The NHB plan
Abstract
This nonpartisan plan features a new private insurer based National Healthcare Benefit (NHB) plan. It is based on the highly successful Federal Employees Health Benefit (FEHB) program. The FEHB is a government managed, free market, competitive approach to qualifying and selecting plans offered by private insurance vendors since 1960. It continues to provide excellent health care coverage for all federal employees. NHB makes health insurance portable. The same plan is available in a new job or new State. Individuals and employees of small businesses will have great low cost health insurance plans to choose from. NHB combined with Medicaid, create a “safety net” for the less fortunate in our society. Together they provide health insurance for all US citizens at significantly lower cost.
The plan provides access for people with preexisting conditions and allows parents to keep their children on their plan until age 26. No matter where you live, you have 11 or more health plan options to choose from each covering: Routine physical exams • Doctor’s office visits • Specialist visits • Lab tests • Prescriptions • Ambulance services • Inpatient hospital care • Surgery • X-rays • Maternity care• Urgent care • Mental health services • Stop smoking aids • Physical therapy • and more”. Details of plan types, premium cost and benefits can be found at https://www.opm.gov/healthcare-insurance/healthcare/plan-information/plans/
Participation in NHB is optional. Employers can continue to offer their existing plans. Employees have a choice to stay with the ACA, an employer plan or join a NHB plan. Those that join the NHB, including private individuals, employees of State and local governments, employees of private businesses, large and small, will choose from the same menu of insurance options. It presents an economically fair, comprehensive solution that makes quality, affordable health insurance immediately available to all Americans.
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Simple Concept
Great health insurance for all Americans, same program as all federal employees, including pre-existing conditions.
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White paper
The Federal Employee Health Benefit (FEHB) is a successful “managed competition” health insurance program that has provided quality affordable health insurance for about 10M Federal employees since its inception in 1960. FEHB’s general model has not changed since its inception. The program has always allowed competing private insurers to offer numerous types of coverage to enrollees within broad federal guidelines. The new National Health Benefit (NHB) plan proposes to open enrollment into the FEHB to all US citizens.
Participation is optional. It does not affect the ACA, private employer plans, or other insurance products availability to institutions or individuals.
Federal Employee Health Benefit (FEHB)
The federal government, like private employers, makes a benefits package available to its employees. The FEHB is a part of that package. For decades, it has included two of the most desirable provisions of the ACA - acceptance of people with preexisting conditions and allowing parents to keep their children on their plan to age 26. The program is based on a free market competitive approach to qualifying and selecting plans from those offered by private insurance vendors. It is managed by the Office of Personnel management (OPM).
From OPM web site: “With FEHB, you can get comprehensive health insurance coverage for you, your spouse, and your children under age 26. There are no waiting periods and no restrictions on pre-existing conditions. Federal employees, retirees and their survivors enjoy the widest selection of health plans in the country. You can choose from among
Consumer-Driven and High Deductible plans that offer
catastrophic risk protection with higher deductibles,
health savings/reimbursable accounts and lower premiums
Fee-for-Service (FFS) plans, and their Preferred Provider Organizations (PPO)
Health Maintenance Organizations (HMO) if you live (or sometimes if you work) within the area serviced by the plan.
All plans offer preventative services at no cost when received from a Preferred Provider. This includes childhood immunizations, screenings for cancer, diabetes, and high blood pressure, and tobacco cessation services and medications.
No matter where you live, you have 11 or more health plan options to choose from, each covering: Routine physical exams • Doctor’s office visits • Specialist visits • Lab tests • Prescriptions • Ambulance services • Inpatient hospital care • Surgery • X-rays • Maternity care• Urgent care • Mental health services • Stop smoking aids • Physical therapy • and more”
“The FEHB program has often been proposed as a model for national health insurance by members on both sides of the aisle. Senator John Kerry proposed opening enrollment in this plan to all Americans. Over time, the FEHB program has outperformed original Medicare not only in cost control, but also in benefit improvement, enrollee service, fraud prevention, and avoidance of "pork barrel" spending and earmarks. Medicare Part D has also controlled costs far better than originally forecast through a competitive, consumer-driven system of plan choices similar to and modeled after the FEHB program.” Insurance vendors can and do offer National, regional and State specific plans.
