i c e s , thereby
leaving consumers with more income to spend on other goods.
Each
of these outcomes w i l l have a stimulative effect on the economy
�and w i l l increase employment.
Economic research has not reached
clear conclusions about how t o apportion the savings among these
effects.
Almost a l l models suggest t h a t wage increases are a
l i k e l y response, but they d i f f e r about whether a l l of the savings
w i l l flow i n t o wage increases.
Nevertheless, the e f f e c t s of
lower health care spending are c l e a r l y b e n e f i c i a l f o r the
economy.
Small businesses w i l l particularly benefit from the Health
Security Act.
Currently small businesses that provide
insurance
face administrative costs of up to 40 percent, while large
businesses face costs of only 5 percent.
Under reform,
administrative costs for small firms w i l l f a l l by up to 25
percentage points.
Additionally, many of those currently
insuring small firms w i l l receive subsidies for on t h e i r
premiums.
Although small businesses that do not currently provide
insurance w i l l pay more, they are l i k e l y to receive discounts to
make health care coverage affordable.
There i s a common myth
that small businesses cannot afford to pay anything for health
insurance.
In fact, many small businesses report they would l i k e
to provide health insurance for t h e i r employees i f i t were more
affordable.
According to a recent study for the NFIB performed
by Charles Hall of Temple University, 64 percent of small
business owners would l i k e to provide some or better insurance
�f o r t h e i r workers.
When asked why they do not o f f e r insurance,
the most common response
high.
(65 percent) was t h a t premiums are t o o
Ninety-two percent of small business owners agree t h a t t h e
cost of health insurance i s a serious business problem.
Under
the Health Security Act, w i t h affordable health insurance and
discounts f o r small businesses, t h i s w i l l no longer be the case.
Third, the Health Security Act w i l l result in greater
employment in the health care sector i n the short run and a more
e f f i c i e n t health sector i n the long run. With the increase i n
the number of insured Americans and the decrease i n the
administrative burden of health insurance, there w i l l be a
significant expansion of employment of health care providers and
a decrease in employment of health administrators and insurance
workers.
As the cost savings of the plan begin to accrue,
employment i n the health sector w i l l grow more slowly, although
there w i l l be no absolute decline i n the number of employees.
Over time, the health sector w i l l become more productive.
This benefits a l l of us. We w i l l be able to have the same or
better health care as well as more investment, research and
development, or j u s t plain goods and services.
Fourth, the efficiency of the economy w i l l also be increased
by reducing iob lock and welfare lock.
By providing health care
security, the reform w i l l give workers the freedom to move to
8
�jobs where they might be more productive without having t o worry
about l o s i n g t h e i r h e a l t h insurance.
Small firms should
p a r t i c u l a r l y b e n e f i t from t h i s , since they o f t e n have the hardest
time a t t r a c t i n g h i g h l y s k i l l e d workers.
I n a d d i t i o n , firms
should be more w i l l i n g t o h i r e workers w i t h p r e - e x i s t i n g
conditions because the new system does not penalize i n d i v i d u a l s
with a prior illness.
This allows f o r b e t t e r , more e f f i c i e n t
matches between employers and employees and increases the
e f f i c i e n c y of the economy.
Some workers may decide to leave the labor force completely
when there i s continuous health coverage.
Evidence suggests that
about 350-600,000 people w i l l decide to r e t i r e early under health
care reform.
This increase in voluntary retirement may
increase
employment opportunities for younger workers.
Financing Reform for the Federal Government
Health care reform w i l l also work to lower the Federal
budget d e f i c i t .
Even with the Economic Plan that was passed in
August, the Federal government w i l l again face r i s i n g d e f i c i t s
unless health care costs —
Medicaid programs —
p a r t i c u l a r l y i n the Medicare and
are brought under control.
Without health
care reform, we face the certainty of higher d e f i c i t s , higher
r e a l interest rates, and continued f i s c a l i n s t a b i l i t y .
Managing
the Federal budget requires health care reform, j u s t as the lack
of security requires universal, comprehensive coverage.
�To meet our h e a l t h care needs, the A d m i n i s t r a t i o n proposes
to spend money i n f i v e major areas.
The f i r s t i s premium
discounts and subsidies. We estimate t h e Federal cost of these
discounts a t $274 b i l l i o n over t h e 1995-2000 p e r i o d .
This i s t h e
amount t h a t i s capped i n the law, a f t e r deducting the required
maintenance-of-effort by the States.
The net cost of reform w i l l
be less, however, because reform w i l l lead t o p r e d i c t a b l e savings
i n Medicaid and Medicare as former b e n e f i c i a r i e s of these
programs receive p r i v a t e insurance.
the
We estimate the net cost t o
Federal Government of the discounts a t $161 b i l l i o n . This
includes a subsidy "cushion" t o account f o r e f f e c t s t h a t we
cannot f u l l y model, such as changes i n employment behavior or t h e
a d d i t i o n a l costs of induced retirement occasioned by t h e
implementation of our plan.
The 100 percent tax deductibility of health expenditures for
the self-employed proposed i n our plan i s the second area that
w i l l require new Federal resources.
The new d e d u c t i b i l i t y
provision w i l l put the self-employed on the same footing as wage
and salary workers.
The t h i r d area of new spending i s spending on new public
health i n i t i a t i v e s , ranging from WIC enhancements to school-based
clinics.
2000.
for
We project spending of $31 b i l l i o n between 1995 and
The l a s t two areas of new spending are two new programs
the elderly and disabled: a drug benefit for Medicare; and a
10
�new program of home and community-based long-term care. The
t o t a l cost of these spending i n i t i a t i v e s i s $332 b i l l i o n over the
6 year period.
We propose to cover these new costs through 6 sources of
savings.
F i r s t , there are Medicare savings of $123 b i l l i o n .
These savings are from specific, scorable program cuts — the
type that the Congressional Budget office has regularly credited
in the past.
Medicaid savings of $65 b i l l i o n are the second
source of savings.
These savings come from two sources: phasing
down the Disproportionate Share payments needed i n the current
system because some people are uninsured; and taking advantage of
the fact that the cost of Alliance plans w i l l grow at a less
rapid rate than the projected cost of Medicaid coverage in the
future.
The third source of funds i s savings from the VA, the
DOD, the Federal Employees Program, and the Public Health
Service, amounting to $40 b i l l i o n .
Fourth, we propose to increase tobacco taxes and to
introduce a corporate assessment which together w i l l r a i s e $89
billion.
A $.75 increase i n the cigarette tax r a i s e s $65
b i l l i o n , and a 1 percent payroll assessment for firms that choose
to form corporate a l l i a n c e s instead of joining the regional
a l l i a n c e r a i s e s $24 b i l l i o n .
The corporate assessment i s
designed i n part to require that a l l firms contribute to the
costs of medical research and other public goods, as well as to
11
�recapture some o f the savings these firms might be expected t o
experience from reduced c o s t - s h i f t i n g .
F i f t h , our plan w i l l provide another $68 b i l l i o n of
a d d i t i o n a l savings from several sources, i n c l u d i n g revenue gains
from slower health care cost growth, from changes i n c a f e t e r i a
plans o f f e r e d by employers, from changes i n some other tax
provisions, and from c o n t r i b u t i o n s of corporations b e n e f i t t i n g
from e a r l y r e t i r e e provisions.
F i n a l l y , our plan generates $4
b i l l i o n of lower debt service.
In t o t a l , we raise $390 b i l l i o n through these sources of
savings.
Since our projected spending i s only $332 b i l l i o n ,
there i s $58 b i l l i o n of d e f i c i t reduction.
We believe that our numbers are credible and based on
careful analysis of a l l of the available information.
We also
believe that they put us on track to a long-term program of lower
Federal d e f i c i t s , lower interest rates, and increased job
creation.
Summary Conclusions on the Likely Economic E f f e c t s of Health Care
Reform
As you know, some have claimed that the Health Security Act
w i l l cause substantial damage to the economy. There i s no
denying that some firms and individuals w i l l pay more than they
12
�did p r i o r t o refonn.
I n p a r t i c u l a r , the Health Security plan
w i l l increase costs f o r some young, s i n g l e i n d i v i d u a l s as w e l l as
for firms t h a t d i d not previously o f f e r h e a l t h insurance.
The
vast m a j o r i t y of Americans, however, w i l l b e n e f i t from the
reduction i n health insurance costs, the p o r t a b i l i t y of coverage,
lower a d m i n i s t r a t i v e costs, the reduction of job lock, the lower
costs f o r small businesses and the self-employed, and the
reduction i n welfare lock.
I n a d d i t i o n , as already noted, many
employers, both large and small, c u r r e n t l y p r o v i d i n g insurance
w i l l enjoy lower costs immediately and the business sector as a
whole w i l l enjoy lower costs w i t h i n three years of the plan's
full
implementation.
Neither the models nor the data that would be required to
y i e l d a precise estimate of the employment effects of health care
reform are available.
In many other areas of economics, there
are models that have been t r i e d and tested for decades, and
economists generally place a good deal of f a i t h in the outcomes
they predict.
Standard macroeconomic models, for example, can
make reasonably precise predictions about how a tax increase or a
spending cut w i l l affect aggregate output or employment.
But there are no existing models that allow us to predict
the employment effects of health care reform with the same degree
of precision.
This i s because the appropriate model for such an
exercise would have to make d i s t i n c t i o n s both between firms that
13
�c u r r e n t l y provide insurance and those t h a t do not and among t h e
many ways t h a t firms i n e i t h e r group might respond t o a change i n
t h e i r h e a l t h care costs.
Such a model would also have t o p r e d i c t
how i n d i v i d u a l s might respond t o new incentives i n the plan,
p a r t i c u l a r l y those a f f e c t i n g small business c r e a t i o n , j o b
m o b i l i t y , welfare lock, and retirement.
In the absence of an appropriately specified model, one can
generate either small net positive or small net negative effects
of our plan on employment, depending on the assumptions one i s
w i l l i n g to make in existing models — demonstrating the old adage
that you get out what you put i n . Not surprisingly, several
private-sector economists have concluded, as we at the CEA have
concluded, that the net effect of our health care plan on the
aggregate employment level i s l i k e l y to be small—our
internal
estimates suggest a range of plus or minus one-half of 1 percent
of the aggregate employment l e v e l .
This i s because although
there are some factors i n the plan that w i l l tend to decrease
employment, there are others that w i l l tend both to increase
employment and to change i t s composition.
These offsetting
factors are l i k e l y to cancel each other out, although over time
as business health care spending f a l l s below baseline, the
factors encouraging an increase i n employment and wages are
l i k e l y to strengthen.
14
�On balance, I am certain that the Health Security Act i s
good for American business and the American people. I t
diminishes job lock and welfare lock and allows more people to
become self-employed.
I t gets health care costs under control.
I t guarantees security to a l l Americans.
inefficiency
I t reduces waste and
i n one-seventh of our economy. And i t lowers the
budget d e f i c i t .
Reorganizing our health care system to use our
scarce resources more e f f i c i e n t l y w i l l help us r e a l i z e our goal
of r e a l i z i n g higher living standards for ourselves and our
children.
I w i l l be delighted to answer any questions that you may
have at t h i s time.
15
�Copyright 1993 The Times Mirror Company
Los Angeles Times
October 8, 1993, Friday, Home Edition
SECTION: Metro; Part B; Page 7; Column 4; Metro Desk
LENGTH: 717 words
HEADLINE: PERSPECTIVE ON HEALTH CARE; BOOSTING WORKERS'
SECURITY; THOSE DISABLED OR ON WELFARE WILL BE EMPLOYAHLI-;
ALL WILL BE FREE TO CHANGE JOBS.
BYLINE: By PAUL STARR, Paul Starr is a professor of sociology at Princeton who has
been working on the Clinton plan. His book, The Social Transformation of Amerk;m
Medicine, won the 1984 Pulitzer Prize for nonfiction.
BODY: One aspect of President Clinton's health security program has hardly
received adequate attention: For millions of people, it is a ticket to economic freedom.
Today's health-insurance system keeps many Americans from becoming fully
productive citizens. Three out of 10 people, according to public opinion surveys, say lhat
they or someone in their family have had to give up a better job opportunity because of
a pre-existing medical condition.
And just as the system produces "job lock," so it also produces "welfare lock." Many
people stay on welfare primarily to qualify for Medicaid because the jobs available io
them don't carry health benefits.
The same is true for many people with disabilities: Often, government health bonefiis
are available only if they do not work, and jobs with health benefits are hard to fiml
because prospective employers may face steep premium increases if they hire somenne at
risk of high medical bills.
By prohibiting exclusions of pre-existing conditions and requiring all employers to
provide health coverage, the President's program will eliminate both job lock and welfare
lock.
And because employers will join large pools called "health alliances" and pay a
percentage of average premiums, they will no longer fear high insurance rates as a result
�of hiring people with a history of serious illness or disability. That will reduce b;.
employment.
s to
Indeed, one little-mentioned provision of the President's program goes even further:
People with disabilities will receive a tax credit for personal-assistance services worth
50% of earnings - a major incentive to take a job.
In addition, the new benefit offering home- and community-based long-term o \nll
open up opportunities to go to work for many people - primarily women - who "< now
at home caring for an elderly parent or disabled member of their family.
1
All these positive effects on work and employment need to be remembered amu the
noisyclaims of opponents that the President's program will hurt small business an.i j,.hs.
In fact, small businesses that now provide insurance stand to gain dramatically '••.•"all
business pays the highest administrative overhead on health insurance - 40 cenh .••• ihe
premium dollar for businesses with fewer than five employees. By purchasing cow •• c
through the new health alliances, small business will get immediate relief from hii
administrative costs.
;
Moreover, discounts for small businesses will enable them to purchase coverage !• -r no
more than a flat percentage of payroll -- as low as 3.5% for firms with fewer than
'-<'
workers and average wages below $12,000. Firms with wages averaging $24,000 a "ver
will pay their share of premiums or 7.9% of payroll, whichever is less.
:
Larger firms will also benefit from the requirement that all employers particip..'
When employers pay for insurance, they typically pay for an entire family, incliulnv ihe
employee's working spouse. Under reform, the costs of families will be more equi' i'lv
spread, reducing the cost to each firm for workers with families by about one-iln.,
Employers who now pay for health insurance also indirectly pay for the uninsin •
leave unpaid bills at hospitals. After reform, that burden will be lifted.
who
For all these reasons, firms that now insure, whether they are big or small, will - .
their health insurance costs go down, counteracting the effects on firms that haw :>ay
for health insurance for the first time.
Reform will also help overcome one of the major obstacles to starting a new s". •;
business. Employees at big firms who would like to set up a small business often e. • i
get health insurance at a reasonable price, especially if they have a pre-existing
condition. Even if they are healthy, they face the risk of starting a business and tK
becoming sick and uninsurable. Guaranteed coverage at affordable rates through :
health alliances removes that risk.
�As the health-care system has become more costly and inequitable, it has impn^-^i
enormous hidden costs on Americans with all kinds of desires and dreams -- s t a n i
business, taking a better job, getting off welfare, making a new start after suffer!ni: a
disabling injury. Health-care reform will not just offer them security. It will give i i . m
back their freedom.
; l
GRAPHIC: Photo, PAUL STARR
LANGUAGE: ENGLISH
�THE COSTS OF FAILING TO REFORM HEALTH CARE
I. HEALTH CARE SPENDING FER WORKING AMERICAN WILL BE OVER $7,000
IN 1994.
Working Americans will, on average, pay $1,864 directly for health care in 1994.
Their employers will pay $3,409 for health insurance and other medical payments.
Federal, State, and Local taxes for health care will total $2,149.
H. WITHOUT HEALTH CARE REFORM, AMERICAN WORKERS' WAGES WILL
CONTINUE TO STAGNATE.
The rapid growth in health care costsrelativeto therestof the economy may have
depressed wages by up to $1,000 since 1975. If current trends continue without
reform, real wages may be further reduced by over $600 by the end of the decade.
HI. THE LACK OF SECURITY AFFECTS EMPLOYMENT
Many individuals are afraid to leave their current job, for fear that they will be unable
to obtain insurance on a future job. Some individuals do not work for small
businesses or do not become self-employed because of the high cost of health
insurance for these groups. Many individuals on welfare would like to work but
cannot take a job without losing Medicaid benefits.
�The Costs of Failing to Refonn Health Care
by
Laura D'Andrea Tyson
Chair, Council of Economic Advisers
October 6, 1993
�I. Effects on Individuals
Our health care system is costly and does not provide security to people. If a person loses
a job, changes jobs, or gets sick, there is no guarantee of health coverage.
A. Health care spending per working American will be over $7,000 in 1994. This total
includes (Chart 1):
i. Out-of-pocket spending and the worker's share of the insurance premium ($ 1,864
in 1994).
ii. Employer-paid premiums ($3,163).
iii.
Employer-paid workers' compensation, disability insurance, and industrial
insurance to their workers ($246).
iv. Payroll taxes to pay for Medicare ($926).
v. Other taxes, fees, and payments (Medicare and Medicaid predominantly) paid to
the Federal government ($654).
vi. Taxes, fees, and payments (Medicaid and state employees predominantly) to state
and local governments ($569).
If we do not have health care reform soon, health care spending per working
American will rise to $12,386 by the year 2000, or 25 percent of compensation.
B. The current insurance system does not provide true security.
i.
Insurers focus on risk selection rather than pooling groups of people.
•
Almost 40 percent of insurers exclude pre-existing conditions from their
coverage of newly insured people.
•
Insurers also price by the experience of the group. This means that people
cannot get one of the most important types of insurance coverage they want:
the right not to have to pay more if they get sick.
•
Insurers "red line" or refuse to cover specific industries that they find to be
hazardous, including many small businesses.
ii. The number of people who are uninsured is high and rising.
�• Three-quarters of the uninsured are in working families. Thirty-two percent
of the uninsured are in families with at least one full-time year-round worker.
C. Fear of losing coverage causes people to keep jobs they would like to leave or to stay
on welfare.
i. Up to 30 percent of employees report that they are afraid to leave their job for fear
of losing continuous health insurance coverage. This reduction in mobility, or "job
lock," can be a major impediment to the efficiency of the economy.
ii. One of the most important reasons people do not leave AFDC is the fear of losing
health care coverage for themselves and their children. This "welfare lock" traps
people into public programs and raises government costs.
iii.
Health insurance creates a substantial barrier to many people choosing to become
self-employed or to start a small firm. Self-employed people face higher
administrative costs than people in large firms for health insurance coverage. In
addition, because groups are experience rated, even self-employed people in good
healthriskhaving high premiums in future years if they become sick.
D. Currently insured people are paying for the costs incurred
•
the uninsured.
Current estimates suggest that about $25 billion of uncompensated care is paid for
by the insured. It is estimated that, in 1994, there will be about $217 billion
of business and household spending on health insurance. Providing health
insurance for all Americans will allow for savings that exceed 10 percent of
existing insurance spending.
II. The Total Costs of Health Care are High and Rising.
A. Current and Projected Health Care Costs
i. In 1992, the United States devoted 14 percent of GDP to health care. In 1980, the
share was 9 percent. No other country in the world spends more than 10 percent of
GDP on health care. Without health care reform, it is estimated that health care
spending will consume 18 percent of GDP in the United States by the year 2000.
ii. The United States spends as much on health care as it does on fuel oil, electricity,
natural gas, other household operations, oil and gasoline, transportation (including
all new and used car purchases), furniture, and other household equipment combined.
iii.
Over forty percent of the growth of real per capita GDP between 1993 and 1996
will be accounted for by health care spending. While some of this growth is
�warranted, this unusually high rate crowds out other
onsumption.
iv. Health care cost growth will continue to outpace grov.
economy.
•
segments of the
Federal Medicaid growth is expected to be over 16 pera nt in 1994, and to
decline to only 12 percent in the rest of the decade. Med »re growth will be
between 9 and 11 percent and private health care costs v grow at between
7 and 8 percent for the rest of the decade. Growth in the st of the economy
is expected to be between 4 and 6 percent.
;
B. The high cost of health care is driven by several market f lilures.
There are numerous instances where the current system 'encourages wasteful and
inefficient medical practices.
i. There is a lack of price competition in the market for insurance, because many
individuals do not have a choice of health care plans.
•
Only 29 percent of companies with fewer thar "00 employees offer any
choice of plans.
f f
ii. Administrative costs in health insurance are extremely hi [h, in part because there is
little or no coordination across insurers in the foi .s they require or their
reimbursement systems.
j
•
Over 5 percent of health care expenditures ($45 billion in 1992) went for
administrative expenses. This exceeds the total amount spent on all public
health service programs.
D. The health care system has a great deal of waste. The current system of
reimbursement encourages providers to over-utilize tests and procedures.
i. Research suggests that up to one-half of some procedures that are performed may
be either inappropriate or unnecessary. For exanple, it is estimated that the
United States spent $1 billion on unnecessary Cesarean sections in 1987 alone.
ii. Fraud and abuse may account for about 10 percent of U.S. health care costs.
�m. The Cost to Business
A. Businesses pay for health care through premium contributions and other programs
such as workers compensation.
i. Real business spending on health care hasrisenfrom $774 per employee (in $1992)
in 1970 to $2,345 in 1992, a 200 percent increase.
ii. Real workers' compensation per employee has more than doubled since 1970, rising
from $149 (in $1987) in 1970 to $326 in 1992. Health care costs are the fastest
growing component of workers' compensation.
B. Smallfirmsare particularly hurt by the current system, because many do not have
access to affordable health care.
i.
Small firms face administrative loads of up to 40 percent, compared to about 5
percent in large firms with 10,000 or more employees.
ii. Because of experience rating, many small firms must pay exorbitant amounts for
insurance or are unable to get insurance at all.
iii.
Small firms often cannot afford to provide any choice of health care plan to their
employees.
C. There is cost shifting from government health care programs and people who are
privately insured to the uninsured.
•
Currently, Medicaid pays providers at about 82 percent of costs, and Medicare pays
at 88 percent of costs. The uninsured pay at 20 percent of costs. The resulting cost
shifting ($26 billion of hospital costs alone) results in higher premiums in the private
sector (Chart 2).
IV. The cost to the Government
Our health care system is a growing burden on the government and leads to increased
deficits.
A. Governments are responsible for 44 percent of health care spending.
•
At the Federal level, most of this spending is for Medicare and Medicaid. State
and local spending is predominantly for Medicaid, and for health care for state
and local government workers.
�B. Rising health costs crowd out other government spending and contribute to the
deficit.
i. Health care spending accounts for 17 percent of Federal spending. Under current
projections, that share is expected to rise to over 20 percent in the next five years.
As health care continues to consume a larger share of the budget, Federal spending
on education, training, employment and social services will actually decline as a
share of total Federal spending over this period. The rate of return to many
government investments - such as education - is very high.
C. Health care will absorb much of government spending in the next several years.
•
Almost two-thirds of the growth in federal spending between 1993 and 1996 will
be accounted for by health care spending.
V. The Cost to Families
A. The bottom line for workers is that they ultimately pay for most of health care
spending, either out-of-pocket or indirectly, through higher taxes and lower wages.
•
Empirical research suggests that the dominant response of businesses to higher
health insurance costs has been to lower the wages they pay their employees.
Similarly, the taxes required to pay for government health spending are bom to
some extent by workers in the form of lower wages. One of the reasons that real
wages have barely grown for the past 20 years is the increased costs of health
care for businesses.
B. Without reform, wages of American workers will continue to lag.
•
If employer contributions to health insurance remained constant at their 1992
share of compensation through the rest of the decade, and employers passed all
of these savings on to workers, real wages per worker would be $655 higher in
2000 than they are otherwise projected to be. If they had remained at their 1975
share, real wages would have been $1,034 higher in 1992 than they actually were
(Chart 3).
�Workers are Losing Wages to Rising Health Costs
If health care had been reformed in 1975, American workers would have
over $1,000 in extra wages every year
$30,000
$29,630
Lost Wages
$29,000
$28,000
$28,494
Actual Wages
$27,000
$26,000
1975
±
J
L
1977 1979 1981
J
L
J
L
1983 1985 1987 1989 1991 1992
Source: C o m m e r r i ' Dep<irlmen», O f f k e of Management and Budget
�More Americans Lack Health Security
16
Percent of population without insurance
14.7%
14
12
10
8
0.5%
1.0%
0
Canada Denmark
France Germany Sweden
Japan
Source: Organization of l-conomic Cooperation and Development
United
United
Kingdom States
�ALTERNATIVE DEFICITS 1993 - 2000
$ BILLIONS
500
WHERE WE WERE
400
300
MID-SESSION REVIEW
200
100
MID-SESSION REVIEW WITH
HEALTH CARE PLAN
1993
1994
1995
1996
1997
1998
1999
2000
11/03/93
�ALTERNATIVE DEFICITS 1993 - 2000
$ BILLIONS
Where We Were (April CBO): Where We Might Be with Health Ca Mid-Session Review (August CEA):
1993
254.948000
254.948
254.948000
1994
301.591000
259.000
259.380544
1995
300.811000
191.000
200.444128
1996
297.785000
177.000
178.982215
1997
346.778000
187.000
184.339311
1998
387.397000
188.000
180.989384
1999
428.892206
155.000
175.774839
2000
477.567335
147.000
184.402709
11/03/93
�The Costs of Failing to Reform Health Care
by
Laura D'Andrea Tyson
Chair, Council of Economic Advisers
October 6, 1993
�I. Effects on Individuals
Our health care system is costly and does not provide security to people. If a person loses
a job, changes jobs, or gets sick, there is no guarantee of health coverage.
A. Health care spending per working American will be over $7,000 in 1994. This total
includes (Chart 1):
i. Out-of-pocket spending and the worker's share of the insurance premium ($1,864
in 1994).
ii. Employer-paid premiums ($3,163).
iii.
Employer-paid workers' compensation, disability insurance, and industrial
insurance to their workers ($246).
iv. Payroll taxes to pay for Medicare ($926).
v. Other taxes, fees, and payments (Medicare and Medicaid predominantly) paid to
the Federal government ($654).
v
vi. Taxes, fees, and payments (Medicaid and state employees predominantly) to state
and local governments ($569).
If we do not have health care reform soon, health care spending per working
American will rise to $12,386 by the year 2000, or 25 percent of compensation.
B. The current insurance system does not provide true security.
i. Insurers focus on risk selection rather than pooling groups of people.
•
Almost 40 percent of insurers exclude pre-existing conditions from their
coverage of newly insured people.
•
Insurers also price by the experience of the group. This means that people
cannot get one of the most important types of insurance coverage they want:
the right not to have to pay more if they get sick.
•
Insurers "red line" or refuse to cover specific industries that they find to be
hazardous, including many small businesses.
ii. The number of people who are uninsured is high and rising.
�• Three-quarters of the uninsured are in working families. Thirty-two percent
of the uninsured are in families with at least one full-time year-round worker.
C. Fear of losing coverage causes people to keep jobs they would like to leave or to stay
on welfare.
i. Up to 30 percent of employees report that they are afraid to leave their job for fear
of losing continuous health insurance coverage. This reduction in mobility, or "job
lock," can be a major impediment to the efficiency of the economy.
ii. One of the most important reasons people do not leave AFDC is the fear of losing
health care coverage for themselves and their children. This "welfare lock" traps
people into public programs and raises government costs.
iii.
Health insurance creates a substantial barrier to many people choosing to become
self-employed or to start a small firm. Self-employed people face higher
administrative costs than people in large firms for health insurance coverage. In
addition, because groups are experience rated, even self-employed people in good
health risk having high premiums in future years if they become sick.
D. Currently insured people are paying for the costs incurred ty the uninsured.
•
Current estimates suggest that about $25 billion of uncompensated care is paid for
by the insured. It is estimated that, in 1994, there will be about $217 billion
of business and household spending on health insurance. Providing health
insurance for all Americans will allow for savings that exceed 10 percent of
existing insurance spending.
H. The Total Costs of Health Care are High and Rising.
A. Current and Projected Health Care Costs
i. In 1992, the United States devoted 14 percent of GDP to health care. In 1980, the
share was 9 percent. No other country in the world spends more than 10 percent of
GDP on health care. Without health care reform, it is estimated that health care
spending will consume 18 percent of GDP in the United States by the year 2000.
ii. The United States spends as much on health care as it does on fuel oil, electricity,
natural gas, other household operations, oil and gasoline, transportation (including
all new and used car purchases), furniture, and other household equipment combined.
iii.
Over forty percent of the growth of real per capita GDP between 1993 and 1996
will be accounted for by health care spending. While some of this growth is
�warranted, this unusually high rate crowds out other items of consumption.
iv. Health care cost growth will continue to outpace growth in other segments of the
economy.
•
Federal Medicaid growth is expected to be over 16 percent in 1994, and to
decline to only 12 percent in the rest of the decade. Medicare growth will be
between 9 and 11 percent and private health care costs will grow at between
7 and 8 percent for the rest of the decade. Growth in the rest of the economy
is expected to be between 4 and 6 percent.
B. The high cost of health care is driven by several market failures.
There are numerous instances where the current system encourages wasteful and
inefficient medical practices.
i. There is a lack of price competition in the market for insurance, because many
individuals do not have a choice of health care plans.
•
Only 29 percent of companies with fewer than 500 employees offer any
choice of plans.
f f
ii. Administrative costs in health insurance are extremely high, in part because there is
little or no coordination across insurers in the forms they require or their
reimbursement systems.
• Over 5 percent of health care expenditures ($45 billion in 1992) went for
administrative expenses. This exceeds the total amount spent on all public
health service programs.
D. The health care system has a great deal of waste. The current system of
reimbursement encourages providers to over-utilize tests and procedures.
i. Research suggests that up to one-half of some procedures that are performed may
be either inappropriate or unnecessary. For example, it is estimated that the
United States spent $1 billion on unnecessary Cesarean sections in 1987 alone.
ii. Fraud and abuse may account for about 10 percent of U.S. health care costs.
�III. The Cost to Business
A. Businesses pay for health care through premium contributions and other programs
such as workers compensation.
i. Real business spending on health care has risen from $774 per employee (in $1992)
in 1970 to $2,345 in 1992, a 200 percent increase.
ii. Real workers' compensation per employee has more than doubled since 1970, rising
from $149 (in $1987) in 1970 to $326 in 1992. Health care costs are the fastest
growing component of workers' compensation.
B. Small firms are particularly hurt by the current system, because many do not have
access to affordable health care.
i. Small firms face administrative loads of up to 40 percent, compared to about 5
percent in large firms with 10,000 or more employees.
ii. Because of experience rating, many small firms must pay exorbitant amounts for
insurance or are unable to get insurance at all.
iii.
Small firms often cannot afford to provide any choice of health care plan to their
employees.
C. There is cost shifting from government health care programs and people who are
privately insured to the uninsured.
•
Currently, Medicaid pays providers at about 82 percent of costs, and Medicare pays
at 88 percent of costs. The uninsured pay at 20 percent of costs. The resulting cost
shifting ($26 billion of hospital costs alone) results in higher premiums in the private
sector (Chart 2).
FV. The cost to the Government
Our health care system is a growing burden on the government and leads to increased
deficits.
A. Governments are responsible for 44 percent of health care spending.
•
At the Federal level, most of this spending is for Medicare and Medicaid. State
and local spending is predominantly for Medicaid, and for health care for state
and local government workers.
�B. Rising health costs crowd out other government spending and contribute to the
deficit.
i. Health care spending accounts for 17 percent of Federal spending. Under current
projections, that share is expected to rise to over 20 percent in the next five years.
As health care continues to consume a larger share of the budget, Federal spending
on education, training, employment and social services will actually decline as a
share of total Federal spending over this period. The rate of return to many
government investments - such as education ~ is very high.
C. Health care will absorb much of government spending in the next several years.
•
Almost two-thirds of the growth in federal spending between 1993 and 1996 will
be accounted for by health care spending.
V. The Cost to Families
A. The bottom line for workers is that they ultimately pay for most of health care
spending, either out-of-pocket or indirectly, through higher taxes and lower wages.
•
Empirical research suggests that the dominant response'of businesses to higher
health insurance costs has been to lower the wages they pay their employees.
Similarly, the taxes required to pay for government health spending are born to
some extent by workers in the form of lower wages. One of the reasons that real
wages have barely grown for the past 20 years is the increased costs of health
care for businesses.
B. Without reform, wages of American workers will continue to lag.
•
If employer contributions to health insurance remained constant at their 1992
share of compensation through the rest of the decade, and employers passed all
of these savings on to workers, real wages per worker would be $655 higher in
2000 than they are otherwise projected to be. If they had remained at their 1975
share, real wages would have been $1,034 higher in 1992 than they actually were
(Chart 3).
�ALTERNATIVE DEFICITS 1993 - 2000
$ BILLIONS
500
WHERE WE WERE
400
300
MID-SESSION REVIEW
200
100
0 —r
1993
MID-SESSION REVIEW WITH
HEALTH CARE PLAN
1994
1995
1996
1997
1998
1999
r
2000
11/03/93
�ALTERNATIVE DEFICITS 1993 - 2000
$ BILLIONS
Where We Were (April CBO): Where We Might Be with Health Ca Mid-Session Review (August CEA):
1993
254.948000
254.948
254.948000
1994
301.591000
259.000
259.380544
1995
300.811000
191.000
200.444128
1996
297.785000
177.000
178.982215
1997
346.778000
187.000
184.339311
1998
387.397000
188.000
180.989384
1999
428.892206
155.000
175.774839
2000
477.567335
147.000
184.402709
11/03/93
�Workers are Losing Wages to Rising Health Costs
If health care had been reformed in 1975, American workers would have
over $1,000 in extra wages every year
$30,000
$29,630
Lost Wages
$29,000
$28,000
$28,494
Actual Wages
$27,000
$26,000
J
1975
L
1977
j
1979
i
1981 1983
i
J
i
1985
1987 1989
L
1991 1992
Source: Commerce Department, Office of Management and Budget
�More Americans Lack Health Security
16
Percent of population without insurance
14.7%
14
12
10
8
6
4
2
0.5%
1.0%
0
Canada Denmark
France Germany Sweden
Japan
Source: Organization of Economic Cooperation and Development
United
United
Kingdom States
��TOP^"QUESTIONS AND ANSWERS:
ECONOMIC HEALTH CARE
December 3, 1993
How is this financed?
Uncapped entitlement
- Retreat from universal coverage?
- What if the money runs out?
Outside Validation
Alternate Plans
Savings
- Would you scale back benefits?
Price controls
- What if this run out of money?
- Rations care
Alliances
Job Losses
Small Business
Deficit
Medicare estimates
Early Retirees
Who wins? Loses?
Cost Pushed Past Budget Window
Inflation
Self-Insured Companies
Payroll Tax
�1.
How can you insure everybody and maintain quality and guarantee
comprehensive benefits and add both preventive care and new drug benefits
and then look at me with a straight face and say that you 're going to pay for
all that by cutting waste?
2.
Aren't the government
entitlement?
discounts in your proposal just another
uncapped
Follow-Up
Q:
Haven't you retreated from universal coverage?
Q:
What will happen when the cap is hit and there's no money left?
3.
Isn't it the case that not a single outside economist will validate your
numbers?
4.
How do you respond to alternative plans which seem to accomplish all that
yours says it will but with considerably less pain?
5.
What makes you think that you can squeeze so much savings from the system?
Follow-Up:
If the savings you predict don't come to pass, would you consider scaling back
your benefits package to help make this plan more affordable?
6.
After learning from our Nixon era experience that price controls don't work,
why are we really going back to price controls under the guise of premium
caps?
Follow-Up
Q:
The premium cap may be too strict for some health plans. What happens if a
health plan rufis out of money?
Q:
Won't these premium caps cause plans to limit services and benefits and ration
care to stay within the range?
7.
The last thing we need is a big government
alliances are?
8.
Won't your proposal just result in huge job losses?
9.
What is the impact of your plan on small
10.
Will this bring down the long-term deficit or will the deficit still spike up after
1998 even with these savings?
bureaucracy.
Isn't that all these
businesses?
�11.
How do you respond to those who seek to cast doubt on your long-range cost
estimates - claiming that when the Medicare program was enacted, it was
estimated to cost about $9 billion in 1990 but ended up costing $66 billion 7.5 times that amount?
12.
On early retirees, why do you provide this huge subsidy to employers and then
take back all the money with an "assessment"? Isn't that just a new tax?
13.
How do you plan on cutting $188 billion from the Medicaid and Medicare
programs?
Follow-Up
Q:
With all these cuts in Medicare and Medicaid, aren't you financing
reform on the backs of the poor/elderly?
health
14.
Isn't it true that most people will pay more under the plan?
15.
Aren't we just seeing lower costs in your plan because costs are being pushed
past the year 2000 -• past the budget window - when new benefits like dental
care and mental health coverage will be added? Is this sustainable in the long
run?
Q:
It seems like health care inflation is coming down by itself, so do we really
need to do so much?
Q:
My company self-insures and this gives us a great economic incentive to take
good care of our employees and bring down our costs. I think you are taking
away a great economic incentive to keep our costs down.
Q:
Isn't the employer mandate a [payroll] tax?
�TOP 15 QUESTIONS AND ANSWERS:
ECONOMIC HEALTH CARE
December
3, 1993
1.
How can you insure everybody and maintain quality and
guarantee
comprehensive
benefits and add both preventive care and new drug
benefits and then look at me with a straight face and say that you're
going to pay for all that by cutting
waste?
A:
I'm glad you asked that because that's not the only way this plan will be
financed. To finance health reform, the President specifically rejected a
government-run system and broad based taxes, building instead on today's
private, employer-based system. There are three primary sources of funding.
1. First, we ask everyone - employers and individuals - to take responsibility
and contribute to the cost of their health care. Right now, those of us who
have insurance and those companies that provide insurance have to pay for
those who do not — and that's just not right. But it's also not right to continue
a system in which the vast majority of the uninsured are working people and
their families who can't afford health insurance. We're going to ask them to
take responsibility to help finance the health care system, but we're also
going to make sure they can afford to - with discounts for low income
workers, the unemployed, and low-wage and small businesses. Two-thirds of
the financing comes from asking employers and employees who don't pay now
to start taking some responsibility.
2. Second, we are going to limit the growth of government spending. We all
know that it's tough to stop government spending, but we do think we can
slow i t down. And unlike other proposals in the past, we won't do i t with
vague caps. We will do it with specific, scorable, line-by-line savings.
In the past, we haven't been able to achieve savings in the growth of
Medicare or Medicaid for a few reasons: First, because it was outside the
context of health care reform, savings were assumed to come from cutting
services for beneficiaries. Let me be clear, I would never do anything to put
those beneficiaries at risk. Indeed, Medicare recipients will see their benefits
increase through the President's plan.
Second, past proposals have sought to contain public sector - Medicaid and
Medicare -- costs while letting private sector costs rise unchecked. This just
resulted in unpaid public sector costs being shifted onto the private sector,
raising the premiums ofthe insured middle class and small businesses who
were already taking the worst hit. I n the context of a plan to control both
�public and private sector costs, however, we can reduce Medicare savings
without this unfair cost-shifting.
Every plan that has been proposed recognizes that national health care
reform can save money by slowing the rate of growth in Medicare and
Medicaid. We can debate how fast those savings can be achieved and how big
those savings can be, but I think we all agree that there will be savings that
will be our second major source of financing for health care reform.
3. Third, although the President specifically rejected a broad based tax on the
middle class, some new taxes - on tobacco and on corporations that form
their own alliances - will be raised to finance reform. The tobacco tax of 75
cents per pack is expected to raise $65 billion over 5 years. Higher cigarette
prices ensure that those who smoke pay for the health costs that smoking
cause and may also have a significant impact in preventing teenagers from
ever starting to smoke. The corporate assessment of 1% - raising $24 billion
over 5 years - will be used to help pay for health care for everyone.
[what about redirected federal revenues??]
Those are the three primary sources of private and public sector funding that
will pay for health security for every American. We believe that it is a fair
approach to financing: one that asks responsibility of everybody involved. I t
is also a conservative approach. We are not even counting the significant cost
savings that we believe will come from emphasizing prevention, and by
encouraging competition in the health care system.
One thing that I want to emphasize is the faith we have in the numbers we
have put forth. Even people who have criticized parts ofthe plan, like Henry
Aaron ofthe Brookings Institution, one of the nation's leading health
economists, said, and I quote: "The calculations were done honestly, using the
best techniques available... The Administration has consulted widely, looked
at various projections and took the set that seems the most likely." So even
people who have policy disagreements with us, like Professor Aaron,
recognize the legitimacy and the soundness ofthe process used to make these
estimations.
2.
Aren't the government discounts
uncapped
entitlement?
in your proposal
just
another
A:
No. The Health Security Act provides discounts on the price of insurance for
small businesses and low-income people. But the plan also sets a limit on the
amount of these discounts that can be spent automatically. We felt an openended entitlement left the federal budget vulnerable for unpredictable costs
�in the future, and that was not an option. This program must pay for itself,
and costs must be clear and predictable. I f the amount specified for discounts
-- plus a 15% cushion -- is spent, Congress has to review the discounts and
take action to either limit spending or raise additional revenue. This trigger
represents the President's strong commitment to financial responsibility.
That said, we are confident we have been conservative in estimating the
needed funds for discounts. These estimates are based on sophisticated
models built from very specific information about factors like family income
data, numbers of firms at certain sizes and wage-rates, etc. Some behavioral
changes -- both positive and negative -- are difficult to quantify i n a program
of this magnitude. This is why we have also specifically built in a cushion for
these unknowns, giving us even greater confidence in these estimates.
Follow-Up
Q:
Haven't
you retreated
from universal
coverage?
A;
Absolutely not. Health care security means universal coverage and
comprehensive benefits that can't be taken away. As I said last week when I
presented the bill, I will not sign a health reform bill that does not achieve
universal coverage with comprehensive benefits. Security is non-negotiable.
Q:
What will happen
A:
We believe that there are enough protections within the system to prevent
us from ever reaching the point where "the money runs out".
when the cap is hit and there's
no money
left?
Our plan is based on the most responsible financing possible and on very
conservative assumptions. As just one example, we overestimated the
demand for discounts for small businesses and low-income families in order
to be as conservative as possible. I n addition, we have a 15 percent "cushion"
- about $45 billion - to cover unexpected costs. We ran sophisticated models
to test how the system would respond to extreme hypothetical situations. For
example, an unexpected 2% increase in unemployment - with millions more
suddenly qualifying for discounts - would require an additional $4 billion a
year. The $11 billion cushion has nearly three times the funds necessary for
this extreme situation, and any funds that are not used in one year can be
carried over to the next year so that a contingency reserve will build over
time. There are also early warning mechanisms built in -- the alliances have
options they can take when they see a problem developing.
So, the system is designed to prevent the kind of situation you're talking
about. We believe the financing is solid and the early warning system will be
�effective. But, if Congressional action is needed, it will be taken. I t could
mean limiting the amount of money spent on discounts or it could mean
raising additional revenue. The important thing is that Congress and the
President will have to re-examine the system, identify the problems, and
decide what to do. They cannot just let federal health spending increase
automatically -- as it has in the cases of Social Security, Medicare and
Medicaid. This mechanism ensures that type of accountability and fiscal
responsibility that the American people demand from their government.
3.
Isn't it the case that not a single outside
numbers?
economist
will validate
your
A:
It's just not true. What may be true is that probably any experts who look at
this plan may find some policy or political judgment they disagree with. But
when you ask economists whether this plan is sound and whether the
numbers add up, you find a lot of support - among top economists like Uwe
Reinhardt of Princeton, Henry Aaron ofthe Brooking Institute, and Ted
Marmor of Yale. These are people who may sometimes be critical of our policy
decisions, but they agree that our numbers are honest and sound.
Typically estimates ofthe cost of a government health care program are
developed by OMB and confirmed by other government analysts. We insisted
on an unprecedented degree of outside review and validation - with
independent double- and triple-checking. Why? Because we wanted to get
the best data available validated by the best people possible so that the
national debate would be able to focus on the policy itself - instead of getting
caught up in minute debates about the numbers.
4.
How do you respond to alternative
plans which seem to
accomplish
all that yours says it will but with considerably
less pain?
A:
The President's plan stands alone as the only proposal that is universal,
comprehensive and workable. It's the only proposal that keeps everything
that's right about the current system in place- private sector health care,
employer-based coverage, choice of doctors and plans, and high quality
American medicine - and fixes what's wrong without any new broad- based
taxes.
Besides a government-run system, it's the onlv proposal that achieves
universal coverage without shifting the full cost of health care to American
families, like Senator Chafee's plan. We have a lot in common with the
Chafee plan - it is probably closer to our plan than any ofthe others. But,
�we think sharing the costs between employers and workers, as the current
system does, is the best way to accomplish universal coverage. This approach
was first proposed by President Nixon in the early 70s. Nor do we think
turning American health care over to the federal government involves less
pain; this requires several new federal taxes that raise huge new federal
revenues.
Some ofthe other proposals, like the Cooper plan, may help poor people get
insurance, but they do nothing to guarantee security to middle-class families.
In fact, some plans actually encourage companies to drop the coverage they
now provide their workers. And the other proposals pave the way for
discriminatory insurance practices to continue by refusing to crack down on
insurance company premium increases. One thing is clear, under these
alternative plans, millions of Americans will continue to lose their health
insurance, and the rest of us will foot the bill for their care.
We have put forth a thorough and explicit proposal that answers the tough
questions: it spells out what's covered, how the system works, and most
importantly, how it's paid for. These other proposals are long on rhetoric but
short on specifics. On all the decisions that affect Americans most - what's
covered, who pays - they provide no details.
I f these other plans want to be a part ofthe debate, then fine, let's debate.
But first, level with us and give us the details. Tell us what your plan will do
for people. Under your plan, who can feel sure they'll have coverage? What
will they be covered for? Which services will be covered and which will be
denied? And most importantly, what will the whole thing cost, and who'll
get stuck with the bill? I f they really think their plans are better, it's time
they come forward with specifics.
5.
What makes you think
system?
that you can squeeze
so much savings
from
the
A:
Every doctor, every nurse, every patient - everyone who comes into contact
with today's health care system - will tell you that there is an incredible
amount of waste and excess and inefficiency. This explains why our
international competitors spend so much less than we do on health care while insuring all of their people with richer benefits than the average
American has.
Let's look at Germany as an example. I n Germany, they have managed to
guarantee all their citizens health coverage while controlling health care
costs. Germany's system is rooted in the private sector, and everyone chooses
�their own doctor. But they have managed to limit the growth of national
health care costs -- their health care costs per person are nearly half the costs
in the United States. I f they control costs, we can too.
Look at the Mayo Clinic, which provides some ofthe highest-quality care in
the country and has kept the growth in its costs down to 3.9%. Listen to Dr.
C. Everett Koop, who argues that emphasizing prevention, as we do in our
reform proposal, will save tens of billions of dollars.
There was a study recently done that shows that open-heart surgery that
costs $21,000 in one Pennsylvania hospital costs as much as $84,000 in
another hospital in the same state but the lower-cost hospital had better
outcomes. I f we have more and better information about the cost and results
of different kinds of treatments, as the President's plan calls for, then we can
see discrepancies like this, and figure out how we can save money and
provide better quality care.
So I say: instead of going to the American people and imposing broad middle
class taxes, as some suggest, let's try and save some money from the current
system. Other countries have done it, individual states have done it, and we
can do i t as well.
Follow-Up:
If the savings you predict don't come to pass, would you consider
scaling back your benefits package to help make this plan more
affordable?
A:
Our first principle -- from which we will not back away - is security: To us
this means a comprehensive package of benefits - that is detailed, spelled out
in advance and guaranteed so that it can never be taken away. I t is nonnegotiable. While we are willing to work with Congress on this legislation,
we are committed to comprehensive benefits.
6.
After learning from our Nixon era experience that price controls
don't
work, why are we really going back to price controls under the guise
of premium
caps?
A:
We have considered - but specifically rejected - a policy imposing price
controls on health care. Our primary strategy for cost containment is
private sector competition - creating the right economic incentives to bring
costs in line and encourage health plans to compete on price and quality.
�But we strongly believe that, regardless of how quickly or how firmly
competitive reforms take hold, we need to build some discipline and certainty
into our system -- so that businesses and consumers know that their health
insurance premiums will not be allowed to suddenly spiral out of control one
year, and that the federal government will not spend without accountabihty.
That is why we reinforce the competitive system with a limit on health care
premium increases.
This is the most sensible approach to ensuring cost control. As Stephen
Zuckerman and Jack Hadley, two leading health policy analysts wrote, "it
seems far preferable that insurance companies that are responsible to their
subscribers make these decisions than having the federal government
involved in detailed price negotiations and review procedures with individual
hospitals and physicians."
In contrast to our plan, price controls call for government micro-management
of every health care service, drug, technology and product. Price controls
would have the government substitute its views for the markets in hundreds
- maybe thousands - of decisions. We reject that type of micro-management
in favor of letting a market that truly competes work.
Follow-Up
Q:
The premium cap may be too strict for some health plans. What
happens if a health plan runs out of money?
A:
If a health plan were to literally run out of money, which is highly unlikely,
consumers would simply join another plan. Unlike today, though, benefits
would be guaranteed. Such a scenario is highly unlikely, certainly less likely
than it is today, because health plans will be required to have met strict
financial solvency requirements before they can do business.
This limit and the security it provides are essential components of
comprehensive health reform. If businesses and individuals are going to all
be asked to contribute to the cost of health care, and government is going to
provide discounts to those who cannot afford their full share, then everyone
must be guaranteed that increases in their payments will stay within
reasonable bounds. Without such a guarantee, reform would have no chance.
When you hear concerns about running out of money, remember the source.
It's the insurance industry that is running an advertising campaign against
this limit on premium growth. And it's because they're out to preserve their
profits - plain and simple.
�Q:
Won't these premium caps cause plans to limit services
and ration care to stay within the range?
and
benefits
A:
Absolutely not. I n fact, health plans have every incentive not to do this. The
President's proposal is built upon competition among health plans. I f a health
plan starts to cut corners on patients, it knows that the patients are free to
switch plans. And they know that their low levels of consumer satisfaction
will be reported on consumer report cards that will be published publicly
about each health plan which will make it very unlikely that new customers
would sign up. For the health plan, cutting corners will mean less customers
and therefore lower profits.
As a common American example, we regulate the rates of utilities like
electric and gas -- and it works just fine. You don't see electric and gas
companies running out of money or cutting off service to customers.
7.
The last thing we need is a big government
all these alliances
are?
bureaucracy.
Isn't
that
A:
The last thing we want is big government bureaucracies, and that is exactly
why we rejected a government-run plan. What we designed instead is a plan
that calls for the minimal amount of new government needed to ensure that
the market is operating to guarantee real choice, real quality and real
competition that serves the consumers - and not the health care industry at
the expense ofthe rest of us. We expect most alliances will be run by groups
of local businesses and consumers, not by the government, and not by
insurance companies. They are purchasers, not government regulators. We
expect the alliance will function on a budget of about 2% of premiums -reducing buying, marketing, and selling costs for employers and health plans.
This will reduce overall administrative costs.
Alliances replace thousands of small inefficient purchasers of insurance
(small and mid-size employers and self-employed individuals) with one
larger, stronger, more sophisticated buyer that's able to get better value and
offer much more choice. People will continue to get their care through
private health care plans. The alliance enables them to have maximum
choice between those plans.
�8.
Won't your proposal
just result in huge job
losses?
A:
I ' l l tell you what will cause huge job losses -- sticking with the current
system. 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. That is why we believe that comprehensive
health care reform is a necessary element in a strategy to increase long-term
economic growth, reduce the deficit, and create jobs.
The bottom line is this: health care reform will bring down the costs of most
businesses who provide insurance to their workers - allowing them to create
jobs and increase wages. CEOs at some ofthe top companies in America companies like Chrysler, Ford, Bethlehem Steel and Xerox - have said that
they support the President's plan because it will help them become more
competitive. And even a leading health economist who has at times criticized
our plan, Henry Aaron ofthe Brookings Institution, said that "Successful
implementation of health care reform is one of the best pieces of news
American business could receive."
•
M a n u f a c t u r e r s - the employers that pay the highest wages to
middle-class Americans - have been forced to lay off workers because
of rising health costs. But a recent study (from the Economic Policy
Institute) indicates that the President's plan will lower manufacturers'
health costs and create over 258,000 jobs over the next decade.
•
Small Businesses t h a t c u r r e n t l y provide insurance i n c l u d i n g
the fastest g r o w i n g businesses will be one ofthe biggest winners.
The Wall Street Journal has called the plan "an unexpected windfall"
for those small businesses. And the fastest growing small businesses
are the ones that provide health insurance.
•
Jobs i n the Health Care I n d u s t r y : 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.
9.
What is the impact
of your plan
on small
businesses?
A:
Today, small businesses -- the engine of America's economic growth - are
threatened by a health care system that is stacked against them. Their
health care coverage costs more and offers less than it does for large
�businesses. Insurers charge them much more than large employers and then
raise their premiums or drop them altogether if even one employee gets sick.
And, administrative costs eat up as much as 40 cents of every dollar small
businesses spend on health insurance premiums -- eight times as much as
large companies.
For the majority of small businesses that currently provide insurance to their
employees, the Wall Street Journal has said that the President's Health
Security Act will be "an unexpected windfall". These businesses will pay
substantially less in a health care system that puts them -- not insurance
companies -- in the driver's seat. Studies show that the fastest g r o w i n g
small businesses are the ones t h a t provide h e a l t h insurance. And
now these will be able to create new jobs and expand their businesses.
A l o t o f small businesses t h a t don't provide insurance w a n t t o — they
j u s t can't a f f o r d i t . The President's plan will provide discounts of
between 30 and 80% for small businesses, depending on the average wage
of their workers. Because it just wouldn't be fair to ask all employers -including low-wage small businesses - to provide comprehensive coverage for
their employees without providing discounts to those that just can't afford it.
And, when they actually looked at the President's proposal, in light of what
they spend today, many small business owners found that they will save
more on their family's policies -- which they get today at the highest prices -than it will cost them to insure all their employees.
Let's look at what/a low-wage small business might pay. For a small businesf^—
who&o employees nake an average of $12,000 a year, they would only have to
pay $ 4 2 0 J 6 ^ < ^ M ^ a year per employee - a little over $1 a day - to give
their employees comprehensive health benefits. I n today's market, they
might have to pay as much as $4,000 per year per employees.
r
>
When we look at what effect the plan will have on small businesses, one
interesting example is Hawaii. Since 1974, when Hawaii passed a plan that
requires all businesses to contribute to the cost of their employees' health
insurance, Hawaiian small businesses have continued to thrive. I n 1991,
Hawaii was the nation's third fastest-growing state for smaU businesses, and
Hawaii's unemployment rates are consistently among the lowest in the
country, [others?]
�10.
Will this bring down the long-term deficit or will the deficit still
up after 1998 even with these savings?
spike
A.
In the long-term, health reform is the most vital component of any deficitreduction strategy. After the President passed his economic package, the
deficit was predicted to decrease for a period and then start to rise again.
But our mid-session review already shows that the long-term deficit will not
only be cut in half in terms of our national income, but is not expected to rise
again even in the later years. And we believe that with the savings health
care reform will bring, we will see the deficit continue downwards even after
1998.
11.
How do you respond to those who seek to cast doubt on your longrange cost estimates - claiming that when the Medicare program was
enacted, it was estimated to cost about $9 billion in 1990 but ended up
costing $66 billion - 7.5 times that amount?
A:
This criticism is exaggerated and unfair. Our plan is based on the most
responsible financing possible and on very conservative assumptions. As just
one example, we overestimated the demand for discounts for small businesses
and low-income families in order to be as conservative as possible. In
addition, we have a 15 percent "cushion" - about $45 billion - to cover
unexpected costs. We ran sophisticated models to test how the system would
respond to extreme hypothetical situations. For example, an unexpected 2%
increase in unemployment -- with millions more suddenly qualifying for
discounts - would require an additional $4 billion a year. The $11 billion
cushion has nearly three times the funds necessary for this extreme
situation, and any funds that are not used in one year can be carried over to
the next year so that a contingency reserve will build over time.
Another example is our use of a very conservative inflation estimate - even
more conservative than CBO's assumption. CBO's mid-session inflation
figure was 3.1%, while we used an estimate of 3.5%.
12.
On early retirees, why do you provide this huge subsidy to employers
and then take back all the money with an "assessment"? Isn't that
just a new tax?
A:
Not at all. Here's how the policy works. Right now, more and more companies
are being forced to drop benefits for early retirees, leaving these employees
who have worked hard and played by the rules all these years with no
�benefits. This benefit is something that we thought was important to protect
working Americans from losing the benefits they've worked hard for all their
lives. But we want to make sure that we're fiscally responsible about it, and
so we phase in the benefit, making sure everything is fully paid for up front.
The government will pick up 50% ofthe costs that employers now pay for
their early retirees for three years. And, after that, it will guarantee the
entire employer share. The retiree will pay the individual share -- an
average of 20% ofthe premium.
13.
How do you plan on cutting
Medicare
programs?
$188 billion from the Medicaid
and
A:
No money will be cut from the Medicare and Medicaid programs. Under
current policies, federal health expenditures are expected to be about $680
billion in 2000 -- about $465 billion of which will be for Medicare and the
federal share of Medicaid alone. The administration is not proposing to
reduce federal health spending -- only to reduce the annual rate of growth
from about 10% to about 5% by 2000 as the new system phases in.
Medicaid and Medicare savings will come from redirecting resources that
would otherwise have gone into these government programs. The
administration is proposing specific changes in the federal health care -Medicare and Medicaid -- programs that are feasible precisely because ofthe
proposed reform ofthe private system.
For example, Medicare and Medicaid cover many working people who will
would be covered by their employers under reform. The money that would
have been spent to insure these working poor and working elderly can be
redirected to new benefits for the elderly and coverage for the uninsured.
Both programs also make huge payments to hospitals to help them cover the
cost of treating the uninsured, who receive care but are unable to pay the
bills they incur. When everyone has insurance, these payments can be
sharply reduced. I n addition, upper-income people would pay a larger share
of the heavily-subsidized premium for physician care under Medicare. These
specific changes in the Medicare and Medicaid rules would reduce the cost of
the two programs by more than $100 billion in the year 2000.
Follow-Up
Q:
With all these cuts in Medicare,
the backs of the elderly?
A:
aren't you financing
health
reform on
No. There's one thing that's important to keep in mind here: older
Americans will receive all the benefits they do today after health
�care r e f o r m . This proposal does not involve cutting Medicare-- it involves
spending Medicare money differently and increasing benefits for older
Americans -- such as providing prescription drug coverage and more options
for home and community-based care.
W h e n t a l k i n g about these savings, we have t o view t h e m i n the
context o f comprehensive health r e f o r m . We will use the savings
f r o m Medicare f o r expanded benefits - p r e s c r i p t i o n drugs and longt e r m care — and greater security f o r older Americans. And we are
talking about using the savings from Medicaid to guarantee universal
coverage. So the savings in these programs goes right back to the people who
these programs serve.
Now, specifically on the Medicare savings. Compare our plan to others out
there, and you'll see that the Medicare savings are actually very reasonable.
The main single-payer bill in the Congress (McDermott/Wellstone) projects
$147 billion in savings over six years, we project $124 billion, and the Senate
GOP bill estimates $92 billion, (check this) So we have a fairly moderate
estimate.
And, only our proposal - for the first time ever -- will seek to enact these
savings in the context of private sector cost containment. I n the past, when
Medicare payments to doctors or hospitals were cut, the hospital was would
just charge people with private insurance more - rather than trying to
control costs. Some estimate that this cost-shifting amounts to $25 billion
(check) each year. When both public and private costs are contained,
hospitals and doctors will look for ways to eliminate waste and provide care
more efficiently rather than just passing the costs on.
14.
Isn't it true that most people
will pay more under
the
plan?
A:
[New Ken Thorpe s t u f f ] This is not true. Let's be clear - without reform,
every American can expect to pay higher insurance premiums and higher
health care bills with no guarantee of security, no guarantee of benefits, and
no guarantee that their health insurance will be there when they need it.
The President's plan provides every American peace of mind and security that
health care will always be there.
Under our plan, seven out of 10 Americans will pay the same or less for
benefits that are the same or better, saving on average about $61 a month.
About 30 percent will pay more, on average about $24 a month, but they'll
receive benefits that can never be taken away and many will receive better
benefits, such as coverage for preventive care.
�15.
Aren't we just seeing lower costs in your plan because costs are being
pushed past the year 2000 - past the budget window - when new
benefits like dental care and mental health coverage will be added?
Is this sustainable in the long run?
A:
This plan is completely sustainable in the long run. In revising our
assumptions and estimates to prepare the final estimates, we took pains to be
as prudent and conservative as possible. This meant that in some cases,
benefits needed to be phased in more slowly, until some savings had been
generated.
Other:
Q:
It seems like health care inflation is coming down by itself, so do we
really need to do so much?
A:
Although recent reports have indicated that medical inflation did not rise as
quickly last year as it has in the past -- this is, by itself, no cause to rejoice.
First of all, historically, every time comprehensive health reform has loomed
on the horizons, those who profit from the waste and excess in the health care
system have curbed their excessive prices for a time. It happened in the
1970's when President Nixon was putting together his health reform
package. Leading health care economists, such as Uwe Reinhardt, have even
dubbed this phenomena the "Hillary Factor" because ever since the First
Lady was named Chair ofthe Health Care Task Force in January, medical
price increases have been slowing.
You should also note that medical costs are still rising two to three times as
high as other prices. The average employers' cost for health care benefits
rose by 8% last year -- exceeding bv far the 2.5% to 3% overall rate of
inflation. And more than two thirds of companies with over 200 employees
reported that their health care costs rose last year. And, this does not even
include small companies, whose annual costs rise significantly more than
those of large companies.
�Q:
My company self-insures and this gives us a great economic
incentive
to take good care of our employees and bring down our costs. I think
you are taking away a great economic incentive to keep our costs
down.
A:
We agree with that and comphment the companies that have recognized that
it makes good economic sense to keep workers healthy rather than just pay
for their care once they're sick. We're not taking away that incentive -- we're
expanding it to the whole system by guaranteeing that plans cover a broad
range of primary and preventive services few insurance plans companies
cover today. Companies will no longer be forced to pick up the slack for
benefits package shortfalls, because every one of their workers, no matter
which plan they choose, will have full coverage of screenings, physicals and
other preventive services.
But, some companies may still feel that it is a good investment to have health
services on-site, or to provide additional coverage for smoking cessation
programs, nutrition classes, or health club enrollments. We agree. Workers
who are healthy have more energy, making them more alert and productive,
and taking fewer sick days. So, regardless of any new system put in place,
employers who feel that they save money for their companies by taking extra
steps to ensure that they have healthier and more productive workers and
less absenteeism will still have that incentive.
Q:
Isn't the employer
mandate
just a payroll
tax?
A:
Nothing could be farther from the truth. The 1967 Report ofthe President's
Commission on Budget Concepts clearly says what is a tax and what is not a
tax. According to the Commission, an item is not a tax if it has a price that is
used by consumers to purchase a service. Employers will pay premiums
under the President's plan as a price to purchase insurance for their workers^j^st «-»
That is why premiums for family coverage will be greater than for single
^pcfcoverage. You get what you pay for. And remember: employers will pay
c^\Zc^s
these premiums to regional health alliances - not to the federal government. ^ +»^».y
Q:
Won't y o u r p l a n eliminate any incentive f o r employers to provide
- - -^-,1 u^t
worksite wellness programs to keep t h e i r workers healthy — a n d lower -ft**
t h e i r w o r k e r s ' h e a l t h care bill?
7 ^ ^')
No. First, for those employers who choose to form corporate alliances, the
pI^^cZT--incentives to provide these services will not change. But all employers will
'[T^Jf
continue to have an incentive for wellness programs. These services help to
�reduce stress, cut absenteeism, minimize man hours lost to doctors visits, and
to keep workers physically and emotionally fit. Employers who offer such
programs will continue to benefit from higher worker productivity and
morale.
�ri
Official White House Publications
^
Available from NTIS
New Health Security Plan Publications
•
President Clinton's Report to America on Health Care.
Order by PB94-102860 at $5.
•
The Health Security Act.
Order by PB94-102878 at $45.
Includes a complimentary copy of President Clinton's six-page letter
to the Honorable Thomas S. Foley and the Honorable George J. Mitchell
transmitting the Health Security Act of 1993.
•
To get both of the above reports with the
complimentary copy of President Clinton's letter,
Order by PB94-102886 at $50.
Other Health Security Plan Publications
The President's Health Security Plan, Comprehensive Overview.
(Note: this document is the same as Tfte Congressional Health Care Workshop,
September 1993.)
Order by PB93-234987 at $10.00.
•
The President's Health Security Plan, Preliminary Summary:
Combined Press Packet and Congressional Briefing Book.
(Note: this document is the same as the Press Packet, September 22,1993 and
Briefing Book, September 22,1993.)
Order by PB93-234979 at $7.50.
•
The Economic Effects of Health Care Reform and The Cost of
Falling to Reform Health Care.
(Supporting documents to White House Health Care Press Briefing, October 6,1993.)
Order by PB93-238863 at $5.00.
NTIS Regular Service
(703) 487-4650
ist Class Mail or equivalent
NTIS Rush Service
(800) 553<NT1S
Overnight Courier
U.S. DEPARTMENT OF COMMERCE
Technology Administration
National Tachnical tntormation Sarvica
I n f o r m a t i o n is our b u s i n e s s .
SpringflaM. VA 22161
Oct. 28, 1993
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Health Care Economic Binder-Draft] [2]
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 5
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621377" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
5/7/2015
Source
A related resource from which the described resource is derived
17621377
12093636
42-t-12093636-20060885F-Seg5-007-005-2015
-
https://clinton.presidentiallibraries.us/files/original/1d7153c93046658e9110dfc281b294fc.pdf
8a697ce711ede14f6d6da89acf7c3f41
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Care Economic Binder - Draft] [1]
Stack:
Row:
Section:
Shelf:
S
52
7
7
Position:
�Date
HEALTH CARE ECONOMIC TEAM - ASSIGNMENTS (Page 3)
Notes
Project
Person
10/11/93
10/12/93
Ongoing Economist Strategy
International -- Zero Growth
Gene
Gene
10/12/93
11/11/93
Perot Analysis
Alliance Project
Christine / Berman
Jason
SOON
Cost shifting to businesses
Paul and Jason
SOON
SOON
SOON
SOON
SOON
SOON
SOON
STUDIES
Gene call? or can
Savings
one of us?
Paul talked to Katz;
Our plan creates jobs for nurses
Kim should follow
(Katz: look at BLS data of total
up with Cutler
occupational expenditures)
Susan Otrin (ask
Small business with health
Gene, Erskine)
insurance creating more jobs
Gene call Bob
Cooper is a tax on employers;
Mclntyre? or can we
Chafee a mc tax
call him?
Jason?
Insurance companies profit under
Cooper
Andy ask Alicia
Other plans put this many people
at-risk of losing health insurance.
Paul and Andy will
Chafee and Cooper put new
work with John
burdens on the states
Hart
With Jamieson
Ken Thorpe did i t - Smitty -Kronick
???
List of hits; defenses; CalPers
example
Dr. Henry Simmons from
National Leadership Coalition.
Who can do this?
Jack Meyer ESRI
Robert Griffin ofHCSA
ANA using Labor Analysis;
Cutler should also talk to Josh
Weiner from Brookings^
EBRI, David B i r ^ K J E t J j /
CTJ and/or HC reform project
Families USA or consumer group
Families USA; Consumers
Union, HC Reform Project
DGA or NGA
�Date
SOON
SOON
SOON
SOON
SOON
|
H E A L T H CARE ECONOMIC T E A M - ASSIGNMENTS (Page 4)
Project
Person
Notes
Reform moving welfare people to
work
Businesses that provide will save
under Clinton plan
Preventive care means savings
Cooper and Chafee creating
bureaucracy
Gene call Bob
Greenstein
Andy
??
Paul will call Ken to
see who at HHS can
work on this
Center on Budget and Policy
Priorities
National leadership coalition on
he
Koop institute; Harvard??
Christine: Give Specter
methodology to Rockefeller?
DPC?
,1
Our benefit package more
comprehensive than most
Paul
Peat Marwick; Foster Higgins?
SOON
Financing is solid
SOON
Employer contribution is simplest,
fairest, most conservative
Universal coverage is necessary for
cost control
Alliances are workable and good for
consumer
HSA puts choice in consumer plans
SOON
SOON
SOON
OP-EDS
Ken Thorpe?
Gene
Gene
J. Hart enthusiastic
Gene
SOON
HSA is best plan for doctors, future
of medicine
Can we ask Lynn M
or Michael C?
SOON
Alternative plans more
bureaucratic
Alternative plans radically
overhaul the system
Jason
SOON
Kim/Paul/Jason
II
Lewin, Altman of Brandeis,
Moon of Urban
Eliot Richardson
Gov. Waihee (?)
Aaron, Reinhardt
Ingrid Tillman has drafted; does^ ^
Jason have this?
Paul Allaire, Tom Elkin of
Calpers
Block of Hopkins, Angell of NE
Journal, Tosteson of Harvard,
Wennberg of Dartmouth
Ted Marmor or David Broder;
_
cooridinate with Paul's project
??
�I Dt
l ae
SOON
SOON
HEALTH CARE ECONOMIC TEAM - ASSIGNM ENTS (Page 5)
Project
Person
Notes
Jason and Judy
Universal coverage necessary for
Whong
real reform
Bob?? Jason/Matt
Individual mandate = more gov't
ONGOING I S S U E S
-Project / To Do List
-Media Coordination
Op Ed Strategy
-Newsclip Project /
Daily News
Maintain Economic
Binders
WELCOME BACK
Stuart Altman
George Will; Michael Kinsley
Meeghan
Jason
Matt
Meeghan / SQM
Matt
�1 > Date
Person
Project
Notes
' . ...-,- :,--=-- - '
-
IMMEDIATE ACTION
who can help with
Circulate economic binders to
distribution?
senior he staff
Gene
Meeting with Ira 10.00
12/17
,12/16 r.
TOP GENE CALLS
Gene
ASAP . ,
Lester Thurow
ASAP
ASAP
ASAP
David Birch
Joint Economic Committee
Did caBto Judy Hassen happen?
Sterner £22-0016
Gene
Gene
Gene
Gene
soor>
Howard Rosen
Gene
ASAP
John Holohan
Gene
SOON
Ev Ehrlich
Gene
Bob Greenstein
Gene
,
: Soon
i'
1
^4
1
9:30 monday meeting done
Gene should tell us what
happened
Article on he costs hurting
competitiveness 617/259-9755
Fastest growing small businesses
see sheet from Jason
Tax cap and new burdens on
states in Cooper and Chafee
can he do manufacturing study?
Also asing commerce for this
Favor for Judy Feder (see Paul
for call sheet) What can Urban
do for us?
Commerce study on
manufacturers winning under
reform (see Paul for background)
EITC plus HC reform = pro work;
also see below
j
�HEALTH CARE ECONOMIC TEAM - ASSIGNMENTS (Page 2)
Project
Person
Notes
ASAP
ASAP
10/7/93
Post break
ASAP
Soon
Post break
11/9/93
11/11/93
11/9/93
11/12/93
11/12/93
11/14/93
...
soon
10/7/93
10/11/93
SHORT-TERM PROJECTS
Gene or Meeghan
Savings memo from Kronick
HRC correspondance with
economists
Pear Request
Gene
HHS link
Creating insecurity
Update Economist List from
Campaign
Maggie memo II?
Deficit Projections — Other Plans
Handout - OpEds w/ memo
Call Sheet for HRC - Victor Fuchs
Hillary Factor - Exact Quote WSJ
Henry Aaron Memo for HRC from
Team Econ -- Quotes, Summary
Economist Outreach Schedule
Gene, Ken
Andy, Jason
Paul
Gene
Meeghan
Jamieson
Matt
Cutler/Kim O'Neill
SQM
Gene to approve
Jamieson
LONG-TERM PROJECTS
-Numbers - what to do about sign
off?
Jason / Gene
Generating Jobs Studies
Smitty
30-something project
Gene
Ongoing Economist Strategy
Are the managed competition
savings included in the baseline?
Who has she talked to? What
does she think about this?
What is this and is this still
valid?
can V serve this function?
Conference call with Alicia?
Need to get info on HRC
correspondance
Need documentation
Gene to OK
??? still relevant?
??? still relevant?
Who is/should be drafting this?
Need Gene to meet with HRC
before hand
see Jason't sheet
Dan Balz Article? [???]
With Jamieson
�HEALTH CARE ECONOMIC TEAM - ASSIGNMENTS (Page 3
Person
Notes
10/12/93
International -- Zero Growth
Gene
10/12/93
11/11/93
Perot Analysis
Alliance Project
Christine / Berman
Jason
Soon
Cost shifting to businesses
Paul and Jason
SOON
SOON
SOON
SOON
SOON
SOON
SOON
SOON
SOON
SOON
SOON
STUDIES
Jason call Jonathon
Commerce Study - How different
industries are affected
Silver 482-5283
Savings
Gene call? or can
one of us?
Paul will call Katz
Our plan creates jobs for nurses
Susan Otrin (ask
Small business with health
Gene, Erskine)
insurance creating more jobs
Cooper is a tax on employers;
Gene call Bob
Mclntyre? or can we
Chafee a mc tax
call him?
Insurance companies profit under
Jason?
Cooper
Other plans put this many people
Andy ask Alicia
at-risk of losing health insurance.
Chafee and Cooper put new
Paul will work with
John Hart on this
burdens on the states
Reform moving welfare people to
Gene call Bob
Greenstein
work
Businesses that provide will save
??
under Clinton plan
Preventive care means savings
??
Ken Thorpe did i t - Smitty -Kronick
List of hits; defenses; CalPers
example
Who can do this?
Gene may want to look over (see
above)
Jack Meyer ESRI
Robert Griffin ofHCSA
ANA using Labor Analysis
EBRI, David Birch, JEC?
CTJ and/or HC reform project
Families USA or consumer group
Families USA; Consumers
Union, HC Reform Project
DGA or NGA
Center on Budget and Policy
Priorities
National leadership coalition on
he
Koop institute; Harvard??
�Date
SOON
SOON
HEALTH CARE ECONOMIC TEAM - ASSIGNMENTS (Page 4)
Project
Person
Notes
Cooper and Chafee creating
bureaucracy
Our benefit package more
comprehensive than most
??
??
OP-EDS
Ken Thorpe?
SOON
Financing is solid
SOON
Employer contribution is simplest,
fairest, most conservative
Universal coverage is necessary for
cost control
Alliances are workable and good for
consumer
HSA puts choice in consumer plans
Gene
SOON
HSA is best plan for doctors, future
of medicine
Can we ask Lynn M
or Michael C?
SOON
Alternative plans more
Jason
bureaucratic
Alternative plans radically
??
overhaul the system
Universal coverage necessary for
??
real reform
Bob?? Jason/Matt
Individual mandate = more gov't
ONGOING I S S U E S
-Project / To Do List
-Media Coordination
Op Ed Strategy
SOON
SOON
SOON
SOON
SOON
SOON
Gene
Can we get Hart to
do this?
Gene
DPC?
Peat Marwick; Foster Higgins?
Lewin, Altman of Brandeis,
Moon of Urban
Eliot Richardson
Gov. Waihee (?)
Aaron, Reinhardt
Chiles, Pollack, Garamendi,
Ingrid Tillman of ESRI
Paul Allaire, Tom Elkin of
Calpers
Block of Hopkins, Angell of NE
Journal, Tosteson of Harvard,
Wennberg of Dartmouth
Ted Marmor or David Broder
??
??
George Will; Michael Kinsley
Meeghan
Jason
Matt
�Date
HEALTH CARE ECONOMIC TEAM - ASSIGNMENTS (Page 5)
Person
Notes
--
Newsclip Project /
Daily News
Maintain Economic
Binders
HAPPY HOLIDAYS!!!
Meeghan / SQM
Matt
�Premium Payments for Medicaid Cash Recipients
for Alliance-Covered Services
o
States and the Federal govenmu nt will make premium contributions to regional
health alliances based according to,the existing Medicaid matching formula on
behalf of cash recipients,
{
Premium payments for both AFDC and SSI eligibles will be determined by:
(1)
(2)
Trending the 1993 expenditures forward to the year before
implementation by national growth rates for cash recipients.
Different national growth rates will be used for the AFDC and SSI
payments.
(3)
11/7/93
Calculating 95 percent of each state's total per capita spending for
the services provided in the comprehensive benefit package in FY
1993 for AFDC and SSIrecipients,respectively
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation.
�\z, /fiWft fioin d>r LJ#"
Payments for Medicaid Non-Cash Recipients
for Alliance-Covered Services
States will be required to make maintenance of effort payments to regional
alliances on behalf of non-cash recipients, f p ^
CoXtotfr fa ^
7
Payments for non-cashrecipientsfor alliance-covered services will be determined
by:
(1)
(2)
Trending the 1993 expenditures forward through the year of
implementation by a national growth rate for non-cash recipients
(3)
11/7/93
Calculating each state's FY 1993 spending (state share only) for
the services provided in the comprehensive benefit package for
non-cash recipients
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation
�Payments for Medicaid Services Not Covered in the Basic Benefits
(Wrap-Around Services)
Coverage for services not included in the basic benefits package but currendy
covered by Medicaid will depend on an individual's:
o
(1)
^
EligibUity for Medicaid (cash or non-cash)
(2)
Ml
Age group, poverty status, and disabUity status
gre/
inancing of
Financing of Medicaid Services Not Covered by Alliances (Wrap-Around Services)
^ yr u
op
Eligibility
Cash
Non-Cash
Non-Medicaid
Below 150% F F L
Children
Federal program with State
maintenance of effort
Federal program with State
maintenance of effort;
1902(r)(2) recipients and
other State option recipients
are also in the Federal
program with State
maintenance of effort (1)
State option; no
Federal match
Adults
Federal-State match
State option; no Federal
match
State option; no
Federal match
Dual Eligibles
Federal-State match
Federal-State match
Not applicable
o
o
11/7/93
Adult non-cash recipients may continue to receive wrap-around services as a state
option. However, no Federal matching payments will be available for this
population.
o
(1)
All cash and non-cash children will receive wrap-around services.
Adult cash recipients will continue to receive wrap-around services. The states
and the Federal government will continue to share the cost of these benefits as
under the current Medicaid program.
