Back to articles

Adventist Health Position on Health Reform


August 20, 2009
Current Congressional health reform efforts revolve around two bills: the “Tri-Committee” bill from the House of Representatives (HR 3200), and the “HELP” bill from the Senate Health, Education, Labor & Pensions (HELP) Committee. A third bill – from the Senate Finance Committee – has yet to be issued. It is widely believed that the Senate Finance bill will pull from the other bills as well as most closely mirror the President’s wishes.

AHS Position
AHS favors a reform effort that relies heavily on a private-government partnership – not a totally government-run program. We also recognize that, whichever bill passes, the rulemaking period that follows is crucial, and we will provide strong input to that process.

AHS Reform Efforts
Adventist Health System believes that some version of health reform – distilled from the bills noted above – will pass by the end of 2009. Because of that, AHS and Florida Hospital leaders are spending time in Washington with elected officials, Congressional staff, and trade groups like the American Hospital Association and Premier, Inc. For the most part, we support the trade groups but have our own positions as well.

Extreme Rhetoric is Counter-Productive
AHS is concerned about the extreme (and sometimes inflammatory) rhetoric circling around the health reform issue. We believe this kind of rhetoric – whether liberal or conservative – is detrimental to the reform process. We hope that Congress will not be frozen by the rhetoric, and will proactively move forward after their August recesses.

Common Elements of Health Reform
Common reform elements thread throughout the bills; the major differences lie in the level of government involvement.
Common elements include individual and business mandates, mandated minimum benefits, a public plan, Insurance Exchanges and reform, prevention and stronger primary care systems, Medicaid expansion, and Medicare payment reform. Again, all elements are subject to the final bill language and the rulemaking that follows.
A review of these elements – and AHS’ specific positions – follows.

Positions on Key Health Reform Elements

August 2009
Individual Mandates & Premium Subsidies

In the current structure, the insured pay for the uninsured through a cost shift to private health insurance.Under reform, all US citizens would be required to have health insurance. There will likely be premium subsidies for lower-income people and tax penalties for non-compliance.

AHS Position
AHS supports an individual mandate or other enforceable demonstration of personal financial responsibility.

Employer Mandates

Employers would be required to offer health coverage.Proposed “Play-or-Pay” models could mean that employers who do not comply would face an excise tax. Very small businesses could be the exception.

AHS Positions

  • Play-or-Pay models must be carefully implemented so that small business – the generator of new jobs – is not crippled or made non-competitive.
  • Small companies with payrolls of $500,000 or less should be exempt.
  • AHS prefers individual mandates to business mandates.
  • Employer and individuals mandates should have equitable tax treatment.
  • Employers should not be allowed to drop coverage or dis-enroll employees under an individual mandate.

Minimum Mandated Benefits

All health insurance plans would have to offer certain minimum benefits. Plans could also offer higher, optional levels of coverage. There would be no denials for pre-existing conditions, or any lifetime or annual limits. Plans would use standard forms.

AHS Positions
AHS strongly supports more standardization in forms, claims processing and adjudication. Significant cost savings can be derived from this.
Minimum benefit requirements should be clearly defined and limited to essential coverage.
Individuals and employers should be free to add (and pay for) enhancements to the basic plan.
AHS supports the provisions relating to pre-existing conditions and guaranteed re-issue. 
The “no lifetime limit” requirement must be thoroughly vetted to make sure it does not result in higher overall health spending.

Public Plan

The public plan remains the most contentious area. Some bills propose a fully government-run plan that mandates hospitals and other providers to participate – and accept mandated rates. Other versions propose a market-based approach including both public and private plans. A third option is a co-op system where businesses and individuals can come together and form their own plans.

AHS Positions
AHS would support a public plan only if it negotiates prices and operates like any other plan in the market place. We strongly oppose government-set rates especially if those rates are below cost (like Medicare). 
The public plan should be tripped only when an individual cannot get affordable, private coverage with pre-defined benefits.
AHS strongly supports financial accountability systems for co-op members.

Insurance Exchanges

Consumers would purchase coverage through InsuranceExchanges that would encourage competitive bidding among insurers and the public plan.

AHS Positions
AHS would support the competition and innovation that Exchanges could encourage. 
We also believe Exchanges could create difficult benefit administration challenges for multi-state employers, and would require significant changes in state insurance laws.
Insurance Reform

New insurance regulations could impose profit caps and/or government rebates on health insurers. All proposals set a threshold for the percentage of the premium going to medical care. One proposed ratio is 85 percent; loss ratios for larger companies now run between 70 and 90 percent.

AHS Position
AHS does not have a position on fixed loss ratios but has two concerns:
Policymakers must carefully determine the impact of such a restriction on (a) companies staying in the market and (b) creating a disincentive for reducing utilization. 
If a company reduced its loss ratio through prevention and case management – and not through simple denial – it could actually be punished for its success. 
Prevention, Primary Care & Medical Homes

Most proposals call for “Medical Homes,” i.e., regular sources of primary care. Primary care physicians could receive per-member, per-month stipends for implementing case management systems that promote prevention and keep medical costs down.

AHS Positions
AHS supports realistic payment incentives for health outcomes not processes.
We support evidence-based (not process-based) prevention requirements.

Medicaid is a state-federal partnership. Both the Senate and the House would expand Medicaid eligibility from 100% of poverty to as much as 133%. Medicaid expansion would be costly, and faces major scrutiny.

AHS Positions
AHS does not support any unfunded mandates to the states, and believes that eligibility expansion could ultimately place unmanageable burdens on states.
Allowing individuals to buy into Medicaid on a sliding fee basis up to 133% or 150% of poverty could be a better solution.

All proposals reduce overall Medicare hospital payments based on assumptions of improvements in efficiency. “Preventable” hospital readmissions will not be covered. Additional cuts would go to Disproportionate Share (DSH) hospitals receiving higher payments for treating significant numbers of charity and Medicaid patients. DSH cuts assume that, under health reform, there will be very few uninsured patients. There is also discussion of a new rate-setting commission or stronger decision-making (and rate-setting) authority by federal agencies.

AHS Position
AHS believes that Medicare payment systems must be more rational and outcomes-focused. Systems must address unjustifiable cost variations among geographic regions.
AHS is also concerned that payment changes could be made without a thorough review of current payment systems. AHS supports a well-considered study of what Medicare pays for, and how. 
AHS supports aggressive Medicare payment reform that emphasizes payments for outcomes, not just processes.
If a public plan is allowed to dictate prices at the Medicare level, there will be a need to continue DSH payments to hospitals taking high numbers of government payers.
AHS could support a new rate-setting Commission if it relied on structured provider and other input. The Commission should be equally appointed by the Senate, House and Executive branch.
AHS opposes rate setting at the sole discretion of federal agencies or a MedPAC-type advisory board.
If you have any questions or for more information please contact AHS Government Affairs at (916)-774-3301