Posts Tagged ‘CBO’

The Insider: Last minute collapse on doc payments, Medicaid and COBRA subsidies a bad omen?

Tuesday, June 1st, 2010

In the lead-up to passing the health reform law, Congress debated what to do about the Medicare physician payment problem.  Under current law, the formula for setting Medicare physician payment rates, known as the Sustainable Growth Rate, or SGR, will impose large and escalating annual cuts on physician reimbursement.  The SGR issue was ultimately separated out from health care reform, and doctors were assured that the issue would be addressed before the scheduled payment cut June 1.  Physicians pressed for a permanent solution to the problem but because of the price tag, Congress scaled back, first to a 5-year patch and then to a 19-month fix.  The scaled-back SGR patch passed the House just before the Memorial Day recess, but without enough time for the Senate to act.  Theoretically that means that a Medicare payment cut of over 20 percent kicks in today, but CMS is holding onto claims for a couple of weeks assuming that when the Senate comes back they will enact a retroactive payment increase.

While the physician payment fix is likely to get sorted out, two other critical provisions face a more uncertain future.  With unemployment still high and state budgets still in trouble, House and Senate leaders attempted to extend enhanced federal Medicaid payments to states through the end of state fiscal year 2011 (the enhanced payments are currently scheduled to end halfway through the year) and to continue the subsidy of COBRA premiums created by ARRA last year.  But in what’s being described as victory for House fiscal conservatives, both of these measures were struck from the House legislation late last week, and whether the Senate will restore them remains uncertain.  Roughly 20 states are already counting on the extra Medicaid help in their state budgets.

However, that victory may prove short-lived. Both the COBRA and Medicaid provisions themselves are popular with core Democratic constituencies, and it’s entirely possible that the Democratic Blue Dogs who have drawn a line in the sand in the name of controlling federal spending will be punished at the polls, not rewarded, if the Medicaid and COBRA funding is not restored. They could lose support from the Democratic base without picking up any offsetting support from more conservative voters.

If funding is not restored there are several implications that go beyond politics.  The first is harm these cuts do to low- and moderate-income families who will lose coverage or services as a result. Second, the loss of COBRA subsidies is a blow to the drive to provide health security for all, while the loss of Medicaid funding will certainly turn up the heat on the already charged debate over the role of Medicaid in reform.  Finally, if there is a more conservative Congress in 2011 as anticipated, future debates over federal health care funding and implementation could become similarly difficult, with Congress unable to agree on funding for provisions in PPACA that are authorized but lack an appropriation.

The immediate implication for health care reform advocates is that we need to redouble our efforts to persuade the Senate to revive the COBRA and Medicaid funding.  It’s time to step in to keep reform on the right track.

More on Living in Chicken Little Land

You know it’s Chicken Little time when people can (and do) go on about how awful health reform is without any regard to the available facts.

Exhibit A:  Public opinion. The most recent Kaiser tracking poll (pdf) shows that the top concerns opponents have about health care reform is that it will increase health care spending and is not paid for.

Both the Congressional Budget Office and the CMS Office of the Actuary have refuted these claims in the past.  CBO has found that health reform will reduce the deficit (pdf) while the CMS actuary projects that reform will provide coverage to over 30 million people with a negligible increase in costs.  Recently, a Commonwealth Fund/Center American Progress analysis has suggested that both CBO and CMS are being too conservative in their projections.  Essentially both agencies assume no savings at all from efficiency gains, quality improvements and delivery system changes–sources that could, by moderate estimates, generate a potential $600 billion savings over 10 years.

Exhibit B: state government.  Numerous states have vociferously complained about the burden the Medicaid expansion, a core component of health reform, will impose on them; many going so far as to file a lawsuit to block the expansion.

The facts? A new paper released by the Kaiser Commission and the Urban Institute tells a different story (pdf).  The study shows that on average health reform will add only 1.4 percent to state Medicaid spending between now and 2019.  This is very similar to the 1.25 percent estimate developed by the Center on Budget and Policy Priorities.  And neither of these forecasts take into account savings to states from changes in the delivery system or from reductions in spending on services that are now 100 percent state funded but will be covered by Medicaid in the future.  Although state by state estimates vary, in no state does the federal government contribute less than 94 percent of the cost of the expansion.

Unfortunately, it isn’t much use telling the truth to people whose minds are already made up. Facts don’t matter to Chicken Little, who gets all his information from the Fox (news).  As we noted in the last post, the only thing that will persuade these folks is when the sky doesn’t fall in 2014 and, at least for some, they start receiving benefits under the law.  Then they’ll probably join the “keep government out of my Medicare” crowd.