This box reflects legislation and may not reflgctcurrent poUcy.
�Disproportionate Share
The disproportionate share program will be eliminated once a state has
implemented health care reform. —y~ ^L.
/
^7
n
ter cjf ^
al/tt^
(
A new Federal program for vulnerable populations will be established. Hospitals
that serve a high proportion (over 25 % of patient load) of low-income individuals
will receive Vulnerable Population Adjustment (VPA) payments directly from the
Federal government.
A state's maintenance of effort payment to regional alliances will include an
amount based on a state's disproportionate share spending for non-cash recipients.
This amount will be determined by:
(1)
(2)
Trending the 1993 expenditures forward through the year of
implementation by a national growth rate for disproportionate
share
(3)
11/7/93
Calculating each state's spending for disproportionate share in FY
1993 attributable to non-cash recipients
Updating annual payments following implementation by the
budgeted rates of increase based on general health inflation and
population growth
�Long-Term Care
o
Current Medicaid policies regarding nursing home care, (ICF/MR, j?ind
community-based long-term care continue, with three exceptions:
(1)
Assets: States have the option of raising allowable assets from $2,000 to
$12,000
(2)
Personal needs allowance: Federal coverage will be raised from $30 to
$70; the Federal govemmenTsdlLpay 100% of the difference in the costs
incurred by raising theaUdwance ^
(3)
Medically needy: [A spend-downhill berequiredfor all states
A new community-based long-term-care program will be available for the
severely disabledregardlessof income.
11/7/93
�'
MEDICAID UNDER HEALTH CARE REFORM
Medicaid will be restructured and w i
in the reformed health care system.
The Current System:
Today, there are several categories of people who get their
through Medicaid:
AFDC/SSI RECIPIENTS:
Pregnant women and children who receive Aid to Families with
Dependent Children (AFDC, or welfare) also receive Medicaid. I n
addition, people who qualify for Supplemental Security Income (SSI)
receive Medicaid as well. These beneficiaries are sometimes called
"cash recipients", because they qualify for Medicaid by virtue of their
participation in AFDC or SSI, programs that provide direct income
support.
P O V E R T Y - L E V E L AND N E A R - P O V E R T Y C H I L D R E N :
•
I n recent years, the Federal government has expanded the Medicaid
program to include coverage of poor children, even i f they do not
receive welfare. Many of these children are in households where
someone works.
" M E D I C A L L Y N E E D Y ' INDIVIDUALS:
•
There are individuals who qualify for Medicaid because their health
care bills have outstripped their ability to pay them, either because
they encounter huge and recurring bills and have no insurance, or
because their insurance has reached an annual or lifetime limit, or
because their insurance did not cover their ailment or needed
treatment.
LOW-INCOME E L D E R L Y :
•
Elderly people who "spend down" to poverty qualify for Medicaid longterm care coverage, which is almost always provided in the nursing
home.
)d fefe ^
^
�MEDICAID SAVINGS UNDER REFORM
Under reform, tHe Medieaid-^rogram will be reduced, and savings will be
achie
1.
The first area of savings comes from the reducing the extra payments
that currently go to hospitals that care for a large percentage of lowincome and uninsured people, and therefore have a great deal of
uncompensated care. These^p^jnentsr-c^lled Disproportionate Share
or "DSH" payments, will<beless necessary\mder reform since there ()ncce^.j^
will be no American or legahresideiilJewthetlt insurance, and will
'
therefore be reduced.
Savings: $55 billion over 5 years
2.
/
The second area of savings comes from integrating many current
Medicaid beneficiaries into alliance plans, since they will no longer end
up on Medicaid- for example people who now fall into the "medically
needy" category would never be in a situation where they faced
insupportable health care costs, and many ofthe children now covered
under Medicaid who aren't on welfare would be covered through the
alliance system and paid for through employer and subsidy payments.
In addition, continuing Medicaid spending would grow at a capped rate
of increase, as with the rest ofthe health care system.
Savings: $22 billion over 5 years
3.
Other savings come from reduced Medicaid spending for elderly
prescription drugs, since under the President's plan Medicare will
begin paying for prescription medications for Medicare/Medicaid
recipients, and from administrative savings to the Medicaid program.
�MEDICAID UNDER HEALTH CARE REFORM
CONTEI
The Current System
• AFDC/SSI Recipients
\
• Poverty-level and near-poverty children^
• "Medically Needy" individuals
• Low-Income Elderly
Medicaid Savings Under Reform
• DSH
• Integrating beneficiaries into alliance system
• Reduced spending for prescription drugs
2
Appendix 1
V'
^ ^
Overview of Medicaid Under the Health Security Act
Alliance Coverage of Medicaid Recipients
Premium Payments for Medicaid Cash Recipients
Payments for Medicaid Non-Cash Recipients
Payments for Medicaid Services Not Covered in the Basic Benefits
Disproportionate Share
Long-Term Care
Appendix 2
Details on Medicaid Savings
Spending for Medicaid Population
Potential Advantages and Disadvantages to States
Current System Vs. New System
Coverage for Medicaid Eligibles
Wrap Around Service — Financing
Long-Term Care
Medicaid Premium Payments to Alliances
Medicaid Premium Payments — Blended Premiums
Appendix 3
Bruce Vladeck Statement
Subcommittee on Health and the Environment
Committee on Energy and Commerce
November 19, 1993
�r
IV
11/7/93
Overview of Medicaid Under the Health Security Act
�Alliance Coverage of Medicaid Recipients
All current Medicaid recipients will be enrolled in an regional alliance.
Current Medicaidrecipientswho do not receive AFDC or SSI (non-cash
recipients) will make a premium contribution. The premium contribution will be
discounted if family income is below 150 percent of the federal poverty line, as
with other low-income groups.
Current Medicaid recipients whoreceiveAFDC or SSI (cash recipients) will not
contribute toward the premium if the chosen plan's premium is at or below the
weighted average premium for the alliance. If the plan's premium is above the
regional alliance's weighted average premium, then therecipientmust pay the
additional cost.
11/7/93
�December 22, 1993
MEMORANDUM FOR DISTRIBUTION
FROM:
GENE SPERLING
HEALTH CARE ECONOMIC TEAM
SUBJECT:
Health Care Economic Binder - DRAFT
Attached please find our proposed Health Care Economic Binder. It is an attempt
to provide senior Administration officials with substantive (i.e., not spin)
information on the financing ofthe health care plan and ensure that we are all
using with the same information. It is.intended to be used as both a reference and a
resource when writing speeches, preparing for congressional testimony, responding
to the press, etc.
. :
:
Each chapter is devoted to a different topic relating to the financing ofthe plan, and
contains one page of talking points in addition to the substantive and financial
follow-up. Relevant articles are included in the back of each chapter.
v
Any comments and suggestions you have would be most welcome and appreciated.
We would appreciate all comments by COB Tuesday, January 4, 1994.
Distribution:
Treasury:
Marina Weiss
HHS:
Judy Feder
Ken Thorpe
OMRNancy-Ann Min
CEADavid Cutler
White House:
Ira Magaziner
Bob Boorstin
�HEALTH CARE ECONOMIC NOTEBOOK
OVERVIEW TABLE OF CONTENTS
I.
Financing
II.
Process / Cost Estimates / Validation
III.
Discounts
IV.
Who Pays What / Distribution Issues
Early Retirees
V.
Savings f r o m Competition
Premium Caps
VI.
Medicare
VII.
Medicaid
V I I I . Small Business
IX.
Jobs and Job Lock
X.
Alternate Proposals
XI.
Economic Effects of Health Reform
XII.
The Problem / Cost of Doing Nothing
X I I I . Questions and Answers
�HEALTH CARE ECONOMIC NOTEBOOK
D E T A I L E D T A B L E O F CONTENTS
I.
Financing
A.
Summary page
B.
Financing Overview
C.
Charts
1.
Financing health care reform (sources and uses_
2.
Cost of Premium Discounts
D.
"A Billion Here, A Billion There" [New York Times. 10/18/93]
IL
Process / Cost Estimates / Validation
A.
Summary page
B.
Cost Estimates: A Thorough Process, A Conservative Result
C.
Statement by Ira Magaziner on Actuarial Validation (10/8/93)
D.
Quotes from experts
E.
Historical Medicare Cost Projections: No basis for comparison
F.
Articles
1.
"It Will Balance Just Fine," Ted Marmor and Jerry
Hashaw, L.A. Times. 10/7/93
2.
"Actuaries Defend Process, Assumptions Used in Review of
Clinton Health Plan" Rick Wartzman, Wall Street
Journal. 10/12/93
3.
"Clinton's Conservative Health Plan", Alice Rivlin, Wall
Street Journal. 10/20/93
4.
"A Billion Here, A Billion There" Uwe Reinhardt, New
York Times. 10/18/93
III.
Discounts
A.
Summary page (to come)
B.
Discount Estimates overview
C.
Chart: Cost of Premium Discounts
IV.
Premium Distribution
A.
Summary/contents page
B.
Who pays less? Who pays more
C.
Health care premiums
D.
Who pays for health insurance under reform?
E.
Treatment of early retirees
F.
"hosier Numbers for Health Plan," Richard Wolf, USATodav,
11/5/93 [to come]
�V.
Savings from Competition
A.
Summary page
B.
Four ways savings will be realized
C.
Preventive care
D.
Premium caps: back up cost control measure
E.
Q&A
F.
Examples of what works today
G.
Talking points
H.
"CUnton's Cost Controls Can Work" PWashington Post. 11/7/93]
VI.
Medicare
A.
Summary/contents page
B.
Medicare under heatih reform -- overview
C.
Chart -- Medicare savings under health care reform
D.
Medicare savings proposals for health reform
VII.
Medicaid
A.
Summary/contents page
B.
Medicaid under health reform -- overview
C.
Medicaid savings under reform
D.
Overview
1.
Appendix 1
2.
Appendix 2
3.
Appendix 3 -- Vladeck testimony
V I I I . Small Business
A.
Summary page
B.
Small business and health care -- overview
C.
Small Business and Health Care: The Problem
D.
Articles
1.
"Small Firms Get Break in Health Plan Fine-Tuning "
Peter G. Gosseim and Richard A. Knox, Boston Globe.
10/27/93
2.
"Health Care Plan Grows on Small Firms." Beth Benton,
USA Today. 10/19/93
3.
"Small Busi?iess Gives Health Plan Second Look", Steve
Pearlstein, Washington Post. 10/10/93
4.
"Small Companies Misunderstand Clinton Health Plan:
Even Those Who Would Benefit the Most Have Doubts
About Proposal," Rick Wartzman, The Wall Journal,
9/24/93
5.
"Clinton Health Plan Will Help, Not Hurt, Small
Business," Thomas Oliphant, Boston Globe, 9/13/93
�6.
7.
8.
"Small Business Sees Burdens Getting Lighter," Udayan
Gupta and Jeanne Saddler, The Wall Street
Journal.9/13/93
"Too Soon to Panic: The Small Business Lobby Says
Clinton's Mandatory Plan Will K i l l Off Jobs. But Mom
and Pop May End Up Breathing Easier," Newsweek,
8/30/93
"Major Employers Fear New Restraints" Wall Street
Journal. ?".
IX.
Jobs
A.
B.
C.
D.
E.
F.
G.
H.
and Job Lock
Summary page
6-pager -- health care and jobs
What is the minimum wage effect of health care reform?
Do most firms offer insurance?
EBRI study
EPI Study -- summary
Talking points
Articles
1.
"Reform Will Cost - and Create - Jobs," Kathleen Day,
Washington Post, 5/93/93
2.
"Fear of Losing Aid Chains Some to Jobs," Michael
Clements, USA Today, ?
3.
"Study Backs Health Plan on Job Creation," Anne Veigle,
Washington Times. 11/5/93
4.
"A Clinton View: Health Reform Equals Jobs," Gerald F.
Seib, Wall Street Journal, 9/22/93 [DON'T HAVE]
X.
Alternative Health Care Reform Proposals
A.
Summary page (to come)
B.
Alternative plan overview
XI.
Economic Effects of Health Reform
A.
Economic Effects of Health Reform (Reich & Tyson)
B.
Tyson testimony
C.
Articles
1.
"Clinton Plan Provides Security, Ends Confusion," Carol
Gentry, Times-Picavune. 9/21/93 [GETTING COPY]
2.
"Boosting Workers' Security" Paul Starr, L.A.
Times. 10/8/93
�XII.
The Problem / Cost of Doing Nothing
A.
The Costs of Faihng to Reform Health Care
B.
Charts
1.
"Workers Losing Wages to Rising Health Costs"
2.
"More Americans Lack Health Security"
3.
Alternate Deficits 1993-2000 (Chart and Table)
X I I I . Questions and Answers
How is this financed?
Uncapped entitlement
•
Retreat from universal coverage?
•
What if the money runs out?
Outside ValidatioTi
Alternate Plans
Savmgs
•
Scale back benefits?
Price controls
•
Run out of money?
•
Rations care
Alliances
Job Losses
S?nall Business
Deficit
Historical Medicare Estimates
Early Retirees
Who Pays More? Who Pays Less?
Cost Pushed Past Budget Window
Inflation
SelfJnsured
Companies
Payroll Tax
�TOP ECONOMIC HEALTH CARE Q&A
1.
How can you pay for this with no new taxes?
2.
Does your plan include an open-ended entitlement?
Follow-up:
Q:
Haven't you retreated from universal coverage?
Q:
But you 're saying you have a capped entitlement.
don't have enough money?
What if you
3.
Isn't it the case that not a single outside economist will validate your
numbers?
4.
All the other plans on the table today seem to accomplish all that yours
says it will but with considerably less pain. What is your comment on
that?
5.
What makes you think that you can squeeze so much savings from the
system ?
Q:
If the savings you predict don't come to pass, would you consider
scaling back your benefits package to help make this plan more
affordable?
6.
After learning from our Nixon era experience that price controls don't
work, why are we really going back to price controls under the guise of
premium caps?
7.
The last thing we need is a big government
these alliances are?
8.
Could you comment on what the employment impact of your plan will
be?
9.
What is the impact of your plan on small businesses?
result in huge job losses?
10.
Will this bring down the long-term deficit or will the deficit still spike
up after 1998 even with these savings?
11.
How do you respond to those who seek to cast doubt on your long-range
cost estimates - claiming that when the Medicare program was enacted,
it was estimated to cost about $9 billion in 1990 but ended up costing
$66 billion - 7.5 times that amount?
bureaucracy.
Isn't that all
Won't it just
�12.
On early retirees, why do you provide this huge subsidy to employers
and then take back all the money with an "assessment"? Isn't that just
a new tax?
Q:
Why are you covering early retirees at all?
13.
How do you plan on getting $188 billion from the Medicaid and
Medicare programs? Why are you funding health reform on the backs of
the elderly?
14.
Isn't it true that most people will pay more under the plan?
15.
Aren't we just seeing lower costs in your plan because costs are bei?ig
pushed past the year 2000 - past the budget window -- when new
benefits like dental care and mental health coverage will be added? Is
this sustainable in the long run?
Q:
It seems like health care inflation is coming down by itself, so do we
really need to do so much?
Q:
My company self-insures and this gives us a great economic incentive to
take good care of our employees and bring down our costs. I think you
are taking away a great economic incentive to keep our costs down.
Q:
Isn't the employer mandate a [payroll] tax?
i/data/healthcare/book-toc.job
12/2/93
�PRAF
December 3, 1993
MEMORANDUM FOR DISTRIBUTION
FROM:
HEALTH CARE ECONOMIC TEAM
SUBJECT:
Health Care Economic Binder
The purpose of this binder is to provide you with substantive information on the
financing of the health care plan. It is intended to be used as both a reference and
as a resource when writing speeches, preparing for congressional testimony,
responding to the press, etc.
Each chapter is devoted to a different topic relating to the financing of the plan, and
contains one page of talking points in addition to the substantive and numerical
follow-up. Relevant articles are included in the back of each chapter.
The question and answer section may very well be the most relevant, containing the
most commonly asked financial questions.
It is our hope that these binders will contain the latest numbers, charts, graphs,
Questions and Answers, etc. so that all Administration representatives will be
responding in the same way. We expect to provide you with regular updates and
additions as numbers change or new issues need to be addressed. Similarly, new
Questions and Answers will be distributed from time to time in response to recent
media reports or changing policies.
If you have any questions, please contact Meeghan Prunty in the Delivery Room at
456-2566 or Kim O'Neill at CEA at 456-4730.
�Distribution:
Secretary Lloyd Bentsen
Secretary Donna Shalala
Secretary Robert Reich
Secretary Ronald Brown
Director Leon Panetta
Director Laura Tyson
Ira Magaziner
Deputy Secretary Roger Altman
Deputy Secretary Larry Katz
Deputy Director Alice Rivlin
Assistant Secretary Alicia Munnell
Dr. Alan Blinder
Robert Rubin
Carol Rasco
• Marina Weiss
David Cutler
Nancy-Ann Min
��FINANCING HEALTH SECURITY
SUMMARY PAGE
THOROUGH, CREDIBLE PROCESS OF ESTIMATING COSTS
USES OF FUNDS - Federal Costs are Identifiable and Clear
•
There are five federal uses of funds
1. Premium Discounts for Small Businesses/Families ($161 Billion)
2. Medicare Drug Benefit ($66 Billion)
3. Long-Term Care ($62 Billion)
4. Self-Employed Tax Deduction ($10 billion)
5. Public Health/Administration ($53 billion)
NEW FEDERAL SPENDING TOTALS $351 BILLION
SIGNIFICANT SHORT- AND LONG-TERM DEFICIT REDUCTION:
•
$58 billion in deficit reduction by the year 2000.
SOURCES OF FUNDS - Revenues and Savings are Specific and Scorable
•
Majority of funds continue to come from the private sector
•
There are six federal sources of financing
1. Medicare Savings ($124 Billion)
2. Medicaid Savings ($65 Billion)
3. Tobacco Tax and Corporate Assessment ($89 Billion)
4. Federal Programs Savings ($40 Billion)
5. Increased Federal Revenues ($86 (68?) Billion)
6. Reductions in Debt Service ($4 Billion)
To be conservative, savings estimates include no savings from
increased competition, incentives toward cost consciousness, etc.
RESPONSIBLE, CONSERVATIVE FINANCIAL PROTECTIONS
•
15% Discount "Cushion"
•
Entitlement Caps on Discounts - Fiscal Accountability
•
Premium Caps - Backup Cost Control Measure
�FINANCING HEALTH SECURITY
SUMMARY:
1.
The Health Security Act is the only comprehensive plan which spells
out exactly what benefits will be provided and how reform will be
financed. A close look at the numbers makes the following clear:
• First, the process used to arrive at the financing numbers was
rigorous and has been validated by many independent sources.
• Second, the federal costs of reform are identifiable and clear.
• Third, the plan achieves significant deficit reduction in the first
five years alone.
• Fourth, the sources of funding are specific and scorable.
• Finally, the Health Security Act contains strong financial
protections to ensure accountability and fiscal responsibility and
guarantee that projected savings are locked in.
THOROUGH,
CREDIBLE PROCESS
OF ESTIMATING
COSTS:
The health care financing analysis undertaken by the administration has
been rigorous, drawing on the best analytical talent from inside and outside
the federal government. Although they may disagree about individual
policies, many outside economists and health economists agree that our
process was thorough and our estimates are both credible and conservative.
//.
USES OF FUNDS - Federal
1.
Premium Discounts
$161 Billion
Costs are Identifiable
for Small Businesses
and
and
Clear:
Families:
Discounts on the cost of insurance will be provided to three groups
who may not be able to assume full responsibility for their share of
their insurance premiums: 1) small businesses; 2) low-income
individuals and families; and 3) the unemployed. The costs of
providing these discounts are approximately $117 billion over five
years. I n addition, there is a 15% discount "cushion" - $44 billion over
5 years - as a reserve built into the discount structure for behavioral
changes that could result in an additional demand for discounts.
Net Discounts ($161 B) = Gross Discounts ($349 B) - Offsets ($188 B)
Gross discounts are offset by money saved by the federal government
($113 billion) and state/local governments ($75 billion) when people
who used to be on Medicare and Medicaid now are in the alhances.
�Financing Overview
Page 2
2.
Medicare Drug Benefit:
$66 Billion
The savings in the Medicare program will be reinvested in new
benefits for seniors. For $11 a month, Americans eligible for Medicare
will automatically receive prescription drug coverage -- with standard
25% Part B premium payments and a $250 deductible. A $1,000
annual cap will be placed on out-of-pocket prescription drug costs, with
all costs above this amount fully covered.
3.
Long-Term Care:
$62 Billion
Americans of all ages who are disabled will gain access to a wider
variety of home and community-based support services, making it
possible for some people to continue to live at home rather than in
nursing homes. There are three components to the long-term care
benefit:
(i) the home and community-based program ($57 billion);
(ii) the liberalized eligibility for nursing home care under Medicaid
($3 billion); and
(iii) the tax incentives towards the purchase of long-term care
insurance ($3 billion).
4.
Self-Employed
$10 billion
Tax Deduction:
Today, the self-employed are discriminated against because they can
only deduct 25% of their health premiums from their taxes, rather
than 100% as all other businesses do. Eliminating this bias against
the self-employed - by giving a 100% tax deduction for their
comprehensive benefits - will encourage the formation of small
businesses.
�Financing Overview
Page 3
5.
Public
Health/Administration:
$53 billion
The Health Security Act includes new public health spending ($3
bilhon) for the Women, Infants and Children (WIC) program, enabling
more people to benefit from the key role WIC plays in health promotion
by providing nutritional supplements to pregnant women and young
children. This also includes an additional $21.5 billion in funds to
academic health centers for research and development, $15 billion of
other public health initiatives, an additional $3 billion dollars fro
veterans' health programs, and $7 billion in administrative costs.
NEW FEDERAL SPENDING TOTALS $351 BILLION
///.
SIGNIFICANT
SHORT- AND LONG-TERM DEFICIT RED UCTION:
Over the long term, experts acknowledge that comprehensive health reform
that provides the universal access needed to control health care costs is the
single best hope for reducing the structural deficit.
The Health Security Act will reduce the deficit by $58 billion by the year 2000.
W.
SOURCES OF FUNDS - Specific and
Scorable:
Majority of funds continue to come from the private
sector:
The Health Security Act builds on our current private health care system.
According to the March 1992 Census Survey, nine out often Americans who
are privately insured today get their insurance through their employers -this will continue. But now every employer and individual will be asked to
take responsibihty. Firms that now cover their employees health insurance
will no longer be penahzed in a system where their competitors can choose to
cut costs by not providing insurance. And all individuals will now have to
take responsibihty for their share of insurance as well. By providing
discounts to small businesses and low-wage workers, the Health Security Act
will enable millions of Americans to contribute toward their comprehensive,
affordable insurance coverage. The majority ofthe funding for the Health
Security Act - 76% - comes from these private sources and remains in the
private sector.
�Financing Overview
Page 4
There are six federal sources of financing:
1.
Medicare Savings:
$124Billion
-
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;
,
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The Medicare program remains intact under the President's plan, with
minor modifications and slower rates in the growth of spending. The
plan identifies $124 bilhon in specific, scorable, line-by-line savings,
which are outhned in the Medicare section of this document. Medicare
will no longer have to reimburse doctors and hospitals for the cost of
caring for the uninsured, saving billions of dollars per year. With all
employers contributing to health care, Medicare will also save on
workers now covered by those programs. Upper-income people will pay
a larger share of their Medicare Part B premium, and there will be a
crackdown on the fraud and overcharges that drive up Medicare costs.
These reforms will lower the growth of Medicare costs from three to
two times the rate of inflation, and the savings will be rechannelled
into the new benefits for older Americans.
Every Democratic and Republican proposal recognizes that national
health care reform can save money in the rate of growth in Medicare
and Medicaid. But only the Health Security Act combines changes in
Medicare with reductions in the growth of private sector spending so
Medicare savings aren't simply shifted to the private sector.
2.
^
Medicaid Savings:
$65 Billion
Under reform, Medicaid will be reduced, and savings will be achieved.
There are two categories of savings:
(i) Disproportionate Share (or DSH) Payments - once all Americans
have insurance, the federal government can reduce the payments
it makes to providers who provide a disproportionate amount of
free services to the uninsured ($55 billion);
(ii) Reduced Medicaid Population -- many current Medicaid
beneficiaries will be integrated into alliance plans, saving $22
billion. For example, many children with working parents who
are now covered under Medicaid would be covered through the
alliance system and paid for through employer payments; and
�Financing Overview
Page 5
In addition, future Medicaid spending will grow at a capped rate of
increase, along with the rest ofthe health care system.
These savings ($77 billion) are offset by three categories of new
expenses: (a) additional spending for Medicaid "wrap-around services"
- such as translation -- that will continue to be provided to disabled
children ($6 billion); (b) additional expenses for administration ($2
bilhon); and (c) additional funds for hospitals serving vulnerable
populations, such as undocumented persons ($4 billion).
3.
Tobacco Tax and Corporate
$89 Billion
Assessment:
The plan will raise taxes on tobacco, asking people whose health costs
are higher to pay more for products that are health hazards. The
tobacco tax rises by $.75 per pack to $.99 per pack, raising $65 billion
over 5 years.
The Administration is also asking those large self-insured corporations
who estabhsh their own alliances to help pay for health care for
everyone. The corporate assessment is 1 percent of payroll, raising $24
billion.
4.
Federal Programs
$40 Billion
Savings:
The plan will lower the federal government's cost of providing health
care for federal workers by integrating them into the alhance
structure. By purchasing health care in the private sector, the
government will be guaranteed the same low rate of cost increase as
private businesses. The savings are from several sources: Veterans
($16 billion); Department of Defense ($3 billion); Federal Employees
Health Benefits ($13 billion); and Public Health Savings ($8 billion).
�Financing Overview
Page 6
5.
Increased Federal
$86 (68?) Billion
Revenues:
Under reform, many employers who now provide insurance for their
workers will experience immediate reductions in their health care
burden. For example, premiums under reform will be 10.5 percent
lower than they are now because, with universal coverage, firms that
insure their workers will no longer be overcharged to cover the costs of
those who are uninsured but still receive care. The new incentives
toward greater competition and more cost consciousness on the part of
both consumers and providers will continue to lower health insurance
costs over time. As employers' health care costs -- which are currently
tax-preferred •• go down, more employer funds can be channeled into
taxable avenues such as increased wages for existing workers and new
hires, increased profits, greater shareholder dividends, etc. This is
expected to raise $23 billion.
This category also includes several other components, such as: revenue
effects of removing health insurance from cafeteria plans ($30 billion);
other tax changes largely affecting the self-employed ($2 billion); and
contributions made by businesses for early retirees ($11 billion).
6.
Reductions
$4 Billion
in Debt
Service:
Lower deficits will lead to savings in federal interest payments.
It is important to note that we do not include any of the system-wide
savings - that have been proven to result from increased
competition, cutting bureaucracy, cracking down on fraud, and a
new emphasis on prevention — in our savings estimates, to maintain
^credibility beyond reasonable dispute.
RESPONSIBLE, CONSERVATIVE FINANCIAL
PROTECTIONS:
Several mechanisms have been included in the plan to ensure accountability,
fiscal prudence, and credibihty.
�Financing Overview
Page 7
15% Discount "Cushion":
Although we have been conservative in estimating the needed funds
for discounts. These estimates are based on sophisticated models built
from very specific information about factors like family income data,
numbers of firms at certain sizes and wage-rates, etc. However, there
are some behavioral changes, both positive and negative, that are
difficult to quantify in a program of this magnitude -- such as creative
accounting by businesses to qualify for additional discounts. For these
reasons, the Health Security Act has a built-in 15% contingency
reserve or "cushion" -- of $44 billion over 5 years - as a safeguard for
these unknowns, giving us even greater confidence in our estimates.
Entitlement Caps on Discounts — Fiscal Accountability:
The plan sets a limit on the amount of discounts that can be spent
automatically. We felt an open-ended entitlement left the federal
budget vulnerable to unpredictable cost increases in the future. The
program must pay for itself, and the costs must be clear and
predictable. I f the amount specified for discounts -- plus the 15%
cushion - is spent, Congress has to review the discount structure and
take action to either limit spending or raise additional revenue. This
trigger represents the President's strong commitment to financial
responsibility.
Premium Caps - Backup Cost Control Measure:
We strongly believe that - regardless of how quickly or how firmly
competitive reforms take hold - we need to build some disciphne and
certainty into the system. This is essential to assure businesses and
consumers that their health insurance premiums will not be allowed to
continue to spiral out of control year after year, and that the federal
government will not be allowed to increase spending without
accountability. The Health Security plan reinforces the competitive
system with a fail-safe limit on health care premium increases. This
targeted, selective limit will be used only if the average premium
across all plans exceeds the alliance's premium target. I t will only
apply, however, to those plans in the Alliance that exceed these
targets. Plans and providers that propose excessive rate increases will
face financial penalties which will be used to automatically "rebate"
the portion of the premium which exceeds the alliance's premium
target, based on a formula set in federal law.
�Financing Hea^n Care Reform
Totals: 1995-2000
$ Billions
500
TOTAL REVENUE: $409
400
Debt Service $4
Other Revenue
Effects $86
300
200
Federal Programs Savings
$40
TobaccoTax and
Corporate Assessment
$89
Medicaid Savings
$65
100
0
Medicare Savings
$124
Sources of Funds
Deficit Reduction $58
TOTAL COST: $351
Cushion $44
Premium Discounts
$117
SeH-Employed Tax
Deduction $10
Medicare Drug Benefits
$66
Long-Term Care
$62
Public Health/
Administration/
Mtscelldneoua $53
Use of Funds
�30-Nov-93
4&0 P.M.
Financing Health Care Reform
Sources of Funds (billions of dollars)
1995
1996
1997
1998
1999
2000
1995-00
Medicare
Part A Savings
Part B Savings
Parts A and B Savings
HI Tax Extended to all State & Local Government Employees
Income Related SMI Premium with outlay and premium effects
2.5
0.0
2.2
0.3
0.0
0.0
9.9
4.0
2.4
1.6
1.5
0.4
14.4
6.8
2.8
2.3
1.5
0.9
'; ??,«
11.8
5.7
3.0
1.5
0.9
33.0
16.5
9.4
4.6
1.4
1.0
41.7
21.2
12.7
5.4
1.4
1.1
124.3
60.4
35.2
17.2
7.3
4.2
Medicaid
Savings from Capitation of Cash-Eligible Beneficiaries
Reduced Disproportionate Share Hospital Payments
less Offset for Hospitals Serving Vulnerable Populations
Less Wrap-around Benefits (net of offset for "Cash" Medicaid)
Payment Lag, Administrative Savings, and Other Changes
0.0
0.0
0.0
0.0
0.0
0.0
0.9
0.3
1.4
-0.2
-0.2
-0.5
4.0
1.2
4.7
-0.4
-0.6
-1.0
10.3
3.9
13.0
-1.0
-1.6
-4.0
PPS
6.7
16.8
-1.0
-1.8
1.6
27.9
10.2
18.6
-1.0
-1.8
1.9
65.3
22.3
54.6
-3.6
-6.0
-2.0
Other Federal Programs
Veterans Affairs: Third Party Receipts
Defense Department Heakh (a)
Federal Employees Health Benefits
Public Health Service Savings
0.0
0.0
0.0
0.0
0.0
1.0
0.6
0.1
0.0
0.3
2.8
1.7
0.2
0.0
0.9
10.1
4.3
0.7
3.3
1.8
12.2
4.5
0.8
4.5
2.4
13.5
4.7
0.8
5.4
2.6
39.6
15.8
2.6
13.2
8.0
Tobacco Tax/ Corporate Assessment
TobaccoTax
Corporate ABBOsamont
12.3
12.3
0.0
14.9
11.1
3.8
15.8
10.9
4.9
15.7
10.6
5.1
15.5
10.3
5.1
15.3
10.1
5.2
89.4
65.3
24.1
Other nevenue Eftocts
Exclusion of HeaNh Insurance from Cafeteria Plans
Effects of Mandate, Cost Containment, and Subsidies
Dedicated Revenues for Academic Health Centers
Assessment on Employers for Retiree Subsidies
Anti-Abuse Rule — Certain 8 Corp. Shareholders
Modify Tax Treatment of Certain Heatih Care Orgs.
Reporting Penalties — Nan-corp. Ind. Contractors
Modify Tax Treatment Retirement Funding Accounts
Recapture Retiree Subsidtes Hi^i-Income Recipients
Incentives for Health Providers in Shortage Areas
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
-0.0
0.6
0.0
-0.1
0.5
0.0
0.2
0.0
0.1
0.0
0.0
-0.0
8.1
5.0
0.7
1.7
0.0
0.5
0.1
0.1
0.0
0.0
-0.0
19.0
7.7
3.6
4.5
2.4
0.5
0.2
0.1
0.1
0.0
-0.0
27.2
8.3
8.0
5.6
4.4
0.5
0.2
0.1
0.1
0.1
-0.0
31.3
8.9
10.8
5.9
4.7
0.5
0.2
0.1
0.1
0.1
-0.0
86.3
29.9
23.0
18.2
11.4
2.2
0.7
0.5
0.3
0.2
-0.1
0.3
0.6
0.5
0.2
0.5
2.0
4.0
15.1
27.9
45.6
78.0
110.7
131.7
408.9
Fiscal Years
Debt Service
TOTAL
(a) Under t h * propoaed laglatetton. Ihe Secretary of Defenee la to decide when the military eyatem will be coordinated wtth national health refonn. Thia table ahowa the
••tint a tad budgetary effecta on the Department of Defenee K the military ayatem were to be fully coordinated wtth national health refonn by F Y 1998.
�Financing Health Care Reform
Uses of Funds (billions of dollars)
30-NOV-93
1995
1996
1997
1998
1999
2000
1995-0(
veterans. WIC, Public Health, Medicare and New Administration
3.1
6.5
9.6
10.4
11.3
11.7
52.6
Veterans Health Care Investment Fund
WIC Enfiancement
New Public Health Initiatives
Net New Spending on Acad. Health Ctrs. and Medical Educ.
Total Spending
L e s s Current Medicare Funding
Advance Practice Nurses (Medicare)
New Federal Administrative and Start-Up Costs
10
00
04
00
59
-5.9
00
1.7
0.6
0.5
1.5
2.7
6.3
-3.6
0.3
0.9
1.7
0.6
26
3.2
68
-3.6
0.5
1.1
0.0
0.6
3.3
4.4
8.0
-3.6
0.5
1.6
0.0
0.7
3.7
5.5
9.5
-4.0
0.6
0.8
0.0
0.7
3.8
5.7
9.6
-3.9
0.7
0.9
3.3
3.1
15.3
21.5
46.1
-24.6
2.5
7.0
0.0
5.2
8.8
12.2
16.0
20.1
62.2
00
0.0
00
00
00
4.5
6.9
-24
0.5
0.2
7.8
11.2
-34
05
0.5
11.0
14.7
-3.7
05
07
14.7
18.7
-4.0
0.5
0.8
18.7
23.0
-4.3
0.5
0.9
56.7
74.5
-17.8
2.5
3.0
0.0
6.6
13.5
14.2
15.2
16.2
65.8
00
00
8.2
-1.6
16.3
-2.8
17.5
-3.3
18.7
-3.5
20.0
-3.8
808
-15.0
100% Tax Deduction for Self-Employed Health Insurance
0.5
06
0.9
1.7
2.9
3.1
9.7
Premium Discounts (Subsidies)
Premium Discounts (Subsidies)
0.0
0.0
7.3
5.7
18.4
13.9
48.0
35.8
44.5
31.8
42.9
29.8
161.1
117.1
Total Premium Discounts (Subsidies)
Employers (net of cushion)
Non-retired Households (net of cushion)
Retirees — low Income subsidies (net of cushion)
Retirees — added subsidies (net of cushion)
Out-of-Pocket
Total -Cushion'
00
00
0.0
0.0
0.0
0.0
0.0
12.8
3.9
6.0
0.9
00
03
1.6
35.7
10.9
16.7
2.6
0.0
1.0
4.5
96.3
27.9
437
6.9
3.0
2.6
12.2
100.6
28.3
45.5
7.2
4.2
2.7
12.7
103.6
28.6
47.3
7.4
4.4
2.8
13.1
349.0
99.6
159.3
25.0
11.6
9.4
44.0
Offsets Made Possible by Health Reform:
00
-5.5
-17.3
-48.3
-56.1
-60.7
-187.9
Medicaid
States' Required Maintenance of Effort
Discontinued Medicaid Coverage
Basic Benefits
Net Wrap-around Benefits
00
0.0
0.0
00
00
-4.5
-2.5
-2.0
-1.9
-0.1
-14.3
-7.4
-6.9
-6.5
-0.4
-40.3
-20.6
-19.7
-18.5
-1.2
-48.1
-21.7
-26.4
-24.7
-1.7
-52.7
-22.6
-30.1
-28.0
-2.1
-159.9
-74.9
-85.0
-79.5
-5.6
Medicare Offset for Employed Beneficiaries
0.0
-1.0
-3.0
-8.0
-8.0
-8.0
-28.0
36
26.1
51.3
86.5
89.9
94.0
351.3
11.5
1.8
-5.7
-8.5
20 8
37.7
57.6
45.6
78.0
110.7
131.7
408.9
Fiscal Years
L o n g - T e r m Care
Net Home Based Care tor the Disabled
Total Spending
Medicaid Offset
Ltoerallzed Medicaid Eligibility
Tax Incentives for Long-term Care
Medicare Drug Benefit
Benefits, Administration, and Pharmacists Costs
L e s s Rebate
Net of Cuahion
Total Spending
Deficit Reduction
TOTAL
::
• ' 15.1 :• •:.(' •:•'•<: 27.S
:
�Cost of Premium Discounts
(Billions of dollars, 1995-2000)
500
400
$349
rrr.
•veiiMlHliiP
Cushion $44
300
200
Out of Pocket $9
$188
/taiiiiB-aiiipli
Families $184
Medicare $28
State Maintenance
of Effort $75
Early Retiree $12
100
Business $1
0
Gross
m
$161
m
Net $161
if-.
Medicaid $85
Offsets
Net
�Billion Here, a Billion There
By Uwe E. Rtinhardt
T
Pf.SCtTO*. s i.
,
ContrtMxmil
tudt«< Oftict f o n e i i i
m i i p n n | iftit i l cur'
rtni i n n a i . I M L'mifd
S u i t i will iptiM 1> ptrctnt of i u | r o u nttionI I proouci on httlUi cart in M y u r
:000 up from 14 ptrctrn lodty Mmx i s i b i t ' " mouitd A m t n c i i pundiu.
7>!ii :tvtl of Mttlth iptnamf. mty
iii<3. .Quia amnrupt tnt country
rhu
Prtnaeni C:mton DropoloJ
:o 5r:n| i n n proitciffl |n:wtn ao»n :o
3niv ' :" percem of 'Jie C N P 5v Jie
..eir 2000
ImpomDie'
ihouieo
*rrer-:ci i sunOits. 5uch i netp 3*::ine :n ipenami *ouia > i d '.c rn;onng M c i r t . 'Jiey irguea
*'iiiit A m e n c i n j i r e 'Jiui meandering rron". despair over the prospea of deprivation n ;" percent io
ingsi over financm collapie i t \ i
percent, no oUier mduitnaiiwd nan *ouid even coniempiatt iptndis .Ttucn i s
percent of its
• ? Dn nemn cire m d none of
•.ic~ ipe.idi even 10 percent today
*>•>• !r!er snouid Prtsideni Cluiion
m»ae -.o mow i : percent is i n
J i l u n b i t joii'> It is the Presi:r:tics * i w WouM demoni:rite -.rn :. :s j n i t t i m i o i e
Let u> exirr.me -.he proiectrt cuts
ice-dng Dn Meoicire. ine neiltn
rsj.-ance progrim for Americi i
't—B'ZI
i S-l'tliO'
50-
•.:er . For -.nat protram. tne Presi:er![ Aouid illaw annual spending to
rc.-'ise m m l ; y S Pillion in I M ] to
is mucn i s ICT ( billion rn the year
:000 T h i ! represenu i n a v t n f t an- . j i i :ompound ifowvh rata of ?1
percent C m America s pfiyMOanj
-•ail> :oo> the t u p a y t r IB d a t y t
jno irgue U I I L evtn acooiaiBf for
nfiitior for 120: t billior Oxy eouM
io'. '.rest tne eiderly properly tn me
..eir 20O0
1
T3 put mat Question in persotctive.
:onsiaer some fascinating data publisned m The New England Journal of
Medicine on Marcn «. 1»M Tht aurs of i n i m c l e on Medicart spendin cines found J i n . m IMS. liter
.usung for differences in age tnd
gender. Medicare piymenta for docV i care, per beneficiary, vaned
im lows of M22 in Minneapolis. W I
San Francisco and ttS« m Sew
York City to night of l l rtJ in Detroit.
tl.UT in Fon LaudtrOale and 11.1*4
in Miami.
ihould not Atoenca s physicians,
and the legitlaiori from tht high-cost
sutes. be matft ta defend thtat differentials to the tu-peying public
Suppose CongrMa artKranly slashed
Vedicire reimBunemenu for Miami
phyiicianf by a glotaf a percent.
v e n after this budget c u t Miami
v i i c u n i would n i l ! be ibsorbmg 37
rceni more Medicare dollars per
peneficiary than would their cole
Clintons spending
cuts will work.
leagues m Mew Yom. md over J
O
percent more -.mn '.neir coilngues m
Minneapolis
Ccnsider mother x m t Mmv cr-.t
ics i r g j e '.hat '.ne )" •nuhon c j r r t m l y
jnmsurec Amer.cins :ru:d iot possi
3iv pe icccmmoaitea i t ipenamg
.eve:s or or!i> :" percent pf -.ne
G N P Oddly enough, some pf :ne
s i n e :r iics iiso issert t h u these
l
HEALTH CARE
SECOND OPINIONS
Americans rnereiy lack htaiift insurance, noi neaith care ror ihey aileg« [ v receive adequate treatment at
the expense of p i y i n | patients '-0
wnom tne con of ifiai chanty care is
imfted
But A the jmnsured already get '.re
rare :. t<y need, wfty rtoutd injuring
:r:em *;> z\ i iudden oreak the njnonk\ San*' On
point too opponents
of the President i nea.tn : i r « s u n
mould try narder to get meir nones
straigm.
The Clinton Adrninijtr»i:or. \ zr^pot*'
complex enougn '.a ;ffer j r y
wouid-oc cntic many targetj y. :c
portunuy It is puzzling '.nai "e
spending forecast :» :r.:e! irr.:-?
tftem Sure, me Prestden'. rouifl t \
plain his forecast Miter '. .»n -« - J I
so far. me j«crecy lur-ourdirg -.-e
basis of h!S numbers s
9ut
the burden of proof on
rsiuf sugrt
not :o rest * i t n :fte Presideni .'i rests
on :he shoulders of n,j crnxs .'or :i :j
:hev ^nc " j ^ e Tiuch explaining '.o
30
I
b
1
fc
�COST ESTIMATES
SUMMARY PAGE
UNPRECEDENTED PROCESS OF OUTSIDE REVIEW AND INTERGOVERNMENTAL COOPERATION
•
A wide array of non-government and government actuaries analyzed the
numbers process
•
The process gives us great confidence in our numbers
CONSER VA TIVE NUMBERS LEA VE OUT MANY SA VINGS
•
Our estimates are conservative; we claim no savings from administrative
simplification or regional cost differences
VALIDA TION BY A CTU ARIES
•
It was essential that experts independent of the policy process review the
methodology
•
These actuaries strongly support the process and the resulting estimates
QUOTES FROM EXPERTS
•
The process was very thorough
•
The best possible cost estimates were reached
•
The cost containment strategy will work
•
Cost containment will not lead to rationing
•
Universal coverage and savings go hand in hand
•
Real world comparisons can be made
•
Senator Moynihan has had a change of heart
DEFENSE OF HISTORICAL MEDICARE COST PROJECTIONS
•
This criticism is exaggerated and unfair
•
Times have changed, and our ability to forecast has improved
•
At the same time, we recognize the difficulty and importance of getting the
numbers right
ARTICLES
"It Will Balance Just Fine," LA. Times, 10/7/93
•
"Actuaries Defend Process, Assumptions Used in Review of Clinton Health
Plan," Wall Street Journal, 10/12/93
"Clinton's Conservative Health Plan," Wall Street Journal, 10/20/93
i/data/healthcare/costest.sum
12/2/93
�COST ESTIMATES:
A Thorough Process, A Conservative Result
SUMMARY:
TTie health care financing analysis undertaken by the
administration has been rigorous, using the best analytical
talent inside and outside the federal government. In
creating the analytical foundation for our estimates, there
was an unprecedented degree of outside review of our
assumptions and methodologies from nationally
recognized consulting and accounting firms and from
Fortune 500 companies. That's why we 're so confident
that our estimates are both credible and conservative.
UNPRECEDENTED
PROCESS OF OUTSIDE REVIEW.
•
Urban Institute modelers and a team of non-government actuaries and
health economists followed the model building and estimating process
throughout, and offered analysis and suggestions. They immersed
themselves in the models early on, made significant contributions to
the methodologies finally used, and came away impressed with the
amount of analytical rigor underlying the models and with our
commitment to accuracy and prudence.
UNPRECEDENTED
INTERGOVERNMENTAL
COOPERATION.
•
I n addition to the outside groups, a team of actuaries and health
economists from all the branches of government that do financial
analysis and cost estimating set up a working group back in February,
and have been working together ever since. They have shared data
and worked through assumptions and methodologies in much greater
detail than has ever been done before.
•
Estimating one seventh of the nation's economy is obviously an
immensely complex task. Reasonable people differ about assumptions,
so we tried to consistently err on the side of conservatism.
THE PROCESS GIVES US GREAT CONFIDENCE IN OUR NUMBERS.
•
We invited outside review and validation for one reason: to get the
best data available validated by the best people possible so that the
national debate could focus on the policy itself. Several independent
economists have validated both the process and our cost estimates
gives us strong confidence in our numbers.
�CONSERVATIVE NUMBERS LEAVE OUT MANY SAVINGS.
•
All of the savings we beheve are achievable through competition,
through cutting bureaucracy, through cracking down on fraud, and
through a new emphasis on prevention -- are not counted in our tables
as savings estimates. Despite the evidence of lower costs in parts of
the country where these reforms have taken hold, despite the fact that
virtually everyone agrees that there's enough waste and bureaucracy
in the system to wring out several billion dollars by streamlining
paperwork, we claim no savings from these initiatives so that the
credibility of our numbers and the standards of our rock-solid process
will be beyond reasonable dispute.
i/data/healthcare/costest.doc
12/2/93
�THE WHITE HOUSE
Office ofthe Press Secretary
For Immediate Release
October 8, 1993
STATEMENT BY IRA C. MAGAZINER
In early spring of 1993, the White House assembled a group of actuaries from nationally-recognized accounting and actuarial firms -- to be involved
from the beginning in examining the cost estimates for the President's health
care reform proposal.
We considered it essential that experts who were independent ofthe policy
process review the methodology used to develop the premium and subsidy
numbers, which represent the fundamental building blocks ofthe reform
proposal. This outside Cost Audit group was not required to support the
policy itself -- just to verify the validity of the cost estimates. The actuaries
were asked to question the assumptions, substantiate the numbers, examine
the models, and communicate independently with each agency involved -- to
verify that both the process and the estimates were valid and accurate.
As the attached letter indicates, these actuaries maintain that "...theprocess
was very thorough" and the methodology and assumptions "...soumi and
reasonable" They further confirm that "...these cost estimates are the best
available at this time and are suitable for planning purposes."
The expertise of the Cost Audit group was appropriate for the premium and
subsidy estimates. They were not asked to validate the estimates of savings
projections from administrative simplification, competition and prevention QT
the estimates of the federal (Medicare and Medicaid) savings. Another group
of outside experts was consulted regarding the savings projections from
competition and Medicare and Medicaid experts - from the Department of
Health and Human Services and the Office of Management and Budget participated in the development of federal spending projections.
We insisted on this unprecedented degree of outside review and validation in
developing the health reform proposal for one reason. We wanted to get the
best data available validated by the best people possible so that the national
debate would be able to focus on the policy itself and its implications for the
American people.
�QUOTES FROM EXPERTS
THE PROCESS WAS THOROUGH:
•
"We found that the general methodology and assumptions used in developing the
cost estimates for the non-Medicare, non-Medicaid population were sound and
reasonable. The process was very thorough. The staff is very capable and we are
confident of their ability to apply the assumptions and methodology." [Richard
Ostuw, Chairman of the Cost Audit Group, 10/8/93]
•
"I think the calculations are honestly done, using the best techniques available, if
one presumes enactment of the program the President has called for...The
administration has consulted widely, looked at various projections and took the
set that seems most likely." [Henry Aaron, Brookings Institution, Orlando Sentinel.
9/36/93]
THE BEST POSSIBLE COST ESTIMA TES:
•
"We believe that these cost estimates are the best available at this time and are
suitable for planning purposes." [Richard Ostuw, Chairman of the Cost Audit Group,
10/8/93]
•
•
"The premium cost estimates and the methods and assumptions used were the best
possible within the context of a very challenging process." [John M. Bertko, Member
ofthe Cost Audit Group, 10/8/93]
•
"There's no point in questioning simply whether the numbers 'add up.' Of course
they add up arithmetically." [Yale University Professors Ted Marmor and Jerry Mashaw,
L.A. Times. 10/7/93]
•
"We found that the national premium cost estimates of the standard benefit plan
on a bully phased-in-basis were the best available and that the methodology and
assumptions were sound and reasonable...These base year premium costs
estimates are reliable on a national level for making decisions regarding the
standard plan's benefits levels and the associated subsidies." [John Bertko, Member of
the Cost Audit Group, 10/8/93]
•
"I remain convinced that the financial data with respect to those areas of the
proposal which we were asked to review are well within the reasonable range of
results and are satisfactory for decision making purposes." [Kenneth W. Porter,
Manager & Chief Actuary, DuPont Corporation, 10/8/93]
•
"The Clinton reform projects Medicare growth rates to be 4.1 % by the year 2000
...Why is this not a plausible, even a conservative estimate?" [Yale University
professors Ted Marmor and Jerry Mashaw, L.A. Times. 10/7/93]
�"[The plan is] realistic [and an] excellent foundation." [Phil Nudelman, Chairman of
Groups Health Cooperative at Puget Sound, Wall Street Journal. 10/1/93]
THE COST CONTAINMENT STRATEGY WILL WORK:
•
"In reality, the administration's cost-containment goal is modest...[it] permits
about a 3 percent increase in the share of GDP going to health. This plan does not
try to shrink health spending relative to where we are now. No health care jobs
will be lost, though fewer jobs will be added in the future." [Stephen Zuckerman and
Jack Hadley, Washington Post, 11/7/93]
•
"The Clinton proposal relies on competition among plans, but limits the amount
of tax-subsidized dollars that can flow into the system and requires the
development of a potentially regulatory framework for limiting total spending.
This is a compromise. But, its acceptability and likely success may be greater
than either pure alternative." [Stephen Zuckerman and Jack Hadley, Washington Post.
11/7/93]
•
"Private insurers will no longer be willing to pay providers prices that are 30-40%
above Medicare, nor should they. Providers will be able to survive with lower
prices for private patients, because universal coverage will mean an end to
uncompensated care and low prices for Medicaid beneficiaries." [Stephen
Zuckerman and Jack Hadley, Washington Post. 11/7/93]
COST CONTAINMENT WILL NOT LEAD TO RATIONING:
•
"(T)here is sufficient excess capacity so patients don't have to worry about being
harmed [by the Clinton plan]." [Wall Street Journal. 10/1/93]
•
"How will the system respond to these constraints? The specter of sick patients
being unable to receive care is completely farfetched. The U.S. health system is
fraught with inefficiencies and excess that have no measurable health benefits."
[Stephen Zuckerman and Jack Hadley, Washington Post. 11/7/93]
•
"[The Clinton plan] would produces some administrative savings and would
substantially reduce administrative hassles ... What the insurance industry bums
up in commission, marketing and claims processing costs is almost unspeakable.
Clinton would reduce those costs." [Princeton professor Uwe Reinhardt, New York Times.
9/24/93]
UNIVERSAL COVERAGE AND SA VINGS GO HAND IN HAND:
•
"We cannot have real savings and real cost containment without universal
enrollement. ...Only with universality can we eliminate the practice of making
�patients with insurance pay the medical costs of those without it." [Rashi Fein, New
York Times, 10/28/93]
"It is the experience of every industrialized democracy with a universal health
insurance program that cost control becomes easier when the plan is universal, not
harder...the counsel currently offered by critics ~ go slow in adding new benefits
until we can assure everyone that the savings are real ~ is advice that is likely to
doom the plan to failure. Universalism and cost control go hand in hand.
Otherwise it is politics as usual, full of special pleading." [Yale professors Ted
Marmor and Jerry Mashaw, L.A. Times. 10/7/93]
"I'm generally heartened [by the Clinton plan]. I think the fundamental strategy
[the plan] embraces is the correct one, which is to build on the private insurance
and government programs that already cover most Americans, perfecting that
system and subjecting it to a degree of budgetary control. I'm not wholly
persuaded by some of the details in the proposal, most importantly by the speed
with which the savings projected in the plan would be realized. But that's a
second-level concern almost any observer not directly involved in the particular
design produced by the President's advisors might have. They shouldn't detract
from my belief that the President has laid out the right starting place from which
negotiations regarding a final plan should begin." [Henry Aaron of the Brooking
Institution, Orlando Sentinel. 9/26/93]
REAL WORLD COMPARISONS:
•
"Companies in the private sector commonly make decisions on more limited data
and analysis than this." [Richard Ostuw, Chairman of the Cost Audit Group,
10/8/93]
•
"These estimates also pass a 'real world' test." [John M. Bertko, Member of the
Cost Audit Group, 10/8/93]
MOYNIHAN TURNAROUND:
•
"I feel very comfortable about the administration's position [on financing]."
[Senator Moynihan, USA Today, 10/1/93]
i/data/healthcare/actval doc
12/2/93
�HISTORICAL MEDICARE COST PROJECTIONS:
A^O BASIS FOR COMPARISON
Skeptics of the budget forecasts in the President's health care reform plan often point to
the experience of the Medicare program.. When the Medicare legislation was enacted in
1965, the program's long-range cost estimate was that hospital insurance (HI, or Part A)
benefit payments would be about $9 billion in 1990. Actual 1990 benefits were more
than $66 billion, about 7.5 times the predicted amount. [Adjusting for inflation and
program expandions, a more fair ratio of actual to predicted would be about 3 to 1.]
CRITICISM IS EXA GGERA TED AND UNFAIR:
•
Much of the divergence between the actual and projected dollars in benefit
payments has nothing to do with health care: the general price level is simply
much higher than anyone would have predicted in 1965.
•
Another reason that the prediction wwas too low is that the Medicare program has
been broadened. For example, non-elderly disabled persons and those with
chronic kidney disease are now covered. Failure to predict these new
expenditures is not a forcast error.
TIMES HA VE CHANGED, AND OUR ABILITY TO FORECAST HAS IMPROVED:
•
The people who are preparing the budget estimates for health care reform have
more data and better computers than their counterparts had in 1965.
•
We also have accumulated almost threee decades of experience in projecting
Medicare and Medicaid expenditures.
STILL, WE RECOGNIZE THE DIFFICULTY AND IMPORTANCE OF GETTING
THE NUMBERS RIGHT:
•
Treasury and other agencies are making every effort to make our budget
projections accurate.
•
We have called in outside experts to review and validate the estimates.
•
Our estimates are conservative
i/dau^ealthcare/medicare.est
12/2/93
�Copyright 1993 The Times Mirror Company
Los Angeles Times
October 7, 1993, Thursday, Home Edition
SECTION: Metro; Part B; Page 7; Column 3; Metro Desk
LENGTH: 1068 words
HEADLINE: PERSPECTIVES ON THE CLINTON HEALTH PLAN; IT Wll I
BALANCE JUST FINE; THERE IS PLENTY TO DEBATE, BUT THAT DOI SN 'T
INCLUDE WHETHER THE PROPOSED FINANCING 'ADDS UP.'
T
BYLINE: By TED MARMOR and JERRY MASHAW, Ted Marmor teaches pi.Mio
policy and Jerry Mashaw teaches law at Yale University. They are co-authors of
America's Misunderstood Welfare State (Basic Book, 1992).
BODY: President Clinton in recent days has been out talking with ordinary
Americans about how his health-reform proposal will help meet their need for
insurance security and affordability. Meanwhile, back on the talk show circuit ami in the
press, most of the conversation is a form of anxious hand-wringing about whether ihe
President's numbers "add up." Words like fantasy and hopelessly unrealistic are tlir..wn
around whenever the topic turns to finance. Critics in Congress and elsewhere h.-i* e tried
to focus everyone's attention on the single issue of "How are we going to pay for i f
We have not been, nor are we now, partisans of the particular plan the Preside m has
put forward. But the questions about the plan's cost and financing are being posoi in the
wrong way ~ a way that will discourage productive debate.
Asking these questions in the right way would lead to very different perspective*- on
what might be right or wrong with the reform plan the President has offered.
First, there's no point in questioning simply whether the numbers "add up." Of enurse
they add up arithmetically. Hillary Rodham Clinton, Ira Magaziner and their task force
members are not dopes. The critical issue concerns the assumptions built into the
numbers in order to make them add up. For the President's financial estimates, three
sets of assumptions are crucial. It is the relative uncertainty about the assumptions that
feeds the "do the numbers add up" frenzy.
�Estimates of premium costs -- of how much a family would pay for medical coverage -and population growth are the least uncertain. One can quarrel around the edges - ihe
amount of small-business subsidies, for instance -- but it is not a huge trick to look at
existing payments for the type of plan the President has proposed and come up wiih
reasonable predictions. The President's plan does that, and population growth will not
surprise us much over the period for which the numbers are projected ~ from now until
the year 2000.
The second set of numbers in the President's projections is more controversial. The
Administration estimates that gross domestic product will grow between 4.2% and 5.4%
over the whole period, with inflation never rising above 2.7% a year. These, admiuedly,
are optimistic estimates.
The question, however, is how these projections relate to the Clinton reform proposal.
Is the accuracy of these estimates critical to whether the plan's financing "adds up?" The
answer is "no." The financing plan does not rely on some particular percentage of growth
or inflation. Instead, it pegs limits on spending to these growth rates.
The real question to ask is exactly how the President's program proposes to tic health
spending to these numbers, whatever they turn out to be. This in turn depends on how
effective the techniques for containing costs ~ such as capping insurance premiums -- are
likely to be. It is not a question of whether the economic projections are realistic in the
sense of being precisely right.
Finally, the President's financing relies critically on revenues from certain "sin" taxes
and "savings" from the Medicare and Medicaid programs. The sin tax revenues may be
somewhat overstated but could easily exceed the current estimates if Congress persuades
the President to change his mind and support new taxes on beer, wine, and domesiieally
produced liquor.
The real trouble arises, according to the pundits, from estimates of future savings in
Medicare and Medicaid. The critics seem to assume that these programs are sacrosanct
or, alternately, rapidly growing and politically uncontrollable.
How did these critics get to be so pessimistic? The growth rate of Medicare's hospital
expenditures per enrollee was 6.9% annually in the period 1980-83. But when the
government imposed reasonably effective payment constraints on hospitals in 1983, the
results were dramatic. The growth rate per enrollee between 1983 and 1988 was only
1.3%. The Clinton reform projects Medicare growth rates to be 4.1% by the year 2i»00.
In short, the rules controlling physician payments and pharmaceutical prices, combined
with changes in the age distribution of the population, have generated projections that
expenditure growth will be higher by the year 2000 than in the 1983-88 period. Why is
this not a plausible, even a conservative, estimate?
�Some critics will answer that Medicare's regulation of costs was effective in the past
only because hospitals (and now doctors) could "shift" some of their costs to private
payers. Again, this objection seems plausible, but it ignores the facts.
Under a plan that limits all payers, this cost shifting would not be possible.
It is the experience of every industrialized democracy with a universal health
insurance program that cost control becomes easier when the plan is universal, not
harder.
The explanation is simple. When everyone is in the same boat, special pleading that
leads to a breakdown in regulatory controls or shifting of costs becomes more difficult.
Common gain and common sacrifice are a reality and radically transform the politics of
medical financing.
Equally, a universal system makes someone accountable for overall costs in a way that
cannot be ignored or avoided. If the Congress and the states fail to develop constraints
that meet spending targets, the taxpayers will know about it. This is not politics as
usual, something the critics fail to acknowledge.
Therefore the counsel currently offered by critics ~ go slow in adding new benefits
until we can assure everyone that the savings are real ~ is advice that is likely to doom
the plan to failure. Universalism and cost control go hand in hand. Otherwise it is
politics as usual, full of special pleading.
There are valid concerns about the workability of the Clinton proposals. The
employment-based premiums, avoidance of general taxes and reliance on uncertain
techniques of cost control (particularly in the competing health plans) - all should give
pause. There are safer, more reliable and more effective ways of organizing health
insurance and health finance for all.
The real issue is how to get a sensible health system in place by the end of this
decade. Fixation on the current Clinton numbers or the cynical politics of the moment
will not get us there. In these respects, the critics have not yet started to ask the right
questions.
GRAPHIC: Photo, TED MARMOR ; Photo, JERRY MASHAW
LANGUAGE: ENGLISH
�The
also used
to
Actuaries Defend Process, Assumptions outactuariesimplicationsthe letter as
spell
what they didn't do. such
addressing the
of altering
Medicaid and Medicare, or assessing the
Used in Review of Clinton Health Plan savings from "managed competipossible
tion."
able wilh one of the major policy decisions
embedded In the Clinton plan: the swiftness with which caps on private-sector
WASHINGTON - A group of Indepen
deal actuaries that reviewed aspects of Ihe health spending would be imposed.
In their letter to Mr. Magaziner. the
CUnlon health care proposal has formally
terlified that Ihe methods and assump- actuaries said their focus was on evaluatliuns used lo calculate Ihe private sector ing Ihe cost of Ihe federally guaranteed
premiums in the plan "were sound and benefits package - put al an average of
about $4,200 per family. They also contenreasonable."
Yei in a letter to senior White House Irated on the cost of government subsidies
aide Ira Magaziner. the group of six actu- lhat would help small businesses and lowaries and one economist also was careful to Income individuals pay for Ihe benefits
note lhat Its review didn't cover the cost or package. The actuaries said, however, that
savings estimates for the entire plan. "our review of Ihe cost of subsidies was
Moreover, the letter said. "Policy Issues less comprehensive because of the nature
of Ihe databases used by (hose performing
were outside the scope of our role."
The actuaries found themselves in Ihe Ihe calculations."
sputlighl alter President Clinton mentioned Ihe group in his health-care address
lo Congress last month. "So then we gave
these numbers to actuaries for major
accounting firms and major Fortune 500
companies who have no slake in this other
than to see thai our efforts succeed. So I
believe our numbers are good and achiev
able." Mr. Clinton said.
In Interviews after the speech, several
of the actuaries said (hey thought people
could have misunderstood their role in
light of the preshdent'i remarks. Some of
them said they weren't entirely comfortBy RICK WAITZMAN
Mn/I
Hi porl.-r O / T I I K W A I . I . S T U K ^
JUKHNAI.
Overall, thetetterpraised (he process
for developing (he cost estimates as "very
thorough."
The seven memben of the group are:
Richard Ostuw. Ihe chief actuary at
Towers Perrin In Cleveland; Howard Atkinson, who runs his own actuarial firm In
suburban Washington: John Bertko. a
principal wilh Coopers It Lybrand In San
Francisco; Brent Greenwood, a principal
at Towers Perrin unit Tillinghast in Minneapolis; Richard Helms, an executive will.
Principal Financial Group in Des Moines,
Iowa; Kenneth Porter, chief actuary at
DuPont Co. In Wilmington. Del.; and Jack
Rudgers. a health economist with Price
Waterhouse in Washington.
7
3
Separately. Ihe While House said it had
no Intention of reducing the benefits that
low Income and disabled people now receive under the Medicaid program. The
New York Times reported yesterday that
coverage of some extra services, such as
transportation assistance and special education services, could be Jeopardized under
the Oinlon health plan because (hey aren'l
Included In (he federally guaranteed benefits package.
A Sept. 7 draft of (he health plan
mentioned the possibility of providing
grants to state governments lo finance
such services. Administration officials
said ihey have already calculated the cost
of Including these services for the Medicaid population. They said they're now
trying to figure out how to administer
them. "There Is no way we are going lo
take away Medicaid benefits that people
already have." said Kevin Anderson, a
White House spokesman.
�i^^H
•AY. OCTOBER 20. 1983
THE WALL STREET JOURNAL
Clint jUs Conservative Health Plan
'-•'b.-j
By Auci It f '
The CUntonftdminittntfeB'iplan (or
fixing what ails the Amertcan health care
system U bold ud comprehensive, b t
u
hanlly radical. iDdeed. R ts eonsemtive
in at least time of tbe macs of that term.
First, it reforms the tysttn with minima! disruption to the bask m d of paying
oe
for health care that Amerlcus are used
to-employer-based imunnce. Second, it
relies primarilyOTmarket incentives, not
government regulation, lo control escalating health care coau. Third, it can b fie
nanced-without smoke and mirrors -pnmanly b reallocating resources already
y
devoted to health care and does not require
large tax increases.
Almost everyone agrees that if w are
e
to have the productive, competitive, flexible economy that we all want, we cannot
allow the "health care tax" to conunue rising W are already using ffi of our gross
e
domestic product to pay for health care
Even time we let this "lax"^dnft up another percentage point, we are allocating
an additional ISO billm tyear of the nation s precious resources to liealth care
Moreover, a high-growth economy requires ihat people be able to m v into new
oe
jobs, b t our current system lodu people
u
into jobs and onto welfare out of fear that
they will lose their health insurance. Finally, hanlly anyone would deny that the
way w n w pay for health care cone o
tributes to unnecessary cost increases and
a wasteful use of health Boources
Radical Surrery RcjMtiefl.;
N w that there is sudilnad consensus
o
that the current systenrttfUBishing the
economy, what is to be wot?
The Clinton team fgected radical
surgery such as a sim)e-p«yg system or
government-set health care prices in favor
of restructuring the enrrwt system and
building on its strengths. Ibere are two
types of evidence that well mtnictunng
can work. First, health maintenance organizations and other groups of providers
compensated o a per-captta basis have
n
demonstrated that they Can deliver g o
od
care for appreciably lover, cost These
groups have incentivestoinptaasize prevention, to reduce OMCmary procedures, tests and hnapttaTHaQoei, and to
economize on the acqutoMwt and use of ex ' hSf fcusLiec;
pencive t^uipmeri
expenence has shownfeata Btfge buyer
can negotiate with coaptOaf health plans
-•
and get a m c better deal than k - mailuh
able to individuals and. snail fir j that
lack market power.
' i
The Clinton plan would Dcowafe doctors and other prevtdss o J i t health
plans that would be paid p( capita premiinns. It would give ladMd Us i|H small
employer! access to the nu icet power that
big business has used ao suceessfulty b
y
organizing purchasing t|M ivMkiies
provide health eoverar. cooperatives or
beaith allianca 1 bargUn wtQi beaith
0
would reduce the burden on s VaS.rt to*
plans for the best deal.
^SaS
wage finm. EmpJoyees won ^ure everyone
share In the
cost,The Clinton plan wouldbttlthdtar inwtth a choice of planst ind benefitsat least a choose the of
centivestostandard setmosti tosi^fccwe
benefits that would
opoons changed jobs,not be Virttfan indifor meeting their
vidual Clinton approach beaith needs
beca unemploved
orThe sicL All buslnene reflecttCombined
got consumer incentives. Strong
cBdtfhive to
faith that
"-"fV^"
with buyer power and better intonation
about quality and performance, can rein in
escalating corn. That faith is strong, but
not absolute. II health care premtunscon
tmue rising appreciably faster than Other
pnees. "global budgets" would C Bo the
M r)
rate of increase of premiums, •prmarket incentives work-and the OMM team
believes they will-then the CMPpU wil;
not be necessary .
.
M s of the cost of health e«*3»r.workot
tag people and their fariiUeinjiitid be
shared, as at present, by empHgtrs and
employees. The major n w cafcjv the
e
government would be the subsifiB needed
to make the insurance affordab»t1l,jmall
firms and low-income individuali^'l;These subsidies, along wtthjir*eneflts under Medicare for ow-o<-hai$l|] presenpooc drugs and h m htalOi^re for
o e
the severely disabled, and somfmtr administrative costs, are expecttfl'to increase government health spending b
y
roughly S 3 billion by tbe year » » . when
10
the program is fully up and naajigr. Revenue mcmses-prinapally.'3|tan a
r
:
3
�THE WALL STREET JOURNAL WEDNESDAY, OCTOBER 20. 1M3
Clinton's Conservative Health Plan
growth of Medicare and Medicaid impossible. In the absence of health care reform,
he would be right. Broadened employer
coverage and system-wide reduction of
cost growth, however, make these savings
feasible, while the new prescription drug
and home health benefits under Medicare
make the package attractive to the elderly.
Mr. Feldstein also argued that the Clinton plan's requirement that employers
provide health insurance to their employees will reduce wages and cut tax revenues
to the Treasury. Quite irrelevantly, he calculates how much revenue the Treasury
would lose if no firms provided health insurance now and al) were subjected to a
new TVk payroll tax to provide such coverage. In fact, however, most people are
already covered by employer-provided inworking poor would be covered by their surance, many with more generous coveremployers instead. Both programs also age than the Clinton plan requires. Firms
make huge paymfiflu to hospitals to help whose costs are reduced by the plan will
them cover the cost oPtreatlng the unin- initially have higher profits and ultimately
sured. When everyone has insurance, probably pay higher wages than thev do at
these payments will be sharply reduced.
present.
Increases in reimbursement rates for
providers under Medicare would also be Reduced Impact
slowed-a change made more feasible be- In either case. Treasury revenues will
cause reimbursement for all providers will increase. Employers not now providing
be nsing less rapidly. In addition, upper- health insurance will have to pay more,
income people would pay a large share of but the impact on them will be reduced by
the heavily subsidized premium for physi- subsidies. Very small firms will have their
cian care under Medicare. These specific cost increase capped at 3.5^ of payroll. A
changes in the Medicare and Medicaid more accurate reading of the plan would
rules would reduce the cost of the two pro- have led Mr. Feldstein to the conclusion
grams by more than S100 billion in the year that total wages and Treasury revenue are
2000. The cost of other government health likely to go up if the plan is enacted.
programs-for veterans, federal employThere is plenty of uncenainty about the
ees and military dependents-will also future cost of health care, but two current
grow less rapidly as some of their patients facts cannot be denied One. the U.S. almove into health alliances.
ready has an elaborate health care system
Under current policies, federal health that leaves millions of people uncovered
expenditures are expected to be about $ 8 and whose costs arerisingrapidly Two.
60
billion in 2000-about $ 6 billion of which government already pays more than 40^.
45
will be for Medicare and the federal share of America's health bill.
of Medicaid alone. The administration is
The question now is whether, without
not proposing to reduce federal health scrapping the entire system, we can introspending-only to reduce the annual rate duce incentives that will make health care
of growth from about 105 to about 5 by delivery more efficient, and whether we
%
2 0 as tbe new system phases in.
00
can reallocate some of the resources now
In a Sept 29 article on this page, Mar- bed up in costly government programs to
tin Feldstein argued that political opposi- making insurance affordable for the curtion will make large reductions in the
rently uninsured.
The architects of the Clinton plan believe that we can. and that we owe it to the
American people to try.
huittiy increase in the cirarette tax-are
expected to produce only about $30 billion.
The rest (roughly S100 billion) will come
Irom reallocating resources that would
otherwise have gone into existing government programs.
"
These offsetting savings In other government programs are not. as some critics
have alleged, vague caps or unrealistic
hopes for reducing "waste, fraud and
abuse." Rather, the administration is
proposing specific changes in program
rules that are feasible precisely because of
AA the proposed reform of the pnvate system.
U\
For example. Medicare and Medicaid
cover many working people. Under the
new rules, the working elderly and the
Ms Rnlw is deputu director ofthe Office
of Manaoement and Budoct.
�ds confusio
Ointon plan provides securi
..
WASHINGTON - ^ n W "
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�A Billion Here, a Billion There
By Uwe E. Reinhardt
PKiNcrrow. N.J.
T
ne
Confmsional
Budget O f f m l o r c u n
list tpnng that, t t currtnc trendi. the United
Suieiwillsp*ndl9per.
cent o( i u | r o u netianal produci on neuth care in tAe year
:000. up from n percent today, i m possible' snouted Amenca'i pundiu.
T>iii level ot nealth spending, they
said. *ouia u n k r u p i me coumrv
Pin till. President Clinton proposed
'.o Drmg that proiected growth down to
only
percem ol tfie C N P by Uie
year 2000
impcssibie' ' shouted
America's sundits Such i steep de::ine :n spending would > i d to rmon.ng ol care, tfiey argued
Ahile Americans are Jius meandering from despair over tfie prospect ol deprivation at i : percent to
angst over linencial collapie at 19
percent, no oifter induitnanaed nan would even contemplate spendas mucn as i : percem of its
> P on neaitn care, and none ol
•ncm spends even ;o percent today
'•k'hy, ;ner. snould President Clinton
made to snow i : percent is an
iiausiole goal It is the Presijer: s critics wno should demon>;raie •.nai :t :s unattainable.
1
l e i us enamme ine proiected cuts
.n f e n c i n g on Medicare, the neallh
.r.sj.-ance program lor America's
'-•><' £ Pein-e'dl :s j ' O l n s O ' of 30^riicr-.
?-i;e:on
•icer-.y For '.hat program, the Presi:ent '*ouid allow annual spending to
-crease .'rom J 1 M I billion tn M l to
as mucn as 1207 8 bilhon in Use year
.000 That represenu an a v e n f * annual compound growUi n u of 7.1
percent Can Amenca'i ptiytfclani
-»aiiv ,0011 the taxpayer in the eye
ano argue that, even accoasunf for
ntianor lor 1207.S billion they could
.io: •.reat the elderly properly In ihe
• ear 20<XP
To oui mat question m perspective.
Clinton's spending
cuts will work.
Ieigu«s in S e * York, and over 90
percent more ;n*n meir colleagues m
MinnetpoJis
Consider mother point Manv e n
ici argue '.hat me 3" million currently
uninjured Ampr.'Cans could noi poist6iv ae acrcr-modaied n spending
levels of only' ! percent of me
G N P Oddly enough, some of the
same :-:tics also assert ihat these
_
HEALTH CARE
SECOND OPINIONS
An fHv.ision.if st
Americans merely lack healUi insurance, not nealth care, for ihey allegedly receive adequate treat mem at
ihe expense of paying patients to
whom the cost of that chanty care is
shifted
But if the uninsured already get -.he
care they need, why should insuring
'.hem all of a sudden break the national Oank On tf.:s point, too. opponents
or the President s health care plan
should try harder io get their stones
straight.
T>e Chnion Admmisi.-aiion s r o posai is compien enough -.o offer ir.\
would-be crmc many targe'.s 3' :cportumty It is puzzling -.nai " e
spending forecast 'S
aTi:r.?
them. Sure, tne President csud
plam his forecast better '.nan ne IAS
S far: the secrecv surrourdir.g
O
basis of his numbers is puiz:irg 3ui
the burden of proof on this issue ougr.t
not to rest with the President It rests
on ;he shoulders of rus enncs. 'or it :s
they who nave much explaining -.o
ao
1
:onsicer some laKinating data published m TTie New England Jwitmal of
Medicine on Marcn 4. 1993 The aurs of an article on Medicare spendin cities found ihat. in 19*9. alter
.usung (or differences in age and
gender. Medicare payment! for docv i care, per beneficiary. a n e d
im lows of U22 in Minneapolis »72
San Francisco and MJ< m New
York City to highs of 11.493 m Detroit
t l . U T in Fon Lauderdale and JI 8:«
m Miami.
ihould not Aisenca s pfiyaicians.
and the legif laton from the high<ost
nates be made to defend thoae differential! to the tu-payutg p u b l i c
Suppoae Congreai arbHrinly slajhed
Medicare reimBunemenu for Miami
phyaiciani by a global 20 percerL
v e n after this budget cut. Miami
ysicians would m i l be aMorbrng }7
rcent more Medicare dollars per
beneficiary than would their colv
c
, ,
YORK * , f
r
�0 l660U/rjV5
�DISCOUNT ESTIMATES
The Health Security Act provides discounts on the price of insurance for small
businesses and low-income people. But the plan also sets a limit on the amount of
these discounts that can be spent automatically. If the amount specifiedfor discounts
-- plus a cushion of 15% is spent — Congress has to review the discounts and take
action to either limit spending or raise additional revenue. This trigger represents the
President's strong commitment to financial responsibility.
TALKING ABOUT THE ESTIMA TES:
To discuss the discount estimates, there are generally used terms:
• Gross discount: Payments by the Federal government to low-income individuals
and low wage firms ~ both for premiums and/or for out-of-pocket payments (such
as deductibles and co-payments).
•
Offsets: Money that the Federal and State/Local governments save because some
of the people that used to be on public programs (Medicare and Medicaid) are in
the Allinace ~ and thus cost less than the would otherwise.
•
Net discount: The difference between the gross discounts and the offsets. This is
the number we should be referring to when discussing the discounts as it
represents the true cost of the program.
NET DISCOUNTS ARE $161 BILLION:
• Net Discounts are $161 billion after Offsets of $188 billion are deducted from
Gross Discounts of $349 billion.
THERE ARE FIVE CA TEGORIES OF GROSS DISCOUNTS:
• 1) Twenty-nine percent of the discounts ($100 billion) are for employer
payments. Most of these are to private firms. There is $2 billion assumed for
state/local government discounts, but we do not know exactly how this will be
allocated yet.
It is important to note that small businesses (with fewer than 100 employees)
get 75% of the employer discounts. Of the employer discounts, estimates are
that about 55 percent go to firms with fewer than 25 employees. About 20 percent
go to firms with between 25 and 100 employees, and remaining 25 percent are to
firms with over 100 employees.
•
2) 54 percent of the discounts ($184 billion) are for households. Most of these
payments ($159 billion) are regular payments for families with non-workers
(including unemployed people) or self-employed workers. The rest ($25 billion)
are non-worker discounts to retired people.
