Posts Tagged ‘public option’

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The New Nattering Nabobs of Negativity

Thursday, December 17th, 2009

So Howard Dean has joined the ranks of liberals piling on health reform and encouraging lawmakers to toss in the towel. (See Kos and Firedoglake for more reform-flogging from the left.)

Health reform does not succeed or fail by the public option, despite what Dean and others seem to suggest. This is not to say that the public option wasn’t important—at least as it was originally imagined (see Michael’s post here.) But we and others like Jonathan Cohn have pointed out the success of reform ultimately depends on strong subsidies, insurance reform and improvements in care delivery—things that are still in the bill.

Perhaps it’s because they hitched their wagons so closely to the Obama’s Technicolor campaign and the ’08 election that Dean, Kos and Co. feel such betrayal in the real-world policy give and take happening in the final stretch of health care reform.  And I’ll admit, it’s easy to see how eight years under the Bush administration could lead one to believe that everything is a black-white issue.

But that kind of thinking—a rugby-like mentality in which health reform is a game with a scoreboard—fails both the spirit of reform and the work that’s been done.  By dismissing health reform with such invective, Dean, Kos and the choir of liberals singing their tune haven fallen to the very same faulty syllogistic thinking they shun the “teabaggers” for: Giving any ground is akin to surrender and defeat, and the yield of such defeat must therefore be waste.

But it’s not.  It’s important to see how far health reform has come, within a year of an administration for whom reform was nearly always a dirty word. If, under the Bush Administration, we could have gotten any one of the things that are in the reform packages now – federal matching funds for all low-income people, say, or a ban on pre-existing conditions exclusions – the champagne would have flowed on the Left bank.  But now, the public option is out and folks are headed for the hills.

Far from the “so-called reform” Kos rolls his eyes at, the improvements this bill will make are real: Expanded coverage to hundreds of thousands of people who now go uninsured, critical insurance reforms that will protect American families from losing coverage and medical debt, subsidies to help people buy coverage who can’t afford to now, and innovations in the way the systems delivers and assesses care. Yes, it’s flawed. It doesn’t give low-wage workers help and health security fast enough, for instance. But it gets people help, and binning the whole thing and starting over leaves those people stranded.

Health care reform may have been a presidential campaign promise of Obama’s, but it wasn’t by bashing insurers that the candidates won support for health reform – it was because they were offering to help people who desperately need it.  Health care, despite what some of the news networks insist, is not a Democratic or Republican issue. It’s about helping people. It is about starting to mend a really broken system, and beginning to re-imagine how a country takes care of it’s sick and frail. To try things out and see what works. And it’s sure not a panacea. But when was it ever going to be?

All victories are partial. The Voting Rights Act was a victory by any standard, but it didn’t stop racial discrimination in the U.S. – it made way for a succession of other, smaller victories that helped turn back systemic racism. Passing Medicare was a victory – but not all at once. Coverage for the disabled, and the drug benefit, came later, and this bill continues those efforts to make the program work better. Despite the suggestions of these critics, it’s near impossible to get a project as complex and all-encompassing as reform right on the first try. But we need to make a first try, and the Congress recognizes that.

The flaws and compromises in the health reform proposals are not reason to dismiss them but to instead commit to the process of reform and the act of helping people. We should enact the best bill possible, then start working to make it better. Those bent on merely measuring the gap between Perfect Health Reform and what the Congress is working on now are selling their country short.

–Kate Petersen, Health Policy Hub

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Posted in national health reform, prescription drugs | 1 Comment »

Public Option Post-Mortem

Monday, December 14th, 2009

public optionThe Huffington Post declared the public option’s time of death as 11:12 on 12/10/09–the time of a press conference in which Nancy Pelosi signaled her willingness to entertain a bill without the provision.   If that was the technical time of death, what was the cause?

Basically, the fate of the public option has always been bound up with the rules of the Senate and the willingness of the Senate to pursue a path that did not require 60 votes.  While there are 60 votes in the Democratic caucus, several members have staked unalterable opposition to a bill that includes a government-run insurance plan—in any form.

