America's Affordable Health Choices Act of 2009

Core provisions

 * 1) Protecting current insurance from change
 * 2) Prohibiting preexisting condition exclusions, and
 * 3) Providing guaranteed coverage for all.
 * 4) Prohibiting rescission of health insurance coverage without clear and convincing evidence of fraud.

Other Provisions and Discussion Points

 * Limit annual out-of-pocket expenses to $5,000 for an individual and $10,000 for a family.

Congress wants to limit the amount families spend on health care each year, but these limits will not work for everyone. Some studies estimate that financial hardship emerges when costs exceed 2.5% a year. For a family earning $45,000 a year, that limit is reached at $1,125. For more information on this issue, see: http://www.hschange.com/


 * Premium variances

Under the proposed law, premiums can change according to someone's age, area where they live, and their family status (single, family). The proposed law maintains this approach. Premiums are set by factoring in the cost of care and the risk of higher costs associated with being older, living in an area with high traffic, pollution, and other environmental factors, and raising a family. Economists debate why people pay premiums. The prevailing theory has been that it is to reduce unpredictability of future health care expenses. Emerging theory is that people buy insurance to have access to expensive health care procedures, and so it is an income-enhancing decision. See work by John Nyman: http://books.google.com/books?id=k6o4xc44Y00C&amp;source=gbs_navlinks_s.


 * Health Choices Administration

This would be a new government agency that would contract with "entities"-- such as health insurance providers--to offer health benefit plans through a newly-created Exchange to eligible individuals. It would do the following:


 * Establish a risk-pooling mechanism for Exchange-participating health plans.
 * Provide for an affordability premium credit and an affordability cost-sharing credit for low-income individuals and families participating in the Exchange.
 * Require employers to offer health benefits coverage to employees and make specified contributions toward such coverage or make contributions to the Exchange for employees obtaining coverage through the Exchange.
 * Exempt businesses with payrolls below $250,000 from such requirement.


 * Discussion Points:
 * Removing business-sponsored health care and having individuals purchase their own health care. Under the current system, individuals are largely unaware of the cost of their own health care so there is no consumer-driven need for reform. It's largely a debate among employers, insurers, and doctors: http://economix.blogs.nytimes.com/2009/05/22/is-employer-based-health-insurance-worth-saving/ Economists describe the advantages of a new "social contract" where all individuals agree to support the health care for all; It's called "spreading the risk": http://economix.blogs.nytimes.com/2009/04/17/health-reform-without-a-public-plan-the-german-model/
 * Adjusting the role of business. See Whole Foods CEO John Mackey's ideas the focus on providing more tax write-offs for insurance for individuals, the use of high-deductible plans, and individual health spending accounts: http://online.wsj.com/article/SB10001424052970204251404574342170072865070.html; See the ideas from Harvard Business ideas that focus on shifting to health and wellness benefits more than minimizing the costs of care: http://hbswk.hbs.edu/item/5979.html


 * Health Insurance Exchange

This would be the central clearinghouse for different health insurance options. It would provide both individuals and employers access to health insurance coverage choices, including a public health insurance option.

More details: The Exchange would contract with insurers and establish "a risk-pooling mechanism" for Exchange-participating health plans. It woudl also provide for an "affordability premium credit" and an "affordability cost-sharing credit" for low-income individuals and families participating in the Exchange. Employers woudl be required to offer health benefits coverage to employees and make specified contributions towards such coverage OR make contributions to the Exchange for employees obtaining coverage through the Exchange. Business would be exempt if their payrolls are below $250,000.


 * Discussion Points:
 * Unfair competition. Critics say that the exchange will represent unfair competition because a low-cost public option will be chosen by more people than high-cost private options, putting private insurers out of business: http://www.heritage.org/research/healthcare/bg2304.cfm. President Obama has countered that competition is essential to control costs, and he has added that if UPS and FedEx can compete with the U.S. Post Office, there will be meaningful competition to a government program. Under the current situation, doctors can opt out of the low-cost options and employers can opt out of high-cost options, leaving a growing segment of consumers without coverage and a growing segment of medical providers without full compensation for services.


 * Amendments to the IRS Code

It proposes to tax individuals without health benefits coverage and tax an employer who fails to satisfy health coverage participation requirements for an employee. It proposes to place a surtax on individual modified adjusted gross income exceeding $350,000.


 * Amendments to the Social Security Code

It proposes to reduce payments to hospitals to account for excess readmissions; limit cost-sharing for


 * Medicare Advantage beneficiaries; reduce the coverage gap under Medicare Part D (Voluntary Prescription Drug Benefit Program); and provide for increased payment for primary health care services. There has been much discussion about reducing Medicare costs.

External resources

 * The Congressional Budget Office has an estimate of the proposed health care reform: http://www.cbo.gov/doc.cfm?index=10464