National Healthcare Benefit (NHB) plan
A new National Healthcare Benefit (NHB) plan can be created by expanding the FEHB law to allow all State and local governments, private employers, large and small, to offer the FEHB menu of plans to their employees. New enrollees will join a large, established, cost competitive, national balanced risk pool, critically important to providing low premium costs. The FEHB web site is configured to support State and regionally specific plans. https://www.opm.gov/healthcare-insurance/healthcare/. The NHB will offer the same menu of plans. Employers will be required to offer the NHB to all employees; however, employee participation is optional. The requirement insures that all employees have access to proven quality health insurance plan of their choice.
Employee Choices
The employee will have four choices:
Remain uninsured but pay a Medicaid payroll tax
Stay with the employer’s private plan
Join the ACA or other private plan
Join an NHB plan
The NHB, like the FEHB, accepts people with preexisting conditions. However, it is important to note that the provision is restricted to the first time enrollment only. That prevents people from getting sick, enrolling, and then dropping the plan until they get sick again. Once enrolled, they must continue participation in the plan to retain eligibility. There is also a limit on the time an individual can wait to enroll after the plan is offered. This provision discourages young and healthy people from delaying their first time enrollment until they are sick. The two provisions combined strongly encourage young and healthy people to join early and stay in the program. Both are needed to maintain a large stable balanced risk pool; a requirement to lower the cost of insurance to all participants.
The Medicaid payroll tax insures that all employees will contribute to their healthcare expenses. The tax will be means tested. The working poor will be granted a refundable income tax credit. The credit will be phased out at a TBD level of the federal poverty level guide line. Payment of the tax will grant the individual federal eligibility into the State managed Medicaid program.
Employees of a Union can choose to stay with the employer based “Cadillac” plan won through the bargaining process. Union employees may have accepted lower wages at the bargaining table for great long-term healthcare. It will be each individual employee’s personal choice.
Major NHB benefits:
Portability
Change jobs, move from one State to another and keep the same plan
Employee protection from company buy outs, bankruptcies, mergers, relocation of facilities and more
No preexisting conditions restrictions
Once a year, an employee can select a different plan
Outside of Open Season; change plans if you experience a qualifying life event
Retirement – plan available at any age
At age 65 or older, plan becomes a secondary payer to Medicare
Long term healthcare plans are available
The system is fair
All employees will contribute to their healthcare costs.
All receive the same benefits for the same plan regardless of income.
All select a plan that matches their unique health needs.
Employees of small businesses are guaranteed access to multiple, quality health insurance.
Health Insurance becomes portable like a 401K
Safety Net: People without insurance, unable or too young to work, are eligible for Medicaid
With these simple changes, all citizens would have access to health insurance provided by a free market, competitively selected, private plan of their choice.
The social impact of providing lower cost, quality health insurance of choice that matches the individual needs of every citizen is hard to overstate. With bipartisan cooperation, the benefits of creating a portable fair healthcare plan for the public would be enormous.
Premiums fund the NHB
This table was copied from the OPM FEHB program web site. It lists the premiums that federal employees pay for several popular nationally available plans. All plans are subsidized by the government. On average the government pays 70% and the employee pays 30% of the total premium. A national Blue Cross and Blue Shield (BCBS) as an example, offers three different options. Each option has three sub-options. If an employee of a private business joins the NHB, the employer must reimburse the NHB for the cost of that plan.
Partial example. Complete list @ https://www.opm.gov/healthcare-insurance/healthcare/.
Employer Provided Insurance
Currently, there are an estimated 160M people with employer provided insurance. Many are very happy with their plan. Employers can continue to offer a private plan, however, they will be required to also offer the NHB to their employees. People will only join the optional NHB if there is no disruption to their unique insurance needs. With the NHB there are no waiting periods and no restrictions on pre-existing conditions. The Federal workforce is geographically diverse. Since a minimum of 11 FEHB plans are available in any zip code, there is a high probability that many will find a plan that is equivalent to or most likely better than their current plan and at a lower cost.
