• Republican proposals surface in Obama health reform plan
• President continues push for reform

• North Carolina authorizes health insurance pilot project with pooling of large, small employers
• Illinois allows health insurers to offer wellness programs

• Number of uninsured rose, employment-based coverage fell in 2008
• Young adults losing health care coverage
• Investment in nonprofit health centers would expand coverage at lower cost
• Budgetary effects of prevention programs need clinical data over a long time period
• Small businesses would benefit from some reforms: study

Republican proposals surface in Obama health reform plan

Three Republican proposals—medical malpractice reform, insurance pooling mechanisms for the poor, and a public option only triggered by a failure in the private market to provide affordable health care—would complement the health care reform plan outlined by President Barack Obama in his September 9 speech to a joint session of Congress.

In addition to briefly describing the "80%" of what needs to be done in health reform and on which he said "there is agreement in this chamber", Mr. Obama proposed the following elements that initially had been suggested by Republicans:

Medical malpractice liability reform. Mr. Obama said that "I don't believe malpractice reform is a silver bullet, but I've talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs." He then said that he would direct Secretary of Health and Human Services Kathleen Sebelius to examine "authorizing demonstration projects in individual states to test" caps and other limits on malpractice liability rewards.

Insurance pooling. Mr. Obama said that a national health insurance exchange, would not take effect for four years, but "in the meantime, for those Americans who can't get insurance today because they have preexisting medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill." Mr. Obama then said, "This was a good idea when Sen. John McCain [Ariz.] proposed it in the campaign, it's a good idea now, and we should all embrace it."

During the 2008 presidential campaign, Mr. McCain proposed the creation of insurance pooling mechanisms, in which the federal government would work with states to create a federally-supported guaranteed access plan for people who are denied coverage due to preexisting conditions. Premiums in the plan would be limited and financial assistance would be given to those below a certain income level.

Public option trigger. While insisting that "I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice," Mr. Obama did acknowledge that one constructive idea "worth exploring" was a public option trigger recently proposed by Sen. Olympia Snowe (R-Maine) under which "the public option [would] go into effect only in those markets where insurance companies are not providing affordable policies."

President continues push for reform

President Barack Obama continued to press for health reform after his speech to Congress and the public on September 9, including the following:

On September 10, he addressed the Cabinet to note that "What we can't do is accept a status quo that is bankrupting families, businesses, and our nation." (http://www.whitehouse.gov/briefing_room/Remarks/).

On September 12, Mr. Obama highlighted a report from the Treasury Department that found that about half of all Americans under 65 will lose their health coverage at some point over the next ten years. (http://www.whitehouse.gov/weekly_address/)

On September 13, Mr. Obama said in an interview on 60 Minutes, "The only way I can get medium and long-term federal spending under control is if we do something about health care. Ironically, health care reform is critical to deficit reduction." (see http://www.cbsnews.com/sections/60minutes/main3415.shtml)

Committee leaders support plan. President Obama's September 11 health reform plan drew praise from all the committee chairmen actively working on reform:

Senate Finance Committee Chairman Max Baucus (Mont.) remarked, "The President clearly understands health care reform can't wait any longer—and, it won't... As the President said, It's time to get to work and get health care reform passed this year." Mr. Baucus plans to release his version of health reform this week and to schedule a committee vote next week.

House Energy and Commerce Chairman Rep. Henry A. Waxman (N.Y.) said, "Tonight the President re-focused the nation's attention on all the reasons we need to reform our health care system.... I am ready to do all I can to work with the President and my colleagues in the House and Senate to pass this legislation and enact it into law."

U.S. Rep. George Miller (Cal.), chairman of the House Education and Labor Committee said, "President Obama's excellent address moves us closer to the finish line. He laid out specific benchmarks for reform and proved he wants to put good, sound policies above politics. He extended an open hand to all lawmakers, from both sides of the aisle, who are interested in working together to find common ground.... The time for Congress to act is now."

House Ways and Means Committee Chairman Charles B. Rangel (D-NY) said, "President Obama said what needed to be said at this crucial time, when we are so close to ensuring that every American has access to quality, affordable health care. His message of unity and progress could not have come at a better time.

The outline of Mr. Obama's plan is at http://www.whitehouse.gov/issues/health_care/plan/.

North Carolina authorizes health insurance pilot project with pooling of large, small employers

North Carolina has authorized the creation of a single health insurance demonstration project to provide a model for affordable employer-based health insurance. The goal of the project is to reduce the number of uninsured North Carolinians and to decrease health insurance costs for purchasers in the project area. Coverage under the project must begin no later than December 1, 2010, and may continue through December 31, 2014.

Among its requirements:

• Products for any pooling of groups must be fully insured by an insurer authorized to issue health insurance coverage in North Carolina.
• Insurance must be issued through a group master contract with a bona fide association or a trust or other legal entity that is capable of entering into such a contract.
• Under the pooling arrangement, all large and small employers desiring to join and meeting the eligibility requirements for the group must be accepted and all eligible employees who elect coverage through participating employers must be included in the pool.
• Each employer participating in the pooling arrangement and its employees must be offered the same benefit plans.
• Plans offered to eligible employers must provide coverage that equals or exceeds that in the state's standard health care plan. However, a package with defined tiers of benefits and premiums may be offered to eligible small employers.

