The Wonk Room

Criticism From The Left: Rockefeller Registers Valid Concerns About The Baucus Bill »

Sen. Jay Rockefeller (D-WV) has long argued that the Baucus health care bill does not do enough to improve affordability and protect Americans from predatory insurance practices. The Senator voted the bill out of committee with grave reservations — reservations he has spelled out in a 13 page document now posted on the Committee’s website.

The document, which does not does not include objections to the low penalties for the individual mandate, excise taxes on so-called “Cadillac plans,” the so-called young invincibles program or the low creditable coverage standards offered in the bill, offers the most comprehensive progressive critique of the Baucus legislation. Specifically, Rockefeller is concerned about the lack of a public option and the lax enforcement and accountability measures, limited regulation of self-insured plans, the free rider provision, ineffective co-operatives, benefit standards for newly enrolled Medicaid patients, employer wellness programs, the Medicare Commission, and the failsafe proposal. (Be sure to hit “More” to use the above hyperlinks.)

Below is a summary of Rockefeller’s concerns:

CONCERN: The Baucus bill showers private insurers with $461 billion of taxpayer- funded subsidies but does not force insurers to compete with a public option or hold the industry accountable:

- Rockefeller debunks the industry argument that a public option that reimburses at or slightly above Medicare rates would shift costs to Americans with private insurance. As MedPAC explained in its March 2009 report to Congress, “while insurers appear to be unable or unwilling to push back‘ and restrain payments to providers, they have been able to pass costs on to the purchasers of insurance and maintain their profit margins.” The CBO has indicated that many hospitals negotiate higher payments with private insurers as a form of price discrimination to maximize profits. They demand higher reimbursements from health insurers because they can, not because they are shifting costs.

- Therefore, “the real issue is not whether private plans pay doctors and hospitals more than government programs, but what is a fair rate based on the actual cost of providing quality care. “One of the major disappointments of the Committee mark is the lack of leverage over private health insurance industry prices….The Committee mark spends nearly one-half trillion dollars in federal premium subsidies to supplement high private health insurance costs, rather than to bring those high costs down for consumers,” Rockefeller notes. “If an average family premium is $13,375, a family wishing to enroll in the public health insurance option could save $1,338 – $2,676.”

- “The Committee mark does not include any new federal resources or infrastructure to regulate private health insurance companies and make certain they are actually abiding by the new insurance market rules. Without a new, robust federal regulatory role, I remain extremely concerned that private health insurance companies will continue their long-standing practice of exploiting loopholes in the law and skimming on coverage for beneficiaries to increase profits.”

CONCERN: The insurance reforms in the Baucus Bill do not apply to the 50% of Americans who purchase coverage from employers that self-insure and may prove inadequate:

- “The Committee mark only includes two new reforms of self-insured plans – they must provide coverage that is at least equal to 65 percent of the actuarial value of the Blue Cross Blue Shield standard plan offered through the Federal Employees Health Benefits Plan (FEHBP), and they must provide first dollar coverage for preventive health benefits.”

- “The Committee mark eliminates pre-existing condition exclusions in the individual and small group markets. However, these provisions are not phased-in until July 1, 2013….The prohibition on pre-existing condition exclusions is phased-in for large group plans over five years beginning in 2017, and the prohibition does not apply to the self-insured market.”

- “The bill also prohibits large-employer plans (including self-insured plans) from implementing “unreasonable” annual or lifetime limits, although the term “unreasonable” is undefined. I remain concerned that the mark does not implement a complete prohibition on annual and lifetime limits for large employer plans, including those in the self-insured market.”

- “While reporting of medical loss ratios is an important first step, I remain concerned that the Committee mark does not require private health insurance companies, particularly those offering federally subsidized coverage through the state exchanges, to spend the majority of the nearly one-half trillion dollars in federal premium subsidies on actual medical care.”

CONCERN: The ‘free rider provision’ could jeopardize the employment of lower-income Americans:

- “I remain concerned that this provision provides a disincentive for employers to hire or maintain employment for low-wage workers. It would be particularly burdensome for states, like West Virginia, with a higher percentage of low-wage workers.”

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Snowe Will Vote Baucus Bill Out Of Committee, Did Insurance Industry Report Force Her Hand?

