Posts Tagged ‘health insurance exchanges’

The Health Reform Insider

Tuesday, February 2nd, 2010

“Health reform is on life support unfortunately”—Sen. Mary Landrieu

“The lady doth protest too much, methinks”—Gertrude in Hamlet

“Reports of my demise are greatly exaggerated”—Mark Twain

A lot of ink has been spilled over repeated pronouncements of those declaring health care reform dead, or nearly so. The fact that they have to assert it over and over suggests a) that they would like it to be true and b) that it’s not.

In mulling the new Congressional math coming out of the surprising victory of Massachusetts State Senator Scott Brown in the special election to replace Ted Kennedy, it’s useful to remember that the votes of neither the conservative Senate Democrats nor the ultra-conservative House Republicans who dominate the doom and gloom set are expected or needed for final passage.

Passing the Senate-approved bill in the House alongside a reconciliation bill containing the key amendments negotiated by Congressional leaders and the Obama administration prior to the Brown election offers a clear opportunity to enact almost the same bill that would have been enacted before the election. Indeed, it’s the only opportunity to pass a comprehensive bill in the near future. There are signs that both the House and Senate leadership are pursuing this path and that the votes are there in each chamber, at least in theory.

This can be done. There is no insurmountable obstacle to moving forward and there’s a compelling case to be made, both politically and policy-wise, for doing so. After a period of uncertainty, leaders in both branches and the administration (for the most part) appear to have reached that same conclusion.

That said, there is still no guarantee of success, and there are several significant hurdles to clear before a signing ceremony.

Hurdle one: Policy and politics
The first obstacle is getting agreement on the elements that could pass as part of a reconciliation bill to accompany the Senate language. Key provisions of the agreement negotiated just before the Brown election included removing special treatment for the Nebraska Medicaid program, increasing affordability protections for low- and moderate-income families, closing the Medicare Part D “doughnut hole,” making changes to the Senate plan to impose an excise tax on high-cost health insurance and increasing federal oversight of health insurance Exchanges.

Most of these elements could be included in a reconciliation bill, though it’s unclear whether or to what extent changes in the Exchanges would pass muster, since any provision passed via reconciliation must have more than an incidental effect on the federal budget. There is also a push to reopen the negotiations to revisit yet again the excise tax on high-cost health plans and the public option.

The excise tax: Once more, with feeling
Taxing high-cost health plans has been one of the most contentious issues throughout the debate. Although some significant changes were negotiated in the Senate plan that won labor backing, many in the House are calling for that deal to be reopened and for the tax to be dropped altogether. Some fear that one of the changes, a special temporary exemption for plans negotiated through collective bargaining, will look like one more special interest deal. House members raise a number of both policy and political concerns, so here is a review of the issues at stake.

Pro
The current tax exemption of employer-sponsored health benefits provides a disproportionate benefit to the wealthiest households and nothing for the predominantly low-wage workers who lack health insurance. The excise tax, which would be levied on insurers that sell the most expensive plans, is scored by the CBO as reducing health care spending over the long run and it is one of the few sources of financing on which the Senate has been able to agree. Without that money, Congress may be forced to make reductions in the affordability protections which would, in turn, strike at the core architecture of the bill—and Community Catalyst’s top priority in national health care reform. Without adequate subsidies and cost-sharing protections, the individual mandate becomes unworkable.

Con
“Overinsurance” is not a very convincing explanation for high U.S. health spending, and the tax will give insurers and employers an incentive to reduce the cost of the plans they offer. There are a number of ways to do this. Insurers could work to improve care delivery or they could reduce provider payments, but the path of least resistance is likely to be to skinny down coverage. This is exactly the opposite of what the American people want to happen.

People are looking for lower cost-sharing, not higher, regardless of whether health economists argue the tax will reduce aggregate spending—a goal that does not mean much to the average person. The excise tax not only consistently polls badly, but is also strongly opposed by organized labor which provides a disproportionate share of voters and dollars for Democratic candidates.

Further complicating the issue is that the policy itself is not well-drafted and, in the face of opposition, the response until recently had been simply to make the tax smaller rather than to make it better. The tax, as drafted by the Senate, did not adequately address the fact that plans may be high-cost—not because they have unusually rich benefits, but because of the age, gender, health status, occupation or geography of enrollees. The most recent changes have attempted to address some (but not all) of these problems.

Public option
Some progressives, both in and out of Congress, are calling for the return of the public option. They point out that since a reconciliation bill only needs 51 votes, the objections of conservative Senate Democrats who helped to toss the public option overboard is less important. Polling also shows that the American people still support the public option (though it is not the most important issue to them).

