The chart below indicates what percentage of income a family of four purchasing coverage within the new health insurance exchanges can expect to spend in 2016 on a health care plan with an actuarial value of 70% (in 2009 dollars):

Meanwhile, MIT Professor Jonathan Gruber ’s new analysis relies on available CBO data to compare the cost of coverage within the Senate bill’s exchanges to the cost of an individual policy in the non-group market absent reform.

Even though the plan purchased under the Senate legislation would have an actuarial value of 70% — 10 percentage points higher than the policy sold in the individual market absent reform — a family would pay less for reform’s more substantial coverage than they would for a plan that offers less benefits and even fewer consumer protections in the unreformed individual market. Moreover, “the same plan that cost $6,000 without reform would cost $4,460 with reform, or 25% less,” Gruber concludes:

Analysis of the non-partisan information from the CBO suggests that for those facing purchase in the non-group market, the Senate bill will deliver savings ranging from $500 for singles to $1400 for families – even without subsidies. The savings are much larger for lower income populations that receive premium credits. This is in addition to the higher quality benefits that those in the exchange will receive, with actuarial values for low income populations well above what is typical in the non-group market today.

In the exchange below, Rep. Marsha Blackburn (R-TN) repeatedly misquoted the House health care bill to suggest that the Task Force’s guidelines would become law:

BLACKBURN: The guidelines that came out this week, by the Preventive Services Task Force, have a direct link to what would be offered if the House and the Senate bills were to go into law…if you go to page 1296 of the House bill, the engrossed copy…They become the law. They become the law. The mandate…. When you look at what’s going to happen with these 118 new bureaucracies on what insurances can be offered, and what’s going to be paid, you know that this is the bureaucrat in the exam room. This is how it’s going to happen. This is the first step.

Watch it:

In reality, the U.S. Preventive Services Task Force is an independent panel of experts in primary care and prevention. The panel offers evidence-based guidelines and issues recommendations on a scale of A to D (and even I) for providers to consider when treating patients. Grades A and B indicate that “there is high certainty that the net benefit is substantial” and suggest that providers “offer or provide this service.” Grade C “recommends against routinely providing the service” but stipulates that doctors should “offer or provide this service only if other considerations support the offering or providing the service in an individual patient.” Generally, all of these guidelines are a single piece of scientific data that could help guide physicians in treating individual patients. They are not binding.

The House and Senate health care bills only include “services recommended with a grade of A or B by the Task Force on Clinical Preventive Services” in standard benefit packages, but even these guidelines could be expanded by the Secretary of Health and Human Services. Last week’s mammogram guideline would not be included in the packages. It received a ‘C’ rating from the Task Force.

Ultimately, as Congresswoman Wasserman-Schultz points out, Republicans are manipulating the Task Force decision to scare women into opposing a health reform package that expands access to screenings. The legislation requires insurance companies to cover mammograms and other cancer screenings at no additional cost, ends unfair insurer price discrimination against women and guarantees that all health insurers provide women with the health care services they need.

WALLACE: According to the nonpartisan Congressional Budget Office, federal outlays for health care would increase during the 2010-2019 period and the government run health insurance plan would typically have premiums that were somewhat higher than the average premiums for the private plan. So here’s the question. The Democratic plan by the CBO’s own scoring fails to bend the famous health care cost curve at all over the course of these 10 years, and could you name a single Congress that has ever cut Medicare by half a trillion dollars as this legislation would?

Watch it:

As Sen. Arlen Specter (D-PA) pointed out, the $848 billion bill “would save $130 billion in the first 10 years and projected to have $650 billion saved in the second 10 years.” Page 16 of the CBO report does predict that “federal outlays for health care would increase during the 2010-2019 period,” but the last paragraph of that same page also notes that “during the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming for this legislation would roughly balance out, so that there would be no significant change in the commitment.”

As a result, the federal government would be spending less on health care in the decades following the initial 10-year window, despite the expansion in coverage:

Wallace’s claim that the bill “fails to bend the famous health care cost curve” is also inaccurate. The legislation establishes an Independent Medicare Advisory Board (IMAB)– which is required to “recommend changes to the Medicare program to limit the rate of growth in that program’s spending” — and places a 40% excise tax on insurers that offer expensive policies. While the budget office did not analyze the effect of the legislation on national health expenditures, the CBO is predicting that spending per Medicare beneficiary would decrease, as compared to the growth rate of the past two decades (from 8% growth rate to 6% growth rate).

As for the public option, the CBO did conclude that the plan could attract sicker enrolles and charge slightly higher premiums, but it would still reduce average premiums “and hence federal subsidies for premiums.” “That’s because average premiums would be even higher if the people enrolled in the public plan enrolled in private plans.” In fact, the CBO has concluded that the Senate’s public option would save the government $3 billion over 10 years.

Finally, while Congress has never voted to cut Medicare by half a trillion dollars, it did pass a series of Medicare cuts as part of the Balanced Budget Act of 1997. That act decreased Medicare spending by 12.7% over 10 years and instituted the kind of payment updates that the Senate bill is now recommending. Specter voted for that bill, with many of his then Republican colleagues.

