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Healthcare Reform Update - November 26-December 2, 2009


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Compiled by Nicole DiMaria*

December 2, 2009

Political Squabbles Mark Opening Day Of Senate Health Debate
December 1, 2009

The Senate on Monday began its health bill debate amid speculation regarding how long the floor consideration would last and how much the bill will change before a final vote is taken.

The Los Angeles Times reported that Majority Leader Harry Reid opened the debate: "'While each of us may not say 'yes' to each word in this bill as it currently reads, let us at least admit that simply saying 'no' is not enough,' said Reid . . . . Republicans have considerable power to extend the debate into the new year, and Minority Leader Mitch McConnell (R-Ky.) has indicated that he would like at least six weeks of discussion" (Hook, 12/1).

The BBC notes that the Senate is "sharply divided" over the legislation, which "aims to extend coverage to tens of millions of uninsured Americans, but faces entrenched opposition from Republicans." The GOP's McConnell focused attention on the bill's expense, saying, "The notion that we would even consider spending trillions of dollars we don't have in a way that the majority of Americans don't even want is proof that this healthcare bill is out of touch." Majority Leader Harry Reid also could face resistance from centrists in his own party (11/30).

The Associated Press : "Debate is expected to last for weeks over the legislation, which includes a first-time requirement for most Americans to carry insurance and a mandate for insurers to cover any paying customer regardless of medical history or condition." And Democrats, who continue to struggle with their own internal divisions, control 60 seats in the Senate--the number needed to overcome a GOP filibuster. But mustering these votes continues to be a challenge. "While Reid spent most of the day jousting with Republicans, his ability to steer the bill to passage will depend on finding ways to finesse controversial provisions within the measure" (Espo, 11/30).

CongressDaily reports that both Republicans and Democrats used Monday to try to score political points on the bill. "Democrats attempted to muddle two of the GOP's main arguments against Senate Majority Leader Reid's healthcare proposal, while Republicans focused their attention on a third hot-button issue, the proposal's nearly half-a-trillion dollars in cuts to seniors' Medicare benefits." Democrats offered the first amendment of the debate, "a measure to guarantee women preventive care and screenings with no co-payment" which was viewed as a swipe at Republicans who themselves pushed back against recent changes in guidelines that now tell women to delay and get mammograms less often. "Republicans, meanwhile, selected as their first amendment a proposal by Sen. John McCain, R-Ariz., to send the bill back to the Finance Committee and remove what Republicans call $400 billion in Medicare cuts" (Edney and Friedman, 12/1).

The Associated Press in a separate story: "McCain's amendment would strip out more than $400 billion in Medicare cuts to home health providers, hospitals, hospices and others--a pitch to seniors, who polls show have deep concerns about the legislation. Democrats planned to go on the offense on the same issue Tuesday with an amendment underscoring benefits to seniors and guaranteeing that basic Medicare benefits would not be touched." Votes on amendments may begin today (Werner, 12/1).

Politico: "Sen. Mike Enzi (R-Wyo.) accused Reid of engaging in a 'stunt' by catching the Republicans unprepared with requests to agree to prohibit senators from raiding surpluses from Social Security or a new long-term care insurance fund. Reid also sought agreement that all senators must first post amendments on their Senate Web pages before proposing them on the floor" (Budoff Brown, 12/1).

Modern Healthcare: "The amendments came the same day that . . . Reid (D-Nev.) threatened to keep the Senate in session during the year's remaining weekends in order to reach a vote on the bill by the end of December" (DoBias, 11/30).

NPR quoted Reid: "The next weekends, plural, we will be working. I have events, uh, this weekend that I'll have to postpone, some I'll have to cancel. That's the way it's going to have to be with everyone. There is not an issue more important than finishing this legislation" (James, 11/30).

New Report: Insurance Plans For Most Americans Wouldn't Cost More After Health Reform
November 30, 2009

A long-awaited analysis shows health insurance rates would generally hold steady or decline for most Americans--those covered by large employers
--if the Senate health overhaul bill became law.

The report released Monday by the nonpartisan Congressional Budget Office described a different picture for people who buy their own coverage. Some would face moderate increases, while others would pay much less than they do now.

