Our state leadership should move promptly and in good faith to facilitate the implementation of health insurance reforms. Texans can look to the establishment of the Children’s Health Insurance Program (CHIP) and our response to Hurricane Ike as recent examples of the excellent performance of which our state government is capable when it has the backing of leadership.

Click here to read the full statement.

You’ll hear any number of statistics thrown around about how the public feels about health care. Usually, this is broken down into pro-and anti-reform numbers — who likes the current bill, and who doesn’t.  Chris Fitzsimon went a step further, breaking down poll numbers. Turns out 37 percent of the people who express skepticism about the bill don’t think it goes far enough.
The public wants — indeed, demands — health care.

41—percentage of people who say they “favor the health care reform proposals presently being discussed” (Ipsos/McClatchy Poll. Feb. 26-28, 2010)

47—percentage of people who say they “oppose the health care reform proposals presently being discussed” (Ibid)

37— percentage of those who oppose health care reform proposals presently being discussed because they “favor health care reform overall but think the current proposals don’t go far enough to reform health care” (Ibid)

58—total percentage of people who favor health reform proposals presently being discussed or support reform but think the current proposals don’t go far enough (Ibid)

30—total percentage of people who oppose health care reform proposals presently being discussed or oppose reform but support current proposals because they will keep health reform from happening (Ibid)

57—percentage of people who think that the Republicans are deliberately avoiding compromise in order to obstruct the bill in any form (Ibid)

36—think that Republicans in Congress are working hard to try to find a compromise with the Democrats on the health care bill (Ibid)

67—percentage of people who say they are not confident in pharmaceutical companies to recommend the right thing for reforming the U.S. health care system. (Gallup Poll. March 2-3, 2010)

71—percentage of people who say they are not confident in health insurance companies to recommend the right thing for reforming the U.S. health care system. (Gallup Poll. March 2-3, 2010)

19—-percentage of people who say that Congress should stop working on health care reform this year (Kaiser Family Foundation Tracking Poll, February 23, 2010)

76—percentage of people who say it is extremely or very important to reform the way health insurance works (Ibid)

68—percentage of people who say it is extremely or very important to provide financial help for lower and middle income people as part of health reform law (Ibid)

58—percentage of people who say they will be angry or disappointed if Congress decides to stop work on health care reform and does not pass a law this year (Ibid)

38— percentage of people who say they will be happy or relieved if Congress decides to stop work on health care reform and does not pass a law this year (Ibid)

It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured. High health care costs alone cannot account for a premium increase that is 10 times higher than national health spending growth. Katherine Sebelius’ response to WellPoint regarding rate hikes of 39%

Unfortunately, this story is not unique to California or a financial faux pas carried out by WellPoint alone.  A recent report by Health Care for American Now! revealed that the five largest insurance firms — WellPoint, UnitedHealth Group Inc, Cigna Corp, Aetna Inc, and Humana Inc – raked in $12.2 billion in profits in 2009, a 56 percent increase from the previous year. They also proposed rate increases between 13 and 40 percent (mostly in the individual and small group markets) in several states.  By the end of last year roughly 2.7 million Americans lost their coverage, while CEOs of the top five firms each received as much as $24 million in compensation. It is a bitter pill to swallow.

Growing health care premiums have forced many people to make tough decisions on how to pay for health care. Increasingly, employers are expecting workers to pay a greater share of health care costs—or cutting benefits all together. Younger and healthier people may choose to drop out to save money, and the risk pool deteriorates, causing prices to increase further. A report by the Commonwealth Fund found that nearly 75 percent of people seeking coverage on the individual market did not buy coverage, 61 percent of those individuals cited costs as the primary factor in their decision.  This is the dreaded death spiral that health reform legislation was meant to prevent.

Texans have watched their premiums nearly double since 2000, and without meaningful reform experts project that they will double again by 2020.  Folks gulped at the proposed rate increases in California, but data from the Texas Department of Insurance (TDI) show that insurers have already been charging small businesses in Texas premiums as high as $29,000 per person per year. It’s clear the health insurance status quo is too expensive and unsustainable.  We need our leaders in Washington to get the job done, and make high quality affordable health care available to every American.

In Massachusetts, 98% of the people already have good insurance, and insurers can’t deny people based on pre-existing conditions.  It’s time the rest of the United States had the same access to good, affordable care.  Here in Texas, 6.1 million of us have no insurance, and one in 3 working-age adults and one in 5 children are uninsured.

We need real leadership from the President and Congress to get the job done, and pass reform to make decent, affordable health care available for every American.

