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Rosty's health care initiative pushes cost containment.

Last fall, the House Ways and Means Committee held two weeks of hearings on comprehensive health insurance reform proposals. These hearings heightened the Committee's understanding of the serious problems that plague the health care system and reaffirmed the importanc eof moving expeditously to address the twin problems of the lack of health insurance coverage and spiralling health care costs.

HR 3626 proposes to improve health insurance access and cost containment in five important ways: First, the current 25-percent tax deduction for health insurance cost of self-ejmployed individuals would be increased to 100 percent. This increase would be phased-in by extending the current 25-percent deduction through 1992, increasing the deduction to 50 percent in 1993, 75 percent in 1994 and 100 percent in 1995 and thereafter.

Second, a series of reforms would improve the availability and affordability of group health insurance: Under the bill, insurers could not exclude individuals in a small group from coverage or cancel policies due to health status or medical history. For all small groups, defined as groups including two to 50 employees, insurers would be rquired to guarantee availability of health insurance on a continuous, year-round basis. Guaranteed renewability would also be required. Exclusions for pre-existing conditions would be limited to six months. Small groups would not be permitted to self-insure.

Hr 3626 would also limit the wide variability in premiums and allowable premium increases. Premiums for all small group plans within a community would be required to be based upon average costs within the community, adjusted for age and sex differences, except that the resulting rates could not vary more than plus or minus 25 percent from the average. Rates would be permitted to vary by up to 20 percent between different blocks of business, such as insurance sold by mail or employers.

The bill would also required that the policies provided by insurers to small groups include a minimum benefit package based upon the current Medicare benefit package plus the additional prevention benefits which are added to Medicare. State mandates prohibiting the offering of the benefit package would be preempted.

Third, the bill would address the phenomenon called "job lock" which forces workign Americans to stay in their current job due to a pre-existing health condition. Individuals with a pre- existing condition who change jobs without a lapse in coverage of more than 3 months would genrally be protected from any pre- existing condition exclusion.

Insurers that fail to comply with the Federal insurance standards established by this bill would be subject to a federal excise tax.

Fourth, an especially important component of this bill is its cost containment provisions. The Secretary of the Department of Health and Human Services (HHS) would establish optional, maximum payment rates that would apply to the standard benefit packages offered by all employer plans. These rates would be based upon existing Medicare methodologies, such as the diagnosis-related group (DRG) methodology for hospitals and the resource-based relative value scale (RB RVS) for physicians. Current extra billing limits on physician payments would also be included under the methodology. The plans could choose to pay providers of health services based upon the rates set by the Secretary. A provider's failure to accept the established rates would result in civil monetary penalties.

A National Health Care Cost Containment Commission would also be established. The Commission would approve optional payment rates established by the Secrtary of HHS, develop uniform claims and reporting standards, analyze health costs and make recommendations for controlling rising expenditures.

Fifth, new prevention benefits would be added to Medicare. These benefits would include annual mammography screens, colorectal screening and a series of prevention bnefits for the small number of children on Medicare. These prevention benefits were also included in HR 2565 and S. 1231, companion bills that Senator Bentsen and I introduced earlier this year.

HR 3626 is a companion bill, not an identical bill, to S. 1872, introduced by Senator Bentsen. It differes in three principal ways.

First, many proposal would put in place a strong mechanism for cost containment based on Medicare payment rates. I believe that we cannot wait any longer to enact real cost containment. Our country currently spends over 12 percent of its GNP on health care costs, and this share is expected to increase to over 16 percent by the year 2000. In the interest of the comptitive posture of our nation, we cannot afford to devote an ever higher proportion of our economy to health care. Real cost control must figure prominently in any reform effort, and we need to get started now.

Second, HR 3626 would establish a Federal and State system of regulation for insurers providing coverage to small groups. This system would assure that health insuranceplans meet the requirements while securing a significant role in the system for States which meet Federal standards. Recently, the Department of Justice indicated that it had constitutional concerns with an approach which relied upon standards created by the National Association of Insurance Commissioners.

Third, my bill would require all small group plans to be community-rated, with adjustments only for age and sex differences.

I am fully aware that the imposition of the rating restrictions in my bill may pose serious problems for insurers and for purchasers of insurance. Given the range of risks which different groups present to health insurers, community rating is likely to increase health premiums for some who currently enjoy the benefit of experienced-rated premiums. Unfortunately, there is minimal information publicly available to assess the impact of the community rating proposal.

It is also likely that a risk-sharing mechanism, such as reinsurance, will be needed in order to make a system based on guaranteed issue and rating bands work. However, little consensus exists about how to deal with this problem and I have not included a special proposal in this bill.

On both of those issues, I specifically invite experts from Blue Cross/Blue Shield, the commercial insurance industry and health maintenance organizations to study the impact of my proposal and make their analysis and recommendations available to the Committee as it considers this legislation. That analysis will provide the opportunity to develop a final product which makes sense from the perspective of both insurers and the insured.

Finally, I want to point out that I have not included budget offsets--any revenue proposals or spending cuts--to cover the costs of this bill. The provisions of this bill have an estimated cost of $7.9 billion over a five year period. I want to emphasize, however, that I fully intend to fund the provisions of this bill and comply with the pay-as-you-go requirements of the budget agreement, consistent with my long-standing commitment to sound budget discipline. I solicit comments and suggestions from the public and my colleagues on the best way to cover the costs.
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Author:Rostenkowski, Dan
Publication:Nation's Cities Weekly
Date:Apr 13, 1992
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