Archive for October, 2009

Is this the best we can do for low-income families?

Friday, October 30th, 2009

While most eyes have shifted to the House, with the release yesterday of their bill, persistent rumors swirl around the Senate that the combination of the HELP and Senate Finance bill will actually offer less financial protection for the lowest income workers than either of the original bills.

Here’s the story: After months of laborious negotiations and weeks of debate, the Senate Finance Committee passed its version of health reform on Oct. 13.  The Finance proposal differed from the bills passed by all of the other committees in numerous ways; one of the most striking was how much less financial protection it offered to low- and moderate-income people who would be required to purchase health insurance.  Premiums under the Finance proposal were higher and benefits lower than in either the Senate HELP or the House proposal.

As Senate leaders work to merge the HELP and Finance proposal into a single bill, they are trying to reduce some of the premiums and, according to a paper by the Center on Budget and Policy Priorities and discussions Community Catalyst has had with a number of Hill staff, the focus is on reductions for people between 200-400 percent FPL—an admirable undertaking that we fully support.

However, in order to pay for those increased premium subsidies, Senate leaders are considering reducing premium subsidies for the lowest income households by as much as 50 percent more than the already low level in the Finance proposal.  If this proposal is adopted, many low-income households will have a difficult time meeting their premium obligations, or could also be faced with financial penalties for failing to purchase health insurance.  Rather than being helped by reform, they will be hurt.

Is taking subsidies away from low-wage workers really the only way the Senate can think of to finance necessary improvements in subsidies for those with slightly higher incomes?  David Stockman, Ronald Reagan’s first budget director, famously noted that once in Washington he found it was “easier to curtail weak claimants than weak claims.”  That adage appears to be alive and well in Washington today, as Senate leaders seem more willing to impose an unmanageable burden on low-wage workers than to explore progressive taxation or to wring a little more waste out of the health care industry, as their colleagues did in the House.

The Senate bill is still an enormous improvement from where we currently are and the process needs to continue to move forward.

As for subsidies, it is not too late for the Senate to change course, and for a bill to emerge that will improve affordability for both low- and moderate-income households.  But it will only happen if people raise their voices and demand it.

–Michael Miller, Director of Strategic Policy

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Massachusetts as Model: the reasons you haven’t heard

Tuesday, October 27th, 2009

Over at the Robert Wood Johnson Foundation blog, Community Catalyst director Robert Restuccia talks about some of the less obvious reasons Massachusetts is an important model for national health reform:

Massachusetts as model — it’s a common claim in health care policy circles. With the lowest rate of uninsured residents in the nation – just 2.7 percent – it’s clear to those watching that Massachusetts’s mix of Medicaid expansions, sliding scale subsidies, private insurance reforms and individual mandate are working to expand coverage and have served as the template for national reform.

But there are other, less obvious lessons from the Massachusetts experience that have not really filtered into the political and policy discourse in Washington.

Among them? Putting coverage expansion before cost containment. Find out what the rest are here.

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Public option revival

Monday, October 26th, 2009

What’s Goin’ On: Untangling the debate on public option
The big story of the week was undoubtedly the political resurgence and maneuvering around the public option – a resurgence we’re glad to see. But with legislative leaders keeping their cards close to the vest and pundits spinning the news based on what they hope is true, it is hard to untangle what is really going on (Good mainstream media coverage in the New York Times and the Washington Post.)

So here’s a special Insider devoted (mostly) to trying to get the story right. (With the caveat that it could change by the time you read this).

Housewarming
There are over 200 votes for the “robust” public option, the one with rates based on Medicare, but the magic number is 218 and it’s still not nailed down. House leadership is trying both to round up a few more votes and to test out other possibilities. But whether a different approach, e.g. a public option with negotiated rates, does any better is open to question, since such a proposal may lose more support from progressives than it gains from more conservative members of the caucus.

The upshot? Progressives need to continue their big push this week to find those last few votes.

The revival of public option in the Senate
Ever since polling revealed that a public option wasn’t a deal breaker to members of the Blue Dog caucus, the question in the House has been not whether a public option would be included, but what version.

