The Health Reform Bill, Part I: Private Insurance Reform


Because I have been uneducated, uninformed, and unimpressed by the media’s overall coverage of the health care reform battle, I’ve decided to read the bill myself. Like all bills introduced into Congress, the full text of the bill is available at The health care reform bill is HR 3200, the America’s Affordable Health Choices Act of 2009 (“AACHA”), introduced by Rep. John Dingell (D-MI).

Here are some notes on the bill’s key points:

Title I: Reforms for Private Health Insurance

Title I of the AAHCA enacts various reforms to the current private insurance market. First, Title I allows insurers who provide health insurers through employers to keep doing so, provided the plans meet certain provisions.

First, the plan is not allowed to raise its rates arbitrarily after the public option goes into effect – if it does raise rates, it has to do so on all its insureds and according to stringent rules set out by the newly-created Health Choices Commissioner.

Private insurers will also have five years to rearrange the plans they offer so that they provide, at the very least, the “essential benefits package” described in the bill.

The above portions of Title I do not apply to plans that are limited to certain specific coverages, such as “hospital-only” or “prescription-only” supplemental plans.

Section 111 of Title I prohibits excluding insureds from coverage based on pre-existing conditions. Private insurers will no longer be able to refuse to pay medical bills based on the argument that the condition was “pre-existing.” Nor will they be able to refuse coverage altogether to persons who have “pre-existing conditions.”

(A “pre-existing condition” is basically anything you had before the day your health insurance went into effect, whether you knew you had it or not. For instance, cancer that is discovered six months after your policy begins is a “pre-existing condition” if it was probably there before you got your insurance. If a private insurer even suspects your condition was “pre-existing,” they will likely deny coverage – this is, in fact, the rule in many companies. This is true even if routine testing showed nothing. Even if you had no symptoms.

I wish I were exaggerating, but I have had too many cases with exactly this fact pattern. I am, in fact, understating the problem.)

Section 113 caps insurance premium costs and prevents insurers from charging different rates arbitrarily. Insurers may use factors such as age, average cost of health insurance in the immediate geographical area, and enrollment by families, but the extent to which they can change rates based on this information is limited.

Section 114 requires coverage for mental health on an equal level with coverage for “physical” health problems.

Section 115 requires insurers to establish comprehensive provider networks. This should reduce the costs to insureds who need specialists that are not in their insurance network, as insurers will be required to include necessary specialists when possible.

Section 121 requires all insurance plans, public, private or otherwise, to provide a minimum level of guaranteed benefits. These include payment for hospitalization, outpatient hospital and clinic services, including emergency room services, professional services by physicians and other health professionals, services, equipment and supplies related to the care prescribed by a physician or health professional, prescription medications, rehabilitative services, mental health and substance use disorder care, preventive care, maternity care, and well baby/well child care for children under 21 years of age.

This section also mandates that insurers provide a minimum of $5,000 care per person and $10,000 per family. The bill also prohibits cost-sharing for preventive and well baby/well child care Insurers are required to use copayments rather than coinsurance whenever possible.

Section 123 establishes a Health Benefits Advisory Committee, to include the Surgeon General. The committee will “recommend covered benefits and essential, enhanced, and premium plans.”

Sections 131 and 132 require private insurers to observe fair marketing practices and to provide fair grievance and appeals procedures. These procedures will include the basic requirements of due process, which are also guaranteed to all U.S. citizens under a public health option.

Sections 133 through 136 provide rules and regulations for transparency, timely payment of claims, and rules for coordination and subrogation of benefits. These rules are designed to prevent insurance companies from “baffling ’em with bullshit,” so to speak. They prevent insurance companies from avoiding payment of benefits by tying up insureds in declaratory actions and other forms of litigation indefinitely.

(Full disclosure: a large part of my caseload involves declaratory actions and other forms of litigation designed to tie up insurance claims in the courts. Among other things, these claims postpone and often abrogate entirely the insurer’s obligation to pay. I have perhaps three of these cases for every one case subject to “tort reform” in recent years. You want to reform torts, tell your Congresscritter to pass this bill and stop insurance companies from baffling their insureds with lawsuits.)

