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SIGN, NELSON signature block for Rae Nelson, centered red � �
� �The Health Security plan guarantees comprehensive health benefits for all American
citizens and legal residents, regardless of health or employment status. Health coverage is
seamless; it continues with no lifetime limits and without interruption if Americans lose or
change jobs, move from one area of the country to another, become ill or confront a family
crisis.
� �Every American citizen will receive a Health Security Card that guarantees
comprehensive benefits that can never be taken away. Fundamental principles underlie health
care reform:
�X � ��X` ` �The guarantee of comprehensive benefits for all Americans. �x ` �
�X � ��X` ` �Effective steps to control rising health care costs for consumers,
business and our nation. �x ` �
�X � ��X` ` �Improvements in the quality of health care. �x ` �
�X � ��X` ` �Reductions in paperwork and a simplified system. �x ` �
�X � ��X` ` �Making everyone responsible for health care.�x ` �
� �
� �Americans and their employers are asked to take responsibility for their health
coverage and, in return, they are guaranteed the security that they will always be covered
under a comprehensive benefit.
� �The Health Security plan creates incentives for health care providers to compete on the
basis of quality, service and price. It unleashes the power of the market and puts American
consumers in the driver's seat. Consumers choose from whom and how they get their care.� �" 0*((�� Ԍ� v�
� �The plan empowers each state to set up one or more "health alliances" that contract
with health plans and bargain on behalf of area consumers and employers. Health plans must
meet national standards for coverage, quality, and service set by the National Health Board.
But each state tailors its approach to local needs and conditions.
�v�
� �The Health Security plan frees the health care system of much of the paperwork and
regulation, allowing doctors, nurses, hospitals and other health providers to focus on providing
high�quality care. It cracks down on and abuse, reforms malpractice law and policy and
outlaws insurance practices that hurt small businesses and imposes the first national standards
for the protection of patient privacy and confidentiality in medical information and records.
� y�
� � X � �� �CREATING SECURITY� �
� �The Health Security plan guarantees every American and legal resident health
coverage that can never be taken away:
� �
�X � ��X` ` �The comprehensive benefits have no lifetime limits on medical
coverage and provides a full range of medically necessary or
appropriate services.�x ` �
� �� ���` ` �No health plan may deny enrollment to any applicant because of
health, employment or financial status, nor may it charge some
patients more than others because of age, medical condition or
other factors related to risk. �x ` �
�y�
�X � ��X` ` �All health plans must meet national quality standards and
provide reliable information to consumers so they can choose
their health plans and providers. �x ` �
�X � ��X` ` �Americans have a broad choice of health plans and providers.�x ` �
�X � ��X` ` �Elderly and disabled Americans receive outpatient prescription
drug benefits under Medicare for the first time and expanded
access to home and community�based long�term care services. �x ` �
�X � ��X` ` �Self�employed workers are able to deduct the full cost of their
health coverage from their federal income taxes.�x ` �� # 0*((�� Ԍ� v�
�X � ��X` ` �Workers older than 55 who retire before they are eligible for
Medicare receive comprehensive coverage for the guaranteed
benefit but continue to pay only the employee share of the
premium. �x ` �
�v�
�X � ��X` ` �New investments and loans help improve the availability and
quality of health care in rural communities and inner�city
neighborhoods. �x ` �
�X � ��X` ` �School�based and community clinics expand access to care in
areas with inadequate health services.�x ` �
�X � ��X` ` �Financial incentives and expansion of the National Health
Services Corps attract health professionals to areas with
shortages of doctors and nurses. �x ` �
�
�
� � X b �� �CONTROLLING COSTS� �
� �The Health Security plan cuts the projected growth in health care costs by increasing
competition in health care, reducing administrative costs and imposing budget discipline.
Health plans compete to provide affordable, quality care:
�X � ��X` ` �Uniform, comprehensive health benefits and reliable information
�
�about the price and performance of health plans encourage
informed choices. �x ` �
� ���` ` �Consumers may choose to pay less for lower�cost health plans
or more for higher�cost plans, creating incentives for cost�conscious decisions.�x ` �
� ��
�X � ��X` ` ����Payments to health plans are fixed, providing incentives to spend
resources wisely. Payments are adjusted based on the risk
characteristics of each health plan's participants.�x ` �
� � X �" �� �� � �If savings attained through competition and reductions in administrative burden fail to
contain costs, limits on the rate of growth of insurance premiums provide an emergency brake
�� or backstop �� to ensure that premiums remain in line with inflation.� h$ 0*((�� Ԍ� v�
� �Health reform also reduces the projected rate of growth in federal and state spending
for Medicare, Medicaid, and other government programs. Resources conserved from those
steps are applied to other aspects of the health care system, particularly the expansion of
Medicare benefits to include prescription drugs and for new long�term care services.
