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Healthcare Reform update - July 29-August 4, 2010


Email Alert

August 4, 2010

Compiled by Nicole DiMaria*

Judge Gives The Go-Ahead To Virginia's Challenge To The Health Overhaul

August 3, 2010

In a ruling issued Monday, U.S. District Judge Henry Hudson refused to dismiss the lawsuit filed by Virginia challenging a key aspect of the health care overhaul. The next round of arguments in this case is scheduled for October.

The Associated Press reports that the lawsuit has passed its first hurdle. "Virginia Attorney General Ken Cuccinelli claims in the lawsuit that Congress doesn't have the authority to require citizens to buy health insurance or pay a penalty. U.S. District Judge Henry Hudson's ruling denied the Justice Department's attempt to have the lawsuit dismissed, saying further hearings are needed to weigh the merits of the case. An Oct. 18 hearing had previously been set." The Virginia General Assembly passed a law this year exempting state residents from the federal coverage mandate (Felberbaum, 8/2).

The Washington Post: "Hudson heard two hours of oral arguments in July. Cuccinelli's legal team argued that a person who has chosen not to buy insurance is not engaged in economic activity and, therefore, Congress cannot regulate his actions as interstate commerce. The administration countered that an insured person will eventually require health care. Going without health insurance is not inactivity—it's simply choosing not to pay for health care, a decision that shifts a $43 billion-a-year burden from the uninsured to the insured, their lawyers contended. (Helderman, 8/3).

Los Angeles Times: "President Obama and many healthcare experts think that requiring Americans to buy health coverage-and fining them if they do not-is the only way to assure that healthy people do not game the system by purchasing insurance only after they develop medical problems, thereby pushing up costs for everyone. Many legal experts also support the administration's view that because the Constitution gives Congress the power to regulate interstate commerce, lawmakers have broad authority to regulate the health insurance market. Critics argue that the insurance requirement is an unprecedented and illegal expansion of federal power" (Levey, 8/3).

The Roanoke Times: "In a 32-page opinion, Hudson ruled that the existence of the state law 'is sufficient to trigger the duty of the Attorney General of Virginia to defend the law and the associated sovereign power to enact it.' . . . Hudson underscored that his ruling today is limited to whether Virginia has standing to challenge the federal law" (Sluss, 8/2).

CongressDaily: "Hudson, who was appointed by former President George W. Bush in 2002, refuted each of HHS' arguments in his opinion, ruling that the case was legitimate and that the law 'radically changes the landscape of health insurance coverage in America.' It 'literally forges new ground and extends commerce clause powers beyond its current high watermark,' he wrote. Peter Leibold, CEO of the American Health Lawyers Association, said such phrasing could give some insight into how Hudson might rule when the court proceeds to a full hearing on whether the law is constitutional" (McCarthy, 8/3).

The Virginian-Pilot: "Hudson's opinion sets the stage for oral arguments on Oct. 18 over 'whether or not Congress has the power to regulate-and tax-a citizen's decision not to participate in interstate commerce.' Many involved in this highly politicized case, which raises questions about federal powers and states rights, expect it will reach the U.S. Supreme Court" (Walker, 8/3).

Politico: "Hudson rejected the Justice Department's suggestions that the court would have to engage in improper speculation to assess the impact of the mandate more three years before it takes effect in 2014." Meanwhile, "[o]ther court challenges to the health care reform law are moving forward in Michigan, where a federal judge heard arguments last month from anti-abortion activists seeking to block the law, and in Florida, where 20 states have banded together in a challenge to the health reform measure. That suit is set for argument before a judge in Tallahassee on Sept. 14" (Gerstein, 8/2).

The Christian Science Monitor: "In noting the national significance of the issues and the murky state of the law, Hudson suggested there may be many legal twists and turns in the case ahead. 'While this court's decision may set the initial judicial course of this case, it will certainly not be the final word,' he said" (Richey, 8/2).