Sen. Olympia Snowe (R-ME) has announced that she will vote the Baucus health care bill out of the Senate Finance Committee, making her the only Republican to support any health reform measure. Snowe explained that she had “reservations” about the Baucus bill and stressed that her vote would help the reform process move forward.

So is this bill all that I want? Far from it. Is it all that it can be? No. But when history calls, history calls. And I happen to think that the consequences of inaction dictate the urgency of Congress to take every available opportunity to demonstrate its capacity to solve the monumental issues of our time…There are many, many miles to go in this legislative journey….That is why my vote to report this bill out of committee represents. It is to continue working the process. I do it with reservations because I share my Republican colleagues’ trepidations about what will transpire on the Senate floor, what will emerge in House and Senate conference and how indeed the Finance Committee’s bill will be merged with the HELP bill.

Watch it:

Some have speculated that the recent insurance industry report encouraged Snowe to vote in favor of reform. The insurance industry attacked Snowe’s amendments to lower the penalties for Americans who don’t meet the requirements of the individual mandate and the senator harshly condemned the industry’s conclusions. “It wasn’t based on any valid assumptions,” she said. Under the legislation, the maximum penalty for a family that does not purchase coverage “would start at $200 in 2014 and rise to $800 in 2017“; people who have to pay more than 8 percent of their adjusted gross income for the cheapest available insurance plan “would not be required to purchase it.”

Snowe’s status as the only Republican to support health care reform will likely bolster her position at the bargaining table; Democrats will have to maintain Snowe’s vote as reform moves froward. Snowe will now be part of the discussions that merge the Finance bill with the HELP bill and conference. Before announcing her vote, Snowe registered her opposition to some Medicare cuts, insisted that the CBO score the final legislative language before the Senate votes on the bill, and argued that the final bill should be posted online so that Americans can review the final legislation.

Snowe preserved her leverage by stressing that her vote in committee does not guarantee that she will vote for the final bill. “I say, my vote today is my vote today. It does not forecast what my vote will be tomorrow.”

Despite Calling CBO ‘God,’ GOP Rejects Politically Inconvenient CBO Score Of Baucus Bill

The CBO’s score of the Senate Finance Committee’s health care reform bill isn’t winning over any converts. After a year of building up the budget office’s ‘bipartisan’ credibility– Sen. Chuck Grassley (R-IA) has repeatedly equated the CBO with ‘God’ — Republicans are now dismissing the office’s politically inconvenient conclusions.

The Congressional Budget Office estimated that the new version of the Senate Finance Committee’s health bill “will result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period” and would actually “reduce the federal budgetary commitment to health care.” But Republicans are stressing that the CBO analysis is “preliminary,” insisting that Democrats have a secret plan to scrap the existing health care legislation that “expands the role of the federal government in the personal health care decisions of every American.”

- Sen. Chuck Grassley (R-IA): “I think it’s going to be closer to a trillion dollars…It’s going to lead to a massive involvement of the federal government in health care.” [Fox News, 10/07/2009]

- Dick Morris: “If that sells well, they should list it under fiction on the best sellers list.” [Fox News, 10/07/2009]

- Michelle Malkin: “These are fantasy numbers, that’s the bottom line.” [Fox News, 10/08/2009]

Watch a video compilation:

The Baucus bill requires some substantial changes, but the Republican effort to invalidate the CBO scores is highly disingenuous. It’s hard to argue that you support bipartisan deficit-neutral health care reform and oppose a measure that incorporates pages of Republican ideas and actually reduces the deficit by $81 billion over 10 years. To make that argument, one must pretend that the Baucus bill is something it’s not.

To be clear, the bill is far from perfect and many progressives have their share of complaints. As Jonathan Cohn points out, the coverage provisions are “significantly lower than the projections from the House bill.” “In raw numbers, it’s the difference between 25 million people (Senate Finance bill) and 17 million (House bills) still uninsured ten years from now.” The Committee has some $71 billion (before it meets President Obama’s cost threshold of $900 billion) and could invest in higher affordability credits or improve affordability measures by allowing the Exchanges to “negotiate with plans for lower bids, encourage plans to form select networks, and exclude plans that do not offer good value and cost-effectiveness.”

