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Health-care reform: What's in the bills?

Tomorrow: Worries about health care overhaul from a large employer.

Want to know more? See bottom of story

PAW PAW, W.Va. -- For 13 years, Susan Corbin has run the cash register, made hoagies and swept the floor at the Stony Creek Country Store near Paw Paw.  "Everyone comes through, sooner or later," she said. "They come in for a pop and stay to talk."

People can pick up a used paperback, a market bulletin, snacks, hunting gear. "We're always thinking of ways to bring in a few more dollars," she said recently.

She has tried hard to follow the health-care overhaul. "I want it, but I'm afraid of it," she said.

"They're still arguing about it in Washington, and I know it affects me, but I can't find out what it's going to be."

She had heard talk about a "public option." But, like most people, she did not know that, under the House and Senate plans:

  • People who earn up to $43,400 as an individual or $88,200 for a family of four would get substantial sliding scale subsidies to help pay premiums.
  • Medicaid would cover 15 million more people, including 85,000 to 100,000 West Virginians and, for the first time, adults who do not have children.
  • Sons and daughters could stay on their parents' insurance until they are 26 in the Senate version and 27 in the House version.
  • Insurers would not be allowed to drop people's insurance for any reason other than fraud.
  • Insurers can no longer deny a person coverage because they have a pre-existing condition or charge women more than men.
  • Insurance companies must spend 80 to 85 percent of the dollars they take in on health care, as opposed to advertising, executive salaries, etc.
  • Community health centers and other non-profit centers that provide sliding-scale health care will get billions.
  • Fraud and abuse in Medicare and Medicaid are strongly targeted.
  • Small businesses can get 50 percent temporary tax credits for offering insurance.
  • In the House bill, Medicare would save billions by negotiating discounts on drug prices instead of paying top dollar.
  • The infamous Medicare prescription drug "doughnut hole" would be eliminated or mostly closed.
  • "And that's just part of it," said Perry Bryant, director of West Virginians for Affordable Health Care, looking at the list. "There is so much in this that's good for West Virginia."

    A House-Senate conference, including Sen. Jay Rockefeller, D-W.Va., will meet soon to iron out differences between the House and Senate bills, then Congress will vote on one bill.

    In West Virginia, at least 177,000 uninsured West Virginians would be newly insured, according to advocacy group Families USA. "That's a huge number of people," Bryant said. "Hospitals will have a lot less uncompensated care, and that's good for everybody."

    At this point, according to Mountain State Blue Cross Blue Shield, about $1,000 of the average person's policy pays for care for people who have no insurance.

    Play or pay

    Here's the part that scares Susan Corbin and her boss: Every American would be required to have health insurance or pay a fine.

    Corbin has heard worrisome rumors. "We heard they'd fine my boss if he doesn't give me health insurance," she said, "and they'll fine me if I don't take it. That worries me a lot.

    "My boss is the greatest guy in the world," she said. "He'd offer me health insurance if he possibly could, but he can't afford any himself. If he had to buy insurance for me, I don't know if he could afford to keep me on."

    She doesn't need to worry about that, Bryant said. "Nobody plans to make small business owners provide insurance."

    Under the House bill, only businesses with a payroll of $500,000 or more must provide insurance or pay a small fine. Under the Senate bill, a business with 50 or more employees is fined for every employee who gets government-subsidized insurance. Existing plans are grandfathered.

    "Small business and individuals are winners in these health care packages," Bryant said.

    Small business owners now pay 18 percent more for insurance than large businesses do. Under health reform, they can pool together to get lower rates and get a tax credit of 50 percent to help pay employee premiums.

    Individuals who make up to $43,000 and families with incomes of up to $88,000 could get lower subsidized premiums.

    People with higher incomes might pay more in the future, Bryant said, but if Congress did nothing, they would be guaranteed to pay more.

    The cost of employer-based insurance more than doubled between 1999 and 2008, and would double again by 2020 under the current system, according to a Commonwealth Fund study.

    "Everybody will pay a lot more if nothing is done," Bryant said, "and millions more will lose insurance by 2019."

    Stacked against individuals

    If Susan Corbin were to try to buy a basic policy today, she would have to apply as an individual.

    Individuals now pay the highest prices on the market, said Tom Kasey of Charleston's Silverstein Maddox Wallace insurance agency. Prices for individuals "are all over the map, with no rhyme or reason," he said.

    If a 40-year-old in Kanawha County tries to get an individual policy with a $500 deductible today, Kasey said, "she could easily pay [monthly premiums] from $350 to $500. If she had a medical problem, it could easily go over $600," he said.

