The Wonk Room

Cantwell’s ‘Basic Health Plan’ Amendment Is A Good Start, But It’s Not A Public Option

Several reports are describing Sen. Maria Cantwell’s (D-WA) ‘Basic Health Plan’ amendment — which would give states the option to provide health care coverage to people with incomes between 133% and 200% of the federal poverty line (about 75% of the uninsured) — as a “quasi public option.”

States would use their purchasing power to negotiate for more affordable coverage options, improve efficiencies, and even lower the health care costs within the Exchange (by shifting lower income and disproportionately sicker individuals into the Basic Health Plan), but they would have to contract with private insurers. And there ain’t nothing public about private insurers. From the amendment:

Under this amendment, the federal government would provide funds to participating states in order to allow such states to provide affordable health care coverage through private health care systems under contract….State administrations would seek to contract with managed care systems, or with systems that offer as many of the attributes of manged care as are feasible in the local care market. A minimum medical loss ratio of 85 percent would be required of all participating plans….State administrators should seek participation by multiple health plans to allow enrollees a choice between two or more plans, whenever possible. A participating health care system can be a licensed health maintenance organization, a licensed health insurer, or a network of health care providers established to offer basic Health Plan Services.

In other words, the federal government would provide states with funds to establish Basic Health Plans for lower income Americans that would be completely run by private insurers. As Ezra Klein explains, and Cantwell freely admits during their interview, the proposal is “entirely orthogonal to the public option debate. It doesn’t create competition or transparency or experimentation.”

And remember, states have to chose to do this, and if they do, they could only offer negotiated rates to a small relatively small group of people. At the end of the day, this plan, like any state-based proposal, would lack the market clout to lower overall health care spending across the board, reform health care delivery, or hold private health insurers accountable.

Large Companies Would Be Exempt From Insurance Regulations, Under Baucus Bill

On September 16, Sen. Jay Rockefeller (D-WV) announced that he would not vote for the Senate Finance Committee’s health care bill unless the committee replaced the network of cooperatives with a robust public option, increased the threshold on the excise tax, restored the CHIP program (the reform bill folded it into the Exchange), improved affordability measures, and regulated self-insured plans.

This last demand may be the least understood and most complicated aspect of health care reform. The Senate Finance Committee’s legislation does not require large employers that self insure to abide by the same rules and regulations as insurers operating in the Exchange or the individual health insurance markets. As Rockefeller explained during mark-up, “you are grandfathering in an unfairness in the insurance market, where you treat 50 percent of the American people in one way…and 46 percent in a very favored way without restrictions, without discipline.” “Most people don’t know that they are treated so differently. Most people don’t know that they have these restrictions on them,” Rockefeller said. Watch it:

Self-insured plans — which are regulated by a law called ERISA — do not have to accept Americans with pre-existing conditions, or remove caps on out-of-pocket or lifetime expenses. “As many as 73 million people, or 55% of those who get insurance through private-sector jobs, are covered in self-insured plans, according to the non-partisan Employee Benefit Research Institute. Workers are often not aware their plans are self-insured because employers hire insurance companies to process claims.”

Congress enacted ERISA in 1974 to allow companies operating across state lines to offer uniform benefit packages. The law establishes minimum standards for pensions, but allows self-insured companies to elude both state and federal regulations.

The initial draft of ERISA exempt employee benefit plans for health and pension from state laws, but subject self-insured companies to existing state regulations. Large corporations would have to abide by the consumer protections of the various states, or so it seemed. Before the final floor vote, Congress folded to big-business demands and inserted the so-called “deemer” clause, barring “self-funded plans from being considered insured plans subject to state insurance regulations.” Suddenly, self-insured companies were exempt from federal and state regulations. The fix was in.

Rockefeller has offered an amendment (C1) to apply health insurance market reforms to the large group and self-insured market. Large corporations are already lining up in opposition.