Decembers, 1993
�•
3) 3 percent of the discounts ($11 billion) are for early retirees.
•
4) 3 percent of the discounts ($9 billion) are to cover out-of-pocket payments by
the poor.
•
5) The remaining discounts (13 percent) are a "cushion" for the premium
discounts. The cushion is 15 percent of the amount of premium discounts ~ i.e.,
without out-of-pocket payments.
THERE ARE TWO SOURCES OF OFFSETS TO THE DISCOUNTS:
• Savings to the Medicare program - becase workers who are currently on
Medicare are will be covered by their employers ~ is $28 billion.
•
Savings from people who are currently on Medicaid but will not be under reform
(workers and non-cash Medicaid recipients) is $160 billion. $85 billion of the
offset is Federal savings; the remaining $75 billion is state and local.
DESCRIBING THE DISCOUNT CUSHION:
Some behavioral changes ~ both positive and negative — are difficult to quantify in a
program of this magnitude. This is why we have also specifically built in a cushion
for these unknowns, giving us even greater confidence in these estimates.
THE DISCOUNT CUSHION OF 15 PERCENT - APPROXIMA TEL Y $45
BILLION OVER 5 YEARS - IS FOR SEVERAL PURPOSES:
• To cover the additional cost of induced retirement ($1-2 billion/year)
• To cover the cost of firms outsourcing employment of low-wage workers
• To cover the costs of states drawing Alliance boundaries to maximize their
Federal discounts.
• To cover possible overpayment of subsides based on "estimated" income at the
beginning of the year (without repayment once the actual income proves higher).
• To cover creative accounting by corporations to lower premium payments.
• To cover any estimating or other calculation errors.
It is incon-ea4e^ay^iaHh€^sh|on is a pure add-on aj'sSme^it-will
jbtfedly be used for these factors.
December3, 1993
�Distribution of Gross Discounts, 1994 - 2000 ($ billion)
Amount
Type
Percent
Gross Piseoums
Employer
- Private
- State/Local
$100
98
2
29%
28
1
Household
- Non-retiree
- Non-worker discounts to retirees
$184
159
25
53%
46
7
Retiree discounts
$11
3
Out-of-pocket
$9
3%
$45
13%*
$349
100%
Medicare
$28
15%
Medicaid
- Federal
- State/Local
$160
85
75
85%
45
40
Total
$188
100%
Net Discounts
Total
$161
100%
Discount "cushion"
Total
Offsets
* The cushion is 15% of the premium discounts, or 13% of total discounts i.e., for premiums and out-of-pocket costs.
Decembers, 1993
�DESCRIBING THE SMALL FIRM DISCOUNT:
The small firm discount has been expanded and is now available to employers with up
to 75 workers, rather than 50 workers — as mentioned in the 9/7 draft. Extending the
discounts to firms with 75 workers avoids creating an "artificial cliff at which full
discounts were available for firms with 50 employees, and no discounts were
available for firms with 51. This smooth discount schedule permits the level of
discounts to gradually decline based on both wage and size.
Cap on Firm Payments
(Percem of Payroll)
Firm Size
25-50
50-75
Average Wage<25
<$12K
$12-$15K
$15-$18K
$18-$21K
$21-$24K
>$24K
3.5%
4.4
5.3
6.2
7.1
7.9
4.4%
5.3
6.2
7.1
7.9
7.9
5.3%
6.2
7.1
7.9
7.9
7.9
The schedule for firms with fewer than 25 employees is the same as the old schedule
for firms with fewer than 50 employees. The rates for firms with 25-50 employees
are higher than the old rates for these firms. Firms with 50-75 employees, however,
now receive an additional discount below 7.9 percent, where previously they did not.
i/data/healthcare/discounts.kon
12/3/93
December 3, 1993
�<3»
COST OF PREMIUM DISCOUNTS
$B.LL.ONS
400
TOTALS: 1995-2000
$349
OF POCKET
$9
CUSHION^
f44 m
y
•JB
300 -
r ^ ^ - ^
...
RLY RETIREE
$12
$188
$161
200 M EC I CARE
o
CUSHION
$44
3
O
100 . I V / ' - ,'..1]j>.M : hV..' ..-ii-kl,-.
OS
GROSS
r
OFFSETS
r
1 iti-
h
NET
r
11/03/93
��PREMIUM DISTRIBUTION
CONTENTS
Page
TALKING
POINTS
WHO PA YS LESS? WHO PA YS MORE?
Firms
• Families
2
3
HEALTH CARE PREMIUMS
•
What are the premiums - numbers by family status
•
Family share
•
Employer share
• Part-time workers
• Non-workers and the self-employed
• Discounts
• Determining premiums
5
5
6
7
7
8
8
WHO PAYS FOR HEALTH INSURANCE UNDER REFORM?
•
Percent of premiums by employers, households,
10
and discounts (federal government)
EARLY
RETIREES
Description of policy
The cost to the federal government
Benefit to corporations
Induced retirement
Effect on Social Security and Medicare trust funds
i/data/healthcare/distribu apr
12/6/93
V
11
12
12
14
14
�12/19/9
SUlVlM^RY:
Themajorily-ef pcopie^cbverecrthrough their employers -- nearly
7 out of 1(3 of thifgroup -- will pay the same or less for health benefits that are
the same or better. These Americans will save an average of $61 per month on
premiums, co-payments, and deductibles. About 30 percent will pay more. On
average, these people will pay $24 more per month, but many will get better
benefits - and they all will receive a comprehensive set of benefits that can
never be taken away. Costs for firms depends on the extent to which they
currently provide health insurance for their employees.
I.
Firms
Two factors generally determine which firms pay more and which pay less:
(i)
whether the firm currently offers health insurance; and
(ii)
if so, how generous is the insurance -- i.e., how many employees do they
cover, do they cover the whole family, and how generous is the benefit
package?
Basically, the more generous the insurance a firm offers today, the more savings
i
/
that firm will realize under the Clinton plan. Those who currently offer no
gd/KJ^''
insurance will have to pay more.
Benefits to Firms That Currently Insure:
•
Eliminating the cost shifting associated with uncpaipensated care^> < f ~rw MAS
lowers premiums by 10.5% for firms that curn rtitly insure.
^
/ u ^ * - ^
•
Under reform, all employers will contribu^e'to the costs of covennK
their workers. This will eliminate "corporate free riders," where on**
firm pays the full amount for a family policy, and the spouse's firm
gets a free ride. Spreading costs oyer all workers lowers premiums for
each currently insured worker by'
•
Firms never pay more than 7.9 percent of payroll on health insurann'
premiums -- and many ofthe smallest firms will get discounts.
Some Firms Who Currently Offer Insurance Will Pay Mote:
•
I f they only cover some workers, they will have to/pay for all worker*
•
If they do not cover dependents, they will have tq contribute
their share for dependents.
•
I f they offer less generous benefits, they will hafe to contribute for .i
comprehensive benefits package.
�12/19/93
II.
Families
POLICY:
There are substantial savings to families from reform, for a couple of reasons:
•
Employers are required to pay 80 percent of the premiums-- many
currently pay less.
•
Due to universal coverage, premiums are lowered to account for the
removal of costs associated with uncompensated care. We estimate
that there is $25 billion in uncompensated care in the current system.
($25 billion is in 1994 dollars and is based on Congressional Budget Office estimates)
•
Slower rate of growth in the costs of premiums
As a result, almost all families who now have insurance see immediate benefits. We
divide the population into 5 groups:
1.
2.
3.
4.
5.
those with employer-sponsored insurance all year
those with independent "non-group" coverage all year
those with Medicaid all year
those who are uninsured all year
those who fit into one or more ofthe above categories during the course
of the year
We present distribution tables for the first group. Our new distribution tables
include out-of-pocket spending as well as spending on premiums.
•
About 70 percent of currently insured families in the first category
would see a reduction in family spending under the Clinton plan.
•
About 30 percent of currently insured families in the first category will
pay more - but they will get the same or more benefits. Many of thes**
are young, healthy people who currently benefit from risk selection by
insurers and will pay more with community rating. Remember, these
people will be assured of comprehensive benefits as they get older.
Remember t h a t these figures only represent spending f o r people w h o get
insurance t h r o u g h w o r k all year; the numbers do not address those w i t h
expensive "non-group" coverage, Medicaid beneficiaries, those w h o are
u n i n s u r e d , or those who f a l l i n t o more t h a n one of these groups d u r i n g the
course o f the year.
�12/19/93
Among those who pay more and less, here are the average amounts:
Change in Monthly Health Care Spending
Spender/Saver
1994
2000
Saver (61%)
Same (7%)
Spender (32%)
-$61
0
$24
-$90
0
$29
(NEW NUMBERS FROM KEN THORPE???)
�12/19/93
H E A L T H C A R E PREMIUMS
SUMMARY:
Both employers and workers pay a share of the premiums. The
employer share is a fixed amount, depending on the family status of the
employee. The family share depends on the plan that the family chooses. If a
family chooses a plan that is cheaper than the cost of the average plan, it pays
less. If a family chooses a more expensive plan, it pays more. Premiums vary
by region, and discounts are available for both employers and families. The
principles below help to explain the premiums in greater detail.
I.
What are the premiums?
The Health Security plan forms four rating pools based on family status to
determine the premiums. Our calculations suggest that the national average
premiums for the four rating pools will be:
Rating Pool
/Single
/
Couple (No' kids)
^ - 1 Adult Family
2 Adult Family
Average
Premium
$1,932
3,865
3,893
4,360
Payments By:
ft
t ^
Family
Employer
QJ^
$386
$1,549
Ge^
773
2,125
^
'
778
2,479
Qs^
U
872
2,479
* These premiums are 10.5 percent lower than they otherwise would be in th.'
absence of universal insurance. With universal coverage, firms that insurf
their workers will no longer be overcharged to cover the costs of those who
are uninsured but still receive care.
II.
What the family pays
The family is responsible for the difference between the employer
contribution and the price of the plan that the family chooses -- on averaK*'
this amounts to 20 percent ofthe premium. The 20 percent share is induat. i
in the Table above. This gives consumers an incentive to make cost-con^ K Udecisions; if a family chooses higher than the average cost plan, it pays m. nthan 20 percent of the premium. If it chooses a lower cost plan, it pays Ir*.
than 20 percent. It is possible for the family to pay nothing at all if it
chooses a plan that is 80 percent of the average cost plan.
5
�SECOND STAFF DRAFT Tue 11/23/93 3:00pm PRELIMINARY & CLOSE HOLD
CHAPTER 4
OFFICIAL USE ONLY
-57-
Table 4-5: Estimated Premiums in the Regional Alliance, 1994
Payments By:
Employer
Average
Premium
Family
(20%)
Per Family
Requirement
(80%)
Average
Workers/
Family
Per Worker
Requirement
Singles
$1,932
$386
$1,546
1.00
$1,546
Couples (No
Children)
3,865
773
3,092
1.45
2,125
1 Adult Family
3,893
779
2 Adult Family
4,360
872
3,409
1.38
2,479
Rating Pool
Premiums are national averages. The actual premiums will differ by alliance.
Employer payments for 1 adult families and 2 adult families are pooled.
�12/19/93
III.
What the employer pays
The employer is responsible for 80 percent ofthe weighted-average premium
in the Alliance. While each worker has a choice of plans with different
premiums, the employer contribution remains fixed (the amount depends on
family status) regardless of which plan the worker chooses. For a single
worker, the employer contribution is $1,549.
Today, the employer for one ofthe workers often pays to cover the entire
family. Now each employer will contribute.
•
If we collected 80 percent ofthe family premium for each worker in a
family, however, we would have too much money. This is because
. there is often more than one worker per family -- on average, there are
a y s t ^ - ^ ' ' w o r k e r s per family. Thus, we only need to collect one 80 percent
\ A \ share for each ^ w o r k e r s .
The employer share is determined by taking 80 percent of the average
premium, and dividing by the average number of workers per family i
each alliancey Since 80 percent ofthe premium is about $3,000, the
amount pejvworker is about $3,000/1.5, or about $2,000 (the exact
is$2.125).
^
^
1
(Dtice that this policy is a substantial benefit fon firms that are already
^
insuring most of their workers. If the firm were/insuring workers in 2 adult
families, it might be paying $3,500 per worker (80 percent ofthe average)
Its cost will immediately fall to $2,500 per workisr.
While the President could have decided to make only one employer
contribute the entire 80 percent, he opted br a per worker standard,
rather than force companies to adapt ever;' time there is a change in
employment status or a spouse is laid-off.
J
r
Summary: A firm determines if each employee (i) single; (ii) a couple; or
(iii) in a family with children. It then pays the appropriate amount for each
worker from the Table above (considering small Business discounts). Note
remember that premiums vary from alliance to alliance.
�12/19/93
IV.
What about part-timers?
Part-timers are pro-rated. The firm pays a percentage/df the pre
bas£d on the
amount of hours of work per month.
•
Part time workers are defined as thosjf working more than 40| hours
but less than 120 hours per month.
•
Employees who work less than 40/Hours per month are covered as if
unemployed.
Hours of work per month:
40 hours
fl-ht
Emplover/^hare:
1/3 of emfployer share
1/2 of employer share
2/3 opemployer share
e total employer contributions/for a family does not amount to the appropriate
employer share, the family paysrhe remainder ofthe employer share, in addition to
their 20 percent family share. J t a y may be eligible for discounts on both the
employer and the family share
V.
What about non-workers?
For non-workers, it is more difficult to determine the payments. The family's
20 percent share ofthe premium is easy to compute. What about the
employer's share? What if the family works part ofthe year, but not the rest '
Here is the rule. We add up how many months of employer payments a
family had (if there are two workers, we add for both). If there are at least 1J
months, the family is a working family and owes just their 20 percent shanIf the combined months of employment is less than 12 months, the family
owes the remainder ofthe employer premiums. Non workers may be
eligible f o r discounts.
^
VL
The Self Employed
As with any business, self-employed individuals pay the employeiYsW&re. .if
their premium. They also pay the individualVfamily share. They^^^y be
eligible to receive discounts on both the employer and the family share. In
addition, they will be able to deduct 100 percent of their health care costs
�12/19/93
VII.
How are the discounts computed?
There are three types of discounts:
Low-Income Families: Low income famines in the Alliance receive a
discount on their 20 percent share. Generally, families owe nothing on the
first $1,000 of income, and the discounts phase-out as income reaches 150
percent ofthe poverty level. The phase-out iate is a little bit complicated, and
the rates vary by rating category (single, couple, ...). The $1,000 disregard
and the poverty line are indexed to CPI growth.
Businesses: The firms' 80 percent share is capped at 7.9 percent of payroll,
with discounts covering any costs above that cap. Small firms receive
additional discounts. This is also true for the self-employed. None ofthe
employer caps are indexed; thus, to the extent health expenses rise relative
to wages, firms pay a smaller share ofthe pr ium costs.
Families 80% Payments: (i.e., for unemployed) Similar to the other family
discounts, a family pays nothing for the st $1,000 of income, and full
payment is expected at 250% ofthe ppvfcrty level. The indexing is the same /ir
as for the family payment.
V I I I . Determining the Premiums
The premiums in the final estimates are from the Office ofthe Actuary, Health
Care Financing Administration, Department ofHealth and Human Services,
E s t i m a t i n g the Premiums
The premiums produced by the SPAM model are based on projected current
levels of health care spending plus upgrades for the uninsured, and add-ons
for preventive care, dental care, and mental health services.
The guaranteed national benefits package provides health insurance
comparable to average coverage levels associated with Fortune 500
companies. These premiums are higher than what will have to be charged
under reform, however, because current premiums are marked up by the
presence of uncompensated care. Estimates from the Congressional Budget
Office suggest that there is about $25 billion of uncompensated care in
current private health insurance premiums in 1994 dollars. Accordingly, dur
to universal coverage, we lower the premiums to allow for uncompensated
care savings. The newly insured are brought into the reformed system at 100
percent of average cost. The resulting premiums are shown in the first
�12/19/93
column ofthe following Table.
In addition to premium estimates from the Health Care Financing
Administration, we obtained estimates from the Agency for Health Care
Policy and Research, in the Department ofHealth and Human Services.
These estimates are displayed in the second column ofthe Table. The
AHCPR premiums are lower than those estimated by the Health Care
Financing Administration. We thus used the more conservative premium
estimates for our final models.
These premiums are averages for the nation as a whole. In areas with
greater health care costs, the premiums will be higher.
Policy Tvpe
Premium
HCFA AHCPR
Single
Couple, no children
1 Adult Family
2 Adult Familv
$1,933 $1,735
$3,865 $3,471
$3,894 $3,647
$4,361 $4,262
Employer
Payment
$1,546
$2,125
$2,479
$2,479
�12/19/93
WHO PAYS FOR HEALTH INSURANCE UNDER REFORM?
Most health insurance premiums in the new system will come from employers and
employees -- the same way it does currently. We estimate that if the system were in
place in 1994 instead ofthe current system, there would be $321 billion of
premiums. These premiums would be split between employers ($189 billion, or
59%), households ($56 billion, or 17%), and gross government premium discounts
($76 billion, or 24%).*
* This amount includes the discount "cushion," which is allocated
to employers and households based on their share of discounts.
(DON'T WE HAVE A CHART FOR THIS)
10
�12/19/93
TREATMENT OF EARLY RETIREES (AGES 55-64)
SUMMARY:
Right now, more and more companies are being forced to drop
benefits for early retirees. This benefit is important to protect
working Americans from losin^tlTe seeurityJhey've worked hard
for all their lives. To ensure-fiscat~fespdnsibility, ihe^eftefit
phased-inovef three years. The'govefhment will pick-up-50% <
t^Kexs. After th^Jj^u^r^nm^TiTeet^
employer
re. The retiree will pay the 20 percent family share of the
premium.
Effective 1/1/98, the Federal government pays the required employer premium for
early retirees. Eligible retirees, their spouses and children are treated as full-time
employees; they are obligated to pay no more than the family share ofthe premium
for their health plan. To qualify for government payment ofthe employer share:
•
a person must be aged 55-64;
•
owe any employer premium; and
•
have worked a minimum of 40 quarters of Social Securitycovered employment.
The provision phases out gradually for higher income individuals and families; the
phase-out begins with income above $90,000 per year (single) or $115 per year
(family). Tax-exempt interest income is considered income when determining
eligibility. If a person is over the income limits and does not work at all, they would
owe the employer premium. If they work half-time, their employer would pay half
of the employer share, and they would owe half of an employer premium^Zand N XT)
wouM-TrTpivr d i i r r m n t i Imviinl'i llirtf nmnnnt
G
O
The retiree is responsible for 20 percent ofthe premium unless their income is
'below 150% of poverty, in which case they receive a discount. Just as some do
today, employers have the option of paying the 20% share for their former
ir^^A *
employees. Employer-provided medical benefits for retirees aged 65 and over are \
j
not affected by the Health Security Act (except that firms will benefit from the
inclusion of prescription drug coverage in Medicare).
�e estimate the cost of thfr^etiree policyWtfabout $3 biUion in 199^. This policy
i l l generate substantial savings for many employers who now cover the health
care costs of early retirees. In order to recover some of this windfall to employers
we ask organizations who benefit from this policy to pay a portion of these savi
for a three year period. Specifically, from 1998-2000, companies and state/loca
governments must pay 50% of the greater of: (i) the estimated decrease in theijr
early retiree costs due to the Health Security Act; and (ii) the annual average
actual amount they paid for early retirees in 1991, 1992, and 1993, adjusted to
98-2000 based on the medical component of the Consumer Price index.
4
£
T ^ r ! are two items of revenue related to retiree provisions, although both may be
more accurately described as "reductions in discounts" than "revenue increases."
These are the 50 percent assessment on the corporate gains for three years, and the
phase-out of benefits for wealthier retirees. The amount of money raised is:
Revenues from Retiree Issues ($ billion)
Item
1995 1996 1997 1998 1999 2000 Total
Assessment
Payments from High
Income Retired
Total
$0.0
$0.0
$0.0
$2.4
0.0
0.0
0.0
0.0
$4.4
$4.7
0.1
0.1
$11.4
0.2
$11.6
III.
How M u c h Do Corporations Benefit?
Corporations benefit by the difference between what they currently pay for retiree
health insurance and the amount they will have to pay under reform. It is
estimated that total annual health insurance payments for early retirees with
employer sponsored health insurance is about $16 b i l l i o n in 1994. Estimates arv
that this will increase to $30 b i l l i o n in 2000, if there is no reform. Under reform
payments by corporations will be about $2 billion per year (assuming they pay the
20% share of the employee's premium), and the three-year assessment will cost
them about $4 billion per year in the years it is paid. Hence there are substantial
savings to firms from the retiree provisions. There are two important points about
the savings to corporations:
•
The assessment is on only one-h«tlfof m«^benefits and applies for onlv
three years.
/
-7
The benefits are greater thanlthe $ >l^jifi^H government cost of the
retiree discount, because the oiscouflf^tne cost of community-rated
family premiums. Today, corporations pay experience-rated
premiums.
/
<
12
�12/19/93
Here is a summary of changes in payments for currently retired workers with
employer sponsored health insurance:
Ofthe $16 billion that employers and employees are paying under the
current system, $7 billion is eliminated because of community rating. When
early retirees are pooled with the rest ofthe population, the cost of providing
them insurance faDs by over 40%. This cost is borne by people who are
currently younger and healthier, but who receive other benefits from the
program.
Ofthe remaining $9 billion, $4 billion is received in payments from
employers. This money is collected because many people aged 55-64 work
part-time or have spouses who work. Contributions from employers for parttime workers offset the retiree and non-worker discounts. There is $1 billion
of discounts paid as part ofthe regular non-worker discount system. The
additional cost of providing everyone below $90,000 or $115,000 with a
discount for the employer's share ofthe premium is about $2 billion (recall
that this decomposition is for people with current retiree health insurance
only; this is only 40 percent ofthe retired population). Finally, the family .share of the premiums is $2 billion.
—
- Change in Payments for Earlv Retirees with Health Insurance
If Program Were Fully In Place in 1994 ($ billion)
Current Payments
$16
- Employer
13
- Private
8
- Federal and State/Local
5
- Employee
3
Reduction in Payments
Due to Community Rating
$7
Required Payments
$9
- Employer Payments*
4
- Non-worker Discounts
1
- Additional Retiree Discount
2
- Remaining 20% Share
2
Corporate Savings**
$7
Corporate Retiree Assessment*** 4
* Includes a small amount of discount payments to employers subject to the cap
** Current employer payments, less reform employer payments, less 20% share
assumed paid by corporation.
*** I n the 1998-2000 period.
13
�12/19/93
IV.
Won't This Induce More Retir^m^nt?
-
Fear of losing health care insurim^phoiild not be what drives career
decisions. As with any plan that;provides universal coverage, we expect there to be an increase in retirement's a result ofthe Health-Security plan.
Administration estimates are th^t&fre will be an increase in thelvnumber of
retired people of about 350,000 to^eGO.OQO (roughly 5 to 7.5 percent of the.
population aged 55-64). This wilMaye some effect on discount payments, of
about $1 to $2 billion annually (500,000 people x $2,000 each = $1 biUion).
To the extent that these people are replaced by younger people who would not
be in the labor force, however, therewill be additional employer payments to
offset the additional discounts give'Sf The net effect on discounts could thus
e small. We include the amounftbf the additional discounts as part of the
discount cushion.
t ofthe inducement to retire earlycomesfromthe provision of universal
coverS^tfseTP In today's market, it is difficult or impossible for an early f"
retiree to obtain private (non-group) health insurance coverage. Under
reform, this coverage will be available at an affordable level, even^ul^a^
the early retiree discount. The costfof health insurance for even a:"rici^reffiree
would be one employer share (about $2,100 for a couple) plus the &mily'&
share ofthe premium (about $ TTOfbr a couple). For a retiree with income
less than 250% of poverty (about3i>24,000 for a couple), the cost would be even
smaller. Compared to the inducement to retire stemmingfromthe
community rating of premiums and the general non-worker discounts, t he
additional discounts to earlv retirees should not lead to much more earlv
retirement.
V.
What effect will this have on Social Security and Medicare?
This increased retirement will cost the Social Security and Medicare tru>t
funds some additional expenses. We estimate these costs to be $10 billion
over the 1994 to 2000 period, and about $3 billion per year after 2000^
•
• ?>>.•-—•.
There are a large number of prQ&isions in the Health Security plan^lfa^*^.
affect the trust funds, however.^The'feduction in employer healtH;ins#Sn|e
spending would raise wages andlltad^to more revenue for the trust fiind^f^r
example. We do not know the fullcextent ofthe effects on the Trust-F.uhdiirhowever.
' i ^ s l ^ ,.
14-
�Clinton Presidential Records
Digital Records Marker
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a tabbed divider. Given our
digitization capabilities, we are sometimes unable to adequately
scan such dividers. The title from the original document is
indicated below.
Divider Title:
^(\\j\r\c\3
�SAVINGS/COST C O N T R O L
SUMMARY P A G E
F O U R WAYS SAVINGS W I L L B E R E A L I Z E D
• Increased competition in the health care market place, allowing
consumers to choose plans based on price and quality.
• Strengthening consumer buying power through large buying pools.
• Streamlining the system by eliminating fraud and waste.
• Reinforce the power of competitive forces with fail-safe limit on premium
increases.
U N I V E R S A L C O V E R A G E P R O V I D E S O V E R A L L SAVINGS
• Care for the uninsured is limited, and more often than not, is provided in
the most costly arenas - Emergency rooms. Through universal coverage,
the redirecting of care to the uninsured, and emphasizing prevention,
much savings will be realized.
• Today consumers bare the burden of compensating for those who cannot
insure themselves. Hospitals increase the price of care to cover their
losses when those who can't pay receive treatment - this is called costshifting. Universal coverage will eliminate cost-shifting and curb this rise
in cost for consumers.
PREMIUM CAPS: BACK UP COST CONTROL MEASURE
•
•
Setting realistic premium targets.
limiting increases of premiums.
•
Exceeding the premium target for health expenditures.
SAVINGS F R O M P R E V E N T I V E C A R E
• Incorporating preventive care in reform saves money and reduces the
demand for care.
• 1984 study from the University of North Carolina finds that for every $1
spent towards child immunization, $10 dollars is saved in subsequent
medical costs.
Q&A: WHAT HAPPENS IF THE MONEY RUNS OUT?
SAVINGS/CONTROLLING COSTS: EXAMPLES OF WHAT WORKS
TODAY
•
•
Estimated savings for the Wisconsin State health cost savings program
were approximately $12 million in its first year (1984).
A State alliance for small businesses in California - through bargaining received bids 55% lower than other common plans in California.
�SAVINGS FROM MANAGED CARE
"I am among those who have concluded that 25 - 30% of current
diagnostic
and treatment procedures
is medically
unnecessary.
If we cut that fat alone, we would save 200 billion
dollars,
which would more than pay for what the uninsured
lack." [C.
Everett Koop, 9/20/93]
SUMMARY:
Health care costs can be brought under control by increasing competition,
strengthening consumer buying power, and giving consumers the information they
need to make cost-conscious choices, changing incentives for doctors, nurses and
other health care workers, and moving aggressively to cut out waste and streamline
administrative
overhead.
How do we know this can work? Our international competitors spend much less
than we do on health care - - yet they insure all of their people, provide better benefits
and have similar quality outcomes. In this country, evidence from communities,
companies and regions illustrates that providers can and will cut costs substantially
and quickly in the right environment - while maintaining the high quality care for
which America is famous. Providing incentives to deliver more cost-effective care and
reducing administrative costs can free up dollars to make health care more
affordable and help insure all Americans.
It is important to note that we do not include any of these system-wide savings - that
have been proven to result from increasing competition, cutting bureaucracy,
cracking down on fraud - in our savings estimates, to maintain the credibility of our
numbers
dispute.
1.
Increase competition
in the health care marketplace,
allowing
consumers to choose plans based on price and quality.
Increased Competition
•
The major source of cost containment under the Health Security plan
will come from bringing market forces to bear on the health care
system, increasing efficiency through competition between health
plans. Limiting the rate of premium growth acts as a backstop to
competition -- a commitment to downward pressure on costs that can
further bolster competitive savings.
Consumer Cost Consciousness
�•
Under today's system, consumers often don't have a sense ofthe actual
cost ofthe care they receive. Employers pay their premiums; insurers
pay the tab. Under reform, consumers, not their employers, will have
the power to decide among health plans -- based on price and quality.
Consumers who choose higher cost plans will have to pay more for
those plans, while consumers who choose low-cost plans will benefit
from the savings. Increase cost-sensitivity on the part ofthe
consumers will force price competition between plans and push
providers to become more efficient.
•
Evidence from Minnesota's state employee health plan indicates that
consumers respond to changing incentives and, lowering annual rates
of increase. The Minnesota program — changed five years ago from
paying for 100% of a fee-for-service plan to 100% ofthe lowest-cost
plan serving a given county -- has seen cost increases stay 2% below
statewide trends since 1991. Estimated savings have been $23 million
over the last three years, $12 million in 1993 alone.
Eliminating Unreasonable Medical Practice Differences
Making patients aware of regional differences in medical process and
care practice will help them make cost conscious choices that will
produce savings but maintain quality.
•
By bringing costs into line, the Health Security Act will eliminate the
kind of situation that leads to open-heart surgery costing $21,000 in
one Pennsylvania hospital and $84,000 in another Pennsylvania
hospital, with the lower-cost hospital having better results.
•
I n 1887, the Memphis Business Group on Health (a group of 11
employers) commissioned a study that found that some hospitals
charged as much as 80% more for the same service. The group
published the findings and took competitive bids for their 25,000
employee group. One hospital offered discounts of up to 20%.
Members of the group believe that they have saved tens of millions of
dollars.
Changed Incentives for Doctors
•
r^cv*-
Under today's system, doctors get paid for each test and procedure they
perform -- so the more they do, the more they get paid. Under reform,
health plans work under a fixed prepayment - - a budget that provides
discipline - - changing the incentive from doing more to competing on
quality and efficiency.
�Reform will also bring down the cost of defensive medicine by
reforming our malpractice system -- encouraging disputes to be settled
out of court and reducing lawyers' collections from malpractice claims.
2.
Strengthening
the buying power of consumers and businesses
pooling them into large groups to bargain for lower prices.
by
Strengthened Consumer Power
•
•
3.
Larger pools mean lower costs. The Health Insurance Plan of
California -- a new state alliance for small businesses -- received bids
from one plan that were as much as 55% lower than that same plan
offered to the Federal Employees Health Benefits Plan.
Focusing on quality can also drive costs down. I n Orlando, the 78member Central Florida Health Care Coalition worked with hospitals
to analyze why costs and quality of care differed for patients with the
same illnesses and then used this information to bargain for better
prices. Costs per hospital discharge fell 2% -- and the cost savings
enabled the county school board to save 20 teaching slots it had
planned to cut.
Simplify
bureaucracy
and administration
in health
care.
Streamlining Administration
•
The Health Security Act will introduce a single claims form, a
comprehensive benefits packages, and standardized reimbursement
rules, procedures and regulations. No longer will a growing share of
health care dollars pay for processing paper and complying with
regulations. Nor will the health care industry be forced to continue
hiring sixteen new administrators for every doctor* simply to keep up
with the flood of paperwork.
•
Under today's system, as much as 30-40% ofthe premiums paid by
small firms support the overhead of brokers, insurance agents and
underwriters. Large firms pay significantly less for administration - closer to 5-7% of premiums. Under reform, firms with 5,000 or fewer
employees join health alliance where administrative and purchasing
functions are consolidated. Economies of scale result in a lower
administrative burden for the system as a whole.
�Rooting Out Fraud and Abuse
•
4.
The Health Security plan will reduce the estimated $80 billion spent
on false billing and other fraudulent practices by making health care
fraud a punishable crime with stiff penalties and by recovering money
from offenders.
Reinforce
premium
the power of competitive
increases.
forces with a fail-safe
limit on
•
While there is ample evidence that lower cost growth will be driven by
competition and increased efficiency, the Health Security plan will
build in a back-up measure: premium caps.
•
These caps will limit the growth in what individuals and businesses
pay for the comprehensive benefits package; this is similar to caps
proposed in other legislation - from Republican Senators Kassebaum
and Danforth - and enacted in the State of Washington.
•
Our policy acts like a speed limit on how fast premiums can go up.
Just as a speed limit only affects those cars that are speeding,
premium limits target will only apply to plans whose prices go up
faster than the targeted rate in their region. Enforcement of these
premium limits will only be enacted if the average growth (of all
regional plans together) exceeds the targeted regional rate of growth.
This way, gross offenders will not be singled out until there is a system
wide collaboration of 'speeding', and everybody is going a bit to fast.
* The National Data Book, Statistical Abstracts ofthe US
�• .a
Savings Due to Preventive Care
t
^
a
A study in Massachusetts estimated that each $1 spent on the prenatal
component ofthe Women, Infants and Children (WIC) program saved
more than $3 i n short-term hospital costs alone. Savings on the long-term
treatments were over and above this.
Two studies of WIC in Missouri found that each $1 spent on prenatal care
returned 49 to 83 cents in lower Medicaid expenses within the first weeks
of life. An earlier study estimated that the savings during the infants
first year were about $2.
The Institute of Medicine estimated that each $1 spent on prenatal
services for low-income pregnant women saved $3.38 in costs of care for
low-birthweight infants.
/
' A t the University of California at San Diego in 1985, hospital care for
babies born with no prenatal care cost an average of $2,200 more than
corresponding care for babies whose mothers received adequate prenatal
care. But such care cost only about $1,000 per pregnancy.
A 1984 study at the University of North Carolina estimated that each $1
spend on the Childhood Immunization Program saves $10 in subsequent
medical costs. A year later, a more specific study ofthe measles, mumps,
and rubella vaccine found a benefit-cost ration of 14 to 1.
I n 1983, Birmingham Alabama's health care expenses were rising at twice
the national average. Officials launched a full-scale prevention program.
From 1985 to 1990 the city's health costs did not rise, even as the price of
care skyrocketed. Bv investing $3 million in health promotion,
Birmingham officials estimate thev saved $10.5 million over five years.
* The above comes from "Opportunities for Success: Cost Effective Programs
for Children (Update 1988)" a report ofthe Select Committee on Children,
Youth and Families, US. House of Representatives, 100th Congress, 2nd
session, 1988
�PREMIUM CAPS:
BACKUP COST CONTROL MEASURE
SUMMARY:
While there is ample evidence that lower cost growth will be driven
by competition and increased efficiency, the Health Security plan
will build in a back-up measure to cost containment: premium caps.
These caps will limit the growth in what individuals and businesses
pay for the comprehensive benefits package.
The reassurance of this limit is essential. If businesses and
individuals are all going to be asked to contribute to the cost of
health care, and the government is going to provide discounts to
those who cannot afford their full share - then everyone must be
guaranteed that increases in their payments will stay within
reasonable bounds. [ WithOttt-this-guaixmteerrefGrm would ttavejiQ^
SETTING PREMIUM TARGETS:
•
The National Health Board will calculate a national target amount for the
guaranteed comprehensive benefits package, which will include the increased cost
of caring for the currently uninsured.
•
The Board will use the national premium target to calculate a premium target for
each regional health alliance, adjusting the national target based on current variations in
health spending and distribution of the uninsured.
LIMITING INCREASES IN PREMIUMS:
•
After the initial premium base has been set for each regional alliance, the Health
Security plan will limit how fast the cost of those premiums can rise.
•
Since premiums paid by employers and consumers will grow at the inflation rate,
total health spending for the guaranteed benefits will grow at inflation plus
increase in population.
•
Limits on premium increases will apply only after increases in total health care
spending to cover the uninsured and the under-insured have been taken into
account.
�NEGOTIATING
PREMIUMS
OVER TIME:
•
I n each regional health alliance, health plans will bid annually to provide the
guaranteed benefits package and negotiate with alliances to set premiums.
Premiums will vary from plan to plan.
•
I f the average premium across all plans is less than the alliance's premium target that is, if premiums, on average, are increasing consistent with inflation -- then no
federal enforcement will be triggered.
FAIL-SAFE LIMIT ON PREMIUM
INCREASES:
•
Federal enforcement will be used only if the average premium across all plans
exceeds the alliance's premium target. I t will only apply, however, to those plans in
the Alliance that exceed these targets.
•
Plans and providers that propose excessive rate increases will face financial
penalties which will be used to "rebate" the portion ofthe premium which exceeds
the alliance's premium target, based on a formula set in federal law.
•
I f the plan does not lower its premium, then the rebate automatically takes effect.
And, payments from the plan to its providers are automatically reduced across the
board by the same percentage amount that the plan's premium has been reduced.
The enforcement, therefore, applies both to the plan and its providers -- giving
alliances, plans and providers an incentive to negotiate beforehand to keep rate
increases in line.
CORPORATE ALLIANCES HAVE SAME RULES:
•
Large employers forming corporate alliances are expected to comply with the same
limits on premium increases as regional alliances. I f premiums in a corporate
alliance exceed the allowed rate of growth during two of any three years, the
corporate alliance will be required to purchase coverage through
regional alliances.
REDUCING VARIATIONS IN PREMIUMS ACROSS THE COUNTRY:
•
Today, health care costs vary widely from state to state and even within states -with no apparent differences in the quality of care. At first, alliance premium
targets will be set based on the current level of health care spending in each area,
and will vary from alliance to alliance. However, data will be collected to try to
determine how these needless variations can be reduced over time.
�PREMIUM CAPS:
QUESTIONS AND ANSWERS
Q:
The premium cap may be too strict for some health
happens if a health plan runs out of money?
plans.
What
A:
Health plans #^11 never hit the cap because there is plenty of waste and
inefficiency in the health care system that can be reduced or eliminated.
Insurance companies that say they have to constantly jack up rates aren't
playing straight.
I f a health plan were to literally run out of money, consumers would simply
join another plan. Unlike today, though, benefits would be guaranteed. Such
a scenario, however, is highly unlikely, certainly less likely than it is today,
because health plans will be required to have met stringent solvency
standards before they can do business.
When you hear concerns about running out of money, remember the source.
It's the insurance industry that is running an advertising campaign against
this limit on premium growth. And it's because they're out to preserve their
profits -- plain and simple.
.
j u,
Q:
But what if they do hit the cap?
A:
Health plans will have to decide how to cut their costs, as they are likely to
do anyway if they expect to compete in a reformed insurance market. They
are likely to do it in any or all of the following ways:
1)
2)
3)
4)
Limit their own profits
Pay less to doctors, hospitals and other health care providers
Further support health promotion and prevention among customers to
keep them healthy, rather than having to treat them once they get
sick.
Provide care in a more efficient way
To those who question letting individual health plans decide how to limit the
growth of costs, two leading health policy analysts recently wrote that "it
seems far preferable that insurance companies that are responsive to their
subscribers make these decisions than having the federal government
involved in detailed price negotiations and review procedures with individual
hospitals and physicians."
�Q:
Won't they limit services and benefits, cut corners, ration care, and do
other bad things to patients?
A:
No. They have every incentive not to do this. The President's plan relies on
competition among health plans. If a health plan starts to cut corners on
patients, it knows that the patients is likely to switch plans. And the low
consumer satisfaction will be noted as part of the consumer report cards that
will be published publicly about each health plan. So it is very unlikely that
new customers would sign up to replace the old, dissatisfied subscribers. For
the health plan, cutting corners will mean less customers and therefore lower
profits.
As an everyday example, we regulate the rates of utilities like electric and
gas -- and it works just fine. You don't see electric and gas companies running
out of money or cutting off service to customers.
Q:
How do we know this premium cap will be effective? How do we know
it won't lead to all kinds of market distortions?
A:
The Congressional Budget Office (CBO) released a study in September of
1993 which stated a number of necessary ingredients to increase the
effectiveness of premium caps in controlling health care costs without
adverse effects. They listed:
•
•
•
•
•
Instituting a standardized benefits package
Mandating guaranteed renewal of insurance policies
Guaranteeing universal coverage
Modifying payments to insurers based on the health status of their
enrollees (risk adjustment)
Limiting "balance billing," which occurs when providers bill patients
for the amount above what their insurance plan pays
The Health Security Act includes every one of CBO's suggestions for
improving the effectiveness of limits on premium increases. The CBO
report states that with these elements, premium limits would "reduce the
rate of growth in health care spending."
In addition, an article in the Washington Post -- called "Clinton's Cost
Controls Can Work," written by two leading health policy analysts, Stephen
Zuckerman ofthe Urban Institute and Jack Hadley of Georgetown
University, maintains that competition among plans and a premium cap
would be effective in eliminating waste from the system and controlling costs.
�They also say that controlling costs will not compromise the quality of care or
the effectiveness of doctors and hospitals.
The premium cap hajpfeen proposed by leading~RepuBTican Senators such as
Senator Nancy Kassebaum.
0
�C O N T R O L L I N G COSTS: E X A M P L E S THAT WORK TODAY
The H e a l t h Insurance Plan o f C a l i f o r n i a -- a new state alliance for
small businesses - received bids from one plan that were as much as
55% lower than that same plan offered to the California Federal
Employees Health Benefits Plan.
The State o f Minnesota's p u b l i c employees h e a l t h p l a n has kept
its annual rates of increase 2% below statewide trends for the last two
years, as bargaining power has increased - due to the pooling effect of
consumers - individuals have opted for lower-cost high-benefit plans.
I n 1984, Wisconsin began contributing at the price ofthe low cost
plan. I n one year, enrollment in the low cost plan increased from 15
percent to 60 percent. By 1993, 85 percent of enrollees were i n lower
cost plans. Estimated savings were approximately $12 million -- or
$500 per employee - in the first year alone.
Xerox C o r p o r a t i o n Xerox was experiencing a 20% increases every
year in its health care costs - because employees, isolated from the
costs of their health care, chose very expensive and inefficient health
care packages. I n 1991, Xerox changed to a modified low cost pricing
strategy - I t began screening a menu of cost efficient and quality plans
for its employees, in hopes that it would find quality plans at
competitive prices. Induced competition between participating health
care plans is the cornerstone of there idea, and each year all
participating plans are reviewed to ensure that they meet high quality
standards and offer comprehensive benefits packages. Premium
increases for all health care plans - especially the benchmarks -- have
fallen significantly. As a result, Xerox estimates that enrollment in
the lower cost more competitive plans was up 30 percent, and saving of
up to $1,000 per year for each employee who switched was achieved.
D i g i t a l E q u i p m e n t C o r p o r a t i o n (DEC) switched to a low cost
pricing strategy in 1991. DEC estimates that this strategy has
reduced 1993 costs by $360 per employee. They further estimate that
their savings will amount to $1,400 per employee by 1997. This
translates into 1993 savings of $20 million, rising to $63.5 million in
1997.
The C a l i f o r n i a Public Employees Retirement System administers
health care plans for almost 900,000 state and local government
employees and their families across California. Its large size has given
it bargaining power to hold annual premium increases in 1992 to 3.1
�percent while forcing its insurers to root out wasteful administrative
costs, reduce inappropriate care, and encourage hospitals and doctors'
groups to moderate their rates.
In Rochester, NY, doctors, hospitals and local businesses have all
cooperated to keep the quality of care high, while implementing
incentives to control costs. Through insurance reform, Rochester has
been able to serve the needs of its large businesses -- by keeping costs
down -- while also establishing a structure that enables small
businesses and families to purchase competitively priced insurance.
Rochester's medical costs are now 25 percent lower per capita than
national levels and administrative costs are half national averages.
I n Orlando, the 78-member Central F l o r i d a H e a l t h Care
Coalition worked with hospitals to analyze why costs and quality of
care differed for patients with the same illnesses and then used this
information to bargain for better prices. Costs per hospital discharge
fell 2% - and the cost savings enabled the county school board to save
20 teaching slots it had planned to cut.
In 1887, the Memphis Business Group on Health (a group of 11
employers) commissioned a study that found that some hospitals
charged as much as 80% more for the same service. The group
published the findings and took competitive bids for their 25,000
employee group. One hospital offered discounts of up to 20%.
Members ofthe group believe that they have saved tens of millions of
dollars.
�
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Health Care Task Force Records
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White House Health Care Task Force
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<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
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[Health Care Economic Binder-Draft] [1]
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Health Care Task Force
Alice Dunscomb
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Box 7
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52
7
7
3
�HiCOlluiiii^ ^
of Reform'
�ECONOMIC EFFECTS
Table of Contents
I.
Economic Effects of Health Care Reform
A.
The HSA will lower costs for many businesses...
B.
Small businesses who now provide coverage will particularly
p. ?
benefit
C.
D.
E.
G.
The HSA will reduce "job lock"
The HSA will reduce "welfare lock"
Reform will level the playing field among small businesses,
and between large and small businesses
The HSA will increase health care jobs in the short run and
increase efficiency in the health care sector in the long run
Minimum wage — look at real world evidence
H.
Hawaii - look at real world evidence
F.
II.
Reich/Tyson Testimony (October 6, 1993)
p.?
ID.
Tyson Testimony (November 4, 1993)
p.?
IV.
"Boosting Workers' Security"
p. ?
i/dala/healthcare/econefct sum
12/7/93
�ECONOMIC EFFECTS OF HEALTH CARE REFORM
Comprehensive health care reform is a necessary element in an overall strategy to increase
long-term economic growth, lower interest rates, reduce the deficit, and create jobs. Today,
the rising cost of health care is a hidden tax on employers - hurting businesses, depressing
wages, limiting job creation and threatening our competitiveness. The bottom Une is this:
health care reform will lower business costs, raise wages, and increase opportunities for
workers.
I. THE HEALTH SECURITY PLAN WILL LOWER COSTS FOR MANY
BUSINESSES, FREEING UP MONEY FOR NEW JOBS, HIGHER WAGES,
AND MORE INVESTMENT.
Most businesses provide health care, and the Health Security plan will lower their
costs by slowing the rate of growth of health care costs, eliminating "freeriders,"and
lowering the markup for uncompensated care. This will make it easier to hire future
workers and to give wage increases to existing workers.
H. SMALL BUSINESSES WHO NOW PROVIDE COVERAGE WILL
PARTICULARLY BENEFIT.
Most small businesses provide health care to their workers and have to pay up to 35%
more for health care than their big business competitors. The Health Security plan
will lower health care costs for these small businesses, giving these firms more money
to hire more workers and pay their existing workers higher wages. As the Wall
Street Journal said, "for many small businesses, saddled with escalating health care
costs, President Clinton's health care package comes as an unexpected windfall."
Accessible, reasonably priced insurance makes it easier for people to form new
companies and for small business to attract and keep workers.
in.THE HEALTH SECURITY PLAN WILL REDUCE "JOB LOCK" AND
INCREASE PEOPLE'S ABILITY TO FIND BETTER JOBS.
Up to 30% of people report that they are afraid to leave their current jobs because
they could lose their health insurance. The guaranteed security of the Health Security
plan means that people will be free to switch jobs or start a small business.
IV. THE HEALTH SECURITY PLAN WILL REDUCE "WELFARE LOCK."
One of the reasons people do not leave welfare is the loss of Medicaid benefits.
Studies suggest that as many as one million of the four million welfare recipients
would take jobs if they were guaranteed health care.
�V. HEALTH CARE REFORM WILL "LEVEL THE PLAYING FIELD" AMONG
SMALL BUSINESSES, AND BETWEEN LARGE AND SMALL BUSINESSES.
Small businesses that provide insurance currently pay more for labor than their
competitors that do not insure, and pay more for insurance than their large business
competitors. They also must bear the cost, in the form of higher premiums, to
finance care for the uninsured.
VI. THE HEALTH SECURITY PLAN WILL INCREASE HEALTH CARE JOBS IN
THE SHORT RUN AND INCREASE EFFICIENCY IN THE HEALTH CARE
SECTOR IN THE LONG RUN.
By 1996, as many as 400,000 jobs will be created in the health care industry. As
cost savings begin to accrue, employment growth in the health care sector will slow.
Improved efficiency in the health care sector will lower the price of care to families
and businesses.
VH. MINIMUM WAGE - LOOK AT REAL WORLD EVIDENCE.
Real world evidence from Harvard and Princeton studies of small businesses and
restaurants shows that recent minimum wage increases did not hurt job growth, and in
fact, can make it easier to hire people. Health carerefonnis equivalent to a small
increase in the minimum wage for those firms that currently do not provide health
insurance. The increase in health care costs under the Health Security plan for
currently uninsured low-wage worken in small firms is equivalent to only a very
modest minimum wage increase of $.15 to $.35 per hour.
VHI. HAW AH - LOOK AT REAL WORLD EVIDENCE.
Real world experiencefromHawaii, which imposed an employer health insurance
mandate in 1974, shows thatfromthe ^TO's until now, Hawaii's private non-farm
employment increased by 90% (compared to 54% in the U.S.) andretailand
wholesale trade employment grew by more than in the U.S.
�Economic Effects of Health Care Refonn
by
'
Roben Reich, Secretary of Labor
and
Laura D'Andrea Tyson, Chair, Council of Econor ^ Advisers
October 6, 1993
�I.
Many features of the plan work to lower employer costs, increase iob ODoortimitfo,
and improve economic cfTiciencv.
A.
The Health Security plan lowers business spending on health insurance and
thus frees up money for increased wages and salaries or for additional hiring.
1.
The slower growth rate of health care costs means that aggregate business spending falls over time.
While the business sector as a whole will initially pay more for health insurance because of the expansion to universal coverage, the reduction in
health care cost growth lowers premiums over time. By the end of the
decade, businesses in aggregate will pay less for health care than they
otherwise would have, even with the increase in coverage (Chart 1).
•
2.
By the year 2000, aggregate business spending on covered services
alone will fall by $10 billion. This is about 4 percent of baseline
spending in that year. In 1989 dollars (the peak of the business
cycle), this is about 3 percent of total business profits and about 6
percent of net investment in fixed, non-residential plant and
equipment.
Many employers who currently offer health insurance will see their
costs drop, freeing up resources for increased wages or additional
hiring.
•
Businesses that currently provide insurance pay more than true cost
since providers overcharge them to make up for care to the uninsured. This "uncompensated care tax" amounts to over 10 percent
of premiums. Under the Health Security plan, every business and
individual must contribute something to the cost of their health
care. Ending this cost shifting will lower costs for businesses that
now provide insurance.
•
Employers now providing insurance will benefit from spreading
the costs over all workers. Currently, about 20 million workers are
insured through a spouse's policy. By eliminating corporate "free
riders", the Health Security plan will lower costs for many firms.
•
Small businesses will see additional price reductions, since the load
on their insurance premiums - the amount by which the price
exceeds the expected benefits - will fall by up to 25 percent.
�Many currently insuring firms will receive discounts on their
premiums.
3.
Insuring firms can respond to cost reductions by:
Hiring more workers.
Raising wages of their existing workers or providing better pension
or other benefits.
Investing more in plant, equipment, education and training, and
research and development.
Increasing dividends to shareholders.
Lowering prices, thereby leaving consumers with more income to
spend on other goods.
Each of these outcomes has a stimulative effect on the economy and will
increase employment. Economic research has not reached clear
conclusions about how to apportion these effects. Almost all models
suggest that wage increases are a likely response, but they differ about
whether gll of the savings will result in wage increases, or whether some
of the savings will be allocated to additional investment or new hiring.
B.
Small businesses benefit from other features of the plan as well.
•
Small businesses, particularly those with low average wages, receive the
largest discounts.
•
Small businesses will see the largest reductions in their administrative
costs.
Many small businesses will benefit from the movement to community
rating. Small businesses have the most variability in insurance premiums,
because of the small size of their groups. This variability contributes to
the difficulty small firms have in attracting and keeping highly skilled
workers. If costs were independent of each group's risks, small
businesses might find it easier to attract and keep workers.
Health care reform will "level the playing field" among small businesses,
and between large and small businesses.
•
Small businesses that provide insurance currently pay more for
labor than their competitors that do not insure. They also must
bear the cost, in the form of higher premiums, tofinancecare for
the uninsured.
�•
Small businesses that insure currently pay up to 35 percent more
than their large business competitors for the same set of benefits.
Many small businesses would like to provide health insurance but cannot.
According to a recent study prepared by Charles Hall of Temple
University for the NFIB:
•
•
When asked why they do not offer insurance, the most common
reason (65 percent) is that premiums are too high.
•
C.
64 percent of small business owners would like to provide some or
better insurance for their workers;
92 percent of small business owners agree that the cost of health
insurance is a serious business problem.
The reform will result in greater health care employment in the short run
and a more efficient health sector in the long run.
•
•
As the health sector becomes more productive, the economy will be able
to produce more output than it could before reform. This productivity increase will raise living standards.
•
D.
By 1996, as many as 400,000 net new jobs will be created in the health
sector. This net job increase consists of a significant expansion of employment of health care providers and a decrease in employment of health
administrators and insurance workers. As the cost savings begin to
accrue, employment in the health sector will level off. By the end of the
decade, health care employment will grow more slowly, although there
will be no absolute decline in the number of employees.
Prohibiting pre-existing condition exclusions and the ability of insurers to
drop coverage will improve efficiency. While any one insurer benefits
from having these screens, those excluded are ultimately covered by
someone, or receive uncompensated care. The resources spent "passing
the buck" are thus a loss to society.
Health care refonn will end one reason firms discriminate among types of
workers.
•
Firms currendy have an incentive to favor workers who have other health
insurance coverage, particularly working spouses in two earner families,
�part-time workers, and temporary workers. In most cases, firms can hire
these workers without providing health insurance.
•
E.
The Health Security plan will eliminate incentives to hire people
on the basis of their health care costs as opposed to their job
qualifications.
By providing health care security, tbe Health Security plan will improve the
efficiency of the economy.
1.
The reduction in "job lock" will increase people's ability to find better
jobs.
Up to 30% of people repon that they are afraid to leave their current job
due to the risk of losing health insurance. Research by Brigitte Madrian
at Harvard has found that mobility rates for married men are depressed by
25 percent because of job lock. This effect impedes the ability of workers
to move to jobs where they are more productive.
Reducing job lock may also affect employment^ Firms may be more
willing to hire qualified workers with pre-existing conditions when they
cannot be charged more for them. On the other hand, some workers may
decide to leave the labor force if affordable health care is no longer tied
to staying at a particular job. Evidence suggests that about 350-600,000
people will decide to retire early following health care reform. The
increase in voluntary retirement is likely to increase employment
opponunities for younger workers.
2.
Lower costs for small businesses and tbe self-employed may make it
easier for people to form new companies.
The difficulty of self-employed workers and small businesses today in
purchasing health insurance creates large disincentives for individuals to
leave covered jobs to start up new businesses. Reform may thus
stimulate new business formation, particularly for small businesses. There
is littie economic research on this subject to date.
3.
Eliminating the link between welfare and health insurance will reduce
"welfare lock".
One of the barriers to leaving welfare is the loss of Medicaid benefits.
�Having universal insurance coverage will end
on welfare, for example, will get to keep abc
any additional earnings as a result of health
. typical mother
percent more of
Several studies estimate that eliminating weitar^ jck could have
substantial employment effects among the welfare p -pulation. Robert
Moffitt at Brown University and Barbara Wolfe at the University of
Wisconsin suggest that as many as 1 million of th
million welfare
recipients would take jobs if there were continuous \ 1th care benefits.
Aaron Yelowitz of MIT also finds that more Medic? \ recipients would
work if they could keep more of their income anc still receive health
insurance.
1
�n.
Existing studies fail to analyze accurately the Health Security plan.
There are two commonly cited studies of the economic impacts of the President's health
care reform proposal: "The Impact of a Health Insurance Mandate on Labor Costs and
Employment", by June and Dave O'Neill for the Employment Policies Institute; and
"The Employment Impact of Proposed Health Care Reform on Small Business", by The
CONSAD Research Corporadon. These studies do not adequately analyze the economic
effects of the President's health care reform proposal:
A.
The studies make several fundamental errors in characterizing tbe Health
Security plan.
•
They completely excluded from their analysis the discounts to small and
low-wage businesses that the Health Security plan provides.
The lack of discounts ~ coupled with the questionable assumption that
firms cannot shift any costs to workers earning less than $25,000 per year
— lead directly to the massively overstated claims of job loss.
•
They incorrecdy calculate the cost for part-time employees working 20 or
more hours per week.
In the O'Neill study, employers are assumed to pay the full premium for
all workers who work more than 20 hours per week. In the Health
Security plan, however, employers pay a much smaller, pro-rated
premium for part-time workers.
•
They use a benefit package that costs much more than the
Administration's package.
The O'Neill study assumes that employers pay $5,310 per worker with a
family and $2,160 per single worker. Estimates for the Health Security
plan are that employers will pay about $2,500 per worker with a family,
and about $1,500 per single worker. The cost that employers pay for a
family policy is adjusted to take into account that many families will have
two adults in the labor force. In these cases, both employers will
contribute to the cost of health insurance.
B.
The assumption about howfirmschange their employment in response to cost
changes is three to six times higher than most conventional estimates.
The O'Neill study assumes that firms will lay off 3% of their workforce if
�compensationrisesby 10%.
•
Summary estimates in the economic literature, for example by Charles
Brown and Allison Wellington, suggest that the responsiveness of firms
to cost changes for low-wage workers is only one-sixth to one-third of the
O'Neill assumption.
C.
Neither study accounts for job gains from businesses whose costs fall under
the reform.
D.
Real world evidence suggests that mandates do not have major adverse
employment effects.
1.
Hawaii imposed an employer health insurance mandate in 1974. From the
1970s until now.
•
Total private non-farm employment in Hawaii increased by 90
percent, compared to 54 percent in the United States as a whole.
•
Retail and wholesale trade employment grew by more in Hawaii
than in the United States as a whole.
•
Within the health care sector, total health services employment in
Hawaii grew more rapidly than it did in the United States as a
whole. In contrast, health insurance employment grew less rapidly
than it did in the United States as a whole.
The increase in health care costs for currendy uninsured low-wage
workers in smallfirmsis equivalent to only a very modest minimum wage
increase of $. 15 to $.35 per hour. An increase of this magnitude will still
leave the real compensation cost for minimum wage workers below its
average level in the 1980s.
•
E.
Evidence by Lawrence Katz at Harvard and Alan Krueger and
David Card at Princeton suggests that recent increases in the
minimum wage have had minimal or even positive effects on
employment.
These studies do not focus on the many beneficial aspects of the Health
Security plan discussed in Part I.
�There is no denying that some firms will pay more after reform than they did
prior to reform. The vast majority of Americans, however, will benefit from the
reduction in health insurance costs, the portability of coverage, the lower
administrative costs, the reduction in job lock, the lower costs for small
businesses and the self-employed, and the reduction in welfare lock. Any study
which ignores these effects cannot be a complete analysis of the employment
effects of health care reform.
ffl.
There are many factors in the health care reform that will tend to increasp
employment. There are some factors that will tend to decrease employment. And
there are several factors that will change the composition of employment. OveraU.
the net effect on employment is likely to be small. Over time, the beneficial effects
on employment are likely to strengthen.
A.
Existing models do not allow us to quantify the net effect on employment.
Estimating these effects would require precise ans^rs to a wide range of
questions, including:
•
How will individuals respond to the incentives in the plan, particularly
those affecting small business formation, job mobility, welfare reduction,
and retirement?
•
Will firms respond to reductions in health care costs by increasing wages
dollar-for-dollar, or in part by increasing employment, increasing investment, or reducing prices?
•
Will decreased uncertainty in the growth of health care costs encourage
firms to hire more workers or encourage more individuals to become selfemployed?
There are no existing models that can address all of therelevantissues. The
range of uncertainty is too great to use precise numbers. For this reason, we will
not present specific estimates of the employment effects of the Health Security
plan.
�Testimony
of
Dr. Laura D'Andrea Tyson
Chair
Council of Economic Advisers
before
the
House Committee on Ways and Means
Subcommittee on Health
Thursday, November 4, 1993
11:00 a.m.
THE ECONOMIC EFFECTS OF HEALTH CARE REFORM
Thank you, Mr. Chairman, f o r the o p p o r t u n i t y t o come before
your Committee t o discuss t h e economic e f f e c t s of h e a l t h care
reform.
The United States i s facing a h e a l t h care c r i s i s .
The
r a p i d l y r i s i n g cost of h e a l t h care h u r t s businesses, depresses
wages, and c o n t r i b u t e s t o f i s c a l imbalance.
The lack o f h e a l t h
s e c u r i t y makes many i n d i v i d u a l s a f r a i d t o leave t h e i r c u r r e n t
jobs, discourages others from working f o r small businesses o r
becoming self-employed, and keeps people on welfare instead o f
working.
Reforming h e a l t h care i s a d i f f i c u l t challenge, b u t one t h a t
we must face.
Let me f i r s t o u t l i n e the problems t h a t f o r c e us t o
take a c t i o n , and then I w i l l discuss t h e economic e f f e c t s o f t h e
Health S e c u r i t y Act.
�Whv Refonn Health Care?
There are five reasons why urgent health care action i s
needed.
The f i r s t problem i s that our health care system does not
provide security to individuals. When people get sick, the cost
of their insurance can increase dramatically, or they can be
dropped from coverage completely.
This situation i s a result of
r i s k selection practices on the part of insurers.
Insurers spend
large amounts of money trying to select good health r i s k s , and
avoid bad r i s k s .
This practice i s profitable for any one insurer
but i s s o c i a l l y wasteful.
After a l l , someone must cover the
costs incurred by people who get sick.
The r e s u l t i s that many
people cannot get coverage, and many more fear for their a b i l i t y
to get coverage i n the future.
The second problem with our health insurance system i s that
i t interferes with the employment decisions of individuals.
Almost 40 percent of insurers exclude pre-existing conditions
from t h e i r coverage of newly insured people, thus locking many
people into t h e i r current insurance p o l i c i e s and jobs.
Surveys
show that up to 30 percent of employees f e e l "locked" into t h e i r
jobs. Some do not form small businesses or become self-employed
because of the d i f f i c u l t y of obtaining insurance.
F i n a l l y , many
people remain on welfare because they w i l l lose t h e i r Medicaid
�coverage i f they take a job.
I f we are to adapt to changing
domestic and international economic circumstances, we must not
penalize individuals every time they change or lose a job.
The third problem with our health care system i s that the
number of people who do not have access to affordable insurance
is large and increasing. Over 37 million people do not have
health insurance.
And this i s not a predicament unique to the
unemployed. Three-quarters of a l l uninsured people are in
working families, and over one-third of the uninsured are in
families with at least one full-time year-round worker. We have
a system in which millions of people, many of them in working
families, cannot afford the rising costs of health care coverage,
and they face the risk of being financially crippled by events
beyond their control.
I t i s a myth that insured people do not need to worry about
the uninsured.
Under our current system, when the uninsured face
catastrophic costs, the insured pick up the b i l l .
Currently, the
uninsured pay only 20 percent of the health care costs they
incur, while the privately insured pay 130 percent of their
actual health care costs. The uninsured receive more costly care
than the insured, because they seek treatment in emergency rooms
when they have acute problems, rather than seeking treatment from
a physician at an early stage of their illnesses.
We know that
preventive actions reduce health care costs. For example, a
�recent study at the University of California at San Diego found
that hospital care for babies born with no prenatal care cost an
average of $2,200 more than corresponding care for babies whose
mothers received adequate prenatal care.
The cost of the
prenatal care was only about $1,000 per pregnancy.
The fourth problem with the health care system i s that
health care costs are high and r i s i n g .
No other country in the
world spends more than 10 percent of i t s GDP on health care.
United States spends 14 percent.
The
American consumers spend more
on health care than on fuel o i l , e l e c t r i c i t y , natural gas,
other
household operations, o i l and gasoline, local transportation,
furniture, and other household equipment combined.
The f i f t h problem with our health care system i s that i t i s
riddled with market f a i l u r e s , excess supply, and i n e f f i c i e n c i e s .
These distortions are the inevitable consequence of i n s u f f i c i e n t
competition: many consumers have l i t t l e or no choice i n the
health insurance they receive; and many providers have l i t t l e or
no incentive to control costs.
Despite our massive commitment of
resources to health care spending, the United States ranks 19th
out of 26 countries in infant mortality and 18th i n l i f e
expectancy.
abuse.
We lose an estimated $80 b i l l i o n a year to fraud and
Over 5 percent of our t o t a l health care spending—
conservatively $45 b i l l i o n in 1992—covers administrative
expenses and paperwork.
As many as one-third of common medical
�procedures may be unnecessary and inappropriate.
Hospital prices
continue to r i s e even though hospital beds are i n excess supply
in many parts of the country.
H O experience indicates that the
M
cost of medical care can be cut by as much as 10-20 percent
without reducing the quality of care.
These diverse indicators paint a compelling picture of the
misallocation of resources i n our current health care system.
Perhaps the most important economic reason for reform i s to
improve the efficiency of t h i s system.
This i n turn w i l l make
resources available to cover the uninsured and to address other
pressing economic and social needs.
The Economic Effects of Reform
The Health Security Act addresses these fundamental problems
in the current system.
I t w i l l lower costs, provide security,
increase job opportunities and increase the efficiency of the
economy. Many businesses w i l l see their costs f a l l , and many
others w i l l have access to coverage previously denied them.
Slower cost growth w i l l allow workers to enjoy faster growth i n
t h e i r r e a l wages, and reduced job lock w i l l increase t h e i r
a b i l i t y to find better jobs.
Let me describe what I believe to
be the important economic effects of health care reform.
�F i r s t , many employers who currently offer health
w i l l see t h e i r costs f a l l immediatelv.
insurance
Under the Health Security
plan, every individual w i l l receive health
insurance.
Eliminating uncompensated care i n the current system w i l l lower
costs to businesses that provide care, thereby making resources
available for increased wages or additional hiring.
Eliminating
corporate "free r i d e r s " w i l l also reduce spending by companies
that currently provide health benefits for t h e i r employees and
for their spouses who are not covered by their own employers.
Second, the Health Security Act gradually lowers aggregate
business spending on health insurance.
Although the business
sector as a whole w i l l i n i t i a l l y pay more for health
insurance,
the reduction i n health care cost growth lowers the growth of
premiums over time.
In fact, by the end of t h i s decade, we
estimate that aggregate business spending on mandatory services
covered by the Health Security plan w i l l f a l l by over $10
billion.
Businesses can do many things with the resulting cost
savings.
They can: hire more workers; r a i s e wages or provide
better benefits for existing workers; invest i n more plant,
equipment, education and training, and research and development;
increase dividends to shareholders; or lower prices, thereby
leaving consumers with more income to spend on other goods.
Each
of these outcomes w i l l have a stimulative e f f e c t on the economy
�and w i l l increase employment.
Economic research has not reached
clear conclusions about how t o apportion t h e savings among these
effects.
Almost a l l models suggest t h a t wage increases are a
l i k e l y response, but they d i f f e r about whether a l l of t h e savings
w i l l flow i n t o wage increases.
Nevertheless, t h e e f f e c t s of
lower h e a l t h care spending are c l e a r l y b e n e f i c i a l f o r t h e
economy.
Small businesses w i l l p a r t i c u l a r l y b e n e f i t from the Health
Security Act.
Currently small businesses t h a t provide insurance
face a d m i n i s t r a t i v e costs of up t o 40 percent, w h i l e large
businesses face costs of only 5 percent.
Under reform,
a d m i n i s t r a t i v e costs f o r small f i r m s w i l l f a l l by up t o 25
percentage p o i n t s .
A d d i t i o n a l l y , many of those c u r r e n t l y
i n s u r i n g small f i r m s w i l l receive subsidies f o r on t h e i r
premiums.
Although small businesses that do not currently provide
insurance w i l l pay more, they are l i k e l y to receive discounts to
make health care coverage affordable.
There i s a common myth
that small businesses cannot afford to pay anything for health
insurance.
I n fact, many small businesses report they would l i k e
to provide health insurance for t h e i r employees i f i t were more
affordable.
According to a recent study for the NFIB performed
by Charles Hall of Temple University, 64 percent of small
business owners would l i k e to provide some or better insurance
�for their workers.
When asked why they do not offer insurance,
the most common response (65 percent) was that premiums are too
high.
Ninety-two percent of small business owners agree that the
cost of health insurance i s a serious business problem.
Under
the Health Security Act, with affordable health insurance and
discounts for small businesses, t h i s w i l l no longer be the case.
Third, the Health Security Act w i l l result in greater
employment in the health care sector in the short run and a more
e f f i c i e n t health sector in the long run. With the increase i n
the number of insured Americans and the decrease in the
administrative burden of health insurance, there w i l l be a
significant expansion of employment of health care providers and
a decrease i n employment of health administrators and insurance
workers.
As the cost savings of the plan begin to accrue,
employment in the health sector w i l l grow more slowly, although
there w i l l be no absolute decline i n the number of employees.
Over time, the health sector w i l l become more productive.
This benefits a l l of us. We w i l l be able to have the same or
better health care as well as more investment, research and
development, or j u s t plain goods and services.
Fourth, the efficiency of the economy w i l l also be increased
by reducing iob lock and welfare lock.
By providing health care
security, the reform w i l l give workers the freedom to move to
8
�jobs where they might be more productive without having to worry
about losing their health insurance.
Small firms should
particularly benefit from t h i s , since they often have the hardest
time attracting highly s k i l l e d workers.
I n addition, firms
should be more w i l l i n g to hire workers with pre-existing
conditions because the new system does not penalize individuals
with a prior i l l n e s s .
This allows for better, more e f f i c i e n t
matches between employers and employees and increases the
efficiency of the economy.
Some workers may decide to leave the labor force completely
when there i s continuous health coverage.
Evidence suggests that
about 350-600,000 people w i l l decide to r e t i r e early under health
care reform.
This increase in voluntary retirement may increase
employment opportunities for younger workers.
Financing peform fox the Federal govgrmpent
Health care reform w i l l also work to lower the Federal
budget d e f i c i t .
Even with the Economic Plan that was passed i n
August, the Federal government w i l l again face r i s i n g d e f i c i t s
unless health care costs —
Medicaid programs —
p a r t i c u l a r l y i n the Medicare and
are brought under control.
Without health
care reform, we face the certainty of higher d e f i c i t s , higher
r e a l interest rates, and continued f i s c a l i n s t a b i l i t y .
Managing
the Federal budget requires health care reform, j u s t as the lack
of security requires universal, comprehensive coverage.
�To meet our health care needs, the Administration proposes
to spend money in five major areas.
discounts and subsidies.
The f i r s t i s premium
We estimate the Federal cost of these
discounts at $274 b i l l i o n over the 1995-2000 period.
This i s the
amount that i s capped in the law, after deducting the required
maintenance-of-effort
by the states.
The net cost of reform w i l l
be less, however, because reform w i l l lead to predictable savings
in Medicaid and Medicare as former beneficiaries of these
programs receive private insurance.
We estimate the net cost to
the Federal Government of the discounts at $161 b i l l i o n . This
includes a subsidy "cushion" to account for effects that we
cannot f u l l y model, such as changes in employment behavior or the
additional costs of induced retirement occasioned by the
implementation of our plan.
The 100 percent tax deductibility of health expenditures for
the self-employed proposed in our plan i s the second area that
w i l l require new Federal resources.
The new d e d u c t i b i l i t y
provision w i l l put the self-employed on the same footing as wage
and salary workers.
The t h i r d area of new spending i s spending on new public
health i n i t i a t i v e s , ranging from WIC enhancements to
clinics.
2000.
school-based
We project spending of $31 b i l l i o n between 1995
and
The l a s t two areas of new spending are two new programs
for the elderly and disabled: a drug benefit for Medicare; and a
10
�new program of home and community-based long-term care.
The
t o t a l cost of these spending i n i t i a t i v e s i s $332 b i l l i o n over the
6 year period.
We propose t o cover these new costs through 6 sources of
savings.
F i r s t , there are Medicare savings o f $123 b i l l i o n .
These savings are from s p e c i f i c , scorable program cuts — t h e
type t h a t the Congressional Budget o f f i c e has r e g u l a r l y c r e d i t e d
i n the past.
Medicaid savings of $65 b i l l i o n are the second
source of savings.
These savings come from two sources: phasing
down the Disproportionate Share payments needed i n the current
system because some people are uninsured; and t a k i n g advantage of
the
f a c t t h a t the cost of A l l i a n c e plans w i l l grow a t a less
r a p i d r a t e than the projected cost o f Medicaid coverage i n t h e
future.
The t h i r d source of funds i s savings from the VA, t h e
DOD, t h e Federal Employees Program, and the Public Health
Service, amounting t o $40 b i l l i o n .
Fourth, we propose to increase tobacco taxes and to
introduce a corporate assessment which together w i l l r a i s e $89
billion.
A $.75 increase i n the cigarette tax r a i s e s $65
b i l l i o n , and a 1 percent payroll assessment for firms that choose
to form corporate a l l i a n c e s instead of joining the regional
a l l i a n c e r a i s e s $24 b i l l i o n .
The corporate assessment i s
designed i n part to require that a l l firms contribute to the
costs of medical research and other public goods, as well as to
11
�recapture some of the savings these firms might be expected to
experience from reduced cost-shifting.
Fifth, our plan will provide another $68 billion of
additional savings from several sources, including revenue gains
from slower health care cost growth, from changes in cafeteria
plans offered by employers, from changes in some other tax
provisions, and from contributions of corporations benefitting
from early retiree provisions.
Finally, our plan generates $4
billion of lower debt service.
In total, we raise $390 billion through these sources of
savings.
Since our projected spending i s only $332 billion,
there i s $58 billion of deficit reduction.
W believe that our numbers are credible and based on
e
careful analysis of a l l of the available information.
W also
e
believe that they put us on track to a long-term program of lower
Federal deficits, lower interest rates, and increased job
creation.
Summary Conclusions on the Likely Economic Effects of Health Care
RefPfin
As you know, some have claimed that the Health Security Act
w i l l cause substantial damage to the economy. There i s no
denying that some firms and individuals w i l l pay more than they
12
�did prior to refonn.
In particular, the Health Security plan
w i l l increase costs for some young, single individuals as well as
for firms that did not previously offer health insurance.
The
vast majority of Americans, however, w i l l benefit from the
reduction i n health insurance costs, the p o r t a b i l i t y of coverage,
lower administrative costs, the reduction of job lock, the lower
costs for small businesses and the self-employed, and the
reduction i n welfare lock.
In addition, as already noted, many
employers, both large and small, currently providing
insurance
w i l l enjoy lower costs immediately and the business sector as a
whole w i l l enjoy lower costs within three years of the plan's
f u l l implementation.
Neither the models nor the data that would be required to
y i e l d a precise estimate of the employment effects of health care
reform are available.
I n many other areas of economics, there
are models that have been t r i e d and tested for decades, and
economists generally place a good deal of f a i t h i n the outcomes
they predict.
Standard macroeconomic models, for example, can
make reasonably precise predictions about how a tax increase or a
spending cut w i l l affect aggregate output or employment.
But there are no existing models that allow us to predict
the employment e f f e c t s of health care reform with the same degree
of precision.
This i s because the appropriate model for such an
exercise would have to make d i s t i n c t i o n s both between firms that
13
�c u r r e n t l y provide insurance and those t h a t do not and among the
many ways t h a t f i r m s i n e i t h e r group might respond t o a change i n
t h e i r h e a l t h care costs.
Such a model would also have t o p r e d i c t
how i n d i v i d u a l s might respond t o new i n c e n t i v e s i n the plan,
p a r t i c u l a r l y those a f f e c t i n g small business c r e a t i o n , j o b
m o b i l i t y , welfare lock, and retirement.
I n the absence of an a p p r o p r i a t e l y s p e c i f i e d model, one can
generate e i t h e r small net p o s i t i v e or small net negative e f f e c t s
of our plan on employment, depending on the assumptions one i s
w i l l i n g t o make i n e x i s t i n g models —
demonstrating the o l d adage
t h a t you get out what you put i n . Not s u r p r i s i n g l y , several
p r i v a t e - s e c t o r economists have concluded, as we a t the CEA have
concluded, t h a t the net e f f e c t of our h e a l t h care plan on the
aggregate employment l e v e l i s l i k e l y t o be s m a l l — o u r
internal
estimates suggest a range of plus or minus one-half o f 1 percent
of the aggregate employment l e v e l .
This i s because although
there are some f a c t o r s i n the plan t h a t w i l l tend t o decrease
employment, there are others t h a t w i l l tend both t o increase
employment and t o change i t s composition.
These o f f s e t t i n g
f a c t o r s are l i k e l y t o cancel each other out, although over time
as business h e a l t h care spending f a l l s below baseline, t h e
f a c t o r s encouraging an increase i n employment and wages are
l i k e l y t o strengthen.
14
�On balance, I am certain that the Health Security Act i s
good for American business and the American people. I t
diminishes job lock and welfare lock and allows more people to
become self-employed.
I t gets health care costs under control.
I t guarantees security to a l l Americans.
inefficiency
I t reduces waste and
i n one-seventh of our economy. And i t lowers the
budget d e f i c i t .
Reorganizing our health care system to use our
scarce resources more e f f i c i e n t l y w i l l help us r e a l i z e our goal
of r e a l i z i n g higher l i v i n g standards for ourselves and our
children.
I w i l l be delighted to answer any questions that you may
have at t h i s time.
15
�Copyright 1993 The Times Mirror Company
Los Angeles Times
October 8, 1993, Friday, Home Edition
SECTION: Metro; Part B; Page 7; Column 4; Metro Desk
LENGTH: 717 words
HEADLINE: PERSPECTIVE ON HEALTH CARE; BOOSTING WORKERS'
SECURITY; THOSE DISABLED OR ON WELFARE WILL BE EMPLOYABLE;
ALL WILL BE FREE TO CHANGE JOBS.
BYLINE: By PAUL STARR, Paul Starr is a professor of sociology at Princeton who has
been working on the Clinton plan. His book, The Social Transformation of American
Medicine, won the 1984 Pulitzer Prize for nonfiction.
BODY: One aspect of President Clinton's health security program has hardly
received adequate attention: For millions of people, it is a ticket to economic freedom.
Today's health-insurance system keeps many Americans from becoming fully
productive citizens. Three out of 10 people, according to public opinion surveys, say that
they or someone in their family have had to give up a better job opportunity because of
a pre-existing medical condition.
And just as the system produces "job lock," so it also produces "welfare lock." Many
people stay on welfare primarily to qualify for Medicaid because the jobs available to
them don't carry health benefits.
The same is true for many people with disabilities: Often, government health benefits
are available only if they do not work, and jobs with health benefits are hard to find
because prospective employers may face steep premium increases if they hire someone at
risk of high medical bills.
