The Foundry

The new House bill ( H.R. 3962) contains a slightly revised version of the “public option”, a new government run health plan designed to compete against private health plans.

Pool of Eligible Enrollees. Under the original House tri-committee legislation ( H.R. 3200), in year one (2013), individuals and employers with 10 employees or fewer were eligible for the exchange. In year two (2014), individuals and employers with 20 employees or fewer became eligible. In year three (2015), the “Health Choices Commissioner”—a presidential appointee tasked with heading a new executive-branch agency called the Health Choices Administration—was granted the authority to expand employer eligibility with the “goal of allowing all employers access to the Exchange.”

Under the version of H. R. 3200 amended by the by the Committee on Education and Labor, in year one (2013) individuals and e
mployers with 15 employees or fewer were eligible for the exchange, in year two (2014) individuals and employers with 25 employees or fewer became eligible, in year three (2015) individuals and employers with 50 employees or fewer became eligible, and then in year four (2016) the Health Choices Commission was given authority to up it up to employers of all sizes.

The New Bill. The merged House bill, as specified in section 302 above, makes individuals and employers with 25 employees or fewer eligible for the exchange in year one (2013), in year two (2014) individuals and employers with 50 employees or fewer become eligible, in year three (2015) employers with at least 100 employees become eligible but starting that year, the Commissioner permitted from this year forward to expand employer participation as appropriate, “with the goal of allowing all employers access to the Exchange.” In effect, the merged bill makes larger sized employers explicitly eligible and still turns over authority to the health choices commissioner to further open it up. The goal has been, and still is, clearly to open the exchange and the public plan to everyone.

Plan Payment Rates. Its being widely reported that House Speaker Pelosi had to forgo the robust public option with Medicare payments rates for a less robust public plan that would only negotiate rates with medical providers.

This change was clearly a move to attract moderate Democrats in the House and to address the concerns of doctors and hospitals who worried about cuts in reimbursements levels to providers as the public plan crowds out private coverage. But the moderate Democrats and medical providers should take note: a less “robust” public option today will almost be a more robust public option tomorrow. Look no further than the history of Medicare. Medicare was initially designed to pay private rates, but now the program has a complex formula for administered pricing. A brief history here.

The Secretary of HHS, under Section 325, has the authority to develop conditions of participation for the public health insurance option. But doctors are to be excluded from participation if they are excluded from other federal health programs.

Co-authored by Greg D’Angelo.