Source: The Kaiser Family Foundation 2018 health benefits survey
Private Insurance Plans
Most large private employers also subsidize the company healthcare plans. Many provide a similar 70% - 30% premium cost split. Figure 6.7 “Worker and Employer Contributions for Premiums” was extracted from the Kaiser Family Foundation 2018 health benefits survey. In their survey, a small firm is one with fewer than 200 employees. The chart displays the average premium for both self and family coverage.
Unfortunately, this historical approach to providing worker benefits has created an enormous and growing problem for small business. Simply stated, they can’t afford to subsidize premiums at the same level as large company’s and stay in business. Profit margins are generally too small and for some startups, there are no profits in the early years. Currently, it is reported that about 60% of the small businesses do not offer any healthcare insurance to their employees. Even when offered many find the employee does not participate because it is “too costly”. Individuals are priced out the market. The result is that a significant segment of our society has either limited plans or no plans at all.
OPM Reimbursed by Private Employers
The contracts with the insurance vendors are awarded and managed by OPM. When an employee of a private company selects an NHB plan, the private company must reimburse OPM for the total cost of the premium. The “employee’s share” will be deducted from employees pay check. The amount would be the same as a federal employee would have paid for the same plan.
The mechanism for the private firms to reimburse OPM is an important legal issue that must be addressed by legislators when writing the law. The SCOTUS ruled that the ACA mandate was a tax and hence legal. Had it not been deemed a tax, the entire law would have been ruled unconstitutional. Legal challenges continue even today. Legislatively referring to the “reimbursement” as a “tax” may become necessary to insure its legality. Regardless of the label of the reimbursement payment, there is no additional cost to the American taxpayer for the NHB.
For large employers, there will be differences in the healthcare expense. The “employers share” of the premium selected by the employee will likely be different than the equivalent cost for the employer’s private plan. The differences should be small and should have minimal effect on the company bottom line. As is current practice, the subsidy expense would continue to be tax deductible. Any cost difference, be they large or small, will be borne by the large employers not the taxpayer.
The Kaiser Foundation reports that, for firms with 200 or more employees, 98% offer health insurance to their employees. The NHB would require the remaining 2% to offer the NHB to their employees. It would be a significant change for those companies but the employees would directly benefit.
Exemptions
Quality health insurance must be made affordable for employees of small businesses. The NHB plan would exempt employers with less than 50 employees from paying the employer share of the plan premium. The exemption would start to phase out at 51 employees growing to 100% phase out at 500 employees.
After enrollment, the employee must maintain continuous program participation to retain eligibility. The plan contains provisions for temporary lapses in employment. The employee can permanently retire and continue enrollment by personally paying only the “employee share” of the premium.
Cost Reductions
OPM is a part of the Executive Branch; as such they are uniquely positioned to modify or eliminate regulations that unnecessarily increase the cost of delivery of health care services. The FEHBA outlined the role of OPM in FEHB. By law, OPM has the authority to contract with insurers and to prescribe regulations to manage the program. FEHB’s general model has not changed since its inception. The program has always allowed competing private insurers to offer numerous types of coverage to enrollees within broad federal guidelines. The federal government and the employee or retiree has always shared the cost of the premium, and generally employees and retirees have had access to the same plans at the same cost.
OPM has a long demonstrated history of improving benefits and reducing cost. “Statute gives OPM broad authority to administer FEHB, and in exercising that authority OPM can implement changes to the program. For example, OPM issues call letters to FEHB plans each year that outline OPM’s policy goals for the upcoming year. In the call letter for the 1990 contract year, OPM used its authority to require all plans to include coverage of prescription drugs. Subsequent call letters have expanded and modified OPM’s prescription drug requirements.” Unless prevented by the enabling legislation, OPM could negotiate drug prices for all plan members.
Insurance company’s profits and overhead can be controlled. Thousands of unique employer insurance plans will be eliminated along with their associated overhead costs. Contract provisions could require service providers to make public their costs for typical procedures. (Cost transparency). The net effect will be a major reduction in the nation’s cost of insurance while providing improved benefits at lower premium cost to all citizens
The Safety Net