In fact, that language is still up on her Senate website:

By September 1, Lincoln changed her mind. “I would not support a solely government-funded public option,” Lincoln said at an event in Little Rock. “We can’t afford that.” This afternoon, Lincoln expressed concern that the option could ignore the letter of the law and charge premiums that would not cover the cost of the program. (H/T Jon Walker)

In a dramatic and long winded speech on the floor of the Senate, Sen. Blanche Lincoln (D-AR) announced today that she would provide the 60th vote “in support of cloture on the motion to proceed” to the health care reform bill. But Lincoln also stressed that she is “opposed to a new government administered health care plan as a part of health care reform and will not vote on the health care proposal introduced by leader Reid as it is written”:

I’ve already alerted the leader, and I’m promising my colleagues, that I’m prepared to vote against moving to the next stage of consideration as long as a government-run public option is included. The public option as a part of health insurance reform has attracted far more attention than it deserves. While cost projections show that it may reduce costs somewhat, those projections don’t take into account who pays if it fails to live up to expectations. If in fact premiums don’t cover the cost of the public plan, it is taxpayers in this country who are faced with the burden of bailing it out.

Watch a compilation:

The Senate bill requires that “the premiums for the public plan be set to fully fund expenditures for medical claims, administrative costs, and a contingency reserve” and instructs the Secretary of Health and Human Services to negotiate reimbursement rates with physicians. The Senate’s public option would save the government $3 billion over 10 years, the Congressional Budget Office has concluded.

Lincoln, who supported giving Americans the choice of enrolling in a public option as recently as July, is arguing that the option could ignore the letter of the law and charge premiums that would not cover the cost of the program. Her skepticism may be well-founded, but it’s also short-sighted and inconsistent. She is doubting the integrity of the public option, while tacitly assuming that private insurers — who have a long-standing practice of exploiting loopholes in the law and skimming on coverage for beneficiaries to increase profits — will follow the new benefit and rate regulations. Lincoln supports ‘building on the current system’ and regulating private insurers without questioning their commitment to “live up to expectations.”

Ultimately, if she’s is worried that the language of the health care bill won’t be properly implemented, she should encourage the Senate to establish a federal oversight mechanism that could force private health insurance companies and the public plan to abide by the new rules of reform. As it stands now, her objection to the public plan sounds rather manufactured and hypocritical.

This afternoon, Sen. Mary Landrieu (D-LA) took to the Senate floor to announce that she would vote on a motion to proceed with the Patient Protection and Affordable Care Act. Landrieu is the 59th Senator to commit to voting to open debate on the floor. Senate Majority Leader Harry Ried (D-NV) would still have to secure the support of Sen. Blanche Lincoln (D-AK) to begin considering the legislation.

In her remarks, Landrieu stressed that she was concerned about the bill’s costs to small businesses and individuals, the possible premiums spikes families could face in the time between when the bill passes and its reforms are implemented, and reiterated her opposition to a public health insurance option:

My vote today to move forward on this important debate should in no way be construed by the supporters of this current framework as an indication of how I might vote as this debate comes to an end. It is a vote to move forward to continue the good, and essential, and important and imperative work that is underway….We must enhance and expand tax credits that are in this bill that are for small businesses, particularly those of 25 and less and if we can expand it between 25 and 50, that would be a great help…I will continue to fight for more tax equity for the 27 million Americans who are currently self employed…in order to really deliver on our promise to lower costs for families focus on ways for premiums to be excessively raised between the time this bill is enacted and the time these provisions go into affect … I remain concerned that the current version of the public option included in this bill could shift significant risk to tax payers over time, unnecessarily…I’ve suggested that a free-standing community option…

Watch a compilation:

Landrieu also directly responded to “some very partisan Republican bloggers” who suggested that she agreed to support the bill only after Reid included “an extra $100 million in federal aid for low-income people in her state. “The Louisiana money is intended to adjust the percentage of federal payments to the state for Medicaid to avert a scheduled cut in U.S. assistance in 2011 for the program, which provides medical care for the poor. Louisiana had a bump in per capita income from the post-Katrina construction boom, which would force the decline in federal aid.”

Landrieu explained that following the hurricane, “some of those one-time recovery dollars were calculated into our per-capita income” and inflated the state’s income. As a result, the state is scheduled to receive less matching fund for the Medicaid program. “It is the number one request of my Governor, who is a Republican and it is unanimously supported by every member of our delegation, Democrat and Republican. I’ m proud to have asked for it. I’m proud to have fought for it, and I will continue to,” she said.

Under this compromise, a small sliver of the population — individuals and families under 400% of the federal poverty line who receive employer-sponsored coverage and spend 8-9.8% of their income on premiums — could “convert their tax-free employer health subsidies into vouchers that they can use to choose a health insurance plan in the new health insurance exchanges.” Currently, individuals in employer-based coverage who have to spend more than 9.8% of the incomes on premiums aren’t required to purchase health insurance and don’t quality for affordability credits if they enter an Exchange:

“As I have long said, empowering Americans to choose the health insurance that works best for them and their family is the single best way to hold health insurance companies accountable,” Wyden said in a statement. “While this is just one step in the direction of guaranteeing choices for all Americans, it is a major step because – for the first time – it introduces the concept of individual choice to a marketplace where it has long been foreign. This is a significant step toward real reform.”

