National Health Security Plan Proposal (SUMMARY)


HEALTH SECURITY 





PRELIMINARY PLAN SUMMARY





	The Health Security plan guarantees comprehensive health
benefits for all American citizens and legal residents,
regardless of health or employment status.  Health coverage is
seamless; it continues with no lifetime limits and without
interruption if Americans lose or change jobs, move from one
area of the country to another, become ill or confront a family
crisis.



	Every American citizen will receive a Health Security Card that
guarantees comprehensive benefits that can never be taken away. 
Fundamental principles underlie health care reform: 



	*	The guarantee of comprehensive benefits for all Americans.  



	*	Effective steps to control rising health care costs for
consumers, business and our nation.  



	*	Improvements in the quality of health care.  



	*	Increased choice for consumers.  



	*	Reductions in paperwork and a simplified system. 



	*	Making everyone responsible for health care.

	



	Americans and their employers are asked to take responsibility
for their health coverage and, in return, they are guaranteed
the security that they will always be covered under a
comprehensive benefit.



	The Health Security plan creates incentives for health care
providers to compete on the basis of quality, service and price.
 It unleashes the power of the market and puts American
consumers in the driver's seat.  Consumers choose from whom and
how they get their care.



	The plan empowers each state to set up one or more "health
alliances" that contract with health plans and bargain on behalf
of area consumers and employers.  Health plans must meet
national standards for coverage, quality, and service set by the
National Health Board. But each state tailors its approach to
local needs and conditions.



	The Health Security plan frees the health care system of much
of the paperwork and regulation, allowing doctors, nurses,
hospitals and other health providers to focus on providing
high-quality care.  It cracks down on  and abuse, reforms
malpractice law and policy and outlaws insurance practices that
hurt small businesses and imposes the first national standards
for the protection of patient privacy and confidentiality in
medical information and records.





CREATING SECURITY





	The Health Security plan guarantees every American and legal
resident health coverage that can never be taken away:

	

	*	The comprehensive benefits have no lifetime limits on medical
coverage and provides a full range of medically necessary or
appropriate services.



	*	No health plan may deny enrollment to any applicant because
of health, employment or financial status, nor may it charge
some patients more than others because of age, medical condition
or other factors related to risk. 



	*	All health plans must meet national quality standards and
provide reliable information to consumers so they can choose
their health plans and providers. 



	*	Americans have a broad choice of health plans and providers.



	*	Elderly and disabled Americans receive outpatient
prescription drug benefits under Medicare for the first time and
expanded access to home and community-based long-term care
services.  



	*	Self-employed workers are able to deduct the full cost of
their health coverage from their federal income taxes.



	*	Workers older than 55 who retire before they are eligible for
Medicare receive comprehensive coverage for the guaranteed
benefit but continue to pay only the employee share of the
premium.  

 

	*	New investments and loans help improve the availability and
quality of health care in rural communities and inner-city
neighborhoods.  



	*	School-based and community clinics expand access to care in
areas with inadequate health services.



	*	Financial incentives and expansion of the National Health
Services Corps attract health professionals to areas with
shortages of doctors and nurses.  





CONTROLLING COSTS





	The Health Security plan cuts the projected growth in health
care costs by increasing competition in health care, reducing
administrative costs and imposing budget discipline.  Health
plans compete to provide affordable, quality care:



	*	Uniform, comprehensive health benefits and reliable
information about the price and performance of health plans
encourage informed choices. 



		Consumers may choose to pay less for lower-cost health plans
or more for higher-cost plans, creating incentives for
cost-conscious decisions.



	*	Payments to health plans are fixed, providing incentives to
spend resources wisely.  Payments are adjusted based on the risk
characteristics of each health plan's participants.





	If savings attained through competition and reductions in
administrative burden fail to contain costs, limits on the rate
of growth of insurance premiums provide an emergency brake -- 
or backstop -- to ensure that premiums remain in line with
inflation.



	Health reform also reduces the projected rate of growth in
federal and state spending for Medicare, Medicaid, and other
government programs.  Resources conserved from those steps are
applied to other aspects of the health care system, particularly
the expansion of Medicare benefits to include prescription drugs
and for new long-term care services.



