The National Assn of Insurance Commissioners has proposed a model act for the states as a way to control costs. It says that the highest rates for any age group should be no more than 400% of the lowest rate charged to any group. This would be reduced to 300% two years after the law is passed, then to 200% after five years. That would mean a 63-year-old living in San Diego, for example, could not be charged more than double the rate paid by a 25-year-old in Santa Monica.
Price differences and subsidies are crucial. It would be meaningless to have the guaranteed right to buy health insurance if you make $30,000 a year, have high blood pressure and diabetes, and a policy would cost you $10,000.
If I have a business, would I have to buy coverage for my workers?
The answer to this question may determine the success or failure of health reform efforts.
This is the "pay or play" issue in health policy language. A company "plays" by offering coverage to its employees, or "pays" into a public fund to help cover the uninsured.
During his campaign, Obama said he favored a mandate for business. But, like the idea of a mandate for individuals, any discussion of a mandate for business was conspicuously absent from the budget document, and was never mentioned by administration officials in their briefings Thursday. They repeated over and over that the president wants every American covered by health insurance, and that he welcomes all ideas from Congress about how best to achieve the ambitious goal.
Big questions remain. If there is a mandate, which businesses should be exempt? Those with 25 or fewer workers? 10 or fewer? And what share of payroll should businesses have to contribute if they don't offer coverage?
Big companies already offer coverage and likely would continue to do so. They might favor the mandate because it levels the playing field, with all firms now in the game.
Small businesses, vociferous opponents of the Clinton plan in 1993, would be hard to persuade now to accept a mandate as they struggle with the biggest economic slump since the Great Depression.
Would there be some help for older workers who don't have coverage on the job and can't afford an individual policy?
Perhaps. One of the ideas circulating on Capitol Hill would allow people to buy into the Medicare program at age 55 or 60. (Medicare eligibility begins at 65.) Early entry would protect people who may have taken early retirement, or been laid off in their late 50s. They are old enough to have developed medical problems that make it hard to get an affordable policy.
The question that would need to be resolved is how much would the government charge as a premium. Most of the cost of Medicare is borne by the taxpayers, with the beneficiaries paying only a small share. Since Medicare faces long-term financial problems, Congress might want to charge the full cost of Medicare to these new enrollees. This could range from $500 to $700 a month.
Might there be a public health insurance plan?
This idea, backed by the president, would create for the first time a public insurance plan to compete with the myriad plans offered by private-industry insurers. The plan would be designed to provide a benchmark for quality coverage, with a basic package of comprehensive benefits. The Obama health plan issued during the presidential election campaign envisioned that millions of the 47 million uninsured would move into a public plan.
How can the country pay for a reworking of its health insurance system?
There's the rub. The only thing certain is that it would cost a lot, and the debate will be vigorous over where that money should come from.
Obama has proposed a down payment of $630 billion. Most of the money would come from an increase in federal income taxes by limiting deductions for people making more than $250,000 a year.
He also wants to cut payments to Medicare HMOs, saving about $175 billion over 10 years, according to the budget plan issued Thursday. This program, known as Medicare Advantage, requires enrollees to get their hospital and doctor care within a network of providers. In return, they get extra benefits, such as dental care, which are not included in the regular Medicare program. Under regular Medicare, called fee-for-service, the beneficiary can see any doctor or hospital where Medicare payments are accepted.
Other ways to find revenue, mentioned by administration officials but not endorsed in any way, include:
* Capping the federal income tax deduction for health insurance.
Workers do not currently pay taxes on the total value of their coverage. Suppose Sarah Jones has a policy at work with premiums of $10,000 a year. She pays $2,000 and her employer pays $8,000 on her behalf. That $8,000 is not counted as income for Sarah Jones. And her employer can deduct the $8,000 as a business expense.