PelosiCare Analysis Continued

On Friday, we outlined how the House version of Obamacare (PelosiCare) requires everyone to get “approved” medical coverage (H.R. § 101) or face a fine equal to 2.5% of your gross taxable income. (H.R. § 401).

Here are more details of the bill:


How Does The Public Option Work

PelosiCare creates a new Public Health Insurance Option.

So how does it work? We don’t know. The exact details of the Public Option plan will be established by a Health Choices Administrator (HCA), who will report to the Health and Human Services secretary.

However, we do know the following:

• The Public Option plan will have four tiers: (1) a basic level, (2) an enhanced level, (3) a premium level and (4) a creatively-named “premium plus” level (it’s double-plus good!). (H.R. § 203). The price difference from one level to the next may not exceed 10%.

• The HCA may negotiate directly with providers (H.R. § 224), and may require such "cost savings measures" as value-based purchasing, bundling of services, differential payment rates, performance based payments, price caps, etc. If physicians/providers want to participate they must agree to the rates established. (H.R. § 225).

• The HCA may negotiate directly with drugs companies. (H.R. § 223).

Who Qualifies For the Public Option

To qualify for the Public Option, individuals must not be eligible to join another “acceptable” plan either through an employer, Medicare, Medicaid, Tricare, the VA, or a state health plan. (H.R. § 202).

Employers are required to provide qualified private insurance. If they refuse, they will be fined 8% of the employee’s wages. (H.R. § 412). This decreases to between 0% and 6% for small businesses that earn less than $400,000 (those earning less than $250,000 pay 0%).


Subsidies

For all persons legally in the country and not eligible for Medicaid, PelosiCare promises subsidies to help pay the premium costs for an acceptable policy (either Public Option or private insurance). (H.R. § 242). However, persons who receive health care through an employer are not eligible for such subsidies (consider this an incentive for people to avoid working).

The subsidies range between 70% and 97% of premiums, depending on family income. (H.R. § 242).

To be eligible for a subsidy, family income must be between 133% and 400% of the poverty level. (H.R. § 242). Depending on family size, this means:

• Family Size 1, income between $14,403 and $43,320.
• Family Size 2, income between $19,378 and $58,280.
• Family Size 3, income between $24,352 and $73,240.
• Family Size 4, income between $29,326 and $88,200.

* uses 2008 data

FYI, according to the Census Bureau, 61% of households (one or more persons) earned less than $60,000 in 2005. Thus, expect around 60% of Americans to be eligible for a subsidy. . . and the other 40% to flee.

No payments may be made under this plan for illegal aliens. (H.R. § 246).


How Does Congress Plan To Pay For PelosiCare

Good question. The numbers are nonsense. No full CBO estimate of the bill’s costs has been completed to date, but the bill is currently estimated to cost more than $1.65 trillion over ten years.

An estimated $781 in tax hikes are planned from the following two sources:

1. The fining of employers discussed above (H.R. § 412). This is estimated to bring in $237 billion over ten years; and

2. An income tax surcharge at the following rates: 1% for income above $350,000, 1.5% for income above $500,000, and 5.4% for income above one million dollars. (H.R. § 441). However, this will go up automatically to 2%, 3% and 5.4% when the cost projections prove to be false. This is estimated to bring in $544 billion.

An additional $525 billion is estimated to "saved" from reducing payments to private insurers and drug makers. Fortunately, it’s unpatriotic to pass those costs on to private customers, right?

The remaining $344 billion will come from ________.


New Requirements For Qualified Plans

As noted previously, PelosiCare generously allows individuals to acquire “acceptable coverage” from “qualified” private medical plans.

To be considered a “qualified” plan, the private insurance must do the following:

• The plan may not exclude pre-existing conditions. (H.R. § 111).

• The plan may only vary the rates it charges for age, family size, and geography. (H.R. § 113).

• The plan may not terminate your coverage unless you stop paying the premiums. (H.R. § 112).

• The plan must use “cost sharing” measures, such as requiring co-payments. (H.R. § 117).

• The plan may not discriminate “without regard to personal characteristics extraneous to the provision of high quality health care or related services.” (H.R. § 152).

• The plan must offer an “essential benefits package” that is consistent with the standards TO BE established by the HCA. (H.R. § 124). In other words, the crux of the plan will be figured out later.

The HCA can also require rebates to enrollees whenever the plan does not meet a medical loss ratio defined by the HCA. (H.R. § 116). This provision is not clear in the bill, but it appears to be a profit-cap.


Cost Savings

Uh.

And they’re going to stop waste, fraud and abuse. (H.R. § 226).


Impressions

The bill. . .

1. Contains no real cost savings, just cost shiftings.
2. Provides few details of how the Public Option will work.
3. Does nothing to address costs imposed on states and providers by illegal aliens.
4. Leaves the current nightmarish bureaucratic system in place.
5. Promises subsidies at an unsustainable rate.
6. Uses math that simply does not add up.