	The Health Security plan cracks down on providers and
institutions that overcharge or engage in health care fraud.  It
sets tough new standards and imposes stiffer penalties that
include:  



	*	New criminal penalties for health care  and for the payment
of bribes or gratuities to influence the delivery of health
services and coverage.



	*	New civil financial penalties against providers who submit
false claims.



	*	Tighter restrictions to eliminate referral "kickbacks" in the
private sector and new standards that prohibit physicians from
sending their patients to get services at institutions in which
they have financial interests.



	*	Strong accountability standards that make provider  and other
misconduct automatic grounds for exclusion from all health plans.



EXPANDING CHOICE





	The Health Security plan guarantees consumers a choice of
health plans and enhances the patient-doctor relationship.



	*	Alliances offer an array of competing health plans from which
individuals and families choose their health coverage, expanding
the range of choice for many Americans.



	*	Alliances must offer a traditional fee-for-service option in
which every patient can see any physician he or she chooses.



	*	Consumers -- rather than their employers -- choose their
health plan from among a menu of plans offered by alliances.



	*	Doctors and other health care providers also have a choice of
health plans and delivery systems in which they may choose to
practice medicine.



	*	Separate programs increase federal support for long-term care
and improve the quality and reliability of private long-term
care insurance.





ENHANCING QUALITY





	The Health Security plan improves the quality of health care. 
It creates standards and guidelines for health professionals,
reorienting quality assurance programs to measuring outcomes
rather than regulation, increases the national commitment to
medical research and promotes primary and preventive care.



	*	Health plans are held accountable for delivering appropriate,
quality care.



	*	Regular surveys of consumer satisfaction are used to measure
health plans.



	*	Regular publication of useful and easily understood
information about quality and cost allows consumers to make
informed choices among health plans.



	*	A special funding mechanism strengthens the role of academic
health centers in research, training and specialized care.



	*	Increased investment in research advances medical knowledge.



	*	Changes in Medicare rate schedules and the allocation of
federal funds supporting graduate medical education provide new
incentives for physicians to choose primary care as the focus of
their training.



	*	Expanded funds for education and new federal action helps
remove artificial barriers to practice that hinder nurses and
other professionals.



	*	Investments in public health and medical research improve
health protection for all Americans.





REDUCING BUREAUCRACY





	The Health Security plan reduces the burden of paperwork and
administration, streamlines regulatory, billing and reporting
requirements and helps reduce confusion. 



	*	A comprehensive benefits package that covers every American
and legal resident reduces confusion for health care providers
and consumers.



	*	Administrative costs caused by multiple insurance policies
with different benefits and risk selection disappear.



	*	Standard forms for insurance claims and billing procedures
simplify paperwork and reduce administrative costs.



	*	Administrative costs for small companies decline as those
firms purchase care through regional health alliances that
benefit from economies of scale.

 

	*	The plan simplifies federal regulatory requirements for
Medicare, Medicaid and programs that govern clinical
laboratories. 



	*	The plan requires that health care services covered by
workers' compensation and automobile insurance be delivered
through an individual's health plan reducing duplication and
waste.



	*	Malpractice reform reduces incentives for the practice of
"defensive medicine," including unnecessary tests and procedures.





THE HEALTH SECURITY PLAN



 

COVERAGE





	All American citizens and legal residents are guaranteed a
nationally defined, comprehensive package of benefits and enroll
in a health plan.  Coverage continues without interruption
regardless of a change of employer, employment status, marital
status or medical condition.



	Coverage goes into effect -- state by state -- beginning in
1995 and is fully implemented by 1997.



	The vast majority of Americans continue to receive their health
coverage at work, as they do today.  All workers have a choice
of health plans, each of which must be certified as meeting
quality standards.  Unlike today, however, all employers
contribute to the purchase of health coverage for their
employees, both full and part-time.



	Employed individuals receive information about enrollment and
health plans either at work or directly from the alliance. 
Small business owners and their families, employees of small
business, the self-employed and the unemployed sign up for the
health plan of their choice through the regional alliance office
in their area.



	Firms or Taft-Hartley Plans with more than 5000 employees may
fulfill their obligation to provide coverage for their employees
by establishing a corporate alliance or joining the regional
alliances.  Corporate alliances must meet federal standards for
benefits, choice and quality.