There are two problems with this argument. The first, as discussed below, is that working out an acceptable public option takes time, which is in short supply if we are going to get health care reform done.

The second problem lies more with the supposedly more liberal House than with the Senate. House leaders are still in search of 218 votes. While Speaker Pelosi has said the votes are there, there is still work to do. Several House members who provided the margin for victory the first time around are expected to vote no because of the Senate bill’s abortion provisions. Getting to 218 therefore means flipping first-round no votes to yes among Blue Dogs and other conservative Democrats—the same House Democrats who have been least supportive of the public option.

Hurdle two: “No, please, after you,” aka the trust deficit
The cooperation among committees of jurisdiction in the House and the Senate and commitment of all the key players to move forward this past year represents a stark difference from the reform attempt in the 1990s. But a problem has emerged that didn’t come up last time because a bill never got this far: The lack of trust between the branches. The adage, attributed to former House Democratic Speaker Sam Rayburn, that “the Republicans are our opponents, but the Senate is our enemy” captures the spirit of the current atmosphere, and this lack of trust and cooperation between the branches is one of the biggest obstacles to moving forward.

The House is afraid that if they pass the Senate bill first, the Senate won’t take up and pass the agreed on amendments through reconciliation. They want the Senate to move first, which greatly complicates the process because of the rules that govern the reconciliation process. For its part, the Senate thinks the House is making unreasonable demands in order to make the Senate look bad and blameworthy if health care reform doesn’t pass. These issues can be worked out, but it will take time, which brings us to the final hurdle….

Hurdle three: Time is not on our side
With popular support for health care reform below 50 percent—even if that’s based on a lack of understanding of what is actually in the bill—Democrats are eager to shift their focus. Top on their list is job creation and banking regulation.

But while a short breather might be helpful in nailing down the details of path and content for health care reform, time is running out. The closer it gets to the election, the harder it will be for some members of Congress to take what many consider to be a tough vote. And for various reasons, the parliamentary path that health care has to travel now becomes more difficult the longer we wait.

The bottom line is that a comprehensive bill still has a good shot at passage, but the opportunity is time-limited. We all have to make a strong all-out push in the next few weeks.

As the Super Bowl approaches, we go to the football analogy file. We’re just a few yards from the goal line, but it’s late in the fourth quarter. We just used our last time out and the game clock is ticking. Let’s carry it across.

–Michael Miller, director of strategic policy

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Posted in Health Reform Insider, affordability, national health reform, prescription drugs | 1 Comment »

Of Doughnuts and Dragons: The Health Reform Insider

Wednesday, January 6th, 2010

Though a series of critical votes happened in the last month, not to mention the holidays, the issues that define negotiations between the House and Senate remain largely the same (check out our list if you need a refresher). Here’s an update on a few of those, and the process ahead.

The Overall Process
Reports that the House and Senate will bypass a formal conference committee and informally negotiate a bill instead have been circulating for over a month but, in one of those mysteries of the news cycle, the plan has recently become a hot topic.

The other important process piece (though also not really news) is that the Senate bill is expected to be the starting point for negotiations, and the House will likely have to wage a limited number of battles to make changes.  Defining what that list will include is The Task for House Democratic leaders now as they seek to hold together their own fractious caucus.  One item almost certain to make the list is closing the Medicare Part D “doughnut hole.”  Indeed, Senate leaders have already stated publicly their intention to close the Part D coverage gap—though how to pay for it remains a matter of intense debate, with House members arguing that funding should come from the drug industry, and the Senate perhaps less keen to go that route (as the specter of its summer deal with PhRMA looms.)

Financing
As we reported in December (and said many times before that), in the coverage debate, financing is the key.  Most observers believe that the excise tax on high-cost health benefits in the Senate bill will be further scaled back in negotiations with the House.  A critical and related issue—probably the most important one you never hear talked about–is one we flagged just before Christmas: How the price tag of reform gets calculated.

By our reckoning (see last week’s post), the Senate bill provides only a little over $600 billion in assistance to make coverage affordable for low- and moderate-income families, while the House comes in at around $900 billion.  Those extra $300 billion in assistance translate into a year’s worth of coverage (at the front) and more financial protection to low- and moderate-income uninsured people.

So the big financing questions left are: Will the House accounting prevail? And what, if anything, replaces the money lost from the excise tax? The answers to those questions determine whether there is any possibility of doing better than the Senate on critical affordability measures or by accelerating the implementation timetable.