By prohibiting exclusions of pre-existing conditions and requiring all employers to
provide health coverage, the President's program will eliminate both job lock and welfare
lock.
And because employers will join large pools called "health alliances" and pay a
percentage of average premiums, they will no longer fear high insurance rates as a result
�of hiring people with a history of serious illness or disability. That will reduce b;i'
employment.
^ to
Indeed, one little-mentioned provision of the President's program goes even further:
People with disabilities will receive a tax credit for personal-assistance services worth
50% of earnings - a major incentive to take a job.
In addition, the new benefit offering home- and community-based long-term cau- u ill
open up opportunities to go to work for many people ~ primarily women -- who ;•'<• now
at home caring for an elderly parent or disabled member of their family.
All these positive effects on work and employment need to be remembered ami'! ihe
noisyclaims of opponents that the President's program will hurt small business an.i jobs.
In fact, small businesses that now provide insurance stand to gain dramatically. Small
business pays the highest administrative overhead on health insurance -- 40 cent^ " i ihe
premium dollar for businesses with fewer than five employees. By purchasing cow-^e
through the new health alliances, small business will get immediate relief from hit
administrative costs.
1
Moreover, discounts for small businesses will enable them to purchase coverage i"r no
more than a flat percentage of payroll -- as low as 3.5% for firms with fewer than ^
workers and average wages below $12,000. Firms with wages averaging $24,000 a".i over
will pay their share of premiums or 7.9% of payroll, whichever is less.
Larger firms will also benefit from the requirement that all employers particip.'u .
When employers pay for insurance, they typically pay for an entire family, includiiv ihe
employee's working spouse. Under reform, the costs of families will be more equiK^ly
spread, reducing the cost to each firm for workers with families by about one-Uii'> .
!
Employers who now pay for health insurance also indirectly pay for the uninsti" •:. who
leave unpaid bills at hospitals. After reform, that burden will be lifted.
For all these reasons, firms that now insure, whether they are big or small, will MV
their health insurance costs go down, counteracting the effects on firms that have !•> pay
for health insurance for the first time.
Reform will also help overcome one of the major obstacles to starting a new small
business. Employees at big firms who would like to set up a small business often on'i
get health insurance at a reasonable price, especially if they have a pre-existing
condition. Even if they are healthy, they face the risk of starting a business and tlum
becoming sick and uninsurable. Guaranteed coverage at affordable rates through i'•••
health alliances removes that risk.
�As the health-care system has become more costly and inequitable, it has impo-v i
enormous hidden costs on Americans with all kinds of desires and dreams - stani .;' a
business, taking a better job, getting off welfare, making a new start after sufferins:
disabling injury. Health-care reform will not just offer them security. It will give ii.em
back their freedom.
GRAPHIC: Photo, PAUL STARR
LANGUAGE: ENGUSH
�Cost of
Doing Nothing
�COST OF DOING NOTHING
Table of Contents
he Costs of Failing to Reform Health Care
Health care spending per working American will be over
$7,000 in 1994
B.
Without health care reform, American workers' wages will
continue to stagnate
C.
The lack of security affects employment
p. ?
Tyson Testimony
p. ?
Workers Are Losing Wages to Rising Health Cost (graph)
p. ?
IV.
More Americans Lack Health Security (graph)
p. ?
V.
Alternative Deficits (graph)
p. ?
i/tiata/healthcare/donoth.sum
12/7/93
�TALKING POINTS
COST OF DOING NOTHING
Every American - 100% - can expect to pay higher insurance premiums nearly every
year, with no guarantee of security, no guaranteed benefits, and no guarantee that
insurance will be there when they need it.
One of every four Americans will lose their insurance at some point in the next two
years.
Almost $1 out of every $5 Americans spend will go to health care.
By the end of the decade, just to keep their benefits, American workers will sacrifice
almost $600 in wages every year.
Millions of Americans will find that rising costs will force their firms to cut back on
benefits and limit choices of doctors and health plans.
i/data/healthcare/donoth.tps
12/7/93
�THE COSTS OF FAILING TO REFORM HEALTH CARE
I. HEALTH CARE SPENDING PER WORKING AMERICAN WILL BE OVER $7,000
IN 1994.
Working Americans will, on average, pay $1,864 directly for health care in 1994.
Their employers will pay $3,409 for health insurance and other medical payments.
Federal, State, and Local taxes for health care will total $2,149.
H. WITHOUT HEALTH CARE REFORM, AMERICAN WORKERS' WAGES WILL
CONTINUE TO STAGNATE.
The rapid growth in health care costsrelativeto therestof the economy may have
depressed wages by up to $1,000 since 1975. If current trends continue without
reform, real wages may be furtherreducedby over $600 by the end of the decade.
ffl. THE LACK OF SECURITY AFFECTS EMPLOYMENT
Many individuals are afraid to leave their current job, for fear that they will be unable
to obtain insurance on a future job. Some individuals do not work for small
businesses or do not become self-employed because of the high cost of health
insurance for these groups. Many individuals on welfare would like to work but
cannot take a job without losing Medicaid benefits.
�The Costs of Failing to Reform Health Care
by
Laura D'Andrea Tyson
Chair, Council of Economic Advisers
October 6, 1993
�I. Effects on Individuals
Our health care system is cosdy and does not provide security to people. If a person loses
a job, changes jobs, or gets sick, there is no guarantee of health coverage.
A. Health care spending per working American will be over $7,000 in 1994. This total
includes (Chart 1):
i. Out-of-pocket spending and the worker's share of the insurance premium ($1,864
in 1994).
ii. Employer-paid premiums ($3,163).
iii.
Employer-paid workers' compensation, disability insurance, and industrial
insurance to their workers ($246).
iv. Payroll taxes to pay for Medicare ($926).
v. Other taxes, fees, and payments (Medicare and Medicaid predominantly) paid to
the Federal government ($654).
%
vi. Taxes, fees, and payments (Medicaid and state employees predominandy) to state
and local governments ($569).
If we do not have health care reform soon, health care spending per working
American will rise to $12,386 by the year 2000, or 25 percent of compensation.
B. The current insurance system does not provide true security.
i.
Insurers focus on risk selection rather than pooling groups of people.
•
Almost 40 percent of insurers exclude pre-existing conditions from their
coverage of newly insured people.
•
Insurers also price by the experience of the group. This means that people
cannot get one of the most important types of insurance coverage they want:
the right not to have to pay more if they get sick.
•
Insurers "red line" or refuse to cover specific industries that they find to be
hazardous, including many small businesses.
ii. The number of people who are uninsured is high and rising.
�•
Three-quarters of the uninsured are in working families. Thirty-two percent
ofthe uninsured are in families with at least one full-time year-round worker.
C. Fear of losing coverage causes people to keep jobs they would like to leave or to stay
on welfare.
i. Up to 30 percent of employees report that they are afraid to leave their job for fear
of losing continuous health insurance coverage. This reduction in mobility, or "job
lock," can be a major impediment to the efficiency of the economy.
ii. One of the most important reasons people do not leave AFDC is the fear of losing
health care coverage for themselves and their children. This "welfare lock" traps
people into public programs and raises government costs.
iii.
Health insurance creates a substantial barrier to many people choosing to become
self-employed or to start a small firm. Self-employed people face higher
administrative costs than people in large firms for health insurance coverage. In
addition, because groups are experience rated, even self-employed people in good
healthriskhaving high premiums in future years if they become sick.
D. Currently insured people are paying for the costs incurred
•
the uninsured.
Current estimates suggest that about $25 billion of uncompensated care is paid for
by the insured. It is estimated that, in 1994, there will be about $217 billion
of business and household spending on health insurance. Providing health
insurance for all Americans will allow for savings that exceed 10 percent of
existing insurance spending.
n. The Total Costs of Health Care are High and Rising.
A. Current and Projected Health Care Costs
i. In 1992, the United States devoted 14 percent of GDP to health care. In 1980, the
share was 9 percent. No other country in the world spends more than 10 percent of
GDP on health care. Without health care reform, it is estimated that health care
spending will consume 18 percent of GDP in the United States by the year 2000.
ii. The United States spends as much on health care as it does on fuel oil, electricity,
natural gas, other household operations, oil and gasoline, transportation (including
all new and used car purchases), furniture, and other household equipment combined.
iii.
Over forty percent of the growth of real per capita GDP between 1993 and 1996
will be accounted for by health care spending. While some of this growth is
�warranted, this unusually high rate crowds out othc-
onsumption.
iv. Health care cost growth will continue to outpace grov.
economy.
>egments of the
• Federal Medicaid growth is expected to be over 16 pera it in 1994, and to
decline to only 12 percent in the rest of the decade. Med • r growth will be
>e
between 9 and 11 percent and private health care costs v grow at between
7 and 8 percent for the rest of the decade. Growth in the st of the economy
is expected to be between 4 and 6 percent.
;
B. The high cost of health care is driven by several market f lilures.
There are numerous instances where the current system 'encourages wasteful and
inefficient medical practices.
i. There is a lack of price competition in the market for insurance, because many
individuals do not have a choice of health care plans.
•
r
Only 29 percent of companies with fewer tha' 00 employees offer any
choice of plans.
%
ii. Administrative costs in health insurance are extremely hi th, in part because there is
little or no coordination across insurers in the fo; :s they require or their
reimbursement systems.
•
•
Over 5 percent of health care expenditures ($45 billion in 1992) went for
administrative expenses. This exceeds the total amount spent on all public
health service programs.
D. The health care system has a great deal of waste. The current system of
reimbursement encourages providers to over-utilize tests and procedures.
i. Research suggests that up to one-half of some procedures that are performed may
be either inappropriate or unnecessary. For example, it is estimated that the
United States spent $1 billion on unnecessary Cesarean sections in 1987 alone.
ii. Fraud and abuse may account for about 10 percent of U.S. health care costs.
�m. The Cost to Business
A. Businesses pay for health care through premium contributions and other programs
such as workers compensation.
i. Real business spending on health care hasrisenfrom $774 per employee (in $1992)
in 1970 to $2,345 in 1992, a 200 percent increase.
ii. Real workers' compensation per employee has more than doubled since 1970, rising
from $149 (in $1987) in 1970 to $326 in 1992. Health care costs are the fastest
growing component of workers' compensation.
B. Small firms are particularly hurt by the current system, because many do not have
access to affordable health care.
i. Small firms face administrative loads of up to 40 percent, compared to about 5
percent in large firms with 10,000 or more employees.
ii. Because of experience rating, many small firms must pay exorbitant amounts for
insurance or are unable to get insurance at all.
iii.
Smallfirmsoften cannot afford to provide any choice of health care plan to their
employees.
C. There is cost shifting from government health care programs and people who are
privately insured to the uninsured.
•
Currently, Medicaid pays providers at about 82 percent of costs, and Medicare pays
at 88 percent of costs. The uninsured pay at 20 percent of costs. The resulting cost
shifting ($26 billion of hospital costs alone) results in higher premiums in the private
sector (Chart 2).
IV. The cost to the Government
Our health care system is a growing burden on the government and leads to increased
deficits.
A. Governments are responsible for 44 percent of health care spending.
•
At the Federal level, most of this spending is for Medicare and Medicaid. State
and local spending is predominantly for Medicaid, and for health care for state
and local government workers.
�B. Rising health costs crowd out other government spending and contribute to the
deficit.
i. Health care spending accounts for 17 percent of Federal spending. Under current
projections, that share is expected toriseto over 20 percent in the next five years.
As health care continues to consume a larger share of the budget, Federal spending
on education, training, employment and social services will actually decline as a
share of total Federal spending over this period. The rate of return to many
government investments - such as education - is very high.
C. Health care will absorb much of government spending in the next several years.
•
Almost two-thirds of the growth in federal spending between 1993 and 1996 will
be accounted for by health care spending.
V. The Cost to Families
A. The bottom line for workers is that they ultimately pay for most of health care
spending, either out-of-pocket or indirectly, through higher taxes and lower wages.
•
Empirical research suggests that the dominant response of businesses to higher
health insurance costs has been to lower the wages they pay their employees.
Similarly, the taxes required to pay for government health spending are bom to
some extent by workers in the form of lower wages. One of thereasonsthat real
wages have barely grown for the past 20 years is the increased costs of health
care for businesses.
B. Without reform, wages of American workers will continue to lag.
•
If employer contributions to health insurance remained constant at their 1992
share of compensation through the rest of the decade, and employers passed all
of these savings on to workers, real wages per worker would be $655 higher in
2000 than they are otherwise projected to be. If they hadremainedat their 1975
share, real wages would have been $1,034 higher in 1992 than they actually were
(Chart 3).
�Workers are Losing Wages to Rising Health Costs
If health care had been reformed in 1975, American workers would have
over $1,000 in extra wages every year
$30,000
$29,630
Lost Wages
$29,000
$28,000
$28,494
Actual Wages
$27,000
$26,000
>
1975
Soimv.
I
1977
I
1979
i
L
1981
1983
J
i
1985
1987
1989
L
1991
C o m m c r c i ' f V p . i r t m e n l , Office of M a n a g e m e n t and Budget
1992
�More Americans Lack Health Security
16
Percent of population without insurance
14.7%
14
12
10
8
2
0.5%
1.0%
0
Canada
Denmark
France
Germany Sweden
Japan
Source: O r g a n i z a t i o n of I x o n o m i c C o o p e r a t i o n a n d D e v e l o p m e n t
United
Kingdom
United
States
�ALTERNATIVE DEFICITS 1993 - 2000
$ BILLIONS
500
WHERE WE WERE
400
300
MID-SESSION REVIEW
200
100
MID-SESSION REVIEW WITH
HEALTH CARE PLAN
1993
1994
1995
1996
1997
1998
1999
2000
11/03/93
�ALTERNATIVE DEFICITS 1993 - 2000
$ BILLIONS
Where We Were ( April CBO): Where We Might Be with Health Ca Mid-Session Review (August CEA):
1993
254.948000
254.948
254.948000
1994
301 591000
259000
259.380544
1995
300.811000
191.000
200.444128
1996
297.785000
177.000
178.982215
1997
346.778000
187.000
184.339311
1998
387.397000
188 000
180.989384
1999
428.892206
155 000
175.774839
2000
477.567335
147 000
184.402709
11/03/93
�Questions &
Answers
�TOP QUESTIONS AND ANSWERS:
HEALTH CARE AND THE ECONOMY
December
20, 1993
1.
How can you insure everybody and maintain quality and
guarantee
comprehensive
benefits and add both preventive care and new drug
benefits and then look at me with a straight face and say that you're
going to pay for all that by cutting
waste?
A:
I'm glad you asked that because that's not the only way this plan will be
financed. To finance health reform, the President specifically rejected a
government-run system and broad based taxes, building instead on today's
private, employer-based system. There are three primary sources of funding.
1. First, we ask everyone -- employers and individuals -- to take responsibility
and contribute to the cost of their health care. Right now, those of us who
have insurance and those companies that provide insurance have to pay for
those who do not - and that's just not right. But it's also not right to continue
a system in which the vast majority ofthe uninsured are working people and
their families who can't afford health insurance. We're going to ask them to
take responsibility to help finance the health care system, but we're also
going to make sure they can afford to - with discounts for low income
workers, the unemployed, and low-wage and small businesses. Two-thirds of
the financing comes from asking employers and employees who don't pay now
to start taking some responsibility.
2. Second, we are going to limit the growth of wasteful government health
spending. We all know that it's tough to stop government spending, but we
do think we can slow it down. And unlike other proposals in the past, we
won't do it with vague caps. We will do it with specific, scorable, line-by-line
savings.
In the past, we haven't been able to achieve savings in the growth of
Medicare or Medicaid for a few reasons. Because it was outside the context of
health care reform, savings were assumed to come from cutting services for
beneficiaries. Let me be clear, I would never do anything to put those
beneficiaries at risk. Indeed, Medicare recipients will see their benefits
increase through the President's plan.
Past proposals have sought to contain public sector - Medicaid and Medicare
- costs while letting private sector costs rise unchecked. This just resulted in
unpaid public sector costs being shifted onto the private sector, raising the
premiums ofthe insured middle class and small businesses who were already
taking the worst hit. I n the context of a plan to control both public and
�private sector costs, however, we can reduce Medicare savings without this
unfair cost-shifting.
Every plan that has been proposed recognizes that national health care
reform can save money by slowing the rate of growth in Medicare and
Medicaid. We can debate how fast those savings can be achieved and how big
those savings can be, but I think we all agree that there will be savings that
will be our second major source of financing for health care reform.
3. Third, although the President specifically rejected a broad based tax on the
middle class, some new taxes -- on tobacco and on corporations that form
their own alliances -- will be raised to finance reform. The tobacco tax of 75
cents per pack is expected to raise $65 billion over 5 years. Higher cigarette
prices ensure that those who smoke pay for the health costs that smoking
cause and may also have a significant impact in preventing teenagers from
ever starting to smoke. The corporate assessment of 1% - raising $24 billion
over 5 years -- will be used to help pay for health care for everyone.
Those are the three primary sources of private and public sector funding that
will pay for health security for every American. We beheve that it is a fair
approach to financing: one that asks responsibility of everybody involved. I t
is also a conservative approach: one that builds on the current system.
One thing that I want to emphasize is the faith we have in the numbers we
have put forth. This faith was confirmed by a study from an independent,
widely respected health policy consulting firm, Lewin-VHI. The chairman
and CEO of Lewin-VHI said that their study showed that "the plan's
financing structure works: it meets the President's requirement of providing
universal coverage, and it does so without relying on an increase in broadbased income taxes." He also said that "If the question is whether thev can
finance this program with the revenues thev will get under their plan, the
answer is yes, and thev will still end up with $25 billion for budgetary deficit
reduction."
Follow-up
Q:
But what about Lewin-VHI's finding
higher than they
estimated?
A:
that premiums
will be 17%
We have some problems with the way that they calculated the premiums. But
the bottom line is this: even though thev assumed the cost of the premiums
would be higher, thev still said that mv proposal would achieve universal
covergae with billions of dollars left over for deficit reduction.
�2.
Aren't the government
discounts
uncapped
entitlement?
in your proposal
just
another
A:
No. The Health Security Act provides discounts on the price of insurance for
small businesses and low-income people. And the amount of discounts
provided was said to be sufficient bv an independent study done bv LewinVHI. But the plan also sets a limit on the amount of these discounts that can
be spent automatically. We felt an open-ended entitlement left the federal
budget vulnerable for unpredictable costs in the future, and that was not an
option. This program must pay for itself, and costs must be clear and
predictable. I f the amount specified for discounts - plus a 15% cushion -- is
spent, Congress has to review the discounts and take action. This trigger
represents the President's strong commitment to financial responsibility.
That said, we are confident we have been conservative in estimating the
needed funds for discounts. These estimates are based on sophisticated
models built from very specific information about factors like family income
data, numbers of firms at certain sizes and wage-rates, etc. Some behavioral
changes -- both positive and negative -- are difficult to quantify in a program
of this magnitude. This is whv we have also specifically built in a cushion for
these unknowns, giving us even greater confidence in these estimates.
Follow-Up
Q:
Haven't you retreated
A:
from universal
coverage?
Absolutely not. We are confident we have been conservative in estimating the
needed funds for discounts. And we have specifically built in a cushion for
any unknown factors, giving us even greater confidence in these estimates
Let me be clear: health security means universal coverage and
comprehensive benefits that can't be taken away. As I said last week when I
presented the bill, I will not sign a health reform bill that does not achieve
universal coverage with comprehensive benefits. Security is non-negotiable.
Q:
What will happen
when the cap is hit and there's no money
left?
A:
That's very unlikely. We believe that there are enough protections within the
system to prevent us from ever reaching that point.
Our plan is based on the most responsible financing possible and on very
conservative assumptions. As just one example, we overestimated the
demand for discounts for small businesses and low-income families in order
to be as conservative as possible. I n addition, we have a 15 percent "cushion"
-- about $45 billion -- to cover unexpected costs. We ran sophisticated models
�to test how the system would respond to extreme hypothetical situations. For
example, an unexpected 2% increase in unemployment -- with millions more
suddenly qualifying for discounts -- would require an additional $4 billion a
year. The $11 billion cushion has nearly three times the funds necessary for
this extreme situation, and any funds that are not used in one year can be
carried over to the next year so that a contingency reserve will build over
time. There are also early warning mechanisms built in -- the alliances have
options they can take when they see a problem developing.
So, the system is designed to prevent the kind of situation you're talking
about. We believe the financing is solid and the early warning system will be
effective. But, i f Congressional action is needed, it will be taken. I t could
mean limiting the amount of money spent on discounts or it could mean
raising additional revenue. The important thing is that Congress and the
President will have to re-examine the system, identify the problems, and
decide what to do. They cannot just let federal health spending increase
automatically -- as it has in the cases of Social Security, Medicare and
Medicaid. This mechanism ensures that type of accountability and fiscal
responsibility that the American people demand from their government.
�3.
Isn't it the case that not a single outside
numbers?
economist
will validate
your
A:
It's just not true. After the independent, widely respected health policy
consulting firm, Lewin-VHI, did a study on our numbers, their chairman and
CEO said that "the plan's financing structure works: it meets the President's
requirement of providing universal coverage, and it does so without reiving
on an increase in broad-based income taxes." He also said that "If the
question is whether thev can finance this program with the revenues they
will get under their plan, the answer is yes, and thev will still end up with
$25 billion for budgetary deficit reduction."
What may be true is that probably any experts who look at this plan may
find some policy or political judgment they disagree with. But when you ask
economists whether this plan is sound and whether the numbers add up, you
find a lot of support -- among top economists like Stephen Zuckerman of the
Urban Institute, Jack Hadley of Georgetown, Uwe Reinhardt of Princeton,
Henry Aaron ofthe Brookings Institute, and Ted Marmor of Yale. These are
people who may sometimes be critical of our policy decisions, but they agree
that our numbers are honest and sound.
Typically estimates ofthe cost of a government health care program are
developed by OMB and confirmed by other government analysts. We insisted
on an unprecedented degree of outside review and validation - with
independent double- and triple-checking. Why? Because we wanted to get
the best data available validated by the best people possible so that the
national debate would be able to focus on the policy itself -- instead of getting
caught up in minute debates about the numbers.
Follow-up
Q:
But didn't
A:
Pat Moynihan
call your numbers
"fantasy"?
That's old. He said that based on initial estimates, before we finished
scrubbing the numbers and making them a little more conservative. And I
think he was pointing out more of a pobtical or policy disagreement than a
problem with the actual numbers themselves. But after we released our most
recent estimates, he said they were "more rigorous" and "more accepting of
uncertainty."
�4.
How do you respond to alternative plans which seem to
accomplish
all that yours says it will but with considerably
less pain?
A:
The President's plan stands alone as the only proposal that is universal,
comprehensive and workable. It's the only proposal that keeps everything
that's right about the current system in place-- private sector health care,
employer-based coverage, choice of doctors and plans, and high quality
American medicine - and fixes what's wrong without any new broad- based
taxes.
Besides a government-run system, it's the only proposal that achieves
universal coverage without shifting the full cost of health care to American
families, like Senator Chafee's plan. We have a lot in common with the
Chafee plan - it is probably closer to our plan than any of the others. But,
we think sharing the costs between employers and workers, as the current
system does, is the best way to accomplish universal coverage. This approach
was first proposed by President Nixon in the early 70s. Nor do we think
turning American health care over to the federal government involves less
pain; this requires several new federal taxes that raise huge new federal
revenues.
Some of the other proposals, like the Cooper plan, may help poor people get
insurance, but they do nothing to guarantee security to middle-class families.
In fact, some of these alternatives actually encourage companies to drop the
coverage thev now provide their workers. And the other proposals pave the
way for discriminatory insurance practices to continue by refusing to crack
down on insurance company premium increases. One thing is clear, under
these alternative plans, millions of Americans will continue to lose their
health insurance, and the rest of us will foot the bill for their care.
We have put forth a thorough and explicit proposal that answers the tough
questions: it spells out what's covered, how the system works, and most
importantly, how it's paid for. These other proposals are long on rhetoric but
short on specifics. On all the decisions that affect Americans most -- what's
covered, who pays -- they provide no details.
If these other plans want to be a part ofthe debate, then fine, let's debate.
But first, level with us and give us the details. Tell us what your plan will do
for people. Under your plan, who can feel sure they'll have coverage? What
will they be covered for? Which services will be covered and which will be
denied? And most importantly, what will the whole thing cost, and who'll
get stuck with the bill? I f they really think their plans are better, it's time
they come forward with specifics.
�5.
What makes you think
system?
that you can squeeze
so much savings
from
the
A:
Every doctor, every nurse, every patient -- everyone who comes into contact
with today's health care system -- will tell you that there is an incredible
amount of waste and excess and inefficiency. Dr. C. Everett Koop. who was
Surgeon General under President Reagan, thinks that there is over $200
billion in waste that we can eliminate bv reforming the system. This
explains why our international competitors spend so much less than we do on
health care -- while insuring all of their people with richer benefits than the
average American has.
For an example in the United States, look at the Mayo Clinic in Minnesota. It
provides some ofthe highest-quality care in the country and has kept the
growth in its costs down to 3.9%.
There was a study recently done that shows that open-heart surgery that
costs $21,000 in one Pennsylvania hospital costs as much as $84,000 in
another hospital in the same state but the lower-cost hospital had better
outcomes. If we have more and better information about the cost and results
of different kinds of treatments, as the President's plan calls for, then we can
see discrepancies like this, and figure out how we can save money and
provide better quality care.
So I say: instead of going to the American people and imposing broad middle
class taxes, as some suggest, let's try and save some money from the current
system. Other countries have done it, individual states have done it, and we
can do it as well.
Follow-Up:
If the savings you predict don't come to pass, would you consider
scaling back your benefits package to help make this plan more
affordable?
A:
Our first principle is security: To us this means a comprehensive package of
benefits - that is detailed, spelled out in advance and guaranteed so that it
can never be taken away. While we are willing to work with Congress on this
legislation, we are committed to comprehensive benefits.
�6.
After learning from our Nixon era experience that price controls don't
work, why are we really going back to price controls under the guise
of premium caps?
A:
We have considered -- but specifically rejected -- a policy imposing price
controls on health care. Our primary strategy for cost containment is
private sector competition -- creating the right economic incentives to bring
costs in fine and encourage health plans to compete on price and quality.
But we strongly believe that, regardless of how quickly or how firmly
competitive reforms take hold, we need to build some discipline and certainty
into our system -- so that businesses and consumers know that their health
insurance premiums will not be allowed to suddenly spiral out of control one
year, and that the federal government will not spend without accountability.
That is why we reinforce the competitive system with a limit on health care
premium increases.
This is the most sensible approach to ensuring cost control. As Stephen
Zuckerman and Jack Hadley, two leading health policy analysts wrote, "it
seems far preferable that insurance companies that are responsible to their
subscribers make these decisions than having the federal government
involved in detailed price negotiations and review procedures with individual
hospitals and physicians."
In contrast to our plan, price controls call for government micro-management
of every health care service, drug, technology and product. Price controls
would have the government substitute its views for the markets in hundreds
-- maybe thousands -- of decisions. We reject that type of micro-management
in favor of letting a market that truly competes work.
Follow-Up
Q:
The premium cap may be too strict for some health plans. What
happens if a health plan runs out of money?
A:
If a health plan were to literally run out of money, which is highly unlikely,
consumers would simply join another plan. Unlike today, though, benefits
would be guaranteed. Such a scenario is highly unlikely, certainly less likely
than it is today, because health plans will be required to have met strict
financial solvency requirements before they can do business.
The limit of a premium cap and the security it provides are essential
components of comprehensive health reform. If businesses and individuals
are going to all be asked to contribute to the cost of health care, and
�government is going to provide discounts to those who cannot afford their full
share, then everyone must be guaranteed that increases in their payments
will stay within reasonable bounds. Without such a guarantee, reform would
have no chance.
When you hear concerns about running out of money, remember the source.
It's the insurance industry that is running an advertising campaign against
this limit on premium growth. And it's because they're out to preserve their
profits -• plain and simple.
Q:
Won't these premium caps cause plans to limit services
and ration care to stay within the range?
and
benefits
A:
Absolutely not. In fact, health plans have every incentive not to do this. The
President's proposal is built upon competition among health plans. I f a health
plan starts to cut corners on patients, it knows that the patients are free to
switch plans. And they know that their low levels of consumer satisfaction
will be reported on consumer report cards that will be published publicly
about each health plan which will make it very unlikely that new customers
would sign up. For the health plan, cutting corners will mean less customers
and therefore lower profits.
As a common American example, we regulate the rates of utilities like
electric and gas -- and it works just fine. You don't see electric and gas
companies running out of money or cutting off service to customers.
�7.
A:
t
The last thing we need is a big government bureaucracy.
all these alliances are?
Isn't that
The last thing we want is big government bureaucracies, and that is exactly
why we rejected a government-run plan. What we designed instead is a plan
that calls for the minimal amount of new government needed to ensure that
the market is operating to guarantee real choice, real quality and real
competition that serves the consumers - and not the health care industry at
the expense of the rest of us. It's a proposal for guaranteed private
insurance. We expect most alliances will be run by groups of local businesses
and consumers, not by the government, and not by insurance companies.
They are purchasers, not government regulators. We expect the alliance will
function on a budget of about 2% of premiums -- reducing buying, marketing,
and selling costs for employers and health plans. This will reduce overall
administrative costs.
Alliances replace thousands of small inefficient purchasers of insurance
(small and mid-size employers and self-employed individuals) with one
larger, stronger, more sophisticated buyer that's able to get better value and
offer much more choice. People will continue to get their care through
private health care plans. The alliance enables them to have maximum
choice between those plans.
�8.
Won't your proposal
just result in huge job
losses?
A:
No. 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. That is why we beheve that comprehensive health care
reform is a necessary element in a strategy to increase long-term economic
growth, reduce the deficit, and create jobs.
People that make this job loss criticism sometimes cite a few, old studies that
don't take into account the significant discounts that the President's plan
offers small businesses. But the lobbyist who paid for the most cited iob loss
study calls it "outdated" and not relevant to the President's plan.
The bottom line is this: health care reform will bring down the costs of most
businesses who provide insurance to their workers - allowing them to create
jobs and increase wages. CEOs at some ofthe top companies in America companies like Chrysler, Ford, Bethlehem Steel and Xerox - have said that
they support the President's plan because it will help them become more
competitive. And even a leading health economist who has at times criticized
our plan, Henry Aaron ofthe Brookings Institution, said that "Successful
implementation of health care reform is one ofthe best pieces of news
American business could receive."
•
M a n u f a c t u r e r s -- the employers that pay the highest wages to
middle-class Americans - have been forced to lay off workers because
of rising health costs. But a recent study (from the Economic Policy
Institute) indicates that the President's plan will lower manufacturers'
health costs and create over 258,000 jobs over the next decade.
•
Small businesses t h a t c u r r e n t l y provide insurance i n c l u d i n g
the fastest g r o w i n g businesses will be one ofthe biggest winners.
The Wall Street Journal has called the plan "an unexpected windfall"
for those small businesses.
•
Jobs i n the Health Care I n d u s t r y : In addition, there will be jobs
created 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.
A recent study by the Employee Benefit Research Institute -- a nonpartisan,
nonprofit research group -- said that the proposal would create up to 660,000 iobs
overall.
�9.
What is the impact
of your plan on small
businesses?
A:
Today, small businesses -- the engine of America's economic growth -- are
threatened by a health care system that is stacked against them. Their
health coverage costs more and offers less than it does for large businesses.
Insurers charge them much more than large employers and then raise their
premiums or drop them altogether i f even one employee gets sick. And,
administrative costs eat up as much as 40 cents of every dollar small
businesses spend on health insurance premiums -- eight times as much as
large companies.
For the majority of small businesses that currently provide insurance to their
emplovees. the Wall Street Journal has said that the President's Health
Security Act will be "an unexpected windfall". These businesses will pay
substantially less in a health care system that puts them -- not insurance
companies -- in the driver's seat. These small businesses will now be able to
create new jobs and expand their businesses.
A lot of small businesses that don't provide insurance want to -- they just
can't afford it. The President's plan will provide discounts for small
businesses, depending on the firm size and average wage of their workers.
When they actually looked at the President's proposal, many small business
owners found that they will save more on their family's policies -- which they
get today at the highest prices -- than it will cost them to insure all their
employees.
One business owner said she recently became convinced that the Clinton
plan, or something like it, would be in the best interest of her company
and her eight employees, who are now uninsured.
"Worki?ig through the Clinton plan figures, I found that it would allow
me to cover all my employees with very good benefits for the same price
or less than I am now paying for myself and family," said Peg Tebbets,
owner of Window Pretties, a Kennebunk curtain
manufacturer.
"I don't really think I'm that unusual," said Tebbets, a registered
Republican. "If more small business owners have the opportunity to sit
down and work the figures through, I think they will be more positive
and optimistic." (Boston Globe, 12/14/93)
When we look at the effect on small businesses, one interesting example is
Hawaii. Since 1974. when Hawaii passed a plan that requires all businesses
to contribute to the cost of their employees' health insurance. Hawaiian small
businesses have continued to thrive. I n 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.
�10.
Will this bring down the long-term deficit or will the deficit still
up after 1998 even with these savings?
spike
A.
In the long-term, health reform is the most vital component of any deficitreduction strategy. After the President passed his economic package, the
deficit was predicted to decrease for a period and then start to rise again.
But our mid-session review already shows that the long-term deficit will not
only be cut in half in terms of our national income, but is not expected to rise
again even in the later years. And we beheve that with the savings health
care reform will bring, we will see the deficit continue downwards even after
1998. The independent study of our plan conducted bv Lewin-VHI predicted
that our plan would mean $25 bilhon in deficit reduction by the vear 2000.
�11.
How do you respond to those who seek to cast doubt on your longrange cost estimates — claiming that when the Medicare program was
enacted, it was estimated to cost about $9 billion in 1990 but ended up
costing $66 billion — 7.5 times that amount?
A:
This criticism is exaggerated and unfair. Our plan is based on the most
responsible financing possible and on very conservative assumptions. As just
one example, we overestimated the demand for discounts for small businesses
and low-income famihes in order to be as conservative as possible. In
addition, we have a 15 percent "cushion" -- about $45 bilhon -- to cover
unexpected costs. We ran sophisticated models to test how the system would
respond to extreme hypothetical situations. For example, an unexpected 2%
increase in unemployment - with millions more suddenly qualifying for
discounts - would require an additional $4 billion a year. The $11 billion
cushion has nearly three times the funds necessary for this extreme
situation, and any funds that are not used in one year can be carried over to
the next year so that a contingency reserve will build over time.
Another example is our use of a very conservative inflation estimate - even
more conservative than CBO's assumption. CBO's mid-session inflation
figure was 3.1%, while we used an estimate of 3.5%.
The chairman and CEO of Lewin-VHI said that their study showed that "the
plan's financing structure works: it meets the President's requirement of
providing universal coverage, and it does so without reiving on an increase in
broad-based income taxes." He also said that "If the question is whether thev
can finance this program with the revenues thev will get under their plan,
the answer is yes, and thev will still end up with $25 billion for budgetary
deficit reduction."
�12.
On early retirees, why do you provide this huge subsidy to employers
and then take back all the money with an "assessment"? Isn't that
just a new tax?
A:
Not at all. Here's how the policy works. Right now, more and more companies
are being forced to drop benefits for early retirees, leaving these employees
who have worked hard and played by the rules all these years with no
benefits. This benefit is something that we thought was important to protect
working Americans from losing the benefits they've worked hard for all their
lives. But we want to make sure that we're fiscally responsible about it. and
so we phase in the benefit, making sure everything is fully paid for up front.
The government will pick up 50% ofthe costs that employers now pav for
their early retirees for three years. And, after that, it will guarantee the
entire employer share. The retiree will pay the individual share -- an
average of 20% of the premium.
�13.
How do you plan on cutting $188 billion from the Medicaid
Medicare programs?
and
A:
No money will be cut from Medicare and Medicaid. Under current policies,
federal health expenditures are expected to be about $680 billion in 2000 -about $465 billion of which will be for Medicare and the federal share of
Medicaid alone. The administration is not proposing to reduce federal health
spending -- only to reduce the annual rate of growth from three times to two
times the rate of inflation as the new system phases in.
Medicaid and Medicare savings will come primarily from redirecting
resources that would have gone to providers into new benefits for people on
Medicare and Medicaid. The administration is proposing specific changes in
the federal health care -- Medicare and Medicaid -- programs that are feasible
precisely because ofthe proposed reform ofthe private system.
For example, Medicare and Medicaid cover many working people who will
would be covered by their employers under reform. The money that would
have been spent to insure these working poor and working elderly can be
redirected to new benefits for the elderly and coverage for the uninsured.
Both programs also make huge payments to hospitals to help them cover the
cost of treating the uninsured, who receive care but are unable to pay the
bills they incur. When everyone has insurance, these payments can be
sharply reduced. In addition, upper-income people would pay a larger share
of the heavily-subsidized premium for physician care under Medicare. These
specific changes in the Medicare and Medicaid rules would reduce the cost of
the two programs by more than $100 bilhon in the year 2000.
Follow-Up
Q:
With all these cuts in Medicare, aren't you financing
the backs of the elderly?
A:
health reform on
No. There's one thing that's important to keep in mind here: older Americans
will receive all the benefits thev do today after health care reform. This
proposal does not involve cutting Medicare- it involves spending Medicare
money differently and increasing benefits for older Americans - such as
providing prescription drug coverage and more options for home and
community-based care.
When talking about these savings, we have to view them in the context of
comprehensive health reform. We will use the savings from Medicare for
expanded benefits -• prescription drugs and long-term care -- and greater
security for older Americans. And we are talking about using the savings
�from Medicaid to guarantee universal coverage. So the savings in these
programs goes right back to the people who these programs serve.
Now, specifically on the Medicare savings. Compare our plan to others out
there, and you'll see that the Medicare savings are actually very reasonable.
The main single-payer bill in the Congress (McDermott/Wellstone) projects
$147 billion in savings over six years, we project $124 billion, and the Senate
GOP bill estimates $92 billion. So we have a fairly moderate estimate.
And, only our proposal -- for the first time ever -- will seek to enact these
savings in the context of private sector cost containment. In the past, when
Medicare payments to doctors or hospitals were cut, the hospital was would
just charge people with private insurance more -- rather than trying to
control costs. Some estimate that this cost-shifting amounts to $25 billion
each year. When both public and private costs are contained, hospitals and
doctors will look for ways to eliminate waste and provide care more efficiently
rather than just passing the costs on.
�14.
Isn't it true that most people will pay more under the plan?
A:
This is not true. Let's be clear -- without reform, every American can expect
to pav higher insurance premiums and higher health care bills with no
guarantee of security, no guarantee of benefits, and no guarantee that their
health insurance will be there when they need it. The President's plan
provides every American peace of mind and security that health care will
always be there.
Under our plan, seven out of 10 Americans will pav the same or less for
benefits that are the same or better, saving on average about $61 a month.
About 30 percent will pay more, on average about $24 a month, but they'll
receive benefits that can never be taken away and many will receive better
benefits, such as coverage for preventive care.
The independent study of our plan conducted bv Lewin-VHI concluded not
only that most families would save under the Clinton plan, but that what
families have to pay for health care would be reduced bv $26.2 billion bv 1998
under the plan.
�15.
Aren't we just seeing lower costs in your plan because costs are being
pushed past the year 2000 - past the budget window - when new
benefits like dental care and mental health coverage will be added?
Is this sustainable in the long run?
A:
This plan is completely sustainable in the long run. In revising our
assumptions and estimates to prepare the final estimates, we took pains to be
as prudent and conservative as possible. This meant that in some cases,
benefits needed to be phased in more slowly, until some savings had been
generated.
�16:
It seems like health care inflation is coming down by itself, so do we
really need to do so much?
A:
Although recent reports have indicated that medical inflation did not rise as
quickly last year as it has in the past -- this is, by itself, no cause to rejoice.
First of all, historically, every time comprehensive health reform has loomed
on the horizons, those who profit from the waste and excess in the health care
system have curbed their excessive prices for a time. It happened in the
1970's when President Nixon was putting together his health reform
package. Leading health care economists, such as Uwe Reinhardt, have even
dubbed this phenomena the "Hillary Factor" because ever since the First
Lady was named Chair of the Health Care Task Force in January, medical
price increases have been slowing.
You should also note that medical costs are still rising two to three times as
high as other prices. The average employers' cost for health care benefits
rose by 8% last year -- exceeding bv far the 2.5% to 3% overall rate of
inflation. And more than two thirds of companies with over 200 employees
reported that their health care costs rose last year. And, this does not even
include small companies, whose annual costs rise significantly more than
those of large companies.
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to take ood care of our
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temmtefiti^
shortfoUs, because aU their workers, no matter which plan they choose, will ^
have full coverage of screenings, physicals and other preventive services
w
Q
But, some companies may still feel that it is a good investment to have health
services on-site, or to provide additional coverage for smoking cessation
programs, nutrition classes, or health club enrollments. We agree. Workers
who are healthy have more energy, making them more alert and productive,
and taking fewer sick days. So, regardless of any new system put in place
^
employers who feel that they save money fhr th.ir n n
t ^
^ ^ steps to ensure that they have healthier and nL*
Z l ^ ^ M V
less absenteeism will still b^ve that inrant^T
JS-Umi
W a n i e f l h v
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:
�
Dublin Core
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Health Care Task Force Records
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White House Health Care Task Force
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<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
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<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
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William J. Clinton Presidential Library & Museum
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2006-0885-F
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[Health Care Economic Binder] [3]
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
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2006-0885-F Segment 5
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Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621375" target="_blank">National Archives Catalog Description</a>
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Clinton Presidential Records: White House Staff and Office Files
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17621375
12093636
42-t-12093636-20060885F-Seg5-007-003-2015
-
https://clinton.presidentiallibraries.us/files/original/e3fa5baf2a17e117b623a8dd51903c92.pdf
9a4e86dabdb893303c60d4be247e4c09
PDF Text
Text
FOIA Number: 2006-0885-F.
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MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Care Economic Binder] [2]
Stack:
Row:
Section:
Shelf:
Position:
S
52
7
7
3
�PARTB PROPOSALS
Base MVPS on Real GDP Per Capita. This proposal would change the statutory formula that is used to determine the
Medicare Volume Performance Standard (MVPS), a target for the rate of growth in Medicare physician expenditures.
Currently, the MVPS is based on the average annual growth in the volume and intensity of physicians' services over
the preceding five fiscal years. This proposal would substitute thefive-yearaverage of growth in real GDP per capita for
this volume and intensity factor and the performance standard factor. This change would directly connect the MVPS to
the growth rate of the nation's economy. The MVPS for all three categories of physician services (surgical, primary care,
and all other) would continue to be adjusted for projected increases in physicians' fees, beneficiary enrollment, and
changes resulting from regulatory and legislative activity. The MVPS for primary care services would be given an
additional 1-1/2 percentage point upward adjustment. Under current law, there is no upper limit on physician fee
increases, but fees cannot decrease by more than five percentage points. This proposal would eliminate the floor on
physician fee reductions.
Saxinga
1226
122Z
1224
1222
2000
1226-2000
$0
275
1,075
1,975
2,775
$6,100
Establish Cumulative Growth Targets for Physician Services. Currently, the MVPS for each year is based on the prior
year's actual rate of growth in outlays, without regard to the prior year's laigfil rate of growth in outlays. This process
weakens the abiUty of the MVPS to serve as a meaningful target for sustainable growth in Medicare physician spending.
Under this proposal, the MVPS for each category of physician services would be built upon a designated base-year
MVPS (FY 1995). This initial target would be updated annually for changes in beneficiary enrollment and inflation, but
not for actual outlay growth above or below the target Essentially, physician fee changes in any one year would no
longer distort the MVPS for the following years. The annual process for calculating physician fee updates would not
change from current law.
Savings
1996
$0
1997
(85)
1225
1^25
1222
2,475
2000
160
,0
1296-2000
$5,815
�Rev, - the Medicare Fee Schedule Conversion Factor by 3% I.. .495. Except Primary Care Service The conversion
factor is a dollar amount that converts the fee schedule's relative value units (RVUs) into a payment amount for each
physician service. This proposal would reduce the conversion factor by 3% in CY 1995 to account for the excessively
high FY 1992 target and 1994 update that is anticipated, except that primary care services would not be reduced.
Sdxlnga
1925
$250
1226
475
122Z
525
1225
550
1222
575
2Q
QQ
600
1225200Q
$2,975
Eliminate Formula-Driven Overpayment in Hospital Outpatient Departments. Under current law. Medicare pays for
hospital outpatient ambulatory surgery, radiology, and other diagnostic services using a blended payment methodology.
Because ol a flaw in the statutory payment formula, which assumes a lower coinsurance payment than is actually made,
hospitals receive more than the intended payment amount. This proposal would eliminate the flaw in the payment
methodology and the resulting overpayment, effective July 1,1994. In addition, the current payment method gives
hospitals strong incentives to increase charges for these services, thus raising beneficiary coinsurance liabilities. Fixing
the formula-driven overpayment would mitigate the hospital incentive to raise the charges to Medicare enrollees.
Saxinga
1224
1225
1226
122Z
1229
1222
$150
1,050
1300
1,690
2,190
2Q '
0Q
.2,750
3/480
1294-2000
$12,610
Contract CompetitivelyforAll Paij B Laboratory Services, The Secretary would berequiredto establish the same kind
of competitive acquisition system for Medicare laboratory services as for other selected Part B items and servioes
beginning January 1,1995. Pricing assumes that competitive contracting willreducethe price of laboratory services by
10%. Medicare laboratory payments currently are projected to grow by 15% to 18% per year. This proposal seeks to
curtail the growth rate by lowering the price of tests and reducing the profit incentive for physicians to order
unnecessary tests. If the competitive system does not result in a reduction of at least 10 percent in the price of all
laboratory services from the price that would otherwise occur in 19%, then the Secretary would reduce Medicare fees for
these selected services to achieve an overall 10 percent reduction in price.
Sanngi
1225
$140
1226
220
122Z
260
121
21
290
1222
320
2000
360
1925 - 2000
$1,590
�Cot>., .iHvely Bid Selected Medicare Part B Itema and Service . his proposal would require the HHS Secretary to
contract competitively for Medicare services and supplies, based on quality and other standards. The initially planned
items for competitive procurement are MRIs, CAT scans, oxygen services, and enteral nutrients. Pricing assumes a 10%
reduction in price for these services and supplies. If the competitive system does not result in a reduction of at least 10
percent in the price of these selected services from the price that would otherwise occur in 1996, then the Secretary
would reduce Medicare fees for these selected services to achieve an overall 10 percent reduction in price.
SflVingS
1225
$110
1226
190
122Z
210
1225
240
1222
270
2Q
0Q
300
1995 - 2000
$1,320
•
Income-Related Part B Premium. Fully Phased-in to 75%. Currently, all Medicare enrollees pay the same Part B
premium, regardless of income. This premium is set at approximately 25% of program costs, beginning in 1996; the
balance is paid by general revenues. This proposal would charge high-income enrollees a premium up to 75% of
program costs. The increase in the premium for single individuals would begin at modified adjusted gross incomes
(plus taxable Social Security benefits) of $90,000 and phase up to 75% for those individuals with incomes equal to or
above $10b,000. The increase for couples would begin at $115,000, with the maximum 75% premium being paid by
couples in which both are eligible for Medicare with a combined income of over $130,000.
Savinga (includes interaction)
1226
122Z
1225
1222
2m
1926-2000
$350
935
900
985
1,070
$4,240
Re-establish 20% Coinsurance for Laboratory Services. This proposal would re-establish a 20% coinsurance on all
physician office, outpatient, and independent laboratory tests under Medicare Part B, effective January 1,1995. Congress
eliminated the required coinsurance on laboratory services for independent labs and those in hospital outpatient
departments in 1984. In 1985, Congress eliminated the coinsurance for physician office laboratory services. Clinical
laboratory services are the only services provided under Medicare Part B for which no coinsurance is now required.
Savinga
1225
$650
1226
1,070
122Z
1,230
1225
1380
1222
1,540
2000
1,720
1995-2000
$7,590
8
�ExU.-* OBRA 93 Provision: 25% SMI Premium through 20(H>. ^BRA 93 established the Part B premium collections .
25% of program costs for 1996-1998. This proposal would extend the OBRA 93 provision requiring that Part B premium
collections cover an estimated 25% of program costs.
b
Savings
1996
$0
1997
0
1995
0
1999
1,770
2000
4^10
Interaction ($710)
(1,090)
(2,140)
(2,770)
(3,180)
($9,890)
NET
(1,090)
(2,140)
(1,000)
1,130
($3,810) •
($710)
12264000
$6,080
Limit Payments to High-Cost Medical Staffs. This proposal would establish limits on Medicare physician payments per
inpatient hospital admission, similar to limits used in other parts of Medicare. The proposal would take effect in 1998.
Payment limits would be established based on the median of hospital-specific case-mix adjustedrelativevalue units per
admission. For urban hospitals, the limit would be 125% of the national median in 1998 and 1999, and 120% in 2000
and thereafter. For rural hospitals, the limit would be 140% of the national median in 1998 and thereafter. Annually, a
hospital-specific per admissionrelativevalue would be projected for the upcoming yearforeach hospital. This
projection would be adjusted for each hospital's teaching status and disproportionate share. At the beginning of each
year. Medicare would establish a 15% withhold for medical staffs projected to be over the national limit After the end
of each year. Medicare would compare the actual RVUs per admission per hospital to the limitforthat year. For
medical staffs above the limit, either none or only a portion of the withhold would bereturned.For medical staffs
below the limit, the entire withhold would be returned.
Saxinga
1225
$0
1226
0
122Z
0
1225
500
1222
780
2000
1,040
1996 - 2000
$2320
�El^
Itlon on Balance Billing. Physicians and other proviu. of Part B services are said to "accept assignment" oi»
Medicare claims when they accept the Medicare approved amount as payment in full for covered services. Balancebilling (also called extra-billing) occurs when providers charge more than the Medicare approved amount — Medicare
pays 80% of the approved amount and the beneficiary or other payor (e.g., Medigap insurance) is responsible for paying
the balance. Balance-billing is prohibited under current law for most Part A and B services. Physicians may not charge
more than 15% over the Medicare approved amount for their services, and only about 6 of all physician dollars are
%
billed on an unassigned basis. Elimination of balance-billing remaining in Medicare will make for consistent treatment
of all services within Medicare and between Medicare and the health alliance-approved plans serving the under-65
population. It will also reduce beneficiary confusion, enhance beneficiaries' financial protection, and simplify carrier
administration. This proposal will mandate assignment and prohibit all balance-billing by providers of Part B services
effective January 1, 1996. The costs from this proposal arise largely from elimination of the participating physician
payment differential.
Costs
1296
($130)
122Z
(250)
1229
(260)
1222
(270)
2m
(290)
1996 - 2000
($1,200)
10
�PARTS A AND B PROPOSAI S
Extend OBRA 93 Provision: Eliminate Catch-Up after Home Health Freeze Expire*. OBRA 93 eliminated the inflation
adjustment to the home health limits for two years, FY 1994-1995. This proposal would eliminate the inflation "catchup" - currently allowed after the freeze expires on July 1,1996 — by recalculating the percent of the mean that would
produce the same amount of savings as if the freeze continued. HCFA actuaries estimate this to be 100% of the mean.
Savings
1226
122Z
122&
1222
2m
1996 - 2000
$0
480
600
650
690
$2,420'
Lower Home Health Limits to 100% of Median. Home health is projected to rise over 10% a year through 1998,
including 33% growth in 1994. This proposal would lower the cost limits to 100% of the median for cost reporting
periods beginning on or after July 1,1997. In other words. Medicare would reimburse home health agencies at a rate no
higher than the costs encountered by half of the agencies.
Savings
1226
122Z
1228
1222
2m
$0
10
160
230
250
1996-2000
$650
Require a 10% Copavment on All Home Health Visits for Visits other than Those Occurring 30 Davs after a Hospital
Discharge. Home health is one of the fastest growing benefits in Medicare, with a projected increase in home health
outlays of nearly 33% in 1994. Medicare enrollees do not currently pay cost-sharing on home health care. This
provision would charge a copayment on all home health visits except those received within 30 days of an inpatient
hospital discharge; these visits are less discretionary and more intensively rehabilitative. Enrollees who receive home
health without an inpatient stay would pay the 10% copayment on all services. The copayment would be equal to 10%
of the average cost per visit
Savings
1225
$230
1226
140
,0
122Z
150
,6
1228
160
,8
1222
180
,0
2000
190
,2
1995 - 2000
$8,590
11
�Expand Centers of Excellence. HCFA has initiated two bundled payment demonstration projects that show potential for
Medicare savings. These projects involve contracting with "Centers of Excellence" that perform coronary artery bypass
graft (CABG) surgery and cataract surgery. By expanding this concept to all urban areas, contracting with individual
centers using a flat payment rate for all services associated with the cataract or CABG surgery. Medicare would be able to
reduce costs. The Secretary also would be granted the authority to designate other services that lend themselves to this
approach. Beneficiaries would not be required to receive services at these centers, but would be encouraged to do so
through rebates representing 10% of the government's savings from the center. Pricing assumes a 10% discount in the
price of services for the 20 percent of beneficiaries who are assumed to use the centers.
Savings
I
1996
1997
1998
1999
2W0
PartA
$60
70
70
70
70
PartB
$40
40
40
40
40
1996 - 2000
$340
$200
Extend OBRA 93 Provision: Medicare Secondary Payor (MSP) Data Match with SSA and IRS. OBRA 93 included an
extension of the data match between HCFA, IRS, and the Social Security Administration to identify the primary payors
for Medicare enrollees with health coverage in addition to Medicare. This proposal would extend that provision
beyond its scheduled expiration date of 1998.
Saxinga
1226
$0
12
2Z
0
12
28
12
22
ZfiQfi
0
195
330
1996 - 20W
$525
12
�Establish a Threshold of 20 Employees for MSF for the Disabled. OBRA 93 extended through 1998 an OBRA 90
provision making Medicare the secondary payor for disabled enrollees with employer-based health insurance. The
provision is applicable to all employers with 100 or more employees. This proposal would lower the employee
threshold from 100 to 20 employees beginning on January 1, 1998. With community rating under health care reform,
small employers will no longer be vulnerable to paying higher premiums for covering disabled or other high-risk
individuals. A separate provision in the Health Security Act addressing alliance enrollment of Medicare beneficiaries
who work or whose spouses work would eliminate the employee threshold. The provision would require all
employer-sponsored plans to cover workers, dependents of workers and workers' spouses who are eligible for Medicare.
Savinga
1226
$0
122Z
0
1225
150
1222
240
2fl0fl
260
1996 - 2000
$650
Extend OBRA 93 Provision: MSP for Disabled. OBRA 93 extended through 1998 an OBRA 90 provision making
Medicare the secondary payor for disabled beneficiaries with employer-based health insurance. This proposal would
extend this provision permanently.
Savings
1226
$0
122Z
0
1225
0
1222
990
20Qfl
1340
1996-20W
$2330
Extend OBRA 93 Provision: Medicare Secondary Pavor Provisions for ESRD Patients. OBRA 93 extended through FY
1998 a provision that makes Medicare the secondary payor for individuals with end stage renal disease (ESRD) enrolled
in employer group health plans for 18 months after they become eligible for Medicare benefits. This provision
permanently extends the MSP provision for individuals with ESRD. A separate provision in the Health Security Act
addressing alliance enrollment of Medicare beneficiaries who work or whose spouses work would provide for coverage
of individuals with end stage renal disease for as long as the individual requires care. The provision would require all
employer-sponsored plans to cover workers, dependents of workers and workers' spouses who are eligibleforMedicare.
Savings
1226
$0
122Z
0
1225
0
1222
75
2Q
QQ
105
1996-2TO0
$180
13
�HMO Payment Improvement Medicare pays 95% of the average adjusted per capita cost (AAPCC) for Medicare
enrollees in Medicare-contracted HMOs. This proposal would establish a range around the Part A and Part B
components of the AAPCC that would presumably encourage HMOs to participate in Medicare while establishing
reasonable limits on reimbursement for high-cost counties. The ceiling would be 150% of the national average Part B
component of the AAPCC and 170% for the Part A component of the AAPCC, with a floor established at 80%. The
range would be phased-in over a four-year period, beginning in 1995.
Savings
1225
$30
1226
90
122Z
165
1224
250
1222
350
2m
400
1991? -20W
$1,285
TOTAL SAVINGS
1224
$150
1225
240
,8
1226
985
,7
122Z
1,7
433
122ft
2,1
285
1222
3,0
300
2lQ
fQ
19-W
942Q
. 41721 $ 2 , 1
1444
14
�Medicaid
�MEDICAID UNDER HEALTH CARE REFORM
CONTENTS
Page
Talking Points
Summary
1
The Current System
• Cash recipients
• Non-cash recipients
• Wrap-around benefits
Alliance Coverage of Medicaid Recipients
• Premium Payments for cash recipients
• Premium Payments for non-cash recipients
• Wrap-around services
1
Disproportionate Share
5
Long-Term Care
6
Medicaid Savings Under Reform
• Explanation of savings
• Explanation of Costs
7
8
9
Appendix 1
Bruce Vladeck Statement
Subcommittee on Health and the Environment
Committee on Energy and Commerce
November 19, 1993
2
3
4
�MEDICAID
Talking Points
THE PROBLEM:
•
The current Medicaid system has burdened states with astronomical
costs while providing health coverage that is a mixed blessing for those
it serves; Medicaid coverage can be a disincentive to join the workforce,
and low reimbursement rates and the stigma attached to the program
have caused many providers to not accept Medicaid patients.
MEDICAID UNDER REFORM:
•
Under reform, all Medicaid beneficiaries will carry the same Health
Security card that provides a comprehensive package of benefits, and
all beneficiaries will be able to choose from among health plans offered
by their local alliances - just as all other Americans. Because health
plans will receive the same payment from the alliance regardless of an
enrollee's Medicaid status, Medicaid patients will be treated like all
others.
SAVINGS U N D E R R E F O R M :
•
The federal government will save $65 billion as Medicaid recipients
are integrated into the new system, and as payments to hospitals that
care for a large percentage of low-income and uninsured people are
reduced.
•
Reform will also provide much-needed fiscal relief to state and local
governments. States' payments to alliances will grow at a much
slower rate than what they do now, and many current Medicaid
recipients will no longer rely on Medicaid as they are integrated into
the new system.
�12/13/93
MEDICAID UNDER HEALTH CARE REFORM
SUMMARY: The current Medicaid system has burdened states
with astronomical costs while providing health coverage that is
a mixed blessing for those i t serves; Medicaid coverage can be a
disincentive to join the workforce, and low reimbursement rates
and the stigma attached to the program have caused many
providers to not accept Medicaid patients. Under reform,
Medicaid will be restructured to address these problems. A l l
current Medicaid recipients will join regional alliances; and the
federal government will save $65 billion in Medicaid costs as
Medicaid recipients are integrated into the new system.
THE CURRENT SYSTEM
Today, there are several categories of people who get their health care
through Medicaid. We divide these recipients into two groups: "cash
recipients" and "non-cash recipients."
CASH RECIPIENTS:
•
Those Medicaid recipients who also receive direct cash assistance,
including pregnant women and children who receive Aid to Families
with Dependent Children (AFDC, or welfare), people who qualify for
Supplemental Security Income (SSI), and those receiving Food Stamps
are described as cash recipients.
NON-CASH R E C I P I E N T S
•
This category includes everyone who receives Medicaid who is not a
cash recipient. This includes poverty-level and near-poverty level
children; "medically needy" individuals who qualify for Medicaid
because their health care bills have outstripped their ability to pay
them, because they have no insurance, because their insurance has
reached an annual or lifetime limit, or because their insurance did not
cover their ailment or needed treatment; and low-income elderly
people who "spend down" to poverty qualify for Medicaid long-term
care coverage, which is almost always provided in nursing homes.
WRAP-AROUND B E N E F I T S
•
All current Medicaid recipients are eligible for benefits beyond what
will be covered in the comprehensive benefits package under reform.
These benefits can include translation and transportation services,
rehabilitation, baby-sitting, and vision and dental care. Continued
coverage for these services under reform will depend on an individual s
"cash" or "non-cash" Medicaid status and on age.
�12/13/93
ALLIANCE COVERAGE OF MEDICAID R E C I P I E N T S
All those who would be eligible for Medicaid under current law will be
enrolled in regional alliances. Financing for these Medicaid eligibles will
depend on whether they receive AFDC or SSI benefits - cash recipients -or whether they are non-cash recipients of Medicaid benefits.
Premium Payments for Medicaid Cash Recipients for AllianceCovered Services
States and the federal government will make premium contributions to
regional alliances, according to the existing Medicaid matching formula,
on behalf of cash recipients. Medicaid-eligible individuals who currently
receive AFDC or SSI will not contribute toward the premium i f the chosen
plan's premium is at or below the weighted average premium for the
alliance. I f the plan's premium is above the regional alliance's weighted
average premium, the recipient must pay the additional cost.
Per capita premium payments for AFDC and SSI recipients will be
determined by:
(1) Calculating 95 percent ofthe state's FY 1993 spending for AFDC
and SSI recipients, respectively, for the services included in the
comprehensive benefit package.
(2) Trending the 1993 per capita amounts forward through the year
before the state's first year of reform by the lesser of: the national
growth rate for cash recipients specified in the Act, or actual growth in
per capita spending in the state over the same period. Different
national growth rates apply for AFDC and SSI payments.
(3) Updating per capita payments through the state's first year of
reform and annually thereafter by budgeted rates of increase based on
national health inflation.
�12/13/93
Payments for Medicaid Non-Cash Recipients for Alliance-Covered
Services
•
Medicaid-eligible individuals who do not receive AFDC or SSI (non-cash
recipients) will make premiums contributions like any other enrollees in
an alliance. As for other low-income groups, discounts on the family share
of the premium contribution will be available i f family income is below
150 percent of the federal poverty line.
•
States will be required to make maintenance-of-effort payments to
regional alliances on behalf of non-cash recipients. These payments will
be determined by:
(1) Calculating the state's FY 1993 spending (state share only) for
non-cash recipients, for the services included in the comprehensive
benefit package.
(2) Trending the 1993 expenditures forward through the state's first
year of reform by a national growth rate for non-cash recipients,
specified in the Act.
(3) Updating payments for each year following the first year by
budgeted rates of increase based on national health inflation.
�12/13/93
Payments for Medicaid Services Not Covered in the Basic Benefits
Package (Wrap Around Services)
Financing and coverage of services not included in the comprehensive
benefit package but currently covered by Medicaid, called "wrap-around"
services, will depend on an individual's cash or non-cash Medicaid status
and age.
Children: All cash and non-cash children will receive wrap-around
services under a new federal program. The program will be a capped
federal program. States will make maintenance-of-effort payments to
alliances for cash recipients. There is no state contribution for noncash recipients.
Adults: Adult non-cash recipients may continue to receive wraparound services as a state option. However, no federal matching
payments will be available for this population. Adult cash recipients
will continue to receive wrap-around services. The states and the
federal government will continue to share the cost of these benefits as
under the current Medicaid program.
Dual Eligibles: Dual eligibles are generally low-income elderly who
qualify for both Medicare and Medicaid. Medicaid coverage continues
for both cash recipients and non-cash recipients who are dual eligibles.
financed by federal/state matching payments.
�12/13/93
DISPROPORTIONATE SHARE
The disproportionate share program will be eliminated when a state
implements health care reform.
A new federal program for vulnerable populations will be established.
Hospitals that serve a high proportion (over 25 percent of total utilization)
of low-income individuals will receive Vulnerable Population Adjustment
(VPA) payments directly from the federal government for five years. I n
part, this will help ensure that the costs of treating undocumented
persons for emergency services do not get shifted to the private sector.
State will contribute a maintenance of effort payment to regional
alliances. The amount of the MOE will be based on a state's
disproportionate share spending attributable to non-cash recipients. This
amount will be determined by:
(1) Calculating each state's spending for disproportionate share
attributable to non-cash recipients.
t
(2) Trending this amount forward through the state's first year of
reform by a national growth rate for disproportionate share specified in
the Act.
(3) Updating payments for each subsequent year by the budgeted
rates of increase based on national health inflation and national
population growth.
�12/13/93
LONG-TERM CARE
Current Medicaid policies regarding nursing home care, Intermediate
Care FaciUties for the Mentally Retarded, and community-based longterm care continue, with three exceptions:
(1) Assets: States have the option of raising allowable assets from
$2,000 to $12,000.
(2) Personal needs allowance: Federal coverage will be raised from
$30 to $50; the federal government will pay 100 percent ofthe
difference in the costs incurred by raising the allowance.
(3) Medically needy: All states will be required to have a medically
needy program.
A new community-based long-term care program will be available for the
severely disabled regardless of income.
�[2/13/93
MEDICAID SAVINGS UNDER REFORM
Under reform, the Medicaid program will be restructured, saving the
federal government $65 billion over five years (1996-2000).
Savings i n billions:
•
•
•
•
Discontinuation of DSH
Integration into alliances
Offset for Medicare Drug Benefit
Administrative Savings
t o t a l savings
$55
$22
$ 6
$ 4
$87
Costs i n billions:
•
•
•
•
New federal kids wrap-around
New VPA program
Payment lag from conversion
Cost sharing subsidies
$
$
$
$
•
Interaction with Medicare
$ 1
t o t a l costs
T o t a l Savings - T o t a l Costs = $65
6
4
8
2
$21
�12/13/93
Explanation of Savings
1.
Discontinuation of DSH: $55 billion over five years
The first area of savings comes from reducing the extra payments that
currently go to hospitals that care for a large percentage of low-income
and uninsured people, and therefore have a great deal of
uncompensated care. These payments, called Disproportionate Share
or "DSH" payments, will be less necessary under reform since there
will be no American or legal resident without insurance.
2.
Integration into alliances: $22 billion over five years
The second area of savings comes from integrating current cash
recipients (AFDC/SSI) Medicaid beneficiaries into alliance plans.
Federal and state payments to the alliance for this coverage will be (1)
based on 95 percent of 1993 Medicaid spending; and (2) tied to health
care inflation and population growth. Increases will therefore be
substantially lower than historic Medicaid growth rates.
3.
Offset for Medicare Drug Benefit: $6 billion over five years
The new Medicare drug benefit will replace Medicaid spending for
prescription drugs for the low-income elderly. Medicaid will cover the
premium and cost sharing for the low-income Medicare beneficiaries
for this benefit.
4.
Administrative savings: $4 billion over five years
Since the non-cash Medicaid eligibles will be included in the alliance,
the states will no longer be required to determine their eligibility for
Medicaid.
�12/13/93
Explanation of Costs
1.
New federal kids wrap-around: $6 billion over five years
Wrap-around services for non-cash children will be fully federally
financed, with a new federal cost.
2.
New VPA program: $4 billion over five years
Hospitals which serve a high proportion of low-income patients (more
than 25 percent of patient load) will receive a Vulnerable Population
Adjustment.
3.
Payment lag from conversion: $8 billion over five years
"Close out costs" from the current Medicaid program will need to be
covered as final bills come in from states. Alliance premium payments,
children's wrap-around services, and DSH payments will all incur
these costs.
4.
Cost sharing discounts: $2 billion over five years
Cash assistance recipients and low-income families will receive costsharing discounts to enable them to enroll in low and combination cost
sharing plans. These discounts will be made available i f the alliance
does not have sufficient low cost sharing plans below the average
premium price. Cash assistance recipients will also receive an 80
percent discount off of the low cost sharing rates (i.e.: from $10 to $2)
5.
Interaction with Medicare: $1 billion over five years
Medicaid costs for dual eligibles will increase as Medicare program
savings are realized through higher costs to beneficiaries.
�11/19/93
17:31
©202 690 5673
HHS-PUBLIC AFFAI
21002
OEPARTMEN'T OF HEALTH & HUMAN SERVICES
Washington. D.C. 20201
STATEMENT OF
BRUCE C. VLADECK
ADMINISTRATOR
HEALTH CARE FINANCING ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT
COMMITTEE ON ENERGY AND COMMERCE
UNITED STATES HOUSE OF REPRESENTATIVES
NOVEMBER 19, 1993
�11/19/93
17:31
® 2 0 2 690 5673
HHS-PUBLIC AFFAI
Mr. Chairman, Members of the Subcommittee, I am pleased to have yet another
opportunity to continue our discussions of the President's proposed Health Security
Act. Today, I will explain what health care reform means for our low income citizens,
the changing role of States in administering health care for this population, and how
we will achieve savings by integrating Medicaid into the mainstream of our health •
care system.
For nearly three decades, the Federal government and States have provided medical
assistance through the Medicaid program. Today, more than 32 million Americans
benefit from Medicaid. In recent years, Congress has expanded Medicaid to include
individuals beyond traditionally defined eligibility groups. States, too, have initiated
improved coverage and care by serving greater numbers of "medically needy"
individuals and by implementing effective managed care programs for certain
targeted underserved populations.
Now, with the President's comprehensive health care reform plan, all Americans,
young and old, poor, working and retired will be ensured the security of basic hear.n
care coverage. The current system bases eligibility for health care on income,
resource, and categorical criteria, leaving millions without basic health care benefits
Under the President's plan, no American will be excluded from basic health care
benefits.
HEALTH CARE REFORM AND LOW INCOME CITIZENS
The President's Health Security Act proposes universal coverage through the sha;e<J
contributions of individuals, States, alliances, the Federal government and employe's
Individuals will be able to select the coverage that best serves their needs. Choic*
will extend to everyone, from the most destitute to the most economically advanta$«d
individuals.
Medicaid, the program which has traditionally served many of our neediest a t j z t r t
will be largely absorbed into the mainstream of our Nation's health care system
Health care coverage will no longer favor certain individuals whose income, age c
sex makes them needier than other individuals. Health care coverage will not
exclude young, healthy males because they do not have children, or married cov-cw
because the primary wage earner has a minimum wage job.
Furthermore, under the HeaJth Security Act, no provider will be reimbursed for aa~-«
care services at a lower rate of payment just because a patient is covered by
Medicaid. Providers will be blind to an individual's status as a Medicaid recipient
The Health Security Act will establish a system whose time is long overdue. This
Administration intends to replace fragmented coverage and services with uniform
coverage and comprehensive benefits, without regard for medical condition or ae<- ry
21003
�11/19/93
17:32
© 2 0 2 690 5673
HHS-PUBLIC AFFAI
to pay.
We are going to achieve this goal through a number of mechanisms designed to
maximize the best aspects of private insurance and publicly funded programs. This
effort will produce a system that is simple, efficient, secure, cost effective, quality
driven, and choice oriented.
THE CHANGING ROLE OF THE MEDICAID PROGRAM
The Medicaid program is a jointly funded Federal/State program administered within
broad Federal guidelines by the States. States currently receive Federal matching
payments based upon a State's ability to share in program costs as measured by per
capita income.
Under the Health Security Act, States will continue their shared Federal partnership in
the Medicaid program, but will benefit from redirected Federal funding and savings
from a new relationship with the private sector through alliance health plans.
Recipients will benefit from participation in an integrated health care system that
leaves no one without coverage and assures that everyone's coverage will be the
same throughout the country. And, providers of acute care services will benefit from
more uniformly applied payment rates that treat all patients equally.
Coverage In Alliance Plans
The Health Security Act will integrate Medicaid acute care sen/ices into alliance plans
The most vulnerable poor will receive full coverage while maintaining the ability to
choose among health plans. Low-income individuals receiving cash assistance may
choose any alliance plan with premiums at or below the weighted average premium
for ail plans in their alliance, without paying a premium. If they choose a plan with
premiums above this average, they will be responsible for the additional cost.
The State and the Federal government will pay a premium to the alliance for Medicaid
individuals receiving cash assistance based on 95 percent of current State per caeoa
Medicaid spending on alliance-covered services, trended forward by national growtn
rates.
Other low-income individuals who do not receive cash assistance will also recetve
health care coverage through alliance health plans. These individuals will make a
premium contribution based on a sliding scale related to income. Employers of IOWincome employees will pay premiums to the alliance based on private sector rates as
they do for all .employees.
(21004
�11/19/93
17:32
© 2 0 2 690 5673
HHS-PUBLIC AFFAI
State Maintenance of Effort
States will continue to support the provision of health care to those low-income
individuals who participate in Medicaid but do not qualify for cash assistance by
making "maintenance of effort" payments to the alliance, based on 1993 spending for
Medicaid services that will be covered by alliance health plans. Maintenance of effort
payments will be used to help finance the costs of Federal discounts to individuals
with incomes below 150 percent of the federal poverty level.
Cost Sharing
Cost-sharing for low income individuals will be subsidized if a low cost-sharing plan,
such as an HMO, is not available. And, cost-sharing for individuals receiving cash
assistance will be reduced to 20 percent of the HMO cost sharing schedule, or S2 per
office visit.
Supplemental Services
Additionally, the Health Security Act will create a new Federal program that will
provide uniform supplemental benefits to low-income children. This will ensure that
most children who would have been eligible for Medicaid will continue to have access
to services such as transportation to health care providers, hearing aids, outpatient
therapies and other medically necessary services not covered under the alliance s
comprehensive benefit package or under the Medicaid long term care benefit.
States may also continue to provide optionai Medicaid services to adult recipients ct
cash assistance, as under current law. States will continue to pay for elderly
Medicare beneficiaries who qualify to have their out-of-pocket expenses paid by
Medicaid.
Serving Vulnerable Populations
A portion of State payments intended for hospitals serving a disproportionate snare c
low income patients will be counted toward State maintenance of effort payments 'ot
Federal matching purposes. States will not have to continue disproportionate snart
hospital payments associated with cash assistance recipients, and these payments
are not built into the premium payment to the alliances.
A new Vulnerable Population Adjustment program will provide Federal payment
adjustments to hospitals. Hospitals will qualify for these payments if at least 25
percent of their patients have low incomes. The adjustment will include payments ' c
hospitals in States with large numbers of undocumented persons. Annual funaing -c
the' Vulnerable Population Adjustment program will be $1 billion once the alliances
are fully implemented.
[2]005
�11/19/93
17:33
©202 690 5673
HHS-PUBLIC AFFAI
Long-Term Care Benefit
In addition to mainstreaming current Medicaid recipients into alliance health plans,
the Health Security Act will make other improvements to the Medicaid program.
Medicaid long-term care benefits will continue for eligible patients in nursing facilities,
intermediate care facilities for the mentally retarded and community-based long-term
care, regardless of whether they receive cash assistance. These benefits will be
improved in several ways. The monthly allowance permitted for institutionalized
Medicaid patients to meet personal needs will be increased. Further, States may opt
to increase the asset standard for institutional long-term care eligibility from the
current $2,000 limit to $12,000.
MEDICAID SAVINGS
The Health Security Act will produce net Medicaid savings totaling approximately $65
billion .
Medicaid savings will result from:
•
Discontinuing Medicaid payments to hospitals serving a disproportionate sna/e
of low-income individuals as States enter the alliance system. These payments
were established to help hospitals with large uncompensated care burdens
Since universal coverage will virtually eliminate this problem, disproportionate
share hospital payments would be discontinued. The Vulnerable Population
Adjustment program will help those hospitals that continue to require some
assistance.
•
Lower payments to alliances based on 1993 Medicaid spending, adjusteo to
reflect health care inflation and population growth. Under a complete reform o»
the health care system, plans will be able to provide better coverage for —%
cost, and increases in spending will, therefore, be substantially lower than
Medicaid growth rates expected under the current system.
•
Reducing State Medicaid administrative responsibilities in enrollment,
oversight, rate-setting, and claims processing by including Medicaid reep-ents
in the alliance and by providing supplemental services to children througn a
separate program.
•
Replacing some Medicaid spending for prescription drugs for the low-inccme
elderly with the new Medicare drug benefit.- .Mtdxaid will cover premr-.- ;
cost sharing for low-income Medicare beneficiaries for this benefit.
@006
�11/19/93
17:34
© 2 0 2 690 5673
HHS-PUBLIC AFFAI
CONCLUSION
Mr. Chairman, a new era in the way we provide basic health care sen/ices to our
underserved and low-income citizens is about to be realized. What the President
envisions is a system that not only includes every individual in this nation, but a
system that also provides quality care at an affordable price.
We have designed a program that combines the best of what America has to give
private sector innovation with public sector initiative.
I look forward to working with you and this Committee as we proceed in the coming
months to forge a plan that not only will benefit this generation but future generations
of Americans as well. Together, we can accomplish what has eluded all of us for so
long -- uniform, basic health care for all.
21007
�SMALL BUSINESS
T A B L E O F CONTENTS
Talking Points
Summary Document
3
Control Escalating Health Costs of Small Businesses
Helps Small Businesses Grow
Ends Insurance Abuses of Small Businesses
Discounts will be provided to low-wage small businesses
100% Tax deduction for the self-employed
Reform of the health care portion of workers compensation
Small Business and Health Care: The Problem
Articles
A.
B.
C.
D.
E.
F.
G.
H.
6
8
"Small Companies Misunderstand Clinton Health Plan"
Wall Street Journal
"Clinton Health Plan Will Help, Not Hurt, Small Business"
Boston Globe
"Small Business Sees Burdens Getting Lighter" Wall Street
Journal
"Too Soon to Panic" Newsweek
"Small Firms Get Break in Health Plan Fine-Tuning"
Boston Globe
"Health-Care Plan Grows on Small Firms" USA Today
"Small Busmess Gives Health Plan Second Look", Washington
Post
"Small Firms Stake in Health Reform" Nations Business
�SMALL BUSINESS
TALKING POINTS
LIMITS ON INSURANCE
PREMIUMS
•
There will be a limit on how much insurance companies can raise their
premiums, to prevent premiums from increasing several times the rate
of inflation, as they do today. This limit -- combined with the new
bargaining power that small businesses will gain from pooling together
with consumers in health alliances -- will mean lower prices on
insurance.
SMALL BUSINESSES THAT PROVIDE INSURANCE WILL SEE
THEIR COSTS GO DOWN
•
Small businesses pay as much as 35% more for health care insurance
than big businesses. By allowing small businesses and consumers to
pool their purchasing power, the Health Security Act enables small
businesses to negotiate just as good a deal as big businesses do today.