	Medicare beneficiaries continue to receive all current benefits
and, in 1996, receive a new benefit covering outpatient
prescription drugs.  New long-term care programs also expand
access to home and community-based care.



	Those people who receive health care through the Department of
Defense, the Department of Veterans Affairs and the Indian
Health Service may continue to do so.



	Medicaid beneficiaries receive coverage through the regional
health alliance, choosing among the health plans it offers.   

 

BENEFITS





	The health benefits guaranteed to all Americans contain no
lifetime limits on coverage, and provide a comprehensive package
of medical services delivered in hospitals, clinics,
professional offices and other sites.  One uniform,
comprehensive benefit package replaces hundreds of different
insurance products in the market today.   



	When medically necessary or appropriate, covered services
include hospital care, emergency services, preventive care,
mental health and substance-abuse services, family planning,
pregnancy-related care, hospice care, home health and
extended-care services following an acute illness, ambulance
services, outpatient laboratory and diagnostic services,
prescription drugs and biologicals, outpatient rehabilitation,
durable medical equipment, vision and hearing care, periodic
medical checkups and preventive dental services for children.



	The plan includes coverage for a full range of preventive
screening and care often not covered in traditional health
insurance policies.  Covered preventive care includes well-baby
checkups and immunizations for children, periodic physical
examinations, routine laboratory work and screening tests, with
no charge to the patient.

	

	Additional benefits, including preventive dental care for
adults and a more comprehensive mental health and
substance-abuse benefit, are phased into the nationally
guaranteed benefits by the year 2001.  



	Individuals or employers who wish to purchase benefits beyond
the nationally guaranteed package may do so. 



	All individuals in a health plan pay the same premium for the
nationally guaranteed comprehensive benefits regardless of
health status, age, place of residence or employment status. 
Health plans are prohibited from discriminating based on
existing medical conditions and other individual
characteristics. 



	Medicare beneficiaries continue to receive all current benefits
and, in 1996, receive a new benefit covering outpatient
prescription drugs.  Financial support for long-term care also
expands.  



COST-SHARING





	Health plans adopt one of three standard cost-sharing
arrangements: 



	*	Low cost-sharing: This follows the existing model for
integrated health plans, such as health maintenance
organizations.  Consumers pay $10 co-payments for outpatient and
professional services and do not make additional co-payments for
inpatient services, preventive services, or home health care
following an acute illness. 



		To obtain care from providers outside the network, plans may
offer a point-of-service option that allows patients to visit
any doctor, including those who may not belong to the patient's
plan.  

	*	Higher cost-sharing: Following the existing model for
fee-for-service plans, consumers may choose to see any provider.
 Individuals pay $200 annual deductibles before coverage begins;
families pay a $400 deductible.  Consumers pay 20 percent
co-insurance after meeting the deductible.  No individual pays
more than $1500, and no family pays more than $3000.  Consumers
are not charged for preventive services included in the benefits
package.



	*	Combination: Following the existing model for preferred
provider organizations, consumers pay low cost-sharing ($10
co-payments) when seeing physicians and other professionals in
the provider network and higher cost sharing (20 percent
co-insurance) when they consult providers who are not
participants in the network.  Preventive services are provided
without charge.





CHOICE OF HEALTH PLANS





	The Health Security plan allows individuals, rather than
employers, to choose their health plans on the basis of quality
and price.  Today, only half of employed individuals have a
choice of health plans.  For the rest, employers choose their
health plans, locking individuals and families into a system of
care delivery and determining how much they pay out of pocket. 



	Because the Health Security plan requires that alliances
provide at least one traditional fee-for-service plan, it
preserves consumers' ability to choose their own doctors and
other health providers -- an option that is not available to
many today.



	Likewise, doctors and other health providers may choose to
participate in as many or as few of an alliance's health plans
as they want.



	Individuals whose employers provide more generous benefits than
the nationally defined comprehensive benefits may continue those
benefits at their current level without

any change in coverage or cost.





SUPPLEMENTAL INSURANCE





	Health plans may offer standardized supplemental insurance
policies to cover cost-sharing or health benefits above and
beyond the comprehensive benefits package.  Employers may
contribute to purchase supplemental coverage for their
employees.  Health plans that adopt the high-cost sharing option
must offer their participants the opportunity to purchase
supplemental insurance policies that cover cost sharing.