Exchange Exchange
It looks now like the House is going to make a major push to swap out the Senate proposal for state-based insurance Exchanges in favor of a national Exchange as in the House bill.   (States could still opt to run their own if they met federal standards.)  With that in mind, here’s a brief overview of the pros and cons of state and federal Exchanges.

A national Exchange benefits from uniformity and is likely to have lower administrative costs than 50 state Exchanges would. A national Exchange also reduces the problems that could stem from state governments being unable or unwilling to take on the new responsibilities envisioned in the Senate bill. It’s also possible that a national Exchange would have somewhat better negotiating leverage with national insurance plans, at least in small states.

But the price tag difference between a national Exchange and state Exchanges is likely less than many proponents of a national Exchange who tout a federal model’s savings believe.  The bulk of health care costs are determined by underlying local conditions, and a national Exchange will have little influence over those factors.  In addition, while it’s likely that states will vary in how well they rise to the new challenge, at least some are likely to do an excellent job.  If a future federal administration were to be hostile to health reform, the entire Exchange for the whole country could be undermined; recall that this was a problem for many executive agencies in the previous administration.

Finally, a national Exchange is no more a safeguard against the influence of the health care industry than are state Exchanges.  In fact, the geographic remoteness of Washington from most of the country poses no real obstacle to special interests seeking to influence decisions, but does limit the ability of consumers to engage directly in the decision-making process or hold decision-makers accountable.

In the end, state versus national Exchange is of less importance than are the rules under which any Exchanges must operate and the underlying structure of insurance regulation.  So for example, a bill should ensure that there is no conflict of interest in Exchange governance and that business is conducted subject to open meeting laws, as well as provide for consumer representation in Exchange governance.

It is also important not to carve insurance markets up into distinct pieces: for instance, not to split up non-group and small-group insurance, or allow separate risk pools to operate both within and outside the Exchange. The bill should also empower the Exchange to exclude insurers if it is determined that they do not meet standards for providing good value.

On many of these issues, the House does in fact do better than the Senate, as well as on matters  of insurance regulation such as limiting rate variation based on age and clearly eliminating annual and lifetime limits on coverage.

Bottom line? If the House wants to fight about Exchanges, they should focus on the issues that matter most.

Immigrant access
Discrimination against immigrants remains a problematic aspect of reform, but the Senate seemed to make progress as reports indicate that leadership agreed to eliminate the ban on federal Medicaid matching funds for immigrants who have been in the country for less than five years.

We hope that, in negotiations,  the House will match the Senate’s willingness to remove the “5-year bar,” but won’t trade this progress for legal immigrants for its rightful opposition to the Senate proposal to bar undocumented immigrants from the Exchange, even when paying entirely with their own money—a provision supported by the Obama administration.

It’s also unclear just how many states would take advantage of the new matching funds option when, by doing nothing, they can leave the entire cost of covering low-income recent immigrants to the federal government.  The only fair alternative would be to give legal immigrants equal access to Medicaid, but state-based opposition to this fix has proved insurmountable thus far.

Next Dragon in the RoadDragon
Though negotiations between the House and Senate are far from finalized, reform opponents are already gearing up for a multi-pronged attack on the legislation, including legal challenges, state constitutional amendments and ballot initiatives.

Those who argue that these challenges have little legal merit are missing a larger point.  This strategy is first a political one, and only secondarily aims to change the course of the short-run health care debate.

First, given the pace of implementation, the Presidential election of 2012 becomes pivotal.  A change of administration that year would likely cripple implementation, perhaps fatally.  Campaigns being developed now are largely geared toward building a base of activists for 2012.

Even if they are unable to unseat Obama, Republicans see health reform as a wedge issue they can use to regain control of Congress.  Failing that, by defeating some vulnerable and prominent supporters of reform, opponents hope to create a chilling effect that will dampen the willingness in Congress to pursue further reform.

What this means for reform supporters is that—far from final negotiations curtaining the show—a new act in the saga of U.S. health care reform  is about to begin.


–Michael Miller, director of strategic policy

photo courtesy  of austinevan at flickr creative commons

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The dam breaks, PLUS the votes are in! The Insider’s Naughty and Nice pol(e)

Monday, December 21st, 2009

By reaching a compromise with Sen. Ben Nelson (D-NE) (we’ll talk about how below), Senate Majority Leader Harry Reid has cleared the last major obstacle to historic passage of health reform in the U.S. Senate.

