Healthcare Reform Financing Options Discussed in Senate Committee Paper

Janice Simmons, for HealthLeaders Media , May 13, 2009

The Senate Finance Committee on Thursday will meet behind closed doors and "walk through" policy options on expanding healthcare coverage. These options are found in the second of three papers on healthcare reform released this week by the Finance Committee; the panel is looking to mark up healthcare reform legislation by June.

An introduction to the paper, which follows a Finance Committee roundtable on coverage issues on May 5, notes that it is "intended to spur discussions regarding proposed options." Not all of the options have the support of Committee Chair Max Baucus (D-MT) or ranking minority leader Charles Grassley (R-IA).

Many of the policy options are aimed at reforming individual and small group health insurance markets. This, in turn, would create a competitive insurance market "where health plans compete on "price and quality"—rather than segmenting the market by risk and discriminating against individuals with preexisting conditions, the paper said.

The paper presents three alternatives for a public health insurance option—an area that has created heated debate in Congress. One alternative is a Medicare-like option that would be administered by the Department of Health and Human Services (HHS). The government would set payment rates for that plan, and Medicare providers could participate in the plan. This public health insurance option would not have solvency requirements.

Another alternative is a public health insurance option that would be administered through multiple, regional, third-party administrators (TPAs). These TPAs would be required to report to the HHS secretary. The TPAs would establish networks of participating medical providers and would negotiate payments for providers participating in the option. This public option would be required to adhere to solvency requirements.

A third alternative would be a state-run public health insurance option. The policy paper also presents the option of not creating a public health insurance option, but expanding coverage through a reformed and more regulated private market.

The policy options also would standardize Medicaid eligibility for all parents, children, and pregnant women below 150% of the Federal Poverty Level (FPL) or $33,000 a year for a family of four.

The paper also calls for creating options for people ages 55 to 64 years old and for changing the Medicare 24-month disability waiting period. The policy options would not make changes to the Children's Health Insurance Program (CHIP) until after September 30, 2013. After that time, CHIP would be offered through a health exchange and would provide additional benefits for low-income children not eligible for Medicaid.

The paper also suggests making wellness visits available to Medicare beneficiaries once every five years and providing a personalized prevention plan. The options also would provide incentives for Medicare beneficiaries to use preventive services.

Examples of these incentives include reducing or eliminating cost-sharing for screenings and offering rebates for completion of health promotion programs, such as smoking cessation. The policy options call for aligning Medicare coverage for preventive services with scientific evidence to ensure patients receive appropriate screenings.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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