An editorial in today’s Wall Street Journal argues that that the House health care bill would undermine President Obama’s pledge to allow Americans to “keep your health care plan” by “repealing Erisa” — the federal law that “allows employers that self insure — that is, those large enough to build their own risk pools and pay benefits directly — to offer uniform plans across state lines”:
The House bill says that after a five-year grace period all Erisa insurance offerings will have to win government approval—both by the Department of Labor and a new “health choices commissioner” who will set federal standards for what is an acceptable health plan. This commissar—er, commissioner—can fine employers that don’t comply and even has “suspension of enrollment” powers for plans that he or she has vetoed, until “satisfied that the basis for such determination has been corrected and is not likely to recur….In other words, the insurance coverage of 132 million people—the product of enormously complex business and health-care decisions—will now be subject to bureaucratic nanomanagement.”
The editorial correctly notes that after a five-year grace period, self-insured plans, as well as any other insurance plan, would have to meet Qualified Health Benefit Package requirements, but they would not lead to the kind “nanomanagement” the paper describes. This is because these rules target plans in the inadequate individual market where insurers exclude Americans with pre-exising conditions, rescind coverage, and offer subprime plans that offer no real actual benefit. The overwhelming majority of self-insured plans already meet these standards.
According to the House legislation, any insurance plan would have to end discrimination based on pre-existing conditions (which employer plans already prohibit), guarantee issue and renewal for coverage (which employer plans already do) , allow for minimum variance in premiums rates, limit cost sharing for preventive services, not impose any annual or lifetime limit on certain coverage, provide coverage for hospitalization, outpatient hospital and outpatient clinic services, professional services of physicians, prescription drugs, rehabilitative services, mental health and substance use disorder services, preventive services, maternity care, and well being and well child care. According to the bill, the plans would need to provide benefits that are “actuarially equivalent to approximately 70 percent of the full actuarial value.”
Most HMOs and PPOs offer plans that are far above the 70 percent threshold, suggesting that Erisa companies would have no trouble meeting the standard established in the House legislation. According to the Congressional Research Service, “the actuarial value of a typical HMO (assuming only in-network usage) is approximately 93%. The actuarial value of the typical PPO ranges from 80% to 84%.”
It’s unclear why Journal is objecting to these very basic health standards. After all, the paper continuously argues that the private market is perfectly capable of providing Americans with affordable and adequate coverage without a public competitor. The House legislation is holding them to it.