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A Closer Look at the House Bill: Taking on the Insurance Industry

October 30th, 2009 | Jason Rosenbaum

Over the next few days, I’ll be taking a closer look at the provisions on the House health care bill – H.R. 3962, the Affordable Health Care for America Act. As was the case when the original tri-committee bill was released, the House committees have a ton of fact sheets on the bill that are required reading for folks looking to learn more.

Overall, the House bill is a bill that takes on the insurance industry. Here’s how:

A Public Health Insurance Option

First and foremost, the House bill creates a public health insurance option, available in the new health care marketplace called the “Exchange,” that would compete directly with private insurance. The public option won’t have to worry about profits or stockholders, and because it is run by HHS, it will have huge bargaining clout to get good rates from providers. Overall, while the public option in the House bill won’t save taxpayers as much money as a public option based on Medicare rates, it will still save money according to the CBO.

Because of all that savings, and because the public option will have a mandate to provide health care to people, not maximize profit, it will be a strong competitor to private insurance, keeping prices down and attracting customers. Private insurance will be forced to compete or face losing their most profitable customer base – the individuals and small group customers who are in the Exchange from the start.

Insurance Industry Regulations

The House bill puts new regulations on the insurance industry to curb their bad practices.

The practice of rescission – terminating someone’s insurance plan because they get sick – would be outlawed immediately. Similarly, as soon as this bill is signed, lifetime caps on insurance coverage would be outlawed.

After the Exchange is set up in 2013, all insurers, not just the ones in the Exchange, will be barred from denying care for pre-existing conditions, charging more if your are a woman or sick, or employing annual benefits caps. They will have to cap out-of-pocket expenses at a standard level, keep administrative costs down to below 15%, and publicly disclose and justify their rate increases.

Medicare beneficiaries and the unemployed will benefit as well, with overpayment to private companies through Medicare eliminated and COBRA coverage extended until the Exchange is set up.

Finally, the House bill will eliminate the anti-trust exemption on health insurance companies, making it possible to finally prosecute them for their monopolistic practices.

Immediate Relief

The House bill also provides immediate relief for people at the mercy of the insurance industry by setting up an interim high risk pool open to people who have been uninsured for at least a few months or who have been denied insurance because of pre-existing conditions.

Though clearly not a long term solution, the high-risk pool, combined with the COBRA extensions mentioned above, would get people out from the trap the insurance industry has put them in until full reforms kick in.

Taking on Drug Companies

The House bill also gives us significant savings from drug companies, which according to the Washington Post would amount to between $125 and $150 billion in cuts to their profits.

It does this by eliminating the donut hole which forces seniors to pay unaffordable prices for prescription drugs, starting immediately and completely closing the hole by 2019. It also requires the Secretary of HHS to negotiate for better drug prices for Medicare and Medicaid, and makes it easier for Medicare Part D to offer free generic prescription drugs to enrollees.

Of course, some issues, like biologics (new drugs exempted from generic competition), are still unresolved.

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There’s a lot to talk about in the House bill – employer responsibility, fair financing, a whole host of other reforms that take effect immediately. Over the next few days I’ll talk about those. However, the overall thrust of the bill is clear – it takes on the insurance industry for consumers, strengthening care for folks without insurance, on the individual market, in small and large businesses, and on Medicare and Medicaid.

About the Author: Jason Rosenbaum is a writer and musician currently residing in Washington D.C. He is interested in the intersection of politics and culture, media consolidation issues, and making sense out of our foreign policy disasters. He currently works for Health Care for America Now and he is also the webmaster for The Seminal.

This article originally appeared in Health Care for America Now on October 29, 2009. Reprinted with permission from the author.

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