That means that to pass a bill with a public option Democrats had to either go the route of “budget reconciliation,” which requires only a simple majority, or take the “nuclear option” and change the rules of the Senate to bypass a filibuster. (You may remember that Republicans threatened the “nuclear option” when they controlled the Senate and Democrats were blocking a number of Bush nominees to the federal court, but there’s been no real discussion of amending Senate rules to make it possible to pass health care reform.)

While reconciliation remains a technical possibility, and has all along, the clock really ran out on it during health reform’s slow walk through the Senate.  When a bill finally cleared Finance, Majority Leader Reid had, in theory, a last chance to combine the HELP and Finance bills in a way that would move via budget reconciliation.

But major technical challenges, a lengthy process, and the perceived political liabilities to doing reform with a narrower base of political support closed the door on reconciliation, and with it, any real chance that the public option would make it through the process in any recognizable form (notwithstanding the compromise version included in the bill Reid brought to the Senate floor.)

Well before a group of conservative and liberal Democrats started meeting to discuss alternatives, and a bevy of liberal bloggers began to toll its death knells, the public option had been significantly compromised from the original vision.  That vision contained two key elements: Universal availability, and Medicare-based networks, pricing and administration.

Universal availability went first, with the public option restricted to those who would purchase coverage through the exchange.  Medicare-based pricing fell in the House when many members from rural districts opposed using Medicare as basis for payment.

What survived would have had, in the short run, a modest impact on health insurance, an impact that  with potential to grow over time. Without 60 votes in the Senate or an alternative path, the question has always been more when than if it would get removed.

What’s the alternative?
With the public option out, the question remains: What will take its place?  The Senate is remaining very close-mouthed about the details of the negotiated alternative pending a CBO score later this week.

Elements of the alternative appear to include creating a national network of not-for-profit health plans overseen by the Office of Personnel Management (The same office that oversees the federal employee health plan), funding for CHIP through 2015 (instead of the current 2013), stricter regulation of private insurance, e.g. requiring 90 cents of every dollar to be spent on health benefits, and reducing the Medicare eligibility age to allow younger people to buy in, perhaps starting at age 55.  A proposal to also expand Medicaid to 150 percent FPL, as the House bill does, was discussed but rejected.

Several House progressives signaled that they would be prepared to entertain a Medicare expansion as an alternative to the public option, where the idea has long been popular.

But even before the deal has become available for public inspection it has taken fire from hospitals and doctors.  One Dem and an increasingly infamous Independent who negotiated the deal have started backing away from it, leaving its fate very much in doubt.  (Ironically, the only thing that could possibly resurrect the public option is if the conservative Democrats become too intransigent, forcing Senate leadership to reconsider budget reconciliation despite its difficulties.)

The Road, and November baseball
Little time remains to close a deal if the Senate intends, as it says, to complete their work before Santa’s circumnavigation.  Senate rules require a certain amount of time to elapse before the motion to halt debate can be acted on, so unless we see both the public option compromise and the Senate “Manager’s amendment” this week, it’s likely that the Christmas deadline will slip.  Once the Senate does act, there will be enormous pressure to seal a deal with the House, and fast.

There has been a lot of speculation this past week over whether Congress will bypass the conference committee process altogether, instead having the two chambers informally negotiate a small number of amendments that the House would pass and send back to the Senate for concurrence.  Failing that, leadership is seeking a very compressed conference process—Speaker Pelosi has said she thought they could do it in 48 hours.

While the pressure to wrap up is undeniable, the significant gulf between the House and Senate on financing, affordability, abortion, employer responsibility, and access for immigrants will make reaching a quick conclusion difficult.  (See our rundown of the issue gaps in last week’s Insider.)

President Obama wants health reform done before the State of the Union address and he may push the address into February to make that possible. Kind of like November baseball, but less hats.

–Michael Miller, director of strategic policy

photo courtesy of aflcio2008 on flickr

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Harry Reid’s Flying Circus

Monday, December 7th, 2009

Oops! Read the Public Option Post-Mortem and Dec. 14 Health Reform Insider here.

