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A Health Plan to Hush Up Harry and Louise

By John Reichard, CQ HealthBeat Editor

February 22, 2007 -- The Federation of American Hospitals (FAH) unveiled a new plan Thursday to cover the uninsured, emphasizing that it builds on the current system of coverage and won't plunge Americans into uncertainty about their health care.

Announcing the plan at a Washington, D.C., press briefing, Federation President Chip Kahn didn't call it the "Harry and Louise" health plan, but he might have. Kahn was a top insurance lobbyist in the 1993–1994 health reform debate who helped launch the Harry and Louise TV ads in which a middle-aged couple complained that the Clinton health plan would create too much government meddling with their health care.

The campaign was credited with helping to derail the Clinton plan, apparently tapping into deep public anxiety about how the overhaul would reshape health care. Kahn emphasized Thursday that FAH's approach would point the way to virtually universal coverage within the context of the current system without creating as much uncertainty among Americans about their health care as would other recent proposals.

"All Americans can be covered without turning the world upside down" under FAH's new "Health Coverage Passport" proposal, Kahn said.

"All" actually means virtually all—98 percent of Americans would be covered, primarily through an expansion of private sector coverage. People who have health insurance now would keep their current coverage, while two of every three uninsured Americans gaining coverage under the proposal would be enrolled in private sector plans.

FAH also released poll results showing strong public support for its plan and that 79 percent of the public said a presidential candidate's position on the uninsured will influence their vote in the 2008 election.

Everyone would be required to have health coverage under the plan—but FAH estimated 100 percent compliance would be difficult to achieve. Medicaid would be expanded to cover all uninsured adults with annual incomes below the federal poverty level, now $9,800 for individuals and $20,300 for a family or four.

Funding would be increased for the State Children's Health Insurance Program (SCHIP) so that the program would cover all eligible uninsured children. Eligible people would be automatically enrolled in health coverage based on income data taken from other government programs such as those providing food stamps or school lunches.

Health Coverage Passports, or HCPs, would be issued to Americans below 400 percent of the federal poverty level who are not eligible for Medicaid or SCHIP. The passports would be subsidies that pay a percentage of premiums on a sliding scale based on income. People who can obtain coverage at work but are uninsured would be required to use the subsidies to enroll in their employer's plan. Other uninsured people would use the subsidy to buy coverage in the individual market.

Out-of-pocket monthly premium costs for individuals receiving the subsidies would range from $52 in the case of a person making $19,600 a year to $349 for a person making $39,200.

Uninsured people who make too much money to qualify for the subsidies would have to buy their own insurance, but their premiums would be tax-deductible. "This new tax deduction ensures that those purchasing their own insurance in the individual market are treated equally with those who receive a tax exclusion from employer-purchased coverage," said an FAH summary of the plan.

"Employer coverage will continue to be the largest source of insurance, covering 55 percent of the population," the summary said. "Employers who now offer coverage are likely to continue since employees can apply HCPs to their share of employer coverage."

The plan would entail revisions of state insurance laws. Coverage would be guaranteed to everyone regardless of age or health status. Premiums charged by health plans would be "community rated," meaning they could not vary with age, gender, health status, or other risk factors.

Health care providers would continue to care for uninsured people ineligible for public programs because of their citizenship status—currently 20 percent of the uninsured are not U.S. citizens, according to FAH. Language in the Medicare overhaul law (PL 108-173) would be reauthorized at a higher level of funding to offset costs to providers who provide emergency care to undocumented immigrants.

Anyone uninsured when filing federal income taxes or seeking health care would be enrolled in Medicaid or SCHIP if eligible, or in a private health plan eligible to receive the HCP subsidy, in which case they would be charged premiums minus the subsidy amount.

The group estimated that if the plan were adopted this year, the number of uninsured Americans would drop in 2007 from 47 million to 6.6 million.

However, one thing Harry and Louise might choke on is the cost of the plan. If implemented in 2007, the cost would be $115 billion, according to John Sheils, vice president of the Lewin Group, which calculated the cost.

Kahn sidestepped a question about where the money would come from, saying he'd be happy to be a part of that discussion once it's clear that Congress has mustered the political will to cover the uninsured. The group planned to brief congressional staff Thursday on the plan, but said it isn't scouring the Hill for a legislative sponsor.

Passage this year or next would obviously be a long shot, Kahn said, indicating it is being offered to shape the presidential debate on the issue and to offer one of the few "soup to nuts" proposals for covering virtually all of the uninsured. Kahn defended its price tag as an "honest" estimate of how much money would be involved. Sheils said that any plan covering as many of the uninsured as FAH's would have comparable costs.

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