Empowering Patients First Act
Encyclopedia
The Empowering Patients First Act of 2009 (H.R. 3400, introduced July 30, 2009) is legislation proposed in the United States Congress during the 1st Session of the 111th Congress as a Republican alternative to the America's Affordable Health Choices Act of 2009
(H.R. 3200.)
It contains clauses that are intended to reduce costs in the health care system (such as reducing the scope of mandated health care coverage, giving insurers new subsidies, and reducing the cost of medical liability insurance).
Because it contains new spending (mostly subsidies) and no taxes, the cost of the bill to the Federal budget over ten years would be about $100 billion higher than either of the Democratic bills passed by the House and the Senate.
The bill does not prevent insurers from discriminating against those with pre-existing conditions. This distinguishes it from the bills currently passed in the House and Senate which do contain provisions preventing discrimination against the sick and those considered likely to become in need of health care. It does propose (but does not mandate or create) the creation in each State of a high risk insurance pool for people who have been refused private insurance.
In fact, the bill has been assessed by the Congressional Budget Office
(CBO). It reported that the bill would leave about 52 million nonelderly residents uninsured by 2019, a coverage rate of 83 percent, roughly in line with the current share.
CBO pointed out that the bill contained several clauses which would reduce insurance company costs and provider costs, and provides a new subsidy for insurance companies (for them to purchase reinsurance in the small group market). These, together with medical malpractice
reform and administrative changes by government, would reduce spending without substantially changing the amount of coverage provided or the mix of enrollees covered. CBO assumed that most of these cost savings would ultimately be passed back to insurance purchasers in the form of reduced premiums. CBO cautioned that the estimates of cost reductions were very preliminary and subject to an unusually high degree of uncertainty.
CBO noted that the bill contains provisions which would cause insurers to cover fewer conditions than they do at present by encouraging states to reduce the number and extent of benefit mandates that they impose on insurers and would allow individuals or affiliated groups to purchase insurance policies in other states that have less stringent mandates.
CBO also said that provisions within the bill would induce states to take some actions affecting the average health status of people with insurance and people without insurance which would cause premiums for older people to increase and premiums for younger people to decrease.
According to CBO,The bill places a much greater strain on the Federal budget than either the House or the Senate bills. CBO estimated that the bill would only reduce the federal deficit by $18 billion in 2019. This is a much lower reduction in the deficit than either the Senate bill, which reduces the deficit by $132 billion, or the House bill, or the House Bill which reduces the deficit by $109 billion in the same period.
The proposal places a mandate on States requiring them to provide premium assistance for Medicaid and CHIP enrollees with access to employer-sponsored insurance. It requires states to offer private insurance subsidies to individuals who would otherwise be eligible for Medicaid and CHIP for the purchase of alternative private health insurance. The net effect of this is to use state taxes to put more money into the hands of private insurers.
Section 211 of the bill provides that the Federal government will distribute a block grant to the States to offset the cost of Medicaid and the cost of running the high risk pools but limits this to just 300 million dollars a year to be distributed between the States as the Secretary of HHS sees fit. Section 201 provides that any tax credit for an insured person in a high risk pool goes to the high risk pool (not to the individual). It is not clear why an insured person will have an incentive to seek a tax credit if the benefit is received by the insurance pool and not himself personally. The availability of tax credits under section 201 is dependent on States fulfilling certain conditions, so the bill does not guarantee that credits will be available to an individual.
He said "In other words, this looks much like the reforms that collapsed in Texas, and in California. Price isn't learning from past policy mistakes, and so he means to repeat them." The good elements, he said, were its proposal for automatic enrollment (of employees in employer health care schemes) and the extension of tax exemption on the purchase of private insurance by buyers in the individual insurance market currently enjoyed by the employed. These, however, would be capped at "the average value of the national health exclusion for Employer Sponsored Insurance (and not at the true cost). He pointed out that this tax exemption amounts to a huge tax increase, but said that "(Tom) Price won't call it that". Presumably this is because the exemption is not specifically tax funded but would increase the deficit and would have to be paid for from taxes eventually.
