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Response to CATO critique of the Patients’ Choice Act

POSTED BY Galen Institute on May 22, 2009.

A response to the Cato Institute's critique of the Patients’ Choice Act by Charlotte Ivancic, counsel to the House Budget Committee and health policy advisor to Rep. Paul Ryan.

  • Mandate that states create a new regulatory bureaucracy called a "State Health Insurance Exchange,"

States are not required to set up exchanges.  They can if they want to by applying to HHS for certification of an exchange, but there’s no requirement in our bill that any state set up an exchange.

  • Mandate that all plans offered through those exchanges meet federal regulatory standards,

Once a state sets up an exchange, it’s true that, yes, they must offer at least one plan that meets the FEHBP minimum benefit standard.  But we did this to get around state mandates.  The plans that participate in the exchange must offer at least the FEHBP minimum benefit standard, but they are not subject to the insurance mandates of the state (i.e. as long as they are offering at least minimum FEHBP standard, they don’t need to cover Viagra, infertility, etc.).

  • Mandate "guaranteed issue" in those exchanges,

There’s no guarantee issue in our plan.  There IS “guarantee access” but you’ll see in the bill text that it is entirely dependent on the consumer being able to pay the premium cost (BIG caveat).  Consumer has to agree to pay a premium for the “access” and we aren’t specific as to what that premium need be.  Thus, plans aren’t required to issue insurance to anyone and plans still control the premiums they charge.

  • Mandate "uniform and reliable measures by which to report quality and price information,"

Are you talking about the Healthcare Services Commission here?  This may just be one you won’t agree with our bosses on, but just want to make sure that’s what you are referencing.  I would point out that the Healthcare Services Commission doesn’t mandate anything – only reports the info.

  • Impose price controls on those plans by prohibiting risk-rating,

Bill text specifically says the exchange cannot set prices or impose price controls.

  • Launch a government takeover of the "insurance" part of health insurance, by means of a "risk-adjustment" program intended to cope with the problems created by price controls, and

Again, states don’t have to set up exchanges but IF they do, they need to have EITHER risk-adjustment, high-risk pools, OR reinsurance.  There’s no requirement for risk-adjustment just as there’s no mandate for exchanges.

  • Fall just short of an individual mandate by setting up (mandating?) automatic enrollment in exchange plans at "places of employment, emergency rooms, the DMV, etc." – essentially, trying to achieve universal coverage by nagging Americans to death.

There’s no mandate for auto-enrollment in our bill.  I’d encourage you to look at the text because you’ll see that whether a state with exchange, which is optional for the state to set up, adopts auto-enrollment as one of their conditions, is also optional.  We have a very clear opt-out provision such that no one is enrolled in a plan if they don’t want to be.  Furthermore, people can use their credit money to buy insurance outside the exchange (there’s no requirement that insurance must be purchased through the exchange, even if a state has one) and the auto-enrollment would not apply outside the exchange.  

Filed Under: Uncategorized

Response to CATO critique of the Patients’ Choice Act

POSTED BY Galen Institute on May 22, 2009.

A response to the Cato Institute's critique of the Patients’ Choice Act by Charlotte Ivancic, counsel to the House Budget Committee and health policy advisor to Rep. Paul Ryan.

  • Mandate that states create a new regulatory bureaucracy called a "State Health Insurance Exchange,"

States are not required to set up exchanges.  They can if they want to by applying to HHS for certification of an exchange, but there’s no requirement in our bill that any state set up an exchange.

  • Mandate that all plans offered through those exchanges meet federal regulatory standards,

Once a state sets up an exchange, it’s true that, yes, they must offer at least one plan that meets the FEHBP minimum benefit standard.  But we did this to get around state mandates.  The plans that participate in the exchange must offer at least the FEHBP minimum benefit standard, but they are not subject to the insurance mandates of the state (i.e. as long as they are offering at least minimum FEHBP standard, they don’t need to cover Viagra, infertility, etc.).

  • Mandate "guaranteed issue" in those exchanges,

There’s no guarantee issue in our plan.  There IS “guarantee access” but you’ll see in the bill text that it is entirely dependent on the consumer being able to pay the premium cost (BIG caveat).  Consumer has to agree to pay a premium for the “access” and we aren’t specific as to what that premium need be.  Thus, plans aren’t required to issue insurance to anyone and plans still control the premiums they charge.

  • Mandate "uniform and reliable measures by which to report quality and price information,"

Are you talking about the Healthcare Services Commission here?  This may just be one you won’t agree with our bosses on, but just want to make sure that’s what you are referencing.  I would point out that the Healthcare Services Commission doesn’t mandate anything – only reports the info.

  • Impose price controls on those plans by prohibiting risk-rating,

Bill text specifically says the exchange cannot set prices or impose price controls.

  • Launch a government takeover of the "insurance" part of health insurance, by means of a "risk-adjustment" program intended to cope with the problems created by price controls, and

Again, states don’t have to set up exchanges but IF they do, they need to have EITHER risk-adjustment, high-risk pools, OR reinsurance.  There’s no requirement for risk-adjustment just as there’s no mandate for exchanges.

  • Fall just short of an individual mandate by setting up (mandating?) automatic enrollment in exchange plans at "places of employment, emergency rooms, the DMV, etc." – essentially, trying to achieve universal coverage by nagging Americans to death.

There’s no mandate for auto-enrollment in our bill.  I’d encourage you to look at the text because you’ll see that whether a state with exchange, which is optional for the state to set up, adopts auto-enrollment as one of their conditions, is also optional.  We have a very clear opt-out provision such that no one is enrolled in a plan if they don’t want to be.  Furthermore, people can use their credit money to buy insurance outside the exchange (there’s no requirement that insurance must be purchased through the exchange, even if a state has one) and the auto-enrollment would not apply outside the exchange.  

Filed Under: Uncategorized

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