On Friday, the US Chamber of Commerce chief lobbyist Bruce Josten “sent out a memo this afternoon listing three ‘dangerous amendments’ the business community should weigh in on before the committee gets back to work on Tuesday.” Rockefeller C1 is the most dangerous:

This amendment will significantly and adversely impact larger employers and self-insured plans and the millions of Americans who count on their employer provided health coverage. The federal uniformity standard under ERISA (also known as the “preemption” standard) is critical to our health care system, especially the 170 million Americans receiving coverage from the employer-based system. Its hallmark feature is that it allows employers to offer uniform benefits to their employees, retirees and families without being subject to the conflicting patchwork of mandates, restrictions and costly rules that vary from state to state….This amendment would jeopardize employers’ ability to offer uniform national plans without interference by contradicting state rules. Benefits costs could soar.

But Rockefeller’s amendment would presumably subject self-insured plans to the new federal regulations, permitting large corporations to continue offering uniform plan. The Committee is expected to consider Rockefeller’s amendment this week.

48 Amendments To Protect Health Insurers’ Interests

On Thursday, Sen. Jay Rockefeller (D-WV) speculated that “if there’s anything which is clear, it’s that the insurance industry is not running this markup, but it is running certain people in this markup.” Indeed, in the last two and a half years, the health insurance industry has spent at least $585,725,712 lobbying Congress to protect its investments in Medicare advantage, defeat competition from a public option (or even a cooperative), and preserve policies that allow it to attract a disproportionate number of healthy applicants.

An analysis conducted by the Center for American Progress Action Fund of all 534 amendments has identified at least 48 amendments that directly reflect the industry’s wish list. And while the information below does not demonstrate a direct quid-pro-quo between an insurers’ contribution and a senator’s amendment, it raises an important question: Why are some senators so intent on protecting an industry that is partly responsible for creating the current health care crisis?

Watch a video compilation of senators arguing on behalf of the industry:

Industry ask: “We have strong concerns about the proposed funding cuts in Medicare Advantage.” [AHIP Letter, 9/21/2009]

Industry gets: At least 14 amendments that protect the 14% subsidy private plans receive for participating in the program.

Insurers ask: “We have strong concerns about the proposal for new, untested government-created health insurance cooperatives.” [AHIP Letter, 9/21/2009]

Insurers get: At least 9 amendments eliminating the mark’s network of cooperatives.

Industry asks: “We are concerned that the new national benefit standards – taking into account both the actuarial value requirements and provisions that provide unlimited access to any and all services – would impose higher costs.” [AHIP letter, 9/21/2009]

Industry gets: At least 4 amendments loosening benefits standards.

Industry asks: “Without system-wide cost containment provisions, the proposed new taxes on high cost plans and the proposed new taxes on key components of health expenditures would cause many Americans to spend more on coverage….We are concerned that these provisions will increase costs.” [AHIP letter, 9/21/2009]

Industry gets: At least 8 amendments loosening benefits standards.

Download a complete copy of the report HERE.

Baucus Accepts Numerous Republican And Democratic Amendments, Brings Cost Of Bill To $900 Billion

I’m live Tweeting the Senate Finance Committee’s mark-up on @wonkroom.

Sen Max Baucus (D-MT) has just released a Chairman’s amendment to his mark. The new amendment enhances the bill’s affordability measures and increases the threshold on so-called Cadillac health care plans for ‘high-risk’ Americans. The modified amendment also preserves a subsidy to certain Medicare Advantage plans.

Baucus accepted 29 Republican amendments, including 10 from Sen. Olympia Snowe (R-ME), who has indicated that she is open to voting for the Senate Finance Committee bill. Baucus did not address any public option amendments and will likely consider Snowe’s trigger proposal during mark-up.

Below are the most significant revisions:

GOP Senators Offer At Least 27 Amendments To Weaken Affordability Measures In Baucus Health Bill »

While marking-up the Kennedy health care bill, Republicans on the Health, Pensions, Education and Labor Committee (HELP) introduced at least seven amendments designed to lower subsidies for Americans who purchase coverage through the Exchange. Now Republicans on the Senate Finance Committee are pushing the same agenda, asking Chairman Max Baucus (D-MT) to accept at least 27 separate amendments to reduce the Committee’s far less generous affordability measures.

