Health insurance must be affordable for American families if we are all to buy it. With the proposed "public option" in doubt, we could end up with no strong mechanism to slow insurance price increases, and there's no cap on how much prices could rise. Making sure health insurance policies are actually affordable for those who must buy them is our top priority in the coming weeks, and should be Congress' top priority as well.

For millions of Americans, affordability is mainly secured through the discounts that will be available on a sliding scale to families earning under 400 percent of poverty (about $43,000 for an individual and $88,000 for a family of four). The discounts become available January 1, 2013 in the House bill, or 2014 in the Senate bill (see our summary of effective dates here).

The discounts will save qualifying families thousands of dollars--a huge improvement over the status quo. But, depending on the version finally sent to the President, the discounts may not be enough for some already strapped family budgets. For families who earn more than 400 percent of poverty and currently don't get insurance from an employer, there will be a new mandate and no discounts.

That's why we also have to get the underlying price of the insurance itself under control.

Neither the House nor the Senate proposal control insurance costs directly. Instead, they limit the price difference between young and old and eliminate a lot of distinctions that currently make insurance unaffordable for people who need it the most—they can’t charge more because of your health history, your gender or your occupation. They also require insurance companies to spend 85 cents of every premium dollar on medical care. The House bill starts this standard immediately, while the Senate version starts in 2011 with premium rebates to policy holders if companies don't meet the goal.

Requiring insurers to direct your premium dollar to medical care will make sure we all get some medical "value" for our insurance dollars (something we don't necessarily get right now). But it does not necessarily keep prices down. Insurance companies always claim their rate increases are related to increases in the underlying costs of care, and state regulators vary a lot in how aggressively they question those claims. And to be fair to insurance companies, doctors and hospitals are always pressing for higher fees.

So any effort to address the constantly rising cost of health insurance must look at both fronts--how we determine whether a rate is justified under the new standard, and how we actually reduce the underlying cost of care. Here I want to focus on the first question—the cost of insurance.

How can we address that? Well first, the Senate bill discourages unjustified rate increases but doesn't define the term. The bills need to define an "unjustified rate increase" clearly so that we don't have 50 different state approaches and big rate increases in some areas. Then, insurance companies with unjustified rate increases should be booted from the exchange. Finally, temporary provisions in the Senate bill designed to make sure insurance companies spread the cost of care across all policy holders ("risk adjustment") should be extended past their current end date, and evaluated to see if they need to be made permanent. We've outlined in more detail these and other provisions from each bill, and some changes to both bills, that would help keep insurance costs under control.

Even so, there will be people who simply can't afford to pay their required health insurance premiums, so the hardship exemptions need to be made very clear--people will not lose their house or car or be forced into bankruptcy if they cannot pay the insurance premium, and installment payments must be available. The goal of the legislation is to provide insurance, not generate new government revenue by imposing onerous penalties.

Over the long term, as we implement these reforms, insurance companies may invent new ways to cherry-pick their way to a more profitable (read healthier) policyholder base. After Congress finally passed strong credit card reforms, it took the credit card banks mere months to revise credit card contracts in ways designed to get around the new rules. We need to get the best possible bill finally passed now, and then we will need to track its implementation very closely to make sure we finally get the benefit of reform--that everyone can get the health care they need without drowning in impossible bills.

comments (6)

I'm actually all for a single-payer system, like Canada, Britain and France (where any loss of life or health from queueing is far, far less than the US loss of life or health from being uninsured). I've lived in Europe and know somewhat of the benefits.

Since we most probably won't get that, I begin to wonder just how much damage the health self-insurance plans of large companies cause. How many of our complaints against insurance companies should really be aimed at big employers instead of at those insurance companies who are just servicing the big company's self-insurance plan?
- How many instances of "insurance companies" blocking procedures are really "big, self-insured business" acting to limit costs?
- How many instances of job loss are really health cost related (my sister with breast cancer seems to be in this category).
- How low would premiums drop if everyone was actually insured instead of just *covered*? (i.e. big companies promise to cover health costs without contributing anything to future needs through the shared cost pool.)

I believe that companies with self-insurance plans "youth-anize" their staff so as to lower health care costs, and wonder how much lower everyone's insurance costs would be if big companies weren't engaged in cost-shifting to individuals and small business. Coverage is not insurance, and if younger, relatively healthy people aren't paying into the shared pool, then everyone else's costs go up.

I want my money going to a health care provider not to Insurance, the health care denier. Look up the original definition of Insurance. It's needed for unexpected expenses, not health care.

Pass a bill that will:
* Save money and not increase any more spending
* Enforce existing laws that prevent medical care from being practiced Illegally; without a license. How are Insurance companies allowed to make medical decisions without a license??? Eliminate insurance from making health care choices. Insurance is in the business to deny health care not provide it.
* Eliminate premiums, Co-Pays, and deductibles. Without Insurance, health care would be affordable to ALL. Money would go to health care.
* Eliminate the corruption in the FDA and AMA. They will not approve any "Cures"! Cure is not in their vocabulary. They approve only treatments that perpetuates more spending.
* Help improving the Doctor/Patient relationship. I feel like I'm going through a divorce with my Dr. I have to go through my Attorney=Insurance Co to have anything approved.
* Give me health care that I will always have access to no matter what happens with my job;
* Health care would be competitive if Insurance didn't have a monopoly on the national market to prevent better health care.

The government has never introduced a program that has actually cost what they said it would cost. Social Security has been cut in the past (by increasing the age of eligibility) and will be cut again...it is just about broke because it is a Ponzi scheme. If a private company attempted to introduce such a program, the Attorney General would shut it down.

Medicare and Medicaid are bloated, rife with fraud and cost millions and millions more than originally estimated.

The Post Office is running a deficit and just about every welfare program is costing us more than we can possibly afford.

Now the Government wants to control our health care. There is absolutely no reason to believe that we won't wind up like our British or Canadian brethern...waiting for permission to see a doctor or have a critical test.

If you trust them, you ought to look at the past as a reality check. I'm not buying that this is either necessary or good for us. Before adopt radical change, how about trying some non-conprehensive fixes like real tort reform (like loser pays?), allowing inter-state competition, prohibiting insurance companies from barring pre-existing conditions or dropping people because they get sick.

The Government should be protecting us from terrorists, not caring for our every need from cradle to grave.

First, there is no good reason for a profit-making company to insert itself between the patient and health care providers. Health care can be managed better without a profit motive affecting the process, driving up costs to the patients.
Secondly, the prices we pay in the US for health care do not need to be so high. We are held hostage to the charges determined by providers and drug companies and denied any power to affect these prices other than remain ill, or die.
Living in France I experience their health care firsthand. Drugstores here charge people not on the French plan less than my co-pay in the US. Doctors charge about $60 for an office visit in Paris if you are not on the French plan, or just $15 for a quick visit, and just a few Euros if you are on the French plan. The care is very good and statistics show it is better than than the US. You do not get kicked out of the hospital before you are ready, for one example. nor is there much wait for care.
Although providers and drug companies do need some profit to continue their work, the ever-increasing cost of medicines and services needs to be controlled.

What benefits apply to a US citizen living in Mexico? Are both Senate and House bills restricted to US residents?

My concern is this my mother who is in pretty bed health can not afford insurance and doesnt qualify for medicaid because she isnt old enough or dying enough. she is going to school and living with me. if for some reason she wont qualify for medicaid after reform how is she expected to pay a fine for not being able to afford insurance i think that part is a little redundant to say the least. Make it easier for those out of work to get healthcare dont punish them because they cant afford it.

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