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"EVERYBODY IN, NOBODY OUT: Kennedy's bill aims to improve access to coverage by regulating insurers, expanding Medicaid and the State Children's Health Insurance Program (SCHIP), and building state-sponsored insurance Gateways (or exchanges) to help Americans find affordable coverage. Americans who like the insurance they have can keep it, but those who are dissatisfied with the porous policies of the individual market -- and those who are uninsured -- would be able to purchase affordable and adequate coverage. Under the legislation, "a group or individual health insurance plan may not impose preexisting condition exclusions." In fact, "rates cannot vary by health status, gender, class of business, or claims experience." Insurers must accept every employer and individual that applies" for coverage and must also renew their policies. The bill eliminates lifetime or annual limits on benefits and limits the cost sharing for certain preventive services and immunizations. Individuals and employers would be required to purchase insurance, but families earning up to 500 percent of the federal poverty line (FPL) -- $110,000 for a family of four -- could "buy insurance on a sliding scale with government subsidies." Anyone with incomes up to 150 percent of the FPL -- $33,000 for a family of four -- would also be eligible for Medicaid, and people up to age 26 would be able to participate in SCHIP. The new state-based insurance Gateways -- where individuals and small employers could compare plans side by side, find options with a minimum benefits package, and buy coverage -- would help applicants find and enroll in comprehensive and portable coverage and certify qualified health plans to ensure they "provide a level of standard benefits."
A MUSCULAR PUBLIC OPTION:The new public health plan would provide all Americans under 65 the choice of public coverage, restore competition into the consolidated health insurance market, lower health care premiums across the board, lead the way in innovation, and improve health quality. As CAPAF Senior Fellow Peter Harbage and Director of Health Policy Karen Davenport argue in a recent report about the public plan, "In the face of tremendous consolidation in the health insurance market, employers and individuals have a shrinking set of health insurance options. Private insurers have used this market power to boost their profits." Harbage and Davenport add, "By including a public health insurance plan as another insurance option and creating a health insurance exchange that delivers transparency and accountability to the market, we can assure both viable competitors and real competition." A new public plan has the potential "to drive improvements in the health care system" and set the standard for developing new payment models and investing in preventive care and care coordination. Critics of the public option, including the insurance industry and most Republicans, argue that a public plan could not compete fairly with private insurers because its lower reimbursement rates would "crowd out" private coverage and spell death for the private insurance industry. But as health care economist Uwe Reinhardt explains, "If the new public plan had to negotiate its own prices, then it would not have a competitive advantage any more 'unfair' than is the ability of large insurers -- such as Aetna and Wellpoint -- to negotiate lower prices with hospitals and physicians than these providers charge smaller insurers. For some reason, no one has ever called this form of price discrimination 'unfair.'" Under Kennedy's bill, the new public option would reimburse providers 10 percent above current Medicare rates. It would not have to negotiate its own rates, but could piggyback off of Medicare's considerable reach. Using "Medicare plus 10" rates, rather than the prevailing market rates, would lower costs and allow the plan to charge lower premium rates."
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