The Senate Health Bill: Federally Designed Health Exchanges With A Government Run Plan » The Foundry

The Senate Health Bill: Federally Designed Health Exchanges With A Government Run Plan » The Foundry: "Senate Majority Leader Harry Reid’s massive Senate health bill (H.R. 3590) contains a “public option”, a new government run health plan to compete against private health plans within a federally designed system of state health insurance exchanges.

Federally Designed State Health Exchanges. Under Section 1311 of the bill, the Secretary of the Department of Health and Human Services would be required to provide states grants for the establishment of American Health Benefit Exchanges, and by 2014 states would be required to establish these exchanges for the purchase of “qualified” health plans. Such plans would only be qualified if they met federal rules governing benefit packages, provider networks, “essential community providers”, quality standards and measures uniformity of enrollment procedures, the right kind of rating system, outreach, reinsurance and risk adjustment, and a variety of other federally determined processes under federal supervision. States would be able to require the qualified health plans to offer additional benefits and make the health plans more expensive, if they wished to do so, but they could not allow benefit changes that differed from the standards set by the federal government. As for the administration of the new federally required exchanges, they are required to be “self-sustaining”, and may impose assessment or fees on health plans and enrollees to secure the coverage of those administrative costs.

Co-ops. Under Section 1322, the Secretary is required to sward loans and grant monies to “member-run” non profit that will offer “qualified health plans”. This is, in effect, a federally created “co-op” option. The coops would be able to make purchasing decisions, but they could not fix provider payment rates. Neither existing private health insurance companies nor government organizations could, under the terms of the bill, set up these co-ops. The Comptroller General of the United States is to appoint an Advisory Board to oversee this new program, and the bill provides $6 billion in federal funding for the start up of the Co-op program. The Senate’s proposed health insurance “coop option” is , in effect, federally created and funded. It is worth noting, as Heritage analysts have noted, none of this is necessary. The only major change in law required to allow for health insurance to be offered through private sector co-ops is a change in the tax laws."