DoJ presents its case
The Department of Justice has, in several legal briefs, laid out its basic arguments against the lawsuits seeking to undermine health reform.  Here’s a CliffsNotes version of the arguments:

•    States have no standing relative to the individual coverage requirement, which applies to individuals, not states (duh).
•    There is no need to block the law from going forward now since there is no possible injury until April 2015, when penalties for failure to purchase coverage would be due.
•    Individuals who now claim the law would require them to purchase coverage can’t know their circumstances in 2014, so the “injury” is purely speculative.
•    State residents cannot vote to exempt themselves from federal law they don’t happen to like.
•    The minimum coverage requirement is a reasonable part of the regulatory scheme that governs economic activity related to health care and health insurance, and thus falls within the Commerce Clause,
•    Tax penalties associated with the requirement to purchase coverage fall within Congress’ power to tax and spend for the general welfare.

Call it what it is—then change course

When responding to repeal proponents it’s important to:
a) Call the attacks what they are: an attempt to preserve an unsustainable status quo that leaves millions without coverage and millions more who have coverage at risk of financial ruin.

b) Turn to the benefits of the law—reform will:
•    Provide security to millions of working Americans
•    Guarantee people access to the same plans as members of Congress
•    Help women, children and people with serious medical conditions get more affordable and more secure coverage
•    Strengthen oversight of insurance premiums and help people get better value for their premium dollar

–Michael Miller, director of strategic policy

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Land Ho!

Monday, March 15th, 2010

After a stormy voyage of more than a year, this Monday morning finds the good ship health reform within sight of a final vote. The tentative timetable has a CBO score out today or tomorrow, Rules Committee action on Wednesday and a vote before the end of the week.

Our understanding is that House leaders are leaning toward a single vote on the Obama fixes that will contain a clause passing the Senate bill passed upon passage of the amendments. That way, House members who are unhappy with the Senate bill will never actually have to vote on it. We do not expect House leadership to wait for all the votes to be locked down before going to the floor, but instead think they will schedule the vote once they are close and try to round up the last few yeses as the debate and vote are happening.

Deconstructing the Opposition Strategy: Be Very Afraid

The Republicans’ strategy at this point boils down to trying to scare the House Democrats into voting no. Their two main lines of attack are:

  1. The Senate won’t pass the fix-it bill, leaving the House stuck with the Senate bill.
  2. It will mean electoral trouble for Democrats in the fall.

Let’s break down each argument:

The first argument has shifted in recent weeks. Originally, the Republicans tried to play on the institutional distrust between House and Senate, suggesting that if House members “took the plunge,” Senate Democrats would leave them high and dry. But as more and more Senate Democrats committed to voting yes on a package of amendments (at least the necessary 50 have done so) the power of this scare tactic has waned, and so Republicans now threaten instead to gum up the works, making passage as hard as possible.

As we observed before, the bill that comes to the Senate will be small and will contain things that are easy to support—e.g. closing the Medicare doughnut hole, increasing federal funding for Medicaid, taking out special deals. Though Republicans certainly might play obstruction games, such parliamentary delay tactics may not play out the way they hope—think of the way Gingrich shutting down government in the 90s backfired with the public.

The second line of attack is that if Congressional Democrats vote yes, it will cost them their jobs. Republicans recently put out a poll from districts of swing members purporting to show that vote for reform would hurt their electoral chances. Whether a coordinated part of the strategy or on their own initiative, two former Democratic pollsters made the same argument in a Washington Post op-ed.

What makes the piece fishy is that a) the only polling they cite is from Rassmussen, a polling company with a well-known “house effect” in favor of conservatives and Republicans  and b) they conclude that what the Democrats should do is essentially pass the House Republican health care proposal (you can compare the GOP proposal to Obama’s plan here).

A more fair reading of the polling:

  • People want major change
  • The main elements of the reform bill are popular, and some are very popular.
  • People don’t know what’s in the bill. As Jon Stewart pointed out (watch at 4:05), there have been not a few misinformation campaigns to take the credit there. But once they learn what’s actually in the bill, they like it a whole lot better.

As the President has become more active in the debate and pushed out a clearer message about what reform does—eliminate insurance company abuses, provide people with security of never losing their coverage, provide tax credits to small business to help them afford insurance—public support has trended up.

Not to say that there aren’t some fundamental glitches in public opinion. Voters think a bipartisan bill is important, and that Democrats should keep working with Republicans until they get it. What the media have failed to convey is that

  1. the bill is supported by Republicans, including governors, former Senate leaders and former administration officials and
  2. the bill is essentially what Republican Senators proposed as an alternative to the Clinton plan in the 90s.