Moreover, Congress should replace the proposed network of cooperatives — which, according to the CBO, are “unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payment — with a robust public option that could save the government as much as $150 billion over 10 years. It should eliminate the “failsafe” clause that “automatically” cut subsidies in the exchange to avert a projected increase in spending, strengthen employer-based coverage by replacing the bill’s free-rider provision with a pay-or-play employer mandate, and improve consumer protections by regulating the insurance plans of large self-insured corporations and lowering the amount insurers can charge older people for coverage. The Committee bill should also invest in long term care by adopting the Community Living Assistance Services and Supports (CLASS) Act, “a national insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become severely functionally impaired.” The legislation establishes a safety net for long term care needs and also generates new revenue for reform. The House bills and the Senate’s health committee both include the program.

The Baucus bill provides Congress with an important opportunity to build up and incorporate many progressive criticisms into the final Senate bill. After all, Republicans have demonstrated, once again, that they will paint even the most conservative health bill as an expensive government take-over of health care.

CBO: New Baucus Deficit Neutral Bill Costs $829B, Will Reduce Deficit By $81 Billion Over Next Decade

The Congressional Budget Office has estimated that the new version of the Senate Finance Committee’s health bill “will result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period.” The Committee’s deficit neutral proposal will cost approximately $829 billion, about $55 billion more than the original pre mark-up version, but about $71 billion less than President Obama’s $900 billion target. The full Committee is expected to vote on the final bill sometime next week.

During 7 days and more than 80 hours of mark-up, the Committee considered over 140 different amendments and voted on 103. In fact as Chairman Max Baucus (D-MT) pointed out throughout the hearings, “it has been 15 years since this committee has held mark-up that took five days.” “Since then we have held more than 150 mark-ups and most of those took one or two days.” Baucus reminded Republicans that “the 2001 tax cut bill was a $1.3 trillion bill, we spent, I don’t know how many days on that, not too many days. This is a $900 billion bill…this committee hasn’t spent actually more than two days in mark-up for ten years. But this is a big bill and we’re just trying to find away to find the right balance here, the balance between understanding the bill on one hand, and acting on the other,” Baucus said.

Per the Chairman’s instruction, the committee’s health care bill had to remain deficit neutral and cost less than $900 billion over 10 years. Today, the CBO concluded that the committee met its goal. Here is a comparison of how the bill evolved during mark-up:

Despite the positive CBO score and the bipartisan nature of the bill, it incorporates many conservative ideas, Republicans are still dismissing the legislation. In fact, during the last few minutes of mark-up, Sen. Chuck Grassley (R-IA), the ranking member on the committee conceded that regardless of the CBO score, “There is a product here that all of the people on my side may not vote for.”

The Senate Finance Committee’s Affordability Catch-22

Last night,the Senate Finance Committee approved a series of amendments that reduce penalties for Americans who don’t purchase health insurance and exempt more individuals from the requirement to obtain coverage. Under the legislation, the maximum penalty for a family that does not purchase coverage “would start at $200 in 2014 and rise to $800 in 2017“; people who have to pay more than 8 percent of their adjusted gross income for the cheapest available insurance plan “would not be required to purchase it.”

“This is the major amendment on affordability,” Sen. Chuck Schumer (D-NY) said. “We should make insurance more affordable by increasing the subsidies. That was not fiscally possible to stay within the constrains that we have in this committee. Hopefully we can move them, make them better as we move forward in the process,” he said.

The problem is this: the White House has decided that they don’t want to defend the higher taxes that affordable universal coverage would require. They don’t want to be labeled as ‘tax-n-spend’ liberals. Instead, they’re willing to accept a smaller reform package with less subsidies and less coverage. As a result, Congress is forced to exempt an extra two million people from the mandate to avoid the hits that would come from requiring these Americans to purchase expensive, unsubsidized coverage. If you can’t help people afford insurance, you can’t require all of them to buy it.

But this approach doesn’t make good policy or politics. On the policy front, exempting too many people from coverage maintains the perverse cost-shifts (uninsured to the insured) already in the system, jeopardizes the balance of the new purchasing pools in the Exchanges, and only increases health care costs. Politically, Congress is asking Americans to purchase not-so-affordable coverage from the less-than trustworthy private insurance industry. Medical bankruptcies and out-of-control spending will not disappear over night.