The medical journalist Maggie Mahar has criticized the bill for the suggestion that people with pre-existing conditions should be moved into high risk pools run in each state. She points out that that existing state-based high risk pools can’t provide affordable coverage for nearly enough of the medically needy who have no other option, and that others have noted how "high-risk pools have been around for over 30 years and currently exist in 35 states, but they only cover about 207,000 Americans. The biggest barrier to enrollment is cost. High-risk pools are inevitably expensive because all of the enrollees have medical conditions that could potentially result in costly medical bills, which means the pools cannot spread costs across low-risk and high-risk individuals. Despite attempts to cap premium rates, the coverage is still unaffordable for many. In fact, a recent study found that premiums for high-risk pools are unaffordable for about one-third of eligible individuals."
America's Affordable Health Choices Act of 2009
The proposed America's Affordable Health Choices Act of 2009 was an unsuccessful bill introduced in the U.S. House of Representatives on July 14, 2009. The bill was introduced during the first session of the 111th Congress as part of an effort of the Democratic Party leadership to enact health...
(H.R. 3200.)
It contains clauses that are intended to reduce costs in the health care system (such as reducing the scope of mandated health care coverage, giving insurers new subsidies, and reducing the cost of medical liability insurance).
Because it contains new spending (mostly subsidies) and no taxes, the cost of the bill to the Federal budget over ten years would be about $100 billion higher than either of the Democratic bills passed by the House and the Senate.
The bill does not prevent insurers from discriminating against those with pre-existing conditions. This distinguishes it from the bills currently passed in the House and Senate which do contain provisions preventing discrimination against the sick and those considered likely to become in need of health care. It does propose (but does not mandate or create) the creation in each State of a high risk insurance pool for people who have been refused private insurance.
Proposer claims and CBO assessment
Speaking directly to President Obama, Rep. Tom Price, the proposer of the bill, claimed that his bill "would provide health care coverage for all Americans, would correct the significant health care challenges of portability and pre-existing conditions, would solve the lawsuit abuse issue which is not addressed significantly in any of the other proposals going through the House or Senate, would write into law that medical decisions are made by family members and doctors, and does all of that without raising taxes by a penny". In his reply, President Obama was skeptical, saying "if you say that we can extend coverage to all Americans and it won't cost a penny, that's just not true. You cannot structure a bill in which suddenly 30 million people have coverage, and it costs nothing." He went on to say that he too could make similar claims which would be great politics, but it would just not be true. He said that "there has to be some test of realism in any of these proposals, my own included".In fact, the bill has been assessed by the Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....
(CBO). It reported that the bill would leave about 52 million nonelderly residents uninsured by 2019, a coverage rate of 83 percent, roughly in line with the current share.
CBO pointed out that the bill contained several clauses which would reduce insurance company costs and provider costs, and provides a new subsidy for insurance companies (for them to purchase reinsurance in the small group market). These, together with medical malpractice
Medical malpractice
Medical malpractice is professional negligence by act or omission by a health care provider in which the treatment provided falls below the accepted standard of practice in the medical community and causes injury or death to the patient, with most cases involving medical error. Standards and...
reform and administrative changes by government, would reduce spending without substantially changing the amount of coverage provided or the mix of enrollees covered. CBO assumed that most of these cost savings would ultimately be passed back to insurance purchasers in the form of reduced premiums. CBO cautioned that the estimates of cost reductions were very preliminary and subject to an unusually high degree of uncertainty.
CBO noted that the bill contains provisions which would cause insurers to cover fewer conditions than they do at present by encouraging states to reduce the number and extent of benefit mandates that they impose on insurers and would allow individuals or affiliated groups to purchase insurance policies in other states that have less stringent mandates.
CBO also said that provisions within the bill would induce states to take some actions affecting the average health status of people with insurance and people without insurance which would cause premiums for older people to increase and premiums for younger people to decrease.
