Throughout 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