The House health bill (H.R. 3962) creates a new minimum federal standard benefit package that will eventually apply to nearly all health plans, and establishes a new “Health Benefits Advisory Committee”. The Committee, housed within HHS, will make detailed recommendations, which the Secretary of HHS would then impose on all private insurers and employers through regulation.

HHS would have broad, permanent authority to continually update and expand the federal benefit requirements for all private health insurance and could regulate not only specific items and services than must be covered but also the minimum frequency or duration of a required covered service and the maximum allowable patient cost sharing.

All existing employment-based health insurance coverage would have to be modified or replaced to meet the new federal benefit package by 2018. Starting in 2013, all new individual or employment-based coverage would have to conform to the federal minimum benefit rules.

Limits age rating of premiums to no more than a two to one difference between highest and lowest. Thus, a 64 year old could not be charged more than twice the premium of an 18 year old. In contrast, there is about a five to one natural difference in the consumption of medical care between a 64 year old and an 18 year old. Thus, the effect will be to significantly increase the cost of health insurance for younger adults (those in their twenties and thirties).

Gives HHS extremely vague orders to “establish a process for the annual review of increases in premiums for health insurance coverage,” and further specifies that, “the process shall require health insurers to submit a justification for any premium increases prior to implementation of the increase.” This is an open invitation to politicized federal insurance rate regulation that could result in insurers being prevented from raising rates to cover increased claims costs, potentially forcing insurers into insolvency and leaving policyholders liable for provider claims.