It’s a different story in the Senate.  Olympia Snowe’s vote in Finance initially seemed to seal the deal against inclusion of a public option in the Senate, but a number of factors have kept it alive.  Persistence from both organizing groups such as Health Care for America Now, among others, and champions in the Senate such as Sen. Schumer, who has worked to find a version of public option that would secure support from conservatives, has been instrumental.

The self-inflicted wounds of the insurance industry also factored in.  By squarely attacking the Senate Finance proposal—the most industry-friendly of any of the bills on the table—the insurers convinced some members that they were trying to kill health reform, and no accommodation would be possible.  Another factor that has flown mostly below the radar is the ripple effect from the President’s insistence that a bill clock in at under $900 billion. And here’s where the public option and affordability story lines start to run together.

While the SFC proposal was scored under $900 billion, the relatively skimpy benefits and high premiums were concerning to the Democratic caucus and many reform supporters.   Without adequate affordability provisions, the underlying structure of health reform—insurance reform coupled with an individual mandate—is unworkable.

Fixing the affordability problem requires not only additional revenue, but cost-effectiveness measures in order to create enough “head room” under the $900 billion ceiling to find that revenue, and there, the public option is an important part of the solution.  By reducing the price-tag of reform, inclusion of a public option becomes a “two-fer”—a proposal that enjoys broad support within the caucus and that also addresses cost issues.

Senate Democratic leaders seem to be leaning toward inclusion of a public option that gives states the ability to opt out.  This way, leaders give Democratic conservatives a chance to vote to strip the provision but protect it by setting up the vote so that 60 votes are required to delete it instead of add it.  (It’s a strategy Ezra Klein says made the White House and Sens. Baucus and Snowe none too happy.)

This strategy works if and only if all the members of the Democratic caucus agree to at least stick with the party to break a filibuster – even if they vote no on the underlying bill.

That’s because they will almost certainly lose Sen.Snowe (and fail to pick up Sen. Collins) with this strategy.  As the failed cloture vote on a permanent fix for Medicare physician fees last week demonstrated, there is no guarantee that the Senate leadership can hold all 60 members. If a cloture vote on a bill with a public option fails, leadership might have to go back to a trigger or some other option, but only as a last resort if all else fails.

Read the rest of the Health Reform Insider on the Community Catalyst National Reform page, or subscribe to the Health Policy Hub by email to the get the Insider each week.

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Too bad they can’t vote

Monday, October 19th, 2009

A substantial and growing cadre of prominent Republicans have come out in favor of health reform recently. A partial list: former majority leaders Bob Dole, Howard Baker and Bill Frist (who this week disputed critics who claimed that Obama was promoting socialized medicine), California Governor Schwarzenegger, former HHS Secretary Tommy Thompson, and former CMS chief Mark McClellan.  Not exactly a fringe element.

Yet there’s been no sign that these endorsements will move Republicans in Congress.  Maybe it’s something in the water in Washington, or maybe it’s just an indication of the extent of ideological or simply partisan polarization that so few sitting Republicans are willing to join party elder-statesmen in moving reform forward.  Right now, the calculus in the Republican caucus seems firmly set on continuing its near-unanimous opposition to reform – and carrying it into the 2010 elections and beyond (just in case you thought this issue was going away after passage.)

The Ladies from Maine Part I: Snowe Fall
Sen. Olympia Snowe’s aye vote on the Finance Committee reform bill ended intense speculation over which way the senior Senator from Maine would go.  To many, her vote suggests that she agrees with assessments that a yes vote in Finance gives her more leverage over the process going forward than continuing to dangle the carrot of her possible future support.  Snowe is now positioned to limit the movement of the bill to the left as it’s combined with the more liberal HELP bill, to be a key decision-maker on floor amendments, and perhaps even to have a formal role in conference committee.

In the eyes of the beholder
What is it that Sen. Snowe wants as the process moves forward?  One priority is preventing the inclusion of a public option except as a fallback.  A second Snowe priority is affordability.  At the same time, she has opposed most of the options on the table advanced to make better subsidies available.

