Health Insurance Reform
The Essential Healthcare Profit Regulation Act
Purpose
To establish a comprehensive regulatory framework for Pharmacy Benefit Managers (PBMs), Health Insurance Companies, and other Essential Healthcare Companies. The legislation will cap profit margins in these sectors, redistribute excess profits to the public, and ensure that essential healthcare services are affordable, accessible, and equitable for all Americans.
Key Provisions
1. Establishing the Designation of "Essential Healthcare Company" (EHC)
1.1. Definition: An Essential Healthcare Company (EHC) is any corporation primarily engaged in:
Pharmacy benefit management.
Manufacturing, distributing, or retailing essential medications or medical devices.
Providing health insurance plans for medical care, prescription drugs, or mental health services.
Providing healthcare services critical to public health and safety.
1.2. Eligibility: The Essential Healthcare Oversight Board (EHOB) will designate eligible companies annually. The board will evaluate companies based on their services’ essentiality, market position, and impact on public health.
2. Corporate Tax on Excessive Profits
2.1. Profit Margin Cap:
Essential Healthcare Companies (PBMs, health insurers, pharmaceutical manufacturers, and related companies) are subject to a 12% profit margin cap above total operational costs.
Health insurance companies will have a stricter cap of 5%.
Operational costs include production, administrative expenses, research and development, and direct health services.
2.2. Excess Profit Tax:
Profits exceeding the cap will be taxed at 75% for PBMs, pharmaceutical companies, and other healthcare manufacturers, and 90% for health insurance companies.
The tax revenues will be redistributed to the public through healthcare subsidies, including:
Direct healthcare assistance, such as Medicare and Medicaid expansion.
Reduction in health insurance premiums and out-of-pocket expenses.
2.3. Transparency and Reporting:
EHCs must publicly disclose financial statements, showing profit margins, cost breakdowns, and use of profits.
Detailed annual reports on their compliance with the profit cap and public health initiatives will be submitted to the Essential Healthcare Oversight Board.
3. Regulation of Pharmacy Benefit Managers (PBMs)
3.1. Rebate Transparency:
PBMs must disclose all negotiated rebates and discounts with pharmaceutical companies. At least 80% of rebates must directly benefit consumers by lowering drug costs or premiums.
3.2. Administrative Fee Limits:
PBMs’ administrative fees will be capped at 2% of total drug costs.
3.3. Prohibited Practices:
PBMs are prohibited from implementing “gag clauses” that prevent pharmacists from informing patients about cheaper alternatives.
Open competition among pharmaceutical manufacturers must be promoted to ensure fair pricing.
4. Regulation of Health Insurance Companies
4.1. Premium Rate Restrictions:
Health insurers must justify premium increases based on actual health cost inflation. Premium hikes beyond the rate of inflation will be subjected to additional public scrutiny and regulatory review by the Health Insurance Regulatory Authority (HIRA).
Premium increases above inflation will require approval by the Health Insurance Regulatory Authority and public explanation.
4.2. Essential Health Benefits:
Health insurance companies must ensure coverage includes:
Preventive care (e.g., screenings, vaccines).
Emergency services.
Prescription drugs.
Mental health care.
Chronic disease management.
5. Redistribution of Excessive Profits
5.1. Public Dividend:
Excess profits will fund an annual Healthcare Dividend for individuals below a set income threshold.
The Healthcare Dividend will subsidize premiums, reduce copays, and directly assist with the cost of essential medications.
5.2. Healthcare Infrastructure Investment:
Remaining excess profits will be reinvested in public health initiatives, such as:
Expanding rural healthcare access.
Subsidizing life-saving medications.
Supporting mental health services and preventive care programs.
6. Penalties for Noncompliance
6.1. Fines for Noncompliance:
EHCs found evading profit margin regulations or failing to meet transparency requirements will face:
Fines of up to 25% of annual revenue.
Revocation of their Essential Healthcare Company designation, making them ineligible for government contracts or programs.
6.2. Executive Accountability:
Executives knowingly involved in evading regulations will be held personally accountable, with potential bans from leading any healthcare-related company.
7. Oversight and Implementation
7.1. Essential Healthcare Oversight Board (EHOB):
A federal body consisting of healthcare economists, public health experts, and consumer advocates will oversee the designation of EHCs, set profit margin caps, and review compliance.
The EHOB will annually evaluate the essentiality of healthcare companies and ensure their adherence to the profit margin caps.
7.2. Health Insurance Regulatory Authority (HIRA):
A new federal agency tasked with regulating health insurance companies, ensuring compliance with premium rate restrictions, and overseeing health insurer operations.
HIRA will also manage the redistribution of tax revenues from excess health insurance profits to the public.
Expected Outcomes
Reduced Healthcare Costs: By capping profit margins and redistributing excessive profits, this act aims to reduce healthcare costs for individuals, making healthcare more affordable for everyone.
Improved Transparency and Accountability: With clear financial disclosure requirements, healthcare companies will be held accountable for their pricing and profit strategies.
Reinvestment in Public Health: Excess profits will be directed back into the public healthcare system, ensuring more equitable access to care, especially for underserved populations.
Enhanced Public Trust: This legislation will promote fairness and transparency within the healthcare sector, building greater public trust in healthcare companies and the industry as a whole.
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