Not surprisingly, people who qualify for subsidies--those earning less than 400 percent of the federal poverty level ($73,240 for a family of three this year)--would see their premiums drop. About 57 percent of the 32 million people expected to buy coverage on their own in 2016 would qualify for a subsidy, the CBO estimates. On average, the subsidized buyers would see their premiums fall 56 percent to 59 percent.

But the CBO said those who don't receive subsidies would pay, on average, 10 percent to 13 percent more. The main reason: the policies required under the legislation generally cover more benefits and out of pocket costs than what is currently purchased, and thus would be more expensive.

Individual rates also would be affected by changes in rules governing how insurers set prices. Some people--younger or healthier ones, for example
--would likely pay higher rates, while older or sicker people would pay less, the CBO said.

The analysis compares rates with what they would be under current laws, and is based on estimates for 2016, when provisions of the new legislation would be fully implemented.

Democratic and Republican leaders immediately seized upon the report.

"The analysis . . . indicates that whether you work for a small business, a large company or you work for yourself, the vast majority of Americans will see lower premiums than they would if we don't pass health reform," said Senate Finance Committee Chairman Max Baucus, D-Mont., in a written statement.

But Senate Minority Leader Mitch McConnell, R-Ky., said the legislation would result in trillions more in spending and yet "most people will end up paying more or seeing no significant savings."

Here are some of the specific findings from the 27-page CBO report:

--Premiums paid by large employers would hold steady or drop by up to
3 percent. Most insured people get coverage through their jobs; the CBO estimates large employers would represent 70 percent of the market in 2016.

--Small employers, representing 13 percent of the market, would see a range of effects. Premiums for some could fall by up to 2 percent, while others may see a 1 percent increase. About 12 percent of very small employers--those with generally lower wages--would qualify for tax credits, causing their premiums to fall by 8 percent to 11 percent.

--Employers offering high cost or "Cadillac plans"--those that exceed $8,500 for individuals and $23,000 for families--would most likely trim benefits or lower costs through other changes to reduce the impact of an excise tax the bill would impose on such plans.

The Senate bill and one that has passed the House would both change the way insurance is sold to individuals and small groups. They would buy policies in new, regulated marketplaces, called exchanges. Insurers could no longer reject applicants with health conditions, or set annual or lifetime limits on coverage. New rules would alter how they set premiums, tightening limits on how much rates can vary by age, for example.

At the same time, the legislation would fine people who don't enroll, with some exemptions. The Senate penalty would phase in, from $95 per person the first year--2014--to $750 per person by 2016.

Insurers and some economists say those penalties wouldn't be strong enough to make sure everyone--especially younger, healthier people--would buy insurance. They might wait until they fall sick, which could raise premiums for everyone else.

But contrary to insurance industry arguments, the CBO said that more than enough people would obtain coverage to help lower premiums overall. The effect would most noticeable for people who buy their own insurance; it would be less for small employers.

The insurance industry took issue with some of the CBO's findings. America's Health Insurance Plans, a lobbying group, says the nationwide average premiums projected by the CBO ignore regional differences that could sharply increase premiums in some states. And, in a statement, it said subsidies do not lower premiums.

"Subsidies are essential to helping low and moderate income families afford health coverage," the statement says. "But in the same way that Pell Grants do not lower the cost of college tuition, subsidies do not reduce underlying medical costs."

Questions Circle Over Health Reform's Effect On Rising Costs
December 1, 2009

"The White House has started to aggressively push back against a growing narrative that pending health reform legislation doesn't do enough to control spiraling health costs," Politico reports. Peter Orszag said reporters who go "on buzz and sort of loose talk," instead of doing "the hard work," were partly to blame for the pending narrative. But "[o]ne of the most recent and damaging reports came from the administration's own independent actuary. The Centers for Medicare and Medicaid Services reported that the legislation passed by the House would increase health care costs by almost $300 billion over the next 10 years" (Frates, 12/1).