Our plan will lower health care costs for these firms, giving them more
money to hire future workers and pay their current employees higher
wages. The Wall Street Journal called the Clinton plan "an unexpected
windfall" for small business.
DISCOUNTS FOR LOW-WAGE SMALL
BUSINESSES
•
Firms with less than 75 employees and an average wage of $24,000 or
less, will be eligible for discounts on the employer portion of their
insurance costs. Contriutions for health coverage will amount to
approximately a dollar a day for the small employer whose average
worker earns minimum wage.
REFORM THE HEALTH CARE PORTION OF WORKER'S
COMPENSATION
•
Injured workers will obtain treatment through their health plans, just
as they would for other injuries or illnesses. This will end unnecessary
duplication of services, help workers get back to work quickly, and
reduce costs for employers. Workers compensation insurers will
continue to provide coverage and reimburse the worker's health plan.
INSURANCE INDUSTRY ABUSES OF SMALL BUSINESSES
WILL
END
•
The Health Security Act makes it illegal for health plans to raise
premiums if an employee gets sick, drop a companyfromcoverage if one
of their employees -- or one of their employees' children gets sick and
illegal to refuse to cover any person or busmess for any reason.
�SMALL BUSINESS AND HEALTH CARE
The Health Security Act
Today, small businesses - the engine of America's economic growth are threatened by a health care system that is stacked against them.
Small businesses health care coverage costs more and offers less.
Despite this, however, many small businesses want to provide health
care coverage to their employees - and a majority do. The businesses
that provide insurance are paying for the ones that do not provide
insurance for their employees. The Health Security Act will end this
unfair "cost-shifting'' ~ lowering costs for most small businesses but
ensuring that no one gets a free ride. The Health Security Act will give
small businesses a better deal by eliminating the abundant amount of
paperwork, giving low wage employers substantial discounts, and
reforming today's complex and inefficient workers compensation
system. Small businesses will be able to enjoy the security of rock solid
coverage for their employees and their families.
CONTROL ESCALATING HEALTH COSTS OF SMALL
BUSINESSES:
•
The Health Security Act will put small businesses and consumers in
the driver's seat -- creating large purchasing pools that enable small
businesses to have the same negotiating power that large companies
get today. Health plans will be forced to compete for business, bringing
down prices and improving the quality of care.
•
Administrative costs will be reduced since the regional health alliance
will assume the administrative burden for the small business -managing benefits, enrolling employees, negotiating and renewing
coverage, and bargaining for insurance prices with health plans.
•
That's why the Chamber of Commerce - representing thousands of
small businesses across the nation - endorsed President Clinton's
employer mandate: "An employer mandate... is a necessary part of the
solution, provided there is an acceptable subsidy (for small business) '
['Business Group Backs Clinton Health Care Plan," Knight. Riridsr. 4/9/93]
HELP SMALL BUSINESSES GROW:
•
The Health Security plan will help those firms that are creating the
most jobs and growing the fastest. The small businesses that provide
insurance today are the fastest growing small businesses in America.
New, more affordable coverage will help them expand even more,
leading to more jobs and higher wages. The Wall Street Journal
wrote: "For many small businesses, saddled with escalating
�health care costs. President Clinton's health care package comes
as an unexpected windfall." fWall Street. Joumn) "Small Business Sees
Burdens Getting Lighter", 9/13/93]
Experience shows that the Health Security plan will create a better
climate for small businesses to grow and prosper. Since Hawaii asked
all employers to provide insurance for their employees in 1974, the
unemployment rate dropped to one ofthe lowest in the nation (2.8% in
1991); small business creation rates remained high (the number of
employers grew almost 200% from 1970 to 1991), and the rate of
business failures in Hawaii remained less than half the national
business failure rate. In addition, only 2% of Hawaii's "rainy day"
fund - set up to assist the smallest businesses provide insurance - has
been used. [The Hawaii Department ofHealth, June 8, 1993]
When all small business employees are guaranteed a comprehensive
package of health benefits, employers will be able to retain a stable,
high-quality workforce.
END INSURANCE INDUSTRY ABUSES OF SMALL BUSINESSES
•
The Health Security Act will not allow health plans to raise premiums
if an employee gets sick. In today's system, small businesses often see
their premiums skyrocket when just one of their employees or
someone in their family gets sick.
•
Under the Health Security Act, health plans will charge small
businesses the same premium as large businesses in the same region
(based on family breakdown of employees) for the comprehensive
package of benefits. Low-wage small businesses will receive a
discount.
•
Insurance companies will have to accept all who apply for coverage.
This will end "occupational redlining," the practice where insurers
refuse to cover certain industries, such as hospitals, grocery stores,
and barber shops.
Many small businesses or self-employed individuals find i t impossible
to purchase insurance due to pre-existing condition exclusions. Under
the Health Security Act pre-existing conditions will be removed.
PROVIDE DISCOUNTS TO LOW-WAGE SMALL BUSINESSES:
•
Small businesses with less than 75 employees and an average wage
of less than $24,000 will receive substantial discounts.
�Small businesses that currently provide health benefits will likely pay
substantially less under reform, due to falling administrative costs and
lower premium rates.
Small businesses who today are only able to provide bare bones
insurance will be able to provide a comprehensive package of benefits
to their employees and their own families at a reasonable price.
100 PERCENT TAX DEDUCTION TO THE SELF-EMPLOYED
•
Today, the self-employed are discriminated against by insurance
companies and the federal tax system. Insurance companies charge
small businesses highest premiums, making it impossible for many to
buy insurance for their families. Currently, they are also able to
deduct only 25% of health care costsfromtheir taxes, rather than the
100% that other businesses. After reform, the self-employed and
independent contractors will be able to deduct 100% ofthe cost of the
comprehensive benefits packagefromtheir taxes.
REFORM HEALTH CARE PORTION OF WORKERS COMPENSATION
•
Under the plan, injured workers will obtain treatment through their
health plans, just as they would for other injuries or illnesses. This
will end unnecessary duplication, help workers get back to work
quickly, and reduce costs for small businesses.
•
Workers' compensation insurers will continue to provide coverage and
reimburse the worker's health plan according to a fee schedule.
•
A Presidential Commission will be established to study the issues
involved in fullfinancialintegration and make detailed
recommendations, advisable to the President by July 1, 1995.
�SMALL BUSINESS AND HEALTH CARE
The Problem
SMALL BUSINESS' FACE HIGHER HEALTH COSTS:
•
For comparable plans and benefits, health plan costs are 10 to 40
percent higher for small employers. [GAO, May 1990]
•
A survey from the late 1980s estimated that employers with fewer
than 25 employees pay about 30% higher premiums than large
employers. [National Small Business United]
SMALL BUSINESS' HEALTH COSTS RISE FASTER:
•
Small businesses have experienced annual health benefit cost
increases of 20 to 50 percent recently. In 1991, one-third of small
business owners experienced health care cost increases of more than
25% and 7% experienced cost increases of 50 - 100% [Washington Poat.
1/26/93; Arthur Andersen, 7/92]
•
During 1988, health care cost for firms with fewer than 25 employees
increased by 33 percent - a rate of increase 1-1/2 times the rate
experienced by the nation's largest firms. [GAO, July 1991]
ADMINISTRATIVE
COSTS BURDEN SMALL BUSINESS:
•
Small employers pay substantially higher administrative costs than do
large companies. Administrative costs consumed 40% of total health
costs for businesses with less than five employees, compared to just
over 5% for a company with 10,000 employees. [CBO, 10/92]
INSURANCE COS DISCRIMINATE AGAINST SMALL BUSINESS:
•
Not all firms that want to provide insurance have the option to do so.
Internal insurance documents confirm that insurance companies
"blacklist" large sectors ofthe small business market - such as
logging, mining, hairdressers, bartenders and medical offices - and
refuse to sell insurance to these small businesses at any price. [New
York Times. 2/5/90]
•
"Redlining [refusing to provide insurance to entire industries] and preexisting condition exclusions [rejecting certain employees because of
their medical history] constitute a major problem for many small
firms; approximately 15 percent of small firms fall into industries that
are routinely redlined. Preexisting condition exclusion • particularly
excluding an entire firm because of one employee's health status - is a
practice almost exclusively reserved for small businesses."
[D.Stone, Chronic Disease and Disability: Beyond the Acute Medical Model, 1990)]
�SMALL BUSINESSES WANT TO PROVIDE INSURANCE:
•
"Two out of three of our members provide it (health insurance) today
and two out of three if those who don't would like to do it." [John Motley,
NFIB Chief Lobbyist, MacNeil Lehrer Newshour, 4/8/93]
•
A recent study prepared for the NFIB said that 64 percent of small
business owners would like to provide some or better insurance to
their workers. When asked why they do not offer insurance, the most
common reason -- stated by 65 percent of small business owners -- is
that premiums are too high. And 92 percent of small business owners
agree that the cost of health insurance is a serious business problem.
[Charles Hall and John Kuder, Small Business and Health Care: Results of A
Survey, The NFIB Foundation. 1990]
•
In a recent study by Wayne State University and KPMG Peat Marwick
42% of the small businesses surveyed support the principle that
employers should be required to contribute to the cost of health
insurance for their employees. Seventy-five percent favor a
restructuring ofthe health care system.
�"HA .iL
o Boston Globe Page 1
m
Small finns
get break in
health plan
fine-tuning
Bill going to Congress today
revises tarset forcost-cuttina
By Peter G. CoscC-Iir. snd Ric'r.aju A. Kncx
The intci est group leaders, who apoke on
t. roition they not be ider.ufied, said W'nite H u ^
o <?
officials in yesterday's biiefing desa-ibed a nmrbc:
WASHINGTON - In its health cave p : 'o ir e
C other charges in its proposal. The atnoant that
T
unvei'oo t-x'ay, tne Clinton adninistr-au'.'.rl!
i-.dlv.duaiS would have to contribute toward health
:-.« s'jdr.taJy expand a prons:-:-. sub^iii^ng sorv.e
ccvevage tor therr.selvtie and theii' families would
•i-p'.cyc-r coiK, hoping tc eaci 'ti-s'-at t-.ccapped at '6:j percent of income.
••vcr'.au! would huit srr.ill 'c.ifir.vcsei
T^e amount that states would have w cortr c ,-e
71 e erpar.s:on is a-jcng hinG-e<J c* c'^arfo*.
t.-waid benefits for their employee would be :a:;ed
-.•:>;* ofthirr. .^.ali. in the 1.300-page lef j;at:v?
a' ^ 3 porctin'. of pajToll. In the administratio-. =
.
- .••cpo.-,al. vrich th<if adr-;.:-,:^ ation d!C'v ?n
ci^nal proposal, neither the individual no) snw
• \r.-ir-ciay to biiwf rr.eTnbers ifConp-sii irr*: esr
amounts wgi-e capped.
V-'upo ar.-u
-ter?. A 24o-psge Jrari c: tr.e plan
Ar.cng the biggest changes predicted between
•'• •- '.2a'«d t"? p'.'tcs la.-'. r.or.:r..
>
=
'he d ar. and thefinalpackage ai-e the followirg
F-r.ivflr.g nom :ne2tirg; -A-it'r. W"h-'ie H'.'.j-e
• Scaling back a proposal that the govanr.e-'t
•/''olv-'s. '-iad?*-? ofir^rc-t poi'.ps 5ayi :r.e
i :ck jp most medical costs of early retirees. T^e
^inuriistraVlon plans :o coumer c-i-f.cin-.*.
11 cposal was attacked as a sop to big busmes; a - •!
-•-a-.trai prvj-t'.'.ion!! bii-i.-.d the p-opcs;;! are
more costly than administration estimates.
riilisrc b: addr-g a 15 perc.-n: ;-;:'r.:cr. v.- a po^l
• Som? reduction m the regulatory auth-n-.t;.
.•.•.-'•.ev fr- i-jcsi<li?.:rg small basir.€.:.»«»s md the
rec'lonal health alliances, lai'ge purchasing
p?- ativcs tr.wugh which most Ame.-ici s woulc
Tl-e --cvti -.v^-jid ;-ut - perhaps by r.o; e thsr. So'"
get the:' ' .aith covei age under the Clinton p i i.
p'. o; .';Cr:d ancunt by x ' - t n e p.an
Insu: a- .;e lobbyists, amorg othei-s, had aru.• •
• •ul': 'vdiice the fec'pval defiut. \\"hi:e Hc-se
p:-?p-;sed alliances as too poweiful.
•-'irirt'.s c-'b'ina'ay nedicted their pi^posal would cut
• cxvr.ding fi-omfiveto seven years the r.r-.e •
; deficit by $31 bilhon overfiveyears.
wyfri take the govai-nment tc begin cover.r.| •-. •
Lo on P-inetf a. dii-ec-Wr of the Office of
cost = ot long-tei-m caje. '!>.« proposed bene*!
^inaK-nfent and Budget said last rj/'rt the pli*n
v,"n;te Ho.ise officials originally es'imatw *y>i.f.. :r.
r-.'y.v would cvt the deficit by
billion. Ha said the
aa
: reposal a'so wocud take a year longer to iT.plemc-nt .SC bil'don before the end of the decade, is
iTT.pcrvmt r'cr am-actmg the support of the eice-. >
;
^'•'.v. c<r;'ir^s a by 1908.
D
Tht reworksd White House pitjposai. one o :-c
<
The cresid-snt and ^-Ife. Hillary Kcchar.
^'•gest piett's of leg'lslatjon ever before Ceng?». ? «
•rilwr. wi". go to Capitol H;i; wiay '<" preser-.t thr?
expected fo be the centei-piece of a fejxxs^u pun.x
TO: r ally *o Cong'-ess. The pveSi'.icr.T.
uc-oat'i over how the nation should rev an p -.'a $*X •
•esk-v^ay chit, he had -..i ?an3 to scale back
biilion-a-year health deliveiy system. I jv-.i>e'»
.ovyi aee undov t'-e propooa'..
wlli almost certainly change the admjmiti aco" rDlK-isr-g ci-.t:cism by 'he N"at:-r-j'. .\s5-x-.ar:
possibly watering :'r down, before voting on v «
.•" M;4r.u:':-.--tuv.-4.-s :hat :s c:-- sal
:.:o
rac'rcage «ometim.e next yea;-.
i'VAcp-^i: Clin'yor, said. "Mos*. rinuvj-.-v.; :-'-s .'i-e
In private liiscus^ions and public corr.ne—^ .tciv..; ty sa\ e r.on^y x th-.s. If -.hr.- v a-, v
3
»»cer. ••vecjks. adrrjr,:sti aacn officials hr ergr: a
K'.:: '-.oi-.^ :n th-- coath. thit -.an c. '.hc.v ".•><•••:•::',
:-ea<::r.-»9S ro alter details to meet object :ns B.".
VTiS. Cl:nwr*f.ook um? ou» c-v. he &:r-:.':3y :o
Wr.in House aides said the overall prcp-.sa' w-j.
x-cfnTapiro; Hi'.'havi ciscui* the pac'-tas-: wr - ?'ir.
remain utile charged from the leaked ti: i"^ ^rpc:r-Hf-^l Pat :-.<.> l4o:.ri:han. L-haiin-i" ^ t'^e r •>•»:•<.•.•
G i. O ST A;- v
P
an
u
,
-
v
,
:
;
:
v
1
r
�-3 •
'•nd the president's Sept. 22 speech, to a joirt session
" Congress.
Most significantly, the administrtition continues
to teljeve that it on puJl in huncb eds of bliions of
hoilai s 'or the plan by cutting expected growth of
"he Medicsue and Medicaid progituns and that it can
-aiie much of the rest ofthe cost by requihrg
-:»npioyers to pay >0 porent of the heaith insurance
cvsts ct'their omplcyers. Both elen\ertj ofthe
proposai have dra^vn stem criticism 6om iawnaket?
and lobb\"i3ts.
\ ar. e^-it to i-rjtt small bvjir»ss ; ippvrt the
'A'hitc Houss flar.i 1 :r.vT?e3.-e th5 ;:?.(•
0
ctrr.parjej cg.b'e fot govoi-nrient iv.bnvUC-s * help
c
o. ver health costs. In the original propesa.'.: .ly low"Tigefirms?"> 50 or fiwer employee's w^s-e elig-lbie.
.: h
' \ d w the latest vvi^ion, that -vuin'oer has b?*n
.vxreteS tc "5.
The plan to req'iire er-.p.'.-yei-s to .ov^r 0
per.-ert cf ".'-e costs of an a-.-ei-age health in?u: anccpolicy h.iifi-;'ghte-r.-idmany small business c^.-ne: s.
wh-i a*s-?ittre ^vper..ie co:.l-i drive hem under.
The plan void assess coiporat* alliancs^ thai
.-ct i., -rvy ..•uieide ' p »;,^tern a:: estimated .$24
V.L'-'.n j'-e: -.ve vc».o. j^fij:a »tfM.ir.^-c'.3» v.:gh.r.
tsi/': ;; vte'tously p.r.nr.unt d 1 p?: ^y-." .ev-;.
Ti*.-??;-.* '. e snail ^r^v.^t
tl«: jc-"ii-:r.-.g
.^m^lcl-.T: -Vor: speciai ir.torcst g'-oups and
rr.rm'c •••: of Ccnpess. C-inton's ?; opoi-s*. fer.a;Tt.«
sh-.-jlir 'o l:»st mr.ih s vut'lre.
••'v^.at s '. jmar-'arle is thit
;tr-: hai
••h-ir^ed.'" '..nt vOr.;vc-s<:or.al heilth a.-ie sa^il
•o-:?! .lay
The has-.t s'.rjcruj'e is :rtact: a system of
v-' /a Sai ..••.vc-age based on mantiawy VOJkplacc;
v;..v:e. '.'-th s.-'paratfe pro^ isior: fo< the
vL. rhc elderly ?nd the pco'
7
;
,
r r
:
:
J
r
v
;
A nationally stand?-oenefit package,
ciesrigned to make p
tisons amc ng health
plans possible and t
:e shopping around, is
still a najoi feature
publican ciht-icifm of
a "one sizefits all" be;
Similarly, the concept c
:nal •'health
alliances," the major stiurut i iTinovau.^n in
Clinton's plan, remains.
Although the alL'anoes re- tdly would have
t - er regulatory powers ovi. -alth plans than
Vw
oi-.ginally envisioned, these
agencies uouid stf.i
r^ct as interme-iianes b-;tvce ons-mers and
"accountable hra>.h p'^ns" t at actually delrwi thr
!n.-'licai se'vices.
States would olso e allowed to opt out vf: he
Clinton proposal, wh: t en\ns.cro in'oltipie hea th
plans, in favor of a s • rU-payer nptjon. Under that
provision, a state agt..cy would -aise funds and pay
riivev-tly for all medical sen-ices for its citian*.
The single-payer "prion :s viewed as impoTtant
bcrh substantive -.d political reasons, i^.thrt,
mui:h ofthe nation, s'.ch as northern New En^iar.c.
does not have a core Wated population to susU.n
mul^ipie. competin.- alth plans, the ma n cost.
.•'.•nr: '.\ mechanism ne Cintor. pi oposa*.
Pollu'ciiiy. the a: ity of staws to dc\"is« sing epaver jystems is dv.-.- .wed to hu-p Ifnej-al D«ii -IG-VZ
to Ci'nron'as^e. Se- Paul Wellstone. a Mm.n.i u .
Demo'.-r&t who leac. .ne ariiU-^.yei' ivjKOf-if.v ,.he Senate, said it is 'cnticaily important" •.'.lit
'^T.:te House agieec last Thui-sday to make n eis-.«• e stat-is to set up jingie-piyer plans without ' i *^
*r
tc -^n nulupie federal ^"aivors or sufferfina-..a
ryn^lt-es.
-
_
:
r
;
�JOVER STORY
Many busweases say they don't offer health insurance
ra only because irs expensive but also because worker?
doot want to share the cost or would rather have cash than
beoelts. If they get O they work out deals with their comL
pames to help them pay the expenses.
For usance. Boy kin stopped paying for health inurance
three yean ago when
premiums jumped in one I
• '•
year to $139 • month per
worker from 138. He
called a meeting of his 23
worken and offered a
ooe-Qme. J13^a-month
raise or continued insurance benefits. The catch:
By Beth B«lton
Employees had to pay
USA TODAY
3% of the insurmnce
0
Despite the imaal outcry premium
"Ai you might expect,
of some small-busuies iot>
byisa that President Clin- they took the raise. Not
ton's health-care plan would one person used it to purbankrupt small companies, a chase beaith insurance.''
growing number of compa- ays Boy kin. Currently,
nies aren't buying that line half of Boyioo's employ— especially the nearly 7 % of businesses with more thanees are repaying cash
(
K
advances taken out to
100 employees that already provide health insurance
Smallfirmspay an average 33^ more per employee for pay medical bills.
In addition to arfuing
health insurance than big companies do because small
"rms spread the nsk among fewer workers The past dec- that their employees
ueA TODAY
doot want beaith insurle they've endured premium increases of 1 i^e or more a
ar — four times the rate of inlaoon. They've lived in ance, companies ay they may have to cut Jota not hire, or
JU that their insurance could become unaflordable — orfreoe or cut workers' pay to cover the con. The day after
be canceled — if one employee were to get seriously ill. CUnton announmi the plan Sept 21 ooe-ttird ot 170 comN w that those companies have had a chance to study pantes urveyed by the SlO.OOfrmember Nafloul Federao
o
Clinton's plan, they are hfnn'ne to see big advantages. O o of lodepeodent nirtnuri art tbeyd have tototpeoThe key. they say government subsidies for small firms ple |D or leave jobs unllled if payroll c s a roae I M or
that would cap annual insurance costs at 3 to 79 * of more to pay for beaith coverage.
.<
average annual payroll. "I talked to some people who im- Their Am reaction is to react to da namiar (feQlac
i what level of Inwrinoe a pravtte). Then day
mediately dismissed (the plan) as much too expensive and
to laanung their prenuums would betower,aad
I asked them. What are you paying and what are you offering* When they sat down and aaually looked, they saw the they're astooahed." ays John Sea»l prwfcteut ot the
Ginton plan would be becer." says Marilyn Han. coowner Snail Busuiea Le^sladve Council In tfahtt^on.
of Design Plasocs in Fort Worth. She bad never figured Many stall busuiea ownen ay the pina would:
what she paid until dlntoo's plan came out. She found she tEUalaase com wbMat Ho**** aad docaon
pays 1 . ' of average annual payroll to cover 63 workers. the coss ol treanng unumired padena by dartfat t
2%
3
The Ginton plan could cut COB almas M*.
higher rates. That adds S91 btllka a yaar a Mat
pay for health insurmnce. Uadar the Gtea
A growing number al snail himranownen are doing
everyhody would pay snmwtilng, redadng tbefel*
what Kenneth Todd has dooe — and many have been surf
prised at the results. "Whan I hear people complain that theprsnlums aow paid by stall coopaniea.
•Oaate a level pUytag M d Coopaotai tet dottpr*
caps wont be low. that theyracyend up bong tugber. I
laugh." ays Todd, i n imuai ot Shaw 4 Todd advenamg vide health benefla oow can UM that money a buy i '
agency in New York. "Aajr cap would be beoer than what tang or new equipraeoL Under the Cttaan ptaa. t
I'm paying." Todd payi 3 % of hit avenge annual payroll paues wouldn't have that iitintagr
0
• StabOln the •yaem. Becatoe w n
-s t.nn AAA M nmnrf* hMMi irmurmnc* He •avs 100% Of
Health-care
plan grows
on small firms
There needs
to be an
incentive to
do it.'
1
�Small busmess Lrivestteaitnflan secona LOOK
AH
1/anv Firms Find Cost eightProviding Insurance Is Lessihe legiiULon
of emplo>ees and tneir (ami- the maior hurdle mat Than Expected
has
By Sunm PevUtem
lies. Brinoon nad a cnarge :i near.
has to overcome.
"I uunii 't * * r " i d*'." «
Because tr.ev accpur: fsr i.T-:st
NuhvUk MOBiteur Jetf Brin- Brandon of President Canton s pian f*o-Uurdj of aJ workers witr.c: a.-.v
dan spoke to tto (cars of many as he rung up the Last check one re- health insurance. sT.a!:-Bc»:r.ess
snuil^usmcu ovncri last month cent altemoon at the Sports Page owners long have viewed with trepirestaurant in downtown Nashvilie. "I
when bt totd ABC Ntwi ancnor Pe- couid certainly swing $2,100 more dauon Clinton s cail for ''am^erui*
health mumnce.
ter Jennmp m a broadcait interview to cover everybody"
Now that they have had i c.iance
lhat he would Be onven out o busif
In the pouueal to and fro over the
nesi by ihe Clinton heaim plan ind Canton health plan, few ^sues pack to review u. many o( the busme**
its requirement that tie pa^ for more political punch than tne plan s owners said the plan could torce
impact on small businesses. Last them to ruse pnees. live with io*er
heaJth mjurance (or rus employees.
• eek alone tne cr.airmen ol the profiu. defer pay raiaes or jy oil a
But a ie* davs later alter :I:C-J- •.vee House committees that will few empioyees. But they reiect
y
'.ating siui it iouid csst sir: as :i::.e :ons,aer -jie Canton package each nouon. populanaed b opponents :t
S M S M A U BlSLNlS8,AU.C«l 1
a* $2,100 more eacr. year '.2 :3-er ; ted -.ne smaii«usineia impact aa
l d
SMALL B l 9 L v m r w A l
the CUnton plan, that it sounds a
death knell for the small buameu in
America.
One such dire prediction was offered b Sen. John McCain iR-Ani.l
y
on a recent edition ol the TV' program "The Mc.Neil-Lehrer News
Hour.'
"U you put this tax on small-busines* employers in m state, they re
y
going out of busmeu.* McCain said.
•A Little More Difficult'
The Washington Post asked
McCain s otfice for a list of firms m
his state that might fail under the
Suroens of the Canton health plan.
Of Lie nine owners contacted from a
Ust al 10. noc one thought the plan
would force their firms to dote
Two. in tact, rijnilaied they would
actually save money.
It won t dm* a t ort ct buuneu—tui it's oot mar* tfent that
wiQ make life a link m n dificult.'
said Jobn Anion, pnadent al Copper
Sute Lafhung al nmena. a what
was a ryp>caJ response
No (roup has waged a stronger
iobbymg eflort afimst the Clinton
pUn than the Nauooal Federal al
Indtpendeni BusmesMS (NFIB).
"Our memben tell us they have a
great fear that this will put them out
ot busmei*.' Jack Fams. NFIB president, told viewers ot Tace the Nation' last Sunday.
Of five buatnesi owners contacted
at the aigfesoon ot the NFS. however, two did talk al telling out or
doaof their Soon—i snail recreatnal vehicle dealership m Kansas
and a family-owned Penosylvinu
coMCUcuon firm. Two others discnmvd Owr would save money under the pton wtulc one wd he would
trm Ins nafl.
"W1B1 mrn*c> Sure—I'm ao quitter* said NFTB memher jotin Bnnaoo. wHom Lehi«h Valley Racquet k
FttaeM Centers m Alleotown. Pa.,
would see its beaith care cnau almost triple to $104,000 from
$40,000 under the CUnton plan.
Bnnson predicts he would lav otf
three emptoyees to pay for bener insunnce for the ITS who remain.
Brttks for Small Busintsi
Ii the rmancial impact of the Clin'on plan on small business is less
than many had feared, it's no aco
aent—it was carefully designed thst
way Aj part of the plan, the aAnah
stntion proposes giving small buwnrises and kjw-income worken $90
oulion a year in accounts an ther
neallh insurance premiums by (he
time the Clinton plan would be fully
imotemented in 1998. The subsidies
will go to firms whether they oMet
health inaurance n w or not.
o
Taken together, the employer and
emptoyee subsidies total eight tunes
the annual budget for the government farm subsidy program m 1998.
nine tunes the budget for foreign aid
and almost three times the allocation
(or food samps. They exceed tit*
mwbned annual opersting budgets
at (he Departments of Commerce.
Eduaooo. Energy. Iniennr. Jusuot
and Suit.
In fact, the subsides could pvf
small businesses m labor-uitenaive
service industries a sifs&cint cm
advtnuge over large compeoton.
Under the plan, a small business
could have health costs o 3.5 m <
eat ot PSTTOU. whik a larp naoooil
firm in the same busmess would ftf
more than double that
Tnder the Clinton plan. McOooald's will be hit harder than tba
nnghborhood pvaa parlor* said Carlos Bonilla. chief economise (or the
Employment Policies Institute, a
Washingron research (roup dnctr
alhed with the restsunat industry.
Who Will Baar C««ts?
Even with the generaa
more anal] mmmrt are kkely to
boe mcrencs a heslth ooa tea
rtecrtasei • • ind how titj aitm to
tbnae OOKS n te cna ot te t o
aoax debate wrrouitet the Q B ton ptan.
Economists long have believed
(hat busmess ownen a most mduotnes pus added health cart costs 4nctly to then employees m te (arm
at lower pay ruses m the futm.
There go (he ChnsunaTSBRs«.* nd Ksltlten CXanwod. ciecutm director at Language LeBrung
Enterpnse. u she toied op the
$10,000 b*s te O B U B pSa would
K We
Tb* fan his one i
TlM aouvftsl u * * * proceu
at pMsnf an added soaa to emptov
l Cake > tanner 4 ywx And
in low-wage industries, aaaimum
wife Irws m«y asks * mtattMt to
PMS H oa it al. • b« csapneiind
Ai Rad C O M
tac
tmKnei
4.000O<4JOO uiwkiiMs w > par
Unse ptuvsluig ^mtsnsi ler^xn
Wssbn(ton ottos IsnkHig ^on* ::
the psrt-time worken J si't-c
hnsitb murines
•U « • had to aOm ». « wows -ajus." md amtm H P«s. « o r.g
ins te Ctetoi Um M M I MM 5
percot totasoo* 4 tmt *»ne%s
Ratter tkaa m h i asfl Pt«.
ODUM try to n m
m r —
i per
OMI to c r m te am* * mmo***
tart* a n wrt te tei»«»i
d at hii ctegMMrt O M I »•-^xg
l-i^i
would.-. •
Sbehao<
sgenram at te Cfcwte t teab Co , Crr*tal O n Thi mm taeruc -t
�Ftllnt Ox PlndL
1
How any out cooipmy
i wddcn increuc « l>e*W> o » u
pendi on the compeuuvt
«nt in which it opcnM* »
enential th* leme*
aid ihoie ntou threit*"^
* »
opentmg in mduttnet w t l too
many competitors otleiini Mmeto
that people could do without
S M S M A U Bt;81NUS.ULCel.S
smu. Bisrxtsi. fw oo
Rainbow Plantacapes Inc. < Baiu4
nore. (or example, which otters no
health insurance to iu 20 employres, would get socied with a
$32,000 premium bill under the
Canton plan at a Une of Gerce pnee
competition in the interior landscape
industry. With few new buildings going up and strapped landlords cutting
back on "Inlls.* such at interior
ptanunf*. prices have been dechnLlg.
There ire smply too many companies chaang too little work.' tad
>ary Bowers. Rainbow's prendenL
"here i hardly a day that goes by
j t some existing customer doesn t
and say. Either you lower your
r
prices or I'l
else.' '
go with someone
Bow rs said the Clinton plan
would force turn to lay ofl at least
one employee.
Restaurants face a similar
scueeie. Because waiters, wniro*.
es. pantry help and busboys geneai:•' get no insurance, restaunnu face
s.gru^cant cost increases under the
Canton plan. But some n s u i s a i t u n
fear that raomg menu p m a to eov-1
er the added cost could bo i
productive, leading riiiimmi teetf
leu—or eat out lest ofton.
"People these days a n
ing i they go out to eat. and'
a lot tea." said Linda Detfnlaugh.,
owner of Fred * Harry's, a seafood'
restaurant in S h w Spnng. T m try-
eyegtaaes in Sc. Petersburg, Fla.. for
24 yean, drove to Tampa rwo weeks
ago to v a n tus coapUints about the
Canton beaith ptas to the president
hiraaetf. it a town tneecng orgamad
by ABC-TVs "Nightine.'
Annual premiums to cover ha three
employees would aotaae $900. But
Mills-Andenon opocal was faong hart
times even bdore the Oatoos waged
into health care refonn. Last year
Mills was forced to dose two < ba
4
three stortronu as casts IHJ eased
while tales lagged because al fierce
cornpeoDon from supemores tike
sionwonu and Lens Craften. The a tn S900 Stills might psy n hesltb prerrjumi. he adnuu. pales in raportane*
to the more banc threst tnm c a 9 * o tors who pay S29 9S for eyeflaas
frames that cost hsn S49.9S.
In other ratances. the CUntOB ptan
would help level thefield<i b u n a
compeuuon among smallfirms,(or »
stance, o the Capital Hill resaurast
market.
Menu pnecs are relatively Keep it
La Colline. a French restaurant oo
Capitol Hill, oi pan bed use tt prondes
health rawance to all employees. On*
result is that sales have dedned a recent yean Another is (hat owner Paul
Zuccom has been busy making the flrm
more dfioent. strtamlming some food
preparation and instilling his own
laundry to wash tabic linens.
Zuccon would save 135.000 in asurance oasts imder tbe Omtan ptao
that he would be Ire* to nvoat a
e
ofigureout a way to reduce my
JS. not raise them."
Jeffinbaufb could see her health
premiums tor 16 employees ns«
$10,000 under th* Clinton plan. Sbe
can t pass th* cost on to the employees, the sad. because they haven't
had a raise in fiv* yean. Nor can she
take it out o( prolits—"1 lost
112.000 Isat year."
Pain wi Ccowmy't F r i i m
the heakh ptm • bkdr to make th*
>eu ftrma naOer n d weaker and
tne Knng Srms tsoer and «roc#er
houi a major npact oo th* overall
nooy, Kooomou ay.
Edcbr MJs. who baa been seOiDi
"It's the layer after
layer, tax after tax,
that kills you. The
constant battle is
not with your
competitor, but with
the government."
- j a o a s Early,
owner cf Capul Tschaognptua
1
Evtryom Hann Opinion
But wruje
^
•• Jy be .auy opinions adcu: me Canton plan among smaiiousmesi own.
ersiimost ajuays are stated snar?^.
•"•Y»reopinions 'Jiat are as akelv :o
he shaped by political news as finanoalones.
I t sounds like I'd save S10 000
h« I dnibc that will come to reatry'
laid WiDam, Co*, who opentes Eastern Sbore Human Services Inc ,
• h i * proinda traiaportauon to and
ran docton offices for low-mcome
pstients in Wicomico County. Md.
Like many businesses, he has
witched another government manto* «««oce precram-WofKen
Compaisauoo-Hloubl. m the last
Wbywn. "Maybethe subady win tc
owe the Snt yar. and the secsnd.'
C«a md.
I can a e thai evapontmt lemng ia bokteg the isiL"
I f l th* * m a t e layer, tai after
th« tah rou.' md Jama Early.
~ al Capsal Technctraphn a
S^ra^ikL wtaii pr•ovido
to architacu u d engmeen. "The
«
a M w«h yov comp a n r . tac v i h th* a
IIMIII It
a n t fb m Hatha.*
Tba '•nw-<hit-brako-ih*-can>
( r ^ a d C a th* nearly ian<ral caop l M d A * Cfaton b o t t pan trm.
i n imall-bosiness enuea. who ar*
K 3 n o r r
m k m oacad te baft of arw eta
tateUA
Aad jm te oioqu* a tadl iround
«B l o ^ o l paradn: How a t .-jt
n l taaaas could haw b r a a m • I • * ttoac job* a te tana •--.e
small basinetMS were be n]
• m a h a f tader the bwtes at (toe.-ii
taaaodririluiaa'
a x n « • * • te o«uy
aaa* whoa* TMV* a n caiarad by
M r btec odcrfyai p e t a l h*Mi.
1 tet o n i i < M B
teb' aid D M I t e . p a
U^Atelfac.41
eaid a * a I H J B a mamm m as
" * i t e rum
lower jncrx Meanwhile, torn* ci i a
toughest competitors—Sfum at
L'mon Station. Bice near Judiciary
Square and La Braacn* on Capcutf
HiB—face up to a 4 percent acreaat
m their ooeraung costs ss (hey art
forced to cticr health insurance tor th*
Snttane.
TheyU bivc to mat ther pnotv*
Zucconi wd. 'and (hat will dnve a km
aouraen bsck to me.'
grrawoiti who have trad I O M *
1 1 u« tafita ^ all 4 (ha* cilacu
4
w i n that a • almasc rmpr—Mr a
do—a pom echoed tut week by L a r
n D'Andres Tyson, (he chanua d
th* Wtac Houc Caaod al t a x a m
Advaerv si a tne&tg f x raponcn.
S I A B * I O n w a 10. ! W l
�Small Companies Misunderstand v^ilinton Health Plan
Fvcn Those Who Would Benefit the Most Have Doubts About Proposal
HV Itll K W4RT7MAN
•.•»f n.
. .., | I D m,*, , Stm»* » J . H - M I A I
I Alt A M I ' S N I
K n l h t H r k n u n . who
m n ' - .1 I . I I I H I V n w n r i l h . i r i l w a r r f f K l r i h i i
hnn loitiiunv
\tmniM Wivr Mill 4 1 l n l n n A
Imm W«tlilnfftnn. rrprrsnri^ • tinrr s h i r *
•nttaHy
i4 thr small buslnrcs mmnnmiiy
trm
w ^ f e y m . Art hr
Hwl f ^ n U r w l
Cltnloft h u a ma|nr crrittMNly praMrm:
A wWriy rtmrtalrd drefl ol thr pro
pnaal s h m lhal thr u l t M i tmattrtt.
h m n l w a t * nrmt « w U wprm6 u ttfllr t a
3 S% of payrvN lo ram Ihrir w o r t m ; no
R m
Ihr our CMntaa * * n hi Ihr
( r m v . M M O n n M a . I r r U Ikal "N I k r
b n m of Ihta ta om Ihr t U b M H w u
ITrflt
h j v r Indkalrd that a s t n w * maturity nf
h i m i m t n * n m Irnd In l a w
ramlMalrs. Im
Imlanrr
TV
RrpuMkm
rrartlom
I H M I I I I I . i n - pi.m
ar^iml
I f c h m m t n r n t l y \prfmtl »tumit 107 flf
tly f a v n i f l In | M O * H * * m r r i t r a l n t r r t a f f r l e
p r n i i l m f » daunlinc task nf Munllnf thai
n*. . ' ? < H i p l o y . ^ H n d n t h r WhMr l l n M
f t f i a * i l it «<Hili|<.prfMliinlvilhn«l S
ill
I' n i . t l1
l
(in .in i n n m h r r h r n r f l K (Mi k
• I:
N-nnHirW^v a l l n It^lminjr *o I h r pr#n
••Ii u l
h r i h h i . i i r jriflrr^
IVitlnruljiy
iiitflii k l i I m h m . H i r.im*- . i v . i y with I h r
.^.ini.tn i h . i l it ih<- Mmfiwi pl;in h n . i m r
11«
I i i i i t h t \ I H I I Itw
Mi
I h i k f n m i<. hAttily * U m r i n h i s
' ttnlII*-H*II .iitrt ( i t n i r m
Hinr H h r i J i r a
v m . i l l liiisinrs«. iH»f>r^ Vint Cllh« i n l h^rr
lo h r I I I IK- prcMtlrnl i s p r r r h .iml I.ilk
>IN>«II h« i l l h i . i r e
id n x n s l i ilrrl i
v i n h m r miMMMtt-fvl intlmt* "I th*- I httt"n
|il.iM m i l hnw il ».Hibl l l l r i l t h r m K v ^ n
* I M M m l i H i n r f l it| «.|M-IIIII ini-:iMiir<. Ili.il
MroHllI h* l | i I ha 111 M K h - I S | i | t ^ « i s n l f n V l i n
MII itl <.iili<>H|irs. r w i n h r i s ul ( h r f"**'!
1
Ihr ninlfm
plan point
up Ihr
"Wmilm
MuralhiK m a t l h i n l n m m n m om
what Ihr inmptri {llntnn hrallh rarr plan
rrallv i r H i * In rto b rlrarly one nt Ihr
admlnlslralinn s primary (nals In Ihr
tmmihs ahr^d
o i i i n c lhal
mnvtfr
mn*\
hnwrvrr. won I hr rasy. n p r r l a l l y
a \ f i r t n l Ihr prrMftrni s p n ^ n a t rtn ihrir
own n h r a l i n c
hrnrtlt
umfrr
Ihr n i n h m syt
rompanr «ouM pay morv I l M 1 9 1
M
Manin Cantor. p m M n M al JMA Parkifl
Inc. a paprr boi mamtfarlwrr lhal r m
p*rrn W pr«plr. n j t .
T h r r r and a haH
(l ridiculously lov Nohndy Ifrls
hr»M\ cir» Int J i X or T V
Anlhmr ( J n r l i n n . tier p m M m l of
salrs
a prlnhng rfMnfuny < a l M Ti ian
f i r Vitfite < : r a p l i i n . 1 • l l r a r t n l hy I h r
^
AnrlMnc hr imj%. I Am I bur M
« * W T t . Ihry wm t t m m m m r Mr. Ore
tlrim. p n t t t m of O B
m n * Cmr . * * * * M p *
— * ImaM
InrnHMfivi lor m o r t l i n d a « n m . u k i If
Ihr l l M M i H f Mralrfy — «l r p l — l m Ihr
niiHmi plan d o n a I pan mil. whn r r l i Irfl
hnMlfir I h r b a c '
Ihr
In Ihmry
Hi
pmMriri
J plan
Mrr
hr nff
ol
Bui ar dnn I Inmr
llw hcilliini Une
R r f w r l a l l r a r SabslaM-r'
• T h r v pmfflr a i r f o t n f In h r p n s h n l
amt fnittnt
hy f l i f f r r r n f m l r r r s l ^ s . i y s
Mi \ M n t t A s h r s r r * it. I h r r h a l l r n c r Ux
I ' r r M i t r n l ( l i n l - m » i l l h r l-i i i v r t r i m i r .in
i n r i . i i n r i t l i n s lh.il m.iny sm.iM I m s i n r s s
( w i i r r s h j v r .if . n n s l I h r p u i f i m . i l .md I h r
p i r s n l r n l h i n t s r l l Al this jnunt Mr l . n n l /
s.iys m . m v h t r s i n r s s t w r n r s .trr M I r n
If i I H tM-d i n i h r i i i^pusitHin ih.il I h ' v will
ii*>l « » r n h ^ l r n In I h r S I I I I S I . I I H r
|< 11 I t ' l l l l f v l l v W i l l i I VIII* I*• III .Hilt s k i | i l |
l l K r i i * . s n l hy Small Huvlarss O w n e r s
I IM I I I M ir.\H«n f UMIJI
* h i ( h » . ! ' . < i»n
v r i m l I.M I h r h m i n - l l hy Itrpiihlii .in .ind
(••i in* i H't\«. IVr»«l p i J K I r i K i a n k l u n l ; is
n i l * h Um* Mn;ill l n h r .1 ^ r i r n l i f i r s i m j i l r n*
r v r i i i r p n s r n U l l v r iif | | N - « | f V l i n f r u |
M|IIIIIUMS
I'Minil .inumE s m . i l l h m i n r s s
• •Hfiiris
Sa v r n I I | I h r |fl i n I h r
i<|t n h t v Ihi i n s r U r s .is l(r|Hil»lii a n s
ffl'tip
Mghl
V f h it l i K I . ' T l I N
i l l"f
Mi
Mush
milv l * n
i l.i.l'rti .iml Mr I i i - l
Mill Hn-. i IHIM-I v . i h v r irnmp
ilislnivitnl
"I
IHL' f i n i M . i n i s
liilrnsrly
riiiiiiihnr
A p n r M i p i l . i n . i i>| w i n r y Inr ni.iny
sni:ill IMIMFH S M S I S I h r r i n p l i i y r i in.iiHl.ilr
in Hu t l i n h m |Hi^ars.il It w m U t rr>|iiirr
Ih tl * ii h hiiMitrss p a y I m i l l r . | \ l sir i>(
I h r . i v r i . i t r i n M i r . i n r r p r r m i u m in A i r
Cimi n n tirh^lf (if l i s M n t l i r r )
lti.it s
K'Hnr tn r l i m m a l r I h r ( h " i r r \ « r r a n
m.ifci-.
(MHISTS Camrla Vmllrnllriivrl.
« h i i owns i m l ^ l a l r m m p i n y wilh M I
full h m r a n d l i v r part liirtr r m p t t i y r r s .
;ini|
ilitrsil I
plMvidr
. m y inMll.illi r
Inf
llw rn now
^ r l . r v i - n m.iny nl I h r M « n r i s lur
wltMtii IIYT I h n l u n pi i n sInMidt h r .i IPHHI
s i - r i n u n w i l l i n g IM . m i ' i i t lh.il I h r y m i c h l
THF. WAI.I S T R I r T JOURNAl- n t l D A Y SKPTEMBKR 2V m i
�'BC-OLIPHANT-COLUMN op-«d editors
7//3
"Clinton health plan w i l l help, not hurt, small business
""homas Oliphant
on Globe
UNGTON Mandate, schaandate.
a l l the health care absurdities being spread around here by the status
quo's shameless defenders, none i s more preposterous than the false alarm
that more than a B i l l i o n people could lose their jobs because President
Clinton i s trying to put small business in a regulatory vice of death.
The truth i s that the nearly gestated Clinton plan constitutes a luscious
opportunity for a minority now at a competitive disadvantage (small
businesses that offer their workers no health insurance and are thus bailed
out by a l l taxpayers) to join the more competitive majority (those that do
have health coverage).
Far from the *'mandate'' that the anti-anything crowd screams about, the
president's proposal i s more accurately an economy-strengthening means of
gradually correcting a serious problem in the business world.
I t i s , for example, no accident that adult Republicans like Sen. John
Chafee, R-R.I., while making clear their opposition to the placing of
onerous, unfunded burdens by government on the private sector, have also said
they do not consider the president's proposal as i t affects employers to be,
as negotiators everyvhere say, a
deal-breaker.''
In part, they say this because they are aware that the Clinton plan is
l i k e l y to so fully fund the mandate as to eliminate any rational basis for
najor complaint, much less gridlock-seeking opposition.
Having just studied a purloined, 240-page copy of the president's plan as
i t stood in i t s f i n a l draft, the notion of a burdensome mandate on small
br ness i s indeed ridiculous. A few facts:
helps to remember that for the ultimate small business, the entity run
.e self-employed individual, every cent that i s paid as premiuaa for the
.vidual involved and his or her family would be tax-deductible. In
addition, 80 percent of the average premium (representing the employer share)
would be kept equal to that contributed by a l l area employer* for workers
with the same family status, and would furthermore be capped as a percentage
of self-employed income.
As for small businesses with 50 or fewer employees, caps and subsidies are
the rule for the phased-in requirement to participate in the new national
system, based on the average wages paid within the firm. Thus, i f ths
business' average wage per full-time worker were less than $12,000, the
owner's contribution would be capped at 3.5 percent of his t o t a l payroll
cost.
This cap would then gradually be raised. With an average wage of
515,000-518,000, i t would be 4.4 percent; above $24,000, i t would reach the
maximum of 7.9 percent of payroll applicable to a l l employers. The difference
between the cap and the actual cost of the business health insurance would
be made up by the government.
Moreover, i t ' s v i t a l to remember that Clinton proposes the gradual
integration into a new system of both workers' compensation insurance (one of
the largest migraines a f f l i c t i n g business today) and automobile insurance,
offering firms a much nicer overall environment as th* program takes effect.
And f i n a l l y , i t ' s equally v i t a l to remember that a national health program
that gradually makes coverage universal and controls private and public costs
more effectively i s going to strengthen the economy, increase busineee cash
flow, and leave consumers with more money to spend on something more
luctive than exorbitant insurance premiums.
r a l l that, a sliding scale of subsidized small business health
-ranee premiums (3.5-7.9 percent of payroll) i s a bargain, especially as
Tt enables smart business people to correct current competitive disadvantages
suffered by those that offer no health plans.
Even among the smallest firms with just a handful of workers, a slight
r
1
�1
THE. U U L iTREET JOl-RNAL MONTDAi. SEPTEMBER .:. .393
I
Small Business
Sees Burdens
Gettipg Lighter
By L':»T»S G(.r»
And J u . " ! SOOLO
Sltlf K f M ' r f . i
T N « W . L L i r t t r * Jot""-**-
For m»ny im»ll Suimrnei udditd
wiifi MCiminf mmn-cirt com. PTHIdent Ginton i n^»l!^-clrt ;icu|t xmn
u in untxptcird irnciLi
Buimtu owrun ersmi jreeicaBi*
jmptic.im iDoul Nw •.*« ;mBOii!i "ould
o
6« finincrt md mr-s »6out i.ie aur»»ucrtuc mntron Jin woujd encunotr J>«m
*itn y«t mort rrd Lie*.
But miny OUJ-JIMJ awnfrj ity 'Jit
provmonj ol '-I* Pi4n ^int ic'. jny olfir
;n«m jipifieim r»i:tf !rom -.se coin Jity
irt Jiyinf n w Ard miny .-oncw* -JMI
o
in ovtrniul i ovtrdut.
w» r» tintdy jjyinr
doilir lor
our fimtn c<3*tntt ' tot" I^>n»•nin. m»n»f.n| p4m«r M Wladhowr IDfonBiQoB Iflc. I Souift Norvult. Conn.,
neuui-cirt :n.'om»tion puBiisner Wltfl is
•mploym. W'.ndflour '.»cu Ji* rrjomr**
tocor.m»nd ffneroui :emi *: Ji .murtn.
Buyi»f rnrouffi I rtferjj^tum ulitnct
:(:n« tor. outlined n :r!e prcpoiil
1
0
reduce our anu. ' Mr Urnpnin uyv
LkewtM. Jty Edward Jonei. pmideni
of TK&OICAJ Lod Cduuiiuu Corp.. u
enfineernf tnd survey r.rm .n Youon'
:own. Ofuo. tuo wilft 1 erripioyt*.
5
crunehei Jie num&en :n Mr. Clatoa'i
plan and uyv "I'll L U I IL '
Mr. Jon« VDICM diuniit for mwiy
mstinf r' «™'"«'" toc:»|.*eif»r» preframi You don t ret inythmf for fm."
n.e s»yi But ne rampirei Jie UTi ne p»yl
eicn montA for ui employee i fimiy corenp
AI lime u 1429 t year jnder tht
Clinton p*cti(t ContrbuDoni of compamei
50 ar fe»tr emptoym •autd M
cipped mm i tow of jiut 3 » of ptyrofl tt
wi(n ivcnct leu iMfl iU m t ymr.
Ne* Yon enirtprtn*ur Gnicry l u ter poinu out (Alt under cumtt amA
noni. lurffi in (itAJtft-e«rt otxa eu cm*
out of :ne PIU«. puiyinf ru»w witii pnflti
indpiinnmi Heihould eow ThtoBBo*
neiim-cirt revtnff n tus SdrtlPf
wr Cipitil Corp.. i New Yon invwantm
souiiqut. ro»« "Wi on Au|. l »»«»u»t of A
new itite nw t A rrunaites expAMfd
At
emptoyee coTtnir ne wyi.
lnde*d. evtn u an suiinmci titrt
decn muunf itndei IOWATS contrMltnf
neuOi-cire mn uiroufti coiiective-our
Pfns* ZVn te f^v Bt. Caium S
v
Small Businesses See
Burdens Lightening
On Costs of Coverage
::uirt irfenena md Diner muiavej
r.Gii sr.4.1 tiiS'.nesieJ nive o»«n rundi
::::fC :> -pur si:e
--eir sue fues m m in edge.
e
•i:-.er i i;siavinu|e. o»er ihe TAflU
:-. •uirii: ven.on of MClinton pun. IM
snuiet! o :nem will fet lufindiei to.
f
•.nu oiv lor 'ne xue co«i •< ro»»rm.
>
M:-pc>f' -.r.ey *tJl De ninded l mindAMd
-ecr.inum 'or aindini afemer in lirfe
rr^Bi *::n more nepmung aout ibtn
B«in< Small Pay*
MM or ne Mngt nagi)(tr« Irm.
tMMUT i
M\
min 112 .MO
ci
:
iu no i m ooo
e
(
• S
111 900 to 111000
« t
in M i tn m
Oo
55
t r 000 ta U 4 . M
i 5
(nittr (im C I 000
:9
«ori Lrnwin • « a n M so
fvfr
Lower Averaft Prrmlua
i^ne-Mir.e Comer, neid of Baayt
:.-.c i P^iiideipnn PiomedicAl rn*»i*t\
mo leveiopment 'im IIJO iiiei.the t o
ok
•I 'ne C";n:on pun It pniecu tn trertft
orfmium 'or i iiandird DeneflU picUp
'.' Jl.SOO i yur for mdividuAli - compared
*-.in me C.tOO ner compiny n w ptyi for
o
:ne moit DAIIC poucy trut sne CAA find.
Ajiytmni iftn would fuirimet suynf :mo i pool it reuomeie ntei w u M
oM
oeneficiAJ. Ml. Comer uyT
Of coune. not every Puimeu ontr J
nippy witn Mr Cmton s iruuiuve. (UtA
KJ;n|»noeT. prendent of TI.C Group Inc..
i Tuuocrat.on ind warenouiinf oompiny n Zeeiind. Mien . >tui>u IUI smpiny an min*|e ncajui CATI Petitr man
iny MR of mindAied jovemmeoi pr»
rim. '
Tne fedtrti plan, ne notn. fori MM an
ivcrtft pnmium of U.m i year fer
'imuin M coau Art nov just A UOIt
y
over C 300 for family coveraf*. »* uyi
And m pirn j mort :nclu»ive. fLc
y
Group wouldn t stnefll from a imaJI bwneu ceuinr on prtmiumi McauM Pu
wonen numser mort uun 300 AM man of
cfietn -:nciudinf auct driven -eara toort
uun M.000 • year.
Mr. lOiApnttrt numattt that ID*
CUDIMI propoaau. J eructed u Lftry BDW
itand. would dounie fus company i rwant)maunnct ooau » ti million, tustanf
profit marfifi. TTui isn t eiptnat eoom.
It i just inooirr im/t of lovtruomi rtiponiibihty onu '.ne dacu of iraall buUneu. Ne uyr
Moreover, i lufe numbtr of wall
Puiinnm would M idvemly lifrotd
oecauie they ion t cufrtntly offtr Any
neaiUt-cArt Benefits at ul. MAndated c0*erin would add an exptnM mat tMy on
il afford, and some smaU-Pvaintis ttfeocatei claim many of mem w u nan to
oM
snui down.
The National Federaoon of Imlipw
oent Busmcts. wrucn nai ion( oppoard any
reouirtmtnt to fom empioytn ID prvrtf*
nvenp. eitimAtn tnai only lOout a * ct
companin witfl fire or fewer emptorMi
n w prmde fitalUi insuruct.
o
In tpitt of tne promise of brtaU for dM
(mallat empioytn. Jotin Modry. dM
NTTB'i efticf lotoym. woodentowtaor
lutmi tiny would &e. tf turn i n (sanll
oinintui suGtidin. n w lon| will tIMy Bt
o
n puce'' ne u u U tntrt s A cap on A
itnAil company t (waitA-caR prtnim. ta
11 ont-yeAr or A (Am-ytar cap?
The pun is snAputf up to Be so M*y.
v eiptniivt uid io radical, it II nat« a
o
•try diincut umt paatinf O i f m s . ' to
IM
idds. ! pndln itey U IUT« is fan ;icx on
i leu radical plan.'
Ttie bifftst Btntflaann nud *rii M
imail. (ut puwim Duiinron mi w
nave u pay dtArty for ntAiin CA.-I s t r ife u tAty comptu for iuiB ie«r: neat
'Coreptdttvt Tori*
A comprtfitaaTt h*altfr<art pacsaft
LS a coRiptoatt Mof. uyi wiilian Mi«ier. chief eucufln oAoe <* OSM lac. t
Boston itan-up mat maruvs CIUMQI coat
and ptrformaoct amumsm iywms.
in Atumponf te provvu iucn oo^rift.
QSM And oum tad tbaoaei ta plana *
hi|ti-nst poupA. pajan, ;
mntr iban Bt| t
a sinflt aoodan
someBmea can T&m A sanrp prtoitaa
incTVAAt, or mn tet » t toaui * full
covtrafi.
(.'nder tto propoMd ptan. 3XM wtuca
nu I Bout il imploytta. mould aire out
aftesd. uyi Mr. MIMMT t»«* tneur* tn*
eiact dtuils of h w the imtrwwi rul
o
manan this profna and wnai i •*dfb\
pay an sail iadaa/. at pravoaan M J
ctrainly WttH it* m t m M »erwa
Larn A d nal) I ^ W I I M
n
tayt.
Firaraon. On ptaa i • t m w • ail
tmpieym Oat My pnwtti ai mm W of
%
tout (&• COM a( esewiit t r a p a <
itncy and t m a
conpaniea."
it art
croaamf tanr fli^wi
Confr«« can ooae * <
pun. But ttny ttm 9m
I ww*B't i
out of toad, say* I
dm ot Paauiy
5#mcta. a O
to a
iSMpUf.^M
LS fouc • fal. «• aaa
tam uuap n>
suna
Mtnciiitta kr tto
Mr. CUntM aoatto no*
ifinf
am M.
pioytr pamupaDoa. w y n f
e m caA w
m
All
:n*
5ulr
tau tto eeiBsy u M M rm run a
AdiuM a a oaior Maitaaw J^VA-J
Tto oiMtooa ia. to sayt Caa a imaji
BuaiMto taau a taia^> taai 7«a*.oon
ptnod?"
�B U S I N E S S
Too S o to Panic
on
W
Health Care: The small-business lobby says Clinton's mandatory plan
will kill off jobs. But Mom and Pop may end up breathing easier.
HEN SHOPKEEPERS IN BRISTOL.
R.I.. saw Clinton health czar
Ira Magaziner walk through
their doors recently, they greeted their old neighbor with
something less than affection: "Ira. what
are you going to do to us " Then, says Magaziner. he'd sit down and explain the coming revolution in health care. "By the time I
left." he says, "they were by and large ecstatic." Ecstatic? That's not the mood ofthe
nation's No. 1 small-business spokesman. If
employers are forced to provide health insurance, warns John Motley, top lobbyist
for the National Federation of Independent
Business, "businesses will close" and hundreds of thousands will lose their jobs.
As the health-care debate kicks into high
gear, small-business worries are getting
lots of attention. That's partly because small
businesses have some real worries. But it's
also because small busmess has become the
ideal "victim" championed by conservative
voters and politicians who want the market, not the government, to solve social
problems. Their argument: government
mandates hurt small business —and if small
business suffers, so does everyone else, because small businesses create most new
jobs. The NFIB is likely to paper the capital
with letters from its members saying just
that A group of 41 Senate Republicans said
it earlier this month in a letter hand-delivered to Hillary Rodham Clinton. Conservative Democrat Jim Cooper of Tennessee
said that requiring small businesses to pay
for health care amounts to "a bailout for
Chrysler" and other big companies. The
Employment Policies Institute, funded by
restaurateurs, issued a study projecting
3.1 million lost jobs.
To anyone who has followed the debates
over family leave, clean air or the minimum
wage, this should sound familiar Presidents
Reagan and Bush, carefully nursing Amencans' romance with entrepreneurs, found
that small business had the same power in
the pobtical lexicon as Mom and apple pie.
The argument for shielding small business
from regulation appeared to be bolstered by
big-company layoffs and one major study since discredited — showing that small companies create most new jobs. But the discussion is based on faulty premises, skewing the
debate. "There's too much talk about small
business." savs health consultant Larrv
9
44
NEWSWEEK
1UCL'5T30.I993
1
-•
Mr
'Knee-jerk reaction': Arbuckle Coffee owner Denney Willis tastes his warn
Lewin. "and not enough concern about the
large businesses that have been bearing this
burden." Relieved of some of their healthcare bills, some big companies will create
more jobs, while small businesses that now
pay through the nose ior coverage may also
find rehet. That's why some greet Modey's
apocalpvtic remarks skeptically. "That's like
the gun lobby saying that everybody should
have an AK-47," says Dennr» Wdli» of Arbuckle Coffee Service in Tucton. Aru It s
just a knee-jerk reaction."
No question, small busmew »-ill have
some adjusting to do—and nxn* at it will
cost big bucks. Boston rwiauraieur Michael Gillen, who covers health car* only
for his chefs and managers, tavs he might
have to cut jobs if he's forced to pav msur-
�Njuiun'.- Busim-ss
IS
NUMMIIIHT 1'.''
.4».;-..V^.t.-
Small Firms' Stake
In H at R f r
e lh eom
By Roger Tho'iipson
hen Pre<idem Cbnton launchei
a media bhu to sell his health
reform paoka^'e to the nation, h
<
made his fu-^ -ales pitches t
the two groups whose support he need
most: ordinary Amenrar.> and small busi
ness.
The two dozen p.-•[••<? Ahum Clinto
invited to the VW.e H .-e Rose Garde
recounted Lhelr p ^ i r - - - ,-nences with
health-care system •-...i i;en denies coi
erage to those who - - . " I it most.
Next, he tra\r'..-.) - j i Washingtoi
DC, hardware <t..r.- -r^ke his case
19 small-business ow-r.er* Itwaiatellir
second venue.
Clinton could ha».e ».!>lr»^d any nur
ber of other groups
Tnjor stakes
his reform plan J..v...r« ^.e elderly, b
business, or health .r.-.r^r* Hut he cho;
small busmess for A -.mpk reason:
cannot deliver unwrv^; .mmge und
his plan without r ^ ^ j - ' g ^il business
to share the cost *r.d r^-pun -ibdity of th
coverage with »r-.|.«i.«r« ^nd govet
ment.
No group is
^tvo'hensive
added costs than •rntJ ^inrsa owne
Clinton hop** M "• nvince ththat they
u feu from
>
plan than lAry 'nai -**e expect
Busineia tfv^pa. large
small
pia; a m^ur role in
reform drtvtu
employ
constitut*
aofrst bloc
health ini-ra«r» ^rrhasers.
Ther* u <»«*r»-»l i^reement
the buain*^* "•^i/ni.nity that c
tinuauon J
^r»*ent syst
W
h
with l U 'kvT'wkrUng COStS
coverag* r». 'u*^n». is no lor
an option
The L S > -»mb»fr of C
merc«, tr* ^rxnn broad-bi
businesa orfvuiauon. was ?n
the first bu*nrM ^mups askc
testify b#for» a cor^ressional (
rmttee in rw^c.** to the p
dent's Sept 22
rvform speec
the nation.
In testimony Oct T before the Hi
Subcommitte* of J » House Ways
Means Comrrutt**. Wiilum T Ar
k
�MatiimV Ru^incss
November W-\
In initiating a historic congressional
debate over health reform, Presideyit
Clinton calls for $30 billion a year in
subsidies to help small companies buy
health insurance.
senior vice president for polic> and con• gressional aj'fiiirs. acknou ledtred that the
president's plan incorporates several
principles in line with Chamber policy.
"Chamber members recognize that employers have a critical role to play in
reforming the health-care system." said
Archey. "We are in favor of a .-ystem that
achieves affordable healih-in-urnnce coverage by building on the -tr'T.e current
base of emplover-provided health benefits.
"The Chamber supports the need for
universal coverage." Archey continued,
"and recognizes that it can only become a
reality and be paid for through the shared
responsibility of employers, employees,
and government."
At the same time. .Archey pointed out
that the Chamber has "serious concerns"
about a number of aspects of the Clinton
plan, including:
• Establishment of regional health alliances that incorporate most ofthe population into a monopolistic purchasing structure that would hamper, not help, true
competition.
• Creation of "a huge new bureaucracy, including a National Health Board,
with excessive powers to regulate, monitor, and ultimately tax employers."
• Government-specified insurance-premium caps, rather than market forces, to
set growth rates of health-insurance
costs.
• Savings and revenue assumptions
"that could prove to be very unrealistic"
as a foundation for funding the president's
reform plan.
• The requirement that employers pay
S percent ofthe insurance-premium cost
O
for employees.
"The 80 percent requirement for employers is entirely too high," Archey said.
"It provides too little incentive for individuals to be thoughtful about their use of
health services."
While the Clinton plan has dominated
the headlines, a bipartisan group of 47
House members introduced an alternative on Oct, 6 that some observers expect
may eclipse the president's plan. Rep. Jim
Continued On Page 22.
President Clinton ansu'ers small-business questions al a Washin^n
la-'.^T
tiore
T e Ci t n Plan's I p c O S a B s
h lno
m at n m l u
business would have
i.-v) %i»t»'.<-l<>ni
1 aEvery smallits employees' health to pay 6 The self-employed::•» 'J* »-UTro«tof
portion of
contractors would t*)
insurance. Companies with 50 or fewer
their insurance, but.
o#r
workers and average annual pay no higher
than $24,000 would have their costs capped
as a percentage of payroll, beginning at 3.5
percent andrisingto 7.9 percent.
Companies with more than 50 workers
would have their costs capped at 7.9
percent of payroll.
2
Based on national averages, employers
would pay $1,546 for each single worker
without children and $2,480 for each
worker with children—whether married or
single. Many employers qualifying for
premium caps would pay less.
business, they would
' # nrvn>jura
caps. The total cost»
•» a ^TT*nt
deductible as a busing <
7
Employee-leasing v<4 *-»»«>ry
- worker com panic* <worker compamea
.vO
percent employer shar* V « M taunnce
percent employer shar* V V V«Mtaun
for all the workers ih*j pr-* * o»»r
companies; leased and >-tr*v»
employees would pay \t*
*p •„ w* ^1
8 Part-timebyworkersp*r»-•»»»•—.•«• *^id be
covered their
j
insurance and would iot
er's
responsibility.
3
Employees would select a health plan
from the range of plans offered by the
regional purchasing alliance.
4
Employers with fewer than 5,000
workers would no longer be allowed to
self-insure.
5
Regional purchasing alliances would
have no role for insurance agents and
brokers in selling standard health plans,
but agents could sell supplemental policies.
9
Employers would p*» ' ' ±. '•-r parttime workers puttirg JI .) » re
hours a week, prorated «
if 30
hours per week equalirf
unw
employment Seasonal •»-of»»r» .
be
prorated on the basis of» « - • • •»»rd.
< A Employees could no ;.-««»r flexI I I plan pretax dollars to p*, jvir -hare
of health premiums or out - J pur»«
expenses not covered by i r w "vaJih plan.
�N.ilinn'- riusini'ss
('.iiilntm il Frmii I'ugi 19.
iti'ms with fewvr ih.ui
Cooper. D-Tenn., the plan's
workers found that oil |
chief architect, says he supcent of those with undei
ports much ofthe president's
workers did not offer he
proposal but thinks it 'Vent
insurance; 30 percent
too far to the left."
those with 10 to 24 vvorl
Like Clinton's plan. Coodid not offer health pi
per's proposal embraces the
and only 15 percent of tl
notion of managed competiwith 25 to 49 workers did
tion, fe.itunng purchasing
offer health plans.
cooperatives that would barThe administration arf
gain on behalf of small comthat it cannot achieve uiii
panies. Unlike Clinton's.
sal coverage wuhin an
Cooper's plan would not imployer-ba.sed system will
pose price caps on insurance
requiring employers top
premiums, set a naiiunaJ
pomon of workers' co
health budget, continue unage. About
percent of
limited business deductibilnation - iT
r. uninsi
ity of insiu-ance plans, or
either -A.irk ••r have fai
require employers to pay for
members who work. T
workers' insurance.
requiring employers to
Demand lor primary-care doctors such aa pediatricians icould
vide health insurance wi
Among all the rival health uicrcnxc under the Clinton plan.
plans introduced in Concover • ir.i.jily the entire
•
gress, Coopers' is 'he only
m.Sv.r-d p..pJation.
one thus far with a bipartisan base. It has
Companies too big to qualify for the
Paving ar.;.-n..- j y j . l . however, w
L'li Democratic and 19 Republican co- sliding scale of premium caps—those with be a hardship :• r •
Hat -upporte
sponsors. (See the related storv on Page more than 50 workers—would still get a Clinton's plan :
.'. •.hat it would
28.)
cap of their own. No company buying the least pro.-; •
. rr.par.ies insur
"The bipartisan support for the Cooper health insurance from one of the newly at a rock-bof. - : rv» Companies c
bill illustrates the real desire in Congress formed regional purchasing alliances— fying for the i ' • - - i payroll cap, t
to achieve consensus." says Knstin Bass, that includes all companies with fewer with average • A.Ar.f> under $12,0
a U.S. Chamber manager for human- than 5,000 workers—would be required to year, would pay -o -.ore than $4
resources policy. "The'Chamber likes the pay more than 7.9 percent of payroll for year—$1.15 a da;, - ^ r
rker forh
fact that this first bipartisan effort avoids health care. (See the chart on Page 18 .)
insurance.
the onerous lev els of federal regulation so
For every small company that qualified
For small oJ- - • : now payin
prominent in the Clinton plan."
for a premium cap, the difference between health insur.tr. - ".-m caps w
For the moment. Clinton's plan re- what an employer would pay and the hold the err.pivv-r
• •' ;r the stan
mains the most visible. .As a rule of thumb, actual employer cost of coverage would be benefits packjg*
S. '"Xlperwc
"
it would require employers to pay 80 made up by the federal government. until average
..-eded $18,1
percent of the average cost of a standard When fully phased in by all the states no year.
benefits package for workers and their later than Jan. 1, 1997, this new entitleFor most <r
; 4- •«•< that all
families, and workers would pay the ment is projected by the Clinton admini- provide hea.t.i
. r , . * *v.h broad
stration to cost the federal government erage for dor'.or*
balance.
•-• j-.d hospit
tion and '.h*t
- -t of the
Using U.S. Small Business Administra- about $30 billion a year.
J -'An a decli
tion data, supporters of the plan say that
The self-employed would also be re- Clinton's plan
only a relatively prosperous minority of quired to purchase insurance from the overall heaitn • »/••-• ••-•iitures.
all small firms would actually pay 80 regional purchasing alliances. Those
percent of their workers' health costs. earning less than $24,000 a year would
hat m#w«*» • • n lost ot
JThat's because the plan would subsidize qualify for the premium caps. Regardless
• -••rs who
small bu.^» >•
"up to^5 percent of a small firm's health- of income level, the self-employed, includthe W.S. .
President
insurance expenditures. (See the chart on ing independent contractors, would be
& Son*
«r» •• re in Was
Page 18.)
able to deduct 100 percent of their health- ton on Sept ; 6 H. • • I get lost in
The largest subsidies would apply to insurance costs, up from 25 percent under media accoLr-.* i - . .-^estion-ar
businesses with 50 or fewer employees current law.
;-lly news !
swer exch»rf»
and average annual pay of $2-1,000 or less.
"If there is one group that will benefit bites and rr
• -.overage
For these firms, the administration pro- from health-care reform, it is small busi- to retailer V*r .-n of Fred
poses premium caps that would range ness," says Paul Starr, an administration Md., who <-;-'• • - i Mr. Pres
from 3.5 percent of payroll for those with health adviser and Princeton University small busir.r-* .' rd this pi;
average pay of less than $12,000 a year to sociology professor. "They are getting a
• ' business
But sever*. • a maximum of 7.9 percent. (See the chart terrific bargain" on health insurance. ers in alter.!:*.-.» .. i aier that
on Page 24.)
'"The subsidies are a windfall" for small- favored the ^r»»..>" plan and t
-•
Most companies with fewer than 20 business owners and their workers, he would save
Marilyn Hart, p'-^dent of I
employees would qualify for a federal adds.
subsidy, according to Small Business
The proposed subsidies represent a Plastics Inc. .n Y n. A .rth, Texas
Administration data. In 1990, the nation msyor concession to small-business own- she now pav* *r..^i ,2 percent o
had 3.9 million firms with fewer than 20 ers. Among those who don't provide roll—$136,000- o . - o r her 65 er
workers, and they employed 17.1 million health insurance today, most say they ees. For that •i# .•••u hospital!
people. The average wage for those firms simply can't afford it. The smaller the coverage for .i»r » rKers only, n
was $19,671, well within the range of the firm, the less likely that it offers coverage. their fanuliw l>.d*r Clinton's pla
federal subsidies.
to 7.9 perci
A nationwide survey last spring of would cut her
T
1
�-M
iii
paymll—•NVi..">iX)—ami
u.mlil
save .>|i).j(X) a .vear. Thai wmild
I-OVLT families and add pievintive care. "The point is, if wm
carr\- health insurance for i'inployees, your health-care costs
could he less than what you had
before." Hart says.
Bill Hulton. president of Mutton Industries, in St. Holms.
Ore., pays 100 percent .if the
health costs for his nine full-time
I'mployces. He >.iys the piv.-ident's plan is "just about a wa.-h
for us finain-ially." But ho l.ki-s
the "levelini: effect" of the m.inflate on his cumpotiti'.n. W r
know for a fact that ..ur v"i!!|>ttitors do not carry m.-ur.ukT f'.r
their employees." Hutton says.
"Maybe this will put u.- .MI a little
bit more lev el pla} ir.t: lie Id. '
Roberto DeVincenu-. president of \'aeri t'i.;i.<tniit!..n ('•• .
in Bin^h,imt...n. N Y | M;. .- e.ieh
of his . O worker:- al"....:t .>.'..IHKI a
S
vear in cash to pm e.n.i.-e their
own insurance. He est .m.ites that
about
..ne-lhird
p.- ket
the
money and remain i.mn.-ured.
Under Clinton's plan. De\'incentis would pa.v >l..'-li) for each
single wuiker and >_'.4>0 for
those with children, substantially
lowering his current costs. Ho
would also substantially lower
his pavrnll taxes because his
health-care
costs w.iuld
no
longer be part of his taxable
w age base.
Not everyone who met with
Clinton at the Wa.-hmLnon hardware store wuiild come out a
winner. Roulzahn. the Frederick. M d . , retailer, and William
Fergusen. a Denver restaurateur, would face large increases
in their health-care costs. Both
expect they would pay 7.9 percent of payroll for their health
coverage.
Obtain Their Health limirance
•
Through prlvatl imployirt
142.3 million, 57 2%
•
Pollclu purchiiri by IftdMduiU £ CHAMPUS(mlllUry Oepondtntj)
17.6 million, 7.1%
fa 2 8 million, 1.0%
|
Mtdicin
30.1 million, 12 2%
|
•
Medlcild
19 3 million, 7 !%
No hoiith miunnc*
36.6 million, 14.7%
Workers W o Lack
h
Health Insurance
C M A Y SIZE
O PN
%U I S RD
NN U E
Under 10 employees^. . 3 2
"lii-M employees
H w Caps O Employers*
o
n
Costs W ud Be Determined
ol
Cspt Ai A Percentage 01 Payroll,
Companies With Up To
50 Workers
Imtoii's e.vihaiiL'e
K.'iilxahn was a pi'i
of things to come a;
debate o\er health re
moves to Capuol Hill. The
dale ami its impact on :
lui.-na ss i|iiickl\ emerged a:
c
l.-.-Ul-s
i 'ritics allege that the mar
would cripple the ability o f :
businesses to create jobs
iuel economic growth.
Larry Pre.v-l.-r ,,f S,.uth Da
rankink: l\ei ul luan on the
ate Small Business Commi
maintains '. i.n Clinton's
"eoulil tr.i-'- • oe into 1.0 m
lo S 1
!.--t jobs over
.>ear-.'' >-:|.| ••: t. i s of Clin
plan cha!:, - :•• I'le-sler's i
noting ti-ai 'he studies
which thev ov ilrawn rlid
take into .»« •••iml the impa
•siO h'.iii.-n a -ear in fe
sub-..:.-- •' •, • ail c'M!ipani<
the
• • •-. opponem
Clm:
•
I" > |- mi out t h i
•n has not back
Its •
- that the plan
be ,
venerator.
Laura U Andrea 1\son, <
woman of ;re President's (
cil of Econ-.mic ^(^•isers, s,
an ( V : *
•m'erence th
Comp..-. •
-\ists that
acm.:'.«:•
ct ihe effei
the a.f-•n s progra
jobs ^ " r
" lerlged thi
pi o g r i m
. ad to the l
about '<•''
• bs over s«
> ear« P t •-. e job losses
addeH . . .1 ^e offset b
g a i r . ,[
• ; .-.es that
mur ,
r -.'alth COSt.U->- l . -, n !',,r sure i
sm^il
.-i r« nave bee
spor..,r.,»
' . most all c
ndt:,,n - _ i «~ - i h o v e r t h ••nling to
flVf
>rjr»
r
4
B i r c i . . " • -l.-H ,,f C o g
Inc
i
i * r :-an C a m b
N U - . .r. i : i r m . C o m |
w i t h : < r '•••». r employee
ate<1 "« . • - t .f all n e \
bv'.-*•••-•< . » : o-.d 1992, am a • i !' - - - recent
UV... . • . • ,• h.b*.
Unitor $12,000- $15,000- $18,000- $21,000- Owr
Fergusen, who operates three
$12,000 $15,000 $18,000 $21,000 $24,000 $24,000
Denver restaurants employing
200 people, sponsors a group
Average Annual Wage Per Worker
plan, but his employees pick up
Note: Companies witfi more man 50 employees woukJ pay no
the entire cost. He caKulates
more than 7 9 percent ol payroll Low-income workers would
quality tor a suOsitty.
that his 7.9 percent -hare of
health-care coverage- .;::.ier (•Un• •• L: owth cam.
•
V n C t » « WHIITMOUSt
ion's plan would cost >l IvUOU a
Ml of comf
year. " I don't have Sll-vOiX) in
• .•. To percent
gross profit." he savs "I d have to let
posed 7.9 percent pavroll tax on the backs jobs are beir.i . r - , •i :n 4 jiercent
people go. You can't pu.-h the cost on
firms," Birrn -«
of small business without job loss."
but no dat
customers. A $10 hamburger won't work."
available to
"••w many of
In response. Clinton said: " I f we don't
Roulzahn calculates that the presi.'•es
already
do something to bring down costs, every- job-creating
dent's plan would nearly triple his cost for
health m.-urarvr > • ^ress ought t
body w-ill soon be doing what you are
covering 95 emplovees in five retail
out before .: v * * : * " mandated
doing," purchasing bare-bones coverage.
stores. He said he currently spends about
coverage. B i r ; i
•
He also said that spiraling costs under the
2.9 percent of payroll to prov ide a plan
current health-care system will eliminate
Even among •..-..•»«• determined t
limited to hospitalization. Roulzahn told
more small-business jobs than the reform
the mandate, tr.pre is broad, bipi
Clinton: "We cannot finance your proprogram he has proposed.
support for m<n> A Clinton's propc
�26
Nali'in's Bu.-inos.< N"v,.'ir.i.
