At the summit, President Obama supported selling insurance across state lines, but through a national exchange with at least “minimal standards” through which any insurer could participate.
Ultimately, the new legislation will allow states to form exchanges, but with an option for regional exchanges as well.
Idea: Create a Health Insurance Rate Authority
Championed by Obama, this proposal arrived on the heels of several high-profile rate increases that have generated considerable public angst. Not coincidentally, the House Energy and Commerce Committee held a hearing about soaring premiums the day before the summit.
At the hearing, legislators questioned Wellpoint president and CEO Angela Braly about the company’s Anthem Blue Cross unit and its plans to raise insurance premiums by as much as 39% for some Californians (overall, premium increases average 25%). Braly, in turn, blamed the surge on rising and “unsustainable” pharmacy and hospital care costs, the latter driven primarily by hospital reimbursement rates.
Although the general concept of federal oversight is useful, Ku says, the big question is one of authority. Regulating insurers has traditionally fallen to state governments, which likely will be reluctant to give up jurisdictional power but might accept federal assistance.
“I think in general it would help, but I don’t think it’s going to have as much of an impact unless we control the cost-of-care downlink,” Cousineau adds. Including a mandate for individuals to buy health insurance reduces the need for the authority, though he concedes that some cynics doubt whether health insurers will voluntarily lower rates even if more young, healthy people buy policies. Republicans oppose the idea of an individual mandate and a new federal regulatory entity.
In the March bill, the individual mandate prevailed while the idea of a new insurance watchdog fell by the wayside.
Idea: Provide State Grants to Expand High-Risk Pools for Uninsured
The idea, proposed by Republicans in several iterations, including Sen. John McCain (R-Ariz.) when he ran for president, was offered as a potential alternative to banning insurance companies from denying coverage to patients with pre-existing conditions. Many states already offer high-risk patient pools for patients who have been excluded from the private market, but some have long waiting lists. The Health Insurance Plan of California (HPIC), for example, has a two-year wait, according to Cousineau.
“It’s not a bad idea,” he says of a federal subsidy, but because the pools only include high-risk patients, he says they won’t solve the problem of expensive premiums. Cousineau prefers state-based exchanges that aren’t segregated by risk and spread the cost over a wider range of people, which is included in the March bill. “Otherwise, it’s too expensive, and you’re asking the states to pay for part of it,” he says.
Ku believes high-risk pools could deliver some relief to patients currently priced out of the market. “It’s not going to help the neediest of the needy, but could help some,” he says. As a temporary fix, the new legislation sets up high-risk pools in states that lack them, with $5 billion from the federal coffers. The mechanism will be phased out in 2014, however; by then, all insurers will be banned from denying coverage to anyone.
Idea: Gradually Close the “Doughnut Hole”
An idea popular with senior citizens, closing the gap in Medicare’s Part D prescription drug coverage gained further traction under Obama’s healthcare plan and was included in the healthcare reconciliation bill. The doughnut-hole closure is paid for with savings from cuts to the Medicare Advantage program.
Experts question whether it will affect as many patients as has been widely assumed. “I think it’s an important thing to do,” Cousineau says, “but I’m not as worried as much about the costs there as I am in other parts of the program.”