And now for something completely different, Senator McCain proclaims himself a defender of Medicare

The first week of Senate debate has seemed, at times, more like Monty Python satire than serious debate. Like when Sen. John McCain took the Senate floor to decry proposed Medicare savings in the bill. Apparently, McCain forgot his own proposal as a presidential candidate to make much deeper cuts. The Medicare debate highlights the extent to which the reform debate has become much less about health care and much more about partisan positioning. The main purpose of the McCain amendment appears to have been to afford Sen. McCain the opportunity to record a “robo-call” message casting Democratic politically vulnerable Senators as opponents of Medicare.

Perhaps as a sign of the significance Politico attaches to the floor proceedings, the Capitol Hill online news rag’s weekend health reform coverage focused more on President Obama’s meeting with the Democratic caucus and whether Sen. Baucus did something inappropriate by recommending his girlfriend for a job as a U.S. Attorney than on anything happening on the Senate floor.

Health Reform Punching Bag
It’s a good thing Democratic Majority Leader Harry Reid is a former boxer. He’s going to need everything he learned in the ring to keep health reform from becoming a giant punching bag for opponents while he works to corral 60 votes. The Republican strategy seems to be to throw everything but the kitchen sink up against health reform and hope some of it sticks.

The Democrats’ counterstrategy is to file and debate their own “message amendments” meant to shape the news coverage and allow members, especially those facing difficult reelection fights, to champion popular causes. Examples include an amendment sponsored by Sen. Michael Bennet (D-CO) to ensure that there would be no cuts to Medicare benefits (passed 100-0), and an amendment by Sen. Blanche Lincoln (D-AR) to cap the tax deductibility of pay for insurance company executives (which fell short of passage by four votes, 56-42).

About those 60 votes
We’ll see a short break from these posturing and “message amendments” today as the Senate tackles abortion, one of the two main issues that appears to be hampering its ability to lock down 60 votes for reform (the other being the public option). Senator Ben Nelson (D-NE) has said that he would not support reform legislation unless it included language restricting abortion similar to the language inserted in the House by Michigan Congressman Bart Stupak. But the Senate does not seem likely to approve an amendment that mirrors the House provision.

If Reid loses Nelson’s vote, he will need to rely on the pro-choice but anti-public option Republican Senators from Maine in order to get the 60 votes he needs. In the process, he could possibly pick up the vote of Sen. Lieberman, who has said he would support a filibuster if the public option was included in the Senate bill, but Reid risks losing support from progressives who feel that the “state opt-out” provision in the Reid bill is already too weak. A new public option proposal could emerge from negotiations between liberal supporters, conservative opponents and the White House sometime this week.

Two issues that divide the Democratic caucus but are not likely to get resolved in the Manager’s Amendment are: How far to push the drug industry for savings, and how best to structure health coverage for children.

On the drug issue, many Democrats believe that the deal Senate Finance Chair Max Baucus and the White House struck with PhRMA lets the industry off too easily. They want to wring additional savings from the drug companies and use the money to close the Medicare Part D “donut hole.” Other Democrats fear, though, that if they push the drug industry too hard, the major investment the industry has been making in supporting reform will flip to opposition and could sink the bill. Even if the Senate decides to continue the kid-glove treatment for the drug companies, they will have to wrestle with the issue again because the House takes a more aggressive approach.

The children’s issue mirrors the long-running debate on affordability in that it is not so much about principle as about cash. Both Senators Casey and Rockefeller plan to file amendments aimed at making sure that kids don’t lose benefits they have now. While the Senate supports enhancing coverage for children, the amendments have not yet been scored by CBO, and it is unclear if they are budget neutral or will require an additional revenue source.

As soon as Reid gets 60 votes worth of support on these two issues, watch for a rapid increase in the pace of Senate debate, with many of the Senate Democrats’ main concerns getting wrapped into a final Manager’s Amendment.

Assuming all goes according to plan…
The Senate will conclude their debate prior to Christmas, leaving the House, Senate and White House to work through the many differences in the respective versions. Here are the key ones to watch:

Financing
The House relies largely on progressive income taxes to finance health reform, while the Senate proposal taxes health benefits. Interestingly, this chasm may be the hardest one to bridge, though it hasn’t attracted nearly the press coverage of other tough issues.