The theory of instantly “empowering Americans to choose the health insurance that works best for them” is sweeter than the reality. The merged senate bill establishes a time line that more or less allows everyone to choose a plan from an exchange by 2017. In this way, the legislation builds on the current structure but also sows the seeds for an eventual transition to a more ‘individualistic’ system — or what Wyden calls “real” reform.

This ‘time release’ approach — to borrow a pharmaceutical term — is intentional. Opening the exchanges only to small businesses, individuals and the self-insured for a limited period preserves the employer contribution in the health care system and allows the exchanges to build a capacity for covering more people over time. It helps the Exchanges find their footing without being overrun by millions and millions of new applicants from the employer market. Care continuity is also better preserved.

In short, the existing legislation accomplishes the main goals of Wyden amendment on a more realistic timetable. Wyden was concerned that it didn’t have his name stamped all over it. Now it does.

It’s unclear why the Senate separates the individual and small business markets rather than follow the Massachusetts model of combining the two markets. Under the Senate bill, insurers would pool risk for all policies in the individual market (inside and outside of the exchange) and all small business policies (inside and outside of the exchange) but couldn’t combine the risk unless the state voluntarily merges the two markets.

As Sarah Lueck explains, allowing multiple exchanges to participate in the same geographic area would increase administrative costs and “diminish the ability of an exchange to improve efficiency by creating a well-functioning marketplace”:

If there were multiple exchanges in the same area, the exchanges would have to spend money on marketing and advertising in order to attract customers….Also, permitting multiple exchanges in a single area would require a vastly more complex risk-adjustment system. Risk adjustment provides higher payments to insurers enrolling higher-cost beneficiaries, while lowering payments to plans enrolling healthier individuals with lower-than-average costs. In areas with multiple exchanges, the risk-adjustment mechanism would have to compensate for risk differentials across the various exchanges, as well as among the insurers within each exchange. This would make it more difficult to risk-adjust accurately.

One possible reason for the separation, a source suggests, is the reluctance of some insurers operating in the small group market to expand their options to individuals. The may not want to change their business model or cover a potentially sicker crop of newly insured individuals.

The so-called SHOP-exchanges have also been promoted by the National Federation of Independent Businesses (NFIB) and championed in the Senate by Sens. Dick Durbin (D-IL), Blanche Lincoln (D-AK) and Sen. Olympia Snowe (R-ME). But why they’re still necessary in the broader context of health reform is somewhat of a mystery.

SHOP may not make policy sense, but it may help win the support of a few moderate lawmakers.

Just yesterday — the day before yesterday, U.S. preventive task forces, services, recommended because it’s not cost effective that women under 50 not get mammograms unless they have risk factors. Well, you tell that to the thousands of women who were diagnosed with breast cancer lat last — last year under 50 with a mammogram. You tell them it’s not cost effective. Also in this bill is a 5% tax on the breast reconstruction surgery after they had a mastectomy. They’re going to tax having your breast rebuilt after your breast is taken off because it is elective plastic surgery. It is elective cosmetic surgery. We’re going to have a tax on it because we’ve taxed elective cosmetic surgery. We’re in trouble as a nation because we’ve taken our eye off the ball.

Coburn may be one of only two doctors serving in the Senate, but he’s no more knowledgeable about what constitutes ‘elective cosmetic surgery’ under reform legislation, than the average layman. Section 9017 of the merged Senate bill relies on the IRS definition of ‘cosmetic surgery,’ which defines the procedure as “any procedure which is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.”

The Senate bill doesn’t tax all cosmetic operations. Surgeries to “ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease” are excluded from taxation.

Under that standard, surgery performed to reconstruct a woman’s breast after cancer — a disfiguring disease — would not be taxed:

The tax is intended to discourage consumers from undergoing unnecessary surgeries or procedures. As much as one-third of nation’s health care expenditures are spent on procedures that don’t improve health outcomes. Capturing some of that spending and re-investing it into health care reform would help to slow the growing rate of health care spending, finance reform, and ultimately reduce costs for everyone. In short, the tax would help fill the wrinkles in America’s broken health care system.

The merged Senate bill takes a different approach. Section 1251 eliminates the 5-year period and allows enrollees to remain in their insurance plans for as long as the coverage remains available:

By 2017, most Americans will have the option of purchasing comprehensive insurance coverage within the Exchange and would theoretically abandon plans that offer sub-prime benefits and high-deductibles. Insurers that want to minimize their administrative overhead and standardize their plans, may also modify all existing policies to meet the new federal guidelines.

Under the Senate bill, individuals under 30 years of age or those who are exempt from the individual mandate, could still chose to enroll in a catastrophic plan that covers essential health benefits.

