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A Times Editorial

As health reform nears, time to get details right

The nation stands on the brink of historic health care reform that would extend insurance to millions of Americans and ramp up efforts to control costs without raising the deficit. Yet there are countless details that require careful examination before a final vote on a compromise. Here are four areas of concern:

Tax all costly health plans. The White House, congressional leaders and labor unions agreed on a method of taxing high-cost health insurance policies, but the details should be refined. It makes sense to help pay for health reform with an excise tax on expensive plans, which tend to offer generous benefits and contribute to the overuse of medical services. That Senate approach was better than the House's plan to add a tax on wealthier Americans' incomes, an option that will be needed later to reduce the federal deficit.

The unions raised legitimate questions over whether the tax on insurance policies kicked in too quickly in the Senate plan. The compromise reasonably raised the threshold slightly, to health plans costing more than $8,900 for an individual or $24,000 for a family. But negotiators went too far to win the unions' support by exempting government plans and collectively bargained health plans until 2018. Those are often the more generous plans, and with few exceptions every worker should be on the same playing field. Now $60 billion has to come from somewhere else to make up for the revenue lost by this compromise.

Make insurance exchanges national. One way the House plan outshines the Senate's is on setting up insurance exchanges. The House would have a single centralized exchange (except if a state opts out and creates its own). The Senate would have at least 50 state exchanges with the option of multiple exchanges per state. The exchanges are competitive marketplaces where uninsured individuals and small businesses could shop for quality health insurance options.

A national exchange makes more sense. It would streamline administration, expand the risk pool beyond state lines and help standardize coverage options across the country. A centralized exchange also would have more bargaining power to negotiate premiums and administrative costs with insurers, and it could better police the national insurance landscape. Negotiators pursued a compromise, but the details have to ensure that individuals have plenty of choices that aren't limited by state boundaries and that there are adequate consumer protections.

Finance long-term insurance honestly. With the aging of the baby boomers, Congress is using health reform to address another ticking time bomb of entitlement costs: nursing home care. Medicaid now pays about 60 percent of all long-term care costs, and only 5 percent of Americans have long-term care policies. To try to nudge Americans to better prepare for a time when they may need help caring for themselves, the House and Senate plans include a long-term care insurance program that would help underwrite home health aides and nursing home care. The program is voluntary, but every working adult would be automatically enrolled unless he or she opts out.

Long-term care policies will help Americans remain in their homes into old age, and they won't have to exhaust their assets to receive help under Medicaid. The worry is that too many younger people will opt out of coverage, which could send the program into an "insurance death spiral" where premiums become so expensive that the only people who pay for coverage are those who need it.

A more immediate concern is the financing. Because estimates of the program's costs are based on a 10-year projection, and enrollees would have to pay premiums for five years before tapping benefits, the program appears to generate $72.5 billion in savings in its first 10 years. Those savings are partially illusory and yet are used to offset other aspects of health reform spending. The costs and viability of long-term health insurance have to be analyzed more honestly.

Extend Medicaid fairly. With public outrage building, Sen. Ben Nelson of Nebraska was forced Friday to drop his special deal that indefinitely covered 100 percent of the costs of expanding Medicaid in his state. But as negotiations continued there were broader questions about how states are still treated differently.

While the federal government is expected to pick up the cost of newly eligible Medicaid recipients for the first two or three years as the program expands, the states eventually pay part of the costs. There also are peculiar differences over which Medicaid recipients meet the definition, and the reimbursement rates would vary from state to state.

The good news in Florida is that in five years more than 1.9 million additional residents could be covered through Medicaid. The bad news is that could cost Floridians another $1.4 billion in tax dollars. Where will the money come from?

The most straightforward approach would be for the federal government to cover a larger share of all Medicaid costs and find a revenue source to pay for it.

As health reform nears, time to get details right 01/16/10 [Last modified: Friday, January 15, 2010 8:08pm]
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