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The Latest News On Healthcare Reform

January 13, 2009
Source: www.humana.com

What's happening in Congress

Members of the House and Senate have begun to drift back to Washington: The House officially gets back this week; the Senate will return after the Martin Luther King holiday. But House leaders were in Washington last week: They met on Tuesday to talk about reform; that night, they went to the White House to meet with the President, with Senate leaders participating in the conversation by phone. Two days later, the Democratic caucus met by phone to talk about reform, and Senate leaders met with President Obama.

Clearly the conversation about how to reconcile the House and Senate bills has begun. It is expected to get more intense this week. Toward the end of the week, the President will hold a "Democratic issues conference" with House members. The reality is that if a bill is to be passed before his State of the Union Address – which isn't yet scheduled but will probably be in early February – Senate and House leaders will have to agree on a bill in the next two weeks. It will take about two additional weeks for the Congressional Budget Office to determine the bill's cost, and that report must be circulated before final votes are taken.

Speaker Nancy Pelosi is making no promises about whether the State of the Union deadline will be met, but she has said the House and Senate "are very close to reconciliation" and it's "possible" the vote could take place by the end of the month. Other House members aren't so sure.

Conventional wisdom says that the final bill will have to look a lot like what the Senate passed because it was so hard to get the necessary 60 votes. But the House bill passed with only a two-vote margin and many House members have very strong feelings about what should be in the final bill. For example, Rep. Raul Grijalva, D-Ariz. and co-chairman of the House Progressive Caucus, said last week that to "merely to rubber-stamp what the Senate does is not enough." In the Democratic caucus phone call last week, Speaker Pelosi assured members that they will be able to assert themselves on important points.

After the Democratic caucus meeting, members said the main issues seemed to be whether the insurance exchanges should be federal or state-based; whether the Senate's tax on so-called "Cadillac plans" should be eliminated or at least changed so it would be based on the level of benefits, not premium cost; concern that the subsidies in the Senate bill are too low to make health insurance affordable; a desire to eliminate the existing anti-trust exemption for health insurance companies; and concern over abortion and immigration issues.

Reconciliation is so hard to do

Reconciling the House and Senate bills will be a challenge. For example, on Monday afternoon, a dozen labor union officials had an hour-long meeting with President Obama to talk about their objections to the tax on Cadillac plans that's in the Senate bill. (The House would tax the wealthy to help finance reforms instead.)

Economists have said this tax is an important way to bring down health care costs: If people have health plans that make medical care cheap and easy, they tend to use more care. The tax would also contribute $149 billion over 10 years to the financing of reforms.

A senior administration official told the New York Times that the White House meeting "was a frank conversation about the excise tax. The President was very clear that he thinks this is a critical part of bringing down costs in the long term and bending the curve." But the official also said the President signaled he was willing to amend the proposal to "make this work for working families." One possible compromise would be to raise the cost threshold for what makes a plan a "Cadillac plan." Another would be to consider the value of a plan's benefits as opposed to its costs (this would help even out occupational and geographical differences).

Earlier in the day, AFL-CIO president Richard Trumka warned in a speech at the National Press Club that Democrats would pay a price at the polls if the tax is enacted. The machinists' union announced it would oppose any health bill financed by taxing the value of workers' existing health plans. And the president of the International Association of Fire Fighters said, "We held President Bush accountable when he made decisions that had a negative impact on our members' jobs and lives. We will do the same with President Obama."

The fragility of Senate Democrats' supermajority

The political landscape has shifted a bit in the last week. Last Tuesday, Sen. Byron Dorgan, a North Dakota Democrat, announced he wouldn't run for reelection. The next day, Chris Dodd, D-Conn., announced he wouldn't run either. Both men were facing tough races this year.

North Dakota is a GOP-leaning state, so Republicans are believed to have the advantage there. Connecticut tends to be blue, so Sen. Dodd's seat is likely to remain in Democratic hands.

Republicans took the announcements of the two retirements as a sign that Democrats are on the run and that their chances of breaking up the supermajority in the Senate are improving. Both Sen. Dodd and Sen. Dorgan used to be popular in their states. Sen. Dodd has been an important person in two big issues Congress is grappling with this year: reform of banking regulations and health reform. He is the chair of the Senate Banking Committee and stepped in as acting chair of the Senate Health, Education, Labor and Pensions Committee when his friend Sen. Ted Kennedy became too ill to participate on a daily basis.

Then over the weekend, the Las Vegas Review-Journal released a poll that showed Senate Majority Leader Harry Reid to be in trouble in his home state of Nevada. The poll showed that only 33 percent of Nevadans have a favorable opinion of him (52 percent have an unfavorable opinion); only 35 percent support "the health care legislation that appears likely to pass Congress" (54 percent oppose it); and only 33 percent approve of Sen. Reid's efforts to get a bill through the Senate (60 percent disapprove).

A reporter for the Review-Journal wrote, "Reid's unpopularity with his home state crowd is nothing new; his poll numbers have been plunging ever since he became Senate majority leader and began leading the Democratic Party's efforts to reform the nation's health care system as promised by President Barack Obama.

"What's new is that Sen. Chris Dodd, D-Conn., announced Wednesday that he wouldn't run for reelection, which means Reid now replaces Dodd as the Democrat most likely to lose in what the Cook Political Report shows as 'toss-up' Senate races."

Read the Review-Journal's poll questions and results.

In November, 37 Senate seats will be contested, 19 held by Democrats and 18 held by Republicans. House members must run every two years.

Is a mandate to buy health insurance constitutional?

Attorneys general in a dozen states are threatening to challenge the federal government over the issue of the individual mandate. Both the Senate and House versions of the health reform bill include provisions requiring everyone to have insurance.

The insurance industry, of course, believes that a mandate to have insurance is an essential counter-balance to the part of the bill that says insurance companies must sell policies to everyone who wants them, regardless of pre-existing conditions. Without a mandate, there's little reason for healthy people to buy insurance until they get seriously ill. Without healthy people to help subsidize the sick, premiums would spiral out of control.

In 1994, the Congressional Budget Office wrote a memo on the subject of mandates. It said, "A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States." Last summer, the nonpartisan Congressional Research Service agreed that the question of whether Congress' commerce power extends that far is a "challenging question."

Those who believe a federal mandate is unconstitutional say Congress has the power to enact a general tax to pay for subsidies and other reforms, or to create a tax credit for those who buy health insurance. But the constitution is very specific in terms of the powers it gives the federal government, they say. Telling people they must enter into a contract with or buy a particular product from a private party – especially at an inflated price that helps pay for someone else's – with tax penalties to enforce it, is unprecedented – and unconstitutional.

Democrats, of course, disagree. They say that although the insurance mandate is unprecedented, it falls within the definition of interstate commerce. Congress has the power to regulate interstate commerce, and to provide for the common welfare.

Read a lengthy analysis by the Heritage Foundation, which believes a mandate would be unconstitutional.
Read an opinion piece in the Los Angeles Times saying Congress does have the power to require individuals to purchase insurance

State insurance commissioners weigh in on the debate

The National Association of Insurance Commissioners sent Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi a letter, to provide their thoughts and perspective on what a final reform bill should look like.

The commissioners offered comments "based upon state regulators' over 135 years of experience protecting consumers and promoting healthy insurance markets." The comments included beliefs that:

  • Health insurance should continue to be regulated and overseen at the state level. "State insurance regulators have extensive experience and expertise in regulating health insurance. They are also closer to consumers and have a better understanding of the markets they regulate than a single national regulator in Washington, D.C. could have."
  • Duel regulation by state and federal authorities "is likely to create unnecessary cost and confusion and produce no added value."
  • The individual mandate should be stronger. "More robust penalties will be needed to ensure that young, healthy individuals do not drop out of the insurance market."
  • Tight restrictions on the use of age as a rating factor will also squeeze younger individuals out of the marketplace. More businesses that employ mostly young and healthy people will self-insure, "which will destabilize the… large group market when they flee."
  • Achieving a medical loss ratio of 80 percent in the individual market won't be achievable for several years, when other insurance reforms kick in and the exchanges begin to operate.
  • The McCarran-Ferguson anti-trust exemption for health insurers should not be repealed. Because of state laws that are entwined with McCarran-Ferguson, repeal wouldn't increase competition or control costs – it would likely result in confusion, litigation and higher costs.
  • Effective dates of reforms need to be better coordinated or premiums for all will rise unnecessarily.

Read the entire letter here.

More numbers

If the Senate reform bill passed, according to a new study by the Center for Medicare and Medicaid Services, Americans would see only a modest increase in health care costs. Costs would be only one percent higher ($222 billion over 10 years) than they would be under the current system, while 34 million more people would be covered.

Much of the projected savings, however, would be a result of reductions in Medicare and Medicaid, including lower reimbursements to providers. The report noted that some of these planned reductions would be hard for Congress to actually implement. And if the reductions were put into place, they might jeopardize access to care for beneficiaries, because doctors and hospitals might decide not to participate in programs that would be unprofitable for them.

The actuaries also said that the Senate legislation would leave about 23 million people uninsured, about 5 million of whom are here illegally.

The President again focuses on health reform

In his weekly address, President Obama again talked about health care reform – or "health insurance reform," as he called it. His focus was on telling people what they would get in the first year a bill is passed.

"Now, it'll take a few years to fully implement these reforms in a responsible way," he said. "But what every American should know is that once I sign health insurance reform into law, there are dozens of protections and benefits that will take effect this year.

"Uninsured Americans with a pre-existing illness or condition will finally be able to purchase coverage they can afford. Children with pre-existing conditions will no longer be refused coverage, and young adults will be able to stay on their parents' policy until they're 26 or 27 years old.

"Small business owners who can't afford to cover their employees will be immediately offered tax credits to purchase coverage. Early retirees who receive coverage from their employers will see their coverage protected and their premiums go down.

"Seniors who fall into the coverage gap known as the donut hole will receive discounts of up to 50 percent on their prescriptions as we begin to close that gap altogether.

"Insurance plans will be required to offer free preventive care to their customers – so that we can start catching preventable illnesses and diseases on the front end. They'll no longer be allowed to impose restrictive annual limits on the amount of coverage you receive or lifetime limits on the amount of benefits you receive. They'll be prohibited from dropping your coverage when you get sick and need it most. And there will be a new, independent appeals process for anyone who feels they were unfairly denied a claim by their insurance company."

Read the entire transcript.

Get involved. Contact Congress about health reform at MyHealthReform.org.

Past articles on Healthcare Reform


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Article from 07/08/10

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Article from 05/10/10

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Article from 01/27/10

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Article from 01/13/10

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Article from 11/11/09

Article from 11/04/09

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Article from 10/21/09

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