Description of Health Security Act

Vernellia R. Randall
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I. DESCRIPTION OF THE HEALTH SECURITY ACT

DOES CLINTON'S HEALTH CARE REFORM PROPOSAL ENSURE [E]QUAL[ITY]  OF HEALTH CARE FOR ETHNIC AMERICANS AND THE POOR?  Vernellia R. Randall, 60 Brooklyn Law Review 167-235 ( 1994).

Of the industrialized nations, only two, the United States and South Africa, do not have a national system of health care for their citizens⁽¹⁴⁾ The Health Security Act sets the framework for a national health care system. It is a complex bill, over 1500 pages long. This description is intended to provide only a brief overview of the structure, coverage and benefits proposed by the Act.

A. Structure

According to the HSA, the federal government sets the basic framework for the system, including national standards on benefits, quality and access to care⁽¹⁵⁾ States are given flexibility to implement health care reform within the federal framework, including designing and monitoring the system⁽¹⁶⁾ That flexibility extends to designing a single-payer plan if a state desires⁽¹⁷⁾ The Act, however, clearly lays out each player's responsibilities under the health care plan. States must identify one or more regional alliances to serve as purchasing agents for health care insurance⁽¹⁸⁾ The board of each regional alliance consists of employers and consumers, but providers are specifically prohibited from sitting on a regional alliance⁽¹⁹⁾ Employers with more than 5000 employees may opt out of the regional alliance and develop their own corporate alliance⁽²⁰⁾ Those that do not are required to pay 80% of the average premium of a full-time employee's health care premium. Health plans that are selected by the alliances may market their product in the alliance. But, ultimately health plans are responsible for guaranteeing coverage for a basic comprehensive benefits package by contracting with providers to provide services⁽²¹⁾ Providers may choose to participate in as many or as few health plans as they desire. Consumers are required to enroll in a health care plan, to obtain a health care card, and to make premium payments, co-payments and deductible payments⁽²²⁾ No eligible individual can be disenrolled from a health plan until that individual is enrolled in another health plan or becomes Medicare-eligible⁽²³⁾ The Act offers three basic cost-sharing schedules-the lower, higher and combination types-for health plans, and each individual may sign up for only one of the schedules⁽²⁴⁾ Each of these schemes represents a different type of health care plan. The lower cost-sharing schedule represents a health maintenance organization ('HMO')⁽²⁵⁾ The higher cost-sharing schedule represents a fee-for-services plan⁽²⁶⁾ The combination cost sharing represents a preferred provider organization ('PPO') without network options⁽²⁷⁾ Even though each of these plans assures basic coverage, consumers are free to purchase any health care services not covered by the health plan or purchase supplemental insurance to cover health care services not included within the basic benefit package⁽²⁸⁾ In addition to the difference in cost sharing, the higher cost-sharing fee- for-service option and the combination options charge a higher premium⁽²⁹⁾ Premiums are based on family type⁽³⁰⁾ The general family share of the premium is computed based on the following components: the plan premium, alliance credit, excess premium credit and corporate alliance opt-in credit⁽³¹⁾ The amount a family is required to pay is based on the general family share of the premium for the class of family, any income-related discount for the family, and whether the family receives Supplemental Security Income ('SSI') or Aid to Families with Dependent Children ('AFDC')⁽³²⁾ Full-time employees pay a maximum of 20% of the premium. Employers may pay 100% of the premium if they desire or provide additional benefits⁽³³⁾ In contrast, a part-time employee's premium is not limited to a certain percentage. It is based on the number of hours worked. For instance, if the employee works half-time, then the worker pays 60% of the premium-the employee's share (20%) plus half of the employer's share (40%). Unemployed individuals and self-employed individuals pay 100% of the premium. Individuals with incomes less than 150% of poverty, however, can obtain discounts or reductions in cost-sharing⁽³⁴⁾ Self-employed individuals obtain the same discounts as a small employer. Failure to pay amounts owed will not result in loss of coverage⁽³⁵⁾ however, regional alliances may use credit and collection procedures, including interest charges and late fees, to collect amounts owed⁽³⁶⁾

Eligible individuals include citizens or nationals of the United States; an alien permanently residing in the United States under color of law; or a long- term nonimmigrant⁽³⁷⁾ A Medicare-eligible individual is entitled to health benefits under the Medicare program⁽³⁸⁾ Military personnel and families, veterans and Indians have a choice of health plan coverage⁽³⁹⁾ Prisoner⁽⁴⁰⁾ and undocumented aliens⁽⁴¹⁾ however, are ineligible for benefits through enrollment in a health plan.