Bloomberg Businessweek: "'The decision is a procedural step that just means there will be a full hearing on the arguments,' U.S. Health and Human Services Secretary Kathleen Sebelius told reporters in a conference call after Hudson handed down his ruling. 'We remain confident that the case is solid and that there's a full constitutional case for the passage of the Affordable Care Act.' Virginia filed its suit within minutes of Obama signing the bill on March 23" (Harris and McQuillen, 8/2).

The Hill: "Stephanie Cutter, an assistant to President Obama who was brought on board at the White House in part to help sell the signature domestic initiative, dismissed a court's ruling against a White House bid to dismiss the suit. 'Having failed in the legislative arena, opponents of reform are now turning to the courts in an attempt to overturn the work of the democratically elected branches of government. This is nothing new,' Cutter wrote on the official White House blog. 'We saw this with the Social Security Act, the Civil Rights Act, and the Voting Rights Act-constitutional challenges were brought to all three of these monumental pieces of legislation, and all of those challenges failed. So too will the challenge to health reform,'" Cutter wrote (O'Brien, 8/2).

Roll Call: "'This lawsuit is not about health care, it's about our freedom and about standing up and calling on the federal government to follow the ultimate law of the land-the Constitution,' Cuccinelli said. 'The government cannot draft an unwilling citizen into commerce just so it can regulate him under the Commerce Clause'" (Drucker, 8/2).

The New York Times: "Monday's opinion does not address the overall merits of the health care law. It has no direct effect on the 20 other state challenges, but it may influence the other judges" (Schwartz, 8/2).

MSNBC's First Read: Although the judge found "the law 'has a distinctive political undercurrent,'" Monday's ruling represents "an important tactical victory to challengers of the new health-care law" (Williams, 8/2).

Administration Touts Medicare Savings Report; Republicans Complain It Misleads Seniors
August 3, 2010

The Hill: A report issued Monday by the Obama administration found that the new health care law "will save Medicare $8 billion by the end of 2011, and $575 billion over the next decade, largely by improving care quality and preventing waste and fraud." The report also predicts that the overhaul will "extend the life of the program more than a decade. . . . In 2009, the Medicare trustees projected that Medicare's hospital trust fund would run dry by 2017. CMS now says that fund is sustainable through 2029. . . . Conservative critics immediately dismissed the CMS report as a politically motivated attempt to sell health reform to seniors. They noted that Richard Foster, the chief CMS actuary who crunched many of the figures cited Monday, has been wary of the agency's accounting methods" (Lillis, 8/2).

ExecutiveGov: "The Obama administration report states that the healthcare reform will strengthen Medicare, as opposed to Republicans' concerns that spending cuts will undermine the system" (Mulrain, 8/2).

McKnight's Long Term Care News, on how Medicare expects to get savings: "CMS is working to reduce unnecessary hospital readmissions, establish the Center for Medicare and Medicaid Innovation and create an Independent Payment Advisory Board. Other provisions in the Affordable Care Act aim to fight waste, fraud and abuse in Medicare. Savings to Medicare will rise to more than $575 billion over the next decade, CMS said. Also, beneficiaries should expect to see savings of about $200 a year on what their Medicare Part B premiums would have been without the new law-and about the same in reduced cost sharing, according to CMS" (8/3).

PBS NewsHour includes an interview between host Judy Woodruff and Health and Human Services Secretary Kathleen Sebelius about the "latest health care reform developments and what consumers may see next." Sebelius spoke about how the government has been overcharged by 14 percent for Medicare Advantage plans and how it would create savings by reducing payments to those private Medicare plans. She also spoke about seniors and the health care reform debate: "Well, when you think about what happened to seniors during the course of this debate, it borders on outrageous. Seniors, I would say, were really targeted with a whole series of misinformed statements that were designed to scare them about the law, to get them to actually call on their members of Congress and Senate to stop it, starting with everything from death panels, which still most seniors think are part of the Affordable Care Act" (8/2).