    "That's a basic weakness in the system," said Chris Plein, who directs the public administration program at West Virginia University. Individuals pay more because they are not in a "pool" with others and have no collective buying power, he said. To have lower rates, a pool must also contain healthy people. A big pool of sick people will not have low premiums.

    That's a major reason why everyone is required to buy insurance, he said.

    Susan Corbin and millions of other individuals and small business owners would have three new ways to get lower-cost insurance, under both bills:

  • First, individuals and small businesses can buy together in big pools, and individuals can get group rates, which are lower.
  • Second, if people earn less than 400 percent of poverty, they could qualify for subsidies to help pay premiums. That would be $43,000 for individuals and $88,000 for a family of four.
  • Third, between 85,000 and 100,000 uninsured West Virginians could enroll in Medicaid insurance, according to analysis by the West Virginia Center for Budget and Policy.
  • "Emergency rooms wouldn't be packed with uninsured people trying to get routine care," said Renate Pore, health policy analyst for the center.

    "This is cost containment," she said. It affects the cost of everyone's health care, she said, because hospitals pass much of the cost of uncompensated care to paying customers' bills.

    In West Virginia, the amount of charity care went up 75 percent between 2006 and 2008, to $231 million, according to the West Virginia Health Care Authority.

    Will people sign up?

    Fred Early, CEO of Mountain State Blue Cross/Blue Shield, sees a fatal flaw in both bills.

    Consumers can choose a fourth option, he points out: Don't buy insurance and pay the penalty instead.

    "A lot of people will not buy in because the penalty is so low," he said. That could torpedo the whole effort, he says.

    Under health reform, insurance companies will be required to accept people who have pre-existing conditions, which will involve a lot of expense. The millions of new customers were expected to counterbalance that expense and keep the pool healthy. The insurance companies will get the subsidies.

    But under the House bill, the penalty for not signing up is only $95 the first year. It goes up gradually each year until it reaches $750. There will be hardship exemptions.

    "If I'm in my late 20s and single and healthy and I have a choice of buying a policy that's going to cost me several thousand a year or to paying a penalty of a maximum of $750 a year, understanding that if I get sick, I can go right out and buy a policy without any waiting period," Early said, "I'm going to pay my penalty and spend my several thousand on a nice trip or a car till I do get sick and need the coverage."

    If that happens, he believes, "It will force everyone's premiums to go up." If insurers pay out more than they take in, he said, they must raise premiums.

    The Senate penalty is 2 percent of income - still low, in Early's view.

    Under the reform bills, people can sign up for insurance with little or no waiting period. "That's crazy," Early said. "It's like saying people can take out a home insurance policy when the house is on fire."

    Insurers must collect premiums when people are well, he said, to pay benefits when people are sick. "It's a huge shift into adverse rates to be absorbed into the pool. We're still trying to get a handle on that."

    Blue Cross puts 88 cents of every dollar into health care benefits, Early said. But some national companies pay out as low as 65 cents on the dollar, according to the state insurance commission. Congress will require them to pay out 80 to 85 cents.

    How would it work?

    In 2013 or 2014, a new "exchange" would open on the Internet. "That means we have three to four years to get ready and work out problems," WVU's Plein said.

    After it opens, Susan Corbin - and any individual buyer - could log onto the exchange Web site and compare policies and prices, find out if she was eligible for subsidies, and sign up for insurance.

    To be listed, insurance policies would have to cover doctor visits, hospitalization, maternity and newborn care, prescriptions and wellness services, and pediatric care that includes vision and dental.

    MIT economist Jonathan Gruber analyzed the way the exchange and subsidies might work under the House bill. Using Congressional Budget Office statistics on "typical" policies, he calculated examples.

    A "typical" 40-year-old individual saves an average of 30 percent, he found.  Exact prices will vary from state to state, but discounts range from around 5 percent to 84 percent.

    Two examples, using CBO "typical" prices:

  • A person who earns up to $18,800 could get a $3,990 plan for $850 a year. Someone who makes up to $28,700 can get it for $2,830.
  • family with an income of $60,640 could get the policy for $5,740.
  • For three years, Massachusetts has offered similar subsidies through an exchange. Individual premiums dropped 40 percent while they went up 14 percent nationwide, Gruber found.

    In the Senate version, each state would create its own exchange. In the House version, the exchange is national.

    The "public option," the government-run program, if there was one, would be listed along with commercial plans. "I'm disappointed if it's not there, Bryant said, but I also know how much good this bill does for millions of people."