�v�
� �The Health Security plan cracks down on providers and institutions that overcharge or
engage in health care fraud. It sets tough new standards and imposes stiffer penalties that
include:
�X � ��X` ` �New criminal penalties for health care and for the payment of
bribes or gratuities to influence the delivery of health services
and coverage.�x ` �
�X � ��X` ` �New civil financial penalties against providers who submit false
claims.�x ` �
� v�
�X � ��X` ` �Tighter restrictions to eliminate referral "kickbacks" in the
private sector and new standards that prohibit physicians from
sending their patients to get services at institutions in which they
have financial interests.�x ` �
�v�
�X � ��X` ` �Strong accountability standards that make provider and other
misconduct automatic grounds for exclusion from all health
plans.�x ` �� � 0*((�� Ԍ� �
� � X � �� �EXPANDING CHOICE
� � X � � �� �The Health Security plan guarantees consumers a choice of health plans and enhances
the patient�doctor relationship.
�X � ��X` ` �Alliances offer an array of competing health plans from which
individuals and families choose their health coverage, expanding
the range of choice for many Americans.�x ` �
� �
� � X
�� � �� ���` ` �Alliances must offer a traditional fee�for�service option in
which every patient can see any physician he or she chooses.�x ` �
�X � ��X` ` �Consumers �� rather than their employers �� choose their health
plan from among a menu of plans offered by alliances.�x ` �
�X � ��X` ` �Doctors and other health care providers also have a choice of
health plans and delivery systems in which they may choose to
practice medicine.�x ` �
� �
� �� ���` ` �Separate programs increase federal support for long�term care
and improve the quality and reliability of private long�term care
insurance.�x ` �
� �
� �
�
� � X � �ENHANCING QUALITY� �
� �The Health Security plan improves the quality of health care. It creates standards and
guidelines for health professionals, reorienting quality assurance programs to measuring
outcomes rather than regulation, increases the national commitment to medical research and
promotes primary and preventive care.
� � X � �� �� ��X � ��X` ` �Health plans are held accountable for delivering appropriate,
quality care.�x ` �
�X � ��X` ` �Regular surveys of consumer satisfaction are used to measure
health plans.�x ` �
��
�
�X � ��X` ` �Regular publication of useful and easily understood information
about quality and cost allows consumers to make informed
choices among health plans.�x ` �
� #' 0*((�� Ԍ�X � ��X` ` �A special funding mechanism strengthens the role of academic
health centers in research, training and specialized care.�x ` �
�X � ��X` ` �Increased investment in research advances medical knowledge.�x ` �
�X � ��X` ` �Changes in Medicare rate schedules and the allocation of federal
funds supporting graduate medical education provide new
incentives for physicians to choose primary care as the focus of
their training.�x ` �
�X � ��X` ` �Expanded funds for education and new federal action helps
remove artificial barriers to practice that hinder nurses and other
professionals.�x ` �
�X � ��X` ` �Investments in public health and medical research improve
health protection for all Americans.�x ` �
� � ��� �� � ��� �� �� �
� � X b �REDUCING BUREAUCRACY� �
� �The Health Security plan reduces the burden of paperwork and administration,
streamlines regulatory, billing and reporting requirements and helps reduce confusion.
�X � ��X` ` �A comprehensive benefits package that covers every American
and legal resident reduces confusion for health care providers
and consumers.�x ` �
�X � ��X` ` �Administrative costs caused by multiple insurance policies with
different benefits and risk selection disappear.�x ` �
�X � ��X` ` �Standard forms for insurance claims and billing procedures
simplify paperwork and reduce administrative costs.�x ` �
�X � ��X` ` �Administrative costs for small companies decline as those firms
purchase care through regional health alliances that benefit from
economies of scale.�x ` �
��
�X � ��X` ` �The plan simplifies federal regulatory requirements for Medicare,
Medicaid and programs that govern clinical laboratories. �x ` �� # 0*((�� Ԍ� 1�
�X � ��X` ` �The plan requires that health care services covered by workers'
compensation and automobile insurance be delivered through an
individual's health plan reducing duplication and waste.�x ` �
�X � ��X` ` �Malpractice reform reduces incentives for the practice of
"defensive medicine," including unnecessary tests and
procedures.�x ` �
�1�� �
� �� �� 1 0*((�� � � �� �
��
�" �THE HEALTH SECURITY PLAN�
� � X � � � �� �
� � X � �COVERAGE� �
� �� �
� �All American citizens and legal residents are guaranteed a nationally defined,
comprehensive package of benefits and enroll in a health plan. Coverage continues without
interruption regardless of a change of employer, employment status, marital status or medical
condition.
� �Coverage goes into effect �� state by state �� beginning in 1995 and is fully
implemented by 1997.
� �The vast majority of Americans continue to receive their health coverage at work, as
they do today. All workers have a choice of health plans, each of which must be certified as
meeting quality standards. Unlike today, however, all employers contribute to the purchase of
health coverage for their employees, both full and part�time.
� �Employed individuals receive information about enrollment and health plans either at
work or directly from the alliance. Small business owners and their families, employees of
small business, the self�employed and the unemployed sign up for the health plan of their
choice through the regional alliance office in their area.
