Improving The Health Care Bill

Congressional negotiators have agreed to bypass the traditional House-Senate conference process and fast-track the final health care negotiations through informal “ping pong” discussions between the two chambers. “The informal approach would still require the House and Senate to pass identical bills but would minimize the opportunity for Senate Republicans — who united in opposition to the legislation — to slow the process,” the Washington Post reports. “Under the plan, the House would pass the Senate bill amended with new compromise provisions, then send the package back to the Senate for one final vote.” Lawmakers are hoping to pass the final health care bill before President Obama’s State of the Union address, but despite pressure from the administration to include several controversial provisions from the Senate bill into the final legislation, House leaders aren’t prepared to swallow the whole of the Senate proposal. “Normally you’re just dealing with the Senate and they talk about 60 votes and you listen to them and cave in, but this is entirely different,” Rep. Charlie Rangel (D-NY) said. “I’m telling you that never has 218 been so important to me in the House.” House aides reveal that House Speaker Nancy Pelosi (D-CA) is “miffed with Obama’s tilt toward the Senate plan and his expectation the House will simply go along with the Senate bill out of political necessity,” although some reports have suggested that the White House wants to include House-backed measures, such as a national health-insurance exchange and stronger affordability standards.

THE IMPORTANCE OF A NATIONAL EXCHANGE: House leaders are urging their Senate counterparts to establish a single, national federal exchange that combines the individual and small group markets into one insurance pool. The House legislation establishes a Health Choices Administration (HCA) that “would have primary responsibility for administering the regulatory and subsidy programs established under the bill.” Conversely, the Senate bill “maintains separate insurance pools for individual and small group markets, and separate individual and small group Exchanges in each state.” The Senate legislation allows states to merge the small and individual group markets and create their own basic plan for residents with incomes from 133 to 200 percent of the federal poverty line (FPL). On Friday, during an event sponsored by the Alliance for Health Reform, Washington & Lee University Professor Timothy Jost urged Democratic negotiators to abandon the Senate’s exchange provisions and adopt the House bill’s more centralized approach. Jost laid out the differences between the two approaches and concluded that a single national exchange would eliminate inefficiencies, reduce insurers’ — and states’ — ability to game the system, and ensure greater government oversight of the new market place. “In my view, the House approach would result in effective, uniform, national implementation of the reform legislation, whereas the Senate bill is likely to get mired in state political battles,” Jost writes in the New England Journal of Medicine. “Each state would have to enact the federal laws as its own — and thus would begin 50 state reenactments of the battle we have witnessed all year in Congress.” Under the Senate bill, states would receive seed money to establish their exchanges, but they would have to fund and maintain the operation using their own funds or by levying a tax on insurers. Conservative states or even states facing budget problems — particularly those that are interested in exempting themselves from reform — could drag their feet on implementing an exchange and hamper the success of the effort. Insurers could also game the system. Since the Senate bill preserves a nongroup market outside of the exchange and does not require that insurers market every level of coverage within the exchange, insurers could offer lower-cost/high-deductible plans outside of the exchanges or stay out of the exchanges altogether and attract healthier people into the non-exchange nongroup market. This would increase the costs of coverage for Americans in the exchange.

IMPROVING AFFORDABILITY AND OVERSIGHT: Many have argued that a public option would restore competition to concentrated markets, curtail abusive industry practices, and lower health care costs. Some believe that they can accomplish the same goals by removing the insurance industry’s anti-trust exemption. But anti-trust experts disagree. They point out that insurers are already monopolistic companies and are out of the scope of anti-trust regulation. “At this point, there is really no need from the industry’s perspective, for an anti-trust exemption. This anti-trust exemption permits them to coordinate activities that would be considered collusion in other industries. When you are a monopolist, there is no need to collude,” former anti-trust enforcer and Center for American Progress Fellow David Balto explained. Balto argues that lawmakers need to buttress the capabilities of the Department of Justice and Federal Trade Commission if they wish to prevent insurers from entering into collusive arrangements that would undermine any new competition that results from reform. Lawmakers can also improve the affordability standards in the bill by adopting the House’s Medicaid expansion to 150 percent of the FPL and using the savings to reduce premium payments and out-of-pocket spending for individuals with incomes between 150 percent and 200 percent FPL. The final legislation should also adopt the Senate’s subsidy levels for individuals and families above 250 percent FPL, retain a Prevention and Wellness Trust with a dedicated funding stream that will increase the use of effective preventive services and increase payments to Medicaid providers to ensure that the expanded population can access a broad network of providers. To finance reform more equitably and please House negotiators, the final legislation could add a piece of the House’s surtax or increase other taxes on higher-income Americans and increase the threshold on the excise tax. Yesterday, the Wall Street Journal reported that lawmakers may extend the payroll tax to investment income. The new tax would allow negotiators to raise the threshold on the so-called Cadillac tax, an important priority for organized labor and 190 House members.

CLOSING EXISTING LOOPHOLES: Yesterday, Health Care for America Now (HCAN) hosted a press call outlining some of the remaining loopholes in federal health care reform legislation. Rep. John Garamendi (D-CA), health expert Karen Pollitz, former Blue Cross chief medical officer and former state regulator Michael McGarvey, and former insurance industry executive Wendell Potter stressed that state based exchanges could not guarantee insurer compliance with the new regulations but also warned against various ways insurers could use the weak regulatory language in health care reform to game the system and avoid covering the sickest and most expensive applicants. Pollitz warned that the House and Senate health care bills allow insurers to provide incentives tied to voluntary “wellness programs.” “Current regulations allow group plans to offer rewards up to 20% of premium rates for employees who meet certain health goals.” She also argued that the bill could allow large employers to pass more costs to the individual by associating certain treatments with very high deductibles and cost sharing. But all of the participants stressed the importance of establishing a national exchange. “The state governments vary in their ability to enforce and the influence of the insurance industry varies throughout the states and even in states that have a strong regulatory framework like California, you can wind up with a commissioner that has no interest in protecting consumers but rather protecting the industry.” “You need a broad based exchange because many states would never be able to do because they’re just plain small to begin with,” Garamendi explained.