July 16, 2009
12:01 a.m. Eastern Time
A New Health Insurance Purchasing Exchange Or A New Public Health Plan Could Require New Federal Underwriting And Coverage Standards
In Comprehensive Article, Leading Scholar Of Health Law Examines How The Interplay Between Federal And State Health Care Regulations Could Affect Reform Efforts
Bethesda, MD -- Congress is considering comprehensive health reform that may include a national health insurance purchasing exchange, as well as a public health insurance plan that would compete with private insurers through the exchange. If Congress does create a purchasing exchange or a public plan, it should consider establishing federal coverage and underwriting rules that would preempt existing state standards. The new federal standards would apply to all health plans, public and private, within the exchange, and also to all insurers that compete with the exchange.
This argument is made by Tim Jost, the Robert Willett Family Professor at the Washington and Lee School of Law, in an article published today on the Health Affairs Web site. Uniform federal coverage and underwriting rules may be necessary, Jost explains, because insurers participating in purchasing exchanges can end up with disproportionate numbers of older and sicker enrollees if coverage and underwriting standards are more liberal within the exchange than outside it. Similarly, if a new public plan applies less restrictive standards than the private plans it competes with in the exchange, the public plan could become the victim of “adverse selection” and end up with more than its fair share of expensive enrollees.
This is only one example of the myriad ways in which the interplay between federal and state laws may affect efforts to reform the nation’s health care delivery and financing systems. In his comprehensive article, “Health Care Reform Requires Law Reform,” Jost surveys the ways in which federal and state health care regulations interact with and limit each other. He also examines the effects of both federal and state laws on private actors.
Jost also sets forth the legal reforms that may be necessary if Congress enacts comprehensive health reform, if the states end up taking the lead on reform, or if only limited health reform occurs. His article expands on work he has done previously in conjunction with the Robert Wood Johnson Foundation and Georgetown University’s O’Neill Institute.
If Congress Takes The Lead On Reform
Many reform proposals currently before Congress seek to promote more integrated health care delivery. The most effective tools the federal government has for moving in this direction are the payment policies of federal health insurance programs, particularly Medicare, Jost says. Were Medicare to move away from its current “siloed” payment system toward “bundled, value-based payments, realignments of relationships within the delivery system could be dramatic.”
Jost argues that federal law changes should be considered to accommodate these new relationships and a new, more integrated health care system. “In particular, new safe harbors from the self-referral, antikickback, and civil money penalty laws, and possibly new interpretations of the antitrust and tax-exempt organization laws, could expedite positive changes,” he says. Changes might be needed in state laws as well, such as scope-of-practice restrictions that discourage the effective use of nonphysician medical providers and state privacy laws that complicate the collaborative treatment of patients.
If Reform Remains With The States
If Congress does not enact comprehensive national reform, it should give the states more power to shape reform, Jost says. In particular, Congress should give the states more authority to regulate the health insurance benefits provided by self-insured companies, which include most of the nation’s biggest businesses. “Congress should also give the states broader discretion to expand Medicaid coverage – for example, to include childless adults or unemployed people with incomes below certain levels,” Jost writes.
If Health Reform Is Limited In Scope
Even if only limited health reform occurs in Congress and state legislatures, there is still much that federal agencies can do to facilitate private reform, Jost points out. “The Centers for Medicare and Medicaid Services, for example, has broad authority to sponsor demonstration projects in Medicare and Medicaid,” and the Office of Inspector General at the Department of Health and Human Services “has discretion to issue safe harbors and advisory opinions to protect innovation in provider/professional relationships.”
“As we prepare for health reform, it is important that we inventory and analyze state and federal laws that will affect reform so that we can proceed intelligently,” Jost concludes. “Good groundwork now can spare us missteps if and when reform comes to pass.”
After the embargo lifts, you can read Jost’s article at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w761
ABOUT HEALTH AFFAIRS:
Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.
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