The Congressional Budget Office analysis of the recently released Senate health bill has concluded that compared to the Senate Finance Committee’s bill, the merged legislation makes a stronger contribution towards deficit reduction even though it includes (among other things): 1) more affordability credits for middle class families and a public option, 2) a strong individual requirement to purchase coverage, 3) and a lower threshold for the excise tax on so-called Cadillac health plans. An increase in the payroll tax for individuals/families earning $200,000/$250,000 makes up for the loss in revenue from the excise tax, while the later implementation date (the bill moves the start dates for the individual mandate, exchanges, and employer penalties from July 1, 2013 to January 1, 2014) helps increase the deficit savings in the merged legislation.

Despite these changes, the merged bill still lowers health care spending over the long term. The legislation establishes an Independent Medicare Advisory Board (IMAB)– which is required to “recommend changes to the Medicare program to limit the rate of growth in that program’s spending” — and places a 40% excise tax on insurers that offer expensive policies. While the budget office did not analyze the affect of the legislation on national health expenditures, the CBO is predicting that spending per Medicare beneficiary would decrease, as compared to the growth rate of the past two decades (from 8% growth rate to 6% growth rate). As a result, the federal government would be spending less on health care in the decades following the initial 10-year window, despite the expansion in coverage.

Below is an examination of how the merged Senate bill evolved from the Senate Finance Committee’s proposal:

Here is how the merged Senate bill compares to the legislation passed in the House. The merged Senate legislation has lower affordability standards, covers less people, invests less in prevention, does not require all large employers to provide health insurance, and includes a weaker public option. But the bill goes further in controlling health care spending and reducing the deficit:

The bill –which includes a national public health insurance plan with the option for states to pass a law and opt-out — reduces the uninsured by 31 million Americans and covers 98% of Americans by 2019.

The bill increases the threshold for the so-called Cadillac tax, raises the payroll tax by 0.5% on individuals who earn more than $200,000 and families earning more than $250,000 a year, and cuts waste from Medicare. The payroll tax increase would only apply to employees (not employers) and generate $54 billion.

The bill maintains the Senate Finance Committee’s immigration language and preserves much of the more moderate Capps-abortion compromise. Federal dollars can only be used to pay for abortions when the pregnancy threatens the life of the mother or results from rape or incest; private premiums must be used to pay for any other type of abortion, including those for health reasons. Each plan in Exchange will decide whether to cover additional abortion services and at least one plan in each market must offer abortion services and one plan must not. In the public option, the Secretary can cover abortion only if the procedure is financed with private funds.

Since the Exchanges don’t open open until 2014, the bill offers immediate insurance reforms for Americans purchasing coverage in the individual market. Insurers will no longer be allowed to rescind coverage or impose life-time or annual limits and will be required to meet a medical-loss ratio of 85 percent. Americans who are denied coverage because of a pre-existing condition would participate in a national high-risk pool program until the Exchanges are established. Young Americans can stay on their parents’ policies until they turn 26. Small businesses will receive a tax credit.

Below is a comparison of the relevant provisions in the House and Senate legislation:

Senate Majority Leader Harry Reid (D-NV) is rumored to have included the Community Living Assistance Services and Supports Act, or CLASS Act – a voluntary long-term care insurance program which covers medical and non-medical services like dressing, bathing, and using the bathroom — in the merged Senate bill, despite criticism from economists that the program would eventually pay out more in claims that it would collect in premiums and become an unfunded liability.

Long-term care proponents contend that the current system of financing long-term care is also unsustainable. Americans spend more than $200 billion a year on long term care services in nursing homes, at home, or in assisted living facilities. “Medicaid is now the largest single provider of long-term care costs — it spent more than $100 billion last year, over one-third of its budget” and “paid more than 40 percent of the nation’s total long-term care bill.” Families and senior citizens (and Medicare to a lesser extent) pick up the rest of the tab, often spending down to “$2,000 in financial assets” to qualify for Medicaid coverage. By mid-century, the Congressional Budget Office predicts that the nation will have to spend 16% of anticipated federal revenues on Medicaid to fund care for the baby-boom generation.

“So the question is how do we fix this system? How do we create a system that can both relieve the burden on families and relieve this burden on government?,” Gleckman asks. The CLASS ACT is just one solution. It establishes “a national insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become severely functionally impaired.” All working adults will be automatically enrolled in the program, unless they choose to opt out.

Gleckman sympathizes with critics who say that CLASS may become unsustainable over the long term and argues that policy makers must design a plan that attracts enough young participants and offers a fair benefits package to its enrollees. The plan must be both affordable and comprehensive:

A simple way to do it [ensure that the program is not paying out in claims more than it is taking in] is to make it mandatory. That’s what the Germans have done, and the French and the Japanese and almost every other industrialized nation around the world has done…. If you have a mandatory program, you accomplish two things. The first is you of course eliminate the adverse selection problem, because everyone is in the program, and the other thing is, you are able to push down rates to level where they are pretty easily affordable for most of the population.

