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HEALTHCARE PROPOSAL
Healthcare Proposal
December 7, 1996
Author's Note: This originally was written for
the U.S. Federal Government, then I decided to re-write it
for the Commonwealth of Massachusetts. - Diane Stoler.
INTRODUCTION
We are all aware of the downfall of managed
healthcare. It does not allow us the freedom to choose the
health professional or services of our choice. As adults we
have the ability to choose our car, lawyer, where we want
to eat, but the present healthcare system does not believe
we can freely choose our own health care services.
For the past four years I've worked on this
proposal. I've presented it to state and federal legislators.
Some have written back that they really liked this proposal.
I wanted to share this proposal with you. If you like it,
feel free to copy it or change it. All I want is that our
present healthcare system to be changed so that we have the
freedom of choice and that all uninsured Americans are covered
with health insurance.
PHILOSOPHY
In addressing rising health care costs,
we have neglected to address sufficiently the related problems
of a vast uninsured population and the diminishing personal
autonomy of patients under the managed care system. The cost
of providing care to residents of the Commonwealth accrues
to all of us. Every uninsured resident adds to the potential
burden on the Commonwealth as a whole. Too often we wrongly
focus attention on business as the source of a solution to
our "health care crisis," and fail to look to the individual
to act as a responsible consumer of health care.
The consumer of health care is not the corporation
that purchases insurance plans for its employees. The true
consumer is the individual patient who relies upon the insurer
to cover his or her medical expenses. The Stoler Proposal
recognizes this reality and focuses on the way real people
interact with the health care industry. The Proposal is underpinned
by three concepts. First, every resident of the Commonwealth
must take responsibility for his or her own health care. This
means that individuals will be required to obtain health insurance,
and will also be required to make some contribution to the
costs of their care.
Secondly, every resident of the Commonwealth
must be given greater autonomy in choosing his or her physician
or other provider, as well as in choosing what procedures
and treatments he or she will undergo.
Lastly, the burden of purchasing and maintaining
health insurance for individuals should not fall upon businesses,
but instead must be borne by the individuals who demand the
services. Nevertheless, businesses, because of their relative
purchasing strength, should be encouraged to provide health
care options for their employees. Should they choose not to,
they should be required to shoulder only a portion of the
burden of providing for the health care needs of the Commonwealth.
OVERVIEW
The overriding goal of the Stoler Proposal
is to provide individuals with the maximum choice of health
care plans and providers. Currently, many insured individuals
are restricted in their choice of health care plans and providers
to the choices made for them by their employers. Under this
plan, individuals would be free to choose the plan they preferred,
and moreover, regardless of what plan they chose, would be
free to choose the provider they prefer up to a minimum level
of spending. The Stoler Proposal removes a minimum amount
of basic health care benefits from the constraints of the
managed care system and its gatekeepers.
The Proposal places personal responsibility
and choice at the forefront of the health care regime. Only
those individuals covered by Medicare or Medicaid will be
excepted from the requirements of the Proposal. Under this
plan, every citizen of Massachusetts will be required to obtain
a minimal level of health insurance, known as the Basic Minimum
Benefit. Furthermore, every individual would be required to
make at least a minimal contribution toward the cost of their
health care based upon their ability to pay. This will impart
a sense of responsibility and cause individuals to act as
genuine consumers of health care, while providing access to
those currently without access. The current system encourages
a sense of entitlement in those lucky enough to be covered
by an employer's plan, and a sense of helplessness in those
who are not. Under the Stoler Proposal, employers will not
be required to provide health plans to their employees, though
they will remain free to do so if they wish. Those employers
who chose to continue to offer health plans will receive a
tax credit. Those who choose not to offer such a benefit will
be subject to a modest increase in their tax burden, depending
on the size of the business. Small businesses will be exempted
from this additional burden.
In requiring each individual to obtain health
insurance, the Commonwealth will also mandate a premium scale
linked to income, under which those in the highest income
brackets will pay the most for the required coverage, and
those in the lower brackets would pay less. Except for those
qualifying for Medicare and Medicaid, however, every individual
will qualify to pay some level of premium. The mandated premium
scale would apply only to the Basic Minimum Benefit.
The Basic Minimum Benefit which every citizen
must obtain will be an annual health care dollar limit. An
insured person may obtain health care services of his or her
choosing up to that limit. Insurers may not limit or control
the way in which an insured uses his or her minimum benefit,
nor may an insurer limit or otherwise restrict the speed at
which a provider is reimbursed for services. This ensures
that, up to a minimum level, every individual shall have full
control of what provider he or she sees and what treatment
he or she undergoes. Costs of treatment for catastrophic illnesses
and injuries shall not be applied to the Basic Minimum Benefit.