	Supplemental insurance policies may not duplicate coverage of
any services provided under the nationally guaranteed
comprehensive benefit package.  





LONG-TERM CARE





	Existing nursing home coverage under Medicaid continues. 
Disabled Americans of all ages gain access to a wider variety of
home and community-based support services, making it possible to
continue to live at home.  The Health Security plan also
provides the following expansions and improvements in coverage
for long-term care: 



	*	Improvements in Medicaid coverage for institutional care
expand eligibility for nursing home coverage.  The amount of
income and assets Medicaid beneficiaries may retain increase to
$12,000 and the $30-a-month living allowance rises to $100.



	*	The establishment of national standards improves the quality
and reliability of private long-term care insurance, while tax
preferences encourages its purchase. 



	*	Tax incentives also support the efforts of people with
disabilities to work, covering 50 percent of their costs for
personal assistance and other necessary support.

 



MEDICARE 





	Medicare recipients experience no change in how and where they
obtain health care or their existing benefits.  In 1996,
Medicare benefits expand to include coverage for prescription
drugs under the Medicare Part B policy.



	Medicare continues as a federally run program for individuals
over age 65.  Once the new health care system is in place,
individuals have the option of enrolling in Medicare or
remaining in their health plan when they turn 65.    



	Medicare beneficiaries have a broader range of choice through
the expansion of managed care plans. 



	As the alliance system is fully implemented, states may provide
Medicare benefits through alliances, provided the interests of
Medicare beneficiaries and the Federal Treasury are safeguarded,
and there is no reduction in benefits.  





MEDICAID 





	Medicaid recipients under the age of 65 who are not eligible
for cash assistance either through Aid to Families with
Dependent Children or Supplemental Security Income no longer
enroll in Medicaid.  They choose a health plan through their
area alliance, with 80 percent of the premium covered by
employer contributions if they are employed, or premium
discounts if they are unemployed and have low incomes.  



	Medicaid continues to pay the cost of health insurance for
recipients of AFDC and SSI, who also pick a plan offered by the
regional alliance.  They may choose any plan priced at or below
the weighted-average premium without making additional payments.

  

	Like other members of the alliance, former Medicaid recipients
with incomes below 150 percent of poverty are eligible for
discounts to cover a portion of the cost of co-payments and
deductibles if no plan with low cost sharing is available at or
below the average premium.  Health plans receive the same
payment for Medicaid recipients as for other participants,
reducing any stigma associated with obtaining coverage through
Medicaid.



	To pay for services covered in the comprehensive benefits to
families that receive Aid to Families with Dependent Children
and Supplemental Security Income payments, Medicaid pays health
plans a fixed rate for each participant.  Payments from the
alliance to health plans are risk adjusted.  



	Medicaid coverage for other services, including nursing home
coverage and special services for the severely disabled and
supplemental services, continue as a public program.





RETIREES





	Americans who retire before age 65 and were employed for at
least the amount of time used as a standard to qualify for
Social Security purchase health coverage through their regional
alliance and pay only the employee share of the premium for
their health plan.  The federal government pays the 80 percent
employer share.



	Although they may choose to pay more, employers whose
retirement plans cover health insurance premiums for retired
workers are responsible for paying only the employee's share, or
20 percent of the average premium.

CONTROLLING COSTS: MARKETPLACE REFORMS 





	The Health Security plan controls rising costs and improves the
quality of health care by enlisting the power of a competitive
market and empowering consumers to make choices that suit their
needs.



	Reform reduces administrative costs and frees up resources to
improve quality and access for all Americans.  The Health
Security plan: 



	*	Changes incentives in the insurance market so that health
plans compete on the basis of quality, service and cost -- not
risk selection. 



		Reform requires health plans to accept all applicants, and it
forbids them from dropping anyone from coverage or charging some
consumers more than others on the basis of age, gender, or
health status or any personal characteristic.  



	*	Empowers consumers to make more cost-conscious decisions by
choosing among health plans on the basis of price and quality.

  

		Consumers reap the savings from enrolling in a health plan
that delivers the guaranteed benefits for a lower premium.  If
they prefer a plan that costs more, they pay the difference.



	*	Promotes the development of health plans that give consumers
better value for their money.