That’s the problem the Senate Finance Committee is facing: they have to make the bill more affordable by making actual health insurance coverage less affordable.

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.

Stabenow Replies To Kyl: You Don’t Need Maternity Benefits, ‘But Your Mother Did’

This afternoon, while debating an amendment to prohibit the federal government from “defining the health care benefits offered through private insurance,” Sen. Jon Kyl (R-AZ) argued, “I don’t need maternity care, and so requiring that to be in my insurance policy is something that I don’t need and will make the policy more expensive.”

Sen. Debbie Stabenow (D-MI) interjected into Kyl’s remarks to remind him, “I think your mom probably did.” Watch it:

Kyl’s amendment would prohibit the government from defining which benefits should be included in a standard benefit package and would permit health insurance companies to design policies that exclude higher-cost beneficiaries. Currently, “it is difficult and costly for women to find health insurance that covers maternity care” in the individual health insurance market. According to a survey conducted by the National Women’s Law Center, the vast majority of individual market health insurance policies “do not cover maternity care at all. A limited number of insurers sell separate maternity coverage for an additional fee known as a ‘rider,’ but this supplemental coverage is often expensive and limited in scope.”

A well defined minimum benefits package would compel health insurers to provide basic services to all Americans. The Kyl amendment, which ultimately failed, would have allowed the industry to continue profiting from discriminatory practices. As former health insurance executive Wendell Potter explained in an interview with ThinkProress, insurers would like to move us all into “these limited benefit plans that are very skimpy and don’t cover you, don’t cover what you need. That way, when you do get sick, they’re not on the hook to pay you anything. They would love to have you enrolled in these.”

Schumer & Rockefeller: Final Health Bill ‘Will Include A Strong, Robust Public Option’

This evening, during a hastily arranged press call with reporters, Sens. Chuck Schumer (D-NY) and Jay Rockefeller (D-WV) predicted that the final health reform package will include a public health insurance option. “The health care bill that is signed into law by the President will have a good strong public option,” Schumer said.

“We are going to be all about it,” Schumer told reporters on the call. Both senators rejected the bill’s current network of cooperatives and Sen. Olympia Snowe’s (R-ME) trigger compromise and promised to introduce amendments that would establish a national public option. “We are going to have a full blown debate in the Finance Committee,” “Don’t count it out,” Schumer said. “We are going to keep it in the center of the debate as the bill moves through Congress”:

SCHUMER: This is the starting gate. And we know it will get better and better as we move on. But having said that, we’re going to have a full blown debate in the Senate Finance Committee because the more people learn about the public option, the more they like it. And even though a public plan may be an underdog in the Senate Finance Committee, don’t count it out. We’re going to work really hard to get the public option going and started and keep it in the center of the debate as the bill, the health care bill moves through Congress….Tomorrow is the opening day in our big fight, but it is going to be a fight that goes down all the way to the wire. And I’d like to make a prediction. The health care bill that is signed into law by the President will have a good, strong, robust public option.

ROCKEFELLER: And I agree with that.

Listen:

Rockefeller insisted that “we have a good shot of getting it [the public option] out of the Finance Committee.” “A co-op is not an alternative, a co-op can’t work. The alternative is the status quo,” Rockefeller said. “Don’t rule it out. Don’t fall victim to this feeling that it’s not going to happen. You’re creating a problem for us if that’s the way you’re feeling.”

Rockefeller also praised the committee for passing Rockefeller Amendment D10, which established a MedPAC-like panel of medical professionals who “would be required to implement policies that successfully reduce cost growth in Medicare by at least 1.5 percent annually.” “We did something huge this afternoon in the Finance Committee and that was we passed a MedPac plan.” “Everybody said that there is no chance this could pass. It cannot pass. Well, it passed 15-3 this afternoon in the Senate Finance Committee. So I don’t take a dim view on what we’re able to do. That is a game changer, which is probably, in terms of policy, the largest game changer in health care so far.”

While both Schumer and Rockefeller dismissed the co-op and trigger alternatives as ineffective, it was unclear if Schumer and Rockefeller believed that they could pass a public option that linked the plan’s reimbursement rates to Medicare. A similar proposal was introduced in the House bill, but was later modified in a compromise with Blue Dog Democrats.