If all goes according to plan, the Senate will vote for passage of the Patient Protection and Affordable Care Act (PPACA) on Christmas Eve, putting the United States on the verge of enacting a major historic overhaul of health care financing and delivery and setting the stage of an intense round of negotiations between the House and the Senate over the shape of a final package.  (We’ll focus on those House-Senate negotiations next week).  The expected schedule of votes is as follows:

•    Monday 1 AM: add the “Manager’s amendment” to the underlying PPACA proposal (passed 60-40). See Community Catalyst’s reaction to the vote here.
•    Tuesday 7 AM: replace the underlying “shell bill” with the PPACA (60 votes needed)
•    Wednesday 1 PM: agree to stop talking and take a final vote (60 votes needed)
•    Thursday 7 PM: Vote on final passage (51 votes needed)

The Manager’s Amendment

The Manager’s Amendment includes a number of other improvements to the underlying bill including stronger accountability and transparency provisions for health insurers, a new approach to national plans overseen by the Office of Personnel Management (the same office that oversees the Federal Employee Health Benefits Plan) stronger cost containment provisions and improved coverage for children.  Click here for CC summary of the key changes.

An agreement was also struck with physicians to do a two month patch on Medicare physician payment rates (as an amendment to the Defense appropriations bill) that would otherwise be cut Jan. 1 with the understanding that after the recess Congress would come back and work on a longer term solution.

The key to locking down the 60th vote for heath reform in the Senate was finding language that would be acceptable to both anti-choice Sen. Ben Nelson and pro-choice Senators represented by Senators Boxer and Murray. (Sen. Casey from Pennsylvania was the other main party to the negotiation).  The main elements of the proposed abortion compromise include giving states the right to determine whether abortion coverage will be available in their state exchanges, strict segregation of federal funds, and additional support for adoption and for pregnant teens.

The agreement was struck despite the opposition of virtually all outside advocacy groups on both sides of the abortion debate.  Setting the stage for conflict down the road, both Congressman Stupak (who authored the abortion restriction in the House) and Congresswoman DeGette (who leads the House pro-choice caucus) have voiced concerns about the Senate language.

Naughty and Niceelf-list
The results of the Insider’s holiday naughty and nice poll are in.

In the naughty category, Sen. Joe Lieberman of Connecticut won by a landslide, easily eclipsing interest group leaders and other political figures. While Lieberman was not unique in his opposition to the inclusion of a public insurance option as part of reform, he angered proponents with his inability to articulate any consistent or fact-based basis for his opposition and perhaps equally for his flip-flop on a proposed Medicare buy-in that was advanced as a possible compromise.  Historically, Lieberman has been a supporter of the Medicare buy-in and appeared unable to give a coherent reason for his last-minute switch.  There was a late surge for Sen. Ben Nelson, but there’s no doubt who Insider readers regard as health reform Public Enemy Number One.

In the nice category, the winner was Hill staffers.  The vote reflects the experience of Insider readers who are mostly health reform advocates and activists.  While Senators and Congressmen get the headlines, a small group of Congressional staffers have worked countless hours to make reform happen.  They are truly the unsung heroes of health reform, and the Insider is happy to give them a shout out for their incredible dedication.

The other leader in the nice category was the late Senator Kennedy.  Though illness and untimely death kept him from exerting as much leadership in the debate as we’d come to expect from him over the years, Insider readers agreed that Kennedy remained the guiding spirit throughout the debate.  Final passage of reform will be an enduring monument to his tireless work over the decades to secure health security for all.

Jon Stewart also polled strongly in the nice category.  There have been many times when we desperately needed laughter at the inanity of the debate, and Stewart has probably done more than anyone else to highlight the frequent absurdities. (His panel discussion on death panels—should they be public or private and available to all or only through the exchange—is one of my personal favorites).  The Insider editor also gives an honorable mention in the nice category to Ezra Klein and Jonathan Cohn, two journalists whose blog coverage of the debate has been consistently excellent.  Hope Hanukah Harry was good to you guys.

The Great “Is it Worth it?” Debate or Two Cheers for Health Reform

A Health Reform Quiz:

Is the PPACA
a)    a great bill
b)    a terrible bill that is little more than a giveaway to private insurers
c)    a terrible bill that is a government takeover of the health care system that will explode the federal debt
d)    a flawed bill that nonetheless does a lot of good and must be passed

Depending on which health care “team” you play for, you’re likely to pick your answer from a-c. Senate Democratic leaders and their loyal supporters among some advocacy groups pick “a” (some of them really think the answer is “d” but aren’t allowed to say so), disappointed activists on the left pick “b”, and the (mostly Republican) opposition and certain special interest groups pick “c”.   But the truth—as best as I can determine it and as honestly as I can answer the question—is “d.”

