October 14, 2009

The Week in Health Reform

Federal Legislative Overview

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Senate
The
long-awaited cost estimate of the Senate Finance Committee’s health
care reform proposal, “America’s Healthy Future Act,” was released this
week by the Congressional Budget Office (CBO).

The CBO concluded
that the proposal would cost $829 billion over 10 years – an increase
from the previous $738 billion estimate of the revised Chairman’s Mark
– and would cover 94 percent of Americans. A more detailed overview of
the CBO cost estimate is discussed in the next section of this article.

The
Senate Finance Committee waited to vote on its health care reform
proposal until the CBO completed its work. On Tuesday October 13, the
Finance Committee voted 14 to 9 to approve the legislation. Senator
Olympia Snowe (R-ME) was the only Republican who voted in support of
the measure. This now paves the way for Democratic leadership to begin
merging the Senate Finance legislation with the Senate HELP bill (S
1679). Senators Max Baucus (D-MT), Christopher Dodd (D-CT) and Majority
Leader Harry Reid (D-NV) will lead those efforts, working alongside the
White House. The blended legislation could potentially be on the Senate
floor the week of October 19.

House
House Speaker Pelosi and
other Democratic leaders in the House of Representatives continue to
meld its three pieces of health care reform legislation into one bill,
while aiming to cut its total cost by another $200 billion. Although
Pelosi has publicly stated that she will not consider a “trigger
option” for the public plan, nor health care cooperatives, she has
seemingly become a bit more open to the idea of the creation of a
public plan that would be allowed to negotiate provider reimbursement
rates, an idea that has more commonly belonged to conservative
Democrats in this debate.

This past week, more than 150 House
Democrats wrote a letter to Pelosi (D-CA) urging her “to reject
proposals to enact an excise tax on high-cost insurance plans that
could be potentially passed on to middle-class families.” This letter
was in reference to the Senate Finance Committee’s health care reform
proposal that includes a 40 percent excise tax on insurers that exceed
certain cost thresholds, also known as a tax on “Cadillac plans”.
Beginning in 2013, the threshold for individual plans will be $8,000
and $21,000 for family coverage. It is clear that more than half of
House Democrats recognize that insurers will be forced to pass on these
proposed new taxes to consumers – undermining the shared goal of
ensuring affordable health coverage for all Americans.

Overview: CBO Score of Senate Finance Committee Proposal
As
briefly mentioned above, the CBO has issue its preliminary analysis of
the Senate Finance Committee’s “America’s Healthy Future Act.” CBO
estimates that under this legislation, the percentage of legal
nonelderly residents covered by health insurance would increase from 83
percent today to about 94 percent by 2019. CBO further estimates that:

* The bill’s coverage provisions would cost $829 billion over ten
years. This includes $345 billion in increased spending in Medicaid and
CHIP, $461 billion for premium subsidies provided through the exchange
and related spending, and $23 billion for small employer tax credits.

* These costs would be offset by increased tax revenues and spending
reductions in other areas, resulting in a net reduction in the federal
budget deficit that is estimated to be approximately $81 billion over
ten years. The bill’s offsets include: $201 billion from the high-cost
health plan tax; $117 billion from changes to Medicare Advantage
payments; $106 billion from changes to Medicare hospital payments; $23
billion from penalty payments by employers; and $4 billion from penalty
payments by individuals.