The Texas cost estimate cited (“$20 billion…over a decade”) was drawn from an inflated agency analysis that adds mandated Medicaid expansion costs to a mixture of real and speculative non-reform Medicaid costs. The estimate projected Medicaid costs from 2014 to 2023, adding four years of Medicaid expansion to the 2010-2019 time frame for scoring reform bills. The agency also included costs to cover hundreds of thousands of Texas children eligible for Medicaid right now, but uninsured because of the crisis in Texas’ enrollment system. Covering these kids will entail real state budget costs, only avoided at present because of failed state policies. They do not belong on the national reform balance sheet. The agency also speculated the state might have to fully replace local revenues now used to fund special Medicaid hospital payments, and included those costs. Under House and Senate bills, Texas will gain $10 to $18 federal dollars for each new state dollar we must budget, a potential economic boon. But states view the coming costs of reform coverage through the lens of current hefty revenue gaps. Without short-term federal help with immediate Medicaid costs, states will be ill-prepared to handle the expanded Medicaid caseloads of health reform.

One of the factors behind out-of-pocket cost exposure is of course the extent to which the insurance plan covers the costs of care for the enrollee.  In health reform parlance, a measure of the average percentage of health care costs a particular plan would cover is called the “actuarial value” (detailed explanation here).  Both the Senate and House tie premium subsidies (a.k.a. “credits”) to Exchange plans that provide an average actuarial value of 70%; that is, would pay 70% of the costs of medical expenses for a typical population.  The House and Senate bills then add to the mix cost-sharing subsidies, which are applied to the 70% actuarial value plans to increase the actuarial value of the plan, and thus lower the out-of-pocket exposure of these low-income families.  The House bill offers these subsidies up to 400% FPL, but the Senate ends its cost-sharing subsidies at 200% FPL (good illustration in Table 2 here).

This is where comparing the two bills on affordability can get confusing.  The Senate has a lower out-of-pocket CAP above 250% FPL than the House, but also offers a lower actuarial value plan at those income levels because of the lack of cost-sharing subsidy, and therefore exposes all enrollees to greater out-of-pocket spending.

As an example, an individual who earns just over 250% of the FPL ($27,100/year for an individual), will have her premiums capped at about 8% of her income under both the House and Senate bill.  What she has to pay out-of-pocket to get health care varies considerably.  Under the House bill, she’ll have a policy with an 85% actuarial value.  So, in a simplified scenario, she’ll pay $15 out-of-pocket (copay and/or deductible) for a $100 doctor’s visit.  She’ll keep paying $15 out-of-pocket for every $100 in health care she receives, until she’s spent $4,000 of her own money to—the out-of-pocket cap for an individual just over 250% of the FPL in the House bill.  After people hit their annual out-of-pocket cap, insurance pays 100% of medical costs for the rest of the year.
Under the Senate bill, she’ll have a policy with a less generous 70% actuarial value.  So she’ll have to pay $30 of every $100 medical bill, until she hits her $3,000 cap (limit in the Senate bill for an individual just over 250% of the FPL).   If she needs significant medical care in the year, she’ll pay less overall because of the Senate’s lower out-of-pocket cap at this income level.  But, she’ll have to pay a higher deductible and higher copays at each appointment.  And for people who don’t hit their annual out-of-pocket cap (and most don’t), the Senate bill leaves them paying more out-of-pocket than the House bill at all income levels under 400% of the FPL.

To sum up:
• A higher actuarial value for low- and moderate-income families means all enrollees getting that cost-sharing subsidy—in good and poor health—will experience lower out-of-pocket costs.
• The out-of-pocket cap for that income group provides “stop-loss” protection strictly for families with high medical bills (i.e., those who hit that cap).

Ideally, we would like to see low-and moderate income families have both kinds of protection.  And for those of us who will not need or qualify for subsidies, new out-of-pocket caps combined with the elimination of annual and lifetime caps can provide a level of protection from financial and medical catastrophe few Americans enjoy today.

I find that claim astonishing and assume that people making it must have pretty good health security with good coverage today and little fear that they’ll lose that coverage if they get sick or lose/change their job.  Clearly, the health reform bills are not perfect, and the Senate bill in particular has much room for improvement.  We support a public option and are disappointed that the Senate is unlikely to pass one, but have always held that the public option is not more important than guaranteeing access to affordable, comprehensive coverage for all.  It’s possible to accomplish the latter without the former, as Uwe Reinhardt points out, other countries have done.