Why isn’t the right answer “a”?  First and foremost, although the Senate bill does a lot to make coverage and care more affordable, it doesn’t do enough.  A person can drown in six feet of water or 60, and many low- and moderate-income families will still find the premiums and cost-sharing requirements in the Senate bill to be a significant financial burden that could limit their ability to access health care or threaten their ability to afford other necessities. Legislation passed in the House does a much better job of making coverage and care affordable for those most likely to need help.  And while there are many improvements in insurance oversight, there are still some troubling loopholes that could undermine the effectiveness of the new insurance exchanges as a tool for driving down costs and holding insurers accountable.

Finally, due to their inability to agree on adequate financing, the Senate bill takes too leisurely approach to reducing the number of uninsured.  It’s worth noting that when Medicare passed in 1965, benefits started the next year.  When Massachusetts enacted their groundbreaking reform in 2006, a major expansion of coverage was underway within six months.  In the Senate bill, it takes four years for the major coverage provisions to kick in.

Both Senate Finance Committee Chair Max Baucus and Senate Majority Leader Harry Reid have spoken eloquently about the toll of preventable death, not to mention the financial damage and anxiety caused by our current system.  Yet these problems will continue essentially unchecked for four long years because Senators could not agree on a more robust financing package.  In fairness, some of the responsibility for this slow motion reform must also be laid on the President’s doorstep—a result of his mysterious insistence that the “cost” of reform not exceed $900 billion over 10 years even if fully or more than fully offset with new revenue and savings. Keeping under the $900 billion threshold is part of the reason why it takes reform so long to get going.

Certain corners of  the left claim that the bill is nothing more than a giveaway to insurers or that that the proposed excise tax on high cost health insurance plans is unfair. The first criticism is an exaggeration triggered largely by the disappointment around the public plan. While removal of the public plan is a real loss, basing support for reform on this single issue ignores the substantial good the bill would do (see below). The second criticism also has some merit, but the objection should not be enough to scuttle the bill. Though there’s every reason to think that there are better ways to control health care costs than taxing benefits as an incentive for people to have less comprehensive coverage, the reform proposal is hands down fairer than the status quo, even including the benefit tax.

What about the criticism from the right?  For the most part, it has no more reality to it than the death panels of summer did.

Health care is complicated, health reform is complicated and forecasting the future is far from an exact science.  So it’s possible the Congressional Budget Office (CBO) made mistakes in assessing the impact of the bill on the federal deficit, but it is just as likely that they have underestimated as overestimated the effect.  Despite its limitations, the CBO is the best umpire we have available.  Critics who were all too happy to cite earlier CBO analyses that supported their case look hypocritical now as they reject CBO findings that show that the Senate bill will substantially reduce the federal deficit over time.

And if prohibiting insurers from rejecting people because they have a pre-existing condition or keeping them from ratcheting up premiums to force people who file claims to drop coverage, or creating some transparency and accountability in the industry constitutes a government takeover, then bring it on, I say.  Defense of the status quo is unconscionable.

Why pass reform despite its flaws?  First, as I’ve said, because the bill is simply no where near as bad as its critics on the left and right would have it.  It is imperfect but it does a lot of good, such as elimination of pre-existing condition exclusions, a prohibition on charging people more based on gender or occupation, limits on how much more they can be charged based on age and much more. Here’s our short list of the good stuff.

Not only that, but there will be time and opportunity, as well as the necessity, to correct flaws as we go along.  Consider Medicare Part D.  The program as passed was considered with substantial justification, to be a giveaway to the insurers and drug industry.  It is also overly confusing and inefficient.  Nonetheless it provides important help accessing prescription drugs for millions of Medicare beneficiaries.  Moreover, substantial improvements in the program are being contemplated now as part of reform, and there is no reason to suppose that additional improvements to PPACA cannot be made in the future.  So has it been with Medicare and Medicaid, and so will it be with PPACA.

Like we wrote last week, every victory is partial and impermanent. It must be both defended constantly and built upon.  If the history of health reform teaches us anything, it’s that while incremental progress is possible often, the chances for big change are rare, and we should take them.   If we wait for the perfect, we will wait forever.

Those who want to provide health security for all but who counsel starting over not only undervalue the improvements that reform will make, but also underestimate the difficulty of starting over and the damage that would be done to millions of people in the meantime.  As a rallying cry, “Pass this legislation despite its flaws” may not be that inspiring, but it fits the imperfect world we live in, and captures the imperative before us.

Let’s get this bill passed and then get to work making it better.

–Michael Miller, director of strategic policy

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