• 2010 Early Deliverables:  New high-risk pool; some immediate consumer protections and insurance reforms; premium rate disclosures and oversight;
• Major Coverage Reforms in 2013 or 2014:  Health Insurance Exchanges create marketplace for insurance under new reforms that prohibit denial or pricing based on health status; premium assistance and out-of-pocket caps, Medicaid expansion for poorest; individual and employer responsibility with exemptions for small firms and financial hardship; 
• Improved Medicare coverage for prescription drugs and preventive care
• Both bills fully paid for through budget savings and revenue increases:  both reduce federal deficit by more than $100 billion in the first 10 years, and continue to reduce it in the second decade.

Key Differences to Negotiate:

• Financing:  House progressive income taxes versus Senate excise taxes on high-cost health benefits.
• Affordability: House much better for low-income premiums and all incomes on cost-share and benefits; Senate premiums better for moderate-income.  Obvious solution = best of both bills, but where will the money come from?
• Exchanges and Insurance Regulation:  House bill tighter oversight, more consumer-friendly regulation of the insurance industry, Health Insurance Exchange greater negotiation power.
• Abortion:  Both bills prohibit direct federal support or subsidy for abortion coverage.  Issue is whether Exchanges can sell coverage that includes abortion as an “add-on” paid for by the consumer.
• Public Option:  House has a moderately weak model and Senate has none, though would have OPM contract with insurers to offer minimum of 2 plans that meet “qualified health plan” standards and at least one of these must be non-profit.
• Employer Responsibility:  House includes a “pay or play” provision, Senate charges employers penalties only if their employees actually access subsidized coverage.
• Undocumented immigrants:  Senate bill prohibits undocumented from buying insurance through the exchange, even with their own funds.  House does not and Congressional Hispanic Caucus opposes Senate language.
• Closing the Medicare Part D “doughnut hole”:  How to pay for this is the issue.

For more on the differences, see the Community Catalyst blog and the House Tri-Committee staff comparison of key differences

More information on affordability in health reform from Community Catalyst:

• Affordable Coverage Must Be a Priority in Merging the House and Senate Reform Bills
• Increasing Access to Health Care for African Americans Depends on Improving Affordability during the Merge of the House and Senate Bills    
• Increasing Access to Care for Hispanic Families Depends on Improving Affordability during the Merge of the House and Senate Bills 
•  $900 Billion is $900 Billion – or is it? Gross vs Net Spending and Why It Matters

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.

• Adopting the House bill’s stronger affordability measures for families below 250 percent of the federal poverty income guidelines; and
• Requiring the House’s much stronger standards for a Health Insurance Exchanges–whether through a single national exchange or state-level exchanges–to empower exchanges to negotiate with insurers and deliver better value to individuals and small businesses.

You can read the full letter here.

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.”

• making sure affordable insurance is available to the average consumer (79 percent named this as “extremely” or “very” important)
• requiring insurers to cover those with pre-existing conditions (71 percent)
• not adding to the budget deficit (69 percent)
• filling the so-called donut hole in Medicare prescription drug coverage (68 percent)
• providing enough government financial help so that as many uninsured people as possible can get coverage (65 percent)

Georgetown University’s Center for Children and Families and Lake Research Partners survey (November 3-10) asked families to rank their reform priorities, and asked about how families are dealing with the costs of health care coverage.  Top responses were:

• cutting back on household spending to pay for health care(44%);
• building up credit card and medical debt (23%);
• using up all or most of their savings(21%);
• and/or having someone in their household do without health insurance (21%).

Like the Kaiser poll, affordable coverage was the #1 choice for top reform priority, and when asked, “What is more important to you (1) making sure that health care reform makes coverage more affordable to families or (2) making sure health reform does not cost the country too much,” 66% chose affordable coverage.  The poll also found that families rated the House’s proposed health insurance premiums more affordable than those proposed in the Senate bill.

In my opinion, the biggest thing missing from this House Republican party proposal and the stated positions of  Republican officials on health reform in the current debate is that covering all Americans, or even making coverage affordable for all Americans, is never mentioned as goal.  All that is mentioned is reducing the cost of coverage (or the rate of cost increases).  This can’t get America anywhere near coverage for all, because the $12,000 a year average cost of family premiums (not even counting other out-of-pocket costs) is simply too big a share of total income for too many low-income full-time working families.   Also missing from the House Republican bill are other hallmarks of insurance market reform, such as ending wild unregulated premium variations based on age, gender, health status, and occupation.

I hear daily from a wide range of national groups, from wonky analysts to pro-reform organizers.  In recent days, calls are coming in from all quarter for continued pressure on Texas Congressmen Henry Cuellar (our one avowed Blue Dog), Chet Edwards, Solomon Ortiz, and Ciro Rodriguez to get on board with the House bill.  I can’t begin to explain to you whether or why they are either genuinely wavering or widely perceived to be so, but we want to make sure the word is out on that topic.

TVHR was happy to assemble 21 organizations to sign a letter supporting affordability priorities in health reform; Texas AFL-CIO also submitted a separate but coordinated letter.  It is hard to get everyone in the room, on the phone, or reading their email when you need to coordinate a consensus draft, and ultimately there were 3 major statewide groups who only bowed out because of one provision in the letter.  Guess which one?  You got it—the public option.  The letter pitched that option as a key cost-saving measure, noting that the lower the cost, the more low-income uninsured folks can be helped from the same limited pot of money.  How many of us would have predicted a year ago that this would be the lightening rod issue is has become? 

I continue to believe that the biggest lift of all is establishing in law the goal of making decent coverage affordable for all.  I remain hopeful that we are about to make the biggest step in U.S. history toward that goal.

Read Experts Share Views on Health Care Issues

A critical component of meaningful health reform will be setting an “affordability standard” that sets an upper limit on family health care spending as a percentage of their income, including both premiums and out-of-pocket costs. The following links will be helpful for understanding the issue of affordability as well as for how to talk about the affordability issue with lawmakers and citizen advocates

• A Health Care Affordability Brief by Community Catalyst and the PICO network includes Seven Key Principles of an Affordability Standard

• An Affordabilty Fact Sheet by Families USA provides basic facts and data with regard to health care affordability

• Key Messages on Affordability provices compelling language to talk about the importance of health care affordability

On Monday, April 20th the Bandwagon Tour will be at the People’s Community Clinic in Austin.  At the event Texas Voice for Health Reform will be collecting health care stories, distributing Health Care Affordability Surveys and co-hosting a press conference calling on the federal government to enact health care reform now.  We invite you to come and share your health care story.

Who: VoteHealthCare.org Bandwagon Tour

What: Story Banking and Press Conference

When: Monday, April 20, 2009, 8:00 am – 11:00 am

Where: People’s Community Clinic , 2909 North IH-35, Austin, TX 78722

Come out and make your voice heard on national health care reform!

Co-sponsored by ACORN, the Center for Public Policy Priorities, Children’s Defense Fund, Health Care for America Now, the People’s Community Clinic, and VoteHealthCare.org