The Denver Post : "Requiring nearly everyone to buy insurance--pushing Americans toward preventive care at doctors' offices instead of more expensive care at emergency rooms--would cut costs long term, some argue. But whether there is much else in the national legislation to rein in the soaring cost of medical treatment is a major point of contention." The Post takes a look at five "key reforms" that some say could cut costs: The public option, taxes on expensive health insurance plans, so-called "certificates of need" that limit hospital acquisitions, payment reform such as "bundling payments," and increased transparency in health care pricing all make the list. Not surprisingly, each also has a share of critics and skeptics (Brown, 12/1).

Meanwhile, financing issues also continue to be central in reform efforts. Even if the Senate follows the House in passing its health overhaul legislation, Democrats from the two bodies will still face "yawning differences between negotiators over a funding mechanism," Politico reports in a second story. "Thus far, the White House, House and Senate have each embraced a different financing plan for its proposal--and each one is an anathema to the other players." The White House proposed taxing charitable deductions. The House would increase the income tax on the wealthy. The Senate would combine a tax on costly insurance plans and a payroll tax increase (Cummings, 12/1).

Seven Things You Didn't Know Were In The Senate Health Bill
November 30, 2009

Pay attention: The "Patient Protection and Affordable Care Act"--better known as the Senate health care overhaul bill--is chock full of interesting but little publicized provisions affecting consumers. Sure, the bill is mainly a blueprint for overhauling the insurance system. But look closely and you'll see a variety of items that would affect people from the cradle to old age--from breast pump use to retiree health benefits. It's a congressional tradition, adding pet interests that otherwise might not pass to a big bill that at least will be put up for a vote.

Yes, there's plenty of time to change the bill. But political analysts say a final overhaul bill would more likely look like this measure than the version already approved by the House because Senate Democrats barely could agree on sending it to the floor for debate. In short, there's not much political room for major changes.

Here are some examples of what lies in this 2,074-page bill:

Nursing Mothers Get A Break

Employers would be required to provide an unpaid "reasonable break time for nursing mothers" in the first year after giving birth. Women would be provided a private place, other than a bathroom, to use a breast pump. The provision exempts companies with fewer than 50 workers if the requirement would impose "an undue hardship," a determination left to the employer to make.

This provision was inserted by Sen. Jeff Merkley, D-Ore., who in June introduced the Breastfeeding Promotion Act. Merkley is promoting breast feeding partly as a way to cut health costs. He cites studies showing breast-fed children have a lower rate of disease and illness in their lifetime.

But employers see yet another expense. "Every additional mandated rule further burdens employers who are struggling to keep jobs afloat," says Neil Trautwein, vice president of the National Retail Federation.

Twenty-four states already have protections for nursing mothers in the workplace, according to the National Conference of State Legislatures.

Learning To Be An Adult

Being a teenager is tough. The Senate wants to help with a provision allocating $400 million from 2010 to 2015 to help teens make the transition to adulthood.

The money goes to states primarily to set up sex education programs. But the money can also be used for "adult preparation" programs that promote "positive self esteem, relationship dynamics, friendships, dating, romantic involvement, marriage and family interaction."

In addition, the programs can teach financial literacy and other skills such as goal setting, decision-making and stress management. About $10 million of funding would go to "innovative youth pregnancy prevention strategies" in areas of the country with high teen birth rates.

The Personal Responsibility Education for Adulthood Training funding was approved as an amendment in the Senate Finance Committee. Republican Sen. Olympia Snowe of Maine joined all the Democrats in passing it.

Retiree Health Benefits

The Senate bill includes a provision designed to ease out-of-pocket costs for retirees who are under 65 but who still get health insurance from their former employer. The bill would create a temporary "reinsurance" program under which the government would pick up 80 percent of some high-cost insurance claims filed by retirees. Employers would use the savings only to make retirees' coverage more affordable by reducing their share of premiums or other costs. The Senate bill would set aside $5 billion for the program; the House-passed bill, which has a similar provision, has a
$10 billion pot. The proposal has wide support among employer groups and labor unions.

