HR 3962 Affordable Health Care for America Act - Summary -

SHORT SUMMARY

The Affordable Health Care for America Act provides quality affordable health care for all Americans andcontrols health care cost growth. CBO estimates that it will provide coverage to 96% of Americans, that it doesso under the $900 billion threshold outlined by President Obama, and that it reduces the deficit within thebudget window and beyond. Key provisions of the legislation include:

 COVERAGE AND CHOICE
 AFFORDABILITY
 SHARED RESPONSIBILITY
 PREVENTION, WELLNESS AND PUBLIC HEALTH
 WORKFORCE INVESTMENTS
 CONTROLLING COSTS

COVERAGE AND CHOICE:: The bill builds on what works in today’s health care system and fixes theparts that are broken. It protects current coverage – allowing individuals to keep the insurance they have if theylike it – and preserves choice of doctors, hospitals, and health plans. It achieves these reforms through:

 Immediate reforms. Includes immediate reforms to improve today’s health care system as we implementfull-scale health reform. These improvements include the creation of a new national program to provideaffordable coverage for those who can’t get health insurance today because of pre-existing conditions(including the use of domestic violence as a pre-existing condition); implementation of insurance reforms toenforce an 85% medical loss ratio, coverage of young adults on their parents’ policies through age 26, limitson pre-existing condition exclusions, protections for treatments for children with deformities;implementation of new programs to protect retiree health benefits; enactment of administrativesimplification; and creation of a new federal grant incentives for wellness programs and early advancementof reform by states.
 Health Insurance Exchange. The new Health Insurance Exchange (starting in 2013) creates a transparent andfunctional marketplace for individuals and small employers to comparison shop among private and publicinsurers, including new health insurance co-ops. It works with state insurance departments to set andenforce insurance reforms and consumer protections, facilitates enrollment, and administers affordabilitycredits to help low- and middle-income individuals and families purchase insurance. Within three years, theExchange will be open to employers with 100 employees as another choice for covering their employees.Over time, more employers will obtain that option. States may opt to operate the Exchange in lieu of thenational Exchange provided they follow the federal rules.
 A Public Health Insurance Option. One of the many choices of health insurance within the Health InsuranceExchange is a public health insurance option. It will be a new choice in many areas of our countrydominated by just one or two private insurers today. The public option will operate on a level playing field.It will be subject to the same market reforms and consumer protections as other private plans in theExchange and it will be self-sustaining – financed only by its premiums. The Secretary of Health and HumanServices will administer the public option and negotiate rates for providers that participate in the publicoption. The public health insurance option is provided startup administrative funding, but it is required toamortize these costs into future premiums. Providers are presumed to be participants in the public optionunless they opt-out of participating.
 Guaranteed coverage and insurance market reforms. Insurance companies will no longer be able to engagein discriminatory practices that enable them to refuse to sell or renew policies today due to an individual’shealth status. In addition, they can no longer exclude coverage of treatments for pre-existing healthconditions. The bill also protects consumers by prohibiting lifetime and annual limits on benefits. It alsolimits the ability of insurance companies to charge higher rates due to health status, gender, or otherfactors. Under the proposal, premiums can vary based only on age (no more than 2:1), geography andfamily size.
 Essential benefits. A new independent Advisory Committee with practicing providers and other health careexperts, chaired by the Surgeon General, will recommend a benefit package based on standards set in thelaw. This new essential benefit package will serve as the basic benefit package for coverage in the Exchangeand over time will become the minimum quality standard for employer plans. The basic package will includepreventive services with no cost-sharing, mental health services, oral health and vision for children, and capson the amount of money a person or family spends on covered services in a year. Within the Exchange,there will be four plan levels – all of which cover the essential benefit package, but have varied levels ofcost-sharing. The “Premium Plus” plans will offer additional benefits such as adult dental or vision andprivate hospital rooms.
 Ending the Antitrust Exemption for Health Insurers. By eliminating the antitrust exemption for healthinsurers and medical malpractice insurers, the bill increases competition in the insurance marketplace. Itwill remove their shield that has allowed them to price fix, divide up territory, and effectively createmonopolies in particular markets.
 Helping address long-term health care needs. Creates a new, voluntary, public, long-term care insuranceprogram to help purchase services and supports for people who have functional limitations. Individualsdetermined to need assistance because of functional limitations would qualify to receive a daily or weeklycash benefit to help purchase the services and supports needed to maintain personal and financialindependence. CLASS would supplement, not supplant, traditional payers of long-term care (e.g. Medicaidand/or private long term care insurance).