 

		In the current system, doctors and hospitals get paid extra
for each service they perform.  Under reform, health plans
become accountable for both quality and price.  The incentives
change from "doing more" to giving consumers better value.     



	*	Improves information about quality of care. 



		The program calls for regular monitoring of access, consumer
satisfaction and the appropriateness and effectiveness of care. 
 Consumers receive annual performance reports on health plans.



		The Health Security plan also expands research related to the
effectiveness of medical treatments and courses of care, fosters
the development of practice guidelines and provides other
information to help doctors, nurses and other professionals
deliver more effective care. 



	*	Creates standard reimbursement forms and requirements that
simplify the business side of health care.  



		With some 1,200 different payers of health costs, hospitals,
clinics and doctors contend with thousands of forms, conflicting
regulations and inspections by a variety of federal, state,
local and private agencies.  The plan creates standard
reimbursement rules and inspection procedures that streamline
the system, reducing administrative overhead for providers.



	*	Lowers administrative costs for small groups and individuals
as firms with fewer than 5,000 employees and the self employed
join alliances, consolidating administration and purchasing
tasks. 



		These groups currently pay as much as much as 30-40 percent of
premiums to support administrative overhead, compared to 5-7
percent for large firms.

ENFORCEABLE CAP: THE BACK-STOP FOR COST CONTAINMENT



 

	While ample evidence demonstrates that competition and
increased efficiency control costs, the Health Security plan
builds in a back-up measure to control health care costs: an
enforceable cap.



	The cap is met through capping the growth in insurance premiums
paid by individuals and businesses to cover the guaranteed
benefits.  The Health Security plan guarantees comprehensive
benefits and limits the rate of growth in premiums paid by
employers and consumers for these benefits.  By the end of the
decade, insurance premiums are held to the rate of inflation.



	Those limits are reasonable and achievable, given reforms that
enhance competition in the health insurance market, simplify the
system and reduce administrative costs, expand consumer choice
and strengthen the negotiating power of employers and consumers
through health alliances.



	The projected rage of growth in federal and state spending for
Medicaid is similarly limited, with coverage for Medicaid
recipients provided through regional alliances.  Specific
reforms hold Medicare to comparable, but slightly higher, limits.



	Health insurance premiums pay for coverage in the new system,
just as health insurance premiums pay for coverage today.  The
Health Security plan limits how fast the cost of those premiums
increase.



	Alliance premium targets are based on the current level of
health care spending in each area.  They, therefore, vary
substantially from alliance to alliance.  The National Health
Board appoints a commission to explore methods to reduce these
variations over time.



	  In each regional health alliance, health plans bid each year
to provide the guaranteed benefits, and alliances negotiate with
them over premium levels.  Premiums vary from plan to plan.



	If the average premium across all plans is less than the
alliance's premium target -- that is, if premiums, on average,
are increasing consistent with inflation -- then no enforcement
is triggered.



	If the average premium across all plans exceeds the alliance's
premium target, the premium, the cap prevents premiums from
rising beyond the target.  In that case, plans whose proposed
premium increases exceed the allowed rate of growth are required
to accept lower premiums.   The plan must adjust its payment
rates to providers or accept lower profits to make up the
difference. 



CORPORATE ALLIANCES  





	Large employers that form corporate alliances are expected to
comply with the same limits on premium increases as regional
alliances.  If premiums in a corporate alliance exceed the
allowed rate of growth during two of any three years, the
Department of Labor may require the corporation to purchase
coverage through regional alliances.

STRUCTURE OF THE NEW SYSTEM





	A new national framework organizes the market for health
coverage; the federal government, states and alliances divide
responsibilities as follows:





Federal Government: Sets the basic framework for the system 
*Defines guaranteed benefits package  *Determines caps on growth
in insurance premiums *Reforms insurance system *Establishes
quality standards  

States: Implement health care reform within federal framework 
*Establish alliance(s) *Certify health plans *Monitor quality
and availability of care  *Implement insurance reform  

Alliances: Serve as purchasing agent for employers and consumers
  *Solicit competitive bids from health plans *Distribute
consumer information materials *Collect premiums and pay health
plans   

		

NATIONAL FRAMEWORK





	The new framework for health security includes these components:



	*	An independent National Health Board acts as the board of
directors for the health care system, setting national standards
and overseeing implementation of reform. 