Section 141 establishes the Health Choices Administration and its head, the Health Choices Commissioner, which will be responsible for overseeing both the new rules applicable to private insurers and the administration of the public health options. The HCA will include a Health Insurance Ombudsman (Section 144) to whom we can all complain.

Section 152 provides that “all health care and related services (including insurance coverage and public health activities) covered by this Act shall be provided without regard to personal characteristics extraneous to the provision of high quality health care or related services.” In other words, it prohibits discrimination in health care. The bill also provides whistleblower protection (Section 153) and collective bargaining protections (Section 154).

Section 161 requires insurers whose collections-to-expenditures ratio does not meet a certain limit (i.e., they do not spend as much as expected) to provide rebates to their insureds. It also prohibits recission of insurance except upon clear and convincing evidence of fraud, and requires independent third-party review of rescissions.

Currently, private insurers in most states have limited reasons they can use to rescind (take away) your health insurance. Fraud is included in all the states of which I know. In the states in which I practice, “material misrepresentation” is also included. A “material misrepresentation” is anything that, had the insurer known it when you applied, would have caused the insurer to make a different decision about your coverage. Needless to say, the only thing required to prove this is for the insurer to say under oath, “yeah, if we had known that, we’d have done it differently.”

This Section will eliminate a significant portion of my caseload and may put me out of a job. I do not care. Pass it. Because what insurers do now is unfair, unethical, and wrong.

Section 164 provides reinsurance for retirees whose Medicare benefits are not quite covering all their needs, under the same rules and regs as the rest of us are to get our insurance from now on.

Title II: The Public Health Insurance Option

Section 201 establishes the Health Insurance Exchange (“the Exchange”). The Exchange is basically a health-plan marketplace for individuals/families and employers: both private insurers and the federal government will offer various plans through the Exchange, and individuals, families, and employers can “shop” the various options and pick one that suits their needs and budget.

In order to be eligible to “shop” the Exchange, an individual or employer cannot already have (or provide) health insurance. By “health insurance,” the bill means a plan that meets the requirements laid out in Title I; Medicare; Medicaid; members of the armed forces and their dependents (including Tricare); or coverage under the VA. Individuals and their dependents who do not have any of the above are automatically qualified to “shop” the Exchange. No one is REQUIRED to pick the public option plan; if you find a private plan in the Exchange that you like better, you are free to pick it instead.

Employers are also included in the Exchange on a graded scale: the smallest employers (ten or fewer employees) can “shop” starting in the first year of the Exchange (2013), with larger employers having to wait until the second or third year to begin, depending upon their size. No such “size requirement” applies to individuals or families.

Section 203 outlines the various levels of “benefits packages” available in the Exchange. These are known, basically, as the “basic,” “enhanced,” “premium,” and “premium-plus” plans. The bills goes into some detail as to what goes in which plan, but all of them, including the “basic” plan, must cover the minimum required items set out in Section 121 (above). It also provides for little necessities like linguistically-appropriate and disability-appropriate care.

(Section 121, for the record, requires coverage of several things that are not in most private insurer’s “basic” plans currently, including maternity coverage and mental-health coverage. It is, therefore, already an improvement over the “free market” options.)

(Oh, and don’t bother making a snarky comment about “linguistically-appropriate care.” Instead, think good and hard about just why it is you think people who don’t speak English deserve to die.)

Section 208 provides for operation of State-based Exchanges at the option of a state or group of states. If the state or group of states gets approval to run an Exchange, it must do so under the same rules by which the federal government will run the Exchange.

Whew! This is a larger task than expected! Stay tuned for Part II, where we’ll begin with Section 221: The Public Option.

Dani is an attorney specializing in insurance defense. She is also disabled.


8 Responses to “The Health Reform Bill, Part I: Private Insurance Reform”

  1. 1 fibrofatty

    THANK YOU for helping to decipher this! I was kind of overwhelmed when I tried to decipher it on my own.