Republicans Plan To Block Health Law By Withholding Implementation Funds
August 2, 2010

Republicans may not have the numbers to repeal the health overhaul, even after the election, but they are increasingly likely to try to "deny the Obama administration the money it needs to implement the law," Politico reports. "Republicans have proposed a bill to deny funding to any part of the law. But a more likely scenario is to choke off funding for pieces of the legislation that they find particularly troublesome, such as the requirement to buy insurance, changes to Medicare and the one most cited by House Minority Leader John Boehner (R-Ohio): the 'army of new IRS agents' to implement new requirements for business." About 120 candidates for the House and Senate have signed on to a letter pledging to defund the overhaul.

"But this strategy could prove troublesome if Americans are denied some of the popular provisions of the law that they've already experienced, such as insurance pools for people with pre-existing conditions or one of a series of insurance industry reforms due to go into effect this fall" (Haberkorn, 8/2).

CQ: Republicans are using a computer-generated graphic to illustrate how complicated the new health reform law is and why it won't work. "Kevin Brady, the top House Republican on the Joint Economic Committee, says he was inspired to commission the graphic by a similar chart that fellow Texan Dick Armey, at the time the Republican Conference chairman, produced in 1993 to lampoon President Bill Clinton's health care plan." The graphic shows in minute detail the aspects of the law that affect others (8/2).

The Washington Post: In the meantime, Rep. Paul Ryan, R-Wis., viewed by some as a potential rising star in the GOP, is running on a platform to rid the country of the national debt "even if it means openly broaching overhauls of Medicare and Social Security." His provocative ideas include "putting Medicare and Medicaid recipients in private insurance plans that could cost the government less but potentially offer fewer benefits; gradually raising the retirement age to 70; and reducing future Social Security benefits for wealthy retirees." The moves have created a difficult situation for GOP leaders, who are worried that such ideas don't have the political feasibility to win him or the Republican Party favor (Bacon, 8/2).

The Washington Post, in a separate story: "The year is off to a good start for K Street, with eight of the 10 most successful lobbying shops bringing in more revenue during the first half of 2010 than during the same period last year." The increase was generated in part by the health reform legislation work. "Capitol Hill heavyweight Patton Boggs again topped the charts, bringing in $20.6 million during the first two quarters of the year, according to Capital Business estimates based on Lobbying Disclosure Act forms filed with the Senate. . . . Relationships with companies in the industries that were the focus of Congress-health care, financial services, energy-were also the key to nabbing a spot in the top 10" (Becker, 8/2).

Sebelius Tries To Soothe State Worries About Health Reform
August 2, 2010

Health and Human Services Secretary Kathleen Sebelius is trying to soothe the fiscal and administrative concerns of officials in states who have considerable power in implementing the nation's attempt at health reform, The Wall Street Journal reports. "The law puts heavy demands on Ms. Sebelius—it has more than 1,000 references to actions that the 'secretary shall' take. But much of the responsibility for actually implementing the changes falls to states, so the Obama administration's top health official has been working to guide them." Many states say they are underprepared to implement aspects of the health law, especially when it comes to having the money to hire staff to implement health insurance exchanges slated to begin in 2014. Indeed, others are weighing their role as well. "Missouri will hold a ballot on Tuesday on whether to knock down the health care law by invalidating the requirement that most people buy insurance or pay a fine. Some other states are planning similar votes."

"Another contentious issue is Medicaid funding. Budget-challenged states want more flexibility to pare back spending on the federal-state program for the poor, but the law effectively prevents them from doing that. Ms. Sebelius's hands are mostly tied. Congress has repeatedly failed to pass a $24 billion funding extension states say they need to keep existing Medicaid eligibility rules" (Adamy, 8/1).