Ignoring All Facts, Hatch Makes Up Stats To Scare Seniors In Medicare Advantage

Throughout the mark-up process, Republicans on the Senate Finance Committee have continuously argued that replacing the over-payments to private plans participating in Medicare Advantage with a competitive bidding process, would cause the 10 million Americans who are enrolled in the program to lose the extra benefits some Advantage programs provide.

This morning, during a heated exchange with Sen. Orrin Hatch (R-UT), committee staffer Shawn Bishop explained that under the Committee’s bill, 10 million seniors “would not be losing the extra benefits they have today.” To the contrary, some Americans in low-cost states would actually gain benefits. By 2019, the Congressional Budget Office estimates that 200,000 more Americans would be enrolled in Medicare Advantage coverage. But Hatch did not read that report:

HATCH: Here is the bottom line, will the 10 million people see a loss in their extra benefits? The answer to that of course is ‘yes.’ [...]

STAFFER: Categorically 10 million beneficiaries would not be losing the extra benefits they have today. Some would be gaining.[...]

HATCH: The fact of the matter is, the bottom line, is that these are 10 million people that are going to lose benefits. And that’s what it boils down to.

Hatch repeatedly dismissed the staffer’s explanations and insisted that all 10 million would lose their benefits. Watch it:

Bishop explained that under the legislation’s competitive bidding program — a process under which private insurers in each geographical area would bid to provide coverage to Medicare beneficiaries in a particular geographic area — Medicare Advantage plans that provide quality benefits efficiently, would receive a 5 percent bonus on top of their competitive bid to pay for extra benefits. Consequently, states with low costs, would be gaining benefits.

“So in low cost states, low fee-for-service states, today, the amount of extra benefits is very small. It’s minimal. Competitive bidding will allow good plans that coordinate care, that achieve quality rankings to earn up to 5 percent of the national average and that’s going to bring more extra benefits to low-cost states,” Bishop explained.

“So it’s not accurate Senator to say all 10 million beneficiaries are going to have less extra benefits than they do today. That’s not the case there’s going to be some with more, some with less,” she concluded.

Throughout the mark-up process, Hatch has filibustered amendments by peppering the staff with detailed queries and dismissing answers that departed from his ideology. On Tuesday, insisting that the individual mandate provision was unconstitutional, despite committee assurances to the contrary.

Sen. Roberts Warns Insurers, ‘Think Of What Your CEO Is Going To Do’ If Overpayments Are Eliminated »

All eyes turned to Medicare Advantage today as Republicans on the Senate Finance Committee tried to preserve the 14% overpayments the government pays private insurers that participating in the program. Reacting to the Center for Medicare and Medicaid Services’ recent investigation into Humana’s efforts to rally its beneficiaries against health reforms that would eliminate the overpayments, Sen. Jon Kyl (R-AZ) “offered an amendment seeking to protect the First Amendment rights of private insurers who might want to criticize the proposed health care legislation.”

Sen. Pat Roberts (R-KS) — who earlier today argued that senators needed more time to consult with health insurance lobbyists — strongly defended the health industry’s right to lobby Congress and the public against policies that jeopardized its profits. “Think of what your CEO is going to do,” Roberts said, speaking directly to the health insurers:

Think of what your CEO is gonna to do. Sitting around with the board of directors and he takes a look or she takes a look at this bill and says, ‘we think that this is not legitimate, we think that this is a bad situation that will really harm our patients, and our customers, not to mention our company….We don’t feel free to contact Sen. Roberts or Sen. Kyl or for that matter Sen. Schumer…I mean this is clearly a chilling affect on the entire health care industry…This is, quite frankly, it smells like tough, hardball Chicago politics abridging the First Amendment.

Watch it:

As government contractors, however, private insurers participating in the Medicare Advantage program are explicitly forbidden from directly contacting Medicare beneficiaries. In fact, before joining Medicare Advantage, Humana signed a data use agreement that prohibited the company from distributing communications that were not approved by the Center for Medicare and Medicaid Services. The intent of the law is to protect seniors from receiving misleading information from companies that have a financial stake in the final outcome of the legislation.