� �Firms or Taft�Hartley Plans with more than 5000 employees may fulfill their
obligation to provide coverage for their employees by establishing a corporate alliance or
joining the regional alliances. Corporate alliances must meet federal standards for benefits,
choice and quality.
� �Medicare beneficiaries continue to receive all current benefits and, in 1996, receive a
new benefit covering outpatient prescription drugs. New long�term care programs also
expand access to home and community�based care.
� �Those people who receive health care through the Department of Defense, the
Department of Veterans Affairs and the Indian Health Service may continue to do so.
� �Medicaid beneficiaries receive coverage through the regional health alliance, choosing
among the health plans it offers. � � ��� �� �" 0*((�� Ԍ� ��
� � X � �� �BENEFITS� �
� �The health benefits guaranteed to all Americans contain no lifetime limits on coverage,
and provide a comprehensive package of medical services delivered in hospitals, clinics,
professional offices and other sites. One uniform, comprehensive benefit package replaces
hundreds of different insurance products in the market today.
� �When medically necessary or appropriate, covered services include hospital care,
emergency services, preventive care, mental health and substance�abuse services, family
planning, pregnancy�related care, hospice care, home health and extended�care services
following an acute illness, ambulance services, outpatient laboratory and diagnostic services,
prescription drugs and biologicals, outpatient rehabilitation, durable medical equipment, vision
and hearing care, periodic medical checkups and preventive dental services for children.
���
� �The plan includes coverage for a full range of preventive screening and care often not
covered in traditional health insurance policies. Covered preventive care includes well�baby
checkups and immunizations for children, periodic physical examinations, routine laboratory
work and screening tests, with no charge to the patient.
� �
� �Additional benefits, including preventive dental care for adults and a more
comprehensive mental health and substance�abuse benefit, are phased into the nationally
guaranteed benefits by the year 2001.
� �Individuals or employers who wish to purchase benefits beyond the nationally
guaranteed package may do so.
� �All individuals in a health plan pay the same premium for the nationally guaranteed
comprehensive benefits regardless of health status, age, place of residence or employment
status. Health plans are prohibited from discriminating based on existing medical conditions
and other individual characteristics.
� �Medicare beneficiaries continue to receive all current benefits and, in 1996, receive a
new benefit covering outpatient prescription drugs. Financial support for long�term care also
expands. � � 0*((�� Ԍ� ��
� � X � �� �COST�SHARING
� � X � � �� �Health plans adopt one of three standard cost�sharing arrangements:
� � X v ��X � ��X` ` �� �Low cost�sharing:� � This follows the existing model for
integrated health plans, such as health maintenance
organizations. Consumers pay $10 co�payments for outpatient
and professional services and do not make additional co�payments for inpatient services, preventive services, or home
health care following an acute illness. �x ` �
�X ��X` ` �To obtain care from providers outside the network, plans may
offer a point�of�service option that allows patients to visit any
doctor, including those who may not belong to the patient's plan.
�x ` �
� � X y ��X � ��X` ` �� �Higher cost�sharing:� � Following the existing model for fee�for�service plans, consumers may choose to see any provider.
Individuals pay $200 annual deductibles before coverage begins;
families pay a $400 deductible. Consumers pay 20 percent co�insurance after meeting the deductible. No individual pays more
than $1500, and no family pays more than $3000. Consumers
are not charged for preventive services included in the benefits
package.����x ` �
� H�
� � X � ��X � ��X` ` �� �Combination� �� �:� � Following the existing model for preferred
provider organizations, consumers pay low cost�sharing ($10
co�payments) when seeing physicians and other professionals in
the provider network and higher cost sharing (20 percent co�insurance) when they consult providers who are not participants
in the network. Preventive services are provided without charge.�x ` �
�H�
� � X � �� �CHOICE OF HEALTH PLANS� �
� �The Health Security plan allows individuals, rather than employers, to choose their
health plans on the basis of quality and price. Today, only half of employed individuals have
a choice of health plans. For the rest, employers choose their health plans, locking
individuals and families into a system of care delivery and determining how much they pay
out of pocket. � Q%
0*((�� Ԍ� ��
� �Because the Health Security plan requires that alliances provide at least one traditional
fee�for�service plan, it preserves consumers' ability to choose their own doctors and other
health providers �� an option that is not available to many today.
���
� �Likewise, doctors and other health providers may choose to participate in as many or
as few of an alliance's health plans as they want.
� �Individuals whose employers provide more generous benefits than the nationally
defined comprehensive benefits may continue those benefits at their current level without
any change in coverage or cost.
� � X � �� �� �� �SUPPLEMENTAL INSURANCE
� � X � �� � �Health plans may offer standardized supplemental insurance policies to cover cost�sharing or health benefits above and beyond the comprehensive benefits package. Employers
may contribute to purchase supplemental coverage for their employees. Health plans that
adopt the high�cost sharing option must offer their participants the opportunity to purchase
supplemental insurance policies that cover cost sharing.
� �Supplemental insurance policies may not duplicate coverage of any services provided
under the nationally guaranteed comprehensive benefit package.