The Christian Science Monitor: HHS announced last week that each state could get as much as "$1 million in federal grants to set up the exchanges. The idea is that government creates the marketplace; the private sector competes." Some states, however, are moving on restricting private company access to the large pool of people who will be seeking insurance. "Two weeks ago, a panel appointed by New Mexico Gov. Bill Richardson recommended that the state establish an exchange that 'assumes an active role in driving market reforms and protecting consumers.' The panel's report goes on to explain: 'This could include restricting plans from the Exchange that would exceed specified premium growth levels or by requiring cost containment initiatives of plans participating in the Exchange.' . . . The panel proposes using the exchange as leverage with insurers 'to help control the cost of the health care system.' If that means not providing consumers information on plans that, in the state's eyes, aren't doing enough to keep costs down, the state seems ready to do that" (Belsie, 8/1).

The Hill: Few are satisfied with another provision of the health overhaul, the White House's mandated limits on abortion coverage. Regulations that restrict abortion coverage in the health law's high-risk pools have angered Planned Parenthood, which says it "strongly opposes" the restrictions. "The regulation limits abortion coverage in the federally funded pools, which cover people with pre-existing conditions, to cases of rape, incest or when the mother's life is in danger." Planned Parenthood says abortion coverage is needed for people with serious medical conditions where an abortion would be needed to avoid other medical complications in people with chronic conditions. In the meantime, the provision also did not please anti-abortion groups. "At the other end of the spectrum, the National Right to Life Committee cautions that the regulation raises concerns about the broader health care reform law" (Pecquet, 8/1).

The Associated Press: A provision of the health law that requires businesses to file tax forms for every vendor that sells them more than $600 in goods could become a "paperwork nightmare." The provision was designed "to prevent vendors from underreporting their income to the Internal Revenue Service. The government must think vendors are omitting a lot because the filing requirement is estimated to bring in $19 billion over the next decade. . . . The House rejected a bill Friday that would have repealed the provision. The two parties disagreed on how to make up the lost revenue." Republicans propose changing other parts of the health law to pay for it; Democrats want to raise taxes on international corporations and limit the use of special trusts to avoid gift taxes (Ohlemacher, 8/1).

Week In Review: High-Risk Insurance Pools Rules Stoke Abortion Politics; Seniors Perplexed About The Impact Of Health Reform
By Stephanie Stapleton
July 30, 2010

For the third consecutive week, the question of whether abortion would be covered by the new health law's high-risk pools was high on news outlets' radar—creating a certain degree of drama in the run up to Thursday's release by the Obama administration of regulations on this and other issues.

Kaiser Health News examined the rules. "Elective abortions will be prohibited and people with pre-existing conditions will be able to get comprehensive benefits without paying any more than healthy people, under new federal regulations for high-risk health insurance pools." These state-based pools, which are among the new law's highest-profile features taking effect this year, "allocate $5 billion to create plans to cover people who have been uninsured for at least six months and have a pre-existing health condition" (Galewitz, 7/30).

Modern Healthcare: "Nancy-Ann DeParle, director of the White House Office of Health Reform, writing on the Obama administration's official website, said that an interim final rule, released today, breaks no new ground when it comes to long-standing policies on abortion. 'The program's restriction on abortion coverage is not a precedent for other programs or policies given the unique, temporary nature of the program and the population it serves,' DeParle said" (DoBias, 7/29).

Before the regulations were released, The Washington Times reported that a group of Republican senators was threatening "to force changes to the new national health care law unless the Obama administration does more to ensure that federal dollars won't be used to pay for elective abortions." The issue had "flared as several states began to write regulations for the high-risk insurance pools" (Lengell, 7/28).

Politico offered more analysis, noting that abortion-rights groups were "caught completely off-guard" when some Republicans and anti-abortion advocates successfully mobilized to pressure the Obama administration to keep states from allowing abortion coverage in the insurance pools" (Kliff, 7/30).

(For more detailed news summaries related to these high-risk insurance pools, read KHN's Morning Edition for July 30 and July 27.)