Premiums under Sen. Max Baucus’ health plan would be five times as large “as under the HELP bil” yet Republicans want to finance the repeal of health industry taxes, incentives for states to cap non-economic malpractice awards and expanded Health Savings Accounts, by slashing subsidies:

According to an analysis of the Baucus bill by the Center on Budget and Policy Priorities, families of three earning anywhere between $54,930 per year (300% FPL) and $73,240 per year ($400% FPL) would have to spend 13% of income on health care premiums or somewhere in the range of $7,141 – $9,521 per year. (Comparatively, families in this range would spend $4,339 – $9,155 under the HELP bill).

For more analysis of the Baucus amendments, click HERE. The full list of affordability amendments is available after the jump: More »« Less

Why Do So Many Grassley Amendments Benefit The Health Care Industry?

Most of the Republican amendments to Sen. Max Baucus’s (D-MT) mark seek to obstruct legitimate debate, but Sen. Chuck Grassley’s (R-IA) amendments suggest that the ranking member of the Senate Finance Committee won’t support reform legislation that undermines interests of the health care industry.

Grassley, who has spent his entire summer attacking reform legislation, has offered at least 10 amendments that would directly benefit the health industry, of which he is the top recipient of campaign contributions. According to an analysis of records compiled by the Center for Responsive Politics, Grassley received the most health industry contributions this year – $223,600. Sen. Max Baucus (D-MT) was second with $141,000.

While “there is not a quid pro quo,” Sheila Krumholz, executive director of the Center for Responsive Politics explains, “there is an expectation that a contribution gives you a chance to be heard by the member.” Approximately one-third of Grassley’s amendments benefit the industry.

Three separate amendments aim to protect government’s subsidy of private insurers participating in Medicare Advantage. As a senator from a rural state, Grassley is sensitive about ensuring that his constituents have access to health care services, but his devotion to the 13% subsidy undermines the stability of the broader Medicare program, from which 88% of Iowa Medicare enrollees benefit. Traditional Medicare is actually less expensive to administer and is no less effective than private plans in Medicare Advantage. In fact, according to a Government Accountability Office private plans in Medicare Advantage channel the extra payments into profit, not improved benefits.

Four Two of Grassley’s amendments replace the individual mandate to purchase coverage with a reinsurance policy that would allow insurers to pay into a “reinsurance fund” that would finance very high medical expenses. Without an individual mandate, reinsurance could protect the entire insurance pool from picking up the costs of individuals who purchase coverage after a crippling diagnosis. While ‘reinsurance’ does contradict AHIP’s public embrace of the individual mandate, the scheme would benefit private reinsurance firms (some of which are AHIP members).

Grassley also offers four separate amendments to eliminate fees on health insurance providers, medical device manufactures, clinical laboratories, and manufactures and importers of branded drugs. The industry strongly opposes this fees and is lobbying Congress to eliminate them.

Republicans Amend Baucus Bill To Lower Affordability Standards, Stop Funding For ACORN »

Members of the Senate Finance committee have submitted 534 amendments to Sen. Max Baucus’ (D-MT) health care mark. Democrats introduced several amendments re-instating the public insurance option, expanding Medicare to Americans 54 to 65, striking the network of consumer driven cooperatives, and improving affordability standards. Multiple amendments lowered the threshold for subsidies, limited out-of-pocket expenses, increased subsidies for individuals making 300-400% of poverty and narrowed the so-called ‘age-band’ (the variation that allows insurers to charge older beneficiaries higher rates).

Democrats exempt workers in high risk professions from the excise tax on insurers, replaced the free rider provision with an employer mandate, and even proposed tax equity for domestic partnerships.

And while Republicans have proposed several compromise amendments — Sen. Olympia Snowe (R-ME) offered an amendment to ‘trigger’ the public option if affordable coverage was not available to at least 95 percent of state residents — most of their provisions seek to delay the mark-up process and undermine the bill.

Republicans offered two separate amendments prohibiting funding for ACORN, reduced affordability credits, and eliminated “all industry fees.” Here are some of the most outrageous:

The Senate Finance Committee begins mark-up this week. Below are some of the most important amendments, categorized into Coverage, Financing, and Delivery reforms. To see the complete list, click here. More »« Less