Oct. 30, 2009

This Week in Health Care Reform

This
week, lawmakers fine-tuned their reform proposals and, once again, the
public option became the central issue of the health care reform debate.

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Senate and House Negotiations

Senate
Majority Leader Announces Senate Bill that Includes Public Option: On
Monday, Senate Majority Leader Harry Reid (D-NV) announced that the
health care reform package from the Senate is expected to include a
public option with an opt-out provision should a state choose to not
participate in the government plan. While liberal Democrats cheered the
inclusion of the government-run plan, some moderates - including Sens.
Joe Lieberman (I-CT), Blanche Lincoln (D-AR), Evan Bayh (D-IN) and Mary
Landrieu (D-LA) - all voiced concerns.

Sen. Lieberman said that
he would vote to block the passage of the Senate health care reform
bill in Sen. Reid's proposed form. In addition, Sen. Olympia Snowe
(R-ME), the only Republican to vote in favor of any health care reform
legislation to date, stated that she is "deeply disappointed" with the
inclusion of the public option.

This backlash comes as a blow to
Sen. Reid and calls into question whether he has the 60 votes needed
for final passage of the bill without an anticipated Republican
filibuster. Sen. Reid has delivered a variety of proposals to the
Congressional Budget Office (CBO) for cost estimates as he works to
finalize the legislation.

Pelosi Unveils House Health Reform
Bill: On Thursday, following weeks of negotiations to merge three bills
passed by House committees last summer, House Speaker Nancy Pelosi
(D-CA) unveiled the House's 1,990-page health care reform legislation.

The
merged legislation includes a version of the public option, favored by
moderate Democrats, that uses reimbursement rates negotiated with
private insurers rather than the option favored by liberal Democrats
that pegs rates to Medicare. The bill also includes:

*
Mandates for individuals and employers to purchase coverage (with some exemptions)
*
Subsidies to help lower-income individuals purchase insurance
*
An expansion of Medicaid eligibility to include individuals and
families with incomes of up to 150% of the federal poverty level
*
Taxes on the wealthy of 5.4% for individuals who earn more than $500,000 and for couples who earn more than $1 million
*
Significant insurance market reforms
*
Fees collected from the medical device industry totaling $20 billion

The
House bill does not include the "Cadillac Tax," a controversial tax on
high-end insurance plans. And, House Democrats indicated that party
leaders have yet to resolve long-standing disagreements regarding
coverage for abortion and illegal immigrants.

This bill is
estimated to cost just under $900 billion over the next 10 years.
However, the legislation does not address Medicare physician payments
and instead moves this portion of the proposal to a separate bill,
which is anticipated to increase the U.S. budget deficit by more than
$200 billion over 10 years.

Senate and House Propose Lower
Medical Device Industry Fees: In the bill originally passed by the
Senate Finance Committee, fees collected from the medical device
industry would have totaled $40 billion over 10 years. Lawmakers from
both the Senate and the House are proposing lower fees. In the emerging
Senate legislation, Sen. Reid is expected to adjust the fees to between
$15 and $20 billion over 10 years. By comparison, the House version
includes a tax that would be imposed at the point of sale, thereby
spreading its impact across manufacturers, wholesalers and
distributors, and would yield $20 billion between 2013 and 2019.

Additional Activities

U.S.
Business Group Opposes Public Option: On Wednesday, The Business
Roundtable, comprised of chief executives at Verizon Communications,
JPMorgan, General Electric, Wal-Mart and other companies, said the
federal government is inefficient and would underpay providers while
driving up costs for employers and their workers.

Public Opinion

American
Opinion on Public Option Remains Steady: The October Kaiser Family
Foundation poll found that 55% of Americans believe that it is now more
important than ever to take on health care reform, while 41% say the
country cannot afford it, results that are unchanged from the previous
month. Other findings include:

*
Americans' support for
taxing the wealthy to pay for reform decreased slightly in October,
while support for taxing insurance companies increased.
*
Americans still worry about the potential impact of the reforms on
measures such as wait times, cost and choice of providers.
*
Most Americans believe that health care reform will deliver changes
immediately. About half of Americans believe that if Democrats pass
health care reform legislation, help for the uninsured and consumer
protections in the insurance market will begin within a year. In
actuality, however, most of the reform provisions will take years to
kick in.

Looking Ahead

Sen. Reid awaits CBO financial
estimates to finalize the Senate bill before bringing it to the Senate
floor. The House bill will be submitted to the full House for debate as
early as next week.