Getting to a Public Option that Contains Costs: Negotiations, Opt-Outs and Triggers

7814.pdf. For example, a hospital system with member hospitals in several markets can negotiate from strength as a system without having excessive concentration in any individual market. A number of different plan levels would be offered within the exchange. While all would cover the same services, they would vary in the cost-sharing required of enrollees. Lower-income individuals and families would be subsidized for plans requiring lower cost-sharing than those with higher incomes. The reference premium for subsidy determination would be computed based upon the three lowest cost plans with the appropriate level of costsharing, given the income of the enrollees. Douglas W. Elmendorf, “Preliminary Analysis of the Affordable Health Care for America Act,” Letter to the Honorable Charles B. Rangel, Congressional Budget Office, October 29, 2009, http://www.cbo.gov/ ftpdocs/106xx/doc10688/hr3962Rangel.pdf. The Sustainable Growth Rate (SGR) is a statutory formula which is part of an overall system used to determine annual Medicare physician fee updates. The SGR is designed to limit aggregate Medicare spending on physician services by aligning spending with specific expenditure targets that prospectively reduce fees whenever aggregate spending exceeds those targets due to service volume growth.