Oct. 16, 2009

This Week in Health Care Reform

This
week, Senate Finance Committee members voted on the committee's health
care reform bill, and the conversation shifted to how to reconcile the
bill with pending legislation from the House.

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Senate Negotiations

Senate
Finance Committee Passes Bill: On Tuesday, after months of
negotiations, the Senate Finance Committee passed its $829 billion
health care reform package with a 14-9 vote. One Republican, Sen.
Olympia Snowe (R-ME) voted with Democrats on the committee. The
proposal would expand coverage to 29 million uninsured Americans while
reducing deficits by $81 billion over 10 years. The bill includes
insurance market reforms, an individual mandate to purchase coverage
that appears reduced when compared with prior versions, an expansion of
Medicaid, a cut in future Medicare spending, new fees and taxes on
employers, and billions in new fees on health insurance and other
sectors of the health care industry. The bill also includes seed
funding for state cooperative plans and subsidies for other state
coverage programs.

Shortly after the vote, labor unions and
large business organizations requested changes to the Finance Committee
bill primarily because it omitted a public option . The swift feedback
from interest groups underscores the difficult road ahead for Senate
Majority Leader Harry Reid (D-NV), who will work to merge the Finance
Committee bill with the Senate Health, Education, Labor and Pensions
(HELP) bill passed last summer. Unions and lawmakers such as Sens.
Chuck Schumer (D-NY) and Jay Rockefeller (D-WV) have criticized the
legislation for not including a public option . At the same time,
insurance companies, medical device makers and others in the health
care industry are voicing strong concerns about the increased premium
costs of the proposed legislation.

House Activities

Legislators
Look to Reconcile Health Care Measures: House leaders indicated that
negotiators have trimmed costs for its proposed health care reform bill
to President Barack Obama's goal of $900 billion, down from $1.2
trillion. Aides said the final bill will include slightly lower
subsidies for copayments and deductibles for people who buy coverage
through the new insurance exchanges that be would established for those
who can't access affordable employer coverage. A provision preventing
doctors who see Medicare patients from having their fees cut was
excluded, while a surcharge tax on incomes of individuals ($500,000 or
more) and families ($1 million or more) was included. House members
will consider including more low income families in Medicaid instead of
the insurance exchange market, and adopting tax increases featured in
the Senate Finance Committee bill, including a profit tax on health
insurers. They have, however, rejected the tax on "Cadillac" plans.

Additional Activities

Insurance
Industry Study Indicates Higher Costs: On Sunday, the insurance
industry trade association, America's Health Insurance Plans, released
a study indicating that the proposed Finance Committee legislation
would raise the price of a typical policy. The study, completed by
PricewaterhouseCoopers, projected that family premiums could be $4,000
higher and individual premiums could be $1,500 higher in 2019. The
report details that a weak individual mandate, measures preventing
insurers from barring people with pre-existing conditions, taxes on
high-cost health care plans and new taxes on some health care industry
sectors will rapidly raise costs.

On Wednesday, another study
conducted by Oliver Wyman Inc. and sponsored by the Blue Cross Blue
Shield Association indicated that the proposed legislation would raise
premiums 50% for individual and 19% for small group policies. Premium
increases would likely be a result of a weak individual insurance
mandate over the next five years.

Looking Ahead

Following
the Senate Finance Committee vote, health care reform legislation
negotiations will continue behind closed doors. Sen. Reid will merge
the Senate Finance and the HELP Committee bills. He has indicated that
the full Senate will begin debating the merged legislation the week of
October 26.

House leaders are expected to vote the first week of November.