The Senate Health Bill: Federally Designed Health Exchanges With A Government Run Plan

Robert Moffit / November 20, 2009

Senate Majority Leader Harry Reid’s massive Senate health bill (H.R. 3590) contains a “public option”, a new government run health plan to compete against private health plans within a federally designed system of state health insurance exchanges.

Federally Designed State Health Exchanges. Under Section 1311 of the bill, the Secretary of the Department of Health and Human Services would be required to provide states grants for the establishment of American Health Benefit Exchanges, and by 2014 states would be required to establish these exchanges for the purchase of “qualified” health plans. Such plans would only be qualified if they met federal rules governing benefit packages, provider networks, “essential community providers”, quality standards and measures uniformity of enrollment procedures, the right kind of rating system, outreach, reinsurance and risk adjustment, and a variety of other federally determined processes under federal supervision. States would be able to require the qualified health plans to offer additional benefits and make the health plans more expensive, if they wished to do so, but they could not allow benefit changes that differed from the standards set by the federal government. As for the administration of the new federally required exchanges, they are required to be “self-sustaining”, and may impose assessment or fees on health plans and enrollees to secure the coverage of those administrative costs. (more…)