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Healthcare Reform Update - March 18-24, 2010

 

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Compiled by Brian Betner*

March 24, 2010

Marking "A New Season In America," Obama Signs Health Bill Into Law
March 23, 2010

At a White House ceremony this morning, President Barack Obama signed into law the Senate version of health insurance reform.

The Associated Press: The president "signed a historic $938 billion health care overhaul that guarantees coverage for 32 million uninsured Americans and will touch nearly every citizen's life, presiding over the biggest shift in U.S. domestic policy since the 1960s and capping a divisive, yearlong debate that could define the November elections." Obama was joined at the bill signing ceremony by House and Senate Democrats as well as "lesser-known people whose health care struggles have touched the president" (Superville, 3/23).

USA Today: "A jubilant President Obama signed the health care bill into law today, calling its massive expansion of insurance coverage 'reforms that generations of Americans have fought for and marched for and hungered to see.'" Shortly after the president completed his remarks, "Republican attorneys general from 13 states filed a lawsuit seeking to overturn aspects of the new health care law." In addition, "House Minority Leader John Boehner, R-Ohio, tweeted, 'with the stroke of a pen, President Obama has signed away another share of Americans' freedom. We will take it back'" (Jackson, 3/23).

Los Angeles Times: "Obama, who sought passage of this legislation for more than a year, portrayed it as an achievement on an historic par with the passage of Social Security after the Great Depression and Medicare in the 1960s" (Silva, 3/23).

The New York Times: "Despite the president's signature, the legislative work on the measure is not over, nor is the intense partisan fight over it. Republicans are already vowing to repeal the bill. And the legislative battle will flare anew in the Senate on Tuesday, where lawmakers are set to take up a package of changes to the measure under the parliamentary procedure known as reconciliation" (Gay Stolberg and Pear, 3/23).

Politico: "The bill Obama signed Tuesday is the single largest expansion of the government's role in health care since Medicare--a fact that cheers Democrats who say health insurance is now a right, not a privilege, in this country but provoked staunch resistance from Republicans." The bill is "setting up a clash of political philosophies that the voters will get to judge in midterm elections come November. Democrats hope it will cement their majorities in both houses and Republicans believe it will dislodge them in the House." The focus has now shifted to the Senate, where the upper chamber will begin consideration today of a bill that "fixes" the Senate legislation (Lee, 3/23).

The Hill: "Senate Democrats are still working on a package of adjustments to the legislation Obama signed into law on Tuesday. The Senate hopes to vote on that package by the end of the week, when it would then be sent to Obama for his signature. . . . Though liberals in his party have criticized the president for not pushing stronger reform, Democrats largely reacted with a mixture of relief and exuberance to the passage of a bill that was pronounced dead on more than one occasion." Democrats are also hopeful that they can convince voters before the November elections that the legislation controversy will ease (Young, 3/23).

Final Healthcare Package Shaped by Changing Political Landscape
By Jordan Rau, KHN Staff Writer
March 23, 2010

In the year it took Congress to write and pass a health care overhaul, turbulent political shifts--including the Democrats' loss of Sen. Edward Kennedy's seat and the rise of the Tea Party movement--forced critical compromises on the scope of legislation.

The downsized ambitions of the final package mean that 32 million more people--not the 37 million in the original proposals--will end up insured by 2019. Others will face greater financial strain than lawmakers originally envisioned.

The political developments are well-known: A so-called gang of six Democratic and Republican senators, led by Finance Chairman Max Baucus, D-Mont., failed to forge a bipartisan agreement. Concerns about the federal deficit swelled. Grass-roots conservatives filled congressional town hall meetings last August and helped to propel Republican Scott Brown to victory in Massachusetts. That deprived Democrats of a filibuster-proof Senate majority and transformed them from confident victors of the 2008 elections to nervous incumbents.

Less widely understood are the adjustments the health overhaul legislation underwent from July 2009, when House Democratic leaders first introduced their ambitious proposal, to this week, as the House passed the Senate bill and a related package of changes requiring Senate action. Those modifications will have major effects on Americans in years to come:

  • The final package will leave 23 million people without coverage, nearly 6 million more than originally intended.

  • Low-income workers receiving subsidies will end up paying more in premiums than they would have under the original House proposal; they also may have to pay more out of pocket on deductibles and co-insurance. (To be sure, the final version offers people significant financial protections that they do not have now.)

  • The final package will experiment with dozens of ways to brake the growth of medical costs, but it lacks the most aggressive cost-control measures proposed during a year of negotiations.