Gleckman says that a mandatory long-term insurance program could push down premiums to $45 a month on average, even lower ($12-$20/month) for younger Americans. “But again, the problem is the politics. Can you really do a mandate in the current political environment? The sponsors of the CLASS act made a decision that they couldn’t, so consequently they’re struggling to create a program that has a benefit that is descent enough that people would be interested in, but doesn’t have premiums so high that it will chase people away.”

Working within these political realities, lawmakers can amend the existing CLASS legislation to ensure that the program is sustainable over the long term:

- Vary premiums by age: Currently, enrollee would pay the same premium for life. This increases the cost of the average premiums and pushes young people out of the program. By increasing the premium slightly every year, “you make it possible to sell to young people at a very very low rate.”

- Greater flexibility to HHS flexibility in design: Since it’s unclear who will participate in the program and whether high premiums will detract younger Americans from enrolling, giving the HHS secretary greater flexibility in varying premiums and benefits would ensure that the program is fiscally sound over time.

– Buy the insurance with pre-tax dollars: To encourage participation, premiums could be purchased with pre-tax dollars.

- Requirement that only working adults can purchase coverage: While nonworking spouses also need coverage, limiting enrollment and risk exposure to working Americans may be an option for strengthening the solvency of the legislation.

“Affordability is the key to this,” Gleckman says. “They’ve got to find a way to keep premiums below $100.” Moreover, policy makers must stop talking about long-term care “as a way to pay for the rest of health care reform.” “The more you talk like that, the more people don’t see this as insurance, they just see this as another government bait-and-switch program. ‘I’m going to be paying all this money, and 40 to 50 years from now, when I actually need it, it’s not going to be there.’ I would design it so that it would really fund itself and the money stayed separate from the rest of government.”

Democrats are also indicating that they may “short-circuit the legislative process” to pass health care reform by December 18th, the last day Congress is in session. “The most talked about method is end running the formal conference committee process in favor of some sort of mini-conference. Democratic officials in the White House and Congress are envisioning an end game similar to the way the $787 billion stimulus package came together with congressional leaders and White House aides hashing out the differences behind closed doors.”

Details of the merged legislation remain elusive but here is the latest:

- Bill will cost less than $894B/10 years: The “preliminary estimates by the nonpartisan Congressional Budget Office, the legislation’s official scorekeeper, have indicated that the Senate measure would cost far less than the bill the House approved last week, while lowering the federal deficit further over the long term.” This suggests that Reid was able to bring down the price tag and increase the new revenue. To lower the price tag he could have lowered the amount the bill spends on subsidies, further expanded Medicaid, decreased funding for prevention and wellness, or tinkered with a few other provisions like the tax credit for small businesses. Reid may also replace the opt-out national public option with Sen. Tom Carper’s (D-DE) ‘non profit board’ trigger compromise.

- Bill may lower the maximum contribution for premiums for families 133-150% FPL from 12% to 10%: Family USA’s Ron Pollack tells TNR’s Suzy Khimm that “the Senate leadership has basically decided to give more help to middle-class families on the higher of the subsidy spectrum, whose incomes are 300 to 400% above the poverty line.” The legislation may lower the maximum premium contribution from 12% to 10%, but increase the premium contribution for the lower end of the spectrum (Americans between 133-150% of the federal poverty line) from 2% to about 3%.

- Roll back Cadillac health plan tax, replace some of the revenue with a payroll tax: “To scale back a plan to tax high-cost insurance policies, an idea that is highly unpopular among labor unions, Reid is expected to propose an increase in the Medicare payroll tax for families earning more than $250,000 a year.” “The provision would be expected to generate about $50 billion over the next 10 years” and “the extra revenue would allow Reid to reduce the number of people who would be hit by a new 40 percent tax on the most expensive insurance policies.” According to the Dow Jones, “Reid has already raised the family threshold by $2,000 for everybody.”

- Bill will invest in the CLASS Act: Reid is expected to incorporate the Community Living Assistance Services and Supports Act, or CLASS Act, a long-term care program championed by the late Sen. Ted Kennedy. The program was part of the HELP Committee’s bill and generated some $59 billion in new revenues from premiums to help fund reform. The CLASS Act establishes “a national insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become severely functionally impaired.” All working adults will be automatically enrolled in the program, unless they choose to opt out. “Fiscal conservatives and government economists have questioned whether the program would be financially sustainable over the long run, and insurance companies are lobbying to strip it from the health care bill.”

- Bill could remove a provision that removes insurers’ anti-trust exemption: The New York Times suggests that in response to demands from Sen. Ben Nelson (D-NE), “the leaders appear willing to drop plans to use the bill to strip health insurance companies of their antitrust exemption.”

Rep. Bart Stupak (D-MI)

In effect, the size of the new market is large enough so that Stupak/Pitts can be expected to alter the “default” customs and practices that guide the health benefits industry as a whole, leading it to drop coverage in all markets in order to meet the lowest common denominator in both the exchange and expanded Medicaid markets. Furthermore, for the reasons outlined above, because the Stupak Amendment bars the subsidization of plan administration activities in connection with prohibited procedures, it can be expected to chill the development of abortion coverage supplements as well as entirely separate plans to non-subsidized women. .