II. AFFORDABIILIITY:: To ensure that all Americans have affordable health coverage the bill:
 Provides sliding scale affordability credits. The affordability credits will be available to low- and moderateincomeindividuals and families. The credits are most generous for those who are just above the proposednew Medicaid eligibility levels; the credits decline with income (so premium and cost-sharing support ismore limited as your income increases) and are completely phased out when income reaches 400 percent ofthe federal poverty level ($43,000 for an individual or $88,000 for a family of four). The affordability creditswill make insurance premiums affordable and will reduce cost-sharing to levels that ensure access to care.The Exchange administers the affordability credits with other federal and state entities, such as local SocialSecurity offices and state Medicaid agencies.
 Caps annual out-of-pocket spending. Will cap annual out-of-pocket spending at a maximum of $5,000 perindividual and $10,000 per family to prevent bankruptcies from medical expenses.
 Increased competition. The creation of the Health Insurance Exchange and the inclusion of a public healthinsurance option and health insurance co-ops will make health insurance more affordable by opening manymarket areas in our country to new competition, spurring efficiency and transparency.
 Expands Medicaid. Individuals and families with incomes at or below 150% percent of the federal povertylevel will be eligible for an expanded and improved Medicaid program. Recognizing the budget challenges inmany states, this expansion will initially be fully federally financed then transition to include a 9%contribution from states starting in 2015. To improve provider participation in this vital safety net –particularly for low-income children, individuals with disabilities and people with mental illnesses –reimbursement rates for primary care services will be increased to Medicare rates with new federal funding.
 Improves Medicare. Senior citizens and people with disabilities will benefit from provisions that fill thedonut hole over time in the Part D drug program, eliminate cost-sharing for preventive services, improve thelow-income subsidy programs in Medicare, increase access to primary care providers, and make otherprogram improvements. The bill will also address future fiscal challenges by improving payment accuracy,encouraging delivery system reforms and extending solvency of the Medicare Trust Fund. Companionlegislation will permanently reform Medicare’s payment formula for physicians.

III. SHARED RESPONSIIBIILIITY:: The bill creates shared responsibility among individuals, employers andgovernment to ensure that all Americans have affordable coverage of essential health benefits.

 Individual responsibility. Except in cases of hardship, once market reforms and affordability credits are ineffect, individuals will be responsible for obtaining and maintaining health insurance coverage. Those whochoose to not obtain coverage will pay a penalty capped at 2.5 percent of modified adjusted gross incomeabove a specified level.
 Employer responsibility. The proposal builds on the employer-sponsored coverage that exists today.Employers will have the option of providing health insurance coverage for their workers or contributingfunds on their behalf. Employers that choose to contribute will pay an amount based on a percent of theirpayroll. Employers that choose to offer coverage must meet minimum benefit and contributionrequirements specified in the proposal.
 Assistance for small employers. Recognizing the special needs of small businesses, the smallest businesses(payroll that does not exceed $500,000) are exempt from the employer responsibility requirement. Thepayroll penalty would then phase in starting at 2% for firms with annual payrolls over $500,000 rising to thefull 8 percent penalty for firms with annual payrolls above $750,000. In addition, a new small business taxcredit will be available for two years for low-wage, small firms who choose to provide health coverage totheir workers. In addition to the targeted assistance, the Exchange and market reforms provide a longsoughtopportunity for small businesses to benefit from a more organized, efficient marketplace in which topurchase coverage.
 Government responsibility. The government is responsible for ensuring that every American can affordquality health insurance, through the new affordability credits, insurance reforms, consumer protections,and improvements to Medicare and Medicaid.

