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The New Affordability Measures In The Energy And Commerce Health Legislation

By Igor Volsky  

"The New Affordability Measures In The Energy And Commerce Health Legislation"

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On Friday, after days of contentious negotiations between “Democratic House leaders and an influential group of fiscal conservatives in the party,” the House Energy and Commerce Committee passed a health care bill by a vote of 31-28. The committee’s bill “will now be merged with two separate versions passed by other House panels before being considered by the full chamber in September.”

The vote in Energy and Commerce followed tense negotiations between the committee chairman, Rep. Henry Waxman (D-CA) and liberal and conservative wings of the Democratic Party. The conservative Blue Dog caucus secured concessions that decoupled the public health insurance option from Medicare (rather than piggybacking off of Medicare rates, the program would have to negotiate its own reimbursements with providers) exempt more businesses from providing coverage, and lowered affordability measures. In protest, 57 members of the Progressive Caucus sent a letter to House Speaker Nancy Pelosi (D-CA) arguing that the “agreement is not a step forward toward a good health care bill, but a large step backwards” since it does not provide “at a minimum, for a public option with reimbursement rates based on Medicare rates.”

On Friday morning, the two sides reached a deal. According to the amendments passed in committee, the progressives cushioned the Blue Dogs’ affordability cuts by placing a lid on the rise of premiums (premiums cannot increase faster than 150% of medical inflation) and re-investing system savings into affordability measures — thus complimenting the Dogs’ desire to find more savings within the system with the need to improve affordability measures. Moreover, Health and Human Services Secretary Kathleen Sebelius told House members that since she would be negotiating the rate for the public option, in some regions of the country, she might be able to negotiate provider payments even lower than Medicare plus 5 percent.

On the affordability front, the final legislation still increases the premium caps for Americans making more than 150% above the federal poverty line (FPL), but progressives negotiated an agreement to reinvest expected savings from administrative simplifications, the accountable care organizations (models) in Medicaid, and the Medicare’s new-found ability to negotiate drug prices, into premium assistance.

Below is a table of the new affordability standards (before any savings are re-invested):


Family income within the following income tier: Premium range BEFORE agreement (pay this % of income before assistance kicks in): Premium range AFTER agreement (pay this % of income before assistance kicks in): Percent of cost covered by plan (an actuarial percentage):
133% – 150% FPL 1.5-3% 1.5-3% 97%
150% – 200% FPL 3-5% 3-5.5% 93%
200% – 250% FPL 5-7% 5.5-8% 85%
250% – 300% FPL 7-9% 8-10% 78%
300% – 350% FPL 9-10% 10-11% 72%
350% – 400% FPL 10-11% 11-12% 70%

For individuals between 133% and 150% of the federal poverty line, nothing would change. However starting at 150 through 200%, Americans would have to spend a higher percentage of income on premiums before receiving subsidy assistance.

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