The sponsor of the demonstration project must prepare an evaluation of the project and issue a report to the state's Department of Insurance and Joint Legislative Health Care Oversight Committee by February 1, 2014. The Department of Insurance is also charged with evaluating the project and issuing a report to the oversight committee by May 1, 2014. Both reports must include a recommendation as to whether the demonstration project should be extended, made permanent, or terminated on its scheduled expiration date (Ch. 568 (H. 212), L. 2009, effective August 28, 2009, and expires December 31, 2014).

Illinois allows health insurers to offer wellness programs

Group or individual accident and health insurance policies and managed care plans that provide coverage for hospital and medical treatment on an expense-incurred basis may offer reasonably designed wellness programs, under a new law in Illinois. The program may provide rewards, contributions, premium reductions or reduced medical, prescription drug or equipment copayments, coinsurance or deductibles (or a combination of these incentives) for participation in any health behavior wellness, maintenance or improvement program approved or offered by the insurer or managed care plan.

Insureds or enrollees may be required to provide evidence of participation in the wellness program. In addition, individuals who are unable to participate due to an adverse health factor may not be penalized based on adverse health status.

Wellness coverage must satisfy the requirements for an exception from HIPAA's general prohibition against discrimination based on a health factor. Plans offering wellness coverage must:

• give participants the opportunity to qualify for offered incentives at least once per year;
• allow a reasonable alternative to any individual for whom it is unreasonably difficult, due to a medical condition, to satisfy wellness program standards (plans may seek physician verification);
• not provide a total incentive that exceeds 20 percent of the cost of employee-only coverage, including both employer and employee contributions (for plans offering family coverage, the 20-percent limitation applies to the cost of family coverage and is applicable to the entire family).

The law applies to accident and health insurance policies and managed care plans that are amended, delivered, issued, or renewed after January 1, 2010 (215 ILCS 5/356z.15, as added by P.A. 639 (S. 1877), L. 2009).

Number of uninsured rose, employment-based coverage fell in 2008

The U.S. Census Bureau announced on September 10 that the number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008, while the percentage remained unchanged at 15.4%. The most recent census data also included the following details:

• The number of people with health insurance increased from 253.4 million in 2007 to 255.1 million in 2008.
• The rate of private coverage decreased in 2008 to 66.7% from 67.5% in 2007. The number of people covered by private insurance also decreased to 201.0 million in 2008, from 202.0 million in 2007. The number covered by government health insurance climbed from 83.0 million to 87.4 million.
• Most people (58.5%) were covered by an employment-based health insurance plan for some or all of 2008. The rate of employment-based coverage in 2008 was lower than the rate in 2007. The number covered by employment-based health insurance declined from 177.4 million to 176.3 million.
• The number of uninsured children declined from 8.1 million (11.0%) in 2007 to 7.3 million (9.9%) in 2008. Both the uninsured rate and number of uninsured children are the lowest since 1987, the first year that comparable health insurance data was collected.
• Although the uninsured rate for children in poverty declined from 17.6% in 2007 to 15.7% in 2008, children in poverty were more likely to be uninsured than all children.

For more information on the census information, visit http://www.census.gov/hhes/www/hlthins/hlthin08.html.

Young adults losing health care coverage

A recent report from the Department of Health and Human Services notes that "Young adults (18-34) with employer coverage are more likely to lose coverage than older adults (35-64). One in five younger adults lost coverage over the course of two years. An overwhelming 91% of young workers who lost coverage became uninsured, and only nine percent of those that became uninsured found insurance on the individual market — in spite of being relatively healthy and therefore unaffected by discrimination due to pre-existing conditions. Going uninsured can have unintended consequences, even for the young and healthy."

The report also notes that two-thirds of the uninsured (68%) go without needed care — including seeing a doctor when sick, filling prescriptions, and following up on recommended tests or treatment — and 51%of the uninsured report difficulty paying bills, being contacted by collection agencies for unpaid bills, or changing their way of life to pay medical bills.

The report is available at http://www.healthreform.gov/reports/insurance/index.html.

Investment in nonprofit health centers would expand coverage at lower cost

Investing in nonprofit health centers as part of national health care reform would increase access to primary care in underserved areas at lower costs, according to a report recently released by the George Washington University School of Public Health and Health Services. In the report, Using Primary Care to Bend the Curve: Estimating the Impact of a Health Center Expansion on Health Care Costs, the researchers estimated the cost savings that would be achieved by investing in nonprofit health centers as an element of national health care reform.

Under most health care reform proposals, a large number of people would gain insurance coverage from the health insurance exchanges, which would primarily offer private plans and, possibly, a public plan. Private insurance plans tend to pay health centers considerably less, by about 43%, than the actual costs of providing care at health centers, the researchers noted. One option under health care reform, the researchers proposed, would be to require plans offering care under the exchange to pay health centers according to the prospective payment system used in both Medicaid and Medicare, which comes much closer to paying full costs — about 15% below estimated costs in 2007.

