After spending my weekend tamping down fires around HR 3200 which were purely the result of a lack of understanding about how legislation is constructed, I thought it might be helpful to put together some pointers on how to read it, along with some key terms.

Format

The bill is written in outline form. Because many provisions touch existing law (sweeping reform bills in particular), they are separated into divisions, titles and subtitles.

Each title outlines a specific area of focus. Each subtitle outlines specific provisions.

Within subtitles, there are sections. Each section addresses a very specific area of focus. For example, Division A, Title I, Subtitle A, Section 102 is an area that has been the subject of controversy. However, when read in the context of its specific focus it is not controversial at all. It breaks down as follows:

Division A = Affordable Health Care Choices
Title I = Protections and Standards for Qualified Health Benefits Plans
Subtitle A = General Standards
Section 102 = Protecting the choice to keep current coverage

Therefore, when reading page 16 of the bill (one of the sections which has been lifted out of context and widely misinterpreted), it must be read within the context of the division, title, subtitle and section to which it relates. In this case, it is written in the context of protecting choice to keep current coverage, and begins with a grandfather clause.

Key terms

• Grandfather clause – (from Wikipedia) “an exception that allows an old rule to continue to apply to some existing situations, when a new rule will apply to all future situations.”

  This is a key term which must be understood to interpret the meaning of Section 102(a) on page 16. Clearly the intent is to allow contracts currently in existence to continue for the length of the contract. Simply put, no one has to kill it. It can die a natural death.

• Qualified versus Non-Qualified Plan –

  A “Qualified” plan is a plan that meets specific requirements in order to receive favored status under another section of the law. In terms of health care reform, Qualified Health Benefits Plans will meet certain standards with regard to benefit levels, copayments, availability and cost.

  A “Non-Qualified” plan is a plan that is perfectly legal, but does not meet the requirements for Qualified Plans and will not be eligible for preferred treatment.

  Here is an easy example: A Qualified Health Benefits plan must have a premium rate structure that does not vary by any factors other than a small age variation ratio, area, or family enrollment. A Non-Qualified Health Benefits plan could have a different rate structure and be available for sale, but it will not receive favorable tax treatment or be considered an eligible plan for the Health Benefits Exchange.

Prohibitions and Exceptions

For every sweeping provision of a law, there is some reason to make an exception. For example, HR3200 requires that Providers may not also own hospitals. However, in rural areas where hospitals are few and far between, that provision could mean that people have to travel hundreds of miles to get to a hospital. To accommodate the situation, an exception was written (page 316) allowing providers to refer to provider owned hospitals as long as they agree to certain terms.

Again, this is standard language. Like the grandfather clause, it’s intended to preserve the status quo in situations where people would be harmed by the prohibition.

Cross-references

Any section may contain a cross-reference to another section. It’s critical that when a cross-reference exists, the reader check the referenced section for context and understanding of what the intent is. Often, cross-references are definitions which are key to understanding the intent of that particular section.

Example: On page 17, Section 102(b)(1)(A)refers to “the essential benefit package requirement under section 121.”

Section 121 begins on page 25 and very specifically outlines coverage requrements for exchange-participating and non-exchange-participating plans.

Cross-references are critical. If they’re ignored, the entire context of the section can be misconstrued.

In General

1. Context, context, context – When reading, pay attention to the section description, and be careful not to extend the meaning of any particular paragraph beyond the context of that section focus.
2. Keep notes as you read. There are lots of great PDF note-keeping tools (including Acrobat, but there are others as well). I use the bookmarking tools to annotate specific sections that either define or outline broad provisions. The advantage to taking notes is twofold. First, notes help to remember key points. Second, in a bill this large, they are top-level search hits which make it easy to get back to a section you may have left behind.
3. Understand the lingo. Legislation has a language of its own. For example, much of the law is stated in the negative, like this:

   “A health plan shall NOT be a qualified health benefits plan UNLESS it contains the following provisions…”

   That’s paraphrased, but fairly typical and accurate for this type of legislation. Beware those negative statements. I try to rephrase them in the positive to test them, so in this case, I would read it as “A health plan must contain the following provisions to be a qualified health benefits plan…”

4. Don’t get bogged down in amendments to existing law. In this bill, there are amendments to the Internal Revenue Code, Medicare laws, and other laws that touch the sides of this one. Some are key and critical, like the taxation of income above a certain threshhold. Others are amendments to ERISA, for example, and are repeated so they can be inserted into the relevant portions of the Internal Revenue Code relating to ERISA. I don’t recommend getting too bogged down there, since it’s likely to change when the House and Senate bills are reconciled and the compromise bill is reported out.

