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The Nebraska BLUES. Reform Impact Study Pat Bourne. The Need for Reform. We agree the U.S. health care system is broken. As the debate intensified, we promised to be open to change, stay engaged, keep Nebraskans informed.

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the nebraska blues

The Nebraska BLUES

Reform Impact Study

Pat Bourne

the need for reform
The Need for Reform
  • We agree the U.S. health care system is broken.
  • As the debate intensified, we promised to be open to change, stay engaged, keep Nebraskans informed.
  • We began analysis with actual House and Senate proposals on the table.
  • Recently released our Nebraska BLUES Reform Impact Study
reform impact study summary
Reform Impact Study SUMMARY
  • Utilized industry research and actuarial methods
  • Applied measures from both bills to popular BCBSNE insurance products (BlueEssentials $500 and BluePride $1,000)
  • Projected monthly premiums for approximately 95,000 members of different ages and health status
  • Rate increases in many cases—some as much as triple-digit percentage increases. Rate decreases for older, less-healthy populations.
monthly health insurance costs
Monthly Health Insurance Costs

Healthy 25-year-old male

Post Reform


monthly health insurance costs1
Monthly Health Insurance Costs

Average health 40-year-old couple with 2 children

Post Reform


monthly health insurance costs2
Monthly Health Insurance Costs

Less healthy 60-year-old couple

Post Reform


monthly health insurance costs3
Monthly Health Insurance Costs

Small business owner

Post Reform


key drivers of rate increases
Key Drivers of Rate Increases
  • “Guaranteed issue” coupled with an ineffective individual incentive to purchase insurance
  • Elimination of health status discounts
  • New taxes to pay for the reform package
  • Requiring higher benefit levels
  • Limiting age ratio and eliminating gender rating
putting it in perspective
Putting it in Perspective
  • A one-size-fits-all solution does not benefit Nebraska
  • Increased premium costs will not draw uninsured people into the system – in fact, many may leave
  • Weak individual incentives penalize Nebraskans currently in the system
  • Small businesses are already struggling—increasing health care costs and coverage is another hit
  • Current reform bills don’t address rising costs, or bring us closer to affordable, attainable and accessible care
broken promises material
“Broken Promises” material
  • More detailed information available at:

healthcare reform procedure
Healthcare Reform: Procedure
  • With the special election of Republican Scott Brown in Massachusetts to replace the late Sen. Kennedy, Democrats no longer have a 60-vote super majority needed to defeat a GOP filibuster.
  • Leaves the Democrats with a few options:
    • No bill
    • A “skinny” bill (basically start over)
    • House passes the Senate bill as is
    • House passes a modified Senate bill with a budget reconciliation amendment
procedure 2
Procedure (2)
  • If the House passes the Senate bill/reconciliation bill package, Senate would only need 51 votes for final passage
  • Still approximately 50 major discrepancies between the House and Senate bills
  • Senator Nelson has not ruled out voting for a bill under a reconciliation process
  • Senator Reid: “We are in no rush”
  • Likely no action until end of February
important provisions house bill
Important Provisions: House Bill
  • Guaranteed issue required for all markets (generally consistent with current small group requirements)
  • Age band rating set at 2:1
  • No pre-ex for all markets – between 1/1/10 and 2013, limits pre-ex to 3-month exclusion and 30-day look-back for group markets
  • Reinsurance for early retirees with employer coverage
  • Temporary high-risk pool ending with operational Exchange – premiums set at 125% with 2:1 age band
  • COBRA extended until operational Exchange
important provisions house bill 2
Important Provisions: House Bill (2)
  • National Exchange with limited state ability to opt-out and operate a state or regional-based Exchange
  • CHIP enrollees allowed into Exchange in 2014
  • Small employers with 25 or fewer employees allowed in Exchange in Year 1 and 50 or fewer in Year 2
  • Exchange eligibility could be expanded to larger employers in Year 3
  • Essential benefits package and tiered benefit packages required for Exchange beginning at 70% actuarial value
  • All products outside Exchange must meet essential benefits package and have 70% actuarial
important provisions house bill 3
Important Provisions: House Bill (3)
  • New Medicare-like government plan to compete with private plans
  • HHS is allowed to negotiate payment rates with providers
  • $5 billion for state-based non-profit co-ops
  • Individual mandate with penalty of 2.5% modified adjusted gross income
  • Employer mandate with penalty of 8% payroll and 8% tax on average employee wages for employee that declines employer coverage and enrolls in the Exchange.
  • Small employers w/ payroll under $500K exempt.
important provisions house bill 4
Important Provisions: House Bill (4)
  • Individual subsides for persons earning up to 400% FPL
  • Medicaid expansion to 150% FPL
  • Repeals CHIP funding effective October 31, 2013. Gradual phase-out. CHIP children above 150% FPL go to exchange and below 150% FPL to Medicaid
  • Medicare Part D ‘donut hole’ gets phased-out
  • Cuts about $500 billion from Medicare
important provisions senate bill
Important Provisions: Senate Bill
  • Note: similar to House bill except for noted provisions.
  • Age band rating set at 3:1
  • Temporary national high-risk pool premiums are 100% standard rate with 4:1 age band
  • State-based Exchanges (rather than national) established. Allows for continued offering of individual and group coverage outside Exchanges.
  • Small group Exchange eligibility defined as 1-100 workers
  • Essential benefits package actuarial value begins at 60%
important provisions senate bill 2
Important Provisions: Senate Bill (2)
  • Individual mandate with $95 penalty beginning in 2014, graduating in 2016 to $750 or 2% of income, whichever is greater.
  • Employer mandate with $750 penalty per full-time worker
  • Medicaid expansion to 133% FPL (NE Medicaid expansion fully funded forever… for now.)
  • Maintains CHIP program.
  • Raises Medicare part D ‘donut hole’ initial coverage limit point by $500 in 2010
important provisions senate bill 3
Important Provisions: Senate Bill (3)
  • 40% excise tax on insurance companies selling Cadillac plans ($8,500/individual and $23,000/family)
  • BCBSNE is waived from annual tax imposed on health insurers, so long as medical loss ratio is not less than 89% after 2011
what now
What now?
  • Speaker Pelosi said the House is willing to pass the Senate bill with the additional reconciliation bill
  • However, she has demands:
    • Remove the “Cornhusker kickback” language
    • More subsidies
    • National exchange
    • Close Medicare D prescription coverage gap completely
    • Raising the Medicare payroll and unearned income tax on families making more than $250,000
    • And others…
  • Now we wait…