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Healthcare Reform Update - October 15-21, 2009


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Compiled by Jennifer Hansen*

October 21, 2009

Lawmakers Struggle To Balance Interests As Sweeping Health Legislation Negotiations Proceed
October 19, 2009

Lawmakers continue to try to shape health bills as they move closer to floor votes. Kaiser Health News and Politico report that "Some (senators) seeking to help rural hospitals in their states also want to hold the line on the cost of reform." They include Sens. Mark Pryor, of Arkansas, Ron Wyden, of Oregon, Sam Brownback, of Kansas, and Kent Conrad of North Dakota.

"Congress created the 'critical access hospital' category in 1997 to ensure access to care in isolated parts of the country. Under the law, hospitals that are at least 35 miles away from other health facilities can be deemed 'critical access' hospitals; those hospitals can collect 101 percent of their costs from Medicare, for a maximum of 25 beds, rather than the usual 95 percent of allowable costs." Lawmakers want to change the rule that they be 35 miles apart (Pianin and Carey, 10/19).

The current health care reform debate is also spotlighting an unlikely figure, Sen. Roland Burris, The Associated Press reports. "For Democrats determined to get a health care bill, [he] is the house guest who couldn't be refused, won't soon be leaving and poses a plausible threat of ruining holiday dinner." Burris, an Illinois Democrat, was appointed to succeed President Obama in the Senate by disgraced former Gov. Rod Blagojevich. He says "he'll only vote for a bill to provide health care to millions more Americans as long as it allows the government to sell insurance in competition with private insurers." And he says he won't compromise on the issue. And now, Senate Democrats need 60 votes more than ever. "By definition, all 100 senators are relevant because any one can block Senate business unless there are 60 votes to override the objection. But Burris' stated position on the public option means that Democrats can no longer take his vote for granted" (Kellman, 10/19).

The Washington Post interviewed Sen. Olympia Snowe, R-Maine, about her her Senate Finance Committee vote. She said the American people would be "very encouraged" to see how the "Gang of Six" worked together to craft a bill. Snowe also said "I'm still struggling with affordability. The Congressional Budget Office has produced charts showing that the American people will achieve savings, but we have to make sure that is the case."

About her proposal to use a "trigger" for the government-run public health insurance option: "We need a lever to force the industry to drive down prices. If the goal of the public option is to ensure the industry performs, then the same could be true of a trigger mechanism. That lever could be equally potent in providing the maximum incentive to the industry to perform. The CBO has said we'd realize $15 billion in savings" (Klein, 10/18).

In the House, top Democratic lawmakers are facing challenges of their own, The New York Times reports. House Speaker Nancy Pelosi is directly asking colleagues what it will take to win their vote. "Ms. Pelosi, who has been meeting incessantly with fellow Democrats on health care, said she was now focused on producing the strongest possible legislation that can pass the House to provide her side of the Capitol with as much leverage as possible in future talks with the Senate." Pelosi must meet the needs of the moderates in her caucus without alienating the liberals in her party (Hulse and Pear, 10/18).

The Cleveland Plain Dealer reports that the fight over health care "obscures" common ground. "Both parties support plans that would provide incentives for prevention and wellness, extend coverage to those with pre-existing medical conditions, let job-changers retain their insurance, subsidize insurance purchases by the uninsured, and set up exchanges where the uninsured could shop for insurance." Republicans say their ideas aren't heard simply because they aren't in power (Eaton, 10/17).

Senate Postpones Vote On Medicare 'Doc Fix'
October 19, 2009

Senate Democrats have postponed a scheduled cloture vote today on a bill that would make permanent changes to scheduled rate cuts to Medicare reimbursement for doctors and hospitals. Meanwhile, doctors worry about the cuts and lawmakers worry that the fix could break budget goals.

The New York Times Prescriptions Blog reports that the American Medical Association is broadcasting a new television commercial endorsing the Senate bill. "S. 1776 is a Senate bill that would permanently adjust a Medicare payment formula that for years has threatened to impose steep annual cuts in the rates that doctors are paid," according to the Times. "The formula, tracing to laws passed in 1989 and 1997, was devised to keep Medicare spending in check." In recent years, though, congressional lawmakers have intervened with a "patch, known on Capitol Hill as the annual 'doc fix,' to prevent the cuts." Currently, Democrats have no plans "to offset the cost of S. 1776, which is why they are eager to keep it separate from the broader health care legislation and avoid breaking the president's promise [that health reform would not add to the deficit]." They insist "fixing the doctor payment formula should not count toward the cost of the big health care legislation, because it is a problem they inherited. What they have trouble explaining, though, is how the flawed formula is different from any of the zillion other entrenched problems in the health care system that the proposed overhaul aims to fix" (Herszenhorn, 10/18).