The Humana debate was only part of a larger Republican effort to preserve the government’s overpayments to insurers. Under the current system, private insurers receive approximately 14% more to provide the same services as traditional Medicare, but there is little evidence that private insurers are reinvesting that subsidy into better benefits or higher quality coverage. In fact, a number of government reports and independent estimates have concluded that the extra federal dollars don’t improve health outcomes. They pad insurers’ bottom lines, raise costs for beneficiaries in the traditional Medicare program, squeeze both Medicare and the federal budget, and drain resources from more productive uses. Private fee-for-service Medicare Advantage plans have even exposed beneficiaries to serious financial risks.

The health reform bill before the Senate Finance Committee would open most Medicare Advantage plans to competitive bidding, requiring the private plans to compete on an equal playing field with Medicare. While certain Medicare Advantage plans would keep their subsidies (Sen. Bill Nelson (D-FL) amended the bill to preserves Medicare Advantage subsidies for seniors living in high cost areas where plans deliver benefits below the average cost of traditional Medicare), the committee would replace the current subsidy with a competitive bidding process. Insurers in each geographical area would bid to provide coverage, the government would average all of the bids, weigh that by the enrollment in the previous year, and pay out that amount.

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Republicans Try To Delay Passage Of Reform, Inadvertently Undermine Their Own Argument

This morning, Republicans spent two hours debating an amendment offered by Sen. Jim Bunning (R-KY) that would have required the Committee put-off a vote on the health care bill until the legislative language of the bill was available on the Finance Committee‘s website for at least 72 hours. Republicans insisted that they could not vote on a final bill until the Congressional Budget Office produced a cost analysis of that final legislative language, delaying a vote for up to two weeks. “I want to know what the final number is on any bill that I vote on in this Committee….If the CBO director says he needs it for the true cost and the comprehensive cost, then that should get our attention,” Sen. Olympia Snowe (R-ME) said.

Chairman Max Baucus (D-MT) agreed that a final CBO score is needed, but argued that the CBO can use conceptual language — rather than legislative language — to score the bill. Baucus reminded senators that the Committee has traditionally relied on a final CBO score of the conceptual language to pass President Bush’s 2001 tax cuts, the Medicare drug bill, as well as other Republican initiatives. He contended that legislative language would not change the intent of the plain language mark; in fact, should any discrepancies arise, the Chairman promised to introduce a mark that would restore the original intent of the language.

Sen. Kent Conrad (D-ND) argued that plain language enhances transparency — by helping the public and the legislators better understand the intent of the legislation — and read a passage of legislative language to demonstrate its complexity. Sen. Pat Roberts (R-KS) then unintentionally underscored Conrad’s point by misunderstanding the passage. ” If members of this own committee can’t recognize what this is all about, that’s why it’s critically important why it should be in plain English,” Conrad emphasized. Watch it:

Ultimately, the Bunning amendment failed in a vote of 11 to 12. Instead, the Committee adopted Baucus’ amendment that required that the conceptual language, in plain English and a complete cost analysis by the CBO be publicly available on the finance website before the final vote. The amendment carried with a 13 to 10 vote.

Hatch Delays Mark-Up By Questioning Constitutionality Of Individual Health Mandate

During last night’s walk through of the Senate Finance bill with Committee and Congressional Budget Office staff, Sen. Orrin Hatch (R-UT) delayed and obstructed the mark-up process by asking waves of repetitive questions — that the staff had already answered throughout the hearings — and insisting that the individual mandate provision was unconstitutional.

Hatch filibustered amendments by peppering the staff with detailed queries and dismissing answers that departed from his ideology. On several occasions, Hatch lectured Chairman Max Baucus (D-MT) for allegedly caving to White House pressure and ‘rushing’ — after nine months of grueling negotiations — the legislation through committee. “At some point we ought to understand what’s in this God dong bill,” Hatch exclaimed after Baucus announced that the committee would be moving to considering amendments. “You got a conceptual bill, that really doesn’t even have the final language, doesn’t have a score to it.”

Watch a compilation:

“I know what you’re trying to do and I know you have lots of pressure from the administration and elsewhere, but this is the United States Senate. This is the most important committee in the United States Senate. And we ought to look at these things seriously and we ought to ask all the questions that we have,” Hatch insisted, before proceeding to ask staffers with no experience in constitutional law, at least four separate questions about the constitutionality of the individual mandate.