� ��� �
LONG�TERM CARE
� � X e � �� �Existing nursing home coverage under Medicaid continues. Disabled Americans of all
ages gain access to a wider variety of home and community�based support services, making
it possible to continue to live at home. The Health Security plan also provides the following
expansions and improvements in coverage for long�term care:
�X � ��X` ` �Improvements in Medicaid coverage for institutional care expand
eligibility for nursing home coverage. The amount of income
and assets Medicaid beneficiaries may retain increase to $12,000
and the $30�a�month living allowance rises to $100.�x ` �
�X ���� ��X` ` �The establishment of national standards improves the quality and
reliability of private long�term care insurance, while tax
preferences encourages its purchase. �x ` �� Q% 0*((�� Ԍ� ��
�X � ��X` ` �Tax incentives also support the efforts of people with disabilities
to work, covering 50 percent of their costs for personal
assistance and other necessary support.�x ` �
���
� � ��� �� �� �
�
� � X v �MEDICARE � �� �
� � X 1 �� � �Medicare recipients experience no change in how and where they obtain health care or
their existing benefits. In 1996, Medicare benefits expand to include coverage for
prescription drugs under the Medicare Part B policy.
� �Medicare continues as a federally run program for individuals over age 65. Once the
new health care system is in place, individuals have the option of enrolling in Medicare or
remaining in their health plan when they turn 65.
��
�
� �Medicare beneficiaries have a broader range of choice through the expansion of
managed care plans.
� �As the alliance system is fully implemented, states may provide Medicare benefits
through alliances, provided the interests of Medicare beneficiaries and the Federal Treasury
are safeguarded, and there is no reduction in benefits.
� � X � �� �MEDICAID� �
� �Medicaid recipients under the age of 65 who are not eligible for cash assistance either
through Aid to Families with Dependent Children or Supplemental Security Income no longer
enroll in Medicaid. They choose a health plan through their area alliance, with 80 percent of
the premium covered by employer contributions if they are employed, or premium discounts
if they are unemployed and have low incomes.
� �Medicaid continues to pay the cost of health insurance for recipients of AFDC and
SSI, who also pick a plan offered by the regional alliance. They may choose any plan priced
at or below the weighted�average premium without making additional payments.
� �Like other members of the alliance, former Medicaid recipients with incomes below
150 percent of poverty are eligible for discounts to cover a portion of the cost of co�payments and deductibles if no plan with low cost sharing is available at or below the
average premium. Health plans receive the same payment for Medicaid recipients as for
other participants, reducing any stigma associated with obtaining coverage through Medicaid.� :& 0*((�� Ԍ� K�
� �To pay for services covered in the comprehensive benefits to families that receive Aid
to Families with Dependent Children and Supplemental Security Income payments, Medicaid
pays health plans a fixed rate for each participant. Payments from the alliance to health plans
� � X � �are risk adjusted. � �
� �
� �Medicaid coverage for other services, including nursing home coverage and special
services for the severely disabled and supplemental services, continue as a public program.
� � X �� �RETIREES� �
� �Americans who retire before age 65 and were employed for at least the amount of
time used as a standard to qualify for Social Security purchase health coverage through their
regional alliance and pay only the employee share of the premium for their health plan. The
federal government pays the 80 percent employer share.
�K� �Although they may choose to pay more, employers whose retirement plans cover
health insurance premiums for retired workers are responsible for paying only the employee's
share, or 20 percent of the average premium.� 4
0*((�� �
� � X � �� � �� � ��� �� H�� �CONTROLLING COSTS: MARKETPLACE REFORMS� �� � � ă
� �The Health Security plan controls rising costs and improves the quality of health care
by enlisting the power of a competitive market and empowering consumers to make choices
that suit their needs.
�H� �Reform reduces administrative costs and frees up resources to improve quality and
access for all Americans. The Health Security plan:
�X � ��X` ` �Changes incentives in the insurance market so that health plans
compete on the basis of quality, service and cost �� not risk
selection. �x ` �
�X ��X` ` �Reform requires health plans to accept all applicants, and it
forbids them from dropping anyone from coverage or charging
some consumers more than others on the basis of age, gender, or
health status or any personal characteristic. �x ` �
�X � ��X` ` �Empowers consumers to make more cost�conscious decisions by
choosing among health plans on the basis of price and quality.�x ` �
�X ��X` ` �Consumers reap the savings from enrolling in a health plan that
delivers the guaranteed benefits for a lower premium. If they
prefer a plan that costs more, they pay the difference.�x ` �
�X � ��X` ` �Promotes the development of health plans that give consumers
better value for their money.�x ` �
�X ��X` ` �In the current system, doctors and hospitals get paid extra for
each service they perform. Under reform, health plans become
accountable for both quality and price. The incentives change
� � X �from "doing more" to giving consumers better value. � �� � �x ` �� 0*((�� Ԍ� ��
�X � ��X` ` �Improves information about quality of care. �x ` �
�X ��X` ` �The program calls for regular monitoring of access, consumer
satisfaction and the appropriateness and effectiveness of care.
