House reform outline includes public insurance option

"House Democrats released the outline of their health care reform bill Friday - a proposal that would create a public insurance option, expand Medicaid, and require employers to provide coverage or pay a tax," Politico reports. "The outline did not include details on how Democrats would pay for the plan."

The document also provides "the first look at how Democrats would structure a public insurance option - an idea favored by many in the party, but one in which the Senate has been struggling to find agreement." The House approach "is more liberal than what senators are considering, and it is likely to draw fire from the American Medical Association because of the payment levels" which "would pay Medicare rates during the ramp-up phase. 'This tie is severed over time as more flexible payment systems are developed,' the outline stated, and physician participation would be voluntary."

Energy and Commerce Committee Chairman Henry Waxman, D-Calif., "said the House wants to close the 'donut hole' in the Medicare prescription drug program and find a permanent fix for the Medicare reimbursement formula for physicians, which is a top priority for the AMA. But these proposals could add hundreds of billions to the bottom line."

The House measure's subsidy level for low income families - coming in at 400 percent above poverty - is higher than the subsidy in the Senate Finance Committee draft. Also, Medicaid would be expanded to families and individuals 133 percent above poverty. "There would be an individual mandate, except in cases of hardship, and those who do not buy coverage would pay a penalty based on 2 percent of their income above a certain level." Waxman said the House would meet the president's July deadline (Brown, 6/19).

Wall Street Journal: The plan's subsidies "could be used to purchase insurance through a new government-run 'exchange' that includes both private insurance and government plans." The Journal notes that the proposal has "huge implications for the insurance industry. Besides creating a new 'public option' that would compete with private plans, it would cap out-of-pocket costs to policy-holders and prohibit insurers from denying coverage due to pre-existing conditions."

The draft is conceptual in nature and leaves out many details, including a plan for how Congress would pay for the cost of program expansions (Vaughan, 6/19).

Bloomberg: Waxman also said, "The plan, to include a government-run option for consumers, would cover at least 95 percent of Americans" (Litvan and Gaouette, 6/19).