"Some of the key changes are in the area of affordability," says Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, a Washington think tank. The financial assistance for people changed because President Barack Obama and lawmakers, under political pressure, decided that the overall package needed to total less than $1 trillion over a decade.

Only the people near the maximum income for qualifying for subsidies--four times the poverty level, or $88,200 for a family of four--will have to pay less than they would have under the initial House bill.

Under the final package, people earning twice the poverty level will have to pay 6.3 percent of their income toward premiums--1.3 percentage points more than they would have had to pay under the original House bill. That means a family of four earning $44,100 will have to pay $2,778 a year in premiums, $573 more than they would have under the initial House bill.

"There was a political calculation that they could raise this much revenue and have it be palatable politically, but that raising more would be too difficult," says Linda Blumberg, a senior fellow at the Urban Institute, a Washington think tank. "As a consequence they had to adjust the financial assistance provided to be consistent with that level of revenue."

While the original House bill limited out-of-pocket costs to $5,000 for individuals and $10,000 for families, the final version uses the Senate thresholds of $5,950 for individuals and $11,900 for most families. Some families receiving subsidies could end up spending as much as 22 percent of their incomes on health care premiums and costs. These financial protections--as well as the premium subsidies--will become weaker in future years if medical costs continue to outpace inflation.

Older people who are too young for Medicare--those in their 50s and early 60s--will face higher costs than under the House's initial bill, which proposed prohibiting insurers from charging this group more than twice what younger people pay. The final package allows them to charge three times as much. Still, that's much better than the higher premiums some older people face now. One proposal to help them--Sen. Baucus' plan to allow people at least 55 years old to buy into the Medicare program--never made it into the final package.

Overall, 23 million people will still lack health coverage in 2019, according to the Congressional Budget Office. Many are illegal immigrants who never would have been covered under any version of the legislation. Others will choose to pay a fine rather than buy insurance. The rest will be excused from the mandate to obtain coverage because it would cost them more than 8 percent of their incomes.

At the same time that lawmakers scaled back the financial protections for Americans, they also jettisoned several major provisions to control the ever-rising costs of health insurance. Back in May, when lawmakers were drafting the health care bill, economists of differing perspectives told the Senate Finance Committee they agreed on one idea: making employer-sponsored health care insurance taxable. Not only would that generate $226 billion a year, the economists argued, but it would give employers and consumers great incentive to choose cheaper insurance plans, pressuring providers to bring their costs down.

"It is the one thing, if we had been able to get some bipartisanship around it, that could have had a significant effect on cost," says James Capretta, who was a top budget official in George W. Bush's administration and is now at the Ethics and Public Policy Center in Washington.

But that proposal was highly unpopular with unions and many other people who have insurance through their employers. As a result, the Senate approved a much more limited version of the tax, applying it to only the most expensive policies, and the House reconciliation deal limited it even more. The final version of the "Cadillac tax" applies only apply to insurance policies costing more than $10,200 for individuals and $27,500 a year for families and will not start until 2018. The tax is projected to raise $20 billion in 2019--less than a tenth of the original estimate.

The tax is designed to hit more and more plans in the future if premiums grow faster than inflation, as expected, but many experts doubt lawmakers will let that happen.

The Senate also rejected the House's favored plan to bring down costs: the creation of a government-run insurer, known as "the public option." That proposal was strongly opposed by insurers, doctors and hospitals. Advocates disagreed among themselves about whether it would actually hold down costs; nonetheless, its exclusion removes one lever policy makers would have had to try to restrict growing health costs.

The final package kept many pilot projects aimed at changing the way doctors and hospitals are paid to encourage them to provide better care more efficiently.

"The most optimistic thing that can be said is it's taking some consensus steps that might have potential for the future," says Paul Ginsburg, president of the Center for Studying Health System Change. "There are very few concrete steps to control costs."

GOP Introduces Legislation To Repeal Health Reform; Other Senators Express Reconciliation Views
March 23, 2010

USA Today: Sen. Jim DeMint--along with a dozen Republican co-sponsors--introduced legislation to repeal the health care reform law. "We must repeal this bill and start over. There are common-sense solutions we can implement to expand health care freedom and choices, lower premiums and increase quality. But this bill will force taxpayer funding of abortions, raise health costs, hike taxes, cut Medicare, raid Social Security, and put bureaucrats between patients and their doctors," DeMint said in a statement (Kiely, 3/23).

