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CCH® BENEFITS — 04/15/09

Senate Bill Would Replace Existing Health Insurance Coverage With Single-Payer System

from Spencer’s Benefits Reports: While nearly all health care reform legislation recently proposed avoids implementing any major changes to the existing health insurance system, a new Senate bill would replace the current private insurance system with a single-payer option. S. 703, the American Health Security Act of 2009, introduced on March 25 by Sen. Bernard Sanders (Vt.), would replace public health care plans, including the Federal Employee Health Benefits Program (FEHBP), and TRICARE (the military civilian employee coverage), with a state-based health security program. S. 703 was referred to the Finance Committee. Comparable legislation was introduced in the House as H.R.1200 by Rep. Jim McDermott (Wash.) with seven cosponsors and was referred to the Energy and Commerce, Ways and Means, Oversight and Government Reform, and Armed Services committees.

The stated purpose of the American Health Security Act is to provide health care for every American and to control the cost and enhance the quality of the health care system. The state-based health security program would provide all U.S. residents, citizens, nationals, and lawful resident aliens with comprehensive health care benefits, including prevention, dental services, and long term care coverage. The states would administer their programs according to federal standards, and funding would be provided from federal funds that otherwise would have been appropriated for Medicare, Medicaid, FEHBP, TRICARE, and SCHIP; along with an 8.7% tax on employers and the self-employed and a 2.2% tax on individuals. Employers could not duplicate the health insurance coverage provided under the health security program, but states and employers could provide additional benefits.

S. 703 would amend ERISA to make it inapplicable to state health security programs and remove the exemption from ERISA preemption, and would repeal the COBRA continuation provisions and the provisions governing medical savings accounts. An American Health Security (AHS) Standards Board, composed of the Secretary of Health and Human Services and six individuals appointed by the President in partnership with the Senate for six-year terms, would establish uniform reporting standards for states. Other provisions of the American Health Security Act include a federal quality assessment council, a federal health security budget to provide payments to states with a capitation amount plus a contribution percentage, and a national data system and clearinghouse on primary care and prevention research.

The AHS also would promote primary health care, assistance for the medically underserved; and outcomes research and prevention. Funds also would be budgeted for support of the National Health Service Corps to train an additional 24,000 health care professionals, including clinical nurse practitioners and physician assistants. Prescription drug coverage would be determined by a coverage list that would specify the maximum price allowable, exclude coverage for drugs found to be ineffective or dangerous, and pay pharmacies based on the actual cost of the drug plus a dispensing fee.

Covered individuals could select their own physicians, who would be reimbursed by the states based on a payment system of the state’s choosing. These payment systems could be negotiated prospective fee schedules or bundled payment for treatment of one condition, for example.

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