As others have pointed out, even the flawed health reform bills on the table will provide the most meaningful social justice reforms for low- and moderate-income Americans in 40 years. Here’s the big picture:  a progressively financed system of comprehensive care that is accessible not only through a job and is affordable at every income level will enable many more families in poverty to attain middle-class income and assets.  Unlike food, shelter, transportation, and education, the cost of needed health care varies wildly across otherwise similarly situated families.  A family with serious chronic condition, illness or injury may need hundreds of thousands of dollars in care in a year, while one with routine preventive and primary care needs may need relatively little.

There are no shortage of provisions in national health reform that will greatly benefit Texans and that we could not pass on a state level anytime in the foreseeable future, including a prohibition on discrimination based on pre-existing conditions and expanding Medicaid to all people living in poverty, just to name two.

Nothing that emerges from a legislative process is ever perfect, and the Senate process in particular moderates legislation and forces compromises.  But moving forward in the Senate is the best alternative.  Getting the strongest bill possible out of the Senate, out of the conference committee, and signed by the president is just the first step in health reform.  As the legislation progresses, we’ll continue to point out how it can be improved.  And once it is passed, we’ll continue to work with everyone else who wanted more from reform by advocating for strong implementation of the bill, and over the years ahead, improvements that get us closer and closer to ideal health reforms.

Affordability:
For a new reform law to succeed in covering most uninsured, decent coverage must be affordable to citizens at every income level; otherwise, those who cannot afford coverage will just stay uninsured. 

The best compromise for Texans would take the best from both House and Senate bills, because the House bill provides stronger affordability protections (for both premiums and out-of-pocket costs) for low-income families, while the Senate bill is better for moderate-income households.  

• A family of three earning $27,465 could pay up to 7% of their annual income for health costs (premiums plus out-of-pocket) under the House bill, but 19% under the Senate version.
• On the other hand, a family of three earning $73,240 could pay up to 26% of income under the House bill, but a lower 20% under the Senate version. 

Strong, consumer-friendly regulation of health insurance:
In general, the House bill establishes tighter oversight the insurance industry and creates one national Exchange that is empowered to negotiate with insurers and deliver better value to individuals and small businesses. 

Other important items:
The House bill relies on more progressive financing, requires larger businesses to offer health insurance without creating the disincentives found in the Senate bill to hiring and retaining low-income workers, and unlike the Senate bill, does not allow the back-door reintroduction of charging people more when they are sick through “wellness penalties.”

Working Age Texans Most Likely To Be Uninsured

In Texas, 32 percent of adults ages 19 to 64 are uninsured compared to 19 percent of children.  It’s a bit surprising that working-age adults in Texas are so much more likely to be uninsured than children, since parents (and not children) often have insurance provided with their job.

But if you look at how children and working age adults get coverage, you see that kids fare much better because we’ve created a safety net with Medicaid and CHIP that provides access to affordable coverage for children in low-income families.  In Texas today, most of the parents whose kids get Medicaid do not qualify, and poor adults without children do not qualify at all. Only adults who are elderly, fully disabled, pregnant women, and a small handful of parents with almost no income can get Medicaid today.  The income-eligibility level for parents—$308 per month for a working parent with two children—has not been increased by the Texas Legislature since 1985.  Parents working just 10 hours a week at minimum wage will earn too much too qualify for Medicaid (but far too little to afford private health insurance).

Expanding Medicaid eligibility to everyone who is living in or near the poverty as proposed in national health reform bills will dramatically increase access to affordable coverage for low-income Texans and make roughly a million low-income uninsured adults in Texas eligible for Medicaid.

Inspired by recent statements by Senator Hutchison, Professor Uwe Reinhardt’s November 27th post at the New York Times’ Economix blog explains that rationing occurs whenever uninsured Texans choose between spending their cash on care or other necessities, when seniors on Medicare face uncovered “doughnut hole” medication costs or must pay one-quarter of the $700 cost to get a colonoscopy.  Reinhardt takes us back to Economics 101, reminding us that markets are designed to ration scarce resources by price, saying “free markets are not an alternative to rationing.  They are just one particular form of rationing.” 

Professor Paul Starr, probably the best-known scholar of the history of American Medicine, explains in his op-ed that Health Insurance Exchanges with strong reform regulation authority are key to “the basic aim of reform (which) is to create a more efficient and equitable system for health insurance and health care and to provide subsidies so everyone can afford coverage.  Those who obtain insurance individually or through small businesses now get a rotten deal in the market.”  Starr comments that the House’s Exchange provisions are far stronger than the Senate model, and he calls for speeding up the implementation of expanded coverage to 2012, instead of the House’s 2013 and the Senate’s 2014 timelines.