According to CBO,The bill places a much greater strain on the Federal budget than either the House or the Senate bills. CBO estimated that the bill would only reduce the federal deficit by $18 billion in 2019. This is a much lower reduction in the deficit than either the Senate bill, which reduces the deficit by $132 billion, or the House bill, or the House Bill which reduces the deficit by $109 billion in the same period.
The proposal places a mandate on States requiring them to provide premium assistance for Medicaid and CHIP enrollees with access to employer-sponsored insurance. It requires states to offer private insurance subsidies to individuals who would otherwise be eligible for Medicaid and CHIP for the purchase of alternative private health insurance. The net effect of this is to use state taxes to put more money into the hands of private insurers.
Pre-existing conditions
On his web site, Tom Price asserts that the bill "covers pre-existing conditions", though he does not explain how the bill does this. Unlike the other bills before congress, Price's bill does not do this by outlawing the present discrimination by insurance companies against those with pre-existing conditions (e.g. setting higher rates or by refusing covering for certain conditions or by refusing to offer a policy, or rescinding existing policies). Instead it allows this discrimination to continue and provides instead that states should set up high risk insurance pools for high risk individuals who are otherwise unable to purchase insurance. In this way, high risk individuals would be able to buy insurance but only at considerably higher cost and without guarantee to make such insurance affordable except insofar as tax credits are available for the purchase of private insurance. In effect, the cost of insuring high risk individuals is, in this bill, carried collectively by the high risk individuals collectively and by the taxpayers, and not by any insurance company spreading the cost of insurance to the wider population as happens in the bills passed by the House and the Senate).Section 211 of the bill provides that the Federal government will distribute a block grant to the States to offset the cost of Medicaid and the cost of running the high risk pools but limits this to just 300 million dollars a year to be distributed between the States as the Secretary of HHS sees fit. Section 201 provides that any tax credit for an insured person in a high risk pool goes to the high risk pool (not to the individual). It is not clear why an insured person will have an incentive to seek a tax credit if the benefit is received by the insurance pool and not himself personally. The availability of tax credits under section 201 is dependent on States fulfilling certain conditions, so the bill does not guarantee that credits will be available to an individual.
Critical Reaction
Writing in the Washington Post, Ezra Klein said that the bill had some good ideas but that it would not work. In particular he said "its version of the health insurance exchanges will collapse pretty quickly because the bill contains- no individual mandate ensuring that the pool includes both healthy and sick individuals
- no insurance market regulations stopping insurers from cherrypicking
- no risk adjustment rebalancing the scales when they do.
He said "In other words, this looks much like the reforms that collapsed in Texas, and in California. Price isn't learning from past policy mistakes, and so he means to repeat them." The good elements, he said, were its proposal for automatic enrollment (of employees in employer health care schemes) and the extension of tax exemption on the purchase of private insurance by buyers in the individual insurance market currently enjoyed by the employed. These, however, would be capped at "the average value of the national health exclusion for Employer Sponsored Insurance (and not at the true cost). He pointed out that this tax exemption amounts to a huge tax increase, but said that "(Tom) Price won't call it that". Presumably this is because the exemption is not specifically tax funded but would increase the deficit and would have to be paid for from taxes eventually.
The medical journalist Maggie Mahar has criticized the bill for the suggestion that people with pre-existing conditions should be moved into high risk pools run in each state. She points out that that existing state-based high risk pools can’t provide affordable coverage for nearly enough of the medically needy who have no other option, and that others have noted how "high-risk pools have been around for over 30 years and currently exist in 35 states, but they only cover about 207,000 Americans. The biggest barrier to enrollment is cost. High-risk pools are inevitably expensive because all of the enrollees have medical conditions that could potentially result in costly medical bills, which means the pools cannot spread costs across low-risk and high-risk individuals. Despite attempts to cap premium rates, the coverage is still unaffordable for many. In fact, a recent study found that premiums for high-risk pools are unaffordable for about one-third of eligible individuals."