Health care expenditures above the Basic
Minimum Benefit shall be subject to approval and restriction
by the insurer as is the present practice. Providers shall
be free to tailor their plans as they wish beyond the Basic
Minimum Benefit, and may charge what premium the market will
bear for coverage above the minimum.
MAJOR ELEMENTS
1. Establishes Mandatory Health Insurance
Requirement.
All citizens of the Commonwealth will be
required to carry a minimum level of health insurance, to
be known as the "Basic Minimum Benefit." If an individual
has a Social Security number, he or she must carry an insurance
package offering at least this minimum amount of coverage.
Compliance with this requirement will be tracked by the Department
of Revenue, which will assess a penalty if a taxpayer or dependent
is not insured. Furthermore, the receipt of all state benefits
and services will be contingent upon an applicant's health
insurance status. Just as every automobile owner must carry
car insurance, every owner of a Social Security number must
carry health insurance.
The Basic Minimum Benefit shall constitute
a dollar amount of services available annually to the insured
without encumbrances. A health care "credit card" or "debit
card" shall be issued to each insured. The card shall be presented
to a provider and shall be accepted for payment for services
up to an aggregate annual amount equal to the Basic Minimum
Benefit level.
2. Health Care Card Allows Consumers to
Use Minimum Benefits With Any Provider, Without Prior Approval
Requirement.
The Basic Minimum Benefit required of every
insurance plan and insurer will be evidenced by a "Health
Care Credit Card" or "Debit Card" which a patient may present
to a provider for the payment of the provider's bill. The
Card will represent an annual credit or debit line equal to
the Basic Minimum Benefit. Funds expended up to the limit
and the treatments they pay for shall not be subject to restriction
or "gatekeeping" by the insurer. Thus the insured may obtain
at least a fixed dollar amount of medical services annually
from the provider(s) of his choice.
All providers qualified by the Commonwealth
may accept the insured's "credit" card as payment for services
provided. If the insured has not exceeded the annual minimum
benefit level, the insurer must reimburse the provider for
services rendered. This provides the insured with wide discretion
in "spending" his or her health care dollars, up to an annual
level. Beyond the annual minimum level of benefits, the insurer
may impose restrictions on whom it will reimburse and for
what procedures it will provide coverage. Up to the Basic
Minimum Benefit level, however, the individual insured shall
have autonomy in choosing his or her physicians and other
providers, as well as the nature of the care he or she seeks.
3. Health Insurance No Longer Linked to
Employment Status and Employer.
Under this universal health insurance model,
health insurance would be obtained by individuals and families
directly. No employer shall be required to provide health
insurance for its employees. Insurance providers would be
encouraged to market their products more directly as individuals
would be required to be covered to a minimum level. Perhaps
more importantly, individuals will not be limited to plans
offered and chosen by their employer. While employers would
still be able to offer insurance packages to their employees,
employees of businesses that do not offer health insurance
would be required to obtain private insurance. Businesses
greater than a predetermined size who do not provide health
insurance to employees shall be subject to an additional tax.
4. Tax Credit for Employer Who Pays All
or Part of Premium
An employer who pays all or part of the
premium for its employees' health insurance shall be granted
a tax credit commensurate with the proportionate amount of
the premium subsidized. Thus, employers will have an incentive
to provide health insurance for their employees, but small
businesses shall not be penalized if they do not.
5. Uniform Minimum Benefits Must be Provided
Under Every Policy.
Every insurer who provides health insurance
in the Commonwealth will be required to provide a Basic Minimum
Benefit, operating as described above, allowing each insured
to obtain a minimum amount of health care services as measured
by an annual "credit" or "debit" limit. Insureds will present
their health insurance card at the provider of their choice,
and if the insured has not exceeded his or her annual basic
minimum level of benefits, the insurer must reimburse the
provider for services provided until the basic minimum level
of benefits are reached.
An insurer may allow an insured to increase
his or her level of basic benefits obtainable with the card
by contributing funds to the insurer's pool, thus increasing
his or her "credit," or by whatever other means the insurer
may offer.
6. Premium and Co-Payment Scale for Basic
Minimum Benefit Graduated With Income.
Every insured shall pay an annual premium
for his or her health insurance Basic Minimum Benefit. This
premium shall be graduated according to the insured's income.
Those qualifying for Medicare and Medicaid shall be covered
under those programs, and will be exempt from the requirements
of this proposal. Those not qualifying for those programs
shall pay premiums. Providers shall be allowed to charge higher
premiums to those in higher income brackets, and will be restricted
in the premiums they may charge to those in lower income brackets.