    So I have a question. Section 152 prohibits discrimination in healthcare. Is there any discussion you’ve seen that covers this in any more detail? Specifically, I’m concerned that fat prejudice will increase significantly, since there’s such a fear of “the obesity epidemic.” I heard Obama say in a talk recently about hoping to give doctors incentives for making people healthier. Noble cause, but people of size are unlikely to get (and stay) smaller, and, similarly, the disabled aren’t going to get better. I’d like to be reassured that people aren’t going to be treated poorly because doctors may pick and choose who they treat, since now the playing field is FINALLY being leveled and everyone is going to have coverage.

    I’m not sure if this touches on doctor incentives at all, though, so maybe i’m mixing my apples and oranges.

    however, i LIKE this plan. i think we’d be ridiculous not to enact this. i think this is finally requiring some accountability in insurance, along with reasonable expectations for quality care and service. it’s about freakin’ time, i say.

  2. 2 Dani

    Section 152 prohibits discrimination in healthcare. Is there any discussion you’ve seen that covers this in any more detail?

    I have not, and based on the text, I’m guessing that will be a problem left to the Department of Health and Human Services to write regulations for.

    The full text of Section 152, btw, is:


    (a) IN GENERAL.—Except as otherwise explicitly permitted by this Act and by subsequent regulations consistent with this Act, all health care and related services (including insurance coverage and public health activities) covered by this Act shall be provided without regard to personal characteristics extraneous to the provision of high quality health care or related services.

    (b) IMPLEMENTATION.—To implement the requirement set forth in subsection (a), the Secretary of Health and Human Services shall, not later than 18 months after the date of the enactment of this Act, promulgate such regulations as are necessary or appropriate to insure that all health care and related services (including insurance coverage and public health activities) covered by this Act are provided (whether directly or through contractual, licensing, or other arrangements) without regard to personal characteristics extraneous to the provision of high quality health care or related services.

    My assumption, unfortunately, is that *someone* will argue that discrimination against fat people will be “with regard to personal characteristics (i.e., fatness) that are related “to the provision of high quality health care or related services” rather than extraneous to them (e.g., “we can’t save your life if you won’t get thin!”, as though thinness is some kind of magic bullet).

    We might see insurers forced to stop rating-up insureds based on BMI alone. (Insurance and BMI have their own fascinating history, which I really ought to blog about.) It’ll take some concentrated lobbying and comment-writing once HHS starts on the regulations – but it may well be doable, and certainly worth a letter or six dozen.

    Law aside, as much as I’d personally like to see us stop treating “overweight” (over WHAT weight? no one ever says) as a disease in and of itself and start treating the conditions people-who-are-also-fat present with, I think we’re not going to see meaningful movement in that area until the medical field starts (a) producing studies with better controls and (b) paying attention to their own studies.

  3. 3 fibrofatty

    this is exactly what i was thinking/worried about: that if fat folks don’t “get skinny quick,” they’ll be seen as non-compliant, and will be discriminated against. like you said, if there are better studies and the medical community starts paying attention to studies that are out there on the subject, maybe this won’t be an issue at all.

    i’d be really interested to read what you have to say about BMI and insurance someday.

    thanks very much for your input!

  4. 4 Jeff

    What about smoking, under section 152. If I don’t stop smoking, could that be seen as non-compliance?

  5. If I don’t stop smoking, could that be seen as non-compliance?

    There’s no way to know for sure until the bill passes (if it passes) and Health and Human Services passes regulations explaining exactly what they mean by “non-compliance.” I do, however, think that’s a *fabulous* question to ask one’s Congresspeople.

  6. 6 Sue

    Thank you for taking the time to decipher this. It’s a lot to mull over and from what you’ve written so far, sounds like it’s NOT the horrible thing that the ultra-conservatives are making it out to be.

  7. 7 Jeni

    Thanks for this!

    I’m wondering about “noncompliance” and people who utilize less accepted alternative medicine, and where the line might be drawn. Ie, maybe getting chiropractic instead of back surgery will be a-ok, but colon cleanses instead of chemo not so much. And somewhere in between there fall the homebirthers, the people taking St. John’s Wort instead of antidepressants, people who want thermography instead of mammograms… it will be interesting to see how this plays out.

  8. Appreciation for some other great write-up. Where different might any person get that kind of information and facts such the best method of producing? I’ve a demonstration next week, exactly what to the look for such information.

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