The Health Security Act proposes to reform the health care system so that all Americans are guaranteed comprehensive health coverage. Subject to cost-sharing requirements, exclusions, and the National Health Board, the benefits package consists of the following items and services: hospital services, services of health professionals, emergency and ambulatory medical and surgical services, clinical preventive services, mental health and substance abuse services, family planning services and services for pregnant women, hospice care, home health care, extended care services, ambulance services, outpatient laboratory, radiology, and diagnostic services, outpatient prescription drugs and biologicals, outpatient rehabilitation services, durable medical equipment and prosthetic and orthotic devices, vision care, dental care, health education classes, and investigational treatments⁽⁴²⁾ The items and services in the comprehensive benefit package are not subject to 'any duration or scope limitation or any deductible, co-payment, or coinsurance amount that is not required or authorized under' the HSA⁽⁴³⁾ However, each of the services or items is limited by the Act in some manner. For instance, routine screening for cancer of the cervix (pap smears) are authorized only every three years for women between the ages of 20 and 39⁽⁴⁴⁾ The comprehensive benefit package does not include: custodial care, cosmetic surgery, hearing aids, eyeglasses and contact lenses for individuals at least 18 years of age, in vitro fertilization services, sex change surgery and related services, private duty nursing, personal comfort items, or any dental procedures⁽⁴⁵⁾ Furthermore, the comprehensive benefits package does not include any item or service that is not medically necessary or appropriate⁽⁴⁶⁾

FN15. HSA s 1151 (definition of benefits).

FN16. Id. ss 1200-1205.

FN17. Id. ss 1221-1224.

FN18. Id. ss 1301-1303, 1321-1330.

FN19. Id. ss 1301-1302.

FN20. Id. ss 1311-1313, 1381-1397.

FN21. Id. ss 1400-1414.

FN22. Id. s 1002(a).

FN23. Id. s 1002(b).

FN24. Id. s 1131.

FN25. Id. s 1132. The lower cost-sharing plan may limit the number and type of health care providers who participate in the plan; require enrollees to obtain health services (other than emergency services) from participating providers or from providers authorized by the plan; require enrollees to obtain a referral for treatment by a specialized physician or health institution; establish different payment rates for participating providers and providers outside the plan; create incentives to encourage the use of participating providers; or require the use of single- source suppliers for pharmacy, medical equipment and other health products and services. Cf. Id. s 1407 (providing that 'no State law shall apply to any services provided under a health plan that is not a fee- for-service plan (or a fee-for-service component of a plan) if such law has the effect of prohibiting or otherwise restricting plans' from engaging in the above behavior).

The lower cost sharing does not include a deductible, and it has an annual individual out-of-pocket limit on cost-sharing of $1500 and an annual family out-of- pocket limit on cost sharing of $3000. Id. s 1132(a)(1), (2). Except for out-of-network care, payment of any coinsurance is prohibited. Id. s 1132(a)(3)(A), (a)(4). However, a co-payment is required for most services. Id. ss 1132(a)(3)(A), 1135.

FN26. Id. ss 1131, 1133. The higher cost-sharing plan has an annual individual general deductible of $200 and an annual general family deductible of $400. Id. s 1133(1). The higher cost-sharing plan shall have an annual individual out-of-pocket limit on cost sharing of $1500 and an annual family out-of-pocket limit on cost sharing of $3000. Id. s 1133(9). Furthermore, the higher cost- sharing plan may not have co-payments but shall require payment of the coinsurance for most items or services. Id. s 1133(10), (11). In addition, the lower cost-sharing schedule requires an individual to incur expenses: during each episode of inpatient and residential mental illness and substance abuse treatment; during each episode of intensive non-residential mental illness and substance abuse; for one year for outpatient prescription drugs, biologicals and for dental care. Id. s 1133(2)-(5). However, the plan may not require any deductible for clinical preventive services, for prenatal care, for prevention and diagnosis of dental disease. Id. s 1133(6)-(8).