The Hill Blog reports on the decision to postpone today's vote: "Initially, Senate Majority Leader Harry Reid (D-Nev.) scheduled his motion to end floor debate and bring the so-called 'doc fix bill' to a final vote at the beginning of next week. But the leader reportedly changed his mind on Friday, deciding instead to vitiate Monday's vote so both parties' lawmakers could broker an agreement on a few remaining amendments, his office said Sunday. Reid's office did not specify what those amendments might be, but Republicans have previously suggested they hoped to add pay-fors to the Democrats' bill in an attempt to reduce its $248-billion footprint . . . . Nevertheless, it is unclear when Democrats will attempt cloture next, but it could be as soon as later this week" (Romm, 10/18).

Baucus Doubts Public Option Can Get 60 Votes In Senate
October 19, 2009

Senate Finance Committee Chairman Max Baucus, D-Mont., said today that the Senate is unlikely to approve major health care legislation this year that includes a pure form of the controversial government-operated insurance program, following White House signals over the weekend that President Obama did not consider the public option essential to passage of legislation this year.

House Speaker Nancy Pelosi, D-Calif., and many liberal Democrats in the House and Senate, are pressing for inclusion of a robust "public option" in health care reform legislation, saying it is essential to compete with the private insurance industry to drive down costs, but the Senate Finance Committee twice rejected that approach before voting out a health care bill early last week.

Baucus is meeting behind closed doors with Senate Majority Leader Harry Reid, D-Nev., and Sen. Christopher Dodd, D-Conn., to negotiate a compromise health care bill to send to the Senate floor. This compromise plan will meld provisions of bills passed by the Finance Committee and Health, Education, Labor and Pensions Committee and is expected to be sent to the Senate floor later this month.

Baucus told reporters today that it is highly unlikely Democrats could muster the 60 votes needed to overcome a GOP filibuster and pass health care legislation that includes a public option.

"There are various versions of the public option bandied about . . . [and] we're trying to see what makes the most sense," Baucus said. "The goal is health care reform . . . that can get 60 votes. . . . I don't know if there are 60 votes for the pure kind of" public option proponents are demanding.

Baucus took questions from reporters during a conference call sponsored by Families USA, a nonprofit health care advocacy group. During the session, he charged that the insurance industry hurt its credibility with members of Congress by releasing what he termed was a badly flawed and one-sided study, which concluded that the Finance Committee bill, if enacted, would drive up insurance premiums. "It galvanized, solidified a lot of feelings in the Senate against the insurance industry," Baucus said.

He also said the negotiators are reviewing a provision of the Finance Committee bill that would impose a $4 billion-a-year tax on medical device manufacturers, based on their market share, to help finance the expanded health insurance program. Lawmakers from Minnesota, Indiana and other states with heavy concentrations of these industries have opposed the measure, saying it would harm their region's economies. "Frankly, the device manufacturers are divided and they're all over the lot," Baucus said. He added that all sectors of the health care industry should share in the cost of health care reform, and "no group should be exempt."

But by far the most contentious issue facing Senate negotiators is whether the final version of the health care overhaul should include a public option. There are a number of different approaches to a government-run insurance program that have emerged from committees in the Senate and House.

The toughest version, strongly advocated by liberals, would link reimbursement rates for health care providers to those paid by Medicare --an approach that would bring down overall health care costs by $110 billion over the coming decade, according to the Congressional Budget Office. Another approach, favored by centrist Democrats, would mandate the government to negotiate reimbursement rates with providers. CBO says this approach would save about $25 billion over 10 years.

The Finance Committee version would use privately operated insurance cooperatives to provide affordable coverage to uninsured Americans, bypassing the government option altogether, while the Senate HELP bill calls for creation of a strong government insurance program that would negotiate rates.

Sen. Thomas Carper, D-Del., is promoting another model that would leave it up to the states to decided whether to establish a public plan or not. Sen. Chuck Schumer, D-N.Y., has embraced the idea, saying that it would allow states to opt in or out of a public plan.

Over the weekend, Obama administration officials said that the president continues to support the concept of a government sponsored insurance option, but is not demanding that it be included in the final legislation. White House Chief of Staff Rahm Emanuel, in two television appearances on Sunday, said that the public option could provide much needed competition, but that "it's not the defining piece of health care."

Baucus said today that "Personally, I want any mechanism that keeps the insurance industry's feet to the fire." But he questioned whether a robust public option would survive on the Senate floor, in light of the concern of Republicans and some conservative Democrats that it would be a dangerous step toward government control of the health care industry.

