Senate Finance Committee Releases Details of HCR Plan

The Senate Finance Committee, one of 2 key committees in the Senate charged with developing health care reform legislation, has released an outline of its new health care proposal. You can view the document (PDF) here. Columnist Ezra Klein of the Washington Post, who has been following the health care reform discussion closely, discusses the new plan here.

Contrary to prior discussions, the Finance Committee plan doesn't include a public option - the option of allowing consumers and employers to purchase health insurance from a plan administered by the federal government similar to Medicaid. Many analysts agree that such a plan would be able to provide the same coverage as private insurance at a lower cost and would be essential in keeping the health insurance market competitive.

Some key items:

• Mandates individuals purchase health insurance. It allows exceptions if the cost of insurance exceeds 15% of annual income
• Requires insurance companies to cover everyone who applies, regardless of pre-existing conditions, etc.
• No health status rating - meaning no higher prices based on health condition
• Proposes 4 levels of insurance coverage plans and limits some out of pocket costs
• Offers federal subsidy on insurance premiums via tax credit to individuals and families earning up to 300% of the FPL.
• Offers small businesses tax credits for 3 yrs to help pay for group insurance for employees.
• Increases Medicaid eligibility to include parents and childless adults at or below 100% of FPL (like most states, Ohio doesn't allow childless adults to be eligible for Medicaid) Eligibility increases will be phased in over 3 years and states will get some help during that period to pay their share of Medicaid.

On quick review, the plan has some problems. It places a financial burden on states by increasing Medicaid eligibility at a time when most states are having budget problems. It also has too many loopholes that make insurance coverage unaffordable for low income people. There's an exception to the individual mandate that allows people to opt out of purchasing insurance if they can't afford it. Seems like it would make more sense to make it more affordable for them.

While there are incentives for employers to provide health coverage for their employees, there are also big loopholes that allow them to avoid penalties if they don't.

Cost control for both health insurance premiums and health care costs appears to be based solely on trust. While there are caps on the amount of premiums low to middle income individuals must pay, they aren't real caps. Premium costs above 15% of a person's annual income will be absorbed by the federal government through tax cuts. Its a pass-through of the premium cost, not a real price cap.

Here's hoping the Senate HELP Committee can come up with a better proposal. The House has already agreed their version of HCR will include a public option.

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