A contradiction?  Not necessarily.  Affordability in Sen. Snowe’s eyes seems to be more about slimming down the coverage people would receive rather than making subsidies better—an idea that is getting some support in Democratic quarters, as well, even though the Finance bill already offers much less generous coverage than other proposals, particularly for low-wage workers.  Common Sense Affordability Protections, a paper released today by Community Catalyst and PICO, highlights the problems for low-income people in the Finance proposal and makes recommendations for how to fix them.

The Ladies from Maine Part 2: As Snowe goes so goes Collins?
Late last week, Sen. Susan Collins (R-ME) indicated her openness to supporting reform.  This is welcome news in some quarters because of the challenge of getting 60 votes even with support from Sen. Snowe.  On the other hand, Collins’ statement triggers some alarm bells.

The concern she voiced over potential cuts to Medicare benefits (and misrepresenting what is in the bill) should be read as coded opposition to eliminating current overpayments to Medicare Advantage plans and other efforts to reduce Medicare spending  — measures that form an important part of the financing of the Senate bill.

This wouldn’t be such a problem if the Senate weren’t already having such a difficult time agreeing on revenue options.

But attacks on the current financing mix continue, especially from medical device manufacturers concerned about new fees they would have to pay, and from unions and progressives unhappy with the proposed tax on insurers who offer high-cost plans.  This tax is almost certain to be passed on to enrollees and would fall disproportionately on states with high health care costs and firms with older workers.  Senate negotiators are working to modify both of these revenue sources but the struggle will be not to lose revenue in the process.

Read the rest of the Health Reform Insider here.

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Last week, on ‘As the Public Option Turns’

Tuesday, October 13th, 2009

Insurance Industry Takes the Gloves Off
While the insurance industry has been using “guerrilla” tactics behind the scenes to undermine aspects of health reform all along – opposing strong Exchanges, a decent minimum benefit standard and eliminating discrimination based on age and health status –  a report commissioned (and heavily advertised) by the insurance industry and released late Sunday night that attacks the Senate Finance proposal is the first public shot across the bow against reform.

The report, produced by PricewaterhouseCoopers, is problematic for a several reasons—it doesn’t make an “apples to apples” comparisons, it looks only at selected parts of the bill, not the bill in total, and it makes unjustified assumptions about some of the provisions.

For example, the report ignores all of the cost-containment provisions, the positive effect on the risk pool of providing subsidies or the potential for administrative savings through benefit standardization.  And it is, to say the least, disingenuous for the industry to oppose provisions that would lead to more effective cost-containment, such as a public option or an Exchange that can negotiate actively with insurers, and then complain that cost-containment efforts do not go far enough.  Hopefully, lawmakers will see through the report’s flaws and not make concessions to the industry that has finally stopped playing nice.

Food Fight
Insurers aren’t the only interest group turning up the volume as reform lurches forward.  Watch for worried governors to further press their case for Medicaid help.  Govs got the Finance Committee to move from temporary to permanent enhanced federal matching funds for the expansion population, but many remain nervous about new costs their states would have to shoulder under reform.  Governors like Schwarzenegger, who represent a much-sought-after bipartisan voice could be particularly influential, and some Senators have already committed themselves to finding extra help for the states.  Another group turning up the heat is the hospitals, upset that SFC would leave them with a substantial uncompensated care burden while slashing federal funding to hospitals that provide that care.

What this also means is that we can expect a fierce food fight for the remaining $70 billion in “headroom” – the difference between what President Obama said he would support and the CBO score of the Senate Finance bill.  Additional affordability improvements are one way that space could be filled (if revenue or savings measures can be agreed to), but others include the above-mentioned additional help for states, or rolling back fees on health industry stakeholders that are in the SFC proposal now and that have provoked vocal opposition from Senators in both parties.