As for the "opt in, opt out" approach, Baucus said: "That's new, that's interesting . . . We're trying to figure out what some of the unintended consequences [of it] will be."

Obama Administration Appears Open To Public Plan 'Trigger'
October 16, 2009

"The Obama administration signaled a willingness to compromise on a proposed government-run health insurance company by praising Senator Olympia Snowe's plan to start the entity only if private insurers don't meet targets," Bloomberg reports. Snowe, a Maine Republican, has "proposed triggering the so-called public option if private insurers fail to curb insurance-premium increases. A senior administration official, who spoke on condition of anonymity, said that while President Barack Obama prefers the public option, Snowe's trigger was a potentially good compromise if the Senate decides to pursue it. Under the plan, "the government would offer coverage in any state where less than 95 percent of residents have access to affordable insurance" (Rowley and Litvan, 10/15).

On a visit to New Orleans, Obama "took the opportunity to bash insurance companies that he said are trying to block his health care plan to protect their profits," McClatchy reports. "Feeding off the crowd's energy at his town hall meeting at the University of New Orleans, the second of only two stops on his quick survey of the city, the president compared his own determination to expand health care coverage to the city's determination to rebuild. 'I don't quit,' he said." Obama also "warned the crowd that if they see any TV ads underwritten by 'some funny-named group out there that you can't really identify, you know, Americans for Good Health Care or something, that it's probably a front group for the insurance industry, and don't let them fool you. We're going to get this done'" (Talev, 10/15).

The Associated Press: "Obama told a town hall meeting in New Orleans on Thursday that his health care reform plan will also help protect seniors and others from rising health care costs--so that over the long term, those costs won't be rising more quickly than Social Security" (10/15).

At a fundraiser in San Francisco, "the president also reminded liberal Democrats who may be disenchanted with aspects of the health care legislation in Congress that any bill that gets through will help millions of uninsured Americans," The Associated Press reports in a separate story (10/16).

Meanwhile, Obama "will participate via live webcast in Organizing for America's 'call parties' on Tuesday, encouraging supporters to keep the pressure on Congress to overhaul the health care system," Roll Call reports. "The parties are part of an effort by the OFA to generate 100,000 calls to Congress in a single day" (Koffler, 10/15).

House Panel Sets Stage For Reconciliation Maneuver
October 15, 2009

A key House panel approved a measure Thursday setting the stage for Senate Democrats to bypass likely Republican attempts to block health reform legislation, CBS News reports. The Ways and Means Committee's action sets in motion a process that would allow Senators to pass legislation with 51 votes, rather than the 60 required to block a filibuster under so-called reconciliation rules. Reconciliation allows Senators to move more quickly and avoid partisanship on urgent budgetary issues. The process does not, however, allow lawmakers to include laws that don't affect budget, like some consumer protection provisions in the current bills (Condon, 10/15).

The measure approved today by the House Ways and Means Committee "could be used as the vehicle for health legislation to pass in the Senate" by a simple majority, The Wall Street Journal reports. "Under the Constitution, revenue measures must originate in the House. If the Senate wanted to use this procedural tactic, the full House would first have to pass a bill providing for it." House Republicans protested, with one GOP committee member saying the decision to approve the measure is "another clear sign that Democrats have chosen to go it alone on health care" (Vaughan, 10/15).

What Will Make It Into The Final Senate Health Bill?
October 14, 2009

Senate Majority Leader Harry Reid began private meetings Wednesday with fellow Democrats and the White House to merge his chamber's two health care overhaul bills into a single plan that could win a filibuster-proof majority in the Senate.

Work on combining the Senate's Finance and health committees' bills was supposed to be, in theory at least, the less contentious part of this new phase of overhaul negotiations. But the question of what will hit the Senate floor for debate in less than two weeks remains large and open.

Reid's task is complicated by the fact that although Senate Democrats enjoy a 60-vote, filibuster-proof majority, it is a fragile caucus that includes a handful of moderates whose votes on President Obama's signature domestic initiative are not a given.

And already at least one of Reid's fellow Senate Democrats, New York's Charles Schumer, is agitating for a final bill that includes a public insurance option - something missing from the measure passed this week by the more conservative Senate Finance Committee.

"In one sense, the debate begins all over again," says Bob Moffit, director of health policy studies at the conservative Heritage Foundation.

The long-awaited $829 billion proposal approved Tuesday by the Senate Finance Committee with a single Republican vote "concludes one big chapter of the health care debate," Moffit says. "But you're not going to see that bill again."

Opposition Pumps Up The Volume

Schumer wasn't the only one stirring the pot in the wake of Tuesday's vote.

Interest groups have ratcheted up their message machines this week--from insurers denouncing the Finance Committee proposal for failing to require that all Americans obtain coverage to unions balking at proposed taxes on generous benefit packages.