The same can't be said of another provision in both bills. Companies would have to pay a tax on the government subsidies they receive for providing their Medicare-eligible retirees with prescription drug coverage. These subsidies, included in the 2003 law that created the Medicare drug benefit, were designed to encourage companies to keep offering drug coverage. Now, if the subsidies are taxed to help pay for a health overhaul, they become much less attractive to employers; some companies might drop drug coverage for retirees altogether, warned the American Benefits Council, an employer group, and the AFL-CIO in a joint letter to Congress. If that happened, the retirees would get their drug coverage from Medicare. Critics say that would ultimately cost the government more money than it would recoup by taxing the subsidies.

Promoting Use Of Bone Density Scans

Rapid increases in Medicare payments for imaging services led lawmakers to reduce payments for some services, including those that test bone density.

The Senate bill is trying to boost payments, which have dropped by more than half since 2006, for a bone test known as dual energy X-ray absorptiometry (DXA) or bone densitometry. And those cuts have made it more difficult for patients to get access to the test, especially in physicians' offices and clinics, according to the National Osteoporosis Foundation. The Senate bill would increase rates to 70 percent of what Medicare paid in 2006.

Raising the payment for bone density scans is a priority for two senators whom Reid hopes to win over in his bid to get 60 votes for his health care plan: Blanche Lincoln, a moderate Democrat from Arkansas, and Olympia Snowe, a moderate Republican from Maine.

Setting ER Prices

Nonprofit hospitals would have to limit how much they charge low-income uninsured emergency patients to the lowest amount they receive from insured patients for the same services.

The provision in the Senate bill comes more than six years after consumer groups in California and Texas began highlighting how hospitals were charging uninsured patients several times more for the same services as insured patients.

A 2007 study published in the journal Health Affairs showed that many "uninsured and other 'self-pay' patients for hospital services" were often charged "2 1/2 times what most health insurers actually paid and more than three times the hospital's Medicare-allowable costs." The study by Gerard Anderson of Johns Hopkins University also found the "gaps between rates charged to self-pay patients and those charged to other payers are much wider than they were in the mid-1980s."

In response to the criticism, many hospitals have set up programs for the uninsured to apply for financial assistance and obtain discounted care. The Senate provision would require all hospitals to have such programs.

Singing The Blues

Non-profit Blue Cross and Blue Shield health plans would have to spend at least 85 cents of every premium dollar on health services or forfeit their special federal tax deductions. The Congressional Budget Office estimates this provision in the Senate bill would cost the Blues' plans about
$400 million over the next decade.

Historically, Blue Cross and Blue Shield plans received a tax-preferred status because they were created to provide a more significant "community benefit" than other insurance companies. But the Blues have come under increasing scrutiny from state and federal lawmakers and consumer watchdog groups for charging high rates, racking up profits (revenues over expenses) and paying top executives no differently than their for-profit insurance counterparts.

Several Blues' plans converted to for-profits in the past 15 years. Of the 39 Blue Cross and Blue Shield plans nationwide, 24 are now non-profit.

Transparency in Drug Pricing

Pharmaceutical benefit managers are a critical part of the nation's health care system. Administering drug plans for more than 210 million insured Americans, they negotiate discounts on prescription drugs with retail pharmacies and wholesalers and also get rebates from drug makers.

At the urging of Sen. Maria Cantwell, D-Wash., the Senate Finance Committee inserted language into its health bill that would force the benefit managers, known as PBMs, to disclose details of those negotiations--including how much of the savings were passed on to consumers.

Adding that transparency to drug pricing, Cantwell maintains, would help lower drug prices. "We want the consumer to benefit as greatly as possibly from the discounts that PBMs are helping to negotiate," Cantwell said earlier this year. The PBMs don't see it that way. Cantwell's amendment, they argue, would "allow competing drug manufacturers and pharmacies to learn prices their competitors charge and raise prices accordingly. It would decrease, not increase, competition among them," Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association, wrote in a Nov. 24 letter to Senate Majority Leader Harry Reid, D-Nev. Merritt's group represents PBMs.

The CLASS Act: A Flawed But Powerful Game-Changer for Long-Term Care
November 30, 2009
By Howard Gleckman

Congress may be about to make major changes in the way 10 million frail elderly and adults with disabilities pay for long-term care services. Buried in both the House-passed health bill and the Senate Democratic leadership measure, the Community Living Assistance Services and Supports (CLASS) Act would, for the first time, create a national long-term care insurance program.

