Category Archives: Insurance

Democrats’ Health Reform Proposals: The Basics

Although the specific details vary, current House and Senate proposals are broadly consistent with the following eight point outline.

  1. Substantially all Americans will be required to have health insurance that meets minimum requirements specified by the government.  In order to make this health insurance mandate feasible, eligibility for the taxpayer funded Medicaid program will be expanded, and substantial premium subsidies will be provided to lower-to-moderate income buyers.
  2. With the exception of very small establishments, businesses will either have to offer health insurance to workers and contribute much of the cost, or pay significant taxes or fines to the government.
  3. People not covered through employment-based coverage, Medicare, or Medicaid will buy required coverage through a new “health insurance exchange.”  The government will determine several standardized coverage options from which people will be allowed to choose and will approve insurers that can offer coverage.
  4. Health insurers will have to accept all applicants regardless of health status and without excluding coverage for preexisting conditions.  Premium rates will be allowed to vary only by geographic region and, within a restricted range, a person’s age.
  5. People will have the option of buying required coverage from a government-run insurer.  The public insurer will likely provide cheaper coverage than private insurers, in part because the government will back it rather than private capital, and, more important, the public insurer will likely squeeze down reimbursement rates for doctors and hospitals, perhaps to Medicare levels.  (It appears that the proposal under development from the Senate Finance Committee will not include a public plan option.)
  6. Because the expansion of Medicaid and income-based subsidies for health insurance will be very expensive, tax increases will be necessary.  The proposals target high-income citizens and avoid, or at least delay, overt tax increases on the middle class.  The proposals will not alter the current tax exemption for employer-sponsored health insurance.
  7. In an attempt to make reforms budget neutral over the next 10 years, hospitals will be paid less for care covered by Medicare.  Payments to the Medicare Advantage program also will be cut significantly to save money and bring the program’s cost in line with regular Medicare.  The program currently allows private insurers to offer enhanced benefits and/or lower premiums to the 20 percent of Medicare enrollees who have chosen the program, a relatively large number of whom are African-Americans and Latinos with low-to-moderate incomes.
  8. The proposals contain provisions to promote primary care, illness prevention, disease management, and reimburse providers for end-of-life care care counseling for Medicare enrollees.  (The Senate Finance Committee proposal is not expected to include the end-of-life care provision.)

If this basic program is enacted, the nation will still face enormous deficits for federal health care spending in the years ahead.  These deficits will very likely require additional sacrifice through some combination of cuts in medical services, higher taxes, and higher premiums for Medicare enrollees.