House inching closer
The House continues to grapple with divisions within the Democratic caucus, aiming to send a combined House bill to CBO this week.  The key divisions remain over the revenue provisions and the public option.  House leaders are likely to scale back the surtax on wealthy households, raising the threshold to perhaps as high as $1 million, but they have yet to agree on how they would plug the resulting revenue hole.  Don’t look for a bill to hit the House floor for another couple of weeks.

Meanwhile, join us for another installment of:

As the Public Option Turns
The ongoing debate over public options sometimes feels like soap opera – lots of drama but not much plot advancement.

Previously on As the Public Option Turns, we found the importance of the issue elevated by a White House commitment to keep cost of reform under $900 billion.  That means Congress must find ways to make reform more cost effective unless they are willing to sacrifice affordability.

We now join our hero, Public Option, in the House, where the latest whip count shows the House Democratic caucus overwhelmingly in favor of a strong public option with rates based on Medicare payments, but close doesn’t count.  They have to get to 217 votes for passage and it’s those last few that will be the hardest to lock down.

While back in the Senate…
Last week Sen. Carper offered a proposal that would allow states to opt out of the public option.  This week, Sen. Schumer is floating a counterproposal which would make inclusion of the public option the default position but allow states opt out instead of having to opt in.  Schumer is also actively working to defang the Republicans’ number one emerging attack line:  that the individual mandate non-compliance penalties constitute a tax increase on the middle class.  Schumer proposes to blunt that attack by changing the penalty from a fee paid to government to a required contribution that an individual could use to purchase insurance at a later date.

In a separate but related plot line, another public insurance plan is getting a second look.  In their search for more a more cost-effective proposal, House leaders are considering a further Medicaid expansion, up to 150 percent of the FPL.  Even if the federal government paid 100 percent of the cost, expanding Medicaid is more cost-effective than putting people in private plans.

It’s Beginning to Look a Lot Like Christmas (or later)
The goal in the Senate is to have a bill on the floor next week, but it is not certain Majority Leader Reid will be able to complete the combination of the HELP and Senate Finance bills as fast as originally thought. Sen. Reid has indicated that he would like a CBO score on the blended bill, which could also slow things down depending on how extensive changes are. (It’s worth noting that work to combine the bills started even before the SFC final vote).

Add on three weeks of floor debate (maybe even more to account for procedural delays) and, assuming House can match the generally more slow-moving Senate, bills could clear the floor by Thanksgiving.  (That assumes the Senate remains on track for a 60-vote strategy and doesn’t have to pull the bill off the floor to adjust it for Budget Reconciliation).

This leaves only a few weeks before Christmas for what promises to be a protracted and challenging conference committee and final votes in each chamber. As an example of just one of those contentious issues that will have to be resolved in conference, more than half of House Democrats have signed a letter opposing the primary financing source in the Senate proposal.  With multiple and similarly thorny issues to resolve, don’t be surprised if health reform spills over into the new year.

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G-Force

Friday, October 9th, 2009

So now we wait.

The hurry-up-and-wait that has characterized Congress’s movement on health reform is par for the legislative course, especially a bill such as important and many-parted as health reform. But much of that waiting wasn’t on deliberations of the full committee or mark ups but watching the picky-eater-at-dinnertime progress made by the Group of Six, a set of negotiators Sen. Max Baucus handpicked and strove to keep at the table. The Senators represented a lot of wide open spaces — Montana, Iowa, Wyoming, North Dakota, Maine and New Mexico – but not very many people.  8.4 million, to be more precise, or about pi percent of the U.S. population.

As the summer turned to fall, the Group of Six came to give new meaning to “bipartisanship,” and left the committee scrambling to nip and tuck the bill in order to wring from it some small measure of Republican support.  This week, there’s news that Senate Majority Leader Harry Reid is handpicking a smaller team from the Finance and HELP committees to merge the two Senate bills. So far, he’s up to two. Part of this is just the nature of the law-making process – bills get merged in rooms with a certain number of people in them, as Jonathan Chait at The Treatment pointed out.  But from a straight representative viewpoint, a table for three or four or six from land-rich, people-scarce parts of the country necessarily excludes the interests of the majority of the U.S.

The self-winnowing Group of Six experience stands in stark contrast to another big news-making decision made last month in Pittsburgh, when the informal economic group the G-8 decided to handoff its power to the G-20. Such a move acknowledges new global economic realities: the countries in the G-8 (Canada, France, Germany, Italy, Japan, Russia, U.K., and U.S.) represent about 14 percent of the world population, while those in the G-20 represent two-thirds of the world’s people and 85 percent of its gross national product.

I admit that population and economic production are just two of many, many metrics, and do not suggest that world economic decisions, or health care ones, must be closely-tied to some population algorithm. That’s not how things work. But symbolically speaking, expanding and sharing the decision-making power respects certain global realities, can build public buy-in and is, if incompletely, more democratic.  As with many acts of small-d democratization, having more people at the table makes the group more likely to make decisions that are good for more people.

Sure, it’s utilitarian of me to say so, but health reform, too, should be based on decisions that do more good for more people. But just by the numbers, that’s not how it has played out lately. You have to wonder if the unrepresentative nature of the process made it easier for the final product out of Senate Finance Committee to be tilted more toward the needs of special interests than to those of many low- and moderate-income people, especially the uninsured.

–Kate Petersen, Health Policy Hub blogger

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The Great Consensus Hunt: Search for a public option

Tuesday, October 6th, 2009

Despite the support of many Senators, led by Sens. Rockefeller and Schumer, the effort to add a public option to the Senate Finance bill fell short.  Significant opposition from conservative Democrats both on and off the committee makes it hard to see how a public option as currently formulated can pass the Senate as long as 60 votes are needed.

Nonetheless, the strong showing in the Finance Committee has led to an ongoing search for a formulation that will satisfy both the left and right in the party.  One possibility is that conservative Democrats would agree to vote with the majority of Democrats to break a Republican filibuster, but would still be given a chance to vote against the public option.  Another approach is to find one or more new approaches that can satisfy both wings of the party.  With that end in mind, both Sens. Cantwell (D-WA) and Carper (D-DE) have offered new ideas for consideration. (See below).

Cantwell: harnessing state purchasing power, but consumer protections needed

An adopted amendment sponsored by Sen. Cantwell (D-WA) would allow states to negotiate for coverage on behalf of low-income enrollees instead of having them buy coverage through the Exchange.  Presumably states would contract with Medicaid managed care organizations (MCOs) (at rates higher than Medicaid, but lower than commercial insurance) or directly with organized networks of providers.  The proposal is similar in structure to the Washington Basic Health Plan and, in some respects, to Commonwealth Care in Massachusetts.

While it would likely put some downward pressure on insurance rates, the Cantwell amendment has some significant weaknesses.  First, unlike a Medicaid waiver, which must be budget neutral, the federal government gets a cut off the top.  States would receive only 85 percent of the money that would otherwise be available for subsidies for low-income people.  If a state chose this option, savings would accrue automatically to the federal government while the state would be at financial risk for providing a benefit package equivalent to what would have been available in the Exchange, but with less money.  This could give states incentives to skimp on coverage for enrollees.

To the extent states are able to negotiate additional savings, nothing in Cantwell’s proposal requires that any portion of those savings be used to reduce premiums, cost-sharing or improve benefits for the low-income enrollees who would be required to participate in the plan.  Finally, the process for building the program at the state level and room for consumer input there are unclear.  In order to make this proposal work for low-income enrollees:

•    States should get 100 percent of tax credit, maintaining budget neutrality to the federal government
•    Savings should be required to be reinvested in better coverage for program participants
•    Access to providers in the “basic health plan” should be at least as good as in Exchange plans for higher-income enrollees
•    States would need to ensure that the Basic Health Plan was coordinated with both Medicaid and the Exchange to ensure seamless coverage for enrollees
•    Rules should be put in place to make the program development transparent at the state level and ensure opportunity for public input.

Carper: State flexibility to create a public option

Another idea making the rounds, but not included in the SFC bill, is a proposal offered by Sen. Carper as an alternative to forming insurance co-ops.  It would allow states to offer either a public option or open the state employee program to the Exchange population.  While this would give some states an opportunity to experiment with a public option, Sen. Carper’s proposal gives governors a veto that cannot be over-ridden.  a public plan would be available only if a governor and the legislature agree. (Presumably, though it’s not clearly-worded in the proposal, the co-op would be put in place in the absence of an agreement).  As with the Cantwell amendment, the Carper proposal has some merit, but it doesn’t make a public option available uniformly across the country.  As a result, it is likely to get a cold reception from advocates of the public option, both in and outside Congress.

But a proposal like Sen. Carper’s, if it can pass the Senate, does have the advantage of “raising the floor” in eventual negotiations with the House.  In the meantime, Senators and advocacy groups will continue their efforts to secure as much support as possible for the public option in the Senate.  Even if it does not pass, getting a yes vote from over 50 Democrats will strengthen the public option’s prospects in House-Senate negotiations.

It’s Snowe-time

As we’ve observed here before, Sen. Snowe has been the most closely-watched member of the Senate.  Despite all the tea-leaf reading of her committee votes, her position on the SFC bill is still unclear.  But the time for Sen. Snowe to either fish or cut bait is rapidly approaching.

If she votes with the rest of the Republicans against the SFC bill, it will be very hard to convince other members of the Democratic caucus, already frustrated by long months fruitlessly courting the GOP, that they should continue to offer concessions with no assurance of support.  On the other hand, if she votes for the bill coming out of SFC there will continue to be substantial deference to her views, both during the merger with HELP and beyond.

A closer look at the age-rating debate

Sen. Baucus revised his original proposal to narrow the permissible variation in premiums from 5:1 to 4:1 based on age – a move in the right direction though such a wide rating band will still leave insurance unaffordable for many, and should be brought in line with the 2:1 rating proposed in the Senate HELP and House bills. But even 4:1 drew a sharply-worded letter from the insurance industry claiming that it would cause young people to drop out of the risk pool and make coverage more expensive overall. It’s worth reality-testing this common argument against tight rate bands.

The experience that insurers draw on to support their claim is what happened to costs in some states with guaranteed issue and community rating.  But these states were operating without the benefit of income-related subsidies or an individual responsibility requirement – both components of national reform.  With reform, age will be irrelevant for most people with income below 400 percent of the federal poverty line (FPL) buying non-group insurance; They will pay an income-related premium regardless of age.  Only above the subsidy line does age become a meaningful factor, and there the difference is stark.

A 25-year-old making $45,000 buying insurance with a 2:1 rate band (as in the House and HELP bills) would pay about 6.75 percent of her income for coverage).  A 64-year-old with the same income would have to pay about 13.5 percent of hers.  If the age bands remain at 4:1 as Senate Finance proposes, the 25-year-old will be able to get insurance for less than 5 percent of her income, but the 64-year-old would have to pay 19 percent of her income just for premiums.

So despite the insurers’ claims, a 2:1 age band will not make insurance prohibitively expensive for young people, but failing to reduce age-related discrimination more than the Senate Finance bill has so far will leave older adults without affordable options.

House Update: tough sledding ahead

During the Senate Finance mark up, the House has been working out of spotlight, a lack of attention that has probably been welcome to House leaders, who face major challenges to putting together final version of bill.  A debate reminiscent of the Energy and Commerce committee one in July is going on, and has so far kept House leaders from settling on a public option approach.  House Democrats can only lose 39 votes and still retain a majority. More than that have already committed to oppose a plan that does not tie reimbursement in the public option to Medicare rates, but it’s not clear that there are enough votes from Blue Dogs and other more conservative members to pass such a strong public option.

Several other contentious issues remain unresolved, especially how the House will lower the price tag of their bill without gutting affordability protections, and how to resolve concerns about the financing provisions.  A bill isn’t expected on the floor for at least two weeks (although once a bill does go to the floor, the House can move much more quickly than the Senate).

(from the Health Reform Insider, which you can read in full here).

–Michael Miller, Director of Strategic Policy

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