The Stupak amendment “is intended to reach only a specific part of the market,” but in effect, the provision — which prohibits the government from funding any plan that offers abortion coverage — could “move the entire health benefits industry away from its current inclusive coverage norms and toward a new norm of exclusion,” the report concludes.

Given the size of the market in the Exchange (30 million and growing), the scope of the amendment, and the technical challenges and difficulties that arise from administrating supplemental abortion coverage, insurers will “shift away from current abortion coverage norms“; excluding abortion from coverage will become the new norm.

Ultimately, “companies offering coverage products in the employer-sponsored market” “may elect to simply remove the [abortion] procedures from their products so that they can be sold in all markets.” The Stupak amendment will discourage insurance companies from providing abortion coverage and increase the costs of the procedure:

- Amendment could chill the development of abortion coverage supplements: Since Stupak effectively requires that supplemental abortion coverage “be administered separately from other plans,” the cost of supplemental abortion coverage “could be expected to be far higher than simply the cost” of any other supplemental policies.

- Companies would have to absorb the extra administrative costs of providing supplemental abortion coverage: “Not only would companies have to absorb all costs of administration into the supplemental or separate plan fee, but companies would confront having to expand provider networks to assure access to the full range of medically indicated abortions in the case of women who purchase expanded coverage.”

- Cost of later-term abortions would be particularly expensive: The cost of abortions performed later in pregnancy can already “carry a price tag in the thousands of dollars.” However, since this coverage will now be sold as supplement — excluded from the larger risk pool — “the cost of a supplement or a plan that carries additional coverage could be considerable.”

- No incentive for companies to offer additional coverage for women who move into Exchange: While a migration over time of thousands of smaller employers (who offer abortion coverage) into the Exchange “might encourage health benefit services companies to create supplemental abortion coverage products,” the Stupak amendment discourages their development. Currently, almost no insurers offer supplemental abortion coverage in states that already bar the sale of products that offer abortion coverage. The Stupak amendment is designed “to push the price of supplemental coverage higher by prohibiting the integration of administration costs into a single administrative scheme.”

- What if the abortion procedure is part a broader treatment? Under Stupak, plan administrators can only pay for abortions that threaten the life of the mother. But what if the abortion procedure “is part of broader treatment for a serious health condition?” What if the procedure must be performed to in the course of treating a significant health problem? “In these circumstances, how are plan administrators to distinguish between the abortion procedure and the rest of the treatment? Will the entire cost of a course of treatment (e.g., surgery to repair a damaged pelvis following an automobile accident) be denied if abortion is part of the procedure? Health plan administrators, confronted with the prospect of a legal violation for paying for the excluded abortions, may elect to deny the treatment altogether, claiming that it is all related to the excluded treatment.”

The unintended consequences of Stupak are alarming. Legislators have designed a policy that changes the way abortion is treated by insurers and providers in the broader health care market. The amendment devastates the status quo and could prove a serious obstacle to women.

For the average female population, mammograms cause more harm than good:

The harms resulting from screening for breast cancer include psychological harms, unnecessary imaging tests and biopsies in women without cancer, and inconvenience due to false-positive screening results. Furthermore, one must also consider the harms associated with treatment of cancer that would not become clinically apparent during a woman’s lifetime (overdiagnosis), as well as the harms of unnecessary earlier treatment of breast cancer that would have become clinically apparent but would not have shortened a woman’s life. Radiation exposure (from radiologic tests), although a minor concern, is also a consideration.

The debate underscores the complexity surrounding public health care management and raises new challenges for comparative effectiveness research. More immediately, the new guidelines create a political dilemma: clinical trials suggest that mammograms don’t work very well for younger women with thicker breast tissue. The test yields more false positives, anxiety, and over treatment (that itself can lead to more serious health problems) than saved lives. It also drives up health care costs.

Undoubtedly for some women, the mammogram is a life saver, and lawmakers fear that insurance companies will seize the new guidelines to deny coverage for mammograms for younger women. But the Prevention Services Task force had a choice. It could have issued a recommendation that would have 1) hurt the majority of the under 50 population, 2) helped a small number of women, but 3) added to skyrocketing health care costs. Or it could have issued a recommendation that would have 1) benefited the majority of the under 50 population, 2) didn’t create more waste in the system and 3) harmed a small percentage of women. Only in the world of political rhetoric can one test everyone and improve all health outcomes.

At the end of the day, health care providers need to follow scientific protocols. The system can’t accommodate a situation in which doctors order CAT scans for simple headaches or complicated surgeries for problems that can be solved with a regimen of medication. Policy makers must balance risk and benefit because a free-market approach creates the kind of health care costs that price millions out of the health insurance market. It produces a situation where 46 million Americans are uninsured, 45,000 die every single year because they don’t have health insurance, while the nation spends 16% of it’s GDP on health care and $800 billion/year on health procedures that actually worsen health outcomes.

