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February 24, 2000
Dear Member of Congress:
Conferees are working to reconcile differences between the House and Senate
managed care bills, H.R. 2990 and S. 1334. We urge you to support the strong
consumer protection provisions embodied in H.R. 2990 while rejecting all of the
so-called "access" provisions that jeopardize health care quality and access.
Specifically, we urge you to oppose expansion of medical savings accounts,
HealthMarts, Association Health Plans, and tax deductions for health insurance
premiums paid by individuals. As representatives of consumers, persons with
disabilities, seniors, labor organizations, women's organizations, and the
religious community, we believe that Congress should make access to affordable
health care a high priority, but this should proceed on a separate track from
the managed care legislation, particularly given the major consumer concerns.
Medical Savings Accounts should NOT be expanded.
While medical savings accounts have proved a hard sell in the marketplace
(reaching only about 6 percent of the level of accounts allowed by the original
legislation), they continue to pose a threat to the health care system. MSAs
appeal disproportionately to the healthy. When the healthy enroll in MSAs,
premiums increase substantially for people left behind in traditional low
deductible coverage. With the proposed changes, MSAs (over time) could crowd-out
traditional health insurance coverage. During the transition years, consumers
seeking traditional coverage could face premiums 60 percent to 300 percent
higher as a result of MSAs. Eventually, when the "crowd-out" is completed, all
health insurance policies could have high deductibles ($1000 to $2250 for
individuals and $2000 to $4500 for families). Many families will face burdensome
out-of-pocket costs and many will be underinsured if MSAs are expanded.
HealthMarts should NOT be established.
HealthMarts are voluntary purchasing alliances that would negotiate and
purchase health insurance for participants. HealthMarts would be exempt from
state benefit mandates. In order to hold premiums down, HealthMarts could offer
skimpy benefits. With barebones policies, and a voluntary marketplace,
HealthMarts (like MSAs) will fragment the market and divide the risk pool into
healthy and sick. HealthMarts could enable insurers to cherry-pick the healthy,
and drive up the cost of health care for high risks left outside of the
HealthMart. Consumers with skimpy HealthMart coverage will face higher
out-of-pocket costs, as their coverage shrinks and health care costs rise. The
Boards of HealthMarts would have built-in conflicts of interest, with
representatives of insurance companies serving on them. HealthMarts are untried
and untested mechanisms, and they could undermine state efforts to establish
successful purchasing alliances that do play by the rules (without exemptions
from regulation). We note that the Congressional Budget Office recently found
that HealthMarts would lead to an extremely modest increase in the number of
insured; HealthMarts would result in replacement of fully regulated traditional
policies by less comprehensive, less-regulated coverage for millions of
people.(i)
Federally-certified Association Health Plans should NOT be
allowed.
H.R.2990 would create federally-certified Association Health Plans, in which
small employers and self-employed people could band together to purchase health
insurance while escaping certain state regulation. Like HealthMarts, AHP's could
escape state benefit mandates such as mammography screening, well-child care,
cervical cancer screening, drug abuse treatment, mental health benefits, and
bone marrow transplants. The Congressional Budget Office recently found that
AHP's could result in premium reductions because they could attract healthier
risks and would reduce benefits. We believe that cherry-picking the healthy and
skimping on benefits are not desirable means of lowering health care premiums.
Individual-paid health insurance premiums should NOT be deductible, as
proposed.
While we recognize that individuals who lack employer based health coverage
need improved access to affordable health care, we do not believe that an
individual tax deduction is an efficient or equitable mechanism to do this. The
tax deduction in H.R. 2990 would not make coverage affordable to low-income
families; families with income of $25,000 or less do not have any income tax
liability and would not benefit from the proposed deduction. 61 percent of the
expenditure would benefit people with income of $50,000 or more.(ii) The annual cost of the proposed deduction would
be about $8 billion (once fully in effect), and only about 320,000 (of the 44
million uninsured) would gain coverage.(iii) In addition, in the absence of market reforms to
protect high risk individuals, an individual-based tax preference could further
fragment the risk pool, undermine employer-based coverage, and reduce the
options and affordability of coverage for high risks.
In conclusion, we urge you to move forward on legislation to improve the
quality of managed care in the United States, without including "access"
provisions that threaten to split the healthy from the sick, drive up premiums
for those in traditional coverage, create new untested insurance mechanisms that
depend on skimpy benefits and cherry-picking the healthy, and increase the ranks
of underinsured Americans. The managed care bill is not the right place for
provisions designed to improve affordability of health care. The proposed
provisions do not achieve the goals of broad spreading of risk and equitable
sharing of costs.
Sincerely,
Adapted Physical Activity Council
AIDS Action Council
Alliance for
Children & Families
American Federation of State, County, and Municipal
Employees
American Federation of Teachers
American Public Health
Association
Brain Injury Association
Center on Disability and
Health
Center for Medicare Advocacy
Center for Women Policy
Studies
Church Women United
Committee for Children
Communication
Workers of America
Consumer Coalition for Quality Health Care
Consumer
Federation of America
Consumers
Union
Families USA
HIV Managed Care Network
Lutheran Office of
Governmental Affairs, ELCA
Public Citizen
National Association for People
with AIDS
National Association of Developmental Disabilities
Councils
National Association of Protection and Advocacy Systems
National
Association of Social Workers
National Council of Senior Citizens
National
Education Association
National Mental Health Association
National
Partnership for Women & Families
National Women's Health
Network
Neighbor to Neighbor
Network: A Catholic Social Justice
Lobby
Research Institute for Independent Living
Service Employees
International Union
Summit Health Coalition
Title II Community AIDS
National Network
United Church of Christ, Office for Church &
Society
Universal Health Care Action Network
______
Footnotes:
(i) Increasing Small-Firm Health Insurance coverage Through Association Health Plans and HealthMarts," Congressional Budget Office, January 2000, p. 3.
(ii) John Sheils, Paul Hogan and Randall Haught, The Lewin Group, Inc., Health Insurance and Taxes; The Impact of Proposed Changes in Current Federal Policy, prepared for The National Coalition on Health Care, October 1999.
(iii) Joint Committee on Taxation, letter of October 6, 1999 to Hon. Edward M. Kennedy, Congressional Record, October 6, 1999, page H9449.