At each turn, the staff replied that they were not qualified to answer Hatch queries, and directed him to the Congressional Research Service, which had concluded that the mandate and the penalty for not acquiring insurance were indeed constitutional. In fact, as Slate’s Timothy Noah explains, the Commerce Clause — which the federal government has used to “expand its power in various ways” since the New Deal — allows the government to regulate and penalize behaviors “by defining various activities as ‘interstate commerce.’” “When a person declines to purchase health insurance, that affects interstate commerce, too, by driving up health insurance premiums for everyone else,” he explains.

“I’ve been on the committee for 15 years, I’ve never seen a circumstance where any member just got unlimited questions,” Sen. Kent Conrad (D-ND) told Hatch during a heated exchange. “Have you ever seen a bill that’s one-sixth of the American economy,” Hatch asked. “Yes, I did,” Conrad replied. “I saw it with the tax cuts in the Bush administration, affected 100 percent of the economy, and we weren’t given unlimited questions. And you know, you talk about a disaster for the country, that turned out to be.”

Baucus reminded Hatch that “the 2001 tax cut bill was a $1.3 trillion bill, we spent, I don’t know how many days on that, not too many days. This is a $900 billion bill…this committee hasn’t spent actually more than two days in mark-up for ten years. But this is a big bill and we’re just trying to find away to find the right balance here, the balance between understanding the bill on one hand, and acting on the other,” Baucus said.

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:

Insurers Write Baucus To Express Gratitude, Lay Out Concerns

America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni has penned a letter to Senate Finance Committee Chairman Max Baucus (D-MT), applauding the senator for proposing reforms that combine “insurance market reforms with the responsibility of individuals to obtain coverage and financial assistance for low- and moderate-income families and individuals.”

Ignagni agrees with the overall tenor of of the package, but lays out several top-line concerns. These are summarized below:

- Insurers Oppose 35% Tax On ‘Cadillac Health Plans’: The industry has long argued that it would pass any new taxes to beneficiaries in the form of higher premiums. Ignagni argues that without adequate cost controls, a growing number of policies would be affected by the tax (which is indexed to inflation, and not health care costs) and some Americans could be priced out of the market. After meeting with Democrats who oppose the tax, Baucus has said that he would raise the threshold for expensive insurance plans that would be affected by a new tax. “Given this dynamic, raising the thresholds would only impact how quickly consumers would hit the cap,” Ignagni writes.

- ‘Government Created’ Cooperatives = ‘Slower March Toward A Government-Run Plan’: Ignagni argues that cooperatives will retain certain competitive advantages. The cooperative would receive start-up funds “it would not have to be repaid” and “the government would continue to act as a “player and referee” with the Secretary of HHS serving as Chair of the “advisory board.” However, despite insurers’ concerns of increased competition the bill’s ‘network of cooperatives‘ would be unable to compete in today’s concentrated health insurance markets. As the CBO has concluded, “the proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments.”

- Benefit Flexibility To Allow Insurers To Design Policies That Attract Healthier Enrollees: “This means that benefit packages should give consumers flexible options to meet diverse needs and be aligned with the level of premium subsidies provided by Congress, and that the coverage requirement needs to avoid creating incentives for healthy people to forego the purchase of coverage,” Ignagni writes. The letter also expresses concerns about the new national benefit standards.

In other words, insurers want to design packages that attract healthier applicants and deter “enrollment by those in poorer health.” “For example, insurers could offer a benefits design that omits or severely limits services needed by people with serious medical conditions, while offering richer benefits in other areas such as vision care or health-club memberships.” Well-defined standard benefit packages could preclude the industry from slowly moving everyone into high deductible policies.

- Retain Government Subsidy For Plans In Medicare Advantage: The Baucus bill would eliminate the 13% overpayment to private insurance plans that provide Medicare-like benefits at a higher rate, without improving quality. Under the bill, private insurers would have to submit to a competitive bidding process. “We have strong concerns about the proposed funding cuts in Medicare Advantage,” Ignagni wrote.

Ignagni expressed support for establishing a Medicare Commission (which would oversee Medicare spending) and system-wide payment reform.