	*	States establish alliances and qualify health plans. 
Tailoring the system to local needs, states may create a
single-payer system by establishing only one alliance and
negotiating directly with providers.



	*	Regional and corporate alliances bring together consumers and
employers, acting as their advocates in negotiations with
competing health plans over service and price. 



	*	Competing health plans deliver health services covered in the
guaranteed comprehensive benefit.  Each alliance offers a menu
of plans, including a traditional fee-for-service arrangement,
preferred provider organizations and health maintenance
organizations. 





FEDERAL RESPONSIBILITIES AND NATIONAL HEALTH BOARD 





	The National Health Board consists of seven members appointed
by the President with the advice and consent of the Senate.  The
National Health Board assumes certain responsibilities for
administering the new health care system, while existing federal
agencies assume others.  The Board:



	*	Sets national standards for state plans and ensures access to
health care for all Americans.



	*	Interprets and updates the comprehensive benefits and
recommends to the President and Congress changes in the health
care system.



	*	Establishes a new performance-based quality management
program and develops valid measures of health outcomes to be
used in annual performance reports for health plans.



	*	Develops and implements standards for a national health
information system, using a public-private network to support
quality improvement and collects enrollment data and comparative
information about cost.  



	*	Implements the safety net of the national health budget.     





STATE RESPONSIBILITIES





	States ensure that all eligible individuals enroll in a
regional or corporate alliance and have access to a health plan
that delivers the guaranteed comprehensive benefit.  Each state
must implement plans approved by the National Health Board by
January 1, 1997.  



	States may begin to implement the new system as early as
January 1, 1995.   Implementation involves adopting federal
standards and establish health alliances.  



	Within the broad federal guidelines, states exercise
flexibility in the design and governance of regional health
alliances.  States have the option to implement a single-payer
system.



	States certify health plans, much as they license health
providers and insurance companies today.  They determine
mechanisms for evaluating the quality of health plans, their
financial stability and capacity to deliver the guaranteed
benefits, as well as compliance with prohibitions against
discrimination based on race, ethnicity, gender, income and
health status. 

 

	Only certified plans may offer health coverage through
alliances.  In the case of areas where no health plan forms, the
state must assure that at least one health plan is available to
cover every eligible individual.  





HEALTH ALLIANCES





	Each state creates one or more regional alliances that organize
a menu of health plans, negotiate premiums and enroll
individuals in plans.  Within broad federal parameters, states
exercise flexibility in the design and governance of regional
alliances.



	The vast majority of people continue to choose their health
care coverage through their employers, who provide information
on area health plans available through the alliance.  The
following groups obtain health coverage through regional
alliances:

 

	*	Employees in firms with fewer than 5000 employees

	*	Employees of federal, state and local governments

	*	Individuals who are self-employed

	*	Part-time workers

	*	Retirees not yet eligible for Medicare

	*	Individuals who are not employed.

  



	Health alliances consolidate the purchasing power of
individuals, small- and medium-size businesses to secure the
best health coverage for the lowest price.  Alliances organize
and streamline the fragmented insurance system, replacing health
insurance brokers, agents and underwriters with consumer-run
organizations focused on providing access, service, quality and
affordable care. 



	Alliances drive the competitive forces that make the new system
work for consumers and employers.  Their mission is to:  



	*	Bargain with health plans on behalf of consumers, business
and purchasers of health care services. 



	*	Negotiate premiums and coverage and ensure the delivery of
high-quality care while controlling costs.



	*	Assure that all residents in the area enroll in health plans
that provide the guaranteed comprehensive benefits. 





	Where inadequate services exist, alliances may organize health
providers or use financial incentives to encourage health plans
to expand.



	Alliances operate as non-profit corporations, independent state
agencies or agencies of the executive branch of the state.  The
board of each alliance includes an even number of consumer and
employer representatives but may not include health providers
and others who profit from the industry.  Each alliance also
forms an advisory board composed of health care professionals
and providers who practice in its health plans.



	Alliances hold an annual open enrollment period during which
they offer consumers a menu of health plans, including at least
one traditional fee-for-service plan.



