Why Consumers Union supports the House health reform bill (H.R. 3962)
Any proposal that addresses one-fifth of our economy, and deals with an issue as important to Americans as their healthcare, deserves our careful reading and intense scrutiny. With that firmly in mind, and with our decades of experience analyzing incremental health reforms at the state and federal levels, Consumers Union, the nonprofit, independent publisher of Consumer Reports, supports H.R. 3962, the Affordable Healthcare for America Act.
We believe this bill contains workable solutions to the critical problem that so many Americans face right now – namely, the inability to afford dependable, quality healthcare. While we anticipate that some reforms will be revised as implementation unfolds, H.R. 3962 is a strong bill that comprehensively addresses the flaws in a healthcare system that leaves too many families on the brink of poor health and financial ruin.
Here are our reasons why we believe H.R. 3962 will improve Americans’ healthcare:
New protections for consumers
- Insurance companies will no longer be able to deny you coverage for any pre-existing medical condition.
- You won’t face financial ruin due to medical bills. New standards limit annual out-of-pocket costs to roughly $5,000 for a single person and $10,000 for a family. Lower-income families will pay significantly less out-of-pocket, down to $500 for an individual and $1,000 for a family.
- Insurers can vary their premium rates by only a few factors like age, geography and family size. Insurers wouldn’t be able to charge you more just because your health isn’t as good as your neighbors’.
- Insurers must spend at least 85 percent of your premium on medical care. They must justify premium increases based on this formula, and rebate money to you if they don’t meet it.
Meaningful competition among insurers
When consumers can compare their insurance plans on an ‘apples-to-apples’ basis, it forces insurers to compete on price and quality. H.R. 3962 not only makes it easier for consumers to compare coverage, but makes more choices available.
- Creates a one-stop “exchange” where all insurers present their information in the same format, so you can easily compare the price and quality of different insurance plans.
- Eliminates insurance policy fine print, and makes sure there is consistent, use of terms like “deductible” and “hospitalization” so you are not tripped up by industry double-speak.
- Offers a public plan option to provide new competition to insurance companies, which is especially important in the many parts of our nation that have few companies offering coverage – especially rural areas. The public plan will compete on a level playing field with the same rules private insurers follow, will negotiate payment rates with providers, and will not rely on taxpayer subsidies.
Affordable coverage choices
While worthy, the above reforms by themselves would still leave insurance unaffordable for many Americans. H.R. 3962 provides premium credits for individuals purchasing coverage in the exchange. These credits will lower the cost of coverage for families with incomes below 400 percent of the “federal poverty level” – which is about $43,300 for an individual, and $73,250 for a family of three. The credits to help buy coverage vary by how much an individual or family makes below these limits.
Coverage that is always available
Even if you have good insurance through your job now, these reforms provide peace of mind if your circumstances change. If you lose your job, change employers, start your own business, go back to school or develop a medical condition, you will always have reliable, affordable insurance options.
Help for small businesses
Many small businesses face the same difficulties buying health coverage as individuals: astronomical premiums, coverage denials because of prior medical conditions, too few insurers to pick from, and no way to easily compare the plan options from those who do offer policies. Many firms say they would contribute to coverage for their employees if there were an easy and affordable way to do so. H.R. 3962 would:
- Allows small companies to easily offer their employees coverage through the exchange. The employer can provide a fixed contribution to workers’ premiums, and workers can choose from plans in the exchange and pay any remaining premium through payroll deductions.
- Insurers can’t charge more if someone in the company has a pre-existing medical condition or has a major health crisis while in the health plan.
- Very small businesses (under 25 employees) that pay employees salaries less than $40,000 a year can get a temporary tax credit to offset the cost if they haven’t offered coverage before.
Improvements to Medicare
- Closes the prescription drug “donut hole” – a $3,454 coverage gap where seniors have to pay for medications totally out of their own pocket.
- Allows Medicare to negotiate with the drug companies to get lower prices for prescription drugs. Right now, Medicare is prohibited from negotiating drug prices for seniors.
- Improves hospital care by making sure seniors aren’t sent home too soon and then need to be re-admitted. Better hospital discharge practices should help all hospital patients, not just Medicare beneficiaries.
- Makes it easier for seniors to get preventive care and vaccines, like the new shingles vaccine.
- Provides more information to seniors on the relative quality of Medicare Advantage plans, and how they stack up against the other.
It will take a while to put some of these far-reaching reforms in place, so H.R. 3962 includes important reforms that happen right away:
- Anyone who has been denied coverage due to a pre-existing medical condition can get coverage through a new, national high-risk pool.
- Young adults can get coverage through their parents’ policy through age 26. Today, these young people “age off” their parent’s policy when they leave high school, or in some cases, college.
- COBRA, our nation’s program for those who lose their employer-based coverage, is extended until a better option is available. Today, this coverage option typically lasts no longer than 18 months after you lose your job.
More issues important to our healthcare
We can’t list them all here, but we’ll note some more important features in the legislation:
- Requires public reporting of healthcare-associated infections that are largely preventable. These infections, which kill nearly 100,000 Americans each year, are currently kept secret by many medical providers and hospitals. Making infection rates public will encourage providers to clean up their act and prevent their spread.
- Stops brand-name drug companies from paying generic companies NOT to bring lower-cost medicines to market. This is expected to save consumers billions in the years to come.
- Funds research on what medical drugs and devices work the best and are the safest. Consumers will have independent, scientific information about the relative value of new pills, medical implants, and other treatment alternatives.
- Gives you and your loved ones more protection if you need a nursing home, by requiring criminal background checks to weed out potential abusers, by giving you more information about the level of nursing quality in a home, and improving oversight of the safety and quality of nursing homes.
- Takes big steps to address the failures in our nation’s emergency rooms, such as coordination of care, overcrowding, and lack of on-call staff.
November 6, 2009