S. 334 (Wyden)

Name of new program
Qualified private insurance would be guaranteed under a Healthy Americans Private Insurance (HAPI) plan.

Target population(s)
All individuals who are not covered under Medicare or health insurance offered by the Department of Defense, a former employer, a qualified collective bargaining agreement, the Department of Veterans’ Affairs or the Indian Health Service would be required to purchase an HAPI plan. Those individuals opposed to health insurance coverage for religious reasons could opt out.

Eligibility
All citizens and legal residents. Exceptions include persons incarcerated for one month or more and illegal aliens.

Type of Coverage
All individuals (with the exceptions noted above) would have to be enrolled in an HAPI plan. Adults would be responsible for enrolling any dependent children (up to age 24) claimed for tax deductions. Those failing to enroll would be subject to a premium penalty, to be imposed and collected by the state in which the person resides (unless waived for hardship reasons).

Each state, through a Health Help Agency, would have to offer at least 2 HAPI plans meeting certain requirements. Plan offerings could include a plan similar to the FEHBP Blue Cross Blue Shield Standard plan (as of 2007) or actuarially equivalent plans that include specified core benefits. They could also offer plans with additional benefits, if offered and priced separately. (Federal premium subsidies would not be available for additional benefits.) A HAPI plan would have to provide catastrophic protection against out-of-pocket costs, coverage of wellness programs, a “health home,” and care coordination. It also would have to provide for mental health parity, reconstructive breast surgery & protections for mothers & newborns. Plans would have to require cost-sharing similar to that required for the FEHBP BCBS standard plan but no cost-sharing could be required for preventive care services, disease management or treatment of chronic pain. Individuals could purchase other health insurance coverage in addition to HAPI coverage. State mandated benefits would not apply to HAPI plans.

HAPI insurance would have to be offered on a guaranteed issue and guaranteed renewable basis (i.e., applicants could not be excluded for reasons such as age, gender, industry, or health status and could not be dropped from coverage due to their use of health services). HIPAA protections related to preexisting condition exclusions would also have to be provided (including to individuals with no prior creditable coverage for the first enrollment period). In addition, HAPI plans could not base eligibility for coverage or base premiums on genetic information. Insurers offering HAPI plans would have to meet additional requirements relating to prevention and health promotion programs, provider reimbursement, loss ratios, use of common claims forms and billing practices, and reporting.

An advisory committee would be established by the Secretary of HHS to recommend annually to the Secretary and Congress benefit modifications.

If a state failed to establish an HHA and to have a system up within two years for offering and enrolling individuals in HAPI plans, the Secretary would be required to establish a fallback plan so individuals could still enroll in a HAPI plan.

The bill would terminate SCHIP and maintain only a residual Medicaid program for wrap-around benefits that were not covered under an HAPI plan. In addition, it would eliminate group coverage as defined under ERISA, the IRC and the Public Health Service Act. The bill would also terminate FEHBP.

Children without private coverage would be enrolled in a private plan for uninsured children through a new Healthy Start program.

Premiums
HAPI plans would have to be rated either on a community-rated or adjusted community-rated basis (varying only for geography, tobacco use and family size). A HAPI insurer could offer premium discounts for participation in wellness or chronic disease management programs.

Government Subsidiaries
Individuals and families with incomes below 100% FPL would receive a full premium subsidy. For those between 100% and 400% of FPL, premium subsidies would be provided on a sliding scale. Subsidies would also be available to help pay premiums for Healthy Start coverage for children below 300% of FPL.

A new health care standard tax deduction would be available for those with incomes above 100% of FPL, with the deduction phasing out starting at $62, 599 ($125,000 in the case of a joint return) and fully phased out at $125,000 ($250,000 in the case of a joint return). These amounts would be indexed for inflation. The favorable tax treatment of Health Savings Accounts offered in conjunction with high deductible HAPI plans would continue, as under current law. (Contributions up to specified limits, interest on the accounts, and distributions for qualified expenses are not included as taxable income.)

Financing
Combination of individual premiums, employer assessments, state and federal savings in Medicaid, cuts in Medicare and Medicaid disproportionate share hospital (DSH) payments, changes in tax treatment of certain types of insurance, and other tax changes. States would have to contribute 100% of what they spent on health services prior to the bill’s enactment. Employers would have to contribute an amount equal to a percentage of the average premium of their workforce times the number of workers. The percentage of the average premium would depend on the size and revenue of the employer, ranging from 2% to 25%. Employers that had provided coverage prior to enactment would be required to contribute the same amount for the first two years as wages to their workers. The Secretary could provide credits to those private employers who had previously exceeded the 80th percentile of the national average premium contributions in the 2 years prior to enactment and who could demonstrate that the benefits they provided encouraged prevention and wellness activities. Contribution amounts for private employers who had previously not contributed to employees’ health insurance would be phased in an amount less than otherwise required for the first two years. Employer contributions would not be taxable as income to the employee. Employer tax deductions would be limited to contributions for HAPI plans and existing retiree health plans, collective bargaining agreements, and to employer-provided wellness programs and on-site first aid coverage for employees.

Effective Date
The requirements on individuals to obtain a HAPI plan and on employers to make premium contributions would be effective two years after enactment.

Administration
Each State would be required to establish a Health Help Agency to transition to the new program; administer HAPI plans; oversee enrollment; promote prevention and wellness; administer subsidies to eligible individuals; and administer premium collection and plan premium payments.

Other provisions in a bill
A state could be granted a waiver from the bill’s requirements by the Secretary if the state approved a plan to provide health care coverage that was at least as comprehensive as required under a HAPI plan.

The bill also would provide for coordination of supplemental coverage under Medicaid for qualified elderly and disabled individuals, and includes other provisions related to long-term care, Medicare, making health care more safe and effective, promoting comparative effectiveness analysis of drugs and devices, and encouraging states to adopt certain medical malpractice reforms.