Posts Tagged ‘Medicaid’

Reaching the Summit

Wednesday, February 24th, 2010

Must-see TV

If you’re not already planning to tune in to the President’s health care summit tomorrow, maybe it’s time to reconsider. It will be streamed live here, from 10 AM-4 PM Eastern. Forget Lindsey Vonn and The Office baby special: This is must-see TV.

And if you can’t convince your boss that six hours of C-SPAN is equivalent to 30 minutes for lunch, you can follow the Hub’s twitter feed right from your desktop for a live analysis of what’s going down at Blair House (and maybe a little reform haiku thrown in, too.)

Reaching the Summit

With the release of his plan—really a series of amendments to the Senate-passed Patient Protection and Affordable Care Act (PPACA)—President Obama  is ready to embark on the last leg of the health reform journey. Key changes in the proposal include:

•    Improvements in affordability for low- and moderate-income families in the Exchange. Relative to the Senate bill, most families will either pay less and/or get better benefits.

•    Stronger oversight of health insurance premiums. The proposal would give the HHS Secretary the power to deny or modify excessive premium increases as well as strengthen the ability of state insurance regulators to oversee rates.

•    Phasing out of the coverage gap known as the “doughnut hole” in Medicare Part D, making prescription drugs more affordable for seniors.

•    Increased Medicaid funding for all states (and territories), while eliminating the special funding deal for Nebraska.

•    Equalizing the treatment of union and nonunion health benefits with regard to the excise tax on high-cost plans and also adjusting for age, occupation and gender of workers so that firms with an older and sicker workforce would not be hit as hard.

The President also proposed a series of payment integrity and anti-fraud measures to reduce payment errors in Medicare and Medicaid, drawn largely from Republican proposals. (Full summary of the proposal is available here).

Democratic leaders in the House and Senate have reacted positively to the President’s proposal and seem poised to move forward with reform post-summit, with or without a bipartisan agreement that no one is expecting.

Interestingly, not all of the President’s proposals seem to fit neatly into the rules of budget reconciliation. This suggests that some ideas, such as increasing federal authority over insurance rates, will have to get 60 votes in the Senate in order to survive. However, this is likely a win-win for the Democrats: either the rate regulation provision stays in, or Republicans will have to go on record as siding with insurers against consumers on insurance rates.

Summit Watching Guide

The President has continued to sound the theme of bipartisanship by posting on a website all of the Republican-backed ideas already included in PPACA, and offering to post a Republican proposal or statement of principles side-by-side with the President’s plan.    Republican Congressional leaders, however, aren’t having any of it.

The continued trash-talking of the summit obscures the dirty little not-so-secret that the difference between the Republican and Democratic proposals is not about different means to reach the same end, but entirely different ends.

First, Congressional Republicans by and large reject the premise that all Americans should have guaranteed access to secure affordable health insurance and health care. Secondly, they reject the idea that a stronger public-interest watchdog and a new set of rules is needed to correct fundamental weaknesses in the current health insurance market.These are the central premises of the plans put forward by the President and Congressional Democrats and they are beliefs strongly held by the majority of Americans, notwithstanding their skittishness and disillusionment with the process. (Read Real Reform, Community Catalyst’s analysis of the differences between the approaches put forward by the President and the Republicans here.)

At least one prominent Republican, California Governor Arnold Schwarzenegger, has been willing to call out his party on their stance—calling the demand that the summit start with a blank piece of paper “bogus.” (Now that’s a maverick.)

Because the divide between the two parties is so fundamental, at the summit itself we can expect neither a real attempt to reach bipartisan agreement, nor even a real debate over the merits of various policies.

Instead this will be a battle of competing narratives. The President and Congressional Democrats will to try to focus the discussion on the problems with the status quo and substantive ideas for addressing those problems, while the Republican will try to reinforce their anti-government mantra. (If watching 4 to 6 hours of this kind of sparring is not your idea of fun, you can liven it up by taking a drink every time a Republican says “job-killing big government takeover.”)

Look for a special post-summit Insider Friday!

–Michael Miller, director of strategic policy

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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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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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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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Massachusetts as Model: the reasons you haven’t heard

Tuesday, October 27th, 2009

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

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

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

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

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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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The Great Consensus Hunt: Search for a public option

Tuesday, October 6th, 2009

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

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

Cantwell: harnessing state purchasing power, but consumer protections needed

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

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

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

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

Carper: State flexibility to create a public option

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

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

It’s Snowe-time

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

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

A closer look at the age-rating debate

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

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

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

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

House Update: tough sledding ahead

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

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

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

–Michael Miller, Director of Strategic Policy

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