If health care plans sold in the proposed health insurance exchanges paid rates comparable to the Medicaid Federally Qualified Health Center payment rate, health center capacity could reach 41 million patients by 2019, up from the current 19 million, and would result in savings to the health care system of $251 billion over the 2010 to 2019 period just for the additional 22 million patients served.

A number of studies have concluded that health centers are a cost-effective means to furnish primary health care, which can lead to better health and lower health care spending. "Investments in health centers can serve as a complement to health reform efforts to expand the number of people with health insurance, by ensuring that there is an increased availability of primary health care providers to serve the newly insured, as well as those who remain uninsured," the researchers suggested. "This will be particularly important in medically underserved areas where there is already an insufficient supply of primary care providers. Thus, this is a case in which the national economic value of the investment is further enhanced by its ability to bring better health to the nation's most underserved communities.

"These projected savings to the nation's health care costs become possible because of the insurance reforms on which they build, supplemented by a direct health center investment," the researchers concluded. "Health insurance coverage expansions, coupled with investments in the nation's primary health care infrastructure, can spur high-quality and sustainable primary health care in medically underserved rural, urban, and suburban communities, and help bend the curve of health care cost growth."

For more information, visit http://www.gwumc.edu/sphhs/departments/healthpolicy/index.cfm.

Budgetary effects of prevention programs need clinical data over a long time period

Although preventive health measures will not necessarily save money on health care spending, over the long term, they at least will offset a large part of the costs of the prevention programs, according to a study published in the September 1 online journal Health Affairs. Health care reform proponents often claim that expanding coverage and preventive health measures will lower health care costs.

The study researchers, from the University of Chicago's Medical School and the National Opinion Research Center, detail how an "epidemiological" assessment over a period of 25 years, not the commonly used ten-year period, can more accurately project the actual costs of health care reform measures, because "the positive effects of improved treatment often take decades to show clinically significant effects." In contrast, "an epidemiological model could inform budget projections beyond ten years, with transparent methods and an acceptable level of reliability."

The Health Affairs article, "Using Clinical Information to Project Federal Health Care Spending," looked at the effects for ten-year and 25-year periods of implementing a diabetes disease management program for individuals ages 24 through 64. The per-patient annual costs of such a program, taking into account care quality improvement and provision of preventive medications and routine tests, was estimated at $1,024.

Small businesses would benefit from some reforms: study

Small business owners and employees are among those who stand to benefit the most from provisions in some of the current health reform proposals under consideration by Congress according to a Commonwealth Fund report released today. Provisions to extend health care coverage to everyone and repair the small group insurance market would alleviate high premium costs, high broker fees, underwriting, and a lack of transparency about benefit packages that small business owners currently face.

Currently, 39 million Americans work for small businesses (defined as those with fewer than 50 employees) and only 25 percent of them have health insurance through their employer, the report, "Out of Options: Why So Many Workers in Small Businesses Lack Affordable Health Insurance and How Health Care Reform Can Help," finds.

While some workers buy coverage on their own or obtain coverage through a family member, half (52%) of people working for small businesses are uninsured or underinsured, compared to 28 percent working for larger firms. The gap in employer coverage between large and small firm employees widened over 2003 and 2007. In addition, when small business employees do have coverage, it is often less comprehensive: 48 percent have health insurance plans with lifetime coverage limits, compared to 37 percent of employees in large firms.

The report analyzed the effect specific pieces of legislation will have on small business and found there are several broad categories of reform that would improve the ability of small businesses to provide coverage and for their employees to afford coverage if they do not:

• The ability to purchase health insurance through the new health insurance exchange would guarantee a standard benefit package, eliminate lifetime maximums, and control premium costs. Eligibility for this option varies in current Congressional bills under consideration, with the Senate Health, Education, Labor and Pensions (HELP) Committee bill opening the exchange to firms with fewer than 50 employees and the House Tri-Committee bill opening it to firms with 10 or fewer employees the first year and those with up to 20 employees in subsequent years. An amendment to the House bill by the Education and Labor Committee would increase eligibility to 15 employees in year one, 25 in year two, and no fewer than 50 employees in year three.
• An exemption from any requirement to offer health insurance to employees or pay into a fund to finance coverage would protect very small businesses. Again, eligibility varies with the Senate HELP bill exempting employers with fewer than 25 employees and the House Tri-Committee bill exempting small businesses with a payroll of less than $500,000 a year. The House bill phases in the payments as payrolls rise.
• Tax credits provided to small businesses offering health insurance to their workers would help further offset premium costs for businesses that choose to offer coverage to their employees. The tax credits would vary depending on size of the firm, the average wage, and the percent of the premium that the employer pays.
• Premium subsidies to purchase coverage through the health insurance exchange and higher income eligibility limits in Medicaid would help those small firm low-wage workers who do not have access to health benefits through their jobs.

SOURCE: www.commonwealthfund.org.