Is The Senate Considering Lowering Benefit Standards To ‘Improve’ Affordability Measures?

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"Is The Senate Considering Lowering Benefit Standards To ‘Improve’ Affordability Measures?"

BaucusCallThis afternoon, during a conference call sponsored by Families USA, Sen. Max Baucus (D-MT) laid out various measures to improve the affordability standards in the committee’s health care bill. Responding to my question about how to make the bill more affordable for American families, Baucus suggested that the Senate could increase subsidies, reduce benefit packages, or strengthen the penalties for Americans who don’t meet the requirements of the individual mandate.

Baucus said that it would be politically difficult to increase subsidies and did not suggest that the Senate was considering a public plan to help lower premiums and the costs of the actual bill. Instead, Baucus implied that the Senate may reduce the value of the minimal creditable coverage for so-called young invincibles and Americans in the exchange:

There are a lot of ways to address it, as you’ve said Igor. One is higher subsidies, but you know, we don’t want to go much over $900 billion total over 10 years. Another is to adjust the minimal creditable coverage provision that is under the bill…We’re 65% [of actuarial value] in the Senate. If that’s lowered to a lower number, that’s going to make health insurance less expensive. However, it’s going to mean lesser coverage too. There is some talk about, you know, even lower plan for — the popular term is — young invincibles. For people who are very young, say 25 or [2]6 or something like that, who would be able to purchase very low premium plans that might have a high– it’s a catastrophic plan — which may have a high deductible…..That would help coverage, that would help coverage all together and lowering to 65%, for the so called bronze plan, down to 60 would also help address affordability

Listen:

“Raising the tax credit will address affordability, there are lots of different ways,” Baucus said. “And also the mandate if you will, the penalty. If the penalty is changed that will have an effect on coverage too. There are a lot of moving parts here.”

The Senate Finance Committee has already made reform more “affordable” by excluding some 2 million Americans from the requirement to purchase coverage and lowering the benefit standards would further undermine the goals of universal affordable coverage for all. Most progressives argue that the current benefit packages in the Baucus bill are already far below the standards offered to federal employees or most employer-based coverage. The young invincibles plan would allow younger applicants to enroll in cheaper but less substantive plans that may prove inadequate over time. For Americans in the exchange, insurers would have to cover 65% of the health care expenses of an average population; the remaining 35% would be picked up by individuals.

By lowering the minimal creditable coverage, the government would be asking Americans to pay lower premiums for a less substantive plan that could become wholly unaffordable if the beneficiary needs care. Here is a comparison of all the affordability and minimal creditable coverage provisions in the major bills:


HELP Bill (About $1 trillion/10 years) Senate Finance Draft ($829 billion/10 years) Tri House Bill($1.04 trillion/10 years)
Affordability credits Credits up to 400%FPL

Credits tied to average cost of 3 lowest cost plans in geographic area.

Sliding scale 150%-400%FLP; Have to spend 1%-12.5% on coverage before credits kick in.

Cost sharing credits available with specifics to be determined by Secretary.
Credits up to 400%FPL

Credits tied to 2nd lowest cost silver plan in geographic area.

Sliding scale 133-300%FPL; flate rate 300-400%FPL; Have to spend 2%-12% of income before credits kick in.

Cost sharing credits on a sliding scale of 100-400%FPL; Limits: $5,950 individuals/$11,900 family.
Credits up to 400%FPL

Credits tied to average cost of 3 lowest cost plans in geographic area.

Sliding scale 133-400%FLP; Have to spend 1.5-11% income before credits kick in.

Cost sharing credits on a sliding scale of 133%-400%FPL; Limits: $5,000 individuals/$10,000 family.
Minimum Benefits Packages No specific percentage established. 65% actuarial value 70% actuarial value

Transcript:

WONK ROOM: Hi Chairman Baucus, thank you so much for taking the question. You mentioned that you wanted to improve some of the coverage provisions in the bill and I was wondering if you think if the bill, as is now, if it’s affordable, and also what you’re doing and what you’ll be looking at to improve affordability measures in the bill — higher subsidies, maybe a public plan, or lower benefit packages. How would you go about that?

BAUCUS: There are a lot of ways to address it, as you’ve said Igor. One is higher subsidies, but you know, we don’t want to go much over $900 billion total over 10 years. Another is to adjust the minimal creditable coverage provision that is under the bill…We’re 65% [of actuarial value] in the Senate. If that’s lowered to a lower number, that’s going to make health insurance less expensive. However, it’s going to mean lesser coverage too. There is some talk about, you know, even lower plan for — the popular term is — young invincibles. For people who are very young, say 25 or [2]6 or something like that, who would be able to purchase very low premium plans that might have a high– it’s a catastrophic plan — which may have a high deductible…..That would help coverage, that would help coverage all together and lowering to 65%, for the so called bronze plan, down to 60 would also help address affordability…

Raising the tax credit will address affordability, there are lots of different ways, and also the mandate if you will, the penalty. If the penalty is changed that will have an effect on coverage too. There are a lot of moving parts here.

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