By Robert Pear
The New York Times, October 27, 2012
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 state.
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 exchanges.
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 operations.
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)
SEC. 1323. COMMUNITY HEALTH INSURANCE OPTION.
(b) ESTABLISHMENT OF COMMUNITY HEALTH INSURANCE OPTION.—
(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.
By Don McCanne, MD
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.