Managed competition act introduced in Congress - Managed Competition Act of 1993 - Issues & Trends

The Managed Competition Act of 1993, a bipartisan health care reform bill, introduced in Congress last month, is different from the Clinton plan in several ways: It uses tax incentives to encourage providers and insurers to form health partnerships that are accountable for costs and quality. And it does not include an employer mandate.

The bill, which counts among its principal sponsors Rep. Jim Copper (D.-Tenn.) and Michael Andrews (D.-Texas.), both long-time advocates of managed competition, calls for a national commission to establish a uniform set of effective health benefits. To earn tax-favored status, health plans woul be required to offer those standard benefits, comply with insurance reforms, and disclose information on medical outcomes, cost-effectiveness, and consumer satisfaction.

Other key elements of the plan include:

* Insurers and health care providers would combine to form Accountable Health Plans (AHPs).

* Individuals and small businesses would be able to afford health coverage by joining health plan purchasing cooperatives, which would offer group rates with low administrative costs. Individuals would be able to choose annually from a menu of all qualified plans in a geographic area.

* Health plans would be pre-paid so that they have the incentive to promote preventive care, eliminate unnecessary tests, and reduce costs. They also will be required to report outcomes.

* A new federal program would pay health plan premiums for people below 100% of the poverty level would receive sliding-scale subsidies toward the purchase of a plan. States would no longer have to finance Medicaid, but would gradually assume responsibility for long-term care of the poor.

* Employers would be allowed to deduct the cost of the most efficient health plans, but not the costs of excess benefits. Individuals and employees that purchase coverage from a plan that is not federally-qualified would not be able to deduct any of the amount paid for coverage.

* A Health Care Standards Commission would oversee the health market. The commission would establish and update the standard benefits package, establish standards for reporting prices, health outcomes, and consumer satisfaction measures, and develop factors for risk adjustment of AHP premiums.

The sponsors estimate that the bill would require roughly $25 billion in new federal spending annually. This amount would be financed by capping employer deductibility of health benefits ($16 billion); reducing the increase in provider fees under Medicare ($6.5 billion); phasing out the Medicare Part B premium subsidy for upper-income beneficiaries (1.5 billion); and prefunding federal retiree health care benefits ($1 billion).

COPYRIGHT 1993 A Thomson Healthcare Company
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