Chicago Sun-Times: In response, House Speaker Nancy Pelosi's office issued a release: "Congressional Republicans are calling for the repeal of the legislation and for a return to the status quo. But which of these provisions--which will be available immediately--do they want to repeal?" The memo then lists several components of the bill that Democrats have touted as key components to helping Americans pay for health coverage such as small business tax credits and rebates to seniors who have fallen in the Medicare "doughnut hole" and pay higher prescription drug costs (Sweet, 3/23).

Roll Call: Sen. Max Baucus said Tuesday that the Senate might have to make changes to the House-passed health reconciliation bill. "But Baucus cautioned that there are only one or two provisions that Democrats feel could be subject to a Republican point of order and that they are 'minor.' . . . Still, he reiterated that Senate Democrats' goal is to pass the reconciliation measure of 'fixes' to the Senate-passed bill 'as is--no changes.' The Senate Parliamentarian has yet to rule on most of the provisions Republicans claim that the reconciliation bill violates" (Pierce, 3/23).

Politico's Live Pulse: "Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said he will submit a statement into the Congressional Record that the health care reconciliation bill contains nothing that would be subject to the Byrd Rule. 'We find nothing that constitutes a Byrd Rule violation,' Conrad told reporters. 'We think the bill is completely clean.'" The Byrd rule says that provisions in a reconciliation bill that don't affect the budget can be thrown out of the bill. The statement is a formality in the reconciliation office, but it's significant because if the reconciliation bill is changed in any way, the House must again pass the legislation after the Senate does (Budoff Brown, 3/23).

Health Reform Creates Winners, Losers, and an Interesting Timeline
March 23, 2010

The health legislation creates a slew of winners and losers, as well as immediate effects and changes that will arrive slowly.

USA Today has an interactive timeline of when provisions will take effect as well as an article about how the bill could affect "nearly all" Americans. "Poor adults will get Medicaid. Low-income families will get federal subsidies to buy insurance. Small businesses will get tax credits. Children will be able to stay on parents' policies until they turn 26. Seniors will gain additional prescription-drug coverage. . . . On the other hand, the wealthy will pay higher taxes to help finance the 10-year, roughly $940 billion cost. Businesses with 50 or more workers will have to insure them or pay a penalty. Individuals, too, will have to pay a fine if they don't buy insurance" (Wolf and Young, 3/23).

Politico: "Match the effective dates of key reform provisions against the election calendar, and it becomes clear that Democrats were as focused on writing a legislative overhaul of the health care system as they were on devising a political road map for selling it to voters." Senior citizens in the Medicare drug program's doughnut hole will receive rebates this year and young people will be able to stay on their parents' insurance plans beginning in September. But, the most "bitter" taxes will not go into affect until 2013--or even 2018--well after this year's midterm elections and President Obama's 2012 reelection campaign (Budoff Brown, 3/23).

Related KHN story: The Immediate Effects Of The Reform Bill (Appleby and Steadman, 3/22).

Other major changes would not go into effect until 2014, such as "a mandate that most Americans obtain health insurance, a prohibition against insurers turning down adults for coverage because of pre-existing conditions, and the creation of a marketplace or purchasing pool to make it more affordable for people to buy insurance," according to the San Francisco Chronicle (Colliver, 3/23).

The Boston Globe: "The real fireworks in the bill, the core components that will provide coverage for more than 30 million uninsured Americans by 2019 and establish a system of shared responsibility for its cost, don't start for another four years" (Wangsness, 3/23).

The Wall Street Journal adds that, now that the legislation--and its timeline--are in place, the government's focus will turn towards implementing the provisions. "With the health bill passed, the focus now turns to enacting the most-massive changes to the health system in more than four decades. That task will be made difficult by a tight window for launching the first provisions of the bill, and a contentious relationship between government and industry" (Johnson and Adamy, 3/22).

The Washington Post: Over time, "[b]y far, the most direct effect will be on insurers. Over the next several years, health insurance will evolve into something more closely resembling a publicly regulated utility: It will have a guaranteed base of customers, thanks to the coverage requirement, but it will be bound by much tighter restraints than today's individual insurance market, where regulations vary widely from state to state" (MacGillis, 3/23).

Reuters: "Companies and their lobbyists said a host of new rules and regulations are likely to increase taxes and health insurance premiums while hampering job growth for manufacturers, retailers and other large businesses" (Heavey and Zieminski, 3/22).

This information was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.

*We would like to thank Brian C. Betner, Esquire (Hall Render Killian Heath & Lyman, Indianapolis, IN), for selecting the articles for this week's update.

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