	Alliances negotiate rates for premiums with each health plan
and collect premium contributions.  Alliances pay health plans a
fixed premium for each individual or family that enrolls,
adjusting the total payments to plans to reflect the health
status of that plan's participants.





CORPORATE ALLIANCES





	Firms employing more than 5000 workers, Taft-Hartley plans and
rural cooperatives are eligible to organize corporate alliances,
although they may also choose to purchase coverage through
regional alliances.  Corporate alliances resemble the operation
of large employers' benefit departments, arranging premiums and
the delivery of services. 



	Corporate alliances provide health benefits to their employees
either through a self-funded employee benefit plan or through
contracts with health plans.  They operate under the same rules
as regional alliances except that the population served is
limited to company employees and their dependents.  Each
corporate alliance contracts with at least one fee-for-service
plan and offers at least two other health plans. 

 

	The U.S. Department of Labor monitors the operation of
corporate alliances, fulfilling the same role that it assumes
under the Employee Retirement Income Security Act of 1974
(ERISA). 



	Organizations eligible to form corporate alliances may exercise
a one-time option to have individual establishments with fewer
than 100 employees join regional alliances at community rates. 
Large corporations also periodically have the option to join
regional alliances at a risk-adjusted rate, which gradually
declines to the community rate.



	A new chapter in ERISA establishes fiduciary and enforcement
requirements for employers and other sponsoring health benefit
plans in corporate alliances.  



HEALTH PLANS





	Competing health plans provide medical services guaranteed in
the comprehensive benefits, delivering them through
fee-for-service networks, preferred provider organizations and
health maintenance organizations.  Health plans may not:



	*	Deny enrollment to any person based on individual
characteristics, health status or anticipated need for health
care.

  

	*	Terminate, restrict or limit coverage for the comprehensive
benefit package for any reason.  



	*	Cancel coverage for any eligible individual until that
individual is enrolled in another health plan.





COMMUNITY RATING





	Health plans offer coverage at the same rates for all
participants, regardless of age, health or other personal
characteristics.  Alliances adjust payments to health plans to
account for the level of risk among individuals enrolled in each
plan.



IMPROVING HEALTH SERVICES





	The Health Security plan seeks to remove financial and
non-financial barriers that limit care for Americans who live in
urban centers, rural communities and those who suffer from
certain illnesses.  Because a disproportionate number of
residents of rural communities and urban centers lack health
coverage today, universal coverage will bring major new health
resources into those communities.  



	The plan improves access specifically for Americans who live in
rural areas through initiatives to:



	*	Develop communications links between rural health
professionals and academic health centers.



	*	Create incentives to expand community-based networks of
health providers and plans, such as long-term contracts for
health plans in rural areas and federal loan guarantees for
capital improvements.



	*	Attract health professionals to rural areas through the
expansion of the National Health Service Corps, tax incentives
to encourage practice in rural areas, and changes that increase
compensation for primary care physicians who serve Medicare
beneficiaries.



	*	Expand the rural public health system, including support for
transportation, outreach, case management, translation, health
education, nutrition, social support, child care and home
visiting services.





	The Health Security plan makes federal grants and loans
available in underserved urban communities for capital
investment.  The government further supports the efforts of
traditional health care providers, such as community-based
clinics, to adapt to the new system through designation as
essential community providers.



	Essential community providers receive special protection: For
five years, health plans are required to reimburse these
providers for services.  At the end of that period, health plans
must either demonstrate their capacity to provide access for all
participants -- including residents of undeserved areas -- or
continue contracting with essential providers.

  

	Federal block grants that support community health centers,
family planning clinics, health care for homeless families and
maternal and child health programs continue.  New initiatives
include funding for school-based clinics.

TRANSITION



STATE IMPLEMENTATION





	States begin implementation of the new system as early as
January 1, 1995  Most states come into the system in 1996; the
rest are required to begin implementation by 1997.



	At the time of state implementation, federal discounts for
small, low-wage employers and low-income individuals and
families become available.  States that expedite implementation
receive financial incentives including special start-up funds,
and early access to federal funding for discounts.  



	Organizations eligible to establish corporate alliances must
begin providing the guaranteed benefit package by January 1,
1997. 





INSURANCE REFORM





	To reduce the potential for disruption during transition,
interim insurance reform imposes new rules including:

 

	*	Prohibitions against dropping consumers from coverage. 