In this manner, every resident of the Commonwealth will help
to finance the health care costs of the Commonwealth as a
whole, commensurate with his or her ability to do so.
7. Freedom of Choice for the Ultimate
Consumer.
A. Choice of Insurer
By requiring every resident to obtain insurance,
the market for such coverage will be opened to individuals,
whereas currently it is largely restricted to institutional
purchasers. Residents of the Commonwealth should be allowed
the greatest freedom of choice in insurers and benefits, and
not restricted to a greatly limited selection as provided
and determined by their employer.
B. Choice of Provider
Residents of the Commonwealth are being
increasingly limited and restricted in their choice of doctors
and other providers from whom they may obtain health care.
Under the Stoler Proposal, individual policy holders will
be free to choose any provider when they spend their basic
minimum health care benefit. When an individual's annual health
care expenditure rises above the Basic Minimum Benefit, then
and only then may the insurer determine when and from whom
an insured may receive health care services.
8. Preventive Focus Rather Than Reactive.
By providing the insured with the autonomy
to seek initial treatment when he or she chooses and from
whom he or she wishes, individuals will be encouraged to seek
treatment and preventive care before their health care problems
become acute and require more expensive intervention. Furthermore,
because each individual will be responsible for shouldering
a degree of financial responsibility for his or her health
care, he or she will be further encouraged to pursue beneficial
lifestyles and preventative check-ups and treatments.
9. Those Qualifying for Medicare and Medicaid
are Exempt From the Requirement of Private Coverage, But May
Purchase Extra Coverage
While those who qualify for Medicare and
Medicaid shall be exempt from the requirement that they purchase
private health insurance, they shall be allowed to purchase
coverage beyond that provided by those programs, if they are
able to do so and if insurers choose to offer such policies.
10. Provider Fees Not Regulated By State
or Insurer, up to Basic Minimum Benefit Level for Each Patient.
A provider shall be allowed to set his or
her own fees for services provided under the Basic Minimum
Benefit. For care provided to an insured and paid for by the
Basic Minimum Benefit, the consumer shall have the choice
of seeking treatment from a more or less expensive provider,
and the insurer must reimburse the provider according to his
or her fee schedule. In this manner, the insurer's annual
"unmanaged" exposure is limited to the Basic Minimum Benefit,
and providers can be assured of being properly reimbursed
for their services at least up to a minimum level for each
patient.
11. Plans Providing for Coverage Above
the Basic Minimum Benefit May Be Tailored.
Insurers may offer benefit packages of any
type in addition to the Minimum Basic Benefit, and premiums
for those packages and plans may be set by the insurer. This
allows the competitive marketplace to determine the cost of
insurance beyond the minimum level, and allows insurers to
target market segments and recoup the costs of providing the
Basic Minimum Benefit.
12. No Exclusions For Pre-Existing Conditions.
The implementation of the Stoler Proposal
shall include a grace period during which any individual may
obtain insurance under this proposal from any insurer regardless
of preexisting medical conditions.
ERISA
The Employee Retirement Income Security
Act of 1974 broadly preempts state laws "relating to" employee
benefit plans. Exempt from preemption are state laws which
regulate insurance. While health insurance plans provided
by employers fall under the category of employee benefit plans
as contemplated by ERISA, only self-insured ERISA plans are
subject to total exemption from state laws regulating insurance.
The United States Supreme Court's recent decision in New York
State Conference of Blue Cross & Blue Shield Plans v.
Travelers Insurance Company, 115 S. Ct. 1671 (1995), has narrowed
the scope of ERISA preemption by excluding from preemption
those state laws which have only an indirect economic influence
on an employee benefit plan.
The Stoler Proposal regulates and directly
affects the relationship between insurer and insured. Because
it applies to all insurance plans offered in the Commonwealth,
it does not affect employers' choice of medical insurance.
It directly regulates the insurance industry, and any influence
it may have on an employee benefit plan will be indirect.
To the extent that it affects employee benefit plans, it is
exempt from preemption because its affect indirect and economic
in nature. To the extent that the Proposal directly addresses
employer conduct or administration of benefit plans, it does
so through the state's power to tax, and ERISA is therefore
not implicated.
Financing
The Model uses approximately $100 million
dollars in revenues from an additional 25 cent increase in
the cigarette tax to help finance the health insurance premiums
of the lowest income citizens. An additional tax on alcoholic
beverages will contribute to funding. The Proposal further
contemplates a modest tax on the largest employers who do
not offer health insurance to their employees.
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