Meanwhile, the Department of Health and Human Services issued a clarification this week to address health insurers' concerns about the new law and children's coverage. As a result, the insurers appear to be stepping away from decisions "to pull out of the child-only coverage market," according to The Hill. "HHS made it clear that plans are free to set up specific enrollment periods for their insurance plans if allowed under state laws. . . . Health plans had raised concerns that without the enrollment periods, parents could wait until their children get sick before seeking coverage, making it impossible for insurers to stay profitable" (Pecquet, 7/29). The Associated Press noted that insurers "were concerned the new health care law would allow parents to sign their kids up in emergency rooms while the child is in the middle of a health crisis. The administration now says insurers can limit the sign-up to an 'open enrollment' period, for example, December 1 to December 31 for plans that start January 1" (7/28).

(For more detailed news coverage, read KHN's Morning Edition for July 29.)

In other news, two polls this week highlighed confusion among a significant number of seniors on how the overhaul affects them, but one also offered evidence that opposition to the health law is decreasing.

The Washington Post on Thursday reported on the Kaiser Family Foundation's July tracking poll, noting that "opposition to the landmark health care overhaul declined over the past month, to 35 percent from 41 percent. . . . Fifty percent of the public held a favorable view of the law, up slightly from 48 percent a month ago, while 14 percent expressed no opinion about the measure." The Post also noted this "approval level was the highest for the legislation since it was enacted in March, after a divisive year-long debate" (Hilzenrath, 7/29). According to The Hill, "the positive numbers play heavily into this fall's impending midterm elections, in which Republicans and Democrats will jockey over the reforms in the healthcare bill" (O'Brien, 7/29).

The Washington Post's Behind The Numbers Blog, concluded the poll "shows that senior citizens remain more negative than younger adults toward the health care overhaul passed earlier this year and are more apt to say that the bill will have a negative effect on Medicare and those in their age group" (Agiesta, 7/29). Kaiser Health News notes that seniors, who are a key target of both political parties this election season, "are unaware of many of the Medicare provisions in the overhaul and have been left with erroneous perceptions by the bitter legislative debate" (Verdon, 7/29). (KHN is a program of the foundation).

The other poll, this one conducted by the National Council on Aging and released Monday, also advanced the idea that, as reported by The Hill, the "majority of the nation's seniors have little understanding of what the Democrats' newly enacted healthcare law actually does." This survey found that only "14 percent of respondents . . . knew that the new reforms don't include cuts to doctors treating Medicare patients" (Lillis, 7/26). NPR's Shots Blog offered strong words: "a new poll that shows just how little Grandma and Grandpa know about it must be giving the new law's supporters a serious case of heartburn. That's because seniors are not just a key voting bloc in the upcoming mid-term elections, but a group that's been showered with some sweet upfront benefits—like $250 checks as a downpayment to close the notorious Medicare drug benefit 'doughnut hole'" (Rovner, 7/26).

(For detailed news coverage related to these polls, read KHN's Morning Edition on July 27 and July 29.

And, with an eye on the fall midterm elections, Democrats and Republicans are offering different views on how health reform votes will play out in the voting booth. The Hill reports that Senate Majority Leader Harry Reid is saying that health reform will end up helping Democrats this November. "Reid . . . said public opinion is shifting in favor of the new healthcare law . . . and predicted more and more voters would reject Republicans' calls for repealing the legislation." But Republicans "note that polls have been much more mixed than Reid had argued" (O'Brien, 7/26). Roll Call reported on the GOP's plan for attack: "criticizing four aspects of the new law and introducing legislation to partially repeal it. With just more than three months until Election Day, Republicans remain confident that their unanimous opposition to the law will help them pick up seats in the midterm elections" (Drucker, 7/29).

According to Politico, "health insurers are also planning to play big in November. . . . Both America's Health Insurance Plans (AHIP) and its Coalition for Medicare Choices are expected to play a major role in the messaging, along with individual companies. But neither group, according to sources, plans to directly attack Democrats, which would risk infuriating the White House as it writes reform regulations as well as the Blue Dog Democrats who opposed the legislation." Likely ads include those targeted to seniors in the Medicare Advantage program "explaining it was health reform-not insurers-that is responsible for their higher bills and slashed benefits, one industry official said" (Cummings and Frates, 7/28).

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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