Consumers receive annual performance reports on health plans.�x ` �
�X ��X` ` �The Health Security plan also expands research related to the
effectiveness of medical treatments and courses of care, fosters
the development of practice guidelines and provides other
information to help doctors, nurses and other professionals
deliver more effective care. �x ` �
�X � ��X` ` �Creates standard reimbursement forms and requirements that
simplify the business side of health care. �x ` �
���
�X ��X` ` �With some 1,200 different payers of health costs, hospitals,
clinics and doctors contend with thousands of forms, conflicting
regulations and inspections by a variety of federal, state, local
and private agencies. The plan creates standard reimbursement
rules and inspection procedures that streamline the system,
reducing administrative overhead for providers.�x ` �
�X � ��X` ` �Lowers administrative costs for small groups and individuals as
firms with fewer than 5,000 employees and the self employed
join alliances, consolidating administration and purchasing tasks. �x ` �
�X ��X` ` �These groups currently pay as much as much as 30�40 percent
of premiums to support administrative overhead, compared to 5�7 percent for large firms.�x ` �� e 0*((�� �
� � X � ��&� �� �ENFORCEABLE CAP: THE BACK�STOP FOR COST CONTAINMENT�
� � X � � � �
� �While ample evidence demonstrates that competition and increased efficiency control
costs, the Health Security plan builds in a back�up measure to control health care costs: an
enforceable cap.
� �The cap is met through capping the growth in insurance premiums paid by individuals
and businesses to cover the guaranteed benefits. The Health Security plan guarantees
comprehensive benefits and limits the rate of growth in premiums paid by employers and
consumers for these benefits. By the end of the decade, insurance premiums are held to the
rate of inflation.
� �Those limits are reasonable and achievable, given reforms that enhance competition in
the health insurance market, simplify the system and reduce administrative costs, expand
consumer choice and strengthen the negotiating power of employers and consumers through
health alliances.
� �The projected rage of growth in federal and state spending for Medicaid is similarly
limited, with coverage for Medicaid recipients provided through regional alliances. Specific
reforms hold Medicare to comparable, but slightly higher, limits.
� �Health insurance premiums pay for coverage in the new system, just as health
insurance premiums pay for coverage today. The Health Security plan limits how fast the
cost of those premiums increase.
� ��
� �Alliance premium targets are based on the current level of health care spending in
each area. They, therefore, vary substantially from alliance to alliance. The National Health
Board appoints a commission to explore methods to reduce these variations over time.���
� ��
� � In each regional health alliance, health plans bid each year to provide the guaranteed
benefits, and alliances negotiate with them over premium levels. Premiums vary from plan to
plan.
���
� � X � � �If the ��average�� premium across all plans is less than the alliance's premium target ��
that is, if premiums, on average, are increasing consistent with inflation �� then no
enforcement is triggered.
� �If the average premium across all plans exceeds the alliance's premium target, the
premium, the cap prevents premiums from rising beyond the target. In that case, plans whose
proposed premium increases exceed the allowed rate of growth are required to accept lower
premiums. The plan must adjust its payment rates to providers or accept lower profits to
make up the difference. � %' 0*((�� Ԍ�� H�
� � X � �� �CORPORATE ALLIANCES� �
� �Large employers that form corporate alliances are expected to comply with the same
limits on premium increases as regional alliances. If premiums in a corporate alliance exceed
the allowed rate of growth during two of any three years, the Department of Labor may
require the corporation to purchase coverage through regional alliances.�H�� _ 0*((�� �
� � X � ��
�! �� �STRUCTURE OF THE NEW SYSTEM� ă
� �A new national framework organizes the market for health coverage; the federal
government, states and alliances divide responsibilities as follows:
� �� * � �� J
d d x
! �d d x H x J �� ��H �� �� � X � �� ��K � �Federal Government: Sets the basic framework for the system�
�X�� � ��X� � �Defines guaranteed benefits package �� � �
�X�� � ��X� � �Determines caps on growth in insurance premiums�� � �
�X�� � ��X� � �Reforms insurance system�� � �
�X�� � ��X� � �Establishes quality standards�� � �
� � X f
����. �� ă� ���H �� �� � X � �� �� � �States: Implement health care reform within federal framework�
�X�� � ��X� � �Establish alliance(s)�� � �
�X�� � ��X� � �Certify health plans�� � �
�X�� � ��X� � �Monitor quality and availability of care �� � �
� � X d ��X�� � ��X� � �Implement insurance reform� ��� � �
� ��.�O �� �� � X � �� ��h� �Alliances: Serve as purchasing agent for employers and consumers �
�X�� � ��X� � �Solicit competitive bids from health plans�� � �
�X�� � ��X� � �Distribute consumer information materials�� � �
�X�� � ��X� � �Collect premiums and pay health plans�� � �
� � X K ��X�� � � �� �� ��< ��� K 0*((�� �� .� 6 �� . � �� �� � �� ���X �` ` ��� �
� � X � �� �NATIONAL FRAMEWORK
� �
� �The new framework for health security includes these components:
� � X v ��X � ��X` ` �An independent � �National Health Board� � acts as the board of
directors for the health care system, setting national standards
and overseeing implementation of reform. �x ` �
� � X ��X � ��X` ` �� �States� � establish alliances and qualify health plans. Tailoring the
system to local needs, states may create a single�payer system
by establishing only one alliance and negotiating directly with
providers.�x ` �
� � X �
��X � ��X` ` �Regional and corporate � �alliances� � bring together consumers and
employers, acting as their advocates in negotiations with
competing health plans over service and price. �x ` �
� � X K ��X � ��X` ` �Competing � �health plans� � deliver health services covered in the
guaranteed comprehensive benefit. Each alliance offers a menu
of plans, including a traditional fee�for�service arrangement,
preferred provider organizations and health maintenance
organizations. �x ` �
���
� � X � �� �� �� �FEDERAL RESPONSIBILITIES AND � �� �NATIONAL HEALTH BOARD� �
� � X e �� ��� �� � �The National Health Board consists of seven members appointed by the President with
the advice and consent of th���e Senate. The National Health Board assumes certain
responsibilities for administering the new health care system, while existing federal agencies
assume others. The Board:
�X � ��X` ` �Sets national standards for state plans and ensures access to
health care for all Americans.�x ` �
�X � ��X` ` �Interprets and updates the comprehensive benefits and
recommends to the President and Congress changes in the health
care system.�x ` �
� ��
�X � ��X` ` �Establishes a new performance�based quality management
program and develops valid measures of health outcomes to be
used in annual performance reports for health plans.����x ` �� #' 0*((�� Ԍ� v�
�X � ��X` ` �Develops and implements standards for a national health
information system, using a public�private network to support
quality improvement and collects enrollment data and
comparative information about cost. �x ` �
�v�
�X � ��X` ` �Implements the safety net of the national health budget. �x ` �
� 1�
� � X 1 �� �STATE RESPONSIBILITIES� �
� �States ensure that all eligible individuals enroll in a regional or corporate alliance and
have access to a health plan that delivers the guaranteed comprehensive benefit. Each state
must implement plans approved by the National Health Board by January 1, 1997.
�1�
� �States may begin to implement the new system as early as January 1, 1995.
Implementation involves adopting federal standards and establish health alliances.
� ��
� �Within the broad federal guidelines, states exercise flexibility in the design and
governance of regional health alliances. States have the option to implement a single�payer
system.
���
� �States certify health plans, much as they license health providers and insurance
companies today. They determine mechanisms for evaluating the quality of health plans, their
financial stability and capacity to deliver the guaranteed benefits, as well as compliance with
prohibitions against discrimination based on race, ethnicity, gender, income and health status.
� �Only certified plans may offer health coverage through alliances. In the case of areas
where no health plan forms, the state must assure that at least one health plan is available to
cover every eligible individual.
� 0*((�� Ԍ� � X �� �� b�HEALTH ALLIANCES� �
� �Each state creates one or more regional alliances that organize a menu of health plans,
negotiate premiums and enroll individuals in plans. Within broad federal parameters, states
exercise flexibility in the design and governance of regional alliances.
� �The vast majority of people continue to choose their health care coverage through their
employers, who provide information on area health plans available through the alliance. The
following groups obtain health coverage through regional alliances:
�X � ��X` ` �Employees in firms with fewer than 5000 employees�x ` �
�X � ��X` ` �Employees of federal, state and local governments�x ` �
�X � ��X` ` �Individuals who are self�employed�x ` �
�X � ��X` ` �Part�time workers�x ` �
�X � ��X` ` �Retirees not yet eligible for Medicare�x ` �
�X � ��X` ` �Individuals who are not employed.�x ` �
�b�
� �Health alliances consolidate the purchasing power of individuals, small� and medium�size businesses to secure the best health coverage for the lowest price. Alliances organize
and streamline the fragmented insurance system, replacing health insurance brokers, agents
and underwriters with consumer�run organizations focused on providing access, service,
quality and affordable care.
� �Alliances drive the competitive forces that make the new system work for consumers
and employers. Their mission is to:
�X � ��X` ` �Bargain with health plans on behalf of consumers, business and
purchasers of health care services. �x ` �
�X � ��X` ` �Negotiate premiums and coverage and ensure the delivery of
high�quality care while controlling costs.�x ` �
�X � ��X` ` �Assure that all residents in the area enroll in health plans that
provide the guaranteed comprehensive benefits. �x ` �
� �Where inadequate services exist, alliances may organize health providers or use
financial incentives to encourage health plans to expand.� # 0*((�� Ԍ� � ��� �� �
� �Alliances operate as non�profit corporations, independent state agencies or agencies of
the executive branch of the state. The board of each alliance includes an even number of
consumer and employer representatives but may not include health providers and others who
profit from the industry. Each alliance also forms an advisory board composed of health care
professionals and providers who practice in its health plans.
� �Alliances hold an annual open enrollment period during which they offer consumers a
menu of health plans, including at least one traditional fee�for�service plan.