Finally, what should be clear after the Blair House summit is that there is no hope of getting any kind of bipartisan agreement, short of giving up and passing the Republican plan. It would be much more meaningful if pollsters confined their questions to the real choices that are available instead of setting up straw men.

Polls aside, there’s no doubt Democrats are sailing into a stiff headwind right now. The President’s party usually loses seats in the midterm, and this year the persistently high unemployment is fueling voter discontent. Discontent is aimed at incumbents generally, but with a large number of House seats to defend in historically Republican-voting districts, and with incumbent Senate Democrats from conservative states like North Dakota and Indiana retiring, the GOP could see substantial pick-ups. Add in the expected flood of corporate cash into the elections courtesy of the Supreme Court and it is shaping up to be a tough year for Democrats, indeed.

But the fundamental political question persists: are Democrats helped or hurt by failure to pass health reform? They are already on the hook for voting yes and attack ads are already being produced. Flip-flopping is famously unpopular in politics and is unlikely to win a pass from reform opponents in the election. Passing reform gives House Democrats a concrete historic accomplishment with which to fight back.

It don’t come easy: Math in the House
In November, the House health care reform bill passed with  220 votes. Currently with vacancies, 216 are needed to win.  If everyone who voted yes last time votes yes again, reform passes. But House leaders can’t count on every yes vote remaining in place, so every yes-to-no vote must be offset by finding a no-to-yes.

Here are three places where votes are at risk:

Abortion
The number of Democrats willing to ‘vote off’ because of abortion seems to be declining.  A recent letter from pro-life clerics and theologians looked at the abortion provisions in the Senate bill, chapter and verse, and concludes that the bill does not provide federal funding for abortion.  Several members who voted for the Stupak amendment have publicly reached the same conclusion. And although Stupak claimed that he has about 12 members who will stick with him in voting off, his camp seems to be shrinking as the reality that the Senate bill does not allow federal funds for abortion has begun to sink in. Most analysts put the total number of no votes on account of abortion at five or six.

Immigration
The Senate bill bars undocumented immigrants from purchasing health insurance through the new insurance Exchanges even if they use their own money. It also fails to provide equal coverage to legal immigrants, continuing a ban on federal matching funds for state Medicaid coverage and offering instead less comprehensive and more costly coverage in the Exchange. As a result, a number of lawmakers in the Congressional Hispanic Caucus have said that they were leaning toward a no vote.  The issue is further complicated by the fact that the provision relating to undocumented individuals cannot be addressed via budget reconciliation.

But a Medicaid provision that gives states at least the option to cover legal immigrants could be addressed in reconciliation.  While most states would probably not take up the option, the measure could at least provide fiscal relief and perhaps better coverage in those states who now cover legal immigrants with 100 percent of state dollars.

How possible is this? Remember that in the initial House vote in November, there was an 11th hour change on abortion. It’s still possible that House leaders and the President will see the light on Medicaid for immigrants, especially if it is the only remaining obstacle to passage. However, even if this last-minute adjustment is made, the legislation does not go far enough in providing equal access to coverage for immigrants, which only underscores the importance of comprehensive immigration reform (check out this weekend’s march here).

The Scott Brown effect
In the wake of the election of Republican Senator Scott Brown, the Massachusetts delegation has become visibly uneasy about reform. Despite compelling evidence that the Brown election did not turn on the candidates’ positions on health care,  some members of the normally solidly liberal Massachusetts delegation have indicated concern about moving forward, though not all have given the same reasons.  It’s hard to imagine that Massachusetts Democrats would actually sink national health care reform. But as the Brown election proved, nothing can be taken for granted—even in Massachusetts.

Coming soon

Stay tuned for updates this week as the CBO score becomes available and we get more clarity about the vote schedule.

-Michael Miller, director of strategic policy

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And now, the moment you’ve all been waiting for

Tuesday, March 9th, 2010

For months, various parties have been calling on the President to clarify exactly what he was for and, following the loss of a 60-vote majority in the Senate, how he thought that could be accomplished. Starting with the run-up to the Feb. 25 summit, President Obama did just that, laying out a package of amendments to the Patient Protection and Affordable Care Act passed by the Senate and calling last Wednesday for an up-or-down vote on health care within the next few weeks.

The President’s proposal would improve on the Senate bill by toughening oversight of the insurance industry, improving benefits and affordability provisions and closing the Medicare part D doughnut hole. He also added several Republican ideas from the summit such as new proposals to reduce payment errors in Medicare and Medicaid.

In a surprise to many, the RNC called on Groucho Marx to deliver their response.