FN27. Id. s 1131. The combination plan will have both the lower cost (managed care) option and the higher cost (fee-for-service) option. Id. ss 1131(a)(3), 1134. Like the other plans, the combination plan has an annual individual out- of-pocket limit on cost sharing of $1500 and an annual family out-of-pocket limit on cost sharing of $3000. Id. s 1134(a)(1). The combination plan requires different cost sharing for in-network items and services than for out-of- network items and services. Id. s 1134(a)(2), (b). The combination cost-sharing plan may not apply to the deductible. Furthermore, coinsurance is prohibited, and the combination cost-sharing plan requires an individual and a family to incur expenses before the plan provides benefits for the item or service. Id. s 1134(c).

28. FN28. Id. ss 1003, 1421-1423 (describing requirements relating to supplemental insurance).

29. FN29. Cf. Id. s 1423(d)(1)(B) ('the price of any cost-sharing policy shall . . . take into account any expected increase in utilization resulting from the purchase of the policy by individuals').

30. FN30. All members of the same family are enrolled in the same health plan. 'Family' means an individual who is not a child, the individual's spouse, the individual's children and, if applicable, the children of the individual's spouse. Id. s 1011(b). There are separate classes of family enrollment: individual, marriedcouple without children (couple-only), and unmarried individual and one or more children (single parent), and married couple and one or more children (dual parent). Id. s 1011(c). The terms 'spouse' and 'married' are limited to persons married under state law. 'Child' means an eligible individual who is under 18 years of age (or under 24 years of age in the case of a full-time student), who is a dependent of an eligible individual. A child includes a stepchild or foster child, and an unmarried disabled individual, regardless of age, who is incapable of self- support. Emancipated minors and married individuals are not children. Id. s 1011(e).

Examples of health insurance premiums under the health care reform plan are as follows:

Low-cost

Sharing ... Combination Combination Higher Cost

Plan B Plan C Sharing

Dual Parent Family $3700 ....... $4000 $4200 $4900

Single Parent Family $2100 ....... $2200 $2400 $2900

Childless Married $3000 ....... $3400 $3600 $4400

Couple

Single Individual $1500 ....... $1700 $1800 $2200

See Appendix A: President Clinton's Health Care Reform Proposal-Preliminary Working Group Draft of Sept. 7, 1993, at (available in WESTLAW BNA- DER) (hereinafter Description).

31. FN31. HSA s 1342(a)(1). In 1994, a preliminary estimate of monthly premiums based on the Act are:

Monthly Premium under Health Care Reform in 1994

Family Type Range ... Average

Dual Parent Family with children $0-$91 .. $73

Single Parent Family with children $0-$80 .. $64

Childless Married Couple $0-$80 .. $64

Single Person $0-$40 .. $32

The White House Domestic Policy Council, Health Security: The President's Report to the American People 29 (1993) (hereinafter The President's Report).

32. FN32. HSA s 1343(b).

33. FN33. Id. s 1003(b)(4).

34. FN34. Id. ss 1371-1375.

35. FN35. Id. s 1344(d).

36. FN36. Id. s 1345(a).

37. FN37. HSA s 1001(c).

38. FN38. Id. s 1001(d).

39. FN39. Id. s 1004(b).

40. FN40. Id. s 1001(e).

41. FN41. Id. s 1005(a).

42. FN42. HSA ss 1101-1128.

43. FN43. Id. s 1101(b).

44. FN44. Id. s 1114(e).

45. FN45. Id. s 1141(b)

46. FN46. Id. s 1141(a).

Related Pages:

[ Home ] [ Up ] [ Introduction ] [ Description of Health Security Act ] [ Structurally and Ideologically Flawed System ] [ A Fragmented System ] [ Culturally Incompetent System ] [ Rations through a Tiered System ] [ Inadequate Protection Against Discrimination ] [ Conclusion ]

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Contact Information:
Professor Vernellia R. Randall
Institute on Race, Health Care and the Law
The University of Dayton School of Law
300 College Park 
Dayton, OH 45469-2772
Email: randall@udayton.edu