Every worker would get basic coverage under CLASS, for care either at-home or in a nursing facility. They'd pay premiums for five years, and they'd have to need help with at least two activities of daily living (such as bathing or dressing) before they'd be eligible for benefits. While these would be modest (perhaps $75 a day), they would be available in cash. It is hard to overestimate how significant this could be for those Americans who need assistance and the 40 million family members and friends who care for them.

Equally important, CLASS could become the model for a new type of government benefit. Not welfare-like Medicaid. Not another under-funded entitlement such as Social Security. Rather, if designed properly, CLASS could become fully-funded insurance. It would give families the help they need to care for their loved ones. It could help pay for a wheelchair ramp so mom could stay at home. It might make it possible for dad to hire his niece to help him for four or five hours a day, or pay for his visits to an adult day center.

But it is not easy, and done badly, CLASS could merely repeat the flaws of so many other well-intended government programs of the past. Why should people purchase from the government when they won't buy from private companies? And premiums would quickly become unsustainably high if too many buyers are at high risk for becoming disabled.

A key goal of national long-term care insurance is to reduce the role of Medicaid, which today pays for more than 40 percent of all personal care for seniors and others with disabilities. While Medicaid provides a critical safety net, it also often forces the disabled into the wrong care, in the wrong place, at the wrong time. For instance, most benefits go only to those in nursing homes, even though they are often the last place people want to live. And to qualify, people normally are allowed to keep only a few thousand dollars of financial assets and earn only a few hundred dollars a month.

Basic cash insurance would be a game-changer for hard-pressed families. It would replace Medicaid with a flexible benefit that allows families to organize the right care for their loved ones. Does mom need a wheelchair ramp so she can stay home? Would dad like to hire your niece to care for him? No problem.

To the degree that national long-term care insurance can reduce the number of people who go broke and turn to Medicaid for help, both states and the federal government will also come away winners. Medicaid spends one-third of its entire budget, or more than $100 billion a year, on long-term care. The Congressional Budget Office estimates Medicaid will absorb a stunning one-sixth of all federal tax revenues by mid-century. And it is putting enormous financial pressure on states that pay nearly half its costs.

Private long-term care insurance is not doing the job either. Few buy a product that is costly--typically $3,000 a year for a 65-year old--complicated, and, frankly, too depressing to think about. Today, only about seven million people have long-term care insurance, compared to 250 million who have health insurance. That's the real crisis of the uninsured.

But CLASS risks the same market failure as private insurance. Why should people purchase from the government when they won't buy from private companies?

I'd solve this problem by, gasp, making CLASS insurance mandatory. We effectively do this for auto and homeowner insurance and few complain. And universal coverage could cost as little as $50 per month--a small price to pay to lay off some of the risk of care. Those who want more coverage could buy private insurance, much like they purchase a Medicare supplement (Medigap) today. France has universal basic insurance and one-quarter of those 65 and older enhance this coverage with private policies.

If the insurance is to remain voluntary, as in the CLASS Act, government needs to combine carrots and sticks to encourage participation. Employers should be required to offer payroll withholding, but should also get tax benefits for making premium contributions. Workers should pay a penalty for delaying enrollment, just as with Medicare Part D today. But they should also be allowed to buy coverage with pre-tax dollars.

And whatever else it does, the program needs to pay for itself. Premiums should be deposited in a quasi-government corporation that can prudently invest premiums but is walled off from the grasping hands of Congress.

Pay attention to the CLASS Act. It can not only provide better long-term care for those who so desperately need this assistance, it can also become a new way to help those in need in an era of $1 trillion-plus budget deficits. But only if it is done right.

Howard Gleckman, a resident fellow at the Urban Institute, is author of "Caring For Our Parents" and a frequent writer and speaker on long-term care issues.

This information was reprinted from 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 Nicole DiMaria, Esquire (Wolff & Samson, West Orange, NJ), for selecting the articles for this week's update.

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