COVH) STORY
correct wnat ails the natiun's heallh-care
system.
" "The worst thing we could do is let the
status quo continue," says Ira Magaziner,
the administration's senior health-policy
adviser. Under the current system, small
companies have typically been hit with
annual premium increases of 20 to 50
percent the past several years. Many
others have been driven out ofthe market
altogether. Many have resorted to "Swiss
cheese policies," so full of exclusions and
deductibles that only catastrophic coverage remains.
linton's health plan auns to eliminate such problems by restructuring the health-care marketplace
along the lines of managed competition, a concept he says preserves a free
market within the confines of broad
government regulations. Rep. Cooper,
however, argues that his reform plan
adheres more closely to true managed
competition than Clinton's does because
his—Cooper's—does not rely on price
controls to restrain costs.
At the heart of managed competition
would be the regional health alliances,
which would function as purchasing cooperatives on behalf of small businesses and
individuals. They would use their colJec-.
live buying power to reduce health-plan
costs the same way large corporations
have used their purchasing clout for
years.
Shopping for a health plan would be
relatively easy by today's standards. The
current hodgepodge of plan designs offering different levels of coverage, deductibles, and copayments would disappear. A
national standard benefits package would
guarantee the same coverage anywhere in
the United Sutes. The proposed package
includes preventive checkups, doctor'soffice visits, hospital care, prescription
drugs, and limited amounts of mentalhealth and home-based care.
The sundard design would make it
easy for individuals to compare health
plans on the basis of price and quality,
critical measures needed to fuel a competitive marketplace.
Plan costa would be determined by
family status. Workers would pick from
four categories. Current price estimates
are based on national averages: single,
$1,933; couple with no children, $3,863;
single parent with children, $3.89-1; and
couple with children. $-4,361.
With the exception of single-worker
health plans, for which employers would
pay $1,560 per employee, no employer
would actually pay 80 percent of plan
costs. That's because Clinton's plan requires employers to pay a flat rate
totaling less than 80 percent for all family
insurance plans. Based on national averages (final figures would vary by region),
employers would pay $2,480 for each
C
worker with children, regardless of
whether the worker is single or married,
or whether the employee's spouse works.
Fur each married worker without children, the employer would pay $2,125.
This Hat rate would simplify employers'
bookkeeping and eliminate potential employer discrimination against married
workers—with or without children—
whose spouses do not work outside the
home.
Without the flat rate, employers would
pay SO percent of the cost for an employee
with a nonworking spouse but only 40
percent of the cost for each worker in a
dual-income household. In that instance,
each company would cover half of the 80
als during annual opemenroilment
ods; collect and distnbute premiur
health plans; and serve as ombud
when problems arose.
In a sharp break with stancWtti'
tice, workers—not their employ
would pick their health plans. Wo
could choose any plan from the ran
options offered by the local alliance,
would greatly expand the range of ch
available to small-business employe*
The list of health plans would in
three distinctly different types: h
<
maintenance urk'anizations (HMO
traditional fee-for-sen ice plan that v
permit unrestricted choice of do<
and a hybrid providing a preferred
work of do
but with thi
tion to seek
ual care I
doctors oul
the network
Send us your questions about how health reform would affect
pav more.
your company. In future issues, we will answer as many a? A While w
can. Address your questions to: Satimi's Business, Heai-_n
•• rs' compe
Reform Questions, 1615 H Street. N.W, Washington, D C
'.ion woulc
20062-2000.
main a sep
program, in,
workers w
ijet treati
from doctoi
their own h
;-:dn. As a n
•> orkers' c
•••edical c
•'•iuld drop
• • • 20 perce
jdministrj
projects.
The adr
I ' M r MChAll
-'.ration r
• r. ns that
percent employer share.
petition an./** • f '• 4lih plan.
w-.iring woult
For dual-income couples, their employ- administrate*
'«u..n from ab
ers' combined payment would more than annual hea!in cover the total cost of a family health plan. percent tcxU.
. . •-i I percent by
compe
The extra amount would go to cover
As a "ba4-».-i..p nonworking spouses.
didn't work u • .. «.« intended
While premiums under the Clinton plan Clinton plan *-•>- <i .-nt health ins.
to the o
would be low by current standards, they annual premm/i
reflect the savings that the alliances rate of inflaiiu* - • <r»-ut 3 percer
Bass, of •.r.r ' » • -amber, says
would be expected to achieve.
is not a
Clinton's plan would overhaul insur- limiting prt>r-.i - -. ' —<• nrefront <
ance marketing. No insurers would be stop but in fii-i
• » AIII never
allowed to reject or cancel coverage for plan, which
r petition'
anyone because of a health condition. And chance to se* « • . • ' - f
insurance rates would not zoom upward if this plan u r
Critics also
at the pre
once someone in a small group developed
trols that'
a costly illness. Premiums would be based caps amount :.J ; r.»
on the average cost of treating everyone lead to h*>A.;i «r» aiioning.
within a health plan—a practice known as House adv.sw M^vtir.er says th{
community rating.
mium caps *r» t
safe mech;
Alliances would serve many of the designed to . ^ r n subsidies
functions now provided by insurance going through
r
agents and brokers, who would have no
The admjr.i>i/,!.on las also stru
role in selling sundard health plans. The to defend its i.- - . r uuons about fina
alliances would distribute information its reform pi^n. a'-jch project*
about health plans, including "report billion in ne» -fajth-care spe
cards" on overall quality; enroll individu-. through 2000 Th* plan projecta
Write Us Wt Y u Questions
ih o r
5
r
�Nation's Business November 1993
28
C VRSO Y
OE T R
billion in savings front slowing the growth
-^f spending on Medicare and Medicaid,
15 billion in cigarette and possibly other
n" taxes, and $98 billion in miscellaneous savings and revenue.
Based on early congressional reaction,
it seems likely that the administration's
financing scheme will be declared dead on
arrival when the president officially sends
detailed legislation to Capitol Hill.
The debate over this and other issues,
such as the employer mandate, will continue for months on Capitol Hill and
around l-uichen tables across America. No
one expects Clinton's plan to emerge
intact.
"We don't believe we are coming down
from the mountain with tablets and that
what we propose are necessarily the best
solutions to health-care reform," Magaziner says. He suggests that the president's plan be viewed as the "opening of a
national debate over reform. We see it as
a process of developing consensus over
the next several months."
After more than a generation of on-
again. off-again congressional wrangling
over whether to reform the nation's
health-care delivery system, CUnton at
least has secured one preliminary victory.
The question no longer is whether Congress will act. The question now is what
will Congress do?
«
To express your ineics on health rrform,
see the Where 1 Stand poll, on Pnyc 76.
, To order reprints of t'hi<
article, see Page 73.
Oh r Plans Cover The Spectrum
te
President Clinton's health reform
plan has lots of company on Capitol
Hill. Republicans and Democrats
alike are offering their own reform
plans, not so much to supersede the
president's but to define more
sharply the terms of the coming
congressional debate.
At the extremes are plans by
liberal Democrats and conservative
Republicans.
Liberals in both the House and i l
Senate favor a Canadian-style
ernment-run plan that would tax in..iduals and businesses tofinancethe
system and would pay the bills. Fiftyeight members of Congress co-sponsored
such legislation last year.
Conservative Republicans, led by Sen.
Phil Gramm of Texas, would require
employers to offer health-care options to
their employees, but not to pay for them.
Gramm also favors medical IRAs, which
would allow individuals to set up taxdeductible savings accounts to pay for
routine health expenses. Major expenses
would be covered by employer-paid insurance plans for catastrophic illness.
A similar proposal has been endorsed
by 106 House Republicans. It would
require employers to make health insurance available at group rates to their
workers, who would purchase it at their
own expense. The proposal also favors
medical IRAs, medical liability reforms,
paperwork reduction, and insurance market reforms that would limit the ability of
insurers to refuse coverage or charge
different rates based on health status
Along with the Clinton plan, those plans
considered at the center of the debate
have been offered by a panel of GOP
senators headed by Sen. John H. Chafee
of Rhode Island, and by Rep. Jim Cooper,
"enn., representing a group of conserve Democrats in the House.
Like Clinton's plan, the Chafee and
Cooper plans embrace the concept of
managed competition, featuring purchasing cooperatives bargaining on behalf of
1
I*
There are
differences,
and we'll get
{them ironed
out.
-Se*. John H. Chafe*
tlinton's
m
plan veers f
off to the
i &
left, but
' I
managed , '
competition
is still squarely in
the middle.
>:
—flep-Jiffl C o e
o pr
small businesses and individuals. They
also advocate insurance market reforms.
But neither Chafee nor Cooper would
mandate that employers share the cost of
health insurance with their workers.
"Clinton's plan veers off to the left [with
the mandate), but managed competition is
still squarely in the middle," says Cooper.
Nor do Chafee and Cooper favor regulation of health insurance premiums, a
controversial feature of Clinton's plan.
In the bipartisan spirit that has marked
the reform debate thus far. Chafee op-
timistically notes: "There are d-.ffcrer.ces.
and we'll get them ironed out I think he
[Clinton] has laid a wonderful basis"
Chafee's plan is the product of three
years of study and has been end.^ed by
23 of the 44 Republicans in tr^ <.-r.,:f> A
number of its provisions du'f-r .-,.> .:.,n.
tially from parts ofthe Clmt. :• ; . .-. For
example, while the Chafee p: .-• i'.-les a •
sUndard benefits package
.:..r -..Clmton's, it would allow indr- nl. ..-•.«. hoose
medical IRAs combined wur. J
strophic-insurance plan.
To subsidize those unable to -JTord
coverage, the Chafee plan wo>.M pr *-*' m
by 2000 a voucher system to h.-'p
f
those with incomes below Ji",--•--t .f
the federal poverty lev. r *^
income of $33,600 for i ' o-... f ' ^ r
under the current mt-*.--.'- •.. ^ r
chase health insurar.cH
under the Clinton plan » ...t
fully effective by 1997
Like the Clinton pr"|.~*j
Chafee plan projects r . c •*••'•c
from limiting the growm 1 vi-i,
care and Medicaid <p»'.tir< rs»
GOP plan projects $210
n
savings by 2000; CUnton pr»
$238 billion.
Cooper's plan represents •./>» /» 4
the Conservative Democrauc > <-."»
composed of 60 House Deniorr»u»
relies more heavily on comprtiu. •*
t^
incentives torestraincost tr.*r N» *^>j
dent's plan.
Under Cooper's approach - i...s.*u
and companies would be ta.»i-j •*•„•»#
of health plans that exceed* ^41 -J*
least expensive plan offered t» « -«•».->• r-*]
health alliance. The taxes rm^vM .m 'jus
new levy would go to pay for «.i h
insurance for the poor.
While it is not clear ho* muc* (im
plan the Clinton ad minis traL,..n * •.«!
sacrifice to achieve a compr- r-L- •N*
political mood at the Whit* H 4 ^ , 1 .,n
Capitol Hill suggests that aJ
"i.y.ir
players in the refonn debat* » *ri t" And
a bipartisan middle ground.
1
t
�Jobs
�JOBS
CONTENTS
Page
Talking Points
1
Jobs
2
What is the Minimum Wage Effect of Health Care Reform?
8
Do Most Firms Offer Insurance?
11
1 Pagers on Studies
•
Economic Policy Institute
•
13
Employee Benefits Research Institute
Articles
•
Summary of Relevant Articles
•
"Reform Will Cost - And Create - Jobs" Washington Post 5/5/93
•
"Fear of Losing Aid Chains Some to Jobs," USA Today
•
•
"Study Backs Health Plan on Job Creation," The Washington Times
"Perspective on Health Care: Boosting Workers' Security; Those Disabled
or On Welfare Will Be Employable; All Will Be Free to Change Jobs," LA
Times. 10/8/93
�TALKING POINTS
JOBS
COSTS FOR MANY BUSINESSES WILL BE LOWER, CREA TING MORE JOBS
• Most businesses provide health care already, and we are going to lower their costs.
This will make it easier to hire future workers and give wage increases to their current
employees. A study from the Economic Policy Institute predicts that the plan will
create more than 258.000 manufacturing iobs over the next decade. And the
Hmplovee Benefit Research Institute predicts that the President's proposal could
create as many as 660.000 iobs overall.
SMALL BUSINESSES WHO NOW PROVIDE HEALTH INSURANCE WILL HAVE
SIGNIFICANTLY LOWER COSTS
• Small businesses often pay as much as 50% more than big businesses for health care.
The plan will lower health care costs for these firms, giving them more money to hire
future workers and pay their current employees higher wages. The Wall Street
Journal called the Clinton plan "an unexpected windfall" for small business.
HEAL TH CARE JOBS WILL BE CREA TED
• With more people receiving regular care, there will be a need for more people to
provide care — particularly nurses, family doctors and home health care workers.
Joshua Weiner, an 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.
AN END TO JOB LOCK AND WELFARE LOCK
• People who are in jobs they want to leave but don't leave for fear of losing their
benefits will have mobility with universal, guaranteed coverage. These individuals
will be free to switch jobs or start a small business, meaning more jobs and greater
productivity. And tens of thousands of people on welfare will no longer risk losing
health benefits if they work.
EXPERTS VALIDA TE POSITIVE JOB EFFECTS
•
Economic Policy Institute: "There will be job creation."
•
Employee Benefits Research Institute: "From 660,000 jobs created to 168,000 jobs
lost."
•
US Chamber of Commerce: "An employer mandate is a necessary part of the
solution."
•
Leading CEO's endorse Health Security Act.
•
Academia supports positive effect on employment.
1
i/data/healthcare/briefbk5 pwj
12/7/93
�JOBS
SUMMARY:Exploding health care costs are a hidden tax on employers and
employees in at least two main ways. First, waste and
overcharging in the current system rob firms of profits they could
use to hire more employees, to invest back in their companies or
workers, to raise wages, or to pass on to their consumers in the
form of more competitive prices. In addition, our current health
care system locks many employees into jobs because of the
omnipresent fear of losing their health insurance. By reining in
health care costs, the Administration's Health Security Act will
lower costs for businesses -- creating jobs, raising wages and
improving the competitiveness of American firms. As Council of
Economic Advisors Chairman Laura Tyson testified, "the bottom
line is that health reform will save the private sector tens of
billions of dollars more than its costs, money that can be used for
more and better-paying jobs".
EXPERTS VALIDATE POSITIVE OR NEGLIGIBLE EFFECT OF
CLINTON HEALTH PLAN ON EMPLOYMENT
•
Council of Economic Advisors and Labor Department The Chair of
the President's Council of Economic Advisors and the Secretary of Labor
have testified that the Clinton health care plan will have a negligible or
slightly positive effect on employment. [Economic Effects ofHealth Care
Reform", Laura D'Andrea Tyson and Robert Reich 10/6/93] I n certain sectors of the
economy, such as manufacturing and health care providing, the Health
Security Act would raise employment significantly. And of course, over
the long term, the lower costs and increased efficiency of a streamlined,
less expensive health care system will allow firms to use funds previously
going to health care to hire more workers.
•
Economic Policy Institute The Economic Policy Institute (EPI)
concluded that the effect of the Clinton health care plan on job creation is
positive. The EPI economists who conducted the study concluded, "even
though the exact number of jobs may be unclear, we can definitely say
that we think there will be job creation and not job loss...there are lots of
positive effects o f t h e Clinton plan." [Economic Policy Institute "The Impact of
the Clinton Health Care Plan on Jobs, Investment, Wages, Productivity, and Exports"]
2
�•
US Chamber o f Commerce The benefits for businesses and job creation
ofthe Health Security Plan are probably why the U.S. Chamber of
Commerce endorsed President Clinton's employer mandate: "An employer
mandate...is a necessary part ofthe solution, provided there is an
acceptable subsidy (for small business)" [Knight Ridder "Business Group Backs
CUnton" 4/9/93]
•
Employee Benefit Research I n s t i t u t e The independent nonprofit
research institute EBRI produced a range of estimates ofthe Clinton plan
from 660,000 jobs created to 168,000 jobs lost. [EBRI "An Employer Mandate:
What's Know and What Isn't" November, 1993]
•
L e a d i n g A m e r i c a n Businesses CEO's of some of America's leading
firms -large and small -- have sent written statements of support for the
Health Security Act because they recognize that it presents the best
opportunity for American firms to deal with escalating health care costs
that threaten American firms' competitiveness. Prominent business
leaders expressing support for the Clinton plan include the CEO's of
Xerox, USX, Bethlehem Steel, Archer Daniels Midland, American
Airlines, Drummond and Company, Enron, Ford, Chrysler, and General
Motors.
•
Academia Economists and researchers at some of America's most
prestigious universities and research institution predict a negligible longterm impact of health reform on employment. David Brailer, professor of
health care systems at University of Pennsylvania argued that "reforming
the health care system is not going to have a major impact on
employment." Joshua Weiner ofthe Brookings Institution argued that
'"the cost of failing to get costs under control will be much slower than the
any impact [on the economy] through health reforms." [US News and World
Report 7/9/93]
OVERALL EMPLOYMENT: LOWER COSTS FOR BUSINESSES
INCREASED
EFFICIENCY
•
AND
Reduced Costs The slower growth rate of health care costs means that
aggregate business spending on health care will fall over time. Even
though some firms will pay more initially because of the expansion to
universal coverage, reduction in the growth of health care costs will lower
premiums over time. I n particular, comprehensive health care reform
means lower costs for the manufacturing sector --which pays the highest
wages to average people - who have layed off workers because ofthe high
costs of health care. A more competitive manufacturing sector is
important for job creation because it creates exports.
�NOTE: Because the Lewin VHI made an error calculating their
premiums, they predict that firms will pay higher premiums than.
Even with this error, the Lewin study found that the growth of
business spending on health care will be slowed dramatically by the
Health Security Act.
•
E n d o f cost s h i f t i n g f o r uninsured As much as 10.5 percent of
premiums for firms that do insure goes toward the "uncompensated care"
tax to pay for coverage for the uninsured, which providers currently pass
on to businesses in the form of higher prices. The Health Security Act will
end the cost shifting ofthe current system and will lower costs for
businesses that now offer insurance.
•
No more corporate "free riders" The Health Security Act will make
businesses more efficient by eliminating "corporate free riders" -- the
roughly 20 million Americans who are insured through a spouse's policy.
Those individuals will receive coverage individually, which will further
lower costs for business.
•
Benefits f o r f i r m s Firms can respond to cost reductions by hiring more
workers; by raising wages or by providing better pension benefits ; by
investing in plant, equipment, training, and research and development; by
increasing dividends to shareholders; or by lowering prices, leaving
consumers with more income to spend on other goods.
EMPLOYMENT IN HEALTH CARE SECTOR: MORE
AND MORE EFFICIENCY
•
PROVIDERS
More Providers, Fewer A d m i n i s t r a t o r s By 1996, as many as 400,000
net new jobs will be created in the health care sector, with more providers
and fewer administrators and insurance workers. [Bureau of Labor Statistics,
Council of Economic Advisors] As the cost savings accrue, employment in the
health sector will level off. Joshua Weiner, a health economist at the
Brookings Institution, made an even more optimistic prediction: the
Clinton plan would lead to 750,000 home health care jobs alone. [Reuters
"Health Care Reform Impact on Jobs" 9/16/93] By the end o f t h e decade, health
care employment will grow more slowly, although there will be no
absolute decline in the number of employees.
•
A More E f f i c i e n t H e a l t h Sector and H i g h e r L i v i n g S t a n d a r d s As
the health care sector becomes more efficient, the economy will be able to
produce more output than it could before reform. This productivity
increase will raise living standards.
�AN END TO "JOB LOCK" AND 'WELFARE LOCK"
•
Job Lock Impedes Productivity Job lock occurs when workers remain
in a job to avoid impairing the status of their health benefits. Up to 30
percent of people report that they are afraid to leave their current job due
to the risk of losing health insurance. Research by Brigitte Madrian at
Harvard has found that mobihty rates for married men are depressed by
25 percent because of job lock. ["Employment-Based Health Insurance and Job
Mobility", forthcoming Quarterly Journal of Economics 2/94] This effect impedes
the ability of workers to move to jobs where they are more productive.
Studies show that approximately one in five of America's workers stay in
their job because of concerns about health benefits. [Kaiser Family
Foundation as Reported in USA Today] According to Ron Pollack, executive
director of Families USA, job lock "stunts any sense of ambition and
creativity that is supposed to be the hallmark of our job market...it
ultimately impairs the economy." [Kaiser Family Foundation as Reported in USA
Today]
•
No More Discrimination Against Workers With Illnesses Reducing
job lock may also positively affect employment. Firms may be more
willing to hire qualified workers with pre-existing conditions when they
cannot be charged more in health care costs for them.
•
Early Retirement Will Open Up Employment For Younger Workers
Some workers may decide to leave the labor force if affordable health care
is no longer tied to staying in the work force. The President's Council of
Economic Advisers estimates that about 350,000 to 600,000 people will
decide to retire early following health reform. The increase in voluntary
retirement will open up new job possibilities for younger workers.
•
No More Welfare Lock Universal coverage will also eliminate "welfare
lock" the fear of losing Medicaid benefits available to welfare recipients.
Research indicates that as many as 1 million ofthe 4 million welfare
recipients would take jobs if there were continuous health care benefits.
[Robert Moffitt and Barbara Wolfe "The Effect of the Medicaid Program on Welfare
Participation and Labor Supply"] Aaron Yelowitz of MIT also found that more
Medicaid recipients would work if they could keep more of their income
and still receive health insurance.
�MINIMUM WAGE EFFECT MINIMAL, HAS NO EFFECT ON
COMPANIES THAT INSURE
•
f
Real Compensation Cost Lags Behind I980 s Health care reform is
the equivalent to a modest increase (between $.15 and $.35 per hour) in
the minimum wage for workers that do not currently provide health
insurance. An increase of this magnitude will still leave the real
compensation cost for minimum wage workers below its average level in
the 1980's (adjusting for inflation). Studies of small businesses and
restaurants in Pennsylvania, Texas and New Jersey by economists at
Harvard and Princeton show that increases in the minimum wage do not
hurt job growth and can make it easier to for firms to hire people. [David
Card and Alan Krueger "Minimum Wages and Employment: A Case Study of the Fast
Food Industry in New Jersey and Pennsylvania" Working Paper #315, Industrial
Relations Section, Princeton University, 4/83]
SMALL BUSINESS: LARGE DISCOUNTS AND A LEVEL PLAYING
FIELD
•
Discounts Small businesses will receive 75 percent ofthe discounts
available under the plan, allowing them to hire more workers and invest
more of their profits in plants and equipment. Small businesses will see
additional price reductions, since the load of their insurance premiums -the amount by which price exceeds the benefits -- will fall by 25 percent.
•
Benefits of Community Ratings Many small businesses will benefit
from the movement to community ratings. Small businesses have the
most variability in insurance premiums, because ofthe small size of their
groups.
"An Unexpected Windfall" The Wall Street Journal wrote that, "For
many small businesses, saddled with escalating health care costs, President
Clinton's health care package comes as an unexpected windfall." ["Small
Business Sees Burdens Getting Lighter" 9/13/93]
EXISTING STUDIES FAIL TO ACCURATELY ANALYZE PLAN
•
Employment Policies Institute and NFIB Studies Flawed Two
commonly-cited studies of the economic impacts of the Clinton plan by the
Employment Policies Institute ["The Impact of a Health Insurance Mandate on
Labor Costs and Employment"] and the Consad Research Corporation ["The
Employment Impact of Proposed Health Reform on Small Businesses" for the National
Federation of Independent Businesses] both misrepresent the content of the
Clinton health care plan and miscalculate typical business responses to
cost changes. There is no denying that some firms will pay more after
�reform than they did prior to reform. The vast majority of Americans,
however, will benefit from the reduction in health insurance costs, the
portabihty of coverage, the lower administrative costs, the reduction in job
lock, the lower costs for small businesses and the self-employed, and the
reduction in welfare lock. Studies which ignores these effects cannot be a
complete analysis ofthe employment effects of health care reform.
•
Studies Use Faulty Data and Assumptions Both studies make several
fundamental errors in their estimation ofthe President's plan. For
example, the O'Neill study assumes that employers will pay the full cost
of the premium for all workers who work more than 20 hours per week; in
the Health Security Act, however, employers pay a much smaUer, prorated premium for part-time workers. Similarly, the O'Neill study
assumes that employers will pay $5,310 per worker with a family and
$2,160 per single worker; the estimates for the Health Security Act are
actually closer to $2,500 per worker with a family and $1,500 per single
worker, since many families have two adults in the work force, each of
whom will contribute for their health care. In addition, the O'Neill study
assumes that firms will lay off 3 percent of their work force if
compensation rises by 10 percent; evidence in economic literature by
Charles Brown and Allison Wellington suggest that the responsiveness of
firms to cost changes is only one-sixth to one-third of the O'Neill
assumption.
•
Studies Ignore Discounts For Businesses Neither the EPI nor the
NFIB studies accounts for job gains from businesses whose costs fall
under the reform. Similarly, both studies completely excluded from their
analysis the nearly $100 billion in discounts the plan provides. Ignoring
discounts - coupled with the studies' questionable assumptions that firms
cannot shift any costs to workers earning less than $25,000 per year —
leads directly to the massively overstated claims of job loss.
•
Evidence Shows that Employer Mandates Will Not Cause
Unemployment
Real world evidence suggests that employer mandates such as those proposed in the Health Security Plan - do not have major
adverse employment effects. For example, Hawaii imposed an employer
health insurance mandate in 1974. From the 1970s until now, total private
non-farm employment in Hawaii increased by 90 percent, compared to 54
percent in the United States as a whole. Retail and wholesale trade
employment grew by more in Hawaii than in the United States as a whole.
Within the health care sector, total health services employment in Hawaii
grew more rapidly than it did in the United States as a whole. In contrast,
health insurance employment grew less rapidly than it did in the United
States
as a whole.
[Hawaii Department of Health, 1992]
Ldata/healthcare/pjjobs.doc
�WHAT IS THE MINIMUM WAGE EFFECT OF HEALTH
CARE REFORM?
SUMMARY:
Some crimes of the Health Security Act have tried to assert
that health care reform is equivalent to a small increase in
the minimum wage, which will supposedly cost jobs in
small business. In fact, an increase in health care costs for
currently insured low-wage workers in small firms is
equivalent to only a very modest minimum wage increase
of $.15 to $. 35 per hour. An increase of this magnitude
will still leave the real compensation cost for minimum
wage workers below its average level in the 1980's, when
adjusted for inflation. Many studies indicate that recent
increases in the minimum wage have had minimal - or
even positive - effects on employment.
POLICY:
Minimum wage workers will see different effects of the reform, depending on
where they work. The minimum wage is currently $4.25. For firms with the
following caps, the increase in the effective minimum wage is:
Firm
3.5% cap
7.9% cap
Increase
$ .15
$ .34
EVIDENCE THAT MINIMUM WAGE INCREASE WILL NOT CAUSE
UNEMPLOYMENT
Richard Freeman, Harvard University Preeminent labor economist Richard
Freeman from Harvard University found that "moderate legislated increases
did not reduce employment and were, if anything, associated with higher
employment in some locales...Most studies...reject the notion that the late
1980's-early 1990s increases had adverse employment effects". [Richard
,
Freeman, "Minimum Wages -- Again", prepared for the Conference on Economic Analysis of
Base Salaries and Effects of Minimum Wages, Atx en Provence, September 30-October 1,
1993]
Lawrence Katz, US Department of Labor, David Card and Alan Krueger,
Princeton University In a reexamination of an earlier study, these
economists found that when the total labor pool, including part-time workers,
is analyzed, minimum wage increases do not negatively effect employment.
In fact, the increases studied by these economists were much larger ($.90
over two years) than those projected under health care reform. [David Card,
Lawrence F. Katz and Alan B. Krueger "Comment on David Neumark and William Wascher,
�"Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum
Wage Laws", Working Paper #316, Princeton Industrial Relations Section, April 199,
forthcoming in the Industrial and Labor Relations Review; David Card, "Using Regional
Variation in Wages to Measure the Effects of the Federal Minimum Wage" Industrial and
Labor Relations Review. October 1992; and Lawrence Katz and Alan Krueger "The Effect of
the Minimum Wage on the Fast Food Industry", Industrial and Labor Relations Review.
October 1992.
DISTRIBUTION
OF WORKERS WITH/WITHOUT
PROVIDED INSURANCE BY WAGE LEVEL
EMPLOYER-
•
The following table breaks down the total number of workers (117 milhon)
by their wages (over $4.30 per hour and under $4.30 per hour) and
whether or not these workers work for firms that currently offer
insurance.
•
For example, the "Currently Covered by own Employers" section
illustrates that there are 1 million workers who make less than $4.30 per
hour and are currently covered by their own employer.
-- Eleven percent of these individuals work for firms that will be
capped at 3.5 percent of payroll under reform.
-- Thirty-three percent work for firms that will not be capped.
- Twenty one percent work for firms that will belong to corporate
alliances.
Regional Alliance
Firm Cap
Workers
Num 3.5
(millions)
4.4
5.3
6.2
7.1
7.9
No.
Cap
Total
117
3%
3%
4%
4%
15%
46%
5%
Corp. Allian.
19%
Currently Covered bv Own Employer
Total
<$4.30
70
1
2%
1%
11% 4%
2%
3%
2%
2%
2%
3%
15%
24%
52% 23%
33% 21%
Currently Not Covered bv Own Employer
Total
<$4.30
47
4
13%
25%
5%
6%
4%
3%
5%
3%
5%
2%
18%
18%
37%
26%
14%
16%
�KEY POINTS FROM THE DISTRIBUTION TABLE:
•
Almost 20 percent of all minimum wage workers receive health
insurance through their employers. Nearly half of these workers
will be in firms that receive substantial discounts under reform.
•
Even for firms that don't provide health insurance, most of their
workers will be capped (only 37percent of these firms have no
cap).
•
Thirty five percent of all workers work in firms that will receive
some type of discount on their premium
contributions.
•
Most minimum wage workers in firms that do provide will see no
increase
Of the 1 million minimum wage workers who are currently covered by
their employer (about 19% of minimum wage workers), 46% will
receive a cap.
•
Many workers in firms that do not provide will see smallest level of
increase in minimum wage.
Of those currently not covered by their employer, 49% will receive a
cap, with one-quarter of those at the 3.5 percent level.
December 20, 1993
I: I data 1 healthcare \ minimuS.wg
10
�DO MOST FIRMS OFFER INSURANCE?
SUMMARY:
Critics assert that the Health Security Act's requirement that
businesses pay 80 percent of the cost of their employees health
insurance (with discounts for small businesses) will greatly
burden employers and cause job loss. In fact, 81 percent of
all employees and 62 percent of employees in small
firms work for firms that offer health insurance.
The
majority of firms do offer insurance to their employees,
although the exact percentages vary according to the source.
It's clear that, due to the discrimination they face in today's
insurance market, the very smallest firms are the least likely
to offer insurance. That's why 75% of the discounts offered
by the Clinton plan will go to small businesses. If firms with
less than 5 employees are excluded, the vast majority of firms
provide insurance to their employees.
M A J O R I T Y OF WORKERS ARE I N FIRMS THAT OFFER:
•
The most relevant question is the share of workers in firms that offer
health insurance. This is the equivalent ofthe firm-based method
weighted by the number of workers. According to the May 1988
Current Population Survey, 81 percent of all workers and 62 percent of
workers in small firms are in firms that offer health insurance:
Percent of workers whose firm offers insurance
Total
81%
1-24
51%
25-99
83%
100-449
92%
500+
95%
<100
62%
100+
94%
DATA B Y F I R M S I Z E VARIES B U T PROVES T H A T MOST D O OFFER:
•
A study by Jennifer Edwards which surveyed only small firms found
that 50% of all businesses with between 1 and 5 workers offered
coverage to their employees, 75% of all businesses with between 6 and
25 employees offered coverage to their employees, and 90% of all
businesses with between 26 and 100 emplovees offered coverage.
A study prepared for the SBA by Lewin shows that a majority - 51% -of those firms with 1-24 workers offer coverage, 93% of those with 2599 emplovees offer coverage, and 54% of all firms offer coverage.
�SMALLEST FIRMS FIND IT HARDEST TO PROVIDE TOD A Y:
•
Almost all firms above the very smallest offer health insurance.
According to the HIAA survey, even a majority of firms with between 5
and 9 employees offer health insurance:
Percent Offering
26%
54%
72%
90%
97%
99%
Firm Size
<5
5-9
10-24
25-49
50-99
100+
According to tabulations of HIAA data by the Rand Corporation, all
but the very smallest firms are likely to offer health insurance:
Firm Size
Offer
Insurance
1
17%
2
26%
3
34%
4
33%
5
42%
6
41%
7
70%
8
58%
9
77%
10
85%
RESPONSE TO NFIB "40% " CHARGE:
•
The National Federation of Independent Businesses often uses the
statistic - from an HIAA study - that only about 40 percent of firms
offer health insurance.
•
However, according to John Motley, the NFIB's chief lobbyist, "two out
of three of our members provide it (health insurance) today and two
out of three of those who don't would like to do it." [McNeil Lehrer
Newshour, 4/8/93] Previously, Motley had said that two out of three small
businesses currently provide insurance.
•
A recent study prepared for the NFIB said that 64 percent of small
business owners would like to provide some or better insurance to their
workers. When asked why they do not offer insurance, the most
common reason -- stated by 65 percent of small business owners - is
that premiums are too high. And 92 percent of small business owners
agree that the cost of health insurance is a serious business problem.
[Charles Hall and John Kuder, Small Business and Health Care: Results of A Survey,
the NFIB Foundation, 1990]
Decem ber 3, 1993
i:/data/healthcare/frmsoffr.
doc
12
�QAH Employer Mandate: What's
Known and What Isn't
EBRI
I:\II'I.OYI
H I M
III
K i s i \KC I I
INSTITI T I :
A cornerstone of President Clinton's proposal to reform the U S health care system 1 ar
5
employer mandate to provide health insurance coverage to all employees The manaau
calls for all em plovers to pay into a regional pool—a purchasing alliance—from which -.hr employees can select a health insurance plan. The employer contribution will be ca;?- :
at a fixed percentage of payroll (currently set at 7.9 percent), and discounts would bn-^the cost to smaller firms with low-wage employees down to 3.5 percent. Employees wou.j
also be expected to contribute a portion of the health care premium.
As a nonpartisan, nonprofit, research institute, the Employee Benefit Research Institute (EBRI) role in the health care debate is to provide objective information on the tradeotTi
inherent in all the health care reform proposals. To that end, we have developed our c* n
micro simulation model to understand how researchers arrive at widely different est;
mates; examine the sensitivity of those estimates to different assumptions, and under
stand the weaknesses in the methodologies employed. Using a variety of aaaumpticrEBRI produced a range of estimates on the employment effecta of President Clinton proposal ranging from 660,000 jobs created to 166,000 jobs loct.
As part of its mission to advance the public's, the media's, and policymakers' knowleccand understanding of employee benefits and their importance to the nation s econom.
EBRI has put together this publication to provide data and analysis on the possible 1 m p j . •
of an employer mandate without endorsing or lobbying for a specific approach
In addition, EBRI's ongoing efforts on the health care reform issue will include
• an upcoming Issue Brief on health care reform
• an upcoming Issue Brief on the changing health care delivery system
• a January 1994 Issue Brief on sources of health care coverage and character of the uninsured population, and
• upcoming EBRI/Gallup public opinion surveys on health care reform ssues
EBRI has already published several pieces related to health care reform this past
including;
• "Clinton's Health Care Refonn Proposal. Issues for Employers"
• A September 1993 EBRJ/Callup public opinion survey on health reform
• 'The Role of the Health Care Sector in the U.S. Economy"
• "Hospital Pricing; Cost Shrfting and Competition"
• "Making Choices: RatiorUng in the U.S. Health System"
• "Health Care Reform: Managed Competition and Beyond"
• "Sources of Health Insurance and Characteristics of the Uninsured"
-
This Special Report was prepared by Bill Custer, Sarah Snider, Sarah Boyce, Ken
McDonnell, and Paul Fronstin of EBRI with assistance from the Institute's research anJ
education staffs The views expressed m this statement are solely those of the authors j should not be attributed to EBRI, its officers, trustees, sponsors, or other staff EBRI is J
pnvate. nonprofit, nonparnsan. public policy research organization in Washington D C
This Spenal Report was prepared with the financial assistance of the Henry Kaiser FjrFoundation.
jij
�THB IMPACT OP THE
CLINTON HEALTH CARE PLAN ON JOBS, INVESTMENT, WAGESp
PRODUCTIVITY, AND EXPORTS
Th« Economic Policy Institute
SUMMARY
This study analyzes the potential economic impact of two
aspects of the Clinton health care plan: (1) the i n i t i a l
redistribution of health costs that w i l l result from the employer
mandate, the use of community rating, and coverage of early
retirees; and (2) the cost-containment component of the plan.
The EPI analysis focuses primarily on the manufacturing
sector. Using standard macroeconomic assumptions and a modified
microslmulation model, the study concludes that the Clinton
health care plan w i l l save the manufacturing sector b i l l i o n s of
dollars, create thousands of jobs, and promote the creation of
higher quality jobs. In addition, the authors argue that reports
of large job losses in small firms because of the employer
mandate rest on assumptions irrelevant to the Clinton plan.
Below are some of the study's specific findings:
Under the Clinton health care plan, the manufacturing sector
w i l l save $18 b i l l i o n in 1994 compared to i t s expenditures
under the current system. These savings w i l l increase
manufacturing-related employment by 112,800 by the f i f t h
year of the plan.
The economy-wide effect of the redistribution of health
costs i s a net increase of 75,900 jobs by the f i f t h year.
The cost containment provisions of the plan w i l l increase
employment in manufacturing-related sectors by 52,000 by the
f i f t h year. The combined effects of the cost redistribution
and cost containment provisions of the plan w i l l create an
additional 164,700 jobs in manufacturing-related industries
by the plan's f i f t h year and 258,780 by the 10th year.
The economy-wide effects of the cost containment provisions
w i l l depend on how the health dividend i s used. I f i t i s
invested, then the new jobs created w i l l more than offset
the slowdown in job growth in the health care sector. Cost
containment w i l l also lead to greater e f f i c i e n c i e s in health
care delivery.
The study i s based on the Clinton health care refonn plan as
of September 7, 1993, and the effects are determined assuming the
plan i s fully implemented on January 1, 1994. Rather than
attempt to v e r i f y the various projections in the Clinton plan,
the intent i s to evaluate employment and economic effects of the
plan as i t has been outlined by the Administration.
/3
�JOBS
SUMMAR Y OF
ARTICLES
Washington Post 5/5/93 "Reform Will Cost -- and Create -- Jobs"
The Post article is generally favorable, indicating that "under any scenario,
winners and losers emerge from the health care thicket..." I n the health care
sector, the article predicts a shift away from speciahsts and administrators
and toward primary care providers, exactly as the administration intends.
Chairwoman Tyson is quoted as citing "slowing the rate of growth and
changing the composition of the health care work force" as long term goals of
health reform.
USA Today "Fear of Losing Aid Chains Some to Jobs
The USA Today article discusses the effects of job lock on the economy.
Citing a Kaiser Permanente survey, the article asserts that job lock is most
likely to affect older workers, mid care or baby boomers with families, and
working poor and middle class families.
Washington Times "Study Backs Health Plan on Job Creation"
The article reports on the Economic Policy Institute Study, which found that
"the [administration's] health plan has the potential to create 76,000 jobs
over five years if the projected savings in health care costs are realized."
LA Times "Perspective on Health Care; Boosting Workers' Security" 10/8/93
This article by Princeton professor and Working Group member Paul Starr
predicts that the plan is "a ticket to economic freedom" by breaking job and
welfare lock and by ending insurance companies' practice of excluding
workers with pre-existing conditions. Starr also emphasizes the tax credit for
people with disabilities and the benefits for people starting their own small
business. "Health care reform will not just offer [workers] security. I t will
give them back their freedom."
i:data/healthcare/jobart.sum
15
�Copyright 1993 The Washington Post
The Washington Post
May 5, 1993, Wednesday, Final Edition
SECTION: FIRST SECTION; PAGE A l
LENGTH: 2119 words
HEADLINE: Reform Will Cost -- and Create -- Jobs
SERIES: PAYING THE BILL: THE COST OF HEALTH CARE REFORM
of 4
't4
BYLINE: Kathleen Day, Washington Post Staff Writer
BODY:
Last of four articles
Boston ophthalmologist B. Thomas Hutchinson frets that he and other medic;n
specialists would take a big pay cut under President Clinton's health care reform
package.
1
Gerri Lamb, a Tucson nurse, welcomes reform. She sees increases in pay an.
for herself and other lower-paid health care providers. "I'm very optimistic becaubackground and how I fit into the picture," Lamb said.
ius
i my
Under virtually all reform scenarios, winners and losers emerge from the he;•
thicket, according to interviews with industry analysts, economists and executive <
..ire
Winners would be generalists -- from family practice doctors to nurses, nurses'
physical therapists and lab technicians -- who could deliver quality care for less
• v.
As the health care community is called upon to curb costs while serving mou .^.ple.
demand for these workers would grow, albeit at a slower clip than during the nu . • ..I
boom of the 1980s, experts said.
Losers would be cardiologists, other specialists, hospital managers and other W ; •
<
<
paid professionals, who would see slowdowns or even declines in job and pay j;t"-> Ii.
�"Slowing the rate of growth and changing the composition of the health care wor k
force--those will be two main outcomes from reform in the long run," said L.;iUM
D'Andrea Tyson, chairman of the president's Council of Economic Advisers.
These ripples, said Kenneth Abramowitz, health care analyst at Sanford C. Bernstein
& Co., will create "a fundamental shift in the profile of the industry."
Many resources and workers displaced from one sector of medicine - say, a ho<i>ital
that is closed or merged -- would be picked up in another, growing sector, he said. Mich
as a health maintenance organization (HMO) or clinic.
These changes already have started to occur and would continue even without ;i
formal proposal from the Clinton administration, as businesses and the public pri^< for
lower medical bills, specialists said. But White House action, they said, would groin^
accelerate the pace.
Growth in health care employment, which was one of the leading sectors in jol^
creation in the 1980s, would proceed at a slower pace under administration reforms,
experts said.
Pay levels also would shift. "High-income earners will take a bigger hit than ... "'hers
lower down the income chain," said Mark Pauly, health economist at the Universiiy of
Pennsylvania's Wharton School in Philadelphia. "For once, that will be the case in ;in
industry reshuffling."
The bigger change, however, would be in who gets the jobs and who loses, tho
experts said.
DOCTORS
There are 615,000 physicians in the United States, or about 250 for every 100.'>»»'
people. That is about twice as many as would be needed in the more competitive ...ul
efficient system the White House envisions, according to Princeton University economist
Uwe E. Reinhardt.
About 75 percent of doctors are specialists and 25 percent are primary care doci"'\ or
generalists. Reinhardt and others predict that ratio would shift considerably under
reform, where demand would likely grow for primary care doctors, who would act
"gatekeepers" at HMOs and other managed care settings. These gatekeepers would
determine - and presumably limit -- who should see a specialist and how often.
Specialists generally have incomes several times greater than those of generaliSiv An
ophthalmologist specializing in cataract surgery could pull in more than $ 500,000 j >oar
in the 1980s, for example, while a family practitioner might not break into six dkn*
�As demand for generalists grows, so would their income. And as demand for SJH•»-i.(lists
declines, their incomes would drop.
"Physician incomes in excess of $ 300,000 will become increasingly hard to gci."
Reinhardt said in an interview.
This change in the makeup of doctors' offices, which receive 20 percent of all medical
expenditures -- second only to hospitals -- is expected to generate income that could be
spent to hire additional but lower paid health providers, Reinhardt and others said
It is not a popular consequence with doctors.
"The answer to our problem is not to cut specialists off at the knee," said Timodn J.
Gardner, a heart surgeon who teaches at Johns Hopkins University School of Medicine
and practices at Johns Hopkins hospital.
Gardner said he does not believe the gap in pay between specialists like himself and
primary care doctors is unfair, but rather reflects how society values the different level of
stress, training and skill each job entails.
Besides, he said, because the government already has frozen for several years dv
amount it will pay heart surgeons and other specialists, he believes steeper cuts are
unlikely.
"Physicians are being curbed more and more compared to other health care pro\ iders,"
said Hutchinson, the Boston ophthalmologist. "And the specialist is being
disproportionately singled out."
Hutchinson said the trend is particularly unfair because the expense of high-technology
machinery and other overhead is higher for specialists.
"Does the American public realize that if costs are continually ratcheted down, ihe
more rationing of care there will be?" he said.
HOSPITALS
The nation's 6,600 hospitals are the largest recipients of health care dollars, getung 40
cents of every dollar spent. And they are the largest employer, providing jobs for half
of all health care workers. Hospitals alone added 1 million of the 3 million heahh care
jobs created since 1980, many in the administrative ranks.
Hospitals rapidly expanded the range of services they offered, including the numk r of
high-tech machines they bought. Those days are gone.
�Experts predict that 20 percent to 25 percent -- some go so far as to say 50 percent -of all hospitals would disappear in the next few years through mergers or closings in an
effort to cut costs while increasing revenue.
There are simply too many hospital beds -- only 60 percent of them are filled on an
average day, said James D. Bentley of the American Hospital Association.
The pressure to cut costs would hit both for-profit hospitals, such as those operated
by Hospital Corp. of America, and nonprofit facilities. But investors, who often look for
quarterly profits rather than long-term gains, would make it especially hard for publicly
traded institutions such as HCA to tough out the transition, when leaner profits are
likely, said analyst Abramowitz.
"It's a problem of patience," he said.
At both kinds of hospitals, consolidations would leave hundreds of high-paid CEOs
and tens of thousands of the more than 975,000 managers, administrators and their
support staff searching for new employment, analysts project.
"It's part of the natural evolution of rationalizing health care," said Thomas W.
Chapman, president and chief executive of Greater Southeast Health Care Systems,
which has hospitals in the District and in Maryland.
While Chapman said he believes downsizing is necessary, he worries that the
percentage of blacks and other minorities in the executive jobs that survive also would
shrink.
Hospitals would continue to try to cut costs by pushing more and more procedures
into an outpatient setting, cutting overnight stays and the need for tens of thousands of
the more than 470,000 workers who change beds, serve food, provide security services
and perform other housekeeping duties at the bottom of the hospital pay scale.
How well these less-skilled workers would be able to transfer to new employment
would vary.
"Health care has been one of the few industries that hires unskilled workers and gives
them higher than minimum wages and benefits," said Dena Michaelson, spokesman for
the Medlantic Healthcare Group, which includes Washington Hospital Center, the
District's largest acute-care hospital.
"These are people who are essentially in the middle classes because of the health care
system."
Michaelson said many of these workers won't find comparable work. But a spokesman
for the American Hospital Association said that workers willing to take the most
unskilled hospital jobs have been in short supply in many areas of the country.
�NURSES AND OTHER CAREGIVERS
As hospitals shrink their overnight services, many would continue to expand into
outpatient clinics and home care services, creating new jobs.
Of the nation's 1.9 million registered nurses, 65 percent are employed by hospitals. As
hospitals trim down, nurses would find new opportunities in expanding areas, such as
HMOs, nursing homes and home health care. They would be in demand to fulfill the
growing demand for long-term and in-home care for an aging population and also to
provide many of the services doctors provide, but at less cost, said analysts.
T believe the 1990s will be the golden age for nursing," said Virginia Trotter Betts,
president of the American Nurses Association.
Income for nurses already reflects the trend: The minimum and maximum average
annual salaries for a nurse in 1982 were $ 17,568 and $ 23,268 respectively, compared
with $ 27,476 and $ 41,563 today.
Economists said the list of other direct caregivers, whose ranks would swell by 50
percent or more in the next decade, includes home health aides, physical therapists,
medical assistants, radiologic technicians, occupation therapists, speech pathologists and
respiratory therapists.
OTHER SUPPORT STAFF
Today, 90 percent of the $ 930 billion expected to be spent on health care this year
will go to acute care and only 10 percent will go to preventive care.
The plan the White House is likely to propose would dramatically change that ratio,
shifting 30 percent to 40 percent of all health care spending to preventive care.
HMOs and other health networks, which would insure the nation's 37 million
uninsured, would have a financial incentive to go out and find these people and bring
them in for routine checkups and care -- procedures that are far less costly in the long
run than waiting for people in that population to have heart attacks, low birth weight
babies and other costly problems. Among the changes this would bring are:
Social workers and others who could reach out into the community and make sure the
newly insured actually come into the clinic for preventive care would be in increasing
demand. So would managers and consultants who could help health organizations deliver
services more cheaply, say, by figuring out ways for nurses or lab technicians to perform
more duties.
�There would be increased demand for financial experts who could collect and analyze
information on care. They could track such things as which doctor and hospital pcnorms
heart surgery with the highest rate of survival but at the cheapest price.
Buyers of health care -- presumably large employers or insurance cooperatives M i up
by the government to buy medical coverage for small employers and individuals -- uould
need to hire these analysts to help them comparison shop. And probably the government
also would hire these analysts in its new role as overseer of the industry, however iiiat
role may look.
Hundreds of managers of doctors' offices would find less work in the health cartprofession as more and more doctors abandon individual practice to join larger groups,
such as HMOs, and as their paper load dwindles under reform, said John Sheils of
Lewin-VHI Inc., a health care consulting group based in Fairfax. But these people likely
could find employment managing offices in other industries, Sheils and other economists
said.
The psychiatric community could fare well, depending on whether Clinton includes
mental health in the basic benefit package that all Americans would be required io have.
Many health care experts believe it will be included.
The future of the nation's 42,000 chiropractors also is up in the air. Coverage for ihe
treatments they provide may not be included in the basic benefit package, experts said,
though they are lobbying hard for that coverage. In managed-care settings such as
HMOs, calls for their services would be determined by the gatekeeper, a primary eare
doctor. And medical doctors as a rule have frowned on the chiropractic field, though that
prejudice has declined in recent years, medical experts said.
As the medical profession moves to electronic billing and as reform cuts the
paperwork involved in paying for health care, tens of thousands of workers who process
and collect bills in hospitals, doctors' offices and insurance companies would be out of
jobs, insurance and hospital officials said. The White House guesses these savings *ould
amount to $ 10 billion annually.
'Ten billion dollars translates into a lot of jobs lost," said Sheils.
GRAPHIC: CHART, JOBS IN HEALTH CARE (DATA FROM CHART WAS
UNAVAILABLE.)
LANGUAGE: ENGLISH
October 14, 1993
�Ii
COVER STORY
Fear of losing
aid chains
some to jobs
Side effect of
health-care
crisis
'ultimately
impairs the
economy'
By Mjchael Clemens
USA TODAY
When Uida Maraon was
tut b a car in 1976. she
y
didn trealizeUie accident
would limit the mobihty of
her career as well as her
body
Maason's broken hip led
to severe arthnas, a medical
condition that made her an
^ ^ '
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many small companies
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o
couldn t leave her job — and health benefits — at the large
university where she worked. "I never could work for a
small company. 1 never could consider selJ-employment."
says Mattson. 41 of Oakland. Calif. "Even though I wanted
to change fields. I was afraid to try"
Millions of workers like Manson won t or can t change
m
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Please see COVER STORY next page •
7
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�Copyright 1993 News World Communications, Inc.
The Washington Times
November 5, 1993, Friday, Final Edition
SECTION: Part B; BUSINESS; Pg. B7
LENGTH: 743 words
HEADLINE: Study backs health plan on job creation
BYLINE: Anne Veigle; THE WASHINGTON TIMES
BODY:
An economic research group yesterday fortified the Clinton administ^ i on's
claims that its health care plan wouldn't cause widespread job losses.
The Economic Policy Institute said the health plan has the potential to create 76,000
jobs over five years if the projected savings in health care costs are realized. Tin.study assumed that companies would reinvest the savings from lower health care costs
in ways that produce jobs.
"Even though the exact number of jobs may be unclear, we can definitely say • c
>
think there will be job creation and not job loss," said health care economist I'.iith
Rasell, one of the study's authors. "There are lots of positive effects of the Clini->H
plan. "
The health plan's impact on jobs has become a point of heated debate for the
Clinton administration, which has vigorously rebuffed studies showing huge job i"sses.
The Employment Policies Institute, which represents retail and restaurant businc>M-s, has
estimated losses of 3.1 million jobs.
Ms. Rasell said that study is inaccurate because it assumes that all employers would
pay the same cost for health insurance, but Mr. Clinton's plan offers subsidies ihat
would reduce costs for small businesses.
But some small-business groups testifying before the House Ways and Means health
subcommittee yesterday expressed little enthusiasm for the subsidies and said the health
plan would hurt their industries.
�"A health care mandate that drains tens of billions of dollars out of small businesses
every year will put a dramatic damper on job creation and economic growth," said
Pedro Alfonso, a small-business owner and spokesman for National Small Business
United, which represents 65,000 businesses.
Mr. Alfonso said the plan's requirement that all employers provide insurance
amounts to a payroll tax, raising the cost of doing business. He dismissed the
administration's argument that federal subsidies would offset the new costs.
Under the administration's bill, businesses with fewer than 75 workers would get
subsidies that would lower their health insurance costs to a minimum of 3.5 percent of
payroll.
c
Small businesses never asked for these subsidies, Mr. Alfonso said in his prepared
testimony, adding that figuring out the benefits would involve some "extraordinarilv
complex" calculations that "reflect a complete lack of understanding about how small
businesses function."
He said small businesses are "deeply skeptical" that the government could affnrd ihe
subsidies for any length of time.
Two economists told the subcommittee that the president's plan would cause job
losses, but they disagreed on the numbers.
"Our best estimates of job loss are much lower than many of those which have been
cited," said Jacob Alex Klerman, economist with Santa Monica, Calif.-based Rand C orp.,
which estimates that job losses will total less than 0.25 percent of total employment.
Most of the cost of the mandated health benefits will be shifted to employee^ in the
form of lower wages, Mr. Klerman said in his prepared testimony.
Martin Feldstein, president of the National Bureau of Economic Research in
Cambridge, Mass., said the plan would cause "substantial numbers of layoffs of hmli
low- and high-income workers" and amounts to a large tax increase.
Retailers agree with Mr. Feldstein.
"The continued ability of Montgomery Ward and other U.S. retailers to creaie j"bs
and to contribute to national economic prosperity would be threatened by the masMve
new costs the administration's health care plan would place on employers," said
Bernard Brennan, chairman of Montgomery Ward and Co.
Other groups expressed concerns that the regional alliances that would bargain on
behalf of employers and workers for health insurance would not operate efficiently
because they would have a monopoly on the market.
�"The Clinton plan would put 99.9 percent of all employers and 70 percent of all
workers into the hands of a government-regulated body," said Lisa Carroll, spokesw oman
for Small Business Service Bureau Inc., which represents 35,000 businesses.
Small businesses object to the health plan's provision allowing companies with more
than 5,000 workers to opt out of the regional alliances and buy health care directly
from providers. Small businesses want the same flexibility, spokesmen said.
LANGUAGE: ENGLISH
LOAD-DATE-MDC: November 5, 1993
�Copyright 1993 The Times Mirror Company
Los Angeles Times
October 8, 1993, Friday, Home Edition
SECTION: Metro; Part B; Page 7; Column 4; Metro Desk
LENGTH: 717 words
HEADLINE: PERSPECTIVE ON HEALTH CARE; BOOSTING WORKERS'
SECURITY; THOSE DISABLED OR ON WELFARE WILL BE EMPLOYABIJ ;
ALL WILL BE FREE TO CHANGE JOBS.
7
BYLINE: By PAUL STARR, Paul Starr is a professor of sociology at Princeton who has
been working on the Clinton plan. His book, The Social Transformation of American
Medicine, won the 1984 Pulitzer Prize for nonfiction.
BODY: One aspect of President Clinton's health security program has hardly
received adequate attention: For millions of people, it is a ticket to economic freedom.
Today's health-insurance system keeps many Americans from becoming fully
productive citizens. Three out of 10 people, according to public opinion surveys, say that
they or someone in their family have had to give up a better job opportunity because of
a pre-existing medical condition.
And just as the system produces "job lock," so it also produces "welfare lock." Many
people stay on welfare primarily to qualify for Medicaid because the jobs available io
them don't carry health benefits.
The same is true for many people with disabilities: Often, government health benefits
are available only if they do not work, and jobs with health benefits are hard to find
because prospective employers may face steep premium increases if they hire someone at
risk of high medical bills.
By prohibiting exclusions of pre-existing conditions and requiring all employers to
provide health coverage, the President's program will eliminate both job lock and welfare
lock.
And because employers will join large pools called "health alliances" and pay a
percentage of average premiums, they will no longer fear high insurance rates as a result
�of hiring people with a history of serious illness or disability. That will reduce b;.
employment.
s to
Indeed, one little-mentioned provision of the President's program goes even furmer:
People with disabilities will receive a tax credit for personal-assistance services worth
50% of earnings - a major incentive to take a job.
In addition, the new benefit offering home- and community-based long-term ta' ^ ill
open up opportunities to go to work for many people -- primarily women - who .". now
at home caring for an elderly parent or disabled member of their family.
All these positive effects on work and employment need to be remembered am',' he
noisyclaims of opponents that the President's program will hurt small business ai>' -i^s.
v
In fact, small businesses that now provide insurance stand to gain dramaticalh ".ill
business pays the highest administrative overhead on health insurance -- 40 ceni"
he
premium dollar for businesses with fewer than five employees. By purchasing co^ •_
•c
through the new health alliances, small business will get immediate relief from hii'
administrative costs.
Moreover, discounts for small businesses will enable them to purchase coverage • -r no
more than a flat percentage of payroll - as low as 3.5% for firms with fewer than •
workers and average wages below $12,000. Firms with wages averaging $24,000 ;<•••• "ver
will pay their share of premiums or 7.9% of payroll, whichever is less.
;
Larger firms will also benefit from the requirement that all employers particip..
When employers pay for insurance, they typically pay for an entire family, inclmlM .lie
employee's working spouse. Under reform, the costs of families will be more equi
spread, reducing the cost to each firm for workers with families by about one-ihi
Employers who now pay for health insurance also indirectly pay for the uninsin
leave unpaid bills at hospitals. After reform, that burden will be lifted.
who
For all these reasons, firms that now insure, whether they are big or small, will < .
•
their health insurance costs go down, counteracting the effects on firms that haw
ay
for health insurance for the first time.
Reform will also help overcome one of the major obstacles to starting a new v
business. Employees at big firms who would like to set up a small business often e. • 'i
get health insurance at a reasonable price, especially if they have a pre-existing
condition. Even if they are healthy, they face the risk of starting a busmess and iK
becoming sick and uninsurable. Guaranteed coverage at affordable rates through
health alliances removes that risk.
�As the health-care system has become more costly and inequitable, it has i p > .i
m<^
enormous hidden costs on Americans with all kinds of desires and dreams - s t a n i a
business, taking a better job, getting off welfare, making a new start after suffer!ML: '
disabling injury. Health-care reform will not just offer them security. It will give '•'•rm
back their freedom.
GRAPHIC: Photo, PAUL STARR
LANGUAGE: ENGLISH
��ALTERNATIVE HEALTH PLANS
CONTENTS
Talking Points
1
Chafee
Coverage
Financing
Benefits
Cost Containment
Cooper
Coverage
Financing
Benefits
Cost Containment
3
6
Gramm-McCain
Coverage
Financing
Benefits
Cost Containment
10
Michel
Coverage
Financing
Benefits
Cost Containment
13
McDermott/Wellston/Stark
Coverage
Financing
Benefits
Cost Containment
16
Nickles
Coverage
Financing
Benefits
Cost Containment
18
�TALKING POINTS
ALTERNATIVE HEALTH PLANS
Chafee: Republican Health Care Task Force Plan
1.
Universal coverage would occur only if the savings projectedfrom Medicare and
Medicaid under the Chafee plan — about $213 billion — materialize by the year 2000.
This means that millions of Americans will remain vulnerable to the possibility of
unexpected cost increases in public programs - and may never have health insurance
they can count on.
2.
The Chafee plan does not provide the security of a comprehensive set of benefits even for
those who can afford to purchase the standard benefits package. If health care costs go
up, benefits go down, leaving individuals vulnerable to the rising cost of care, much as
they are today.
Cooper: Managed Competition Act of 1993
1.
The Cooper plan does not provide security to any Americans. There is no guarantee
that the currently uninsured will be able to purchase coverage, nor is there any
guarantee that those with coverage will not lose that coverage if they lose their jobs or
change their jobs.
2.
The Cooper plan does not even finance itself. In fact, the CBO estimates that it will
add $70 billion to the Federal deficit over 5years.
3.
The Cooper plan asks Congress to pass a bill that does not define a benefits package,
standard deductibles or cost-sharing levels. All of these things would be determined
after the Cooper plan becomes law. How can Americans be asked to support a bill that
does not even tell them what kind of coverage they have or what they are going to have to
pay for that coverage?
Gramm-McCain: The Comprehensive Family Health Access and Savings Act
1
The Gramm-McCain bill makes no promise of universal coverage and, furthermore, it
leaves the current insurance system and its abuses in place. It allows insurers to
continue to price sick people out of the market (experience rating) — leaving milliom of
Americans, especially those who need it most, unable to afford health insurance.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
�2.
The Gramm-McCain bill would like all Americans to only have catastrophic health
coverage. That means this plan actually tries to discourage the use of plans with
comprehensive benefits packages.
Michel: The Affordable Health Care Now Bill
1
The focus of the bill is on enhancing access to coverage, but not on ensuring that
coverage will be available and affordable. Many individuals will continue to be priced
out of the market under this proposal.
McDermottAVellstone/Stark: National Health Insurance
1.
This system ignores the potential for competition to control costs, and actually eliminates
many of the competitive forces that exist in today's health care system.
Nickles
1
The Nickles plan lacks any mechanism to increase price competition among providers.
2.
While it requires individuals to purchase health insurance, the Nickles plan makes no
guarantee that the insurance available to them will be affordable. The plan encourages
insurers to continue to price the sick out of the market.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
�CHAFEE
THE REPUBLICAN HEALTH CARE TASK FORCE PLAN
KEY POINTS
1.
Universal coverage would occur only if the savings projectedfrom Medicare and
Medicaid under the Chafee plan — about $213 billion — materialize by the year 2000.
This means that millions of Americans will remain mlnerable to the possibility of
unexpected cost increases in public programs — and may never have health insurance
they can count on.
2.
The Chafee plan does not provide the security of a comprehensive set of benefits even for
those who can afford to purchase the standard benefits package. If health care costs go
up, benefits go down, leaving individuals vulnerable to the rising cost of care, much as
they are today.
DESCRIPTION
COVERAGE:
The Chafee plan has an individual mandate with a gradual phase-in
of universal coverage.
•
Individuals would be responsible for the purchase of health insurance for themselves
and their families.
•
The Chafee plan would continue to permit — but would not require — employers to
contribute toward coverage for their employees.
Analysis:
•
Universal coverage would occur only if the savings projected from Medicare
and Medicaid — about $213 billion - materialize by the year 2000. This means
that millions of Americans will remain vulnerable to the possibility of unexpected cost
increases in public programs — and may never have health insurance they can count
on.
FINANCING: The Chafee plan is Financed primarily through Medicare and Medicaid
savings and new tax revenue from a tax cap set to the lowest cost plan.
•
Any new revenue would be used to provide government vouchers to low income
individuals in order to help them purchase coverage
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
�businesses and individuals purchase coverage. The plan would control costs by
encouraging competition among plans within the alliances.
The Chafee plan caps spending on public programs - primarily Medicare and
Medicaid.
The tax cap is expected to control costs by encouraging individuals to choose the
lowest priced health care plan in their area. Individuals who choose more costly plans
will have to pay for the full additional cost of those plans with after-tax dollars.
The Chafee plan prohibits pre-existing condition restrictions and lifetime limits on
insurance coverage, which should limit some risk-selection practices by insurers.
Analysis:
Voluntary alliances only have limited ability to force price competition and
control costs. Mandatory participation in health alliances gives the alliances the
ability to force price competition among health care plans, because insurers cannot
offer health insurance to individuals outside of the alliance. With voluntary health
alliances, such as those in the Chafee plan, insurers do not have to provide insurance
through the alliance in order to be profitable. While the voluntary alliances will allow
bad risks to join into large groups that have some bargaining power, they do not force
aggressive price competition among insurers.
Because the alliances are voluntary, the sick remain vulnerable to high costs
under the Chafee plan. Insurance companies will be able to offer attractive prices
outside of the alliances to healthy groups, who will therefore choose to remain
outside of the alliances. The alliances will be filled with individuals who are bad
health risks and who will require more costly care. The premiums charged within the
alliances will likely be significantly higher than the premiums charged outside the
alliances. There is no guarantee that the prices offered within the alliance will be
affordable.
Because the Chafee plan has voluntary health alliances and no accountability
for premium cost increases, it lacks the competitive pressures necessary to
discourage cost shifting to the privately insured. The cap on public program
spending, in the absence of other cost-containment measures on the private spending
side, would encourage the same cost-shifting that occurs in the health care market
today.
Without universal coverage, the privately insured are going to continue to pick
up the costs incurred by the uninsured.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
�COOPER
THE MANAGED COMPETITION ACT OF 1993
KEY POINTS
1
The Cooper plan does not provide security to any Americans. There is no guarantee
that the currently uninsured will be able to purchase coverage, nor is there any
guarantee that those with coverage will not lose that coverage if they lose their jobs or
change their jobs.
2.
The Cooper plan does not even finance itself. In fact, the CBO estimates that it will
add $70 billion to the Federal deficit over 5years.
3.
The Cooper plan asks Congress to pass a bill that does not define a benefits package,
standard deductibles or cost-sharing levels. All of these things would be determined
after the Cooper plan becomes law. How can Americans be asked to support a bill that
does not even tell them what kind of coverage they have or what they are going to have to
pay for that coverage?
DESCRIPTION
COVERAGE:
The Cooper plan offers no provision for universal coverage and offers no
guarantee that coverage cannot be taken away.
•
The Cooper plan tries to correct market failures in the health care market through
insurance market reform and tax reform in order to make health insurance available to
some individuals who currently cannot afford to purchase coverage.
•
The Cooper plan includes funding for vouchers to assist low-income individuals
purchase health insurance.
•
Medicaid would be replaced by a new Federal program that would assist low income
individuals in purchasing health insurance through Health Plan Purchasing
Cooperatives.
Analysis:
I/DATA/HEALTHCARE/PLANS3.WP -- 12/20/93
�The Cooper plan does not provide security to any Americans. There is no
guarantee that the currently uninsured will be able to purchase coverage, nor is there
any guarantee that those with coverage will not lose that coverage if they lose their
jobs or change their jobs.
The Cooper plan does not eliminate lifetime limits on insurance, which means that
there is no guarantee that coverage will never run out.
Failing to provide universal coverage means that the uninsured will continue to use
expensive, inappropriate care, and the insured will continue to pick up the bill.
FINANCING: The main methods of financing this bill are significant Medicare and
Medicaid savings and new tax revenue from setting the tax deductibility of
health insurance to the cost of the lowest priced plan.
•
The new revenue from the Medicare and Medicaid savings and the tax cap would be
used to finance vouchers for low-income individuals.
Analysis:
•
The Cooper plan does not even finance itself. In fact, the CBO estimates that it
will add $70 billion to the Federal deficit over 5 years.
•
Setting the tax cap at the cost of the lowest-priced plan is the Cooper plan's way of
making health insurance more expensive for most people who already have it.
Under our current system, most people receive their insurance through their
employers, and their employers are allowed to pay for health insurance with pre-tax
dollars. If we set the tax cap at the lowest cost plan, every other health care plan
instantly becomes more expensive than it already is.
BENEFITS: A National Health Board would specify a uniform set of health benefits,
standard deductibles and cost-sharing levels.
Analysis:
The Cooper plan asks Congress to pass a bill that does not define a benefits package,
standard deductibles or cost-sharing levels. All of these things would be determined
after the Cooper plan becomes law. How can Americans be asked to support a bill
that does not even tell them what kind of coverage they have or what they are going
to have to pay for that coverage?
f/DATA/HEALTHCARE/PLANS3. WP - 12/20/93
�COST CONTAINMENT: The Cooper plan attempts to control costs through limited
insurance market reform, voluntary pooling of high-risk groups, and caps on
spending for public programs.
Health Plan Purchasing Cooperatives (HPPCs) would be established by the states and
would organize individuals and small group purchasers into risk pools. Participation
in the HPPCs would be completely voluntary.
The plan would create risk-bearing Accountable Health Plans (AHPs), which would
combine the functions of insurance companies and health care providers. These
AHPs would be prohibited from excluding individuals with pre-existing conditions,
from setting premiums based on health status, or establishing premium rates on a
person-by-person basis (medical underwriting). The AHPs would compete within the
HPPCs to provide a defined benefits package at a competitive price.
The National Health Board would set standards for reporting prices, health outcomes
and measures of consumer satisfaction, and only plans that met these standards would
be certified as AHPs. This information would be used by consumers to make costand quality-conscious decisions about their choice of health care plan.
The Cooper plan would modify the tax code in several ways. First, it would allow
business deductions only for board-certified AHPs, not other health plans. Second,
tax deductibility would be limited to the cost of the least expensive AHP in the region.
Analysis:
Voluntary alliances only have limited ability to force price competition and
control costs. Mandatory participation in health alliances gives the alliances the
ability to force price competition among health care plans, because insurers cannot
offer health insurance to individuals outside of the alliance With voluntary health
alliances, such as those in the Cooper plan, insurers do not have to provide insurance
through the alliances in order to be profitable. While the voluntary alliances will
allow bad risks to join into large groups that have some bargaining power, they do
not force aggressive price competition among insurers
Because the alliances are voluntary, the sick remain vulnerable to high costs
under the Cooper plan. Insurance companies will be able to offer attractive prices
outside of the alliances to healthy groups, who will therefore choose to remain
outside of the alliances. The alliances will be filled with individuals who are bad
health risks and who will require more costly care The premiums charged within the
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
�alliances will likely be significantly higher than the premiums charged outside the
alliances. There is no guarantee that the prices offered within the alliance will be
affordable.
Because the Cooper plan has voluntary health alliances and no accountability
for premium cost increases, it lacks the competitive pressures necessary to
discourage cost shifting to the privately insured. The cap on public program
spending, in the absence of other cost-containment measures on the private spending
side, would encourage the same cost-shifting that occurs in the health care market
today.
Without universal coverage, the privately insured are going to continue to pick
up the costs incurred by the uninsured.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
�GRAMM-MCCAIN
THE COMPREHENSIVE FAMILY HEALTH ACCESS AND SAVINGS
ACT
KEY POINTS
1
The Gramm-McCain bill makes no promise of universal coverage and, furthermore, it
leaves the current insurance system and its abuses in place. It allows insurers to
continue to price sick people out of the market (experience rating) — leaving millions of
Americans, especially those who need it most, unable to afford health insurance.
2.
The Gramm-McCain bill would like all Americans to only have catastrophic health
coverage. That means this plan actually tries to discourage the use of plans with
comprehensive benefits packages.
DESCRIPTION
COVERAGE:
•
The Gramm-McCain bill offers no provision for universal coverage and
no guarantee that coverage cannot be taken away.
The Gramm-McCain bill requires employers who currently provide health insurance
to offer their employees - but not to contribute to - the following options: a
Medisave account; enrollment in an HMO, and the option to continue their current
insurance coverage.
Analysis:
•
The Gramm-McCain bill makes no promise of universal coverage and, furthermore, it
leaves the current insurance system and its abuses in place It allows insurers to
continue to price sick people out of the market (experience rating) - leaving millions
of Americans, especially those who need it most, unable to afford health insurance
FINANCING: The Gramm-McCain bill leaves the current system essentially unchanged,
although it does create "Medisave" accounts, much like IRAs, with tax-favored
status.
DOES THIS BILL HAVE MEDICARE AND MEDICAID SAVINGS???
•
The self-employed and the uninsured would be allowed to exclude from their income
the percentage of medical insurance costs equal to the national average of employer
contributions to health care coverage.
I/DAT A/HE ALTHCARE/PLANS3.WP -- 12/20/93
10
�Analysis:
•
Because the Gramm-McCain bill does little in the way of changing the current health
care system, it does not need to come up with extensive ways tofinanceitself. We
believe, however, that the status quo is unacceptable.
BENEFITS: The Gramm-McCain bill would like all Americans to only have catastrophic
health coverage. That means this plan actually tries to discourage the use of
plans with comprehensive benefits packages.
•
The bill would eliminate state requirements for minimum insurance benefits in order
to create a market for health insurance that would only cover catastrophic
medical expenses. Tax incentives and government assistance would encourage the
purchase of such plans.
Analysis:
•
By encouraging the purchase of only catastrophic coverage, the Gramm-McCain bill
creates incentives for people to wait until they have costly, serious conditions before
they seek out care — which often means more expensive treatment than if they had
sought care in the early stages of their illnesses.
•
The plan has no quality standards, and, in fact, it eliminates basic protections for
insurance plans and provides no information to consumers on the quality of plans or
the effectiveness of treatments.
COST CONTAINMENT: The Gramm-McCain bill seeks to contain costs by encouraging
consumers to assume as much ofthe cost of their care as possible.
•
Under the plan, individuals would pay for routine care and deductibles out of their
Medisave accounts, and would only use their insurance for serious or costly care. All
Medisave funds not used for routine treatment could be retained by the individual for
future medical expenses, creating incentives to limit health care spending.
•
Under the Gramm-McCain bill, health insurance companies would be prohibited from
excluding from coverage individuals with pre-existing conditions, but insurers would
be allowed to charge these individuals higher rates. There would be no limit on how
much higher these charges could be, but Federal subsidies would be available for
some people if the cost exceeded a certain percent of family income.
•
The bill would allow insurance discounts to be available to individuals who engage in
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
11
�activities determined to constitute a "healthy lifestyle." Federal assistance would be
reduced for individuals who engage in "unhealthy" activities.
Analysis:
The Gramm-McCain proposal does not encourage competition among
providers. By allowing the current system to remain essentially unchanged, many of
the cost-increasing components of the current system, such as lack of price
competition, will continue into the future.
How would they monitor healthy and unhealthy practices in order to determine
Federal assistance?
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
12
�MICHEL
THE AFFORDABLE HEALTH CARE NOW BILL
KEY POINT
1
The focus of the bill is on enhancing access to coverage, but not on ensuring that
coverage will be available and affordable. Many individuals will continue to be priced
out of the market under this proposal.
DESCRIPTION
COVERAGE:
•
The Michel bill does not provide universal coverage, nor does it
guarantee that coverage will not be taken away.
The Michel bill requires employers to offer their employees ~ but not to pay for - at
least one catastrophic insurance plan, one standard benefits insurance plan, and one
tax-free medical savings account. Insurance companies that sell to small employers
would be required to offer both a catastrophic plan and a standard plan.
Analysis:
•
The focus of the bill is on enhancing access to coverage, but not on ensuring that
coverage will be available and affordable Many individuals will continue to be priced
out of the market under this proposal.
FINANCING: The Michel bill is financed primarily through savings in public programs.
•
Employers would face the same tax treatment for contributions to employee health
insurance as they do under current law The self-employed would be able to deduct
100 percent of health insurance costs for catastrophic health coverage, as opposed to
the 25 percent that they are currently able to deduct.
•
Medical savings accounts would be tax-free and would have a maximum contribution
level of $2,500.
Analysis:
•
The financing mechanism for the Michel plan is limited, because the achievements of
the Michel plan are limited. The plan does not move far from the current system in its
accomplishments.
BENEFITS: The Michel proposal does not provide the security of a comprehensive
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
13
�package of benefits. Employees will be able to choose among catastrophic and
standard coverage, if they choose to purchase health insurance.
Benefits targets (actuarial targets) would be established by the National Association
of Insurance Commissions (NAIC). Small companies (from 2 to 50 employees)
would have the flexibility to offer a smaller of different benefits package than the one
set by the NAIC.
Analysis:
•
The proposal perpetuates the discrimination against employees of small businesses
that occurs in the current health care system. Employees in small businesses could
not be guaranteed access to the same benefits package available to all employees in
businesses with more than 50 employees.
•
The plan creates a two-tiered health care system in which the wealthy can purchase
a standard benefits package, while many of the poor will likely have to opt for
catastrophic coverage and high out-of-pocket expenditures, if they can afford to
purchase coverage at all. Catastrophic coverage discourages the use of cost-effective
preventive care, and encourages individuals to wait until their illnesses are severe and
costly to treat before they seek care.
COST CONTAINMENT: The Michel bill attempts to control costs by encouraging
competition among health plans and limiting premium costs for small
businesses.
•
The Michel plan would allow regional purchasing cooperatives to be formed, but
would not require anyone to join the cooperatives.
•
The plan would limit variation in premiums for small businesses
•
The proposal would limit higher insurance rates for individuals with pre-existing
conditions, but would not eliminate pre-existing condition exclusions completely.
Analysis:
Voluntary alliances only have limited ability to force price competition and
control costs. Mandatory participation in health alliances gives the alliances the
ability to force price competition among health care plans, because insurers cannot
offer health insurance to individuals outside of the alliance. With voluntary health
alliances, such as those in the Michel plan, insurers do not have to provide insurance
through the alliances in order to be profitable While the voluntary alliances will
I/DATA/HEALT11CARE/PLANS3.WP - 12/20/93
14
�allow bad risks to join into large groups that have some bargaining power, they do
not force aggressive price competition among insurers.
Because the alliances are voluntary, the sick remain vulnerable to high costs
under the Michel plan. Insurance companies will be able to offer attractive prices
outside of the alliances to healthy groups, who will therefore choose to remain
outside of the alliances. The alliances will be filled with individuals who are bad
health risks and who will require more costly care. The premiums charged within the
alliances will likely be significantly higher than the premiums charged outside the
alliances. There is no guarantee that the prices offered within the alliance will be
affordable.
Because the Michel plan has voluntary health alliances and no accountability
for premium cost increases, it lacks the competitive pressures necessary to
discourage cost shifting to the privately insured. The cap on public program
spending, in the absence of other cost-containment measures on the private spending
side, would encourage the same cost-shifting that occurs in the health care market
today.