IV. PREVENTIION,, WELLNESS AND PUBLIIC HEALTH:: Prevention and wellness measures of the billinclude:

 Community Health Centers. Funding for community health centers is significantly increased, allowing forthe creation of new centers and growth in the number of people served.
 Prohibition of cost-sharing for preventive services. Cost sharing requirements in the essential benefitspackage, Medicare and Medicaid are specifically prohibited.
 Community-based programs. New programs are established to deliver prevention and wellness services atthe community level and to support grants to small businesses that promote wellness programs.
 Prevention research. A dedicated funding source is created to support research on clinical and communitypreventive health services to determine which services are most effective. Data Collection. New data collection efforts are required to better identify and address racial, ethnic,regional and other health disparities.
 Public Health Infrastructure. New investments are made to strengthen state, local, tribal and territorialpublic health departments and programs.

V. WORKFORCE IINVESTMENTS:: The bill expands the health care workforce through:

 National Health Service Corps (NHSC). Increased funding and greater flexibility in meeting servicerequirements are provided for the National Health Service Corps.
 Building the nation’s health workforce. Increased funding and other improvements are made to programstargeted on training primary care doctors. Similar expansions are made to encourage more healthprofessionals, including nurses, to choose primary care. A new Public Health Service Corps (modeled on theNHSC) is created to ensure an adequate and qualified public health workforce.
 Workforce diversity. Greater support is provided for workforce diversity programs to help ensure that thenation’s health workforce reflects the population it serves.
 Scholarship and loan repayment programs. Scholarships and loan repayment programs for individuals inneeded health professions and shortage areas are expanded.
 Training for primary care physicians. Puts in place steps to increase physician training outside the hospital,where most primary care is delivered, and redistributes unfilled graduate medical education residency slotsfor purposes of training more primary care physicians. The proposal also improves accountability forgraduate medical education funding to ensure that physicians are trained with the skills needed to practicehealth care in the 21st century.

VI. CONTROLLIING COSTS:: The bill reduces the deficit and will reduce the growth in health carespending in a numerous ways. Specifically, it invests in health care through stronger prevention and wellnessmeasures; increases access to primary care; implements health care delivery system reforms; creates a HealthInsurance Exchange and a new Public Health Insurance Option; improves Medicare payment accuracy andmakes additional reforms to Medicare and Medicaid -- all of which will help slow the growth of health care costsover time. These savings will accrue to families, employers, and taxpayers.

 Modernization and improvement of Medicare. The bill implements major delivery system reform inMedicare to reward efficient health care, rolling out innovative concepts such as accountable careorganizations, medical homes, and bundling of acute and post-acute provider payments. New paymentincentives aim to decrease preventable hospital readmissions, expanding this policy over time to recognizethat physicians and post-acute providers also play an important role in avoiding readmissions. The billimproves the Medicare Part D program by creating new consumer protections for Medicare AdvantagePlans, eliminating the “donut hole” and improving low-income subsidy programs, so that Medicare isaffordable for all seniors and other eligible individuals.
 Innovation and delivery reform through the public health insurance option. The public health insuranceoption will be empowered to implement innovative delivery reform initiatives so that it is a nimblepurchaser of health care and gets more value for each health care dollar. It will expand upon theexperiments put forth in Medicare and be provided the flexibility to implement value-based purchasing,accountable care organizations, medical homes, and bundled payments. These features will ensure thepublic option is a leader in efficient delivery of quality care, spurring competition with private plans.
 Improving payment accuracy. The bill eliminates overpayments to Medicare Advantage plans and improvespayment accuracy for numerous other providers, following recommendations by the Medicare PaymentAdvisory Commission and the President. These steps will extend Medicare Trust Fund solvency, and putMedicare on stronger financial footing for the future.
 Preventing waste, fraud and abuse. New tools will be provided to combat waste, fraud and abuse withinthe entire health care system. Within Medicare, new authorities allow for pre-enrollment screening ofproviders and suppliers, permit designation of certain areas as being at elevated risk of fraud to implementenhanced oversight, and require compliance programs of providers and suppliers. The new public healthinsurance option and Health Insurance Exchange will build upon the safeguards and best practices gleanedfrom experience in other areas.
 Administrative simplification. The bill will simplify the paperwork burden that adds tremendous costs andhassles for patients, providers, and businesses today.

PREPARED BY THE COMMITTEES ON WAYS & MEANS, ENERGY & COMMERCE, AND EDUCATION & LABOR

OCTOBER 29, 2009