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The Latest News On Healthcare Reform

February 11, 2010

All Americans are invited to the discussion

For many months, health care reform was the main topic on the Sunday morning TV news shows. But after a Republican won the Massachusetts Senate race and negotiations between Senate and House Democrats bogged down over the differences in their bills, the subject was mentioned less frequently. Jobs, the economy and the national debt became the lead topics.

This Sunday morning, the economy was the main topic again, but by afternoon, health reform was back in the headlines. On a Super Bowl pre-game show, President Obama told CBS news anchor Katie Couric that he planned to convene a half-day bipartisan health care session that would be televised so everyone could watch. The meeting will be at Blair House on February 25.

So now the health reform conversation won't be just House and Senate Democrats quietly talking to each other about possible compromises and strategies for passing a bill. The announcement of a health care meeting comes after the President promised during the State of the Union address to work in a more open and bipartisan way. He is also hoping to get the Democrats moving again.

He told Katie Couric he will ask the Republicans, "How do you guys want to lower costs? How do you guys intend to reform the insurance market so that people with pre-existing conditions, for example, can get health care? How do you want to make sure that the 30 million people who don't have health insurance can get it? What are your ideas specifically?"

The key, the President believes, "is to not let the moment slip away." As he keeps saying, the country is closer than it ever has been to reforming the health care system. Just about everyone – including the health insurance industry and Humana's President and CEO Mike McCallister – believes the system is broken.

House Minority Leader John Boehner responded that he was looking forward to the discussion. "The best way to start on real, bipartisan reform would be to scrap those bills and focus on the kind of step-by-step improvements that will lower health costs and expand access," he said.

But the administration replied the Democratic bills would not be scrapped. In fact, they will be the starting point of the discussion.

That additional information led Rep. Boehner and House Republican Whip Eric Cantor to write a letter to Rahm Emanuel, the President's chief of staff, which said, "If the starting point for this meeting is the job-killing bills the American people have already soundly rejected, Republicans would rightly be reluctant to participate." The letter posed a series of questions to "help determine whether this will be a truly open, bipartisan discussion or merely an intramural exercise before Democrats attempt to jam through a health care bill that the American people can't afford and don't support. 'Bipartisanship' is not writing proposals of your own behind closed doors, then unveiling them and demanding Republican support," the letter said. "Bipartisan ends require bipartisan means."
Read the entire letter here.

So now there are new issues to wonder about. How useful will this bipartisan meeting be? How much – if anything – is the President willing to give in on some concepts? Even if he's willing to compromise on some big issues, will members of the House and Senate be willing to follow? Will Republicans sincerely engage? Will Democrats sincerely engage? Or will it all disintegrate into an opportunity for political grandstanding?

The mistrust surrounding anti–trust

Since last fall, Democrats have threatened to eliminate the 1945 McCarran-Ferguson Act anti-trust exemption for health insurance companies. In fact, the version of the health reform bill passed in November by the House included that provision. (The Senate's bill did not.)

Now, with comprehensive health reform stalled, the House says it will consider the issue as a stand-alone bill. In fact, it was on the House schedule for this week, but the snowstorms in Washington caused House leaders to cancel all votes until after February 22, the end of the Presidents' Day recess.

The McCarran-Ferguson Act is complicated and there's a lot of misunderstanding about what it actually does. As the Los Angeles Times explains, it "allows companies to share data about losses so they can predict how much they'll have to spend on claims in the future. That calculation is crucial to how they set rates."

But according to the National Association of Insurance Commissioners (NAIC), the organization representing state insurance commissioners, the anti-trust exemption does not protect insurers from regulation and does not allow price fixing or collusion. Others say repealing it would not create more competition in the health insurance industry. It would not make health insurance less expensive or more accessible. In fact, the repeal of McCarran-Ferguson could have the unintended consequence of making health insurance more expensive by disrupting data collection and initiatives to enhance efficiency.

A letter from NAIC to the chairmen of the House and Senate Judiciary committees explained, "The potential for bid-rigging, price-fixing and market allocation...cannot be tolerated. However, we want to assure you that these activities are not permitted under the McCarran-Ferguson Act and are not tolerated under state law."

The big question is, if the exemption is eliminated, what will the effect be on our industry and on consumers? "I don't think this will have much effect," Paul Ginsburg, the president of the Washington research group the Center for Studying Health System Change, told a reporter for the McClatchy newspapers. "This is strictly political posturing."

Humana and its industry group, America's Health Insurance Plans, believe health insurance is one of the most regulated businesses in the country, on both the state and federal level. Repeal of the McCarran-Ferguson Act would not do what advocates of health reform want – make the system more efficient and accessible. In fact, it could have unintended consequences and could disrupt initiatives to increase efficiencies and reduce costs.

The rate of health care spending

Last week, the Centers for Medicare and Medicaid Services (CMS) released its annual health care spending projections. The CMS actuaries and economists project:

  • Between 2009 and 2019, national health costs will grow at an average annual rate of 6.1 percent. This rate is about 2 percentage points faster than the projected growth of the gross domestic product, which is expected to average 4.4 percent. As a result, national health expenditures will grow from an estimated 17.3 percent of GDP in 2009 to 19.3 percent by 2019
  • Private health insurers' administrative costs will continue to fall, from 11.7 percent of premiums in 2008 to 11.2 percent in 2009. (In comparison, administrative costs were 13.7 percent of premiums in 2003.) Projections for administrative costs in 2009 are $4.3 billion lower than in 2007
  • Private health insurance premiums will grow at a rate of 3.3 percent in 2009, up from 3.1 percent in 2008 and down from 4.4 percent in 2007. The rate of growth will decline to 2.5 percent in 2010
  • Public health funds will account for 50.4 percent of all health care spending by 2011 – the first year government programs will account for more than half.

The report, published last week in Health Affairs, notes that the "two primary drivers of growth...are medical prices and utilization." It includes these proof points:

  • Hospital spending growth is projected to have accelerated from 4.5 percent in 2008 to 5.9 percent in 2009
  • Spending growth for physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5 percent in 2008
  • Prescription drug spending is expected to have grown 5.2 percent in 2009, an acceleration of 2 percentage points from 2008

Health care issues may be attached to the jobs bill

The House passed a comprehensive jobs bill in December. The Senate had planned to take up a more modest version this week. It will include another extension of unemployment insurance and COBRA premium assistance.

As part of last year's economic stimulus package, workers laid off from September 2009 through February of this year got a 65 percent break on their COBRA payments for up to 15 months. Although the details of the Senate's bill are unknown, the bill would extend the COBRA benefit to people who lose their jobs in March, April and May. Meanwhile, the President in his budget proposed extending it to the end of the year.

In addition, the jobs bill will include an extension of the physician payment formula as well. It's set to expire on February 28, which means payments to physicians would automatically go down in March. The current rates would be extended for seven months.

Senate Majority Leader Harry Reid had said he hoped the Senate would pass the bill by February 12, the scheduled start of the Presidents Day recess. But the snow storms in Washington made most schedules meaningless this week.

Get involved. Contact Congress about health reform at

Past articles on Healthcare Reform

Article from 08/12/10

Article from 07/08/10

Article from 06/02/10

Article from 05/10/10

Article from 04/08/10

Article from 03/10/10

Article from 02/24/10

Article from 02/17/10

Article from 02/11/10

Article from 02/4/10

Article from 01/27/10

Article from 01/20/10

Article from 01/13/10

Article from 01/06/10

Article from 11/24/09

Article from 11/19/09

Article from 11/11/09

Article from 11/04/09

Article from 10/28/09

Article from 10/21/09

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