In a situation with no good answers, scientific research should inform the best answer.

- Sen. Jim DeMint (R-SC): “Well, no one is going to go without health care, because everyone can just show up at the hospital, but that’s just not the most efficient way to do it.” [Huffington Post, 11/04/2009]

- Rep. Steve King (R-IA): “All Americans have health care. Every single one. And 85 percent of us are insured….you would throw out the liberty of America. Throw out the baby with the bath water of the best health insurance industry in the world, the best health care delivery system in the world. Destroyed by a desire to create a dependency society to steal our freedom.” [CSPAN, 10/07/2008]

- Rep. Virginia Foxx (R-NC): “There are no Americans who don’t have healthcare. Everybody in this country has access to healthcare.” [Talk Radio News Service, 7/24/2009]

But a new study published in Archives of Surgery has found that not all Americans are treated equally. Uninsured Americans “with traumatic injuries, such as car crashes, falls and gunshot wounds, were almost twice as likely to die in the hospital as similarly injured patients with health insurance,” the study concluded.

Researchers have long argued that uninsured adults face a higher risk of mortality than insured adults, are less likely to seek needed medical care, and are more likely to develop serious chronic conditions. This Harvard team of researchers hypothesized that “given the pervasive evidence of disparities in screening, hospital admission, treatment, and outcomes due to insurance status, a disparity in outcomes in trauma patients (in-hospital death) among the uninsured may exist, despite preventive regulations (such as the Emergency Medical Treatment and Active Labor Act).” They were right:

The report does not definitively explain why the variations “in mortality would exist in a system where equivalent care is not only expected but mandated by law,” but concluded that access to care not the same as having health care insurance.

The uninsured patients may experience treatment delay, different care than insured patients (”uninsured trauma patients were less likely to be admitted to the hospital and received fewer services during their admission compared with insured trauma patients”), and possess “a lower rate of health literacy and may have less aptitude in communication with physicians and other treating team members.”

Reid has promised to give Senators at least 72 hours to review the legislation, and debate isn’t expected to begin before Friday, November 17th. Sixty senators will have to vote on a measure to begin what could be six weeks of debate, and 60 votes will stop it.

Before the Senate begins its marathon session — which could last many weeks and weekends — here is a summary timeline of some of how far reform has come, and how far it has to go:

June 2009: Health, Education, Labor, and Pensions Committee Releases ‘Affordable Health Choices Act’ and begins considering the legislation in committee.

June 2009: The Senate Finance Committee’s “nothing-burger” proposal is leaked. The legislation does not include a public health insurance option or a requirement that large employers provide coverage.

June 19, 2009: House releases the first draft of its Tri-Committee proposal. The legislation includes a robust public option, a requirement that all large employers provide health insurance coverage, and a surtax on wealthy Americans.

July 13, 2009: After 13 days and more than 60 hours of debate the HELP Committee passed health care reform. Not a single Republican votes for the bill. Instead, they lie about it.

July 31, 2009: All relevant House Committees mark-up and pass the House health care bill by this date.

August, 2009: Republicans misrepresent the consequences of reform in town halls across America.

September 9, 2009: Obama pushes for health care reform before a joint session of Congress.

September 2009: Sen. Max Baucus (D-MT) releases the Senate Finance Committee health care bill after 6 months of bipartisan negotiations. The bill is attacked from the left and the right. The Committee begins marking up the proposal.

October 13, 2009: The Senate Finance Committee passes the health care bill 14-9. Sen. Olympia Snowe (R-ME) becomes the only Republican to vote for health care reform.

October 26, 2009: Majority Leader Harry Reid (D-NV) announces that the final health care bill will include a national public health insurance option, but gives states the option to opt-out of the plan.

October 29, 2009: House Speaker Nancy Pelosi (D-CA) unveils the merged House health care bill.

November 7, 2009: In a 220-215 vote, the House passes bipartisan health care reform legislation. Rep. Joseph Cao (R-LA) becomes the second Republican to vote for health care reform.

November 17, 2009: Reid will unveil the merged health care bill and the Congressional Budget Office’s analysis. Will promise to bring the bill to the floor on Friday.

November 20, 2009: At least 60 senators vote to begin debate on the health care reform bill. Minority Leader Mitch McConnell (R-KY) predicts that the legislation “will be on the floor for quite a long time.” “I think it ought to be on the floor at least as long as it’s been in Harry Reid’s office,” he said on Sunday.

December 21-23, 2009: The Senate passes health care reform bill.

January 2010: The Conference committee merges the Senate and House bills. Will it keep the Stupak language? What will happen to the public option and the employer mandate? How will the conference finance reform? Will it keep the Senate’s excise tax or opt for the House’s surtax on wealthy Americans?

February 2010: The House and will Senate vote on the final conference report.

February/March 2010: President Obama signs health care reform into law.

Once the bill is enacted, all health insurance plans would be required to spend at least 85 cents of every dollar paid in premiums each year to providing actual health care. If, in a given year, an insurer doesn’t spend that amount on health care, they would have to give their extra profit back to their customers in the form of rebates. [...]

