January 6, 2010

The Honorable Nancy Pelosi
Speaker of the House of Representatives
U.S. House of Representatives
235 Cannon House Office Building
Washington, DC 20515-0508

Dear Speaker Pelosi:

Consumers Union, the independent, non-profit publisher of Consumer Reports, congratulates you for the historic milestones you have accomplished so far on reforming our health system. CU has actively supported moving the health reform debate forward. In this final stage, we offer our suggestions for achieving the best possible health reform law.

In addition to the critical issues of affordability, cost control, improved quality, insurance market regulation and others discussed below, we hope you will improve the role and number of consumers participating on the boards and advisory groups that will be vital in implementing the reforms. This is an issue that has not received as much attention, but we believe it will make a significant difference for American consumers (see below).

Affordability: This is our key concern. We believe that neither bill adequately provides affordable coverage for all Americans. In particular, the Senate bill would create enormous hardship for many lower-income Americans, leaving them paying penalties and no health insurance. We recommend that you:
• raise Medicaid eligibility to 150% of the FPL and accept the House’s improved payment for Medicaid primary care providers,
• adopt the House premium structure up to about 250% of FPL, and
• adopt the Senate structure from 250% to 400%.
• provide cost-sharing subsidies similar to the House, protecting enrollees against unaffordable deductibles.
Finally, we support improving affordability even further than either bill if and when additional funding becomes available, now or in the future.

Ensuring Every American has Access to Quality Insurance Products:
We support the House’s National Exchange system. Experience suggests that some states do not have the capacity to set up a well functioning exchange or to adequately regulate health insurance. In addition, we support the House language that prohibits the sale of individual insurance outside the Exchange. We are concerned that the Senate version, which allows sale outside the Exchange, will allow insurance companies to engage in “cherry-picking”.

Insurance Reforms: We urge a combination of each Chamber’s ‘early actions’ so that the public can quickly benefit from the new reforms. It is important to begin monitoring insurance policy prices immediately, to guard against a rush of rate increases. We particularly support the Senate’s requirement that insurers contract with providers to promote quality (Senate section 2717). We support carefully defined, audited medical loss ratios of 80-85 percent. We urge you to make it clear that the Exchange process can reject an insurer on the basis of rate increases and/or poor quality.

Consumers and Exchanges: The Exchange can help hold down costs if consumers are given the tools to shop. As drafted, the Exchange(s) is likely to resemble the Medicare Part C, D and FEHBP programs—a confusing array of plans, many with tiny, confusing differences. Therefore, we support the Senate’s explicit requirement for the definition of insurance and medical terms, and the presentation of ‘scenarios’ to show how well a plan will cover certain common conditions. We urge you to require each insurer offering a plan at any tier (bronze, etc.) to have to offer at least one identical, standard plan – a plan that is exactly the same in each of the tiers for all insurers — so that consumers can shop on the basis of cost and quality. Variation around the cost-sharing—will just add to the confusion and should not be allowed. We support the Senate’s explicit requirement that plans be comparable on the basis of cost and quality. And finally, make it explicitly clear that the consumer will be able to see the estimated annual total cost of a plan, based on their self-estimated health status or their past medical usage. We have data showing that consumers who look at total estimated annual cost save about 1/6th compared to those who only look at annual premiums.

Comparative Effectiveness Research: To avoid the very real danger of being captured by special interests, we support the House approach of CER placement in AHRQ. Stronger conflict of interest requirements are needed, and rather than the Senate Manager’s amendment’s approach of increasing the number of providers on the Board, we urge you to expand the public interest, patient, and consumer representation on the Board.

Anti-infection, error reduction, and quality: We strongly support both Chambers’ strong improvements in this area. We ask you to maximize the financial incentives to improve quality and reduce errors, while helping consumers through public disclosure of provider infection and error rates. In report language, we suggest that you stress to HHS the need for more aggressive action against infection. We strongly oppose the Senate’s bonus payments to Part C plans that have below-average ‘star’ ratings. We support the Senate Manager’s amendment (Sec. 10332) allowing Medicare claims data to be used for developing quality reports that will help consumers.

The Public Interest in Boards and Advisory Committees: Each bill creates about 18 new advisory or consultative bodies—understandable given the scope of work ahead of us—but we are disappointed that most have little or no requirement for public or consumer representation. We urge that an effort be made to add non-conflicted public representatives. On the key groups—such as those dealing with the qualified plan benefit structure, comparative effectiveness, and Medicare spending—we urge you to ensure that at least one third of the members are selected to represent the public. In all cases, we urge you to strengthen the anti-conflict of interest rules (similar to the stronger COI rules in FDAAA 2007). And if the final bill includes a significant role for the NAIC, we strongly recommend you explicitly ensure a role for meaningful consumer participation.

Guarantee protections against hardships due to the individual mandate: The individual mandate will be subject to enormous amounts of misinformation and demagoguery. The bills clearly provide that the Secretary define a hardship exemption, and Senate penalty language specifically protects individuals from burdensome penalties like liens. But to pre-empt rumors and misstatements of fact, we hope that you can expand on the provisions permitting hardship exemptions, to make it clear that individuals will not be forced into bankruptcy or loss to the IRS of essentials such as housing, vehicles, etc., if they are not able to meet the mandates. Spelling out that installment payments could be used and that the goal of the legislation is to provide insurance, not impose penalties, would help reassure the public against the fear-mongering that will be prevalent.

Protecting consumers who go out-of-network: Recent court cases, settlements by the NY Attorney General, and U.S. Senate hearings have documented serious multi-billion dollar abuse of health insurance consumers through distortions in the calculation of out-of-network co-payments (usual, customary, and reasonable charge calculations). The Senate Manager’s amendment (p. 23) would help prevent such abuses in the future, and we urge its adoption.

Anti-fraud: We greatly appreciate the many anti-fraud provisions. In particular, for the physician ‘sunshine’ legislation we strongly support the House provisions that cover many more entities in the disclosure of ‘payola gifts’.

Anti-trust: We strongly support the House bill’s repeal of the anti-trust exemptions currently allowed for the health insurance industry.

FDA Reforms: To improve patient safety, we support the House device registration provision (sec. 2571). To enhance consumer information and affordability, we support ending the abuse of brand companies paying generics not to come to market (House sec. 2573), the abuse of last minute label changes designed to block generics (Senate sec. 10609) and the drug facts box (Senate sec. 3507).

We appreciate the difficult task you face in developing a final bill and hope our suggestions from the consumer perspective are helpful. Please do not hesitate to call on us if we can be of assistance. Again, best wishes as you work through these important issues in this historic legislation.

Sincerely,

James A. Guest
President and CEO