Monday, October 29, 2012

Fwd: qotd: A national plan for the exchanges

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-------- Original Message --------
Subject: qotd: A national plan for the exchanges
Date: Mon, 29 Oct 2012 07:41:20 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
October 27, 2012
U.S. Set to Sponsor Health Insurance
By Robert Pear

The Obama administration will soon take on a new role as the sponsor of
at least two nationwide health insurance plans to be operated under
contract with the federal government and offered to consumers in every

These multistate plans were included in President Obama's health care
law as a substitute for a pure government-run health insurance program —
the public option sought by many liberal Democrats and reviled by
Republicans. Supporters of the national plans say they will increase
competition in state health insurance markets, many of which are
dominated by a handful of companies.

The national plans will compete directly with other private insurers and
may have some significant advantages, including a federal seal of
approval. Premiums and benefits for the multistate insurance plans will
be negotiated by the United States Office of Personnel Management, the
agency that arranges health benefits for federal employees.

John J. O'Brien, the director of health care and insurance at the
agency, said the new plans would be offered to individuals and small
employers through the insurance exchanges being set up in every state
under the 2010 health care law.

Under the Affordable Care Act, at least one of the nationwide plans must
be offered by a nonprofit entity. Insurance experts see an obvious
candidate for that role: the Government Employees Health Association, a
nonprofit group that covers more than 900,000 federal employees,
retirees and dependents, making it the second-largest plan for federal
workers, after the Blue Cross and Blue Shield program.

Richard G. Miles, the association's president, expressed interest in
offering a multistate plan to the general public through insurance
exchanges, but said no decision had been made.

"Our expertise in the Federal Employees Health Benefits Program would be
useful in the private marketplace," Mr. Miles said in an interview. "But
we are concerned about the underwriting risk in providing insurance to
an unknown group of customers."

To be eligible to participate in the multistate program, insurers must
be licensed in every state. The Government Employees Health Association
recently bought a company that has the licenses it would need.

National insurance plans will be subject to regulation by the federal
government, state insurance commissioners and state insurance exchanges.
That mix could cause confusion for some consumers who have questions or
complaints about their coverage.

The federal standards will pre-empt state rules in at least one respect:
the national health plans will automatically be eligible to compete
against other private insurers in the new exchanges, regardless of
whether they have been certified as meeting the standards of those

The administration has promised to "work cooperatively with states." But
it is unclear whether the government-sponsored plans will have to comply
with all state laws and consumer protection standards; whether they will
have to comply with state benefit mandates; and whether they will have
to pay state fees and taxes levied on other insurers to finance exchange

Robert E. Moffit, a senior fellow at the conservative Heritage
Foundation, said he worried that "the nationwide health plans, operating
under terms and conditions set by the federal government, will become
the robust public option that liberals always wanted."

Rules for the new program have been under review by the White House for
three months, and officials said they would be issued soon.


H.R.3590, Patient Protection and Affordable Care Act (P.L.111-148)

(1) ESTABLISHMENT.—The Secretary shall establish a community health
insurance option to offer, through the Exchanges established under this
title (other than Exchanges in States that elect to opt out as provided
for in subsection (a)(3)), health care coverage that provides value,
choice, competition, and stability of affordable, high quality coverage
throughout the United States.

Comment: Although the White House has not yet released the rules for
federally-sponsored national health plans, we really don't need those
rules to know that this program is not an incremental step towards a
single payer national health program.

At this point, consideration is being given to using the Government
Employees Health Association as a national plan to be offered to
individuals and small businesses through the state insurance exchanges.
This plan is one already offered to government employees through the
Federal Employees Health Benefits Program (FEHBP) administered by the
United States Office of Personnel Management (OPM).

This is still a private plan, even if it is non-profit serving
government employees. It is not and never will be a publicly-owned plan
such as the traditional Medicare program. Currently it is being proposed
for a rather limited market - the state insurance exchanges which will
be offering coverage for only the relatively small proportion of our
population that qualifies for the exchanges. It will be competing on a
private market basis with other private plans within the exchanges.
There is concern that it would be exposed to adverse selection -
insuring more expensive patients such as those with preexisting
disorders, many of whom are currently amongst the ranks of the
uninsured. So it may not even be able to compete on an equal basis with
the other private plans that have proven themselves quite capable of
dodging adverse selection. So it still will be just another cog in our
fragmented, dysfunctional system of financing health care.

It will be offered nationally, in some ways meeting the expressed desire
of Republicans to offer insurance across state lines. It is unclear if
this would satisfy their intent to allow the plans to escape state
regulation since it is not yet known how the state and federal
governments will share regulatory oversight. This aspect of the national
plan could be a step backward.

Thus this national private plan currently offered to government
employees will still be nothing more than a private plan in a market of
other plans within the state exchanges. The single payer community
should not waste its time trying to make this plan something that it is
not and never can be. We cannot let up in our advocacy for a bona fide
national single payer program - an improved Medicare for all.

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