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

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

Grassley Develops New Opposition To Individual Mandate, Proposes Re-Insurance Scheme

Sen. Max Baucus’s health care mark appeases top-line Republican concerns. Under the mark, undocumented immigrants are ineligible for coverage, federal funds cannot be used for abortion and the public option is no more (the list goes on here). But many Republicans are still raising the same stale objections; some are even inventing new reasons to oppose the legislation.

Yesterday, Sen. Chuck Grassley (R-IA) reiterated his concern about undocumented workers being eligible for coverage and public dollars being spent on abortions. Grassley has also developed a new-found opposition to the individual mandate — a policy that even health insurers support:

HEMMER: Now as I understand it, you want stronger language preventing federal funds from going to abortion. You want stronger language to make sure illegal immigrants are not covered. If you got those two big points, would you go for it?

GRASSLEY: No, there are other points as well, but let me mention other points that you didn’t mention. And one would be the individual mandate, which for the first time would have a federal penalty against people who don’t have health insurance. I could do that through re-insurance and risk pools, to make sure we get more people insured in a voluntary way and I’m very reluctant to go along with an individual mandate.

Watch it:

But just last month, when asked “how does this bipartisan group that you`re a member of get to more health insurance coverage if you don`t mandate that employers provide coverage,” Grassley replied “through an individual mandate and that`s individual responsibility and even Republicans believe in individual responsibility.”

During a June appearance on Fox News Sunday, Grassley said, “there isn’t anything wrong with it [an individual mandate], except some people look at it as an infringement upon individual freedom”:

But when it comes to states requiring it for automobile insurance, the principle then ought to lie the same way for health insurance. Because everybody has some health insurance costs, and if you aren’t insured, there’s no free lunch. Somebody else is paying for it….I believe that there is a bipartisan consensus to have individual mandates.

During yesterday’s interview however, Grassley found fault in the “automobile insurance” analogy, explaining to host Bill Hemmer that “owning a car and driving a car are voluntary, you don’t have to do it…in this particular case every American would have to have insurance or you would have a penalty,” he said.

Hypocrisy aside, Grassley’s ‘reinsurance scheme,’ along with his abortion and immigration objections, are simply wrong headed. Grassley would replace the individual mandate with reinsurance. To make-up for the cost of individuals who would only buy coverage once they become sick (and remember, under insurance reform, insurers would have to accept all applicants, regardless of pre-existing conditions), Grassley would allow insurers to pay into a “reinsurance fund” that would finance very high medical expenses. This way, he would protect the entire insurance pool from picking up the costs of individuals who purchase coverage after a crippling diagnosis.

This makes sense in the short term, but on the whole it’s bad policy. We spend about 75% of our health care dollars managing chronic diseases and comparatively little on preventing individuals from developing those diseases in the first place. Grassley’s initiative, in other words, would not do anything to catch folks on the front end of the illness, (like the mandate would) and fail to lower costs over the long term.

The abortion piece is no less peculiar. The Baucus mark preserves current policy by preventing federal money from funding so-called ‘elective abortions’ — abortions in cases of incest, life, or rape would still be covered. The mark forbids women from using subsidy dollars for abortion services and forces them to finance the procedure with private money. But Grassley is suggesting, like Tony Perkins does here, that a woman who wants to buy a benefits package that includes abortion services, should not receive any federal assistance– even if she’s using those dollars for unrelated services. In other words, women who purchase comprehensive packages — that include abortion services — must pay for the entire cost of the package (even if they qualify for subsidies).

Republicans Move Goal Posts On Baucus Health Bill

Yesterday, after nine months of bipartisan negotiations, Sen. Max Baucus (D-MT) released the Senate Finance Committee’s health care bill without attracting any Republican support. According to the Congressional Budget Office, the $774 billion proposal would not add any red ink to the deficit and would actually “result in a net reduction in federal budget deficits of $49 billion over the 2010-2019 period.” Nevertheless, Sen. John Thune (R-SD) falsely stated on Fox News, “This bill continues to spend trillions of dollars.”

For months, Republicans have complained that Democrats were pushing a partisan government-takeover of health care that would only add to the deficit and bankrupt the nation. They insisted that any health care reform bill must exclude a public option, allow Americans to purchase coverage across state lines