� �
� �Alliances negotiate rates for premiums with each health plan and collect premium
contributions. Alliances pay health plans a fixed premium for each individual or family that
enrolls, adjusting the total payments to plans to reflect the health status of that plan's
participants.
� �
� �
� � X � �CORPORATE ALLIANCES� �
� �Firms employing more than 5000 workers, Taft�Hartley plans and rural cooperatives
are eligible to organize corporate alliances, although they may also choose to purchase
coverage through regional alliances. Corporate alliances resemble the operation of large
employers' benefit departments, arranging premiums and the delivery of services.
� � �Corporate alliances provide health benefits to their employees either through a self�funded employee benefit plan or through contracts with health plans. They operate under the
same rules as regional alliances except that the population served is limited to company
employees and their dependents. Each corporate alliance contracts with at least one fee�for�service plan and offers at least two other health plans.
� ��
� �The U.S. Department of Labor monitors the operation of corporate alliances, fulfilling
the same role that it assumes under the Employee Retirement Income Security Act of 1974
(ERISA).
���
� �� �Organizations eligible to form corporate alliances may exercise a one�time option to
have individual establishments with fewer than 100 employees join regional alliances at
community rates. Large corporations also periodically have the option to join regional
alliances at a risk�adjusted rate, which gradually declines to the community rate.
���
� �A new chapter in ERISA establishes fiduciary and enforcement requirements for
employers and other sponsoring health benefit plans in corporate alliances. � h$ 0*((�� Ԍ� �� �� H�� �� �� �� �� �
HEALTH PLANS
� � X � �� � �Competing health plans provide medical services guaranteed in the comprehensive
benefits, delivering them through fee�for�service networks, preferred provider organizations
and health maintenance organizations. Health plans may not:
�H�
�X � ��X` ` �Deny enrollment to any person based on individual
characteristics, health status or anticipated need for health care.�x ` �
� ���X � ��X` ` �Terminate, restrict or limit coverage for the comprehensive
benefit package for any reason. �x ` �
����X � ��X` ` �Cancel coverage for any eligible individual until that individual
is enrolled in another health plan.�x ` �
� �
� � X b �COMMUNITY RATING� �
� �Health plans offer coverage at the same rates for all participants, regardless of age,
health or other personal characteristics. Alliances adjust payments to health plans to account
for the level of risk among individuals enrolled in each plan.� � 0*((�� Ԍ� ��
� � X � �� �IMPROVING HEALTH SERVICES
� � X � �� � �The Health Security plan seeks to remove financial and non�financial barriers that
limit care for Americans who live in urban centers, rural communities and those who suffer
from certain illnesses. Because a disproportionate number of residents of rural communities
and urban centers lack health coverage today, universal coverage will bring major new health
resources into those communities.
� �The plan improves access specifically for Americans who live in rural areas through
initiatives to:
�X � ��X` ` �Develop communications links between rural health professionals
and academic health centers.�x ` �
�X � ��X` ` �Create incentives to expand community�based networks of
health providers and plans, such as long�term contracts for
health plans in rural areas and federal loan guarantees for capital
improvements.�x ` �
�X � ��X` ` �Attract health professionals to rural areas through the expansion
of the National Health Service Corps, tax incentives to
encourage practice in rural areas, and changes that increase
compensation for primary care physicians who serve Medicare
beneficiaries.�x ` �
���
�X � ��X` ` �Expand the rural public health system, including support for
transportation, outreach, case management, translation, health
education, nutrition, social support, child care and home visiting
services.�x ` �
� �The Health Security plan makes federal grants and loans available in underserved
urban communities for capital investment. The government further supports the efforts of
traditional health care providers, such as community�based clinics, to adapt to the new system
through designation as essential community providers.
� �Essential community providers receive special protection: For five years, health plans
are required to reimburse these providers for services. At the end of that period, health plans
must either demonstrate their capacity to provide access for all participants �� including
residents of undeserved areas �� or continue contracting with essential providers.� Q% 0*((�� Ԍ� ��
� �Federal block grants that support community health centers, family planning clinics,
health care for homeless families and maternal and child health programs continue. New
initiatives include funding for school�based clinics.���� � 0*((�� � � �� �� �
� � X � ��t�) �TRANSITION� ă
� � X � �� �STATE IMPLEMENTATION� �
� �States begin implementation of the new system as early as January 1, 1995 Most
states come into the system in 1996; the rest are required to begin implementation by 1997.
� �At the time of state implementation, federal discounts for small, low�wage employers
and low�income individuals and families become available. States that expedite
implementation receive financial incentives including special start�up funds, and early access
to federal funding for discounts.
� �� �� �� �
� �Organizations eligible to establish corporate alliances must begin providing the
guaranteed benefit package by January 1, 1997.
