A new national framework organizes the market for health coverage; the federal government, states and alliances divide responsibilities as follows:
Federal Government:
States:
Alliances:
The new framework for health security includes these components:
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:
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.
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:
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:
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.
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.
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:
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.
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:
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.
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.
To reduce the potential for disruption during transition, interim insurance reform imposes new rules including: