Archive for November, 2009

The beginning of the end game

Tuesday, November 24th, 2009

Harry_ReidOn Saturday night Harry Reid, President Obama and the prospects for health reform got a big boost when the entire Democratic caucus in the Senate voted to begin debate. The vote reflected more than an agreement to get on with the business at hand. The bill that Majority Leader Reid released last week actually has more support in the Senate than either its HELP or Finance committee predecessors. Reid, cast in the role of King Solomon, worked on a number of contentious issues within the caucus. Reid’s bill addressed a number of priorities for the liberal wing of the party, including:

  • Covering more people than Senate Finance
  • Reducing the excise tax on high cost health plans
  • Retaining a public option
  • Generally improving affordability protections relative to the SFC proposal (with a notable exception for those with income between 133-150 percent FPL [see our House and Senate Affordability comparison chart])

At the same time, Reid tried to reflect goals of the conservatives, including:

  • Retaining the excise tax over the objections of most liberals and labor unions
  • Retaining most of the cost-containment provisions from the Finance Committee
  • Reducing the federal deficit over both a 10- and 20-year time horizon
  • Holding spending under $900 billion

[For more details on the Senate bill check out these materials from CC:
Statement on the Reid bill; Summary of bill; Affordability basics: How to Merge the House and Senate bills]

The challenge going forward will be to maintain, and perhaps expand, that 60 vote margin for final passage. Despite the Majority Leader’s tightrope walk, several issues will certainly be revisited before the debate is finished. Two of the most difficult will be:

The Public option: Several Senators, most clearly Lieberman and Lincoln, have said they won’t vote for the plan if the public option remains as is; others have suggested they have compromised as far as they are willing to, while Sen. Burris (D-IL) has already said he won’t vote for plan because it compromises too much. (Some of those expressing reservations from either the left or the right may vote for the critical procedural votes even if they don’t embrace the final bill, but Reid cannot afford to lose a single Democrat unless he gains offsetting report from Republicans, who so far have been unanimous in their opposition.)

Abortion: So far, pro-choice Senators are able to live with the language. However, several Senators on the other side, as well as the Catholic Bishops have expressed opposition. Language mirroring the Stupak provision in the House is unlikely to attract 60 votes in the Senate, but if pro-choice and anti-choice Senators cannot find an acceptable compromise, the result could be stalemate.

Checking in on the interest groups

Last week we took a look at some of the emerging issues that have to be resolved before passage of a health care overhaul. This week, we look at how some of the key interest groups are positioning themselves.

Doctors: Where’s my fix?
From the very beginning of the debate, the number one issue for organized medicine has been enacting a permanent fix to the Medicare reimbursement formula that causes physician rates to decline every year. Due to its price tag, $200 billion over 10 years, the measure has been split off from the larger reform legislation and passed the House last week. In order to secure support from deficit hawks for the fix without any revenue or cost savings offsets, the House attached the physician payment reform to a bill that would create a statutory “PAYGO” (“Pay As You Go”) requirement going forward. (Currently, PAYGO is often invoked as part of the rules governing the budget, but it is not a law.)

However, support for both the PAYGO bill and the physician payment fix is shaky in the Senate. The Senate rejected an unfunded physician payment reform measure just a month ago, and seems unlikely to revisit it, casting the fate of the payment fix into doubt. It’s unclear if this will cause physicians (or at least the AMA) to reconsider its support for reform.

Insurers: True to form
Although they stand to gain millions of new customers, and the prospect of competing with a public insurer has been greatly attenuated, insurers remain locked in an opposition stance. Apparently, nothing short of full eradication of the public option will satisfy the industry.

In addition, insurers continue to object to provisions that would limit their ability to discriminate based on age, and would reduce overpayments to Medicare Advantage plans.

And while adamant that everyone be mandated to purchase coverage, insurers have been completely silent about the adequacy of subsidies to make this requirement practical. What can you say? At least they‘re consistent.

PhRMA tries to pull a fast one (and gets away with it?)
Although they have touted their financial contribution to making reform more affordable, there may be less to PhRMA’s effort than meets the eye (or the wallet). According to a new analysis, drug makers have raised their prices far in excess of inflation this year—a move that many perceive to be an attempt to recoup a significant part of what they proposed to contribute to reform—sort of like a department store that raises prices just before announcing a sale.

The industry’s actions have provoked outrage among some consumer groups and legislators, but as one of the most vocal supporters of reform (and one of the industry groups most willing to put its money behind the reform effort with ad dollars), PhRMA and associated industries have won themselves a certain amount of goodwill in the Capitol, and it’s unclear to what extent lawmakers are willing to risk putting the drug makers’ mammoth war chest to work for the opposition by requiring a more substantial financial contribution.

Employers to Obama: Just kidding!
Last week the Business Round Table released a paper that suggested that they  could get behind “the right kind of reform”—the kind that makes steps to “bend the cost curve.” The BRT statement raised hopes that a major employer organization would get on board health reform, giving it a much-needed boost with business-friendly conservative Dems in the Senate.

This week, despite conclusions by analysts, including a McKinsey report and MIT economist Jonathan Gruber, that Reid’s legislation includes exactly the kind of changes the business group was calling for, the Roundtable has moved more firmly into the opposition camp.

The general public: Paying for keeps

Polls have consistently shown that the public is more likely to support reform if a requirement to purchase insurance is coupled with subsidies that make reform affordable. A poll released last week by the Center for Children and Families provides new data on what the public considers affordable, confirming that, at least with respect to low-income people, the House gets affordability more nearly right than the Senate. The CCF poll also shows that the public is more interested in whether reform lowers their premiums and out-of-pocket costs than they are about the overall price tag of the bill, or whether it adds to the federal deficit.

A lot of effort has gone into reassuring the public that if they like what they have, they get to keep it. But it appears that if anything, the public is concerned that if they don’t like what they have—or what they pay— reform will not do enough to help them.

But more effort should go into getting this story to the public: Both the House and Senate legislation have provisions to make care more affordable for the average person. In the short run, these include a requirement that at least 85 cents of every premium dollar goes to pay for medical care, rules that insurers must justify their rate increases, and provisions limiting out-of-pocket costs and eliminating lifetime caps. In the middle term, the “hidden tax” added to private insurance premiums that pays for uncompensated care should decline. In the long run, measures to reduce the growth rate of health care spending and improve the quality and efficiency of medical care should reduce private- as well as public- sector spending.

These provisions are not widely-known or well-understood. In fact, a slight majority expects that their own premiums will go up as a result of reform.

Most people also expect reform to kick in much faster than it will. Driven largely by cost considerations, full implementation is delayed until 2013 in the House and 2014 in the Senate.

Read Community Catalyst’ s summary of the Senate health reform bill here, and be sure to subscribe to the Health Policy Hub by email.

–Michael Miller, Director of Strategic Policy

photo: House education and labor committee at Creative Commons

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History lesson

Thursday, November 19th, 2009

Richard_Nixon_campaign_rally_1968When we talk about lessons learned, today’s health care reform efforts are often held up to the measuring stick of President Bill Clinton’s failed health reform proposal in 1993.

But an earlier national reform experience—President Richard Nixon’s attempts to pass a comprehensive health insurance plan in 1971 and again in 1974—provide an equally important cautionary tale as we reform supporters look at Majority Leader Reid’s bill today, with all its imperfections, and look at getting from here to the Rose Garden.

In 1971, Nixon came before Congress proposed a national health strategy that would have required all employers to provide employees coverage with minimum benefit standards, created subsidies for low- and middle-income families, established caps on cost-sharing for families, built state exchanges or pools for those ineligible for Medicaid or employer plans, and instituted cost containment measures. But Democrats rejected Nixon’s proposal.  It wasn’t universal health care, they said, and what we needed was universal health care.  By ’74, the common wisdom was that Watergate would sweep Nixon out of office, and the country would elect a Democratic president who would shepherd in Real Health Reform.

It’s been 35 years since Nixon proposed his Comprehensive Health Insurance Plan. Then, health care costs were just over 7 percent of the Gross Domestic Product; today, they account for over 16 percent.  In 1974, there were 25 million uninsured Americans Nixon sought to cover. Estimates suggest there are almost twice that many today.

While not perfect, Nixon’s bill is one that most any Congressional supporter of reform would call a big victory if passed today.  But it didn’t, in part because of opposition from progressives. And that opposition, so vocal then, can be heard again in today’s debate, saying this isn’t universal health care, and what we need is universal health care. And until we get that, we’ll just wait. “I would rather see us do nothing now,” former New England Journal of Medicine editor Marcia Angell wrote after the House bill came out, “and have a better chance of trying again later and then doing it right.”

But commentators like Ezra Klein have pointed out that things tend not to go like that. With each generation that passes on health reform, the vision gets smaller, and the political hurdles bigger.

“For a growing number of Americans, the cost of care is becoming prohibitive.  And even those who can afford most care may find themselves impoverished by a catastrophic medical expenditure…Things do not have to be this way. We can change these conditions–indeed, we must change them if we are to fulfill our promise as a nation. Good health care should be readily available to all of our citizens.”

That was Nixon, in 1971. His words and his health reform proposal came in the wake of the Great Society, when it was still widely accepted that government was on the side of the people.  It’s hard to imagine anyone in Republican leadership making such a promise today. With the exception of Sen. Snowe, those who lead the GOP today seem to deny, as dogma, a constructive role for government in the lives of ordinary people.

History should be corrective agent enough to show that scrapping the possible in favor of some more ideal plan at some future time is not the moral ground—it’s the opposite. Waiting means leaving millions of people at risk; people who are right now uninsured, who are unprotected by inadequate plans, or who are desperately holding onto employer coverage they risk losing in the worst jobs economy in generations.

History (and the ghost of Nixon’s health reform proposal) asks that we stay at the table and make these bills as good as possible.  But sometimes we need to remind each other of history, and how close it still is, and what is asking us to do.

–Kate Petersen, Health Policy Hub blogger

Photo credit: Wikimedia commons

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Immigration, Choice, and the Cost Containment Condundrum

Monday, November 16th, 2009

3882780399_b1fc48da7e_mThroughout the reform debate, a constellation of key issues—financing, affordability and the inclusion and design of a public insurance option—have been key focal points of discussion.  Now, as reform inches closer to the finish line, another set of issues that have always been present but have received less attention are taking new prominence.  Reproductive rights and immigration, two issues that the Obama administration and Congressional leadership were hoping to keep off the table during the health reform debate, are now at the heart of the discussion.

Concerns that the bills as written do not do enough to “bend the cost curve” are being voiced more strongly, but aggressive cost containment action risks upsetting the fragile support for reform among health-industry stakeholders.  In other corners, advocates are raising concerns that reform does not do enough to improve coverage for children, and may actually leave some children worse off.  This issue of the Insider gives an overview of each of these difficult issues, and where the debate seems to be heading.

Choice: Getting Beyond Getting to No
As the House was taking a historic vote last week to pass a major health care overhaul, a long-simmering conflict over abortion burst into the open and now complicates further action.  In order to secure a narrow victory in the House, leadership agreed to allow a vote on the Stupak amendment, which went beyond the compromise that had previously been approved by the House Energy and Commerce Committee and the Senate Finance Committee.  The Stupak amendment, named after Rep. Bart Stupak (D-MI), precludes coverage of abortions in the public insurance plan and also in any plan sold through the Exchange that receives subsidy dollars.  After intense lobbying by the U.S. Conference of Catholic Bishops and conservative Protestant groups, the amendment passed, and though pro-choice members of the House voted against it, they were left with a choice of voting for a health reform bill with Stupak, or rejecting health reform entirely.

As we know, they voted to keep health reform legislation moving forward. But as many as 40 House members have indicated that they will not vote in favor of the legislation if the same restrictive language comes back from a House-Senate conference committee.  At the same time, Rep. Stupak has warned that tinkering with the language could result in defeat of reform in the House, and Sen. Ben Nelson has announced that he wants to see similar language in the Senate bill, which is likely to complicate Majority Leader Reid’s efforts to secure 60 votes there.

But the anti-choice camp does not hold all the cards.  There is no guarantee that including Stupak-like language in the Senate wouldn’t cost as many votes as it would gain.  And if abortion foes overplay their hand and block a Senate compromise, it could force a bill to go to budget reconciliation, in which case language like Stupak’s would certainly be stricken as being non-germane (a major criteria for the budget reconciliation process).  Whether that would then lead to ultimate defeat in House or whether a bill rewritten for reconciliation would find some other way to thread the needle is a purely hypothetical question at this time, but it’s pretty clear that Stupak does not and cannot represent the last word on abortion coverage in health reform.

Bottom line: Expect a lot of conflict and an eventual, new compromise on abortion coverage to emerge from the Senate process.

The Cost Containment Conundrum
A growing chorus is emphasizing that “bending the cost curve,” not only for the public sector but for the private sector, as well, should be a central element of reform. (Notably absent from the choir is the general public, who is much more concerned about how much they have to pay out-of-pocket for premiums and co-payments than with the global cost of reform.) Two new reports cast a spotlight on this issue.

A report last week from the Business Roundtable (BRT) emphasized the potential for cost containment and held out a tantalizing carrot: major business backing for reform, which could be an important counterweight to opposition from groups such as the Chamber of Commerce and National Federation of Independent Businesses.

The politics of cost containment remain tricky. Much of the agenda advanced by the BRT, including malpractice reform and cautions about over-reliance on public sector spending cuts that could lead to cost being shifted to private payers, is likely to be warmly embraced by the health care industry.

But many proposals, such as increasing reliance on “value-based benefit design” (insurance benefits that include financial incentives not to use services considered to have little value or to not be cost-effective) and financial incentives for providers to adhere to best practice guidelines could touch off another round of controversy about “government rationing” similar to the “death panel” flap this past summer.  The report embraces the use of wellness incentives in employer health plans, but these provisions have raised concerns from many consumer advocates who worry that they are just a back door way to charge sick people more once such practices are supposedly eliminated by the proposed insurance reforms.  BRT also advocates for broader adoption of payment reductions for hospitals for preventable complications and readmissions, a recommendation the hospital industry is likely to resist.

At the same time, a new report by the CMS Office of the Actuary finds that the House legislation is unlikely to have a substantial impact on the overall growth of health spending (either positive or negative), and raises doubts about the ability of Congress to go through with proposed long term Medicare spending reductions.  The CMS Actuary’s report is already providing talking points for reform opponents, even though such opponents are also likely to fight changes that would drive costs down.

We should note that both bills out of the Senate made bigger inroads into delivery system reform than the final House bill did, and since such reforms are the biggest source of real cost containment, we anticipate the combined Senate bill will do better at bending the curve.

Bottom line: Expect “bending the curve” to play a much more prominent role in the Senate debate than it did in the House.  Look for Senate leaders to walk the tightrope by coming up with additional cost saving strategies to coax moderates on board without scaring of support from the health care industry.

Fault Lines on Immigrant Access
Immigrant rights groups have tried to keep immigration reform separate from health reform.  But after persistent attacks on immigrants in the context of health reform, coupled with responses from the Obama administration and Democratic leaders that were less vigorous and supportive than expected, many have come to feel that a more public case for health access for immigrants needs to be made.

Advocates for immigrant equality are focused on eliminating the five-year waiting period on coverage for legal immigrants in Medicaid and Medicare, preventing discrimination against legal immigrants in “mixed status” families (where some family members are citizens or legal immigrants and one or more members may lack legal authorization to be in the country), securing coverage for children regardless of their legal status, and allowing undocumented immigrants to purchase coverage with their own funds in the health insurance Exchange.  Reform opponents are likely to introduce amendments on the Senate floor to establish a five-year waiting period on subsidies for legal immigrants and to increase verification requirements in an effort to weed out any undocumented immigrants from getting coverage.

Bottom line: Expect Senate Democrats to beat back Republican attempts to add further restrictions on immigrant access.  Lifting the five-year bar on Medicaid access is a dark horse issue, but could come into play in conference committee because it saves money and conferees will be searching for adequate revenue and savings to pay for reform.

Will kids lose ground under reform?
Support for improving children’s health care is broad both within Congress and the general public, but lawmakers are struggling to figure out how to best integrate the current structure of children’s health coverage into a reformed system in a way that preserves the current benefits that children have.  The House and the Senate are taking distinctly different approaches—each of which has pros and cons—which will set up a challenging dynamic for conference committee.

In the recently passed House bill, Medicaid is expanded 150 percent of the federal poverty line and states that have Medicaid eligibility levels above this threshold will continue to cover children under Medicaid.  Once the Exchange is up and running, CHIP is eliminated and children on CHIP are transferred to the Exchange.

In contrast, in the Senate Finance proposal, Medicaid is only expanded to 133 percent FPL, but CHIP is maintained until 2019 (though the Finance proposal does not include funding for CHIP beyond 2013).  After 2019, CHIP would presumably be eliminated and CHIP kids would be moved to the Exchange.  States would also be free to roll back Medicaid coverage to the federally specified minimum.

The upside of the House approach is that it does more to preserve and expand Medicaid, the most comprehensive coverage for low-income children. When children are moved to the Exchange, they will be able to get the same coverage as their parents, and will no longer be subjected to the waiting lists and other enrollment restrictions some state CHIP programs feature.  The downside of the House approach is that even though premiums and cost-sharing are lower in the House than in the Senate, many moderate-income families could find themselves paying more and getting less for children’s coverage.  And the lack of a phase-in period for transition from CHIP to the Exchange could create confusion and gaps in coverage in the short run.

In the Senate, the current successes of CHIP would be preserved, at least in the short run, and any transition made more gradual.  On the other hand, there is no funding for the CHIP extension, which could mean another reauthorization fight in the offing, and if children are eventually moved over to the Exchange, their premiums and cost-sharing would not be as good as that offered in the House.  Additionally, the Senate bill would mean that some Medicaid children would lose eligibility and have to rely on the less comprehensive Exchange.

Bottom line: Who the heck knows?

Waiting for Harry
Although a Senate CBO score and a bill are expected any day, it’s unlikely that substantive debate will begin in the Senate before December.  While still possible for the Senate to move health reform legislation before the end of the year, it’s virtually certain that a bill will not go to the President’s desk before 2010.

–Michael Miller, Director of Strategic Policy

Photo: courtesy of ragesoss at flickr under creative commons license.

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Historic House Call

Monday, November 9th, 2009

On Saturday night, history knocked on the door of the U.S. House of Representatives and, by a slim margin, they agreed to answer.

Two-hundred nineteen Democrats and one Republican, two more than the bare minimum needed for passage, voted in favor of the Affordable Health Care for America Act.  (Read Community Catalyst’s updated summary). The vote marked the first time in 100 years of episodic efforts to provide health security to all Americans that a bill cleared the floor in either body of Congress. While there wasn’t a single person who voted for the bill who didn’t have some misgivings about some provision, the sentiment that doing nothing was not a viable option prevailed. The vote, above all, meant this: The process must move forward.

The vote was a do-or-die moment in the struggle for health reform and hundreds of groups responded by flooding the Capitol switchboard with calls. Late endorsements from AARP, the AMA and the Conference of Catholic Bishops were crucial, but dozens of state and local organizations also worked tirelessly to advance the cause of health care justice (See the Speaker’s list of endorsing organizations.) Such grassroots mobilization for health care was necessary to counter the ever-more apocalyptic tone of opponents.

The narrow victory was also a testament to the negotiating and vote-counting skills of Speaker Pelosi and Majority Leader Hoyer. Brand new Congressmen Garamendi (D-CA) and Owens (D-CA), winners of special elections only a few days ago and sworn in on Friday, provided the margin of victory. The lone Republican supporter of the bill, Rep. Ahn Cao, who won his seat in 2008 in a heavily Democratic and African American district in Louisiana against an incumbent tainted by corruption charges, provided additional (very thin) cushion.

Wedge issues threaten passage
Abortion and immigration, two emotionally-charged issues that expose deep fault lines in the American body-politic, almost derailed the reform legislation at the eleventh hour. Abortion opponents were able to force a vote on an amendment sponsored by Michigan Rep. Bart Stupak that bans coverage for abortions in the “public option” or any plan that is eligible for a federal “affordability credit.” Sixty-four Democrats voted yes on the Stupak amendment.

While many supporters of the abortion ban voted no on final passage, 37 of those yes votes (38 counting Republican Cao) were also yes votes on the bill.  It’s likely that some of those who voted for the ban would have voted yes even had the amendment lost, but it’s also clear, given the narrow margin of victory, that there were not enough votes in the House to pass a health reform bill without the restriction. The amendment was a bitter pill for pro-choice forces both in and out of Congress who nevertheless supported the bill this time in order to move the process forward.

Up until almost the last minute, organizations and members of Congress supporting equity for immigrants were bracing for a fight over a proposal to bar undocumented immigrants from purchasing health insurance through the Exchange even if they used their own money—a provision supported by the White House and included in the Senate Finance bill.  Though members of the Congressional Hispanic Caucus secured a commitment from House leadership not to include provision in the Democratic bill, there was concern that Republicans would offer the language as part of their “motion to recommit,” which does not need to be vetted by the Rules committee prior to its introduction.  Ultimately, the Republican recommittal motion focused on malpractice reform instead.

House action is far from the final word on either of these hot button issues. Both are certain to remain lightning rods during the Senate debate and conference committee deliberations.

Thank you notes

Passage of House bill provides an enormous boost of momentum to the reform effort.  Thank you for your role in this historic vote.  We know many of you reached out to your Representatives, and your voices were heard.  We appreciate your efforts to reform our heath care system.

Before activists turn their attention to the difficult job of winning passage in the Senate, one more critical task remains on the House side. It’s time to thank the members of Congress who labored for months to bring us to this point, who overcame reservations and disappointments with the bill to move the process forward, and who stood up to blistering attacks of distortion and fear-mongering to achieve this unprecedented victory.

It’s also important to thank Congressional staffers, who have been working unbelievably long hours and whose vital role in keeping elected members connected with the concerns of their constituents often goes unseen by the public.

–Michael Miller, Director of Strategic Policy

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The elephants give birth to a mouse

Friday, November 6th, 2009

At the last possible moment, House Republicans have unveiled their alternative health reform package. The proposal is a jumble of old ideas that does next to nothing to address the rising numbers of uninsured, provide health security to middle-income families, or prevent insurers from cherry-picking only healthy risk.

Republican leaders defended their proposal’s meager impact on reducing the number of uninsured by saying that it is only meant to reduce costs, but even on these terms it does less than the Affordable Health Care for America Act (the House leadership plan).

According to the nonpartisan CBO, the House Republican plan would reduce non-group premiums by about 5-8 percent. MIT health economist Jonathan Gruber recently analyzed CBO data on AHCA, and found that even for those purchasing coverage without a subsidy, the House plan would do better, reducing premiums by about 12 percent while simultaneously providing better benefits. For those eligible for subsidies, the reduction is of course much greater.

CBO also found that the Republican alternative would only cover about 3 million people—compared to 36 million covered by AHCA—and still manages to reduce the federal deficit less than AHCA does.

So minimal is the Republican plan when weighed against the challenges confronting our health care system that one analyst dubbed it “the dollar store version of health reform.”

Since the plan has no chance of passage, one has to wonder if the primary motivation for introducing it was to further delay CBO scoring of the Senate measure. By this criterion, at least, it can be judged a modest success.

–Michael Miller, Director of Strategic Policy

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Anti-trust exemption: as American as health insurance and baseball

Tuesday, November 3rd, 2009

In the U.S., only two industries are exempt from the consumer protections provided by federal anti-trust law: baseball and the health insurance industry.  These two seemingly different industries are subject to antiquated laws: in the case of health insurers, the 1945 McCarran-Ferguson Act grants this broad exemption.

A new report by the Center for American Progress (Center) urges Congress to reverse the exemptions from federal anti-trust and consumer protection laws that now insulate the health insurance industry from federal enforcement and legal challenges.   Sen. Patrick Leahy and Rep. John Conyers each filed bills to rescind the exemption; the House proposal was adopted into the health reform bill introduced last week, and the Senate bill is in play.

Without the authority for effective federal (and state) oversight, this exemption strips the regulatory framework for effective federal (and state) oversight and has quashed competition among insurers.  This causes harm to consumers, the authors write, through “supracompetitive profits,” as well as a growing uninsured class, spiraling costs, systemic fraud. They go on:

Over 47 million Americans are now uninsured, and premiums have risen over 120 percent in the past decade for those who do have coverage. Health insurers engage in an endless list of deceptive, fraudulent, and unfair practices that deny millions of consumers adequate coverage. And meanwhile, 10 of the largest health insurers saw their profits balloon from $2.4 billion in 2000 to $13 billion in 2007.”

As noted above, insurer gains have come at the expense of uninsured and underinsured consumers.  The elimination of this exemption would allow federal regulators to play hardball with the insurers and address the: “misleading and abusive conduct such as egregious pre-approval provisions, deception about scope of coverage, unjustifiably denying or reducing payments to patients and physicians, and other coercive conduct.”  If the House provision is included in health reform, health care consumers would be again protected as they are in every other industry (except for baseball, of course).

FTC at bat
The Federal Trade Commission (FTC), as the lead federal agency on fraud, should referee the health insurance markets, and it needs more support to extend consumer protections in a meaningful way. Currently, the FTC focuses on some companies that market in a fraudulent or deceptive manner,  but cannot pursue insurers due to the anti-trust law. Lacking oversight, the true actions of insurers are hidden from view from the people who purchase health plans.

According to the Center, the government, through the FTC, should target health insurers and intermediaries like pharmacy benefit managers using “a broad range of powers, including studies, workshops, policy hearings, legislative testimony, and industry conferences to better inform marketplace participants of how to properly abide by the law.”

States pinch-hitting
Some in the insurance industry have argued that state regulation of the insurance industry is sufficient, but the Center lays out the true stats.

The authors point to a striking lack of resources, for example: in four states, the insurance commissioner doubles as the fire marshal. As a result of such lack of resources, state insurance commissioners have not brought a single action against an anti-competitive product, the authors observe, and have brought  relatively few consumer protection actions.

State regulators are also hampered by the limits of their home field –  under state law, states can only effectively solve the problem for fully-insured plans within their state borders, but because of ERISA, cannot prosecute the self-funded plans that comprise 40 percent of the insurance market .

People are protected in almost every area against business collusion.  Protections should not be denied because of an antiquated law written about health insurance.

–Georgia Maheras, Prescription Access Litigation

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218, that elusive magic number

Monday, November 2nd, 2009

House prepares to bring a strong reform package to the floor
On Thursday, House leadership unveiled a strong health reform package and plans to begin debate on it late this week.  The House bill gelled in the middle of last week when leaders judged that a final push to get 218 votes for a bill that included the “robust public option”—a public insurer that would pay rates based on what Medicare pays—was going to fall short.

Instead, they put out a bill that includes a public insurance plan that would negotiate rates with providers.  The CBO projects this version would save less money, so Leadership made up for the lost savings by proposing a further expansion of Medicaid to 150 percent FPL instead of the 133 percent that cleared committee in the original bills.

Community Catalyst is strongly supportive of the House bill, which goes beyond earlier drafts in a number of respects. It includes a national insurance Exchange that also gives states the option of creating their own Exchanges, new rules that prevent insurers from denying coverage to people with pre-existing conditions or charging people more because they are sick, expands Medicaid, adds a long-term care insurance program for disabled adults, requires health plans to allow young people through age 26 to remain on their parents’ policy, and eliminates the Medicare doughnut hole by 2019, rather than 2024.

Compared to the bill taking shape in the Senate, the House bill is likely to provide better benefits, better subsidies and more progressive financing while reducing the federal deficit and still costing less than the $900 billion ceiling set by President Obama.  Compared to the Senate, the House leadership appears more willing to take on segments of the health care industry and also includes a more significant employer responsibility provision.  (As a result, it faces stiffer opposition from these interest groups, though insurers are opposing the Senate bill as well).  However, according to some analysts, the House legislation does less to reduce spending over the long run than the proposal that passed the Senate Finance Committee.

While the House bill represents a huge step toward quality affordable health care for all, it includes a couple of notable weaknesses. The bill bars most workers who have employer-sponsored insurance from receiving subsidies in the health insurance Exchange.  Instead, workers would be required to take up their employer offer of coverage unless its cost exceeds 12 percent of their income, a requirement that would be too burdensome for low-wage workers.  A better approach would be to exempt workers from the mandate requirement on a sliding scale, as Massachusetts does.

A second problem is that the House legislation assumes that coverage is “always affordable” for people whose income exceeds 400 percent of the federal poverty line.  This provision would be burdensome, especially for older adults with income just above the cut-off point for subsidies.  Although the bill limits premium variation based on age, an older person could still pay twice as much as young adult, leaving them with a very substantial premium liability. Establishing a ceiling on how much people could be required to pay for coverage, regardless of income, would remedy this problem.

The House bill also eliminates the Children’s Health Insurance Program, known as CHIP, and assumes that children who are not Medicaid eligible will get their coverage through employer plans or through the Exchange.

There a number of potential benefits to moving children off of CHIP, not least of which is moving away from a block grant program that gives states the ability to offer relatively limited coverage (flexibility that states have not generally utilized to date) and instead give children a federal guarantee of coverage.

But while under law, CHIP plans may be limited, in practice most states have provided kids with comprehensive coverage.  As a result, children transferring from CHIP to Exchange coverage could see their benefits reduced and their costs increase.   Preserving CHIIP as a program that provided additional benefits and cost-sharing protections for children in families above the income eligibility threshold for Medicaid could help ensure that children get the health care they need.

For more details on the House bill see this updated Community Catalyst summary and discussion.

218, that elusive magic number
As the House prepares for floor action as soon as this week, several hurdles to passage still stand.  Here are the three main sticking points:.

•    Abortion
A number of House Democrats, led by Michigan Representative Bart Stupak, want to have a vote on language that would preclude plans that receive federal subsidies from including abortion coverage.  The current language in the House bill separates out the cost of abortion coverage from a benefits package, and requires the value of subsidies to be calculated without it. But Stupak wants a stricter prohibition on abortion coverage and claims to have the support of 40 House Democrats, which could be enough to block reform if they do not get their requested vote.

•    Immigrant Coverage
A debate is simmering within the House about whether to adopt a provision, favored by President Obama, that would prohibit undocumented immigrants from buying insurance coverage through the Exchange, even with their own money.  Many progressives, especially members of the Congressional Hispanic Caucus, are concerned about the lack of equal treatment for legal immigrants.  Advocates and lawmakers are now contemplating whether to push for an amendment that would give states the option to receive federal matching funds to cover certain legal immigrants through Medicaid.

•    Public Option
While the House leadership believes they lack the votes for a public option tied to Medicare rates, some progressives still want a chance to vote on that amendment and may block action if they don’t get it.

All of these issues could be addressed in a “manager’s amendment” or in the rule that will govern debate in the House later this week.

Affordability woes in the Senate
In case you missed it in our Friday blog post, the Senate is still struggling with the affordability issue.

While sources on the Hill confirm that the Senate is trying to make badly-needed affordability improvements for moderate-income households, they are trying to do it while still reducing fees paid by medical device manufacturers and an excise tax on high-cost insurance plans.  As a result, the best idea the Senate appears able to come up with at this point is to reduce premiums for moderate-income households by raising them for those at the bottom (We compared this proposal with the SFC bill and House leadership plan here.)

Timetable Update
House: The House plans to start floor debate late this week and to finish no later than Thanksgiving.

Senate: A backlog of work at CBO has slowed progress on the Senate side.  Given the slower pace of debate in the Senate, and with Veteran’s Day and Thanksgiving on the holiday horizon, the Senate is unlikely finish debate this month, though there is still a good chance they will finish before Christmas.  That means though, that resolving the differences between the House and the Senate will likely extend into next year.

Shameless plug department

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