	*	Prohibitions against profiteering. 



	*	Prohibitions against reducing coverage.



	*	Creation of a national risk pool to assure access to coverage
during the transition. 



	*	Assurance of portability of coverage



FINANCING HEALTH COVERAGE IN THE PRIVATE MARKET





	The Health Security plan caps employer contributions for
insurance premiums as a percent of payroll.  The cost of
providing health coverage declines for most firms that currently
provide insurance. 



	*	The plan eliminates the $25 billion that employers pay each
year to cover the cost for uninsured patients. 



	*	In the current system, many employers pay the entire premium
for family policies, while the employer of a worker's spouse
makes no contribution.  Under reform, both employers share the
cost for families in which two spouses work.



	*	In the current system, health insurance premiums for many
employers total more than 10 percent of payroll. Under reform,
premiums paid by employers purchasing through regional alliances
are capped at 7.9 percent of payroll.  



		Businesses that employ fewer than 50 workers receive
additional discounts on their insurance premiums, reducing their
contributions to between 3.5 percent and 7.9 percent of payroll.



	*	Under reform, employers in regional alliances pay community
rates that do not vary according to the age, gender or health
status of their workers.  



		Employer obligations for insurance premiums are calculated
based on the average premium among health plans in their area. 
As competition among health plans -- backed up by national caps
on premium increases -- brings the rate of growth in health
costs under control, the projected rate of growth in health
costs declines throughout the business sector.



EMPLOYER PAYMENTS





	*	Employers pay 80 percent of the average premium in the
alliance toward the cost of the policy chosen by the employee,
which depends on the employee's family status.



		For employees with a spouse, the employer contribution is
reduced to reflect the contributions on behalf of dual wage
earners in the alliance region.



	*	For part-time workers, employers pay a pro-rata share of the
80 percent employer contribution based on the number of hours
worked.





CONSUMER PAYMENTS





	Working Individuals and Families: Individuals and families in
which at least one person works pay a maximum of 20 percent of
the premium to enroll in the average-cost health plan in their
area.



	*	Those who choose a lower-cost plan pay less than the 20
percent average.



	*	Those who choose a more expensive plan pay more, as they do
today.



	*	Employers who currently pay 100 percent of the premium for
their employees may continue to do so.





	Working individuals and families may have their share of the
premium deducted from their paychecks or write a check to the
local health alliance.



	Consumers pay premiums based on the type of policy they need to
purchase:



	*	Two parent family with children.



	*	Couple.



	*	Single parent family.



	*	Single individual.





	Individuals and families with incomes below 150 percent of the
federal poverty level  -- $21,525 for a family of four -- are
eligible for discounts on the employee's share of the premium.



	Part-Time Workers:  Part-time workers are responsible for the
20 percent employee share of the premium, and workers with
incomes below 150 percent of the poverty level receive
discounts.  



	The number of hours an employee works determines how much of
the employer share of the premium is paid by the employer and
how much by the worker.  For example, an employer would pay 40
percent of the premium for someone who works half-time.  The
worker is responsible for the remaining 40 percent of the
premium, with discounts provided on a sliding-scale basis.



	A part-time worker with more than one job receives
contributions from more than one employer toward the employer's
share of the premium.



	Unemployed Individuals:  Unemployed individuals and families
are responsible for the 20 percent employee share of the premium
and receive a discount if their incomes are below 150 percent of
the poverty level.  They also are responsible for what would be
the employer's share of the premium but receive discounts on a
sliding-scale basis to help cover the cost.



	Self-employed Individuals: The self-employed worker pays the 20
percent employee share of the premium and receives a discount if
his or her income is below 150 percent of the poverty level. 
Self-employed workers also are responsible for the 80 percent
employer share and receive the same discounts as small
employers.  They may deduct from their taxes 100 percent of
their health care premiums.   





TAX DEDUCTIBILITY





	Employer contributions toward the premium and toward cost
sharing related to the nationally guaranteed comprehensive
benefit -- as well as for additional benefits phased in by the
year 2001 -- are fully tax deductible and not counted as taxable
income for employees.



	Tax preferences continue for benefits in excess of the
nationally guaranteed benefit package offered as of January 1,
1993, for ten years after enactment of health reform.