   Read for key changes and additions, because those are the heart of the bill and the heart of Congressional intent.

And of course, your questions are welcome in our comment section. If you’re reading and something doesn’t make sense, leave your question and we’ll work on getting an answer.

Disclaimer: I am not a lawyer, nor do I pretend to play one on TV, or even want to be one. However, I’ve spent over 25 years working with these laws, reading similar legislation relating to pension and profit sharing plans, and have a clear understanding of how they’re structured and how to read them.

Now…go read it (pdf). Show your representatives that if you can read the bill, they can read the bill. Ask questions, but be informed and accurate. Tossing inaccurate interpretations into the stream just weakens whatever arguments are to be made, when there are plenty of strong ones waiting for you.

The Lie

Investor’s Business Daily’s latest salvo comes in the form of an editorial claiming that private insurance is eliminated.

When we first saw the paragraph Tuesday, just after the 1,018-page document was released, we thought we surely must be misreading it. So we sought help from the House Ways and Means Committee.

It turns out we were right: The provision would indeed outlaw individual private coverage. Under the Orwellian header of “Protecting The Choice To Keep Current Coverage,” the “Limitation On New Enrollment” section of the bill clearly states:

“Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day” of the year the legislation becomes law.

So we can all keep our coverage, just as promised — with, of course, exceptions: Those who currently have private individual coverage won’t be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private carriers.

Unfortunately, IBD was just a little bit incorrect about the analysis and the reporting. I suppose, though, that characterizing it as an editorial might exempt them from actually reporting facts.

The Truth

Background: Page 16 defines what coverage will be considered “grandfathered coverage”; that is, coverage in existence today which would not be in compliance with new standards imposed by the law.

What it says: Any individual insurance policy (as opposed to a group insurance policy) that is in effect today will be permitted to remain in effect; however, any new policies issued after the law becomes effective will be required to comply with the standards set out in the section relating to policies offered via the new Health Insurance Exchange.

What it does: The purpose of the provision is to bring policy offerings into line with the minimum benefit tiers and provisions required under the new law. Here are those requirements:

1. Must offer “Basic Plan Benefits”, which means the following: No pre-existing condition exclusions, covers hospitalization, outpatient hospital and outpatient clinic services, physicians visits, supplies, equipment, prescription drugs, rehabilitative services, mental health and substance abuse treatment, preventive services, maternity, well baby and well child care, vision and dental for children under 21.
2. Has co-payments and deductibles not more than $10,000 per year, indexed for inflation.

On page 19, the bill clarifies the grandfather provision further by specifying that any individual health insurance coverage that is NOT grandfathered (e.g. products introduced after effective date of the law), will have to conform and be offered as an exchange-eligible plan.

This is all the grandfather provision does. Nothing more, nothing less. It allows existing products to die a natural death while requiring new products to conform to the basic standards. Those products are still offered by insurers. The public plan that has them all in an uproar is simply one among other offerings.

Why the lie? This provision effectively forces the insurers to sit down and craft policies that compete with each other and the public option in terms of benefits and accessibility. Recissions will be far more difficult and subject to three levels of review. Pre-existing conditions will be a dead term. All of this is great for individuals covered, but for insurers, it shuts down their gravy train. They’ll actually have to use one risk pool instead of tiered risk pools.

They don’t want to do that. They like making record profits while the rest of us are bankrupted. They understand that there will be reform; they just want it to be reform that benefits them instead of the rest of us. To that end, they recruit publications friendly to their cause like Investors’ Business Daily to publish ‘editorials’, which can then be spread via social networks and blogs to scare you into opposing ANY reform.

Now you have the facts. Straight out of the proposed legislation, from a person who has read the actual text of the legislation — all 1,018 pages of it — twice, and has a strong background in how these laws are shaped and come into being.

Do not let them scare you. Arm yourself with the facts.

The full text of the House Bill can be downloaded here. (PDF)