Affordability
The House does much better for low-income people, while the Senate, at least on premiums, does better for moderate-income folks—though in general, the House provides better benefits. The obvious solution is to take the best of both worlds, but the challenge goes back to the financing debate: Where will the money come from?

Exchanges and Insurance Regulation
In most ways, the House bill establishes tighter oversight and more consumer-friendly regulation of the insurance industry, including less scope for discrimination against older subscribers, or opportunities for the back-door reintroduction of the practice of charging people more when they are sick. The House also gives the exchange more power to negotiate with insurers and exclude plans from the exchange if they do not offer good value.

Abortion
As of this writing, we don’t know the outcome of the Senate debate, but odds are against the Senate adopting the House language. The question for conferees is whether there is anything in the middle that both sides can live with.

Public Option
After the Senate gets through wrangling over the public option, members will have to take the matter up again in the House, where support for a public plan runs much deeper. A number of  progressive members of Congress are on record saying they won’t vote for a bill without a public option, and advocates are working to hold them to their word.

Employer Responsibility
The House includes a “pay or play” provision, while the Senate charges employers penalties only if their employees actually access subsidized coverage.

Undocumented immigrants
Though relatively few undocumented immigrants could actually afford to pay the full cost of an insurance policy, the Senate bill prohibits them from buying insurance through the exchange, even with their own funds. During the House debate, members of the Congressional Hispanic Caucus told Speaker Pelosi that they would not vote for a bill that contained such a restriction. If the same holds true for a conference report, the Senate may have to back down.

–Michael Miller, director of strategic policy

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Posted in Health Reform Insider, national health reform | 2 Comments »

Historic House Call

Monday, November 9th, 2009

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

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

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

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

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

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

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

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

Thank you notes

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

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

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

–Michael Miller, Director of Strategic Policy

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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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Public option revival

Monday, October 26th, 2009

What’s Goin’ On: Untangling the debate on public option
The big story of the week was undoubtedly the political resurgence and maneuvering around the public option – a resurgence we’re glad to see. But with legislative leaders keeping their cards close to the vest and pundits spinning the news based on what they hope is true, it is hard to untangle what is really going on (Good mainstream media coverage in the New York Times and the Washington Post.)

So here’s a special Insider devoted (mostly) to trying to get the story right. (With the caveat that it could change by the time you read this).

Housewarming
There are over 200 votes for the “robust” public option, the one with rates based on Medicare, but the magic number is 218 and it’s still not nailed down. House leadership is trying both to round up a few more votes and to test out other possibilities. But whether a different approach, e.g. a public option with negotiated rates, does any better is open to question, since such a proposal may lose more support from progressives than it gains from more conservative members of the caucus.

The upshot? Progressives need to continue their big push this week to find those last few votes.

The revival of public option in the Senate
Ever since polling revealed that a public option wasn’t a deal breaker to members of the Blue Dog caucus, the question in the House has been not whether a public option would be included, but what version.

It’s a different story in the Senate.  Olympia Snowe’s vote in Finance initially seemed to seal the deal against inclusion of a public option in the Senate, but a number of factors have kept it alive.  Persistence from both organizing groups such as Health Care for America Now, among others, and champions in the Senate such as Sen. Schumer, who has worked to find a version of public option that would secure support from conservatives, has been instrumental.

The self-inflicted wounds of the insurance industry also factored in.  By squarely attacking the Senate Finance proposal—the most industry-friendly of any of the bills on the table—the insurers convinced some members that they were trying to kill health reform, and no accommodation would be possible.  Another factor that has flown mostly below the radar is the ripple effect from the President’s insistence that a bill clock in at under $900 billion. And here’s where the public option and affordability story lines start to run together.

While the SFC proposal was scored under $900 billion, the relatively skimpy benefits and high premiums were concerning to the Democratic caucus and many reform supporters.   Without adequate affordability provisions, the underlying structure of health reform—insurance reform coupled with an individual mandate—is unworkable.

Fixing the affordability problem requires not only additional revenue, but cost-effectiveness measures in order to create enough “head room” under the $900 billion ceiling to find that revenue, and there, the public option is an important part of the solution.  By reducing the price-tag of reform, inclusion of a public option becomes a “two-fer”—a proposal that enjoys broad support within the caucus and that also addresses cost issues.

Senate Democratic leaders seem to be leaning toward inclusion of a public option that gives states the ability to opt out.  This way, leaders give Democratic conservatives a chance to vote to strip the provision but protect it by setting up the vote so that 60 votes are required to delete it instead of add it.  (It’s a strategy Ezra Klein says made the White House and Sens. Baucus and Snowe none too happy.)

This strategy works if and only if all the members of the Democratic caucus agree to at least stick with the party to break a filibuster – even if they vote no on the underlying bill.

That’s because they will almost certainly lose Sen.Snowe (and fail to pick up Sen. Collins) with this strategy.  As the failed cloture vote on a permanent fix for Medicare physician fees last week demonstrated, there is no guarantee that the Senate leadership can hold all 60 members. If a cloture vote on a bill with a public option fails, leadership might have to go back to a trigger or some other option, but only as a last resort if all else fails.

Read the rest of the Health Reform Insider on the Community Catalyst National Reform page, or subscribe to the Health Policy Hub by email to the get the Insider each week.

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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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Partly cloudy with a chance of Snowe

Tuesday, September 29th, 2009

The Senate Finance Committee returns to its mark up today, and for health reform junkies, the number one spectator sport of the moment has become watching committee member Sen. Olympia Snowe’s every move like they were tea leaves to her votes.

Over the course of the debate, Snowe’s support has taken on great importance. It would help the Democratic leadership hold onto their own conservative members and could even pave the way for several more Republican votes in support of reform.  And a series of committee votes on which she has voted with Sen. Baucus has sparked speculation that Snowe is moving toward a yes vote on the overall bill.

For her part, the senior Senator from Maine is keeping her cards close to the vest.  While Snowe’s support would be a political dream-come-true for Senate leadership and the White House, liberals in and out of Congress have less reason to be enthusiastic, since Snowe has been clear that she does not support a public insurance plan except as a fallback in the event that there are not an adequate number of private options.

With the Finance mark-up  slated to wrap this week, we’ll be watching to see how the committee addresses affordability, the public option and employer responsibility – and of course, Sen. Snowe’s votes on these issues and the final bill.

For more, check out the Health Reform Insider.

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The MD factor: Majority of physicians back public insurance options, study shows

Wednesday, September 16th, 2009

A study released this week in the New England journal of Medicine found that a large majority of physicians support the expansion of publicly-backed health insurance programs. The survey, funded by The Robert Wood Johnson Foundation, polled over 5000 randomly-selected physicians from a broad range of specialties, practice setting, and regions, and the findings represent the opinions of more than 2100 respondents contacted between June – Sept. 2009.

The large majority of respondents – 73 percent – supported a public option in health reform; most surveyed (62 percent) said they think health reform should include a combination of public and private options, mirroring the principles President Obama, three House committees and a Senate committee have all put forward.  A majority of American Medical Association members surveyed also supported a public option.

And in a finding that rebuffs some reform opponents’ claims that expanding or fortifying Medicare would hurt practicing doctors, there was strong, cross-specialty support for expanding Medicare to those ages 55-64.  Check out the paper’s helpful bar graph to see what we mean.

The authors acknowledge that though the American Medical Association’s stand on reform has wavered and changed during health care debates, past and present, it has most recently come out in support of a House reform proposal that includes significant coverage expansions through subsidized private insurance and a public option.   These findings demonstrate that this position is now more consistent with individual physicians’ views on health reform today.  The authors write:

Physicians’ groups have strongly influenced efforts in health care reform throughout modern U.S. history and in so doing may have often obscured the collective views of individual physicians across the spectrum of specialties, interests, and regional affiliations. Given the enormity of the current effort to reform health care and its potential effect on future generations of Americans, policymakers need to hear the views of the whole range of physicians on the key elements of reform.

Both authors, physicians at Mt. Sinai School of Medicine, are members of the National Physicians Alliance. You can hear them talk about their findings on NPR’s All Things Considered.

–Kate Petersen

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