    Getting ready

    At Mountain State Blue Cross Blue Shield, Fred Early has severe misgivings about the new rules of the road, but his company, which insures more West Virginians than any other, is getting ready.

    "We're doing preliminary analysis, sharpening our actuarial models," he said. "It's a whole different dynamic about how those products could be marketed, particularly with an exchange involved, and we need to be prepared for that."

    The Senate passed its bill on Christmas Eve. The Republican leadership calls it a legislative train wreck, and the Democratic leadership calls it the greatest deficit-reduction act of all time.

    The Congressional Budget Office says it would reduce the deficit by $132 billion in the first decade. Critics say the CBO is dead wrong. The Chamber of Commerce says many jobs will be lost. The RAND Corporation says jobs will be basically unaffected.

    In West Virginia, people are asking practical questions:

    Where will all these new Medicaid people get treatment? Will bills drop after hospitals don't have to write off as much charity care?

    The federal government pays nine out of 10 dollars of new Medicaid cost. What happens when and if it drops back to seven dollars?

    "Those kinds of questions have to do with the difficulties of implementing new policies," WVU's Plein said. "As they play out over the next few years, maybe we can move away from simplistic, hot rhetoric and really grapple with access to care, quality of care, and efficiency."

    Near Paw Paw, Susan Corbin and her boss at the Stony Creek Store are hoping. They would love to have health insurance, but may pay the penalty instead.

    "Wait and see what happens and hope we don't get sick in the meantime," she said.

    Tomorrow: Worries about health care overhaul from a large employer.

    Reach Kate Long at katelong@wvgazette.com or (304) 348-1798.

    Want to know more?

  • Kaiser Family Foundation (www.kff.org)
  • Detailed side-by-side comparisons of the two bills

  • The Commonwealth Fund (www.commonwealthfund.org)
  • Analysis of the two bills and related studies

  • West Virginians for Affordable Health Care (www.wvahc.org)
  • Comparison of the bills as they affect West Virginia and links to other resources

  • Families USA (www.familiesusa.org)
  • Reports from consumer advocate point of view

  • Small Business Majority (www.smallbusinessmajority.org)
  • Variety of information from a small business perspective

  • Business Week: the business exchange
  • (http://bx.businessweek.com/health-insurance-reform)

    Excellent listing of informational articles

     The "exchange": How would it work?

    In 2013 or 2014, an "exchange," (insurance marketplace) would open on the Internet. Individuals and small business owners could log on and:

  • For the first time, join larger pools of individuals or small businesses.
  • Compare vetted insurance policies.
  • Sign up for subsidies (up to $43,400 individuals, $88,200 family of four)
  • The House bill specifies one national exchange. Under the Senate bill, each state creates its own or teams up with other states for more buying clout. People keep their own doctor. Insurers keep their preferred provider networks.

    A state-level exchange operated by the Insurance Commission, would:

  • Vet insurance companies offering policies for financial stability and adequate reserves to pay claims.
  • Make sure all policies cover services mandated by Congress
  • Under both bills, policies must include coverage of:

  • Physician services
  • Hospitalization
  • Maternity care
  • Mental health and substance abuse services
  • Prescription drugs
  • Lab work
  • Preventative and wellness services
  • Chronic disease management
  • Pediatric care, including oral and vision
  •  

    The House would also cover rehabilitative services and emergency services.

    Premiums, deductibles, co-pays and amount of coverage of each item would vary.

    Source: Kaiser Family Foundation, Commonwealth Fund.

     

    How can I afford health insurance?

    Prices after subsidies under the Senate bill

     

    For a policy that ordinarily costs $9,435 a year:

    A family of four

    that earns...          would pay

    $30,000             $1,219              

    $40,000             $2,260             

    $50,000             $3,628              

    $60,000             $5,294              

    $70,000             $6,860              

    $80,000             $7,840              

     

    For a policy that ordinarily costs $3,500 a year:

    A single person

    that earns...          would pay

    $15,000             $622                   

    $20,000             $1,153                        

    $25,000             $1,845              

    $30,000             $2,699              

    $35,000             $3,430              

     

    People who make less than $14,400 would qualify for Medicaid insurance, as would a family of four that earns less than $29,300. Young people and those in need could sign up lower-cost catastrophic policies.

    Source: Kaiser Family Foundation, Kaiser Subsidy Calculator. (To check other income levels, type "Kaiser subsidy calculator" into a search engine.) These figures assume a comprehensive silver-level policy with a 70 percent actuarial value.


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