OK, just kidding. What was striking about the real response from Congressional Republicans was the way they resorted to invective. Away from the Blair House setting—where they could be directly challenged for “having their own facts”—they reverted to much harsher language than they used in the largely civil exchange during the summit. “Job-killing“(Independent analysts say health reform will promote job growth), “budget-busting” (the CBO says that reform will reduce the budget deficit by about $100 billion over 10 years and by $1 trillion over 20 years) “government takeover” (people get a choice of private insurance plans) were some of the greatest hits from the last week in sound bytes. Oh, and of course the ubiquitous “jam” that Jon Stewart spoofed last week (video at 2:20).

Despite the fact that the Senate bill that is remarkably similar to the one that Republican moderates were advancing in the 1990s, today’s Republicans have made it clear (through this RNC fundraising presentation, among other things ) that polarization and fear-mongering are central to their campaign strategy. No wonder no bipartisan health care compromise has been possible.

This fact-resistant extremism could be a factor that helps clear the way for final passage. Another other is a series of highly visible double-digit premium increases that are being proposed across the country, especially in the non-group market. The lack of any insurer accountability has been a stark and timely reminder of the need for change.

Here to there: the New new timetable
Deadlines have come and gone more than once while the health reform debate has dragged on. We now have another schedule for action, albeit a tentative one. The administration is hoping to have a reform vote in the House by March 18, just 11 days from now, and hopes that Senate action will begin prior to the spring Congressional recess, which starts March 29.

The first vote is the hardest
Although the challenges of using budget reconciliation have drawn the most attention from commentators, the hardest step in the process from here on out is the first vote in the House. Although subsequent action will address many of the problems House members have with the Senate bill, the path forward requires the House to vote first for the Senate bill as-is and then vote to fix it—something that many House members have expressed reluctance to do.

Abortion contortion
Probably the House leadership’s biggest stumbling block to assembling a majority is dealing with the abortion issue. In the initial debate in the House, Democrats who opposed choice were joined by Republicans to put in very restrictive language, authored by Congressman Bart Stupak, that many feel will eliminate abortion coverage within the Exchange and may undermine private coverage for abortions in employer-based plans.

According to an analysis by Faith in Public Life,  the language in the Senate already precludes federal funding of abortion.

However, Congressman Stupak has argued that the Senate language is not strong enough, and has declared his intention to vote against the Senate bill, claiming that about 10 other Democrats will join him. Given the very narrow margin of victory in the House, every Democrat beyond Stupak who switches from yes to no because they don’t like the Senate abortion language (or for any other reason) must be offset by switching the vote of someone who voted no the first time to yes the second time.

Facts not worth a hill of beans?
Although it seems his vote is pretty fact-resistant, it appears that Congressman Stupak is misreading the Senate language.2352670827_dc9563c0c3_m

The Senate bill, as best as I can tell, does not allow federal funding of abortions—despite Rep. Stupak’s insistence that it does. And we don’t have to take either Speaker Pelosi’s or the pro-choice community’s word for it. If the Senate allowed federal funding of abortion, then presumably the matter could be addressed in an amendment that would pass through budget reconciliation—an amendment Rep. Stupak would undoubtedly bring.

But there is no such amendment on the table. Why? Because amendments through budget reconciliation must impact the budget, and there is no budgetary implication in the difference between the Nelson and Stupak abortion language. Although there is no public document available, this appears to be the view of CBO.

Remember: the CBO is neither pro nor anti-choice in this debate. They are simply the bean counters. And if they say there are no beans on the table to count that should count for something–if not to Congressman Stupak, then at least to other Congress members who oppose abortion rights as a matter of conscience or religious conviction.

Smooth sailing?
Once a bill does clear the House, the road to reform becomes smoother (not quite seat-belt sign off, but smoother). Although Republicans have threatened to delay the vote in the Senate by filing endless amendments and launching parliamentary challenges, this is as much a psychological game as anything else.

Senate Republicans are trying convince some members on the House side not to take that first vote, playing on the fears of House members who worry that the improvements they’ve agreed to won’t happen and the House will be stuck with the unamended Senate bill. But once the House does vote, the dynamics change. Then the choice is no longer health reform, yes or no, it is health reform as passed by the Senate or health reform with the proposed amendments.

By opposing the amendments to improve the Senate bill, Senate Republicans risk exposing themselves as flip-floppers, voting for policies they previously opposed (such as the special Medicaid funding for Nebraska, and the special excise tax provisions that apply to union-negotiated health benefits) in an attempt to score political points. [I talked about this here last week.]

–Michael Miller, director of strategic policy

photo credit: base10 on flickr

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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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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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–Michael Miller, Director of Strategic Policy

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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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