I/DATA/HEALTHCARE/PLANS3.WP -- 12/20/93
15
�MCDERMOTTAVELLSTONE/STARK
NATIONAL HEALTH INSURANCE
KEY POINT
1
This system ignores the potential for competition to control costs, and actually eliminates
many of the competitive forces that exist in today's health care system.
DESCRIPTION
COVERAGE:
National health insurance proposals provide guaranteed universal
coverage for all Americans.
•
The government would take full responsibility as the sole purchaser of a
comprehensive package of health care services for all legal residents.
•
The plan would be administered by states as a fee-for-service program. States would
also have the option of enrolling their residents in health service organizations
(capitated managed care) that meet Federal requirements.
Analysis:
•
We are completely in favor of providing universal coverage that cannot be taken
away.
FINANCING: National health insurance would require about $500 billion in new taxes.
The plan would be funded through increased taxes on individuals and
businesses, including payroll taxes and income taxes.
•
A trust fund would be established by combining new taxes with fundsfromexisting
Federal programs (except the Indian Health Service and the Veterans Administration)
Analysis:
•
Single payer proposals rely on a government system of financing and direct
government control of costs. Many worry about the feasibility of putting one-seventh
of America's GDP under government control. Others question the political
practicability of raising half a trillion dollars in new taxes on individuals, employers
and providers.
BENEFITS: A comprehensive set of benefits would be provided to all Americans.
Analysis:
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
16
�•
We are completely in favor of offering a comprehensive benefits package to all
Americans.
COST-CONTAINMENT: This plan controls costs by setting fee schedules for physicians
and other health care providers.
Analysis:
Under this approach, providers, faced with lower prices but who are still getting paid
for each service, have incentives to increase the volume of services that they provide.
Experience in other countries has shown that such payment systems increase
utilization of services, -and therefore increase national health care expenditures.
This system ignores the potential for competition to control costs, and actually
eliminates many of the competitive forces that exist in today's health care system.
Under this system, prices can no longerfluctuateamong providers — even if
differences in quality of care merit such distinctions.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
17
�NICKLES
KEY POINTS
1
The Nickles plan lacks any mechanism to increase price competition among providers.
2.
While it requires individuals to purchase health insurance, the Nickles plan makes no
guarantee that the insurance available to them will be affordable. The plan encourages
insurers to continue to price the sick out of the market.
DESCRIPTION
COVERAGE:
•
The Nickles bill has an individual mandate to purchase health insurance.
Individuals (except for those on Medicaid and Medicare) would be required to
purchase their own health insurance policies, with assistance from Federal tax credits.
Analysis:
•
Even if this plan is able to achieve universal coverage, the individual mandate will
cause major disruption to the way that health insurance is currently provided in this
country. Most people who are currently insured are insured through their employers
and would have to face major changes in this provision of coverage under the Nickles
plan.
FINANCING: The government wouldfinancetax credits through $133 billion in Medicare
and Medicaid cuts over 5 years and through increased income tax revenue
received because employer premiums, which are currently tax-free to
employees, will be converted into taxable wages.
•
Under the Nickles bill, employees would have to pay for their own insurance with
after-tax dollars, although they would be able to deduct 25 percent of the total cost of
premiums and unreimbursed medical expenditures from their income taxes.
Individuals with exceptionally high expenses could receive a tax credit of up to as
much as 75 percent of the portion of premium and unreimbursed medical expenses
that was in excess of a fifth of their income.
•
Employers who provided health insurance to their workers prior to reform would be
required to give employees a raise equal to the previous cost of their health insurance,
which would then be considered taxable income.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
18
�Analysis:
•
Under the Nickles plan, individuals who currently receive health insurance
through their employers would have to pay more for the same benefits. By
limiting the excludability of health insurance contributions from taxable income,
individuals have to pay for their own premiums with after-tax dollars, which means
that if they want to purchase the same health insurance that they currently have, they
will have to pay more for what they are getting now.
•
Employers who currently offer a choice of health insurance to their employees and
pay for the full amount of that insurance, regardless of how costly a plan an employee
chooses, will be forced to raise the salaries of some employees more than others, even
if all other factors concerning the employees are equal. This could cause major
conflicts in the workplace, and limits employers' flexibility to set the wages of their
own workers.
BENEFITS: At minimum, health plans would have to cover all medically necessary acute
care services, prescription drugs, plus a catastrophic protection feature that
would limit co-payments and deductibles for items covered in the plan to $5,000
a year.
•
The minimum plans would not include mental health, alcohol and drug abuse, or
dental benefits.
•
Individuals could choose more expensive plans with more benefits than the minimum
plans, but they would have to face the full additional cost of those plans.
Analysis:
•
The Nickles plan does not define a specific definition of "medically necessary acute
services " It asks Congress to pass a bill that does not define what kind of coverage
Americans will have under reform.
•
The Nickles plan does not provide enough information for individuals to make
informed decisions about their choice of health care plans. It does not require quality
and outcomes data to be reported so that individuals can make cost-effective, qualityconscious choices.
COST-CONTAINMENT: The Nickles plan attempts to control costs through limited
insurance market reform and increased cost-sensitivity on the part of
consumers.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
19
�Under the Nickles plan, individuals would choose from an array of health plans, which
would be marketed through labor unions, health buying cooperatives, civic groups, or
employers.
Insurers would be forbidden from excluding pre-existing conditions from coverage
and would have to guarantee renewal of coverage.
Analysis:
The Nickles plan lacks any mechanism to increase price competition among providers,
because insurers will be able to sell their plans through a variety of different sources.
Insurers will be continue to be able to sell to groups at different prices through
different sources.
While it requires individuals to purchase health insurance, it makes no guarantee that
the insurance available to them will be affordable. The plan encourages insurers to
continue to seek out the best health risks and to try to avoid insuring the bad risks.
I/DATA/HEALTHCARE/PLANS3.WP - 12/20/93
20
�
Dublin Core
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Title
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Health Care Task Force Records
Creator
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White House Health Care Task Force
Is Part Of
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<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
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2006-0885-F
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Paper
Dublin Core
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[Health Care Economic Binder] [2]
Creator
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
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2006-0885-F Segment 5
Is Part Of
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Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621374" target="_blank">National Archives Catalog Description</a>
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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Preservation-Reproduction-Reference
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5/7/2015
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17621374
12093636
42-t-12093636-20060885F-Seg5-007-002-2015
-
https://clinton.presidentiallibraries.us/files/original/24162a817501cff60f033c46f1d5a219.pdf
96d16dfb563e8154a741dadf9f68638d
PDF Text
Text
FOIA Number: 2006-0885-F.
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Alice Dunscomb
Subseries:
OA/ID Number:
3313
FolderlD:
Folder Title:
[Health Care Economic Binder] [1]
Stack:
Row:
Section:
Shelf:
Position:
s
52
7
7
3
�January 4, 1994
M E M O R A N D U M FOR D I S T R I B U T I O N
FROM:
HEALTH CARE ECONOMIC TEAM
SUBJECT:
Health Care Economic Binder
The purpose of this binder is to provide you with substantive information on the
financing ofthe health care plan. I t is intended to be used as both a reference and a
resource when writing speeches, preparing for congressional testimony, responding
to the press, etc.
Each chapter is devoted to a different topic relating to the financing ofthe plan, and
contains one page of talking points in addition to the substantive and financial
follow-up. Relevant articles are included in the back of each chapter.
The question and answer section may very well be the most useful, containing the
most commonly asked financial questions.
It is our hope that this binder will contain the latest numbers, charts, graphs,
questions and answers, etc. so that all Administration representatives will be
responding in the same way. We expect to provide you with regular updates and
additions as numbers change or new issues need to be addressed. Similarly, new
questions and answers will be distributed from time to time in response to recent
media reports or changing policies.
If you have any questions, please contact Meeghan Prunty in the Delivery Room at
456-2566 or Kim O'Neill at CEA at 456-4730.
�Distribution:
Treasury:
Secretary Lloyd Bentsen
Deputy Secretary Roger Altman
Assistant Secretary Alicia Munnell
Marina Weiss
HHS:
Secretary Donna Shalala
Judy Feder
Ken Thorpe
Labor:
Secretary Robert Reich
Deputy Secretary Larry Katz
CommerceSecretary Ronald Brown
OMRDirector Leon Panetta
Deputy Director Alice Rivlin
Nancy-Ann M i n
CEA:
Director Laura Tyson
Alan Blinder
Joseph Stiglitz
David Cutler
SBA:
Administrator Erskine Bowles
White House:
Ira Magaziner
Robert Rubin
Maggie Williams
Carol Rasco
Bob Boorstin
JeffEller
�-1 C4 ( L / J I C
V/J.
Contents
�HEALTH CARE ECONOMIC NOTEBOOK
DETAILED TABLE OF CONTENTS
I.
Financing
A.
Talking points
B.
Financing -- overview
C.
Charts
1.
Sources and uses -- bar chart
2.
Sources and uses -- line by line breakdown
3.
Cost of premium discounts
D.
Lewin-VHI analysis ofHealth Security Act: selected excerpts
E.
"A Billion Here, A Billion There," Uwe Reinhardt, New York
Times. 10/18/93
II.
Process / Cost Estimates / Validation
A.
Talking points
B.
Cost estimates: A thorough process, a conservative result
C.
Statement by Ira Magaziner on actuarial validation (10/8/93)
D.
Quotes from experts
E.
Letter from Cost Audit Group to Ira Magaziner
F.
Medicare cost projection comparisons: exaggerated and
inaccurate
G.
Articles
1.
"It Will Balance Just Fine" Ted Marmor and Jerry
Hashaw, LA. Times. 10/7/93
2.
"Actuaries Defend Process, Assumptions Used in Review of
Clinton Health Plan," Rick Wartzman, Wall Street
Journal. 10/12/93
3.
"Clinton's Conservative Health Plan", Alice Rivlin. Wall
Street Journal. 10/20/93
4.
"A Billion Here, A Billion There," Uwe Reinhardt, New
York Times. 10/18/93
III.
Discounts
A.
Talking points
B.
Discount estimates: summary
IV.
Premium Distribution
A.
Who pays less? Who pays more?
B.
Health care premiums
C.
Who pays for health insurance under reform?
D.
Treatment of early retirees
i/dala/healthcare/book-toc job
12/6/93
�V.
Savings from Competition
A.
Talking points
B.
Savings from managed competition
C.
Universal care provides, savings
D.
Premium caps: backup cost control measure
E.
Controlling costs: examples that work today
F.
Savings due to preventive care: case studies
G.
Premium caps: Q&A
H.
"Clinton's Cost Controls Can Work" [Washington Post. 11/7/93]
VI.
Medicare
A.
Talking points
B.
Medicare under health reform -- overview
C.
Chart -- Medicare savings under health care reform
D.
Medicare savings proposals for health reform
VII.
Medicaid
A.
Talking points
B.
Medicaid under health reform -- overview
C.
Alliance coverage of Medicaid recipients
D.
Medicaid savings under reform
E.
Vladeck testimony
VIII. Small Business
A.
Talking points
B.
Small business and health care -- overview
C.
Small business and health care: the problem
D.
Articles
1.
"Small Firms Get Break in Health Plan Fine-Tuning,"
Peter G. Gosseim and Richard A. Knox, Boston Globe.
10/27/93
2.
"Health Care Plan Grows on Small Firms" Beth Benton.
USA Today. 10/19/93
3.
"Small Business Gives Health Plan Second Look", Steve
Pearlstein, Washington Post. 10/10/93
4.
"Small Companies Misunderstand Clinton Health Plan:
Even Those Who Would Benefit the Most Have Doubts
About Proposal," Rick Wartzman, The Wall Journal.
9/24/93
5.
"Clinton Health Plan Will Help, Not Hurt, Small
Business," Thomas Oliphant, Boston Globe. 9/13/93
i/data/healthcare/book-toc.job
12/6/93
�6.
7.
8.
IX.
Jobs
A.
B.
C.
D.
E.
F.
G.
H.
"Small Business Sees Burdens Getting Lighter," Udayan
Gupta and Jeanne Saddler, The Wall Street Journal.
9/13/93
"Too Soon to Panic: The Small Business Lobby Says
Clinton's Mandatory Plan Will Kill Off Jobs. But Mom
and Pop May End Up Breathing Easier," Newsweek.
8/30/93
"Small Firms' Stake in Health Reform" Nation's
Business, November 1993
Talking points
Jobs -- overview
What is the minimum wage effect of health care reform?
Do most firms offer insurance?
EBRI study
EPI study -- summary
Summary of articles
Articles
1.
"Reform Will Cost - and Create - Jobs," Kathleen Day.
Washington Post. 5/93/93
2.
"Fear of Losing Aid Chains Some to Jobs," Michael
Clements, USA Today. ?
3.
"Study Backs Health Plan on Job Creation" Anne Veigle.
Washington Times. 11/5/93
4.
"Boosting Workers' Security," Paul Starr, LA. Times.
10/8/93
X.
Alternative Health Care Reform Proposals
A.
Talking points
B.
Chafee
C.
Cooper
D.
Gramm-McCain
E.
Michel
F.
McDermott/Wellstone/Stark
G.
Nickels
XI.
Economic Effects of Health Reform
A.
Economic effects: overview
B.
Economic effects of health reform (Reich & Tyson)
C.
Tyson testimony
D.
"Boosting Workers' Security " Paul Starr, LA. Times. 10/8/93
XII.
The Problem / Cost of Doing Nothing
i/data/healthcare/book-toc.job
12/6/93
�A.
B.
C.
D.
Talking points
The costs of failing to reform health care: overview
Tyson testimony
Charts
1.
"Workers Losing Wages to Rising Health Costs"
2.
"More Americans Lack Health Security"
3.
Alternate Deficits 1993-2000 (Chart and Table)
X I I I . Questions and Answers
i/datt/healthcare/book-toc.job
12/6/93
��FINANCING HEALTH SECURITY
CONTENTS
Page
Talking Points
1
Overview
I.
II.
III.
IV.
2
V.
VI.
VII.
Only Detailed Health Reform Proposal
Builds on Today's Private Sector System
Independent Validation
Uses of Funds ($351 billion)
1.
Premium Discounts ($161 billion)
2.
Medicare Drug Benefit ($66 billion)
3.
Long-Term Care ($62 billion)
4.
Self-Employed Tax Deduction ($10 billion)
5.
Public Health/Administration ($53 billion)
Deficit Reduction ($58 billion)
Sources of Funds ($409 billion)
1.
Medicare Savings ($124 billion)
2.
Medicaid Savings ($65 billion)
3.
Tobacco Tax and Corporate Assessment ($89 billion)
4.
Federal Programs Savings ($40 billion)
5.
Increased Federal Revenues ($86 billion)
6.
Reductions in Debt Service ($4 billion)
Financial Protections
15% Discount Cushion
Entitlement Caps on Discounts
Premium Caps
Sources and Uses -- Bar Chart
11
Sources and Uses - Line by Line Breakdown
12
Cost of Premium Discounts - Bar Chart
1i
Excerpts from Lewin-VHI Analysis of Health Security Act
1"
>
Uwe Reinhardt, "A Billion Here, A Billion There: Clinton's Spending
Cuts Will Work," New York Times. 10/18/93
Mi
�FINANCING HEALTH SECURITY
TALKING POINTS
iVO OTHER PLAN HAS PROVIDED THIS LEVEL OF FINANCIAL DETAIL:
•
We have provided more specifics about our financing ~ exactly how much the
program will cost, where the funds will come from, and how these funds will
be spent than any other proposal and have released extensive
documentation detailing how premiums and discounts were estimated,
exactly where we expect to get savings, the methodology behind predicting
the federal revenues and the anticipated distributional effects of the proposal.
No other plan out there has come anywhere close to this level of detail.
INDEPENDENT FIRM VALIDATED FINANCING:
•
An independent analysis of the Health Security Act conducted by the Lewin
VHI health care consulting firm confirmed that "the plan's financing
structure works: it meets the President's requirement of providing universal
coverage, and it does so without relying on an increase in broad-based income
taxes."
FINANCING BUILDS ON CURRENT PRIVATE SECTOR SYSTEM:
•
Today, nine out of ten Americans with private insurance get it through their
employer. It's a system that works for the vast majority of Americans. That's
why the President rejected any kind of broad-based tax to pay for a
government-run system -- deciding instead to leave our health care system
rooted in the private sector. In fact, two-thirds ofthe total costs of health
reform coming from the private sector - businesses and households - just as
it does today. [CHECK - KEN THORPE]
•
The Health Security Act asks those employers and individuals who aren't
paying to take responsibility and pay their fair share. This will lower costs
for the vast majority of companies and individuals who will no longer see
their premiums rise to pay for free care for people without insurance.
ADDITIONAL FUNDS COME FROM SIN TAXES I FEDERAL SAVINGS:
•
Some additional funding is needed to protect small businesses, provide longterm care and prescription drug coverage to older Americans, and ensure that
no American can ever lose their health coverage. The Health Security Act
includes a cigarette tax and corporate assessment, and savings from slowing
the growth of the cost of federal health care programs.
�FINANCING HEALTH SECURITY
OVERVIEW
SUMMARY:
I.
The Health Security Act is the only comprehensive health reform
plan which spells out exactly what benefits will be provided and
how this reform will be financed, without raising taxes on all
Americans.
Financing for the President's proposal builds on the
current system with two-thirds ofthe total costs of health reform
coming from the private sector - businesses and households - just
as it does today. [CHECK - KEN THORPE]
• The process used to arrive at the financing numbers was rigorous
and has been validated by many independent sources.
• The federal costs for the proposal are identifiable and clear -with significant deficit reduction in the first five years alone.
• The sources of federal funding are specific and scorable.
• Mos£ importantly, the Health Security Act contains strong
financial protections to ensure accountability and fiscal
responsibility and guarantee that projected savings are locked
in.
NO OTHER PLAN PROVIDES
THIS LEVEL OF FINANCIAL
DETAIL
The President has provided more specifics about the plan's financing -exactly how much the program will cost, where the funds will come from, and
how these funds will be spent -- than any other proposal. I n fact, the Health
Security Act is the only comprehensive health reform plan which spells out
exactly which benefits will be provided, with the exception of the single payer
proposals. We have released extensive documentation detailing how
premiums and discounts were estimated, exactly where we expect to get
savings, the methodology behind predicting the federal revenues and the
anticipated distributional effects of the proposal. No other plan out there ha.*
come anywhere close to this level of detail. [CHECK -- CHRISTINE]
//.
B UILDS ON TODAY'S PRIVATE SECTOR
SYSTEM:
The Health Security Act builds on our current private health care system
According to the March 1992 Census Survey, nine out of ten Americans who
are privately insured today get their insurance through their employers •this will continue. But now every employer and individual will be asked to
take responsibility. Firms that now cover their employees health insurance
�will no longer be penalized in a system where their competitors can choose to
cut costs by not providing insurance. And all individuals will now have to
take responsibility for their share of insurance as well. By providing
discounts to small businesses and low-wage workers, the Health Security Act
will enable millions of Americans to contribute toward their comprehensive,
affordable insurance coverage. I n fact, under reform, over 76% of health
insurance premiums ~ and two thirds of total funding ~ comes from these
private sources and remains in the private sector. [CHECK ~ KEN THORPE]
///.
EXPERTS
VALIDATE OUR PROCESS
OF ESTIMATING
COSTS:
The health care financing analysis undertaken by the administration has
been rigorous, drawing on the best analytical talent from inside and outside
the federal government. Our methodology was supervised and validated by a
team of prominent, private sector actuaries from firms such as Coopers &
Lybrand, Towers Perrin, and Price Waterhouse. These actuaries gave said
our cost estimates are the "best possible" and pass a "real world test."
Although they may disagree about individual policies, many independent
economists and health economists agree that our process was thorough and
our estimates are both credible and conservative.
An independent analysis of the Health Security Act conducted by the Lewin
V H I health care consulting firm and authored by a former top Reagan
administration official ~ confirmed that "theplan's financing structure works
it meets the President's requirement of providing universal coverage, and it
does so without relying on an increase in broad-based income taxes." The
study further concluded that the President's plan is conservative enough to
pay for the discounts for small businesses and individuals within the
entitlement cap and still have $8 billion to spare. As John Lewin said: "If the
question is whether they can finance this program with the revenues they will
get under their plan, the answer is yes, and they will still end up with $25
billion for budgetary deficit reduction." [Washington Post, 12/9/93]
TV.
USES OF FUNDS - Federal
1.
Premium Discounts
$161
Billion
Costs are Identifiable
for Small Businesses
and
and
Clear:
Families:
Discounts on the cost of insurance will be provided to three groups
who may not be able to assume full responsibility for their share of
their insurance premiums: 1) small businesses; 2) low-income
�individuals and families; and 3) people who have lost their jobs. The
costs of providing these discounts are approximately $117 billion over
five years. I n addition, there is a 15% discount "cushion" -- $44 billion
over 5 years - as a reserve built into the discount structure for
behavioral changes that could result in an additional demand for
discounts.
Net Discounts ($161 B) = Gross Discounts ($349 B) - Offsets ($188 B)
Gross discounts -- the amount of discounts that are actually
distributed to small businesses and low income families - are offset by
money saved by the federal government ($113 billion) and state/local
governments ($75 billion) when people who used to be on Medicare and
Medicaid now are in the alliances. The total net cost to the
government is $161 billion.
2.
Medicare Drug
$66 Billion
Benefit:
The savings in the Medicare program will be reinvested in new
benefits for seniors. For $11 a month, Americans eligible for Medicare
will automatically receive prescription drug coverage -- with standard
25% Part B premium payments and a $250 deductible. A $1,000
annual cap will be placed on out-of-pocket prescription drug costs, with
all costs above this amount fully covered.
3.
Long-Term
Care:
$62 Billion
Americans of all ages who are disabled will gain access to a wider
variety of home and community-based support services, making it
possible for some people to continue to live at home rather than in
nursing homes. There are three components to the long-term care
benefit:
(i)
the home and community-based program ($57 billion);
(ii) the liberalized eligibility for nursing home care under Medicaid
($3 billion); and
(iii) the tax incentives towards the purchase of long-term care
insurance ($3 billion).
�4.
Self-Employed
$20 billion
Tax
Deduction:
Today, the self-employed are discriminated against because they can
only deduct 25% of their health premiums from their taxes, rather
than 100% as all other businesses do. Eliminating this bias against
the self-employed ~ by giving a 100% tax deduction for their
comprehensive benefits ~ will encourage the formation of small
businesses.
5.
Public
Health/Administration:
$53 billion
New public health spending on programs for children and for research
and development are also included in the Health Security Act. New
funds ($3 billion) for the Women, Infants and Children (WIC) program
will enable more people to benefit from the key role WIC plays in
health promotion by providing nutritional supplements to pregnant
women and young children. This component also includes an
additional $21.5 billion in funds to academic health centers for
research and development, $15 billion of other public health
initiatives, an additional $3 billion dollars fro veterans' health
programs, and $7 billion in administrative costs.
NEW F E D E R A L S P E N D I N G T O T A L S $351 B I L L I O N
V.
SIGNIFICANT
SHORT- AND LONG-TERM
DEFICIT
REDUCTION.
Over the long term, experts acknowledge that comprehensive health reform
that provides the universal access needed to control health care costs is the
single best hope for reducing the structural deficit.
The Health Security Act will reduce the deficit by $58 billion by the year 2000
�VI.
SOURCES
1.
OF FUNDS • Specific
and
Scorable:
Medicare
Savings:
$124
Billion
Every Democratic and Republican proposal recognizes that national
health care reform can save money in the rate of growth i n Medicare
and Medicaid. But only the Health Security Act reinvests these funds
in new prescription drug and long-term care benefits for seniors and
combines Medicare savings with reductions in the growth of private
sector spending so Medicare savings don't continue to simply be shifted
to the private sector. In the long run, health reform represents the
most economically and politically viable way to change the nature of
our entitlement system and control skyrocketing entitlement costs.
The Health Security Act represents a new social compact with older
Americans. Our plan will provide more health security - and two new
benefits - to older Americans while bringing down the cost of their
health care and the cost of the system as a whole.
The Medicare program remains intact under the President's plan, with
minor modifications and slower rates in the growth of spending. The
plan identifies $124 billion in specific, scorable, line-by-line savings,
which are outlined in the Medicare section of this document. Medicare
will no longer have to reimburse doctors and hospitals for the cost of
caring for the uninsured, saving billions of dollars per year. With all
employers contributing to health care, Medicare will also save on
workers now covered by those programs. Upper-income people will pay
a larger share of their Medicare Part B premium, and there will be a
crackdown on the fraud and overcharges that drive up Medicare costs.
These reforms will lower the growth of Medicare costs from three to
two times the rate of inflation, and the savings will be rechannelled
into the new benefits for older Americans.
2.
Medicaid
Savings:
$65 Billion
All credible health reform proposals recognize that with health reform.
Medicaid - the federal health care program for low-income Americans •
- can be reduced and the savings used to provide comprehensive health
care to Medicaid recipients under the new system. Under refonn, the
Medicaid program will be scaled back and savings will be achieved
There are two categories of savings:
�(i)
Disproportionate Share (or DSH) Payments - once all Americans
have insurance, the federal government can reduce the payments
it makes to providers who today provide a disproportionate
amount offreeservices to the uninsured ($55 billion);
(ii) Smaller Medicaid Population - many current Medicaid
beneficiaries will be integrated into alliance plans. For example,
many children with working parents who are now covered under
Medicaid would be covered through the alliance system and paid
for through employer payments ($22 billion).
In addition, future Medicaid spending will grow at a slower rate of
increase, along with the rest of the health care system.
These savings ($77 billion) are offset by three categories of new
expenses: (a) additional spending for Medicaid "wrap-around services"
~ such as transportation ~ that will continue to be provided to disabled
children ($6 billion); (b) additional expenses for administration ($2
billion); and (c) additional funds for hospitals serving "vulnerable
populations", such as undocumented persons ($4 billion).
3.
Tobacco Tax and Corporate
$89 Billion
Assessment:
The plan will raise taxes on tobacco, asking people whose health costs
are higher to pay more for products that are health hazards. The
tobacco tax rises by $.75 per pack to $.99 per pack, raising $65 billion
over 5 years.
The Health Security Act also asks those large self-insured corporations
who establish their own alliances to help pay for health care for
everyone. The corporate assessment is 1 percent of payroll, raising $'24
billion.
4.
Federal Programs
$40 Billion
Savings:
The plan will lower the federal government's cost of providing health
care for federal workers by integrating them into the alliance
structure. By purchasing health care in the private sector, the
government will be guaranteed the same low rate of cost increase ax
private businesses. The savings are from several sources: Veterans
($16 billion); Department of Defense ($3 billion); Federal Employees
Health Benefits ($13 billion); and Public Health Savings ($8 billion •
�5.
Increased Federal
$86 Billion
Revenues:
The Health Security Act will raise an additional $86 billion in federal
revenues without raising any new taxes, although there will be some
changes in tax deductibility outside of the comprehensive benefits
package. There are several components to these savings. For
example, under reform, many employers who now provide insurance
for their workers will experience immediate reductions in their health
care burden. As a start, premiums under reform will be 10.5 percent
lower than they are now because, with universal coverage, firms that
insure their workers will no longer be overcharged to cover the costs of
those who are uninsured but still receive care. The new incentives
toward greater competition and more cost consciousness on the part of
both consumers and providers will continue to lower health insurance
costs over time. As employers' health care costs - which are currently
tax-preferred - go down, more employer funds can be channeled into
taxable avenues such as increased wages for existing workers and new
hires, increased profits, greater shareholder dividends, etc. This is
expected to raise $23 billion.
This category also includes several other components, such as:
increased revenue from removing health insurance from currently tax
preferred "cafeteria plans" ~ mechanisms used by employers today to
allow their employees to select from a variety of benefits on which to
spend their pre-tax dollars ($30 billion); other tax changes largely
affecting the self-employed ($2 billion); and contributions made by
businesses for health coverage for their early retirees ($11 billion >
6.
Reductions
$4 Billion
in Debt
Service:
Lower deficits will lead to savings in federal interest payments.
VII.
RESPONSIBLE,
CONSERVATIVE
FINANCIAL
PROTECTIONS.
Several mechanisms have been included in the plan to ensure accountability
fiscal prudence, and credibility.
8
�15% Discount "Cushion":
We have been conservative in estimating the needed funds for discounts,
basing our estimates on sophisticated models built from very specific
information about factors like family income data, numbers of firms at
certain sizes and wage-rates, etc. However, there are some behavioral
changes, both positive and negative, that are difficult to quantify in a
program of this magnitude - such as creative accounting by businesses to
qualify for additional discounts. For these reasons, the Health Security Act
has a built-in 15% contingency reserve or "cushion" ~ of $44 billion over 5
years - as a safeguard for these unknowns, giving us even greater confidence
in our estimates.
Entitlement Caps on Discounts - Fiscal Accountability:
The plan sets a limit on the amount of discounts that can be spent
automatically. We felt an open-ended entitlement left the federal budget
vulnerable to unpredictable cost increases in the future. The program must
pay for itself, and the costs must be clear and predictable. However, we are
confident we have been conservative in estimating the needed funds for
discounts so that this cap will never be hit. As just one example, we
overestimated the demand for discounts for small businesses and low-income
families in order to be as conservative as possible. Then, we ran
sophisticated models to test how the system would respond to extreme
hypothetical situations. For example, an unexpected 2% increase in
unemployment - with millions more suddenly qualifying for discounts -would require an additional $4 billion a year. The $11 billion annual cushion
has nearly three times the funds necessary for this extreme situation, and
any funds that are not used in one year can be carried over to the next year
so that a contingency reserve will build over time.
If it appears that these caps might be reached, the Secretary of HHS must
notify the President and the Congress immediately. Within 30 days, the
President must submit to Congress a report containing specific legislative
recommendations for actions which would eliminate the shortfall and this
report will be considered under an expedited process. This trigger represents
the President's strong commitment to financial responsibility. It is
important to note that Lewin-VHI confirmed that our financing is
conservative enough to pay for the discounts within the entitlement cap and
still have $8 billion to spare.
�Premium Caps
Backup Cost Control Measure:
We strongly believe that - regardless of how quickly or how firmly
competitive reforms take hold - we need to build some discipline and
certainty into the system. This is essential to assure businesses and
consumers that their health insurance premiums will not be allowed to
continue to spiral out of control year after year, and that the federal
government will not be allowed to increase spending without accountability.
The Health Security plan reinforces the competitive system with a fail-safe
limit on health care premium increases. This targeted, selective limit will be
used only i f the average premium across all plans exceeds the alliance's
premium target. We are confident that these caps will not be hit. I f reached
however, these limits will only apply, however, to those plans in the Alliance
that exceed these targets. Plans and providers that propose excessive rate
increases will face financial penalties which will be used to automatically
"rebate" the portion of the premium which exceeds the alliance's premium
target, based on a formula set in federal law.
[12/20/93; 10:00 a.m., i:\data\healthcare\finance2.mep]
10
�Financing Heaun Care Reform
Totals: 1995- 2000
$ Billions
500
TOTAL REVENUE: $409
400
Debt Service
g~7
Other Revenue
Effects $86
300
200
Federal Programs Savings
$40
TobaccoTax and
Corporate Assessment
$89
0
Deficit Reduction $58
/
/
/
/
/
Medicaid Savings
$65
100
/
/
Medicare Savings
$124
Sources of Funds
TOTAL COST: $351
/
Cushion $44
/
Premium Discounts
$117
SeH-Employed Tax
Deduction $10
/
Medicare Drug Benefits
$66
/
Long-Term Care
$62
/
Public Health/
Administration/
Miscellaneous S53
Use of Funds
/
�30-Nov-93
4:00 P.M.
Financing Health Care Reform
Sources of Funds (billions of dollars)
1995
1996
1997
1998
1999
2000
1995-00
Medicare
Part A Savings
Part B Savings
Parts A and B Savings
HI Tax Extended to all State & Local Government Employees
Income Related SMI Premium with outlay and premium effects
2.5
0.0
2.2
0.3
0.0
0.0
9.9
4.0
2.4
1.6
1.5
0.4
14.4
6.8
2.8
2.3
1.5
0.9
22.8
11.8
5.7
3.0
1.5
0.9
33.0
16.5
9.4
4.6
1.4
1.0
41.7
21.2
12.7
5.4
1.4
1.1
124.3
60.4
35.2
17.2
7.3
4.2
Medicaid
Savings from Capitation of Cash-Eligible Beneficiaries
Reduced Disproportionate Share Hospital Payments
less Offset for Hospitals Serving Vulnerable Populations
Less Wrap-around Benefits (net of offset for 'Cash* Medicaid)
Payment Lag, Administrative Savings, and Other Changes
0.0
0.0
0.0
0.0
0.0
0.0
0.9
0.3
1.4
-0.2
-0.2
-0.5
40
1.2
4.7
-0.4
-0.6
-1.0
10.3
3.9
13.0
-1.0
-1.6
-4.0
22.3
6.7
16.8
-1.0
-1.8
1.6
27.9
10.2
18.6
-1.0
-1.8
1.9
65.3
22.3
54.6
-3.6
-6.0
-2.0
Otier Federal Programs
Veterans Affairs: Third Party Receipts
Defense Department Health (a)
Federal Employees HeaJth Benefits
Public Health Service Savings
0.0
0.0
0.0
0.0
0.0
1.0
0.6
0.1
0.0
0.3
2.8
1.7
0.2
0.0
0.9
10.1
4.3
0.7
3.3
1.8
12.2
4.5
0.8
4.5
2.4
13.5
4.7
0.8
5.4
2.6
39.6
15.8
2.6
13.2
8.0
Tobacco Tax/ Corporafe Assessment
Tobacco Tax
Corporate Assessment
12.3
12.3
0.0
14.9
11.1
3.8
15.8
10.9
4.9
15.7
10.6
5.1
15.5
10.3
5.1
15.3
10.1
5.2
89.4
65.3
24.1
Otfier Revenue Eftocts
Exclusion of HeaNh Insurance from Cafeteria Plans
Effects of Mandate, Cost Containment, and Subsidies
Dedicated Revenues for Academic Health Centers
Assessment on Employers for Retiree Subsidies
Anti-Abuse Rule — Certain 8 Corp. Sharehoiders
Modify Tax Treatment of Certain Health Care Orgs.
Reporting Penalties — N a n - c o r p . hid. Contractors
Modify Tax Treatment Ratbement Fundbig Accounts
Racaptuia Rett— Subetdtes Hk&-tncomm Rartpisnts
Incantfcas lor HaaMi Provldafs to Wtartaq? A I M M
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
-0.0
0.6
0.0
-0.1
0.5
0.0
0.2
0.0
0.1
0.0
0.0
-00
8.1
5.0
0.7
1.7
0.0
0.5
0.1
0.1
0.0
0.0
-0.0
19.0
7.7
3.6
4.5
2.4
0.5
0.2
0.1
0.1
0.0
-0.0
27.2
8.3
8.0
5.6
4.4
0.5
0.2
0.1
0.1
0.1
-0.0
31.3
8.9
10.8
5.9
4.7
0.5
0.2
0.1
0.1
0.1
-0.0
86.3
29.9
23.0
18.2
11.4
2.2
0.7
0.5
0.3
0.2
-0.1
0.3
0.6
0.5
0.2
0.5
2.0
4.0
15.1
27.9
45.6
78.0
110.7
131.7
406.9
Fiscal Years
Debt Service
TOTAL
(a) Under th« propoaad l*giaUtloii. Ih« Secretary el Defenee U to decide when the military syatem will be coordinated with national health reform. This table •how* the
estimated budgetary effect* on the Department ol Defense H the military syatem were to be fully coordinated wtlh national health reform by F Y 1990.
�Financing Health Care Reform
Uses of Funds (billions of dollars)
30-NOV-93
1995
1996
1997
1998
1999
2000
1995-0(
Veterans. WIC, Public Hearth, Medicare and New Administration
3.1
6.5
9.6
10.4
11.3
11.7
52.6
Veterans Health Care Investment Fund
WIC Enhancement
New Public Health Initiatives
Net New Spending on Acad. Health Ctrs. and Medical Educ.
Total Spending
L e s s Current Medicare Funding
Advance Practice Nurses (Medicare)
New Federal Administrative and S t a r t - U p Costs
10
00
04
00
59
-5 9
00
1.7
06
05
15
27
6 3
-3.6
0.3
09
1.7
0.6
26
32
68
-36
05
1.1
00
06
33
4.4
80
-36
05
1.6
0.0
0.7
37
55
9.5
-4.0
0.6
08
0.0
0.7
3.8
5.7
9.6
-3.9
0.7
0.9
3.3
3.1
15.3
21.5
46.1
-24.6
2.5
7.0
0.0
5.2
8.8
12 2
16.0
20.1
62.2
00
00
00
00
00
45
69
-24
05
02
78
11.2
-34
05
0.5
11.0
14.7
-37
0.5
07
14.7
187
-4.0
05
0.8
18.7
23.0
-4.3
0.5
0.9
56.7
745
-17.8
2.5
3.0
0.0
6.6
13.5
14 2
15 2
16.2
65.8
0.0
00
82
-1.6
16.3
-2.8
17.5
-3.3
18.7
-3.5
20.0
-3.8
80.8
-15.0
100% Tax Deduction for Self-Employed Health Insurance
0.5
0.6
0.9
1.7
2.9
3.1
9.7
Premium Discounts (Subsldlee)
Premium Discounts (Subsidies) —
0.0
0.0
7.3
5.7
16.4
13.9
46.0
35.6
44.5
31.6
42.8
29.8
161.1
117.1
Total Premium Discounts (Subsidies)
Employers (net of cushion)
Non-retired Households (net of cushion)
Retirees - - l o w income subsidies (net of cushion)
Retirees — added subsidies (net of cushion)
Out-of-Pocket
Total •Cuahion*
0.0
0.0
00
0.0
00
0.0
12 8
3.9
6.0
09
0.0
03
1.6
357
10.9
16.7
26
00
1.0
4.5
963
279
43.7
69
3.0
26
122
100.6
283
45.5
7.2
4.2
2.7
12.7
103.6
28.6
47.3
7.4
4.4
2.8
13.1
349.0
99 6
159.3
25.0
11.6
94
44.0
Offsets Made Possible by Health Reform:
00
-5.5
-17.3
-48.3
-56.1
-60.7
-187.9
-52.7
-22.6
-30.1
-28.0
-2.1
-159.9
-74.9
-850
-79.5
-5.6
Fiscal Years
L o n g - T e r m Care
Net Home Based Care for the Disabled
Total Spending
Medicaid Offset
Lberallzed Medicaid Eligibility
Tax Incentives for Long-term Care
Medicare Drug Benefit
Benefits. Administration, and Pharmacists Costs
L e s s Rebate
Net of Cushion
oo
Total Spending
Deficit Reduction
TOTAL
00
00
00
00
00
-4.5
-25
-20
-1 9
-0 1
-143
-7.4
-69
-65
-04
-403
-20.6
-19.7
-18 5
-1.2
00
Medicaid
States' Required Maintenance of Effort
Dtaconttnued Medicaid Coverage
Baatc BeiielUe
-48.1
-21.7
-26.4
-247
-1.7
-10
-30
-80
-80
-80
-28.0
36
26 1
61.8
86.5
69.9
94.0
351.3
11.8
1.8
-5.7
-8.5
20.8
37.7
57.6
45.6
78.0
131.7
408.9
15.1
27.9
110.7
�Cost of Premium Discounts
(Billions of dollars, 1995-2000)
500
$349
400
Cushion $44
300
200
^
Out of Pocket $9
$188
Families $184
L
J
100
State Maintenance
of Effort $75
Business $1
Gross
m
:
:
,: :'fit• "
- ; '
Medicare $28
Early Retiree $12
0
$161
ill
Net $161
Medicaid $85
Offsets
M
Net
SI!
�TOP ECONOMIC HEALTH CARE QUESTIONS
1.
How can you pay for this with no new taxes?
2.
Does your plan include an open-ended entitlement'?
Follow-up:
Q:
Haven't you retreated from universal coverage?
Q:
But you 're saying you have a capped entitlement.
don't have enough money?
What if you
3.
Isn't it the case that not a single outside economist will validate your
numbers?
4.
All the other plans on the table today seem to accomplish all that yours
says it will but with considerably less pain. What is your comment on
that?
5.
What makes you think that you can squeeze so much savings from the
system?
Q:
If the savings you predict don't come to pass, would you consider
scaling back your benefits package to help make this plan more
affordable?
6.
After learning from our Nixon era experience that price controls don't
work, why are we really going back to price controls under the guise of
premium caps?
7.
The last thing we need is a big government bureaucracy. Isn't that all
these alliances are?
8.
Could you comment on what the employment impact of your plan will
be?
9.
What is the impact of your plan on small businesses? Won't it just
result in huge job losses?
10.
Will this bring down the long-term deficit or will the deficit still spike
up after 1998 even with these savings?
11.
How do you respond to those who seek to cast doubt on your long-range
cost estimates - claiming that when the Medicare program was
enacted, it was estimated to cost about $9 billion in 1990 but ended up
costing $66 billion - 7.5 times that amount?
i/data/healthcare/book-toc.job
12/6/93
�12.
On early retirees, why do yoitprovide this huge subsidy to employers
and then take back all the money with an "assessment"? Isn't that just
a new tax?
: ~
Q:
Why are you coveringeorly retirees at all?
13.
How do you plan on getting $196- billion from the Medicaid and
Medicare programs? Why ar&you funding health reform on the backs
of the elderly?
14.
Isn't it true that most people will pay more under the plan?
15.
Aren't we just seeing lower casts in your plan because costs are being
pushed past the year 2000 --past-the budget window -- when new
benefits like dental care and mental health coverage will be added? Is
this sustainable in the long run?
Q:
It seems like health care inflation is coming down by itself, so do we
really need to do so much?
Q:
My company self-insures and this gives us a great economic incentive to
take good care of our employees and bring down our costs. I think you
are taking away a great economic incentive to keep our costs down.
Q:
Isn't the employer mandate a [payroll] tax?
i/data/healthcare/book-toc.job
12/6/93
�LEWIN-VHI ANALYSIS OF HEALTH SECURITY ACT
Selected Excerpts
"There is no smoke and mirrors here." [Lewin, AP, 12/8/931
"...theplan's financing structure works: it meets the President's
requirement of providing universal coverage, and it does so without
relying on an increase in broad-based income taxes." |Lewin, PR, 12/8/9:51
"This report validates the logic of the plan's financing..." [Lewin, PR.
12/8/93|
"The Lewin-VHI analysis also shows that American families as a
group are the major beneficiaries under President Clinton's health
care reform package..." [Lewin-VHI Press Release, 12/8/93]
"The 'magic' in the administration's plan, is community rating. This i.s
quite simply a return to the way insurance use to work before insurers
competed to avoid risk." [John Sheils, author of Lewin study, PR, 12/8/931
"[Lewin] has concluded that the proposed funding system for President
Clinton's national health plan is basically sound." [Washington Post.
12/9/93]
"// the question is whether they can finance this program with the
revenues they will get under their plan, the answer is yes, and they will
still end up with $25 billion for budgetary deficit reduction." [Lewin.
Washington Post. 12/9/93]
"An independent analysis ofthe Clinton health plan concludes that it
can cover everybody without a broad-based tax increase and still
reduce the federal deficit." [AP, 12/9/931
"...the Lewin report concluded that older people stand to gain the most
from the Clinton plan, particularly the 55-64 age group." [Knight-KukU-r
12/8/93]
15
�A Billion Here, a Billion There
Bv Uwe E. Reinhardt
PUNCITOK. N J
ic
Confroiionil
Bud|t< Ofric* lerauit
u i ipnn| M I . it currrm tr«ndt. M Lrultd
Scjinviil ipmd Kptrcmi of <u | r a u nuiotiii snjouc. on ntiiji cir» m M y»ir
:000 jp from 14 ptrctfll tod4y !mxinDi*' inoutH Amtnci i pundiu.
>*[ e«»' 3f 'itillft iptnomi. 'nev
ij-a *rnj.a :ir.i(rjoi '.nt toum-v
'aif P-*!ii3#ftt Canton aroocwd
•c t.-'.nl .r-.n ?rC'*ci»C irowun 3cw- -.o
^ni^ :' 5»r:«n'. 3f
C > ? 3v
T
» - r - -a i ;unoiil jucn i I : « D :t:..rt r. itKrcng *ou.c f i a : - i : onA.-ner-.clftl ire Jiul
jnaer-.ng frorr. ietotir aver -Jie jroi5e:'. 3f repr vjuon j i ;• perceru :o
jvf
.'eiguei in i-'ew Yort iro over w
percent more -.nin -.neir co.leig^ei -.n
Minneipoiii
Ccnuder moiner xint Mjnv cr:i:C1 irg-e -"It '.ne 3' muiicn -.•j'-e-.tiv
.r.iia.-es i.me-cirs ::u.3 -ot pom^iv 5e i : : : - - ? ( ; i : e c i . »per^ rg
••even
. ' percent jl tne
Z s ? Oddiv enovign tome ol tne
sime : - : . C J i:io m e n M I tneie
1
HEALTH CARE
SECOND OPINIONS
fmtncKi COIIIDM it 1
9
percem. -ID j^.er .ni)uliniima nt
• *oi,;i3 ever contempiite iDcnd>
ii ^jcn ii
percent ol ill
• P D "Nenn ; i r » ino none ol
n
loerai even .0 percent -.ociy
- - v -.str i.-.ouifl Pnnatni C'.irion
-iice
i.no* : ' percem :i i n
-•'»«>•:•« W - ' !t :» M P t n i
*nc tnomd Jemon.
1
•i:e
Clinton'sspending
cuts will work.
-i: • I
.
jnn;i:niOie
.1 •<i.T...ie '.ne jroieciefl : U I I
- i : e - : . - j ;n Meflicire. ;ne -ei:in
-5-.-i-ce ; - : g - i m 'or *me-icl i
Arrer.cam .Tfrtiy lack fteiiih iniur
*nce not i«».iPi c»f». 'or oitv «nct•Olv r « n v » idtquait ir«itfTnni at
LTie expvnsc o/ pjyin| 5*M#nis :o
*nom '.n« cost of -jiat chirnv a n u
miffed
Bui f :** jfimiurw l l r n d y gf. :**
: i r ? -.r.ey -.eeo wry mould •.riur.rg
rf.n J>' :r J »uO(J»n errtli inr -uiionii San* Or-.-.j pomt '.oo :oponenii
:f :n« President » nei.ir. : j r f pian
inouid try narder to get Lr.eir iiones
i;rai|r.t
">.e C'.nton Admm-iirai or*. % :rpoia- -.i campie* tnougr . :3 :?'er jrv
«ouid-M :r:tic many :j.'ge:i
:c3or:-r.n> !t ii puzzling '.nai "e
iptnoirg 'orwast i :".e! J . T T - ^
•Jiem Siirt. tne P-eiide" :3i..c explain hii 'ortcaii itner •".an
".aj
so far. tht iecrfcv iwr-o^-c.-.g •.-.e
3«sis of riu numwrs :s 3>-::-.^g 3^:
me burden of proof on •.*:» ijiw* augri
iot :o rest wnn
President '•• rtu*
on-.le ihouiders lis c u e s 'or t i
ir-e^ *no
-nucn ewp jinipg '3
30
I
1
1
• :e- •. " :r -.-ti proirim. -jie Pren:e-: ^cu £ i;!ow innuli fpending '.0
---.-eiie ' - O T S i U I oiilion m i»t3 to
it
i s t20" I Million in iht ytir
lO
OO
repreienu an iven^e in- - i i ::rT-.3ouna irovui n t * at M
2e-;tn: Tin Amend l pftyacUM
-fi-:v oo« uie i*«p«y«r n OM ty*
j - a irgje U M L evvn i c c o c w i for
-! i-.ior for l » : I billion irwy couM
-o: •rti'. .le eiaeny proporly in M
• »jr .•ooc
1
T: 3VJI '.rat qucttion m pvnDOClive
. c n i . c c tome riKimcing ^iti pu>
.inefl ,n 1"!^ Ne» EnjUnd Joumn o(
Meoicme on Mtrcfi «. l l l l The iuri ol in ir.icie on Mtdieire <p«idn c:c:e! found M l . m i9*9 i f r r
,j»i:ng 'or jildrtncei in i | t tnd
gender Medicire jiymtflU (or doe-r i cire. per senelicury. vined
.m io«l ol U22 m MinBMpolii. U " :
Sin Frincuco im) »»5« m New
Vorn Cuy to nigM ol S1.4N in Oeiron
11.M" m Fon UuOenuie md l i . n
m Miami.
ilwuid not Amtnci i pnyiicuni.
mo we legiimon from in* nitn-coti
m m
oe m i o . is defend I A « M Oil
leremnn 1 UM tu-poyvng puoiie''
0
Suppoie Congreu erBKrinly iiuntd
Medicim rtimounemenu lor Mitmi
pnyiicuni By i giocxi » p . r a r e
»eri liter Ulil tudget cut. Miami
viicuni vould nill 0* inorttint V
rcert more Medicirt oollln per
jeneficiiry JMn »ouid uieir colc
15
r
�Ereeesg/Cost Estim./j
Validation
/
�COST ESTIMATES
TABLE OF CONTENTS
I.
Talking Points
1
II.
Cost Estimates: A Thorough Process, A Conservative
2
Result
A.
Unprecedented process of outside review
B.
Unprecedented intergovernmental cooperation
C.
The process gives us great confidence in our numbers
D.
Conservative numbers leave out many savings
III.
Statement by Ira Magaziner (October 8, 1993)
4
IV.
Quotes from experts
A.
The process was thorough
B.
The best possible cost estimates
C.
The cost containment strategy will work
D.
Cost containment will not lead to rationing
E.
Universal coverage and savings go hand in hand
F.
Real world comparisons
G.
Moynihan turnaround
5
V.
Letter from Cost Audit Group
8
VI.
Medicare cost projection comparisons: exaggerated and
innacurate
15
VII.
"It Will Balance Just Fine," Ted Marmor and Jerry
Hashaw, L.A. Times, 10/7/93
16
VHI. "Actuaries Defend Process, Assumptions Used in Review
of Clinton Health Plan," Rick Wartzman, Wall Street
Journal, 10/12/93
19
IX.
"Clinton's Conservative Health Plan," Alice Rivlin, Wall
Street Journal, 10/20/93
20
X.
"A Billion Here, A Billion There," Uwe Reinhardt, New
York Times, 10/18/93
22
^
j
Vditt/hatitbctn/costcsLUx
12/7/93
IT BTA
�TALKING POINTS
PROCESS/COST ESTIMATES/VALIDATION
UNPRECEDENTED PROCESS OF OUTSIDE REVIEW
•
The administration's financing was rigorous, using the best analytical
talent inside and outside the federal government, including nationally
recognized accounting firms and fortune 500 companies. Further, when
presented with a choice of two numbers, the administration
consistently chose the more conservative one.
CONSERVATIVE NUMBERS LEAVE OUT MANY SAVINGS (??)
•
The administration does not count many of the savings achievable
through competition, through reduced bureaucracy, through cracking
down on fraud, and through a new emphasis on prevention. This
conservatism was done especially to put the estimates for the bill
beyond reasonable dispute.
VALID A TION BY A CTUARIES
•
In addition to the outside groups, a team of actuaries and health
economists from all branches of government that do financial analysis
and cost estimating set up a working group back in February, and have
been working together ever since.
QUOTES FROM EXPERTS
•
"We beheve that these cost estimates are the best available at this time
and are suitable for planning purposes." [Richard Ostuw, Chair of the
Cost Audit Group 10/8/93]
•
" I remain convinced that the financial data with respect to those areas of
the proposal which we were asked to review are well within the
reasonable range of results and are satisfactory for decision making
purposes." [Kenneth Porter, Manager and Chief Actuary, Dupont
Corporation, 10/8/93]
•
" I think the calculations are honestly done, using the best techniques
available...The administration has consulted widely, looked at various
projections and took the set that seems most likely." [Henry Aaron, th»'
Brookings Institution, Orlando Sentinel. 9/36/93]
i/dala/healthcarc/briefbkS.pwj
12/7/93
�COST ESTIMATES:
A Thorough Process, A Conservative Result
SUMMARY:
The health care financing analysis undertaken by the
administration has been rigorous, using the best analytical
talent inside and outside the federal government. In
creating the analytical foundation for our estimates, there
was an unprecedented degree of outside review of our
assumptions and methodologies from nationally
recognized consulting and accounting firms and from
Fortune 500 companies. That's why we're so confident
that our estimates are both credible and conservative.
UNPRECEDENTED
PROCESS OF OUTSIDE REVIEW
•
Urban Institute modelers and a team of non-government actuaries and
health economists followed the model building and estimating process
throughout, and offered analysis and suggestions. They immersed
themselves in the models early on and made significant contributions
to the methodologies finally used. There was simply an unprecedented
amount of analytical rigor underlying the models and with our
commitment to accuracy and prudence.
UNPRECEDENTED
INTERGOVERNMENTAL
COOPERATION:
•
I n addition to the outside groups, a team of actuaries and health
economists from all the branches of government that do financial
analysis and cost estimating set up a working group back in February.
and have been working together ever since. They have shared data
and worked through assumptions and methodologies in much greater
detail than has ever been done before.
•
Estimating one seventh of the nation's economy is obviously an
immensely complex task. Reasonable people differ about assumptions,
so we tried to consistently err on the side of conservatism.
THE PROCESS GIVES US GREAT CONFIDENCE IN OUR NUMBERS
•
The unprecedented degree of outside analysis and validation gives us
great confidence in our numbers. We invited outside review and
validation for one reason: to get the best data available validated by
the best people possible so that the national debate could focus on the
policy itself.
i/data/heallhcare/costest doc
12/6/93
�CONSERVATIVE NUMBERS LEAVE OUT MANY SAVINGS.
•
All of the savings we believe are achievable through competition,
through cutting bureaucracy, through cracking down on fraud, and
through a new emphasis on prevention - are not counted in our tables
as savings estimates. Despite the evidence of lower costs in parts of
the country where these reforms have taken hold, despite the fact that
virtually everyone agrees that there's enough waste and bureaucracy
in the system to wring out several billion dollars by streamlining
paperwork, we claim no savings from these initiatives so that the
credibility of our numbers and the standards of our rock-solid process
will be beyond reasonable dispute.
i/dala/heal < he are/cos te st. doc
12/6/93
3
�THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
October 8, 1993
STATEMENT BY IRA C. MAGAZINER
In early spring of 1993, the White House assembled a group of actuaries -from nationally-recognized accounting and actuarial firms -- to be involved
from the beginning m examining the cost estimates for the President's health
care reform proposal.
We considered it essential that experts who were independent ofthe policy
process review the methodology used to develop the premium and subsidy
numbers, which represent the fundamental building blocks of the refonn
proposal. This outside Cost Audit group was not required to support the
policy itself -- just to verify the validity of the cost estimates. The actuanes
were asked to question the assumptions, substantiate the numbers, examine
the models, and communicate independently with each agency involved -- to
verify that both the process and the estimates were valid and accurate.
As the attached letter indicates, these actuaries maintain that "...theprocess
was very thorough" and the methodology and assumptions "...sound and
reasonable." They further confirm that "...these cost estimates are the best
available at this time and are suitable for planning purposes."
The expertise of the Cost Audit group was appropriate for the premium and
subsidy estimates. They were not asked to validate the estimates of savings
projections from administrative simplification, competition and prevention QX
the estimates ofthe federal (Medicare and Medicaid) savings. Another group
of outside experts was consulted regarding the savings projections from
competition and Medicare and Medicaid experts - from the Department of
Health and Human Services and the Office of Management and Budget
participated in the development of federal spending projections.
We insisted on this unprecedented degree of outside review and validation in
developing the health reform proposal for one reason. We wanted to get the
best data available validated by the best people possible so that the national
debate would be able to focus on the policy itself and its implications for the
American people.
4
�QUOTES FROM EXPERTS
THE PROCESS WAS THOROUGH:
•
"We found that the general methodology and assumptions used in
developing the cost estimates for the non-Medicare, non-Medicaid
population were sound and reasonable. The process was very
thorough. The staff is very capable and we are confident of their
ability to apply the assumptions and methodology." [Richard Ostuw, Vice
President of Towers Perin and Chairman ofthe Cost Audit Group, 10/8/93|
•
" I think the calculations are honestly done, using the best techniques
available, i f one presumes enactment of the program the President has
called for...The administration has consulted widely, looked at various
projections and took the set that seems most likely." [Henry Aaron,
Brookings Institution, Orlando Sentinel. 9/36/93]
THE BEST POSSIBLE COST
ESTIMATES:
•
'"The plan's financing structure works.'" [Lawrence Lewin, [Wall Street
Journal. 12/8/93]
•
'"These findings come at a time when there is growing skepticism about
whether the President's plan could work...This r e p o r t validates the
logic o f t h e plan's financing.'" [Lawrence S. Lewin, Chairman of LewinVHI, Boston Globe. 12/9/93]
•
"Assuming that Clinton's proposed caps on health insurance premiums
work, 'then the rest of it plays out,' said Lewin. 'There is no smoke and
mirrors here.'" [AP wires, 12/8/93]
•
"Health Plan Passes Reality Check" [Headline, Detroit Free Press. 12/9/93]
•
"We beheve that these cost estimates are the best available at this
time and are suitable for planning purposes." [Richard Ostuw, Vice
President of Towers Perin and Chairman of the Cost Audit Group, 10/8/93]
•
"The premium cost estimates and the methods and assumptions used
were the best possible within the context of a very challenging
process." [John M. Bertko, Principal at Coopers & Lybrand and Member of the
Cost Audit Group, 10/8/93]
•
"There's no point in questioning simply whether the numbers 'add up."
Of course they add up arithmetically." [Yale University Professors Ted
Marmor and Jerry Mashaw, L.A. Times. 10/7/93]
i/data/healthcare/actval.doc
12/6/93
�"We found that the national premium cost estimates of the standard
benefit plan on a bully phased-in-basis were the best available and
that the methodology and assumptions were sound and
reasonable...These base year premium costs estimates are reliable on a
national level for making decisions regarding the standard plan's
benefits levels and the associated subsidies." [John Bertko, Principal at
Coopers & Lybrand and Member ofthe Cost Audit Group, 10/8/93]
"I remain convinced that the financial data with respect to those areas
of the proposal which we were asked to review are well within the
reasonable range of results and are satisfactory for decision making
purposes." [Kenneth W. Porter, Manager & Chief Actuary, DuPont Corporation.
10/8/93]
"The Clinton reform projects Medicare growth rates to be 4.1% by the
year 2000 ...Why is this not a plausible, even a conservative estimate?"
[Yale University professors Ted Marmor and Jerry Mashaw, L.A. Times, 10/7/93|
"[The plan is] realistic [and an] excellent foundation." [Phil Nudelman
Chairman of Groups Health Cooperative at Puget Sound, Wall Street Journal.
10/1/93]
THE COST CONTAINMENT STRATEGY WILL WORK:
•
"In reality, the administration's cost-containment goal is modest...[itj
permits about a 3 percent increase in the share of GDP going to health
This plan does not try to shrink health spending relative to where we
are now. No health care jobs will be lost, though fewer jobs will be
added i n the f u t u r e . " [Stephen Zuckerman and Jack Hadley, Washington PUH
11/7/93]
•
"[The Clinton plan] would produces some administrative savings and
would substantially reduce administrative hassles ... What the
insurance industry burns up in commission, marketing and claims
processing costs is almost unspeakable. Clinton would reduce those
COStS." [Princeton professor Uwe Reinhardt, New York Times, 9/24/93]
•
"The study accepts Mr. Clinton's assumption that the Federal
Government can slow the rate of increase in health care spending by
regulating insurance premiums and by increasing competition among
doctors and hospitals." [New York Times. 12/9/93]
•
"In addition to its broadfindingthat the 'financing structure works,'
the study also found that...The plan's cost controls eventually would
i/data/healthcare/actval.doc
12/6/93
�slow the growth of health spending. By 2000, it would account for 18
percent of gross domestic product instead of the 18.7 percent figure
expected under current conditions, a saving of $57 billion." [Washington
Post. 12/9/93]
COST CONTAINMENT WILL NOT LEAD TO RATIONING:
•
"(T)here is sufficient excess capacity so patients don't have to worry
about being harmed [by the CUnton plan]." [Wall Street Journal. i0/i/93|
•
"How will the system respond to these constraints? The specter of sick
patients being unable to receive care is completely farfetched. The
U.S. health system is fraught with inefficiencies and excess that have
no measurable health benefits." [Stephen Zuckerman and Jack Hadley,
Washington Post. 11/7/93]
•
"There is ample evidence that the kind of managed care the Health
Security Act envisions can slow health care spending growth." (origimil
emphasis) [Lewin-VHI press release, 12/8/93]
UNIVERSAL COVERAGE AND SAVINGS GO HAND IN HAND:
•
"We cannot have real savings and real cost containment without
universal enrollment. ...Only with universality can we eliminate the
practice of making patients with insurance pay the medical costs of
those w i t h o u t it." [Rashi Fein, New York Times. 10/28/93]
•
"It is the experience of every industrialized democracy with a universal
health insurance program that cost control becomes easier when the
plan is universal, not harder...the counsel currently offered by critics
go slow in adding new benefits until we can assure everyone that the
savings are real -- is advice that is likely to doom the plan to failure.
Universalism and cost control go hand in hand. Otherwise it is politics
as usual, f u l l of special pleading." [Yale professors Ted Marmor and Jern
Mashaw, L.A. Times. 10/7/93]
•
"I'm generally heartened [by the Clinton plan]. I think the
fundamental strategy [the plan] embraces is the correct one, which is
to build on the private insurance and government programs that
already cover most Americans, perfecting that system and subjecting it
to a degree of budgetary control. I'm not wholly persuaded by some of
the details in the proposal, most importantly by the speed with which
the savings projected in the plan would be realized. But that's a
second-level concern almost any observer not directly involved in the
particular design produced by the President's advisors might have.
i/data/healthcare/actval.doc
12/6/93
�They shouldn't detract from my belief that the President has laid out
the right starting place from which negotiations regarding a final plan
should begin." [Henry Aaron of the Brooking Institution, Orlando Sentinel.
9/26/93]
"The report found that older Americans would save the most from the"
Clinton plan." [Detroit Free Press. 12/9/93]
"In general, firms that now offer insurance will see a reduction in
spending." [Lewin-VHI press release, 12/8/93]
REAL WORLD COMPARISONS:
•
"Companies in the private sector commonly make decisions on more
limited data and analysis than this." [Richard Ostuw, Vice President of
Towers Perin and Chairman ofthe Cost Audit Group, 10/8/93]
•
"These estimates also pass a 'real world' test." [John M. Bertko, Principal
at Coopers & Lybrand and Member of the Cost Audit Group, 10/8/93]
MOYNIHAN TURNAROUND:
•
" I feel very comfortable about the administration's position [on
financing]."
[Senator Moynihan, USA Today, 10/1/93]
THE PLAN WILL REDUCE THE FEDERAL DEFICIT
• "Under the assumptions used in this analysis, the program would result
in a net reduction in the Federal deficit over the 1994 through 2000
period...." [Lewin Executive Summary, 12/8/93]
•
"A comprehensive analysis of President Clinton's health plan finds that it
would reduce the Federal budget deficit." [New York Times. 12/9/93]
COMMUNITY RATING WILL WORK
• '"The magic in the administration's plan is community rating...This is
quite simply a return to the way insurance used to work before insurers
competed to avoid risk.'" [John Sheds, author of the Lewin-VHI study, Lewin-VHI
press release, 12/8/93]
i/data/healthcare/actval. doc
12/6/93
�October 8, 1993
Mr. Ira Magaziner
Senior Advisor for Policy Development
The White House
Old Executive Office Building
Room 216
Washington, D.C. 20500
Dear Ira:
The members of the Cost Audit Group appreciate the opportunity to aaalst with the
President's health care reform proposal.
Role of Cost Audit Group
The primary role of the Cost Audit Group is to review the methodology and
assumptions used to estimate the baae year cost ofthe standard fee-for-aervice
benefit plan for the non-Medicare, non-Medicaid population. We also reviewed the
assumptions for subsidies for individuals snd employers and provided input on the
implications and alternatives for several technical aspects of the propoaal. We
understand that other groupa conducted the review for other aspects of the propoeal.
Including long term care benefits, prescription drug coverage under Medicare and
the savings from managed competition.
Policy isauea were outside the acope of our role. We did not for example, addreaa
the implications for changing Medicare or Medicaid or the aaaociated savings
eatimatea.
ProcM
The elements of the health care reform proposal and the aaaociated cost estlmetee
have been under development aince early this year. Beginning in April, the Coat
Audit Group met with your ataff and othera to underatand the proposals and the key
aaaumptiona and methodology. We spent significant time with the staff at HCFA end
AHCPR, for example, on their cost models and preliminary eatimatea. We mede
numerous suggestions to refine the assumptions and methodology used In
developing their estimates. We focused our attention primarily on the premium coet
1
-f 7^0600
I 7
• kMQftl ! C<?-9 -OL!
�Mr. Ira Magaziner
October 8, 1993
Page 2
of the proposed standard benefit plan on a fully phaaed-in basis. Our review of the
coat of subsidies was less comprehensive because of the nature of the databases
used by those performing the calculations,
We are pleased to have participated In thla process and appreciate the openness and
receptivity of everyone we worked with. We found everyone interested In our input
where it couid improve their work.
General findings
We found that the general methodology and assumptions used in developing the
cost estimates for the non-Madlcara, non-Medicaid population were aound and
reasonable. The process was very thorough. The staff Is very capable and we are
confident of their ability to apply the assumptions and methodology accurately.
In conducting our review, we recognize that the United States health care system la
extremely complex and dynamic. Aa a result, complete historical data Is not
available and future results are not fully predictable. However, compenlee in the
private sector commonly make buaineaa decialona on more limited data and anatyeia
than thia.
Because of the evolving nature of the proposal and the coat eatimatea, it haa not
been possible to "sign off' on a specific set of numbers. Rather, we have addressed
the current development of the numbers at varloue timea and found them to be
reasonable.
Recognizing theae limitations on available data and the timetable to make d«ci*ione,
we believe thet these cost estimatea are the best available at thia time and are
suitable for plenning purposes.
Additional tasks
The health care reform proposal will likely continue to evolve. The cost eetimetee
will evolve to reflect changea in the propoaal, refinement in the assumptions snd
methodology end the availability of new data. We look forward to assisting In the
process to make the coat eatimatea aa reliable as practicable and to provide other
needed technical support.
1
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UTJjaj
(JSJIOI • ia
ikiar
�Mr. Ira Magaziner
October 8, 1993
Page 3
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Sincerely,
Richard Ostuw
Chair, Coat Audit Group
Members:
Howard Atkinson, Jr.
John Bertko
Brent Greenwood
Richard Helma
Richard Oatuw
Kenneth Porter
Jack Rodgera
IIT
I
�Howard Atkinaon, Jr.
President b Chief Actuary
Atkinaon b Co., Inc.
Silver Springe, Maryland
Mr. Atkinson provides actuarial and consulting services to private and public sector
plan sponsors, Insurance companies, HMOs snd Blue Cross end Blue Shield plans.
Professional Affiliations
Fellow, Conference of Consulting Actuaries
Assoclete, Society of Actuaries
Member, American Academy of Actuaries
Executive Committee, Actusrisl Club of Waahington, D.C.
Education
Lincoln University, B.A. in Mathematics
John M. Bertko
Principal
Coopers b Lybrand
San Francisco, California
Mr. Bertko is chief health care actuary and PrincipaMn-Charge of the health care
consulting practice in the San Francisco office of the human reaource advisory group
of Coopers b Lybrand.
Mr. Bertko has expertise in conventions! fee-for-servlce group insurance and
managed care (HMOs, PPOs, other prepaid plana and providers). He has directed
projects for Insurance companies, HMOs, large corporate employers and government
units.
Professional Affiliations
Fellow, Society of Actuaries
Member of the Board, American Academy of Actuaries
Chairman, American Academy of Actuariea Health & Welfare Plana Committee
Enrolled Actuary
Education
Case Western University, B.S. in Mathematics
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�Brent L Greenwood, A.S.A., M.A.A.A.
Principal
Tillinghaat
Minneapolis, Minnesota
Mr. Greenwood haa expertise in actuarial analysis, rate aetting and operations
strategy for HMOa and PPOs. In addition, he haa worked with inaurance companies
on organizational and product development projects relating to managed care. Other
areas of expertise Include Medicare (supplement, risk and coat), Medicaid, prepaid
dentel programs, employer cost containment strategy and provider contract
evaluation.
Professfonat Affiliations
Associate, Society of Actuaries
Member, American Academy of Actuaries
Education
Drake University, B.S. in Actuarial Science
Richard Helms
Second Vice President
Principal Mutual Life Insurance Company
Des Moines, Iowa
Mr. Helms haa extensive experience in health inaurance pricing and Inaurance
compeny financial Issues. He served on the NAIC Industry Advisory Committees thst
drafted NAIC model lawa on email employer health Inaurance reform. He haa been
ective in the Health Inaurance Association of Amerlca'a (HIAA) diacuasions of health
care reform. Mr. Helma currently serves on the HIAA Industry Claim Data Reaource
Committee, the Health Section Council of the Society of Actuariea, and the Society of
Actuariea Health Systems Professional Development Committee.
Professional Affiliations
Fellow, Society of Actuaries
Member, American Academy of Actuariea
Enrolled Actuary
Education
University of Nebraska
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�Richard Ostuw
Vice President
Towers Perrin
Cleveland, Ohio
Mr. Ostuw assists employers in all aspects of employee benefits with emphasis on
the design and financing of health care and flexible benefits. Mr. Oatuw provides
technical leadership for the U.S. health and welfare consulting practice.
Professional Affiliations
Fellow, Society of Actuaries
Member, American Academy of Actuaries
Education
Rutgers University, B.A, in Mathematics
Northeastern University, M.S. In Actuarial Science
Kenneth W. Porter
Chief Actuary
DuPont
Wilmington, Delaware
Mr. Porter Is responsible for actuarial matters worldwide snd for the worldwide
financing of benefit programa, In addition, within the U.S. Chemicala and Specialties
businesses, he is responsible for the financial analysis support of all human
resources initiatives.
Professionel Affiliations
Member, American Academy of Actuariea
Enrolled Actuary
Member, Retiree Health Committee of the Actuarial Standards Board
Education
Drew Univeraoty, B.A. in Mathematics
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�Jack Rodgera
Senior Manager, Director of Health
Price Weterhouae
Waahington, D.C.
Dr. Rodgera haa extensive experie
computer microslmulation models
reimbursement, and health sector
forecasts of national health spendi
Dr. Rodgers haa concentrated on '
options aa employer mandates, m
national health Insurance.
poficy enefymie. He haa developed
a. Medicare hospital
renging from
For aix yeara,
inoiutfing such
amafl b u a k M Insurance reform and
Professional Affiliations
American Economic Aasociation
Association for Health Services RuiMltfi
Society of Government Economleti"?
Education
Univeralty of Minnesota, M.A., Ph.D.
Univeralty of Alabama, B.A.
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�MEDICARE COST PROJECTION COMPARISONS:
EXAGGERATED AND INACCURATE
SUMMARY:
Skeptics ofthe budget forecasts in the President's health care
reform plan often point to the experience of the Medicare program.
When Medicare legislation was enacted in 1965, the program's
long-range cost estimate was that hospital insurance (HI, or Part
A) benefit payments would be about $9 billion in 1990. Actual 1990
benefits were more than $66 billion, about 7.5 times the predicted
amount.
CRITICISM IS EXAGGERA TED AND UNFAIR:
•
Adjusting for inflation and program expansions, a more fair ratio of actual to
predicted would be about 3:1, not 7.5:1.
•
Much of the divergence between the actual and projected dollars in benefit
payments has nothing to do with health care; the general price level is simply
much higher than anyone would have predicted in 1965.
•
Another reason that the prediction was too low is that the Medicare program has
been expanded. For example, non-elderly disabled persons and those with
chronic kidney disease are now covered. Failure to predict these new
expenditures is not a forecast error.
TIMES HA VE CHANGED, AND OUR ABILITY TO FORECAST HAS IMPROVED.
•
The people who are preparing the budget estimates for health care reform have
more data and better computers than their counterparts had in 1965.
•
We also have accumulated almost three decades of experience in projecting
Medicare and Medicaid expenditures.
STILL, WE RECOGNIZE THE DIFFICULTY AND IMPORTANCE OF GETTING
THE NUMBERS RIGHT:
•
Treasury and other agencies are making every effort to make our budget
projections accurate.
•
We have called in outside experts to review and validate the estimates.
•
Our savings estimates are purposefully conservative.
i/data/heallhcare/medicare.est
12/6/93
\ ^
�Copyright 1993 The Times Mirror Company
Los Angeles Times
October 7, 1993, Thursday, Home Edition
SECTION: Metro; Part B; Page 7; Column 3; Metro Desk
LENGTH: 1068 words
HEADLINE: PERSPECTIVES ON THE CLINTON HEALTH PLAN; IT Wll l
BALANCE JUST FINE; THERE IS PLENTY TO DEBATE, BUT THAT DOi ^ \ T
INCLUDE WHETHER THE PROPOSED FINANCING 'ADDS UP.'
BYLINE: By TED MARMOR and JERRY MASHAW, Ted Marmor teaches pm-v
policy and Jerry Mashaw teaches law at Yale University. They are co-authors of
America's Misunderstood Welfare State (Basic Book, 1992).
BODY: President Clinton in recent days has been out talking with ordinary
Americans about how his health-reform proposal will help meet their need for
insurance security and affordability. Meanwhile, back on the talk show circuit an.
'.he
press, most of the conversation is a form of anxious hand-wringing about whether •.•••K
President's numbers "add up." Words like fantasy and hopelessly unrealistic are i>" • •« :i
>
around whenever the topic turns to finance. Critics in Congress and elsewhere h..«, -icd
to focus everyone's attention on the single issue of "How are we going to pay for
We have not been, nor are we now, partisans of the particular plan the PresiJ. ' a.s
put forward. But the questions about the plan's cost and financing are being pos. • • the
>
wrong way ~ a way that will discourage productive debate.
Asking these questions in the right way would lead to very different perspective • i
what might be right or wrong with the reform plan the President has offered.
First, there's no point in questioning simply whether the numbers "add up." Oi\ • • -^c
they add up arithmetically. Hillary Rodham Clinton, Ira Magaziner and their ta>i> ',c
members are not dopes. The critical issue concerns the assumptions built into the
numbers in order to make them add up. For the President's financial estimates, i' •.,
sets of assumptions are crucial. It is the relative uncertainty about the assumpti." - u i
feeds the "do the numbers add up" frenzy.
l
lb
�Estimates of premium costs -- of how much a family would pay for medical cow rage -and population growth are the least uncertain. One can quarrel around the edges - the
amount of small-business subsidies, for instance -- but it is not a huge trick to look at
existing payments for the type of plan the President has proposed and come up wiih
reasonable predictions. The President's plan does that, and population growth win not
surprise us much over the period for which the numbers are projected - from nnu until
the year 2000.
The second set of numbers in the President's projections is more controversial. The
Administration estimates that gross domestic product will grow between 4.2% and 5.4%
over the whole period, with inflation never rising above 2.7% a year. These, admincdly,
are optimistic estimates.
The question, however, is how these projections relate to the Clinton reform proposal.
Is the accuracy of these estimates critical to whether the plan's financing "adds up?" The
answer is "no." The financing plan does not rely on some particular percentage of growth
or inflation. Instead, it pegs limits on spending to these growth rates.
The real question to ask is exactly how the President's program proposes to tic health
spending to these numbers, whatever they turn out to be. This in turn depends on how
effective the techniques for containing costs -- such as capping insurance premiums -- are
likely to be. It is not a question of whether the economic projections are realistic in the
sense of being precisely right.
Finally, the President's financing relies critically on revenues from certain "sin" taxes
and "savings" from the Medicare and Medicaid programs. The sin tax revenues max he
somewhat overstated but could easily exceed the current estimates if Congress pcrMiades
the President to change his mind and support new taxes on beer, wine, and dome^H .illy
produced liquor.
The real trouble arises, according to the pundits, from estimates of future sa\ in^ in
Medicare and Medicaid. The critics seem to assume that these programs are sacrosanct
or, alternately, rapidly growing and politically uncontrollable.
How did these critics get to be so pessimistic? The growth rate of Medicare's hospital
expenditures per enrollee was 6.9% annually in the period 1980-83. But when the
government imposed reasonably effective payment constraints on hospitals in 198.\ the
results were dramatic. The growth rate per enrollee between 1983 and 1988 was onu
1.3%. The Clinton refonn projects Medicare growth rates to be 4.1% by the year :<•*).
In short, the rules controlling physician payments and pharmaceutical prices, comWmod
with changes in the age distribution of the population, have generated projections ih.it
expenditure growth will be higher by the year 2000 than in the 1983-88 period. \V hy is
this not a plausible, even a conservative, estimate?
�Some critics will answer that Medicare's regulation of costs was effective in the past
only because hospitals (and now doctors) could "shift" some of their costs to private
payers. Again, this objection seems plausible, but it ignores the facts.
Under a plan that limits all payers, this cost shifting would not be possible.
It is the experience of every industrialized democracy with a universal health
insurance program that cost control becomes easier when the plan is universal, not
harder.
The explanation is simple. When everyone is in the same boat, special pleading that
leads to a breakdown in regulatory controls or shifting of costs becomes more difficult.
Common gain and common sacrifice are a reality and radically transform the politics of
medical financing.
Equally, a universal system makes someone accountable for overall costs in a was that
cannot be ignored or avoided. If the Congress and the states fail to develop constraints
that meet spending targets, the taxpayers will know about it. This is not politics as
usual, something the critics fail to acknowledge.
Therefore the counsel currently offered by critics -- go slow in adding new benefits
until we can assure everyone that the savings are real -- is advice that is likely to doom
the plan to failure. Universalism and cost control go hand in hand. Otherwise it is
politics as usual, full of special pleading.
There are valid concerns about the workability of the Clinton proposals. The
employment-based premiums, avoidance of general taxes and reliance on uncertain
techniques of cost control (particularly in the competing health plans) -- all should uivc
pause. There are safer, more reliable and more effective ways of organizing health
insurance and health finance for all.