But there’s a twist to all of this. The version of the bill that was passed by the House last weekend includes the provision, but also includes some curious, new “sunset” language. The sunset language states that the new minimum medical loss ratio requirements “shall not apply to health insurance coverage on and after the first date that health insurance coverage is offered through the Health Insurance Exchange.” In other words, in 2013, when most of the bill takes effect, the medical loss ratio language would be null and void. There would be no more profit control, just the market competition that is provided by whatever form of the public option is included in the bill.

“This really doesn’t make a whole lot of sense. What’s the point of including it in the legislation if it’s not going to apply once the bulk of the bill takes effect?,” Shaw asks.

Shaw’s concern is well taken, but a higher medical-loss ratio would not prevent private insurers from shifting a disproportionate amount of premium dollars into profits. It would do very little to improve care quality. If anything, plans could be encouraged to pay more for certain services (to meet the benchmark) and exclude certain benefits from coverage (benefits which would attract a sicker risk pool).

As James C. Robinson points out in this Health Affairs article, “High ratios can be achieved either through a large numerator (high medical expenditures) or through a small denominator (low insurance premiums).” In 2007, for instance, 6 of the 7 largest publicly-traded health insurers reported that their profits increased by 10%, while their medical loss ratios also went up. The same could happen after 2013. Once the Exchange is established, insurers will spend less on administrative expenses (reform will limit their ability to underwrite policies and the Exchange will streamline certain administrative tasks), and their medical-loss ratio will likely increase. This does not mean that they’re spending more money on patient care or shifting less towards profits.

Health reform should strongly encourage insurers to spend more premium dollars on financing quality health care, and less on administrative costs. The House legislation accomplishes that goal by prohibiting insurers from maximizing profits and denying coverage to Americans with pre-existing conditions. It establishes guaranteed issue and renewal rules, prohibits rescission, requires information transparency and plan disclosure, mandates plans to offer minimum benefits packages and eliminates cost sharing on preventive services. Still, more can be done. Policy makers may better achieve the goal of forcing insurers to spend premium dollars on health care by increasing the minimum actuarial value of health plans and only admitting insurers with high quality standards and low administrative overheads into the Exchange.

The increase in total NHE is estimated to occur primarily as a net result of the substantial expansions in coverage under H.R. 3962, together with the expenditure reductions for Medicare…..The availability of coverage would typically result in a fairly substantial increase in the utilization of health care services, with a corresponding impact on total health expenditures. These higher costs would be partially offset by the sizable discounts imposed on providers by State Medicaid payment rules, together with the significant discounts negotiated by private and public health insurance plans.

Higher utilization from the additional 34 million newly insured enrollees will bend the cost curve slightly up, and, with the exception of the proposed reductions in Medicare payment updates for hospitals, the bill does not do enough to manage utilization or the cost of health care services, the report concludes. It’s a valid point, and one that the Senate health care bill will address with an excise tax on Cadillac health care plans and a Medicare Commission tasked with controlling Medicare-related spending. CMS doubts that the health care industry could “improve their own productivity to the degree achieved by the economy in large” and predicts that the productivity adjustments in the House bill could lead some Medicare providers “for whom Medicare constitutes a substantive portion of their business” to stop seeing Medicare patients.

But the report is not without its positives, and lawmakers must accept the bad with the good. If the CMS analysis suggests that reform legislation should adopt robust cost-containment provisions, it also applauds the bill for expanding coverage by building and strengthening the current public/private system. The report is a wake-up call for reformers as much as it is a full and complete rejection of critics who argue that the House bill will undermine the existing health care system:

- The bill covers 34 million Americans.

- Overall out-of-pocket spending would decline more than $200.

- It extends the life of the Medicare trust fund by 5 years until 2022.

- It invests in comparative effectiveness research without “rationing care.” Such research will reduce national health expenditures by $8 billion between 2010 and 2019.

- The number of Americans in employer-sponsored coverage will increase by 2.5 million.

- Rather than crowding-out private insurers, the public plan would compete on a level playing field and attract about 6 million enrollees. (The report concludes that public plan premiums would be 4% higher than private because it would attract sicker applicants)

- Public expenditures could rise by just 3 percentage points in 2019, or stay the same. Expenditures from private health insurance could actually increase.

- Under the bill, expenditures through Medicare and Medicaid would reduce national health expenditures by roughly 2.1% in 2019.

The CMS report confirms that the House health care bill is a fairly modest proposal that expands access to insurance and builds on what works in the current system. Now, honest lawmakers — who believe in health care reform — must ensure that reform also lowers costs for families and reduces long term health care spending.

Rather than complain about a fictitious government takeover of health care and rationing care to seniors, Sens. Olympia Snowe (R-ME), Susan Collins (R-ME), Joe Lieberman (I-CT) and other ‘moderate’ lawmakers should use this report to insert stringent cost-control mechanisms into the final bill. The report relieves them of their deepest fears (and Luntz-inspired talking points) and challenges them to address the real problems in the health care reform bill.