� � X b ��
�� �INSURANCE REFORM� �
� �To reduce the potential for disruption during transition, interim insurance reform
imposes new rules including:
�X � ��X` ` �Prohibitions against dropping consumers from coverage. �x ` �
�X � ��X` ` �Prohibitions against profiteering. �x ` �
�X � ��X` ` �Creation of a national risk pool to assure access to coverage
during the transition. �x ` �
�X � ��X` ` �Assurance of portability of coverage�x ` �
� � 0*((�� � �
� �
��# :m �\ P� ��; ��XP# �
� � X � �� �� 1 �� �FINANCING HEALTH COVERAGE IN THE PRIVATE MARKET� �
� * � �� �� � �� �
� �
� �The Health Security plan caps employer contributions for insurance premiums as a
percent of payroll. The cost of providing health coverage declines for most firms that
currently provide insurance.
� �� ���` ` �The plan eliminates the $25 billion that employers pay each year
to cover the cost for uninsured patients. �x ` �
�X � ��X` ` �In the current system, many employers pay the entire premium
for family policies, while the employer of a worker's spouse
makes no contribution. Under reform, both employers share the
cost for families in which two spouses work.�x ` �
� �� ���` ` �In the current system, health insurance premiums for many
employers total more than 10 percent of payroll. Under reform,
premiums paid by employers purchasing through regional
alliances are capped at 7.9 percent of payroll. �x ` �
�X ��X` ` �Businesses that employ fewer than 50 workers receive additional
discounts on their insurance premiums, reducing their
contributions to between 3.5 percent and 7.9 percent of payroll.�x ` �
� �� ���` ` �Under reform, employers in regional alliances pay community
rates that do not vary according to the age, gender or health
status of their workers. �x ` �
�X ��X` ` �Employer obligations for insurance premiums are calculated
based on the average premium among health plans in their area.
As competition among health plans �� backed up by national
caps on premium increases �� brings the rate of growth in
health costs under control, the projected rate of growth in health
costs declines throughout the business sector.�x ` �� � 0*((�� Ԍ� � ��� �� ��
� � X � �� �EMPLOYER PAYMENTS� �
�X � ��X` ` �Employers pay 80 percent of the average premium in the
alliance toward the cost of the policy chosen by the employee,
which depends on the employee's family status.�x ` �
�X ��X` ` �For employees with a spouse, the employer contribution is
reduced to reflect the contributions on behalf of dual wage
earners in the alliance region.�x ` �
�X � ��X` ` �For part�time workers, employers pay a pro�rata share of the 80
percent employer contribution based on the number of hours
worked.�x ` �
���
� � 0*((�� � � �
� � X � �CONSUMER PAYMENTS� �� �� �
� � X � �� � �Working Individuals and Families:� � Individuals and families in which at least one
person works pay a maximum of 20 percent of the premium to enroll in the average�cost
health plan in their area.
� X � �� X` ` �Those who choose a lower�cost plan pay less than the 20 percent average.�(#` �
� X � �� X` ` �Those who choose a more expensive plan pay more, as they do today.�(#` �
� X � �� X` ` �Employers who currently pay 100 percent of the premium for their employees
may continue to do so.�(#` �
� �Working individuals and families may have their share of the premium deducted from
their paychecks or write a check to the local health alliance.
� �Consumers pay premiums based on the type of policy they need to purchase:
� X � �� X` ` �Two parent family with children.�(#` �
� X � �� X` ` �Couple.�(#` �
� X � �� X` ` �Single parent family.�(#` �
� X � �� X` ` �Single individual.�(#` �
� �Individuals and families with incomes below 150 percent of the federal poverty level
�� $21,525 for a family of four �� are eligible for discounts on the employee's share of the
premium.
� � X � �� � �Part�Time Workers:� � Part�time workers are responsible for the 20 percent employee
share of the premium, and workers with incomes below 150 percent of the poverty level
receive discounts.
� �The number of hours an employee works determines how much of the employer share
of the premium is paid by the employer and how much by the worker. For example, an
employer would pay 40 percent of the premium for someone who works half�time. The
worker is responsible for the remaining 40 percent of the premium, with discounts provided
on a sliding�scale basis.� :& 0*((�� Ԍ� ��
� �A part�time worker with more than one job receives contributions from more than one
employer toward the employer's share of the premium.
���
� � X � �� � �Unemployed Individuals:� � Unemployed individuals and families are responsible for
the 20 percent employee share of the premium and receive a discount if their incomes are
below 150 percent of the poverty level. They also are responsible for what would be the
employer's share of the premium but receive discounts on a sliding�scale basis to help cover
the cost.
� � X �� � �Self�employed Individuals: � �The self�employed worker pays the 20 percent employee
share of the premium and receives a discount if his or her income is below 150 percent of the
poverty level. Self�employed workers also are responsible for the 80 percent employer share
and receive the same discounts as small employers. They may deduct from their taxes 100
percent of their health care premiums.
� � X y �� � �� �� ��� �� �� �� �TAX DEDUCTIBILITY� �
� �Employer contributions toward the premium and toward cost sharing related to the
nationally guaranteed comprehensive benefit �� as well as for additional benefits phased in
by the year 2001 �� are fully tax deductible and not counted as taxable income for
employees.
� �Tax preferences continue for benefits in excess of the nationally guaranteed benefit
package offered as of January 1, 1993, for ten years after enactment of health reform.