The real issue is how to get a sensible health system in place by the end of this
decade. Fixation on the current Clinton numbers or the cynical politics of the moment
will not get us there. In these respects, the critics have not yet started to ask the npht
questions.
GRAPHIC: Photo, TED MARMOR ; Photo, JERRY MASHAW
LANGUAGE: ENGLISH
�used the
to
Actuaries Defend Process, Assumptions The actuaries alsodidn't do. letter as
spell out what (hey
such
addressing the Implications ot altering
Medicaid and Medicare, or assessing (he
Used in Review of Clinton Health Plan possible savings from "managed competi-
Separately, the While House said it had
no intention of reducing the benefits that
low Income and disabled people now receive under the Medicaid program. The
New York Times reported yesterday that
tion."
coverage of some extra services, such as
transportation assistance and special edu
Overall, the letter praised (he process
able with one of (he major policy decisions
By RICK WAITZMAN
for developing the cost estimates as "very cation services, could be Jeopardized under
embedded In the Clinton plan: (he swiftM n / ; Hi p o m i o/ T i n : W A I . I STM»>rT J I H I H M A I .
the ainton health plan because they aren't
thorough."
ness with which caps on private sector
WASHINGTON - A group of indepen
Included In the federally guaranteed bene
health spending would be Imposed.
The seven members of (he group are:
(tenl actuaries thaireviewedaspects ol the
Ills package.
Richard Osluw. the chief actuary al
In their letter to Mr. Magaziner. (he
CUnton health care proposal has formally
A Sept. 7 draft of the health plan
certilied that the methods and assump- actuaries said (heir focus was on evaluat- Towers Perrin In Cleveland; Howard Atkinson, who runs his own actuarial firm In mentioned the possibility of providing
ing the cost of the federally guaranteed
tions used to calculate the private sector
grants lo stale governments to finance
suburban Washington. John Bertko. a
premiuins In the plan "were sound and benefits package - put al an average of
about 14.200 per family. They also com en principal with Coopers ft Lybrand In San such services. Administration officials
leason.iWe. '
said they have already calculated the cost
- Vet in a letter to senior While House (rated on the cost of government subsidies Francisco; Brent Greenwood, a principal
of including these services for the Medicaide Ira Magaziner. the group of six actu that would help small businesses and low- al Towers Perrin unit Tillinghast In Mlnne aid population. They said they're now
apolis; Richard Helms, an executive will.
anes and one economist also was careful to Income individuals pay for (he benefits
trying lo figure out how lo administer
note that Its review didn'troverthe cost or package. The actuaries said, however, thai Principal Financial Group in Des Moines. them. "There Is no way we are going lo
Iowa; Kenneth Porter, chief actuary al
savings estimates for the entire plan. "our review of the cost of subsidies was
DuPont Co. In Wilmington. Del.; and Jack lake away Medicaid benefits that people
Moreover, the letter said. "Policy issues less comprehensive because ol the nature
already have." said Kevin Anderson, a
Kudgers. a health economist with Price
of (he databases used by (hose performing
were outside the scope of our role."
White House spokesman.
Wateriwuse in Washington.
The actuaries found themselves in the the calculations
spulliglit after President Clinton men
lioned the group In his health care address
to Congress last month. "So then we gave
these numbers to actuaries for major
accounting firms and major Fortune S O
O
companies who have no stake in this other
than to see that our efforts succeed. So I
believe our numbers are good and achievable." Mr. Clinton said.
9
-. /
In interviews after the speech, several
3
of the actuaries said they thought people
could have misunderstood their role In
light of the president's remarks. Some of
them said they weren't entirely comfort-
�.3
THE WALL STREET JOURNAL
•AY. OCTOBER 20, 1 M
9
's Conservative health Plan
By Aucs U. KIVUN
The Clinton administntxa's p& (or
ln
fiun; whit alls the American bealtti care
system is bold and comprehensive, b t
u
hanUy radical. Indeed. K is conservative
in at least three of the senses al that term
First, it reforms the system with minimal disruption to the basic m d of paying
oe
for health can that Americans an used
to-employer-based lasurance. Second, it
relies primarily on martet Incentives, not
government regulauon. to control escaJating health care costs. Third, it can b fie
nanced-without smoke and mirron-pnmanly b reallocating resources already
y
devoted to health care and does not require
large tax increases.
Almost everyone ifrees that if w are
e
to have the producUve. competitive, flexible economy that we all want, w cannot
e
allow the "health care tax" to continue ns
m W are already using i n of our gross
g e
domestic product to pay for health care.
Every time w let this "ttx" drift up ane
other percentage point, we are allocating
an additional 1 0 billion a year of the na5
tion's precious resources to health care.
Moreover, a high-growth economv requires that people be able to m v into new
oe
jobs, bui our current system locks people
into jobs and o t welfare out of fear that
no
they will lose their health insurance. FY
nall\. hardly anyone would deny that the
way w n w pay for health eare cone o
tributes to unnecessary cost increases and
a wasteful use of heahh resources.
Radical Surrery Rejected
N w that there is suckferoadconsensus
o
that the current system wpunishing the
economy, what is to be done?
The Clinton tea/n rejected radical
surgery such as a nngk-payer system or
government-set health a n prices m favor
o restructuring the current system and
f
building o its strengths. There are two
n
types o evidence that sues rastnjctunng
f
can w r First, health matatenance orgaok
nizations and other groups ol providers
compensated o a per-capKi basis have
n
demonstrated that they can deliver g o
od
care for appreciably lover east. These
groups have incentives to amphasue prevention, to reduce oaeceuary procedures, tests and hospttahxatkxu. and to
economize on the acqulitttoB and use of ex
per::-. ? f q^pr.er.:. Seeort. busL-.e::
experience has shownfeatatorg*buyer
can negotiate with wpotlBf httllh plans
and get a m c better deal than if mil
uh
able to individuals and snail fir s thai
lack market power.
The Clinton plan would ncouafc docton and other provMen o Mn health
plans that would be paid pe -eapitapremiums it would give indMC ah sad small
employers access to the nu tet power that
btg business has toed so successfulty b
y
organiang purchasing cooperatives or
health allianees to bargain wtth health
plans for the best deal.
The Clinton plan would* ysure everyone
at least a standard set orbtalth benefitsbenefits that would not be t Visklfanindi
ndual changed )ots. beu imempioved
or g t sicL A buslnesse jultf have to
o
H
provide health eomage. tft subsidies
would reduce the burden on 5 nan and low
w g firms,fcnptoyeeswou. share in the
ae
cost, with a choice of plans ind dear incentives to e o a the mod cost-effective
boe
opoons for meeting their beaith needs.
The Clinton approach reflects strong
faith that consumer incentives, combined
with buyer power and better information
about quality and performance, can rein m
escalating cons. That faith is strong, but
not absolute. If health care premkanscontinue rising appreciably faster than other
prices, "global budgets" would csotrol the
rate o increase of premiums. V the marf
ket incentives work-and the Otatto learn
believes they will-then the
will
not be necessary .
* '' v
Hon of the cost of health caw I * working people and their farilhes vqidd be
shared, as at present, by empiOytn and
employees. The major mw costferthe
goveniment would be the subsidies needed
to make the insurance affordable to small
firms and low-income individuals.
These subsidies, along with arw benefits under Medicare for out-of-hospUs] presenpooo drugs and h m health care for
o e
the severely disabled, and some ether admuustrauve costs, are expected is increase government health spending b
y
roughly 1 3 billion by the year am. when
10
the profram is fully up and nmninf Revenue increases -principally JNm a
.P
O
la
�V. ?
THE WALL STREET JOURNAL WEDNESDAY. OCTOBER 20. I M I
Clinton's Conservative Health Plan
^ 0 1
feMlttay iscruse m the dprette ux-are growth of Medicare and Medicaid impossiexpected to produce only about O billion. ble In the absence of health car* reform,
O
The rest (roughly SO billion) will come he would be right Broadened employer
10
tram reallocatingresourcesthat would coverage and system-wide reduction of
otherwise have gooe into existing govern- cost growth, however, make these savings
ment programs.
feasible, while the new prescription drug
These offsetting savings in other gov- and home health benefits under Medicare
ernment programs are not. as some critics make the package attractive to the elderly.
have alleged, vague caps or unrealistic
Mr. Feldstein also argued that the Dinhopes for reducing "waste, fraud and ton plan'srequirementthat employers
abuse." Rather, the administration is provide health insurance to their employ
proposing specific changes In program ees will reduce wages and cut tax revenues
rules that are feasible precisely because of to the Treasury. Quite irrelevantly, he calAJ\ the proposed reform of the private system. culates how much revenue the Treasury
For example. Medicare and Medicaid would lose if no firms provided health incover many workihg people. Under the surance now and all were subjected to a
new rules, the workug elderly and the new 7.W payroll tax to provide such coverage. In fact, however, most people are
by employer-provided in
wortung poor would be covered by their already covered with more generous coversurance. many
employers instead. Both programs also age than the Clinton plan requires. Firms
make huge paymoits to hospitals to help
the plan will
them cover the cost ofTreating the unin- whose costs arereducedby and ultimately
initially have higher profits
sured. When everyone has Insurance,
these payments will be sharply reduced. probably pay higher wages than they do at
Increases in reimbursement rates for present.
providers under Medicare would also be Reduced Impact
slowed-a change made more feasible be- In either case. Treasury revenues will
cause reimbursement for all providers will increase. Employers not now providing
be rising less rapidly In addition, upper- health insurance will have to pay more,
income people would pay a large share of but the impact on them will be reduced b
>
the heavily subsidized premium for physi- subsidies. Very small firms will have their
cian eare under Medicare. These specific cost increase capped at 3.5< of payroll A
changes in the Medicare and Medicaid more accurate reading of the plan would
rules would reduce the cost of the rwo pro- have led Mr. Feldstein to the conclusion
grams by more than $100 billion in the year that total wages and Treasury revenue are
2 0 The cost of other government health likely to go up if the plan is enacted.
00
programs-for veterans, federal employThere is plenty of uncertainty about the
ees and military dependents-will also future cost of health care, but two current
grow less rapidiy as some of their patients facts cannot be denied One. the U.S. almove into health alliances.
ready has an elaborate health care system
Under current policies, federal health that leaves millions of people uncovered
expenditures are expected to be about 1680 and whose costs are rising rapidly Two.
billion in 2000-about Ulh billion of which government already pays more than •0 .
will be for Medicare and the federal share of America's health bill.
of Medicaid alone. The administration is
The question now is whether, without
not proposing to reduce federal health scrapping the entire system, we can introspending-only to reduce the annual rate duce incentives that will make health care
of growth from about 105 to about 5 by delivery more efficient, and whether we
%
2 0 as the new system phases in.
00
can reallocate some of the resources now
In a Sept 29 article on this page. Mar- tied up in costly government programs to
tin Feldstein argued that political opposi- making insurance affordable for the curtion will male large reductions in the rently uninsured.
The architects of the Clinton plan believe that we can. and that we owe it to the
American people to try.
r
r
Ms Rn lw is deputtt director of the Other
of ManoQement and Budort.
�J± Billion Here, a Billion There
By Uwe E. Reinhtfdt
PHINCTTOW.
N.J.
T
n
Cwirtuioril
Rud|ti o m e t r o r a u n
« j i i p n n i t M i i t curr » m tr»nd«. i M t m l t d
SLiies w i l l i p v n d 19 p«rcetii o( >u | r a u n t i i o r 11 j r o a u c : on N M I ^ I c » r » m t/w y t i r
:000 up f r o m l« p « r c e m ( o d t y
ImX J H O I * ' ' mouied A m t n e i ' i p u n d m .
7 > I I f v f i of i e » i t h i p ^ n d i n g . they
i j i O . *Qu:a 3 i n » r u p i in« countrv
">::3 .'Jll P r e s i d f n i Canton propo»*0
x 3 f . r , | '.nn proiecied | r c w L i down '.o
Dniv
3 » r c e r i of 'Jie C N P 5y --If
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« . - • : ; j i Dunditl iuCti t I I M P 3 f
: : r f .r i p t n o m i * o u i o > t d :o .-ji.on- g :f care -jiev i r | u * d
j r d e r i n g 'rorr. d e i p a i r over u i e prosp«ci 3f a e p r . v i t i o n 41 i * p e r c e m to
over f m i n c i a l c o l l a p M a l 19
p e r c e m . nc o ^ e r m d u i i n i n i e d n t n * o u i d even c o n i e m p i a i t »p«ndi s m u c n J I i ' percent of i l l
' P an n e i i i n c i r e i n d none of
'"c.-r i p e n a j even .0 percent today
- " v -.ner m o u l d P r » » i d * n i C l i n t o n
• n i c e :o snow i r percent 11 an
jiaui.oie j o n
It 11 i n e P r e n s c.v.ici * n o m o u l d demoni : - * [ e -..".jt : :s j n a n a i n a o i e
1
1
.e
e i i T . . n e '.he p r o j e c t e d c u l l
- - r e - c m j j n M e d i c a r e . ;ne neaitfl
- i . - j i c e ; - 3 g r i m for A m e r i c a s
. •. £
j j-c.'eilO'
ro-
Clinton's spending
cuts will work.
l e i f u e s in N « W Y o r t i . m d o v ^ r 40
percent more -.nan i n e i r c a i i e i g - j e i m
Minn««polii
Ccnsider i n o t n e r x m i M»nv c r : i i c i i r g u * :riai '.rif 3" m i l l i o n c j r - e r - . i v
j n i n j j r e - ; * m f - : c j r n ; : u : 3 not p o j j i i « v f . j of
oriy
: * p e r c e m j f :nc
G ^ P Oddlv enougn. i o m e of :ne
sarre v . n c i a l i o a u e n i n a i ;hese
HEALTH CARE
SECOND OPINIONS
A l l (XC.lMOll.t!
A m e n c m s m e r t i y lack h e t l i f t i n j u r ance not neaith c a r e , (or uiey a i l e g '
ealy receive adequate t r e a t m e n t ai
( A t f v o e n s e of p a v i n g p a n e n n :o
w n o m tne cost of tnat c h a n t y care is
tnifted
But ;f :»ie - j m n s u r e d a l r e a d y ge;
care '.ney ne*o. * n y f h o u i d m s u n r . g
'.nem a.i of a l u d d e n oresk tne nanonai Q a n * On \r.:\ p o m i -.oo opponents
of m e President s nea.tn : a r e pian
i h o u i d t r y n a r d e r to get ' . n n r i t o n e s
straight
7>.e C ^ n i o n A d m n i s t r a t i o r . i ; r : .
p o s * s c o m p i e * enougr. -.3
ir-.
* o u i d De c r . u c m a n y targe-.s
:r
portunny
I i i t p u i n m g •.r.at
"e
spending ! o r e c a s i 'S
i-.:-g
tftem Sure, m e Presider.: :ou.c
p l a i n n n forecast setter T.an - e - a s
so f a r the secrecy s u r r o u n d i r g •..•e
basis of his n u m b e r s s s u z z i ^ . g But
the Surden of proof or. :h:s issue o u g r t
not to rest - - i t n '.he President 'A r e s : !
on :ne shoulders of his C M I C S 'or .i s
•.hey * h o -a^-e T^uch e x p i a m m g -.o
:o
1
;
*.cer.-. For •.nit p r o g r a m -jie P r e n : e - i i O m d allow annual spending '.0
- c . - - i s e .'.--jm l ; : > I o i i l i o r m I H J to
JS - ' j c r . a i 1207 8 Dillion in i l M y e a r
.000 r > a : r e p r e i e n u an a v e n g e an- . . a i i m p o u n d g f o e n h n u of 7.1
3 e : : e n t Can A m e n c i l p A T M e l w u
- r a : . ; . .oca t^e i x i p e y e r a d M t y *
J - C argue u i a t even t c c o u M n f f o r
- ! : a : i o n . for > » : I b i l l w r M y c o u l d
-o-. . r e a l -jie e i d e r l y p r o p e r l y in the
DU\ i n a i g u e i t i o n m p e r t p e c t i v e
: : r s , c e r some f a a c m a t m g data pupu n e d m The New E n g U n d J o u r n a l o*
Mecic-.ne on M a r c n «. I M S . Th« a u r i of an a r t i c l e on M f d i c j f * i p e n d ;n cities found J i n . m l » t 9 . a l t e r
. u s t m g for d i f f e r e n c e i m age a n d
gender M e d i c a r e p t y m e n u (or doc>r i c a r e , per s e n e t i c u r y . v a r i e d
i m I O W I of t i : 2 m M i n n e a p o l n M " :
San F r a n c . a c o a n d MSa m New
Y o r « C u y to nigna o t I I 491 in D e t r o i t
l l . U " in F o n U u d e r d i l t a n d
m Miami
i / i o u i d not A m e n c « a p f t y a i c i a m
and tne l e g n l a t o n f r o m Use n i g h - c o n
n a i t i Be made 10 d e f e n d theae dif
' e r e n u a i a to m e t u . p e y i n g p u b l i c '
Suppote C o n g r e i a i r O K r a n l y i l e a n e d
Medicare r e i m B u n e m e n u for M u m i
P f i y s i c i i n i by t g l o M l 10 p t r c t n t .
* t r , a f t e r i h n budget c u t . M i a m i
v s i c i a n s w o u l d m i l be «Cr»or8ing S7
rcent m o r e M e d i c a r e a o l l a n per
b e n e f i c i a r y trian w o u l d t n e i r col1
c
;
��DISCOUNT ESTIMATES
CONTENTS
Talking Points
1
Talking about the Estimates
2
Categories of Gross Discounts
2
Describing the Discount Cushion
3
Distribution of Gross Discounts
4
Describing the Small Firm Discount
5
�TALKING POINTS
DISCOUNT ESTIMATES
NET DISCOUNTS ARE $161 BILLION
•
Net Discounts are $161 billion after Offsets of $188 billion are deducted from
Gross Discounts of $349 billion
SMALL BUSINESSES WITH FEWER THAN 100 EMPLOYEES WILLGET 75
PERCENT OF THE EMPLOYER DISCOUNTS.
•
Of the employer discounts, estimates are that about 55 percent go to firms with
fewer than 25 employees. About 20 percent go to firms with between 25 and 100
employees, and remaining 25 percent are to firms with over 100 employees.
EXTENDING THE SMALL FIRM DICOUNTS TO FIRMS WITH 75 WORKERS
A VOIDS CREA TING AN "ARTIFICIAL CLIFF. "
•
In earlier versions of the plan frill discounts were available for firms with 50
employees, and no discounts were available for firms with 51. This smooth
discount schedule permits the level of discounts to gradually decline based on both
wage and size
�DISCOUNT ESTIMATES
SUMMARY
The Health Security Act provides discounts on the price of insurance for small
businesses and low-income people. But the plan also sets a limit on the amount of
these discounts that can be spent automatically. If the amount specified for discounts
— plus a cushion of 15% is spent — Congress has to review the discounts and take
action . This trigger represents the President's strong commitment to financial
responsibility
TALKING ABOUT THE ESTIMA TES:
To discuss the discount estimates, there are three generally used terms:
•
Gross discount: Payments by the Federal government to low-income individuals
and low wage firms — both for premiums and/or for out-of-pocket payments (such
as deductibles and co-payments).
•
Offsets: Money that the Federal and State/Local governments save because some
of the people that used to be on public programs (Medicare and Medicaid) are in
the Allinace - and thus cost less than the would otherwise.
•
Net discount: The difference between the gross discounts and the offsets. This is
the number we should be referring to when discussing the discounts as it
represents the true cost of the program
NET DISCOUNTS ARE $161 BILLION:
• Net Discounts are $161 billion after Offsets of $188 billion are deducted from
Gross Discounts of $349 billion
THERE ARE FIVE CA TEGORIES OF GROSS DISCOUNTS:
• 1) Twenty-nine percent of the discounts ($ 100 billion) are for employer payment s
Most of these are to privatefirms.There is $2 billion assumed for state/local
government discounts, but we do not know exactly how this will be allocated yd
It is important to note that small businesses (with fewer than 100 employt«>
get 75% of the employer discounts. Of the employer discounts, estimates arc
that about 55 percent go to firms with fewer than 25 employees. About 20 percent
go to firms with between 25 and 100 employees, and remaining 25 percent are to
firms with over 100 employees.
•
2) Households get 54 percent of the discounts ($184 billion). Most of these
payments ($159 billion) are regular payments for families with non-workers
(including unemployed people) or self-employed workers. The rest ($25 billion)
are non-worker discounts to retired people.
•
3) Early retirees get 3 percent of the discounts ($11 billion).
�•
4) Three percent of the total discounts ($9 billion) are to cover out-of-pocket
payments by the poor.
•
5) The remaining discounts (13 percent) are a "cushion" for the premium
discounts. The cushion is 15 percent of the amount of premium discounts - i.e.,
total discounts less discounts for out-of-pocket payments.
THERE ARE TWO SOURCES OF OFFSETS TO THE DISCOUNTS.
• Savings to the Medicare program -- becase workers who are currently on
Medicare are will be covered by their employers -- is $28 billion.
•
Savings from people who are currently on Medicaid but will not be under reform
(workers and non-cash Medicaid recipients) is $160 billion. $85 billion of the
offset is Federal savings; the remaining $75 billion is state and local.
DESCRIBING THE DISCOUNT CUSHION:
Some behavioral changes — both positive and negative -- are difficult to quantify in a
program of this magnitude. This is why we have also specifically built in a cushion
for these unknowns, giving us even greater confidence in these estimates.
THE DISCOUNT CUSHION OF IS PERCENT - APPROXIMA TEL Y $45
BILLION OVER 5 YEARS-WAS DEVELOPED TO TAKE ACCOUNT FOR
POSSIBLE BEHA VIORAL RESPONSES, SUCH AS:
The additional cost of discounts for early retirees who may decide to retire due to
the lower cost of health insurance resulting from health care reform.
Large firms outsourcing the employment of low-wage workers to maximize their
subsidies.
States drawing Alliance boundaries to maximize their Federal discounts.
Possible overpayment of subsides based on "estimated" income at the beginning of
the year (without repayment once the actual income proves higher)
Creative accounting by corporations to lower premium payments.
Any estimating or other calculation errors.
i:\data\healthcare.\teamecon\discounts.kon
3
--
12/20/93
�Distribution of Gross Discounts, 1994 - 2000 (S billion)
Type
Amount
$100
98
2
Gross Discounts
Employer
- Private
- State/Local
Household
- Non-retiree
- Non-worker discounts to retirees
Percent
29%
28
1
$184
159
25
53%
46
7
$11
Retiree discounts
$9
Out-of-pocket
Discount "cushion"
3
3%
$45
Total
$349
100%
Offsets
Medicare
$28
15%
Medicaid
- Federal
- State/Local
$160
85
75
85%
45
40
Total
$188
Net Discounts
Total
$161
100%
100%
* The cushion is 15% of the premium discounts, or 13% of total discounts - which
include discounts for premiums and out-of-pocket costs
i:\data\healthcare\teamecon\discounts.kon
4
- - 12/20/93
�DESCRIBING THE SMALL FIRM DISCOUNT:
The small firm discount has been expanded and is now available to employers with up
to 75 workers, rather than 50 workers - as mentioned in the 9/7 draft Extending the
discounts tofirmswith 75 workers avoids creating an "artificial cliff' at which full
discounts were available forfirmswith 50 employees, and no discounts were available
for firms with 51. This smooth discount schedule permits the level of discounts to
gradually decline based on both wage and size.
Cap on Firm Payments
(Percent ofPavroin
- Firm Size
25-50
50-75
Average Wage<25
<$12K
$12-$15K
$15-S18K
$18-$21K
$21-$24K
>$24K
3.5%
4.4
5.3
6.2
7.1
7.9
4.4%
5.3
6.2
7.1
7.9
7.9
5.3%
6.2
7.1
79
7.9
7.9
The schedule forfirmswith fewer than 25 employees is the same as the old schedule
for firms with fewer than 50 employees. The rates forfirmswith 25-50 employees are
higher than the old rates for these firms. Firms with 50-75 employees, however, now
receive an additional discount below 7.9 percent, where previously they did not.
i:\data\healthcare\teamecon\discounts.kon
5
--
12/20/93
�Distribution
�PREMIUM DISTRIBUTION
CONTENTS
Page
TALKING
POINTS
WHO PAYS LESS? WHO PAYS MORE?
•
Firms
• Families
2
3
HEALTH CARE PREMIUMS
•
What are the premiums - numbers by family status
•
Family share
•
Employer share
• Part-time workers
• Non-workers and the self-employed
• Discounts
• Determining premiums
5
5
6
7
7
8
8
WHO PAYS FOR HEALTH INSURANCE UNDER REFORM?
•
Percent of premiums by employers, households,
10
and discounts (federal government)
EARLY
RETIREES
Description of policy
The cost to the federal government
Benefit to corporations
Induced retirement
Effect on Social Security and Medicare trust funds
i/data/healthcare/distribu apr
12/6/93
11
12
12
14
14
�12/19/93
WHO PAYS LESS? WHO PAYS MORE?
SUMMARY:
The majority of people covered through their employers - nearly
7 out of 10 of this group -- will pay the same or less for health benefits that are
the same or better. These Americans will save an average of $61 per month on
premiums, co-payments, and deductibles. About 30 percent will pay more. On
average, these people will pay $24 more per month, but many will get better
benefits -- and they all will receive a comprehensive set of benefits that can
never be taken away. Costs for firms depends on the extent to which they
currently provide health insurance for their employees.
I.
Firms
Two factors generally determine which firms pay more and which pay less:
(i)
whether the firm currently offers health insurance; and
(ii)
i f so, how generous is the insurance -- i.e., how many employees do they
cover, do they cover the whole family, and how generous is the benefit
package?
Basically, the more generous the insurance a firm offers today, the more savings
that firm will realize under the Clinton plan. Those who currently offer no
insurance will have to pay more.
Benefits to Firms That Currently Insure:
•
Eliminating the cost shifting associated with uncompensated care
lowers premiums by 10.5% for firms that currently insure.
•
Under reform, all employers will contribute to the costs of covering
their workers. This will eliminate "corporate free riders," where on*'
firm pays the full amount for a family policy, and the spouse's firm
gets a free ride. Spreading costs over all workers lowers premiums fur
each currently insured worker by 33%.
•
Firms never pay more than 7.9 percent of payroll on health insura nopremiums -- and many ofthe smallest firms will get discounts.
Some Firms Who Currently Offer Insurance Will Pay More:
•
I f they only cover some workers, they will have to pay for all worki-r•
I f they do not cover dependents, they will have to contribute
their share for dependents.
•
I f they offer less generous benefits, they will have to contribute for .\
comprehensive benefits package.
�12/19/93
II.
Families
POLICY:
There are substantial savings to families from reform, for a couple of reasons:
•
Employers are required to pay 80 percent of the premiums-- many
currently pay less.
•
Due to universal coverage, premiums are lowered to account for the
removal of costs associated with uncompensated care. We estimate
that there is $25 billion in uncompensated care in the current system.
($25 bilhon is in 1994 dollars and is based on Congressional Budget Office estimates)
•
Slower rate of growth in the costs of premiums
As a result, almost all families who now have insurance see immediate benefits. We
divide the population into 5 groups:
1.
2.
3.
4.
5.
those with employer-sponsored insurance all year
those with independent "non-group" coverage all year
those with Medicaid all year
those who are uninsured all year
those who fit into one or more ofthe above categories during the course
of the year
We present distribution tables for the first group. Our new distribution tables
include out-of-pocket spending as well as spending on premiums.
•
About 70 percent of currently insured families in the first categorywould see a reduction in family spending under the Clinton plan.
•
About 30 percent of currently insured families in the first category will
pay more - but they will get the same or more benefits. Many of thrso
are young, healthy people who currently benefit from risk selection by
insurers and will pay more with community rating. Remember, these
people will be assured of comprehensive benefits as they get older.
Remember that these figures only represent spending for people who Ret
insurance through work all year; the numbers do not address those with
expensive "non-group" coverage, Medicaid beneficiaries, those who are
uninsured, or those who fall into more than one of these groups during the
course of the year.
�12/19/93
Among those who pay more and less, here are the average amounts:
Change in Monthly Health Care Spending
Spender/Saver
1994
2000
Saver (61%)
Same (7%)
Spender (32%)
-$61
0
$24
-$90
0
$29
(NEW NUMBERS FROM KEN THORPE???)
�12/19/93
H E A L T H C A R E PREMIUMS
SUMMARY:
Both employers and workers pay a share of the premiums. The
employer share is a fixed amount, depending on the family status of the
employee. The family share depends on the plan that the family chooses. If a
family chooses a plan that is cheaper than the cost of the average plan, it pays
less. If a family chooses a more expensive plan, it pays more. Premiums vary
by region, and discounts are available for both employers and families. The
principles below help to explain the premiums in greater detail.
I.
What are the premiums?
The Health Security plan forms four rating pools based on family status to
determine the premiums. Our calculations suggest that the national average
premiums for the four rating pools will be:
Rating Pool
Single
Couple (No kids)
1 Adult Family
2 Adult Family
Average
Premium
$1,932
3,865
3,893
4,360
Payments By:
Family
Employer
$386
$1,549
773
2,125
778
2,479
872
2,479
* These premiums are 10.5 percent lower than they otherwise would be in thiabsence of universal insurance. With universal coverage, firms that insure
their workers will no longer be overcharged to cover the costs of those who
are uninsured but still receive care.
II.
What the family pays
The family is responsible for the difference between the employer
contribution and the price of the plan that the family chooses -- on average,
this amounts to 20 percent ofthe premium. The 20 percent share is indicated
in the Table above. This gives consumers an incentive to make cost-conscious
decisions; if a family chooses higher than the average cost plan, it pays more
than 20 percent of the premium. If it chooses a lower cost plan, it pays less
than 20 percent. It is possible for the family to pay nothing at all if it
chooses a plan that is 80 percent ofthe average cost plan.
�12/19/93
III.
What the employer pays
The employer is responsible for 80 percent ofthe weighted-average premium
in the Alliance. While each worker has a choice of plans with different
premiums, the employer contribution remains fixed (the amount depends on
family status) regardless of which plan the worker chooses. For a single
worker, the employer contribution is $1,549.
Today, the employer for one ofthe workers often pays to cover the entire
family. Now each employer will contribute.
•
I f we collected 80 percent ofthe family premium for each worker in a
family, however, we would have too much money. This is because
there is often more than one worker per family - on average, there are
1.5 workers per family. Thus, we only need to collect one 80 percent
share for each 1.5 workers.
•
The employer share is determined by taking 80 percent ofthe average
premium, and dividing by the average number of workers per family m
each alliance. Since 80 percent ofthe premium is about $3,000, the
amount per worker is about $3,000/1.5, or about $2,000 (the exact
amount is $2,125).
Notice that this policy is a substantial benefit for firms that are already
insuring most of their workers. If the firm were insuring workers in 2 adult
families, it might be paying $3,500 per worker (80 percent ofthe average)
Its cost will immediately fall to $2,500 per worker.
While the President could have decided to make only one employer
contribute the entire 80 percent, he opted for a per worker standard,
rather than force companies to adapt every time there is a change in
employment status or a spouse is laid-off.
Summary: A firm determines if each employee is (i) single; (ii) a couple; or
(iii) in a family with children. I t then pays the appropriate amount for each
worker from the Table above (considering small business discounts). Not*remember that premiums vary from alliance to alliance.
�12/19/93
IV.
What about part-timers?
Part-timers are pro-rated. The firm pays a percentage of the premium based on the
amount of hours of work per month.
•
Part time workers are defined as those working more than 40 hours
but less than 120 hours per month.
•
Employees who work less than 40 hours per month are covered as if
unemployed.
Hours of work per month:
40 hours
60 hours
80 hours
Employer share:
1/3 of employer share
1/2 of employer share
2/3 of employer share
If the total employer contributions for a family does not amount to the appropriate
employer share, the family pays the remainder ofthe employer share, in addition to
their 20 percent family share. They may be eligible for discounts on both the
employer and the family shares.
V.
What about non-workers?
For non-workers, it is more difficult to determine the payments. The family^
20 percent share ofthe premium is easy to compute. What about the
employer's share? What if the family works part of the year, but not the re-t"
Here is the rule. We add up how many months of employer payments a
family had (if there are two workers, we add for both). If there are at least 1_'
months, the family is a working family and owes just their 20 percent shar«'
If the combined months of employment is less than 12 months, the family
owes the remainder ofthe employer premiums. Non workers may be
eligible for discounts.
VI.
The Self Employed
As with any business, self-employed individuals pay the employers share, of
their premium. They also pay the individual/family share. They may be
eligible to receive discounts on both the employer and the family share. In
addition, they will be able to deduct 100 percent of their health care cost s
�12/19/93
VII.
How are the discounts computed?
There are three types of discounts:
Low-Income Families: Low income famihes in the Alhance receive a
discount on their 20 percent share. Generally, families owe nothing on the
first $1,000 of income, and the discounts phase-out as income reaches 150
percent ofthe poverty level. The phase-out rate is a little bit comphcated, and
the rates vary by rating category (single, couple, ...). The $1,000 disregard
and the poverty line are indexed to CPI growth.
Businesses: The firms' 80 percent share is capped at 7.9 percent of payroll,
with discounts covering any costs above that cap. Small firms receive
additional discounts. This is also true for the self-employed. None ofthe
employer caps are indexed; thus, to the extent health expenses rise relative
to wages, firms pay a smaller share ofthe premium costs.
FamUies 80% Payments: (i.e., for unemployed) Similar to the other family
discounts, a family pays nothing for the first $1,000 of income, and full
payment is expected at 250% ofthe poverty level. The indexing is the same
as for the family payment.
V I I I . Determining the Premiums
The premiums in the final estimates are from the Office of the Actuary, Health
Care Financing Administration, Department ofHealth and Human Services.
E s t i m a t i n g the Premiums
The premiums produced by the SPAM model are based on projected current
levels of health care spending plus upgrades for the uninsured, and add-ons
for preventive care, dental care, and mental health services.
The guaranteed national benefits package provides health insurance
comparable to average coverage levels associated with Fortune 500
companies. These premiums are higher than what will have to be charged
under reform, however, because current premiums are marked up by the
presence of uncompensated care. Estimates from the Congressional Budget
Office suggest that there is about $25 billion of uncompensated care in
current private health insurance premiums in 1994 dollars. Accordingly, dur
to universal coverage, we lower the premiums to allow for uncompensated
care savings. The newly insured are brought into the reformed system at 100
percent of average cost. The resulting premiums are shown in the first
�12/19/93
column ofthe following Table.
In addition to premium estimates from the Health Care Financing
Administration, we obtained estimates from the Agency for Health Care
Policy and Research, in the Department ofHealth and Human Services.
These estimates are displayed in the second column ofthe Table. The
AHCPR premiums are lower than those estimated by the Health Care
Financing Administration. We thus used the more conservative premium
estimates for our final models.
These premiums are averages for the nation as a whole. In areas with
greater health care costs, the premiums will be higher.
Policy Type
Premium
HCFA AHCPR
Single
Couple, no children
1 Adult Family
2 Adult Family
$1,933 $1,735
$3,865 $3,471
$3,894 $3,647
$4,361 $4,262
Employer
Payment
$1,546
$2,125
$2,479
$2,479
�12/19/93
WHO PAYS FOR HEALTH INSURANCE UNDER REFORM?
Most health insurance premiums in the new system will come from employers and
employees -- the same way it does currently. We estimate that if the system were in
place in 1994 instead ofthe current system, there would be $321 bilhon of
premiums. These premiums would be split between employers ($189 billion, or
59%), households ($56 billion, or 17%), and gross government premium discounts
($76 biUion, or 24%).*
* This amount includes the discount "cushion," which is allocated
to employers and households based on their share of discounts.
(DON'T WE HAVE A CHART FOR THIS)
10
�12/19/93
TREATMENT OF EARLY RETIREES (AGES 55-64)
SUMMARY:
I.
Right now, more and more companies are being forced to drop
benefits for early retirees. This benefit is important to protect
working Americans from losing the security they've worked hard
for all their lives. To ensure fiscal responsibility, the benefit is
phased-in over three years. The government will pick up 50% of
the costs that employers now pay for their early retirees for these
three years. After that, it will guarantee the entire employer
share. The retiree will pay the 20 percent family share of the
premium.
The Policy
Effective 1/1/98, the Federal government pays the required employer premium for
early retirees. Eligible retirees, their spouses and children are treated as full-time
employees; they are obligated to pay no more than the family share ofthe premium
for their health plan. To qualify for government payment of the employer sharr:
•
a person must be aged 55-64;
•
owe any employer premium; and
•
have worked a minimum of 40 quarters of Social Securitycovered employment.
The provision phases out gradually for higher income individuals and families: the
phase-out begins with income above $90,000 per year (single) or $115 per year
(family). Tax-exempt interest income is considered income when determining
eligibility. I f a person is over the income limits and does not work at all, they would
owe the employer premium. I f they work half-time, their employer would pay half
ofthe employer share, and they would owe half of an employer premium -- and
would receive discounts towards that amount.
The retiree is responsible for 20 percent ofthe premium unless their income is
below 150% of poverty, in which case they receive a discount. Just as some do
today, employers have the option of paying the 20% share for their former
employees. Employer-provided medical benefits for retirees aged 65 and over are
not affected by the Health Security Act (except that firms will benefit from the
inclusion of prescription drug coverage in Medicare).
i i
�12/19/93
II.
How Much Does This Cost?
We estimate the cost of the retiree policy at about $3 billion in 1994. This policy
will generate substantial savings for many employers who now cover the health
care costs of early retirees. I n order to recover some of this windfall to employers,
we ask organizations who benefit from this policy to pay a portion of these savings
for a three year period. Specifically, from 1998-2000, companies and state/local
governments must pay 50% ofthe greater of: (i) the estimated decrease in their
early retiree costs due to the Health Security Act; and (ii) the annual average ofthe
actual amount they paid for early retirees in 1991, 1992, and 1993, adjusted to
1998-2000 based on the medical component ofthe Consumer Price index.
There are two items of revenue related to retiree provisions, although both may be
more accurately described as "reductions in discounts" than "revenue increases."
These are the 50 percent assessment on the corporate gains for three years, and the
phase-out of benefits for wealthier retirees. The amount of money raised is:
Revenues from Retiree Issues ($ billion)
Item
1995 1996 1997 1998 1999 2000 Total
Assessment
Payments from High
Income Retired
Total
$0.0
$0.0
$0.0
$2.4
0.0
0.0
0.0
0.0
$4.4
0.1
$4.7
$11.4
0.1
0.2
$11.6
III.
How Much Do Corporations Benefit?
Corporations benefit by the difference between what they currently pay for retire*'
health insurance and the amount they will have to pay under reform. It is
estimated that total annual health insurance payments for early retirees with
employer sponsored health insurance is about $16 b i l l i o n in 1994. Estimates anthat this will increase to $30 b i l l i o n in 2000, if there is no reform. Under reform,
payments by corporations will be about $2 bilhon per year (assuming they pay th*20% share ofthe employee's premium), and the three-year assessment will cost
them about $4 bilhon per year in the years it is paid. Hence there are substantial
savings to firms from the retiree provisions. There are two important points about
the savings to corporations:
•
The assessment is on only one-half of the benefits and applies for only
three years.
•
The benefits are greater than the $11 billion government cost of the
retiree discount, because the discount is the cost of community-rah'd
family premiums. Today, corporations pay experience-rated
premiums.
12
�12/19/93
Here is a summary of changes in payments for currently retired workers with
employer sponsored health insurance:
Ofthe $16 bilhon that employers and employees are paying under the
current system, $7 bilhon is eliminated because of community rating. When
early retirees are pooled with the rest ofthe population, the cost of providing
them insurance falls by over 40%. This cost is borne by people who are
currently younger and healthier, but who receive other benefits from the
program.
Ofthe remaining $9 billion, $4 billion is received in payments from
employers. This money is collected because many people aged 55-64 work
part-time or have spouses who work. Contributions from employers for parttime workers offset the retiree and non-worker discounts. There is $1 billion
of discounts paid as part ofthe regular non-worker discount system. The
additional cost of providing everyone below $90,000 or $115,000 with a
discount for the employer's share ofthe premium is about $2 billion (recall
that this decomposition is for people with current retiree health insurance
only; this is only 40 percent ofthe retired population). Finally, the family
share ofthe premiums is $2 billion.
Change in Payments for Early Retirees with Health Insurance
If Program Were Fully In Place in 1994 ($ billion)
Current Payments
$16
- Employer
13
- Private
8
- Federal and State/Local
5
- Employee
3
Reduction in Payments
Due to Community Rating
$7
Required Payments
$9
- Employer Payments*
4
- Non-worker Discounts
1
- Additional Retiree Discount
2
- Remaining 20% Share
2
Corporate Savings**
$7
Corporate Retiree Assessment*** 4
* Includes a small amount of discount payments to employers subject to the cap
** Current employer payments, less reform employer payments, less 20% share
assumed paid by corporation.
*** I n the 1998-2000 period.
13
�12/19/93
IV.
Won't This Induce More Retirement?
Fear of losing health care insurance should not be what drives career
decisions. As with any plan that provides universal coverage, we expect
there to be an increase in retirement as a result ofthe Health Security plan.
Administration estimates are that there will be an increase in the number of
retired people of about 350,000 to 600,000 (roughly 5 to 7.5 percent ofthe
population aged 55-64). This will have some effect on discount payments, of
about $1 to $2 b i l l i o n annually (500,000 people x $2,000 each = $1 billion).
To the extent that these people are replaced by younger people who WOTIM not
be in the labor force, however, there will be additional employer payments to
offset the additional discounts given. The net effect on discounts could thus
be small. We include the amount of the additional discounts as part of the
discount cushion.
Most of the inducement to retire early comes from the provision of universal
coverage itself. In today's market, it is difficult or impossible for an early
retiree to obtain private (non-group) health insurance coverage. Under
reform, this coverage will be available at an affordable level, even without
the early retiree discount. The cost of health insurance for even a rich retiree
would be one employer share (about $2,100 for a couple) plus the family's
share of the premium (about $770 for a couple). For a retiree with income
less than 250% of poverty (about $24,000 for a couple), the cost would be even
smaller. Compared to the inducement to retire stemming from the
community rating of premiums and the general non-worker discounts, the
additional discounts to early retirees should not lead to much more early
retirement.
V.
What effect will this have on Social Security and Medicare?
This increased retirement will cost the Social Security and Medicare trust
funds some additional expenses. We estimate these costs to be $10 b i l l i o n
over the 1994 to 2000 period, and about $3 billion per year after 2000.
There are a large number of provisions in the Health Security plan that will
affect the trust funds, however. The reduction in employer health insurance
spending would raise wages and lead to more revenue for the trust funds, for
example. We do not know the full extent ofthe effects on the Trust Funds,
however.
14
�SAVINGS
Table of Contents
I.
Talking Points
p. 1
II.
Savings From Managed Competition
A.
Increasing competition
B.
Strengthening consumer buying power
C.
Simplifying bureacracy and administration
D.
Reinforcing the power of competitive forces
p. 2
IU.
Universal Care Provides Savings
p. 5
IV.
Premium Caps: Backup Cost Control Measure
A.
Setting premium targets
B.
Limiting increases in premiums
C.
Negotiating premiums over time
D.
Fail-safe limit on premium increases
E.
Corporate alliances have same rules
p. 6
F.
Reducing variations in premiums across the country
V.
Controlling Costs: Examples That Work Today
p. 8
VI.
Savings Due to Preventive Care
p. 10
VD.
Q&A
p. 11
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�TALKING POINTS
SAVINGS FROM COMPETITION
COMPETITION WILL DRIVE DOWN PRICES WITHOUT UNDERMINING
QUALITY
• Health plans will be forced to compete for business on price, quality, and service -driving prices down.
INCREASED BUYING POWER FOR CONSUMERS AND SMALL BUSINESSES
WILL DRIVE DOWN PRICES
• Consumers and small businesses will band together in a "health alliance" — a kind of
buyers' club that makes it possible for you to get quality goods at a discounted price.
In California, a buying group like this ~ known as CALPERS -- held their premium
increases to 3.1%, compared to a statewide average of 13.2% in 1992.
PREMIUM CAPS AS BACK-UP COST CONTROL MEASURE
• Limits on the growth of premiums health care plans can charge will ensure businesses
and consumers that premiums will not grow faster than CPI plus inflation.
LESS PAPERWORK WILL SAVE MONEY
• The Health Security Act will require insurance companies to use a single claim form - replacing today's hundreds of forms from more than 1,500 different insurance
companies.
ROOTING OUT FRA UD WILL DRIVE DOWN COSTS
• The Health Security plan will reduce the estimated $80 billion spent on overcharges,
false billing, and other fraudulent practices by making health care fraud a crime.
PREVENTION WILL SAVE MONEY IN THE LONG RUN
• The Health Security Act contains numerous incentives for consumers to receive
preventive care. A decade ago, Birmingham, Alabama's health expenses were nsinj:
at twice the national average. But after the launch of a health prevention program, i ii)
officials were able to hold costs down, saving an estimated $10.5 million over five
years.
ELIMINATING UNCOMPENSATED CARE SAVES MONEY
• Today, the government and the privately insured pay for billions of dollars in
uncompensated care — care given to uninsured patients who can't afford to pay their
medical bills. With universal coverage, that cost will virtually disappear.
1
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�CompeTition
�SAVINGS FROM MANAGED COMPETITION
"/ am among those who have concluded that 25 - 30% of current diagnostic and
treatment procedures is medically unnecessary. If we cut that fat alone, we would
save 200 billion dollars, which would more than pay for what the uninsured
lack."
SUMMARY:
[C. Everett Koop, 9/20/93)
Health care costs can be brought under control by increasing competition,
strengthening consumer buying power, giving consumers the information
they need to make cost-conscious choices, changing incentives for doctors,
nurses and other health care workers, and moving aggressively to cut out
waste and streamline administrative overhead.
We know this can be done because our international competitors spend
much less than we do on health care - - yet they insure all of their people,
provide better benefits, and have similar quality outcomes. In this
country-, evidence from communities, companies and regions illustrates
that providers can and will cut costs substantially and quickly in the right
environment - while maintaining the high quality care for which America
is famous. Providing incentives to deliver more cost-effective care and
reducing administrative costs can free up dollars to make health care
more affordable and help insure all Americans.
It is important to note that in order to maintain the credibility of our
numbers, we do not include any of the system-wide savings - which have
been proven to result from increasing competition, cutting bureaucracy,
and cracking down on fraud — in our savings estimates.
INCREASING COMPETITION IN THE HEALTH CARE MARKETPLACE
•
The major source of cost containment under the HeaJth Security plan will come from
bringing market forces to bear on the health care system and increasing efficiency thnn^h
competition between health plans. Limiting the rate of premium growth acts as a
backstop to competition — a commitment to downward pressure on costs that can funhcr
bolster competitive savings.
•
Under today's system, consumers often don't have a sense of the actual cost of the care
they receive. Employers pay their premiums; insurers pay the tab. Under refonn,
consumers, not their employers, will have the power to decide among health plans -- hascJ
on price and quality. Consumers who choose higher cost plans will have to pay more !. *
those plans, while consumers who choose low-cost plans will benefit from the savings
Increase cost-sensitivity on the part of the consumers will force price competition bciueen
plans and push providers to become more efficient.
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1
�Evidence from Minnesota's state employee health plan indicates that consumers respond to
changing incentives and lowering annual rates of increase. The Minnesota program -changed five years ago from paying for 100% of a fee-for-service plan to 100% of the
lowest-cost plan serving a given county - has seen cost increases stay 2% below statewide
trends since 1991. Estimated savings have been $23 million over the last three years; $12
million in 1993 alone. [State of Minnesota]
By bringing costs into line, the Health Security Act will eliminate the kind of situation
that leads to open-heart surgery costing $21,000 in one Pennsylvania hospital and
$84,000 in another Pennsylvania hospital, with the lower-cost hospital having better
results. [Pennsylvania Health Care Cost Council]
In 1987, the Memphis Business Group on Health (a group of 11 employers)
commissioned a study that found that some hospitals charged as much as 80% more for
the same service. The group published the findings and took competitive bids for their
25,000 employee group. One hospital offered discounts of up to 20%. Members of the
group believe that they have saved tens of millions of dollars. [Memphis Business Group on
Health, 1993 correspondence]
Under today's system, doctors get paid for each test and procedure they perform - so the
more they do, the more they get paid. Under reform, health plans work under a fixed
prepayment - - a budget that provides discipline - - changing the incentive from doing
more to competing on quality and efficiency.
Reform will also bring down the cost of defensive medicine by reforming our malpractice
system — encouraging disputes to be settled out of court and reducing lawyers' collections
from malpractice claims.
STRENGTHENING THE BUYING POWER OF CONSUMERS AND BUSINESSES
•
Larger pools mean lower costs. The Health Insurance Plan of California - a new state
alliance for small businesses ~ received bids from one plan that were as much as 551
lower than that same plan offered to the Federal Employees Health Benefits Plan.
•
Focusing on quality can also drive costs down. In Orlando, the 78-member Central
Florida Health Care Coalition worked with hospitals to analyze why costs and quality of
care differed for patients with the same illnesses and then used this information to bargain
for better prices. Costs per hospital discharge fell 2% -- and the cost savings enabled the
county school board to save 20 teaching slots it had planned to cut.
SIMPLIFYING BUREAUCRACY AND ADMINISTRATION
•
The Health Security Act will introduce a single claims form, a comprehensive benefits
i/data/healthcare/savings.fzl
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6
�packages, and standardized reimbursement rules, procedures and regulations. No longer
will a growing share of health care dollars pay for processing paper and complying with
regulations. Nor will the health care industry be forced to continue hiring sixteen new
administrators for every doctor simply to keep up with the flood of paperwork.
Under today's system, as much as 30-40% of the premiums paid by small firms support the
overhead of brokers, insurance agents and underwriters. Large firms pay significantly less
for administration - - closer to 5-7% of premiums. Under reform, firms with 5,000 or
fewer employees will join a health alliance where administrative and purchasing functions
are consolidated. Economies of scale result in a lower administrative burden for the
system as a whole.
The Health Security plan will reduce the estimated $80 billion spent on false billing and
other fraudulent practices by making health care fraud a punishable crime with stiff
penalties and by recovering money from offenders.
PLACING FAIL-SAFE LIMITS ON PREMIUM INCREASES
•
While there is ample evidence that lower cost growth will be driven by competition and
increased efficiency, the Health Security plan will build in a back-up measure: premium
caps.
•
•
Caps will limit the growth in what individuals and businesses pay for the comprehensi\e
benefits package; this is similar to caps proposed in other legislation - from Republican
Senators Kassebaum and Danforth - and enacted in the State of Washington.
Our policy acts like a speed limit on how fast premiums can go up. Just as a speed limn
only affects those cars that are speeding, premium limits target will only apply to plans
whose prices go up faster than the targeted rate in their region. Enforcement of these
premium limits will only be enacted if the average growth (of all regional plans together i
exceeds the targeted regional rate of growth. This way, gross offenders will not be singled
out until there is a system wide collaboration of 'speeding', and everybody is going a bit to
fast.
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4
�UNIVERSAL CARE PROVIDES SAVINGS
Savings Through Access to Primary Care
• Care for the uninsured is limited, and more often than not, is provided in the
most costly arenas - Emergency rooms. By providing everyone with access to
health care and health education before small problems can develop into
problematic emergencies, much savings will be realized that today is wasted in
costly treatment.
Cost Shifting Will be Eliminated
• Today consumers bare the burden of compensating for those who cannot insure
themselves. Hospitals increase the price of care to cover their losses when those
who can't pay receive treatment - this is called cost-shifting. Universal coverage
will eliminate cost-shifting and curb this rise in costs for the consumers.
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5
�PREMIUM CAPS:
Backup Cost Control Measure
SUMMARY:
While there is ample evidence that lower cost growth will be driven by
competition and increased efficiency, the Health Security plan will
build in a back-up measure to cost containment: premium caps. These
caps will limit the growth in what individuals and businesses pay for
the comprehensive benefits package.
The reassurance of this limit is important. If businesses and individuals
are all going to be asked to contribute to the cost of health care, and
the government is going to provide discounts to those who cannot
afford their full share - then everyone must be guaranteed that
increases in their payments will stay within reasonable bounds.
SETTING PREMIUM TARGETS
•
The National Health Board will calculate a national target amount for the
guaranteed comprehensive benefits package, which will include the increased cost
of caring for the currently uninsured.
•
The Board will use the national premium target to calculate a premium target for
each regional health alliance, adjusting the national target based on current
variations in health spending and distribution of the uninsured.
LIMITING INCREASES IN PREMIUMS
•
After the initial premium base has been set for each regional alliance, the Health
Security plan will limit how fast the cost of those premiums can rise.
•
Since premiums paid by employers and consumers will grow at the inflation rate,
total health spending for the guaranteed benefits will grow at inflation plus
increase in population.
•
Limits on premium increases will apply only after increases in total health care
spending to cover the uninsured and the under-insured have been taken into
account.
NEGOTIATING PREMIUMS OVER TIME
•
In each regional health alliance, health plans will bid annually to provide the
guaranteed benefits package and negotiate with alliances to set premiums.
Premiums will vary from plan to plan.
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�If the average premium across all plans is less than the alliance's premium target -that is, if premiums, on average, are increasing consistent with inflation -- then no
federal enforcement will be triggered.
FAIL-SAFE LIMIT ON PREMIUM INCREASES
•
Federal enforcement will be used only if the average premium across all plans
exceeds the alliance's premium target. It will only apply, however, to those plans
in the Alliance that exceed these targets.
•
Plans and providers that propose excessive rate increases will face financial
penalties which will be used to "rebate" the portion of the premium which exceeds
the alliance's premium target, based on a formula set in federal law.
•
If the plan does not lower its premium, then the rebate automatically takes effect.
And, payments from the plan to its providers are automatically reduced across the
board by the same percentage amount that the plan's premium has been reduced.
The enforcement, therefore, applies both to the plan and its providers -- giving
alliances, plans and providers an incentive to negotiate beforehand to keep rate
increases in line.
CORPORATE ALLIANCES HAVE THE SAME RULES
•
Large employers forming corporate alliances are expected to comply with the
same limits on premium increases as regional alliances. If premiums in a
corporate alliance exceed the allowed rate of growth during two of any three
years, the corporate alliance will be required to purchase coverage through
regional alliances.
REDUCING VARIATIONS IN PREMIUMS ACROSS THE COUNTRY
•
Today, health care costs vary widely from state to state and even within states -with no apparent differences in the quality of care. At first, alliance premium
targets will be set based on the current level of health care spending in each area,
and will vary from alliance to alliance. However, data will be collected to try to
determine how these needless variations can be reduced over time.
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1
�CONTROLLING COSTS:
Examples That Work Today
The Health Insurance Plan of California -- a new state alliance for small
businesses - received bids from one plan that were as much as 55% lower than
that same plan offered to the California Federal Employees Health Benefits Plan.
The State of Minnesota's public employees health plan has kept its annual rates
of increase 2% below statewide trends for the last two years. As bargaining
power has increased - due to the pooling effect of consumers - individuals have
opted for lower-cost high-benefit plans. [State of Minnesota]
In 1984, Wisconsin began contributing at the price of the low cost plan. In one
year, enrollment in the low cost plan increased from 15 percent to 60 percent. By
1993, 85 percent of enrollees were in lower cost plans. Estimated savings were
approximately $12 million - or $500 per employee - in the first year alone.
Xerox Corporation Xerox was experiencing a 20% increases every year in its
health care costs - because employees, isolated from the costs of their health care,
chose very expensive and inefficient health care packages. In 1991, Xerox
changed to a modified low cost pricing strategy ~ It began screening a menu of
cost efficient and quality plans for its employees, in hopes that it would find
quality plans at competitive prices. Induced competition between participating
health care plans is the cornerstone of there idea, and each year all participating
plans are reviewed to ensure that they meet high quality standards and offer
comprehensive benefits packages. Premium increases for all health care plans -especially the benchmarks - have fallen significantly. As a result, Xerox
estimates that enrollment in the lower cost more competitive plans was up 30
percent, and saving of up to $1,000 per year for each employee who switched was
achieved. [Xerox Corporation]
Digital Equipment Corporation (DEC) switched to a low cost pricing strategy
in 1991. DEC estimates that this strategy has reduced 1993 costs by $360 per
employee. They further estimate that their savings will amount to $1,400 per
employee by 1997. This translates into 1993 savings of $20 million, rising to
$63.5 million in 1997. [Digital Equipment Corporation]
The California Public Employees Retirement System administers health care
plans for almost 900,000 state and local government employees and their families
across California. Its large size has given it bargaining power to hold annual
premium increases in 1992 to 3.1 percent while forcing its insurers to root out
wasteful administrative costs, reduce inappropriate care, and encourage hospitals
and doctors' groups to moderate their rates. [Calpers]
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�In Rochester, NY, doctors, hospitals and local businesses have all cooperated to
keep the quality of care high, while implementing incentives to control costs.
Through insurance reform, Rochester has been able to serve the needs of its large
businesses — by keeping costs down — while also establishing a structure that
enables small businesses and families to purchase competitively priced insurance.
Rochester's medical costs are now 25 percent lower per capita than national levels
and administrative costs are half national averages.
In Orlando, the 78-member Central Florida Health Care Coalition worked
with hospitals to analyze why costs and quality of care differed for patients with
the same illnesses and then used this information to bargain for better prices.
Costs per hospital discharge fell 1% — and the cost savings enabled the county
school board to save 20 teaching slots it had planned to cut.
In 1987, the Memphis Business Group on Health (a group of 11 employers)
commissioned a study that found that some hospitals charged as much as 80%
more for the same service. The group published thefindingsand took competitive
bids for their 25,000 employee group. One hospital offered discounts of up to
20%. Members of the group believe that they have saved tens of millions of
dollars. [Memphis Business Group on Health, 1993 correspondence]
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0l
»
�SAVINGS DUE TO PREVENTIVE CARE:
Case Studies
[Source: "Opportunities for Success: Cost Effective Programs for Children (Update 1988)"
a report of the Select Committee on Children, Youth and Families,
US. House of Representatives, 100th Congress, 2nd session, 1988.J
In 1983, Birmingham Alabama's health care expenses were rising at twice the national
average. Officials launched a full-scale prevention program. From 1985 to 1990 the
city's health costs did not rise, even as the price of care skyrocketed. By investing $3
million in health promotion. Birmingham officials estimate they saved $10.5 million
over five years.
A study in Massachusetts estimated that each $1 spent on the prenatal component of
the Women, Infants and Children (WIC) program saved more than $3 in short-term
hospital costs alone. Savings on the long-term treatments were over and above this.
Two studies of WIC in Missouri found that each $1 spent on prenatal care returned 49
to 83 cents in lower Medicaid expenses within the first weeks of life. An earlier study
estimated that the savings during the infants first year were about $2.
The Institute of Medicine estimated that each $1 spent on prenatal services for lowincome pregnant women saved $3.38 in costs of care for low-birthweight infants.
At the University of California at San Diego in 1985, hospital care for babies bom
with no prenatal care cost an average of $2,200 more than corresponding care for
babies whose mothers received adequate prenatal care. But such care cost only about
$ 1,000 per pregnancy.
A 1984 study at the University of North Carolina estimated that each $1 spend on the
Childhood Immunization Program saves $10 in subsequent medical costs. A year
later, a more specific study ofthe measles, mumps, and rubella vaccine found a
benefit-cost ration of 14 to 1.
i/data/healthcare/prevent.doc
12/14/93
iQ
I
�PREMIUM CAPS:
QUESTIONS AND ANSWERS
Q:
How do we know this premium cap will be effective? How do we know it won't lead to
all kinds of market distortions?
A:
The Congressional Budget Office (CBO) released a study in September of 1993 which
stated a number of necessary ingredients to increase the effectiveness of premium caps in
controlling health care costs without adverse effects. They listed:
•
•
•
•
•
Instituting a standardized benefits package
Mandating guaranteed renewal of insurance policies
Guaranteeing universal coverage
Modifying payments to insurers based on the health status of their enrollees (risk
adjustment)
Limiting "balance billing," which occurs when providers bill patients for the
amount above what their insurance plan pays
The Health Security Act includes every one of CBO's suggestions for improving the
effectiveness of limits on premium increases. The CBO report states that with these
elements, premium limits would "reduce the rate of growth in health care spending."
In addition, an article in the Washington Post -- called "Clinton's Cost Controls Can
Work," written by two leading health policy analysts, Stephen Zuckerman of the Urban
Institute and Jack Hadley of Georgetown University, maintains that competition among
plans and a premium cap would be effective in eliminating waste from the system and
controlling costs. They also say that controlling costs will not compromise the quality ot
care or the effectiveness of doctors and hospitals.
The idea of a premium cap is not new nor is it radical. The premium cap has been
proposed by leading Republicans, including Senators Kassebaum and Danforth.
Q:
The premium cap may be too strict for some health plans. What happens if a health
plan runs out of money?
A:
Health plans should not have to hit the cap because there is plenty of waste and
inefficiency in the health care system that can be reduced or eliminated. Insurance
companies that say they have to constantly jack up rates aren't playing straight.
If a health plan were to literally run out of money, consumers would simply join another
plan. Unlike today, though, benefits would be guaranteed. Such a scenario, however, IN
i/dau/healthcare/premcaps doc
12/14/93
�highly unlikely, certainly less likely than it is today, because health plans will be required
to have met stringent solvency standards before they can do business.
When you hear concerns about running out of money, remember the source. It's the
insurance industry that is running an advertising campaign against this limit on premium
growth. And it's because they're out to preserve their profits ~ plain and simple. In a free
market system, some make it and some don't, but regardless, you will have guaranteed
care.
Q:
But what if they do hit the cap ?
A:
Health plans will have to decide how to cut their costs, as they are likely to do anyway if
they expect to compete in a reformed insurance market. They are likely to do it in any or
all of the following ways:
1)
2)
3)
4)
Limit their own profits
Pay less to doctors, hospitals and other health care providers
Further support health promotion and prevention among customers to keep them
healthy, rather than having to treat them once they get sick.
Provide care in a more efficient way
To those who question letting individual health plans decide how to limit the growth of
costs, two leading health policy analysts recently wrote that "it seems far preferable that
insurance companies that are responsive to their subscribers make these decisions than
having the federal government involved in detailed price negotiations and review
procedures with individual hospitals and physicians."
Q:
Won't they limit services and benefits, cut corners, ration care, and do other bad thing\
to patients?
A:
No. They have every incentive not to do this. The President's plan relies on competition
among health plans. If a health plan starts to cut comers on patients, it knows that the
patients is likely to switch plans. And the low consumer satisfaction will be noted as pan
of the consumer report cards that will be published publicly about each health plan. So n
is very unlikely that new customers would sign up to replace the old, dissatisfied
subscribers. For the health plan, cutting comers will mean less customers and therefore
lower profits.
As an everyday example, we regulate the rates of utilities like electric and gas - and n
works just fine. You don't see electric and gas companies running out of money or euttmi:
off service to customers.
i/data/healthcare/prcmcaps.doc
12/14/93
10-
�ivieaicare
�MEDICARE
CONTENTS
Page
Talking Points
Specific, Scorable Savings
•
List of major sources of savings
1
All Serious Proposals Call for Medicare Savings
2
•
Medicare savings compared to other plans
Eliminates Cost Shifting to the Private Sector
2
Savings Used to Invest in New Benefits for Older Americans
2
Appendix
Line-by-Line Medicare Savings Under Health Care Reform
•
Savings table
•
Descriptions of line items from table
�TALKING POINTS
MEDICARE
PRESERVING AND STRENGTHENING MEDICARE
• Individuals currently eligible for Medicare will continue to receive Medicare coverage
-- with guaranteed security and expanded benefits. Medicare remains intact under the
President's plan, with slower rates of growth and minor modifications.
MEDICARE SAVINGS WILL BE REINVESTED INTO EXPANDED COVERAGE:
Prescription drugs:
• The plan offers prescription drug coverage as part of Medicare — providing
desperately needed protection for older Americans. For $11 a month, older Americans
will get protection against prescription drug prices that are skyrocketing out of
control. A $1,000 annual cap will be placed on out-of-pocket prescription drug costs,
with costs above this amount fully covered.
Home and community-based long-term care:
• The Health Security Act will help Americans who need long-term care live
independently at home and in their communities - which most older Americans,
people with disabilities, and their families and friends prefer.
•
ADVOCATES FOR SENIORS SUPPORT THE PRESIDENT'S PLAN
• A spokesperson for the American Association for Retired Persons (AARP) says that
the President's plan is the "best option for senior citizens," who come out "winners,
partly because of benefits on prescription drugs and long-term care."
• The National Council of Senior Citizens "strongly supports the broad thrust" of the
Clinton plan.
• The National Council on the Aging "applauds" the President's approach to health core
reform.
i/dala/heal thcare/brie fbk5 pwj
12/7/93
�MEDICARE UNDER HEALTH CARE REFORM
SUMMARY: Virtually every serious health care proposal calls for
slowing the growth in spending on Medicare and Medicaid to help
finance reform. Unlike most ofthe other proposals, the President's plan
reinvests that money in new benefits for older Americans and the
disabled. Yet, the overall rate of growth in Medicare spending is
reduced to help tame the federal budget deficit. In addition, only the
President's plan combines Medicare changes with limits on private
sector spending, so that the savings from Medicare don't continue to
simply shift to the private sector. The changes we propose will be within
the framework of a thorough reorganization of the health care system in
which everyone stands to gain.
Medicare remains intact under President Clinton's plan, with minor
modifications and slower rates of growth in costs. Here's how the
Health Security Act achieves these savings:
SPECIFIC, SCORABLE
SAVINGS:
•
The Clinton plan identifies $124.4 billion in specific, scorable, line-byline savings in the Medicare program. That's $124.4 billion dollars to
redirect in the interest of the health of all Americans and in the
interest of the nation's economy.
•
•
•
•
•
Reduce payments to hospitals for the cost of treating the uninsun-d
(as a result of universal coverage)
Re-establish modest co-pays to diagnostic and home health services
Raise Medicare Part B premiums for individuals with incomes
above $90,000 and couples above $115,000
Limit Medicare payments to high-cost medical staffs
Reduce the cost increases, or "updates," of Medicare payments to
certain providers
•
While the amount of savings we are calling for may seem high today,
we must keep in mind they will be taken from a future base of $1.2
trillion in projected Medicare spending over the years 1995 to 2000.
What's more, the $124.4 billion will only reduce the growth i n
Medicare spending from triple the inflation rate to double this rate.
•
A complete list of Medicare savings is included in this section.
�ALL SERIOUS PROPOSALS CALL FOR MEDICARE
SAVINGS:
•
Nearly every credible health care proposal, including both Democratic
and Republican plans, rely on significant savings from Medicare to
help finance reform.
President Clinton's Health Security Act:
Republican Task Force (Chafee I Dole) Proposal:
Gramm I McCain "Medisave" Proposal:
"Managed Competition Act of 1993" (Cooper):
*
$124 billion
$111 billion
$61.5 billion
$40 billion *
this amount of Medicare savings would leave the Cooper plan with a $70 billion
deficit increase, according to CBO
ELIMINATES COST SHIFTING TO THE PRIVATE
SECTOR
•
One difference between the Clinton plan and the others is that we
achieve Medicare savings in the context of limits on private health care
spending. Medicare and other program cuts absent real
comprehensive health care reform would aggravate current cost
shifting problems -- pushing private health care premiums even higher
and making health insurance even less affordable for America's
employers and individuals.
•
For example, i f Medicare payments were simply cut, so that a hospital
was paid $100 for a service that they used to get $150 for, the hospital
would likely charge everyone else $50 more.
•
Uncompensated care bills from government programs -- $14.4 billion from
Medicare and $8.1 billion from Medicaid -- shifted $22.5 billion to the
private sector in 1992.
•
I n fact, private payers paid 128 percent of hospital costs in 1990 to
compensate for government underpayment of costs and uncompensated
care. [Lewin-ICF, April 1992; ProPac Report to Congress, June 1992.]
WE INVEST IN NEW BENEFITS FOR OLDER
AMERICANS:
•
The President's plan preserves the Medicare program, and protects
Medicare beneficiaries by providing them with a new benefit -- coverage
for prescription drugs. I t is reported that prescription drugs are the
largest cost of daily living for 45% of all people over 65.
1
^ r u g Costs Under F i r e " , USA Today, 9/25/93.
2
�It also uses Medicare savings to begin funding a new home and
community-based long-term care program, which will provide needed
services to elderly and disabled Americans who would otherwise be at
risk for entering a nursing home.
Finally, it increases financial protection for seniors who do enter
nursing homes by increasing the asset protection limit so seniors don't
have to spend themselves to destitution before they can get help
paying for their care, and by increasing the amount of spending money
seniors in nursing homes have each month.
�Mtdicar* S i rings under Hulth C a n Rtfonn
(S in milliom, by FY)
MM
mi
vm
1*M
IMA
Ho^itd Update al Mft-2% in 97-2)00
IME (3% MM, ifw. ky wxto^ pnatuaaa)
lUduca Madter* P<ym«»b for Captal
Ftet Down DSH a« Statei EnUr HCX!
MonMum onNawLTC HoapUab
Extend OBRAMSNF Saving*
CME (paytoAHC^ tnaaaaad bjr Ot)
PartA
SalMaJfMA
Part A Rtvaaaa fnponl
Md Ueal EmflcTMi Mora 4/1/S6
PattB
Bwa MVPS on Raal GDP Par Capita (Prim. Can-CDP+13%)
Sat Cumulattva PhyaUan Expanditura Coab
Raduca a by 3% in 1996, Exeapt Primary Can
Eliminate Fenaula-Drtvan Ovwpayaiant in
HoapitelOPDa
Compattthrtly BidforMadkari Lata
CompcttHvdy Bid for Part B Strvkaa
Woo* RaUtod Pramium ($90K/ni5K, $15 K phaa^n)
Raateblish Lab Coinatnnet (20%)
Part B Pranluaai
Imumiim
HishPikadMadkalStaffi
Prohibition on balaitea billing
SuhoU/.PfertB
ParteAAB
extend OBRA 93 Horn. Htalth Savings
HomtHaalth Limits: 100% Median
10% HHA Coins, (after 30 days port-dischargt)
Expand Canten of ExatlUnca
PattA
PtrlB
Extend VMican Stcondaiy Payor (MSP) Data Match
MSPDisablad; changtthresholdfratn 1 0 0 t o 2 0 , l / l / »
Extend OBRA 93 Provision on MSPferDisabled
Extend OBRA 93 MSP ESRD Provision
HMO Payment Improvement
0
0
0
0
20
0
0
0
0
1470
995
OO
40
10
40
0
6
u
iM
0
0
v»
0
0
0
0
0
250
0
0
475
27S
-85
C5
van
VBS
ISO
0
0
0
0
0
0
0
0
0
10BO
140
110
0
0
450
0
0
1,300
220
190
350
0
l/TO
0
-710
0
-130
1/890
240
210
950
-IS
SAYINGS, TOTAL PACKAGE
990
3410
1,400
1<M0
70
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10^25 •
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-1A50»
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290
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SO
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-260
6350
2750
320
270
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•75
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1770
-2770
780
-270
10300
3380
340
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1300
-130
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4310
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•250
7390*
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•9390 •
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•1700*
393i0
i!o
0
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0
0
0
0
0
230
0
0
1/400
480
10
1340
400
160
1380
650
230
1300
690
250
1320
2320*
650*
8390 *
0
0
0
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0
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40
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0
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70
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400
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M includes Treasury estimates ol change in inooaae and OACT estimates erf raducad
oudayi (or thoae who drop Part B eoweragt.
JJoo
14373
124 414 |
�November 17,1993
MEDICARE SAVINGS PROPOSALS for HEALTH REFORM
($ in millions)
PARTA PROPOSALS
Reduce the Hospital Market Basket Index (HMBD Update by 2% In FY 1997-2000. Medicare changes the inpatient perdischarge standardized amount by a certain amount every year to reflect input cost changes and Congressional
direction. OBRA 93 reduced the HMBI in FYs 94 - 97 by 2.5,2.5, 2, and 0.5 percentage points respectively, to reflect
greater efficiencies in hospitals. This proposal would reduce the market basket updates by 2% for FY 1997 - FY 2000.
Since the market basket is projected to increase 5% annually, and case mix is projected to increase 2% per year, hospitals
can still expect an overall 5% increase per year.
Savings
1226
$0
122Z
930
1229
2,870
1222
5,610
2Q
QQ
8,750
1996 - 2000
$18,160
Btdycc Indirect Mcflcri EdflWtipn OME) Adjygtmgnt tp3,p% in FY 1?96. A portion of the IME is intended to
compensate hospitals for uncompensated care. Universal coverage, however, will ensure payment for all patients and
essentially eliminate uncompensated care. In 1996, the IME adjustment will be lowered to 3.0% under this proposal.
Beginning in FY 1997, the aggregate amount of IME payments will be increased by the projected national average
increase in premiums for the under-65 population for those States that opt into the reformed system; by 1998, all
Medicare IME payments will be made in this fashion. These payments will be appropriated to a national pool to finance
the higher costs of academic health centers. The cashfloweffect for IME payments is built into these estimates.
Savings
1226
$2,470
122Z
3,110
122ft
3,470
1222
4,130
ZQQfl
4,660
1296-2000
$17,840
�Adjust Inpatient Capital Payments to Reflect Better Cost Data. This proposal combines three inpatient capital payment
adjustments to reflect more accurate base year data and cost projections. The first piece wouldreduceinpatient capital
payments to hospitals excluded from Medicare's prospective payment system (PPS) by 15% for FY 1996 - 2000. PPSexcluded hospitals, currently paid at full costs, do not have an incentive for efficiency. The second piece would reduce
PPS Federal capital payments by 731 percent and hospital-specific amount by 10.41 percent to reflect new data on the FY
1989 capital cost per discharge and the increase in Medicare inpatient costs from FY 1990 to FY 1992. The last piece
would reduce payments for hospital inpatient capital through a 22.1% reduction to the FY 1996 - 2000 updates of the
capital rates. Current data indicate that Medicare inpatient capital cost per discharge increased 775% during the years
immediately before the introduction of prospective payment for capital-related costs (FY 1986 - FY 1991). The
identifiable variables for capital costs only increased 38.2% over the same period. This proposal would reduce the
update to the capital rates by 4.9% each year during FY 1996-2000 to recover excess capital spending.
Savings
1296
$995
122Z
1,400
122fi
2,005
1222
2,610
2000
3,315
1996-200q
$10,325
Revise the Disproportionate Share Hospital (DSH) Adjustment. Hospitals that treat a disproportionate share of lowincome patients receive an additional payment. Studies show that the additional payment overoompensates for the
higher costs associated with treating low-income Medicare patients. In the reformed system with universal coverage,
DSH can be reduced. This proposal would replace the current DSH program with a new program as States come into
the new system. The new program .would assist hospitals serving the largest share of low-income patients.
Savings
1226
$430
122Z
1330
1225
3,670
1222
4390
2000
4,810
1996-2000
$14,630
�Moratorium on PPS-Exempt Long-Term Care Hospitals. Long-term care hospitals, which have an average length of
stay of over 25 days, are currently exempt from the PPS system, receiving cost-based reimbursement from Medicare,
subject to a rate-of-increase limit. This proposal would pay new long-term care hospitals under the PPS system.
Alternatively, these hospitals could seek reclassification as psychiatric or rehabilitation hospitals, or become certified as
skilled nursing facilities (SNFs), for example, and be paid under the SNF cost limit structure.
1225
$20
1226
40
122Z
70
122a
100
1222
130
2Q
QQ
170
1995 - 2000
$530
Extend OBRA 93 Provision! Eliminate Catch-Up after SNF Freeze Expires. OBRA 93 established a two-yearfreezeon
updates to the cost limits for skilled nursing facilities (SNFs). A "catch-up/ however, is allowed after the SNF freeze
expires on October 1,1995; new cost limits would be established that do not reflect the effects of the freeze. This proposal
would eliminate the "catch-up" by recalculating the percent of the mean that would serve as the cost limit The
recalculation would be calibrated to result in the same amount of savings as a continuation of the freeze.
. Savings
1226
$80
122Z
160
122ft
180
1222
200
2Q
QQ
210
1996-2000
$830
�Graduate Medical Education: Effect of National Pool. Under the legislation. Medicare would pay into two national
pools: one for direct medical education, and one for academic health centers. The projected Medicare spending for
direct and indirect medical education would be transferred to the Secretary for those States that have opted into the
reformed system; by 1998, all States will be folded into the new system. These funds will be transferred out of the Trust
Funds faster than they are currently paid to hospitals. This will result in a slight cost to Medicare. The costs displayed
here are the cash flow effect for direct graduate medical education.
1996
($30)
122Z
(60)
122a
(150)
1222
(20)
2000
(20)
1996-2000
($280)
(730)
($1,650)'
Interaction Costs
PARTA
INTERACTION
($0)
(110)
(300)
(510)
�PARTA REVENUE PROPOSAL
Subject All State and Local Employgea lo Hospital Insurance Tax. State and local jurisdictions can opt to pay the HI
payroll tax for State and local workers hired before April 1, 1986, but are not required to do so. The proposal would
extend the payroll tax to all remaining exempt State and local workers, who would thus be treated like all other covered
workers. Additional revenues would exceed benefit payments for a long time, since 90% of retired State and local
workers already receive Medicare benefits through other covered jobs or spousal employment; only about 70%,
however, worked in State or local government jobs on which HI taxes were paid.
Savinga
1226
$1,535
122Z
1,518
1225
1,470
1222
1,420
20011
1,366
(Estimates for this proposal were calculated by Treasury Department staff.)
122fc2QQfl
$7,309
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
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Original Format
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Paper
Dublin Core
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Title
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[Health Care Economic Binder] [1]
Creator
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White House Health Care Task Force
Health Care Task Force
Alice Dunscomb
Identifier
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2006-0885-F Segment 5
Is Part Of
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Box 7
<a href="http://clinton.presidentiallibraries.us/items/show/36150" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/17621373" target="_blank">National Archives Catalog Description</a>
Provenance
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Clinton Presidential Records: White House Staff and Office Files
Publisher
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William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
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5/7/2015
Source
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17621373
12093636
42-t-12093636-20060885F-Seg5-007-001-2015