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CU examines coverage expansion policy options

Benefit options, the public plan and health insurance exchanges

May 22, 2009
The Honorable Max Baucus
United States Senate
511 Hart Senate Office Building
Washington, DC 20510-2602
The Honorable Charles E. Grassley
United States Senate
135 Hart Senate Office Building
Washington, DC 20510-1501

Dear Senators:

Thank you for the opportunity to comment on the Committee’s excellent Coverage Options paper. We applaud your commitment to reforms that will lead to guaranteed coverage for all Americans regardless of age, health status, or medical history.

Our detailed comments are attached for your consideration. We would highlight the following recommendations:

Keep it simple; make it work for people. Currently, health coverage is very hard for consumers to understand and navigate. The committee’s proposals aim to create a new marketplace which has the potential to be much simpler. We hope the committee will consider our additional suggestions to further reduce complexity so consumers can understand their choices better, enroll more easily, and gauge their subsidy eligibility.

Avoid actuarial constructs/targets. We strongly urge the committee to substitute “fixed” benefit designs, specified in terms of their cost-sharing provisions, for the actuarial targets suggested on page 9. This will permit consumers to more easily compare their plan options. Standardizing the plan designs will also pave the way for other consumer protections, such as standardized plan disclosure forms, that will, in turn, create a more competitive marketplace in the health insurance exchanges.

We urge that these fixed plan designs be tied to the most common health insurance option purchased by Members of Congress, so that all Americans have access to coverage as generous as that of their elected representatives.

Cap consumer expenses. Any individual mandate must be tied to the availability of affordable coverage. Affordability must be measured in terms of both out-of-pocket premium expense and out-of-pocket cost-sharing for doctors and hospitals. We urge the committee to consider a “hardship exemption” of less than 10 percent for lower income families. The hardship exemption should be defined in terms of out-of-pocket premium share, co-pays or cost-sharing, and certain specific qualifying direct medical expenses not covered by insurance (such as home healthcare for a parent or chronically ill family member). When these expenses in combination exceed the specified portion of income (10% or less depending on income), the individuals would be exempt from further medical expenses for that year.

Establish default automatic enrollment. We urge the committee to consider a default enrollment system in the exchanges and, over time, in other existing or new programs. As the committee knows well, enrollment barriers are a serious problem. Millions of people eligible for Medicaid and SCHIP fail to enroll, and some two million low-income people are still not enrolled in heavily subsidized Part D coverage. Enrollment barriers prominently include lack of awareness of the program and eligibility criteria, low “health literacy,” administrative hassles, and stigma issues. We suggest, for example, that a simplified online (Web based) default enrollment system be established at hospitals, community clinics, doctors’ offices, welfare offices, and via motor vehicle offices nationwide.
We would be happy to assist the committee in any way we can.

Sincerely,

DeAnn Friedholm
Director, Healthcare Reform Campaign
CONSUMERS UNION

To download the entire pdf document, please click here.

IssuesHealth