So Reid, with a tough re-election battle back home in Nevada and a looming showdown with House Speaker Nancy Pelosi over her chamber's competing legislation, has to devise a strategy that not only melds the Finance Committee's bill with the more liberal offering from the health committee but still gives the president a win.

There are a few certainties: There is little doubt that the ultimate Senate bill will include changes that prohibit insurers from denying coverage to Americans with pre-existing health conditions or canceling coverage when a policyholder gets sick.

And both Senate bills contain similar provisions for creating state-based insurance exchanges--or pools--that can be used by poor and low-income individuals and families, and small businesses, to purchase more affordable coverage.

The Finance Committee's plan to expand Medicaid coverage to more poor Americans is also expected to make the final bill, though details on how to pay for it--and for many other bill provisions--have yet to be worked out.

But the Finance Committee bill is the only proposal that does not include a government-run plan, and it does not require employers of a certain size to offer coverage to its employees.

"Do you impose an employer mandate that unions want, but employers will fight to the death?" Moffit asks. "Do you include a public plan that moderate Democrats don't want? Do you impose an individual mandate?"

Those big, fundamental questions are unanswered, says Michael Tanner, a senior fellow at Cato Institute. "There are real problems yet to be resolved," he says. "This is not even halfway there."

Different Mandates, Different Parameters

The Senate Finance Committee bill would require that most individuals obtain insurance, but its proposed phased-in penalties for failure to comply are nominal and would do little, critics argue, to encourage insurance purchase.

It proposes that penalties of $200 per adult begin in 2014 and reach $750 by 2017. The Senate health committee has proposed a penalty of up to $750 a person, with no phase-in period.

The insurance industry had banked on a vastly increased pool of potential clients under a mandated-coverage plan. Now the industry is attacking the Finance Committee's proposal as guaranteeing an increase in the cost of premiums.

Also at odds are the competing Senate committee proposals for employer mandates, which have emerged as one of the stickiest issues Reid faces.

The Finance Committee would require that businesses with more than 50 employees foot the bill for government insurance subsidies for which their workers may qualify. The health committee bill demands that employers pay for part of the cost of worker coverage or face a penalty. Both bills include exemptions for small employers.

A merged Senate bill will very likely include both an individual and employer mandate, but just who will be exempted is expected to be one of the issues dominating closed-door sessions over the coming days.

Meeting Obama's Objectives Without A Public Option

Schumer may be pushing hard again for a public option to be included in the final Senate bill, but Obama suggested Tuesday that the Finance Committee bill--sans public option--brought Congress closer to achieving the president's core objectives: dramatically expanding the number of Americans covered by insurance, and bending the cost curve.

Len Nichols, director of the health policy program at the nonpartisan New America Foundation, said there has been "fertile thought" around an alternative to a full-blown public option.

That alternative, he says, could be some kind of a melding of so-called trigger proposals advocated by both Democratic Sen. Tom Carper of Delaware and Sen. Olympia Snowe of Maine, the only Republican on the Finance Committee to vote for the proposed overhaul plan.

Under a trigger plan, a public insurance option would kick in if a state fails to meet federal insurance coverage goals.

"I would not be surprised at all to see that emerge" from the Senate's bill-merging discussions, Nichols says.

"Some kind of trigger is the best way to square the circle," he says. "It shows the right that there's no government takeover going on here, and moderate Democrats can get onboard."

But on Capitol Hill Wednesday, Reid said he wanted to note where he stands at the start of bill negotiations.

"I believe in a public option," he said, adding, pointedly: "Remember: I said I do."

A Win For Obama?

And that may be the path to what Obama could define as success on his signature domestic issue.

Even with a plan emerging that would contain an alternative to a full-blown public insurance option, and with considerably watered-down mandates for individuals to buy insurance and employers to pay for at least some coverage costs, the White House would most likely declare victory.

"The reason this is historic has almost nothing to do with the specifics," Nichols says, "but [with] the commitment now on the part of five congressional committees to make health insurance and health care affordable for all Americans - and to simultaneously bend the cost curve."

"We've never gotten this far before," he said.

But, for overhaul opponents, the game has only begun - and it will play out in the home districts of members of Congress facing re-election in 2010.

"If this is defeated, it will be defeated at the grass-roots level," says John Goodman, president and CEO of the National Center for Policy Analysis, which has gathered the signatures of more than 1.3 million who oppose the "nationalization" of health care.

"There is," Goodman says, "a real intense battle going on out there."

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 Jennifer Hansen, Esquire (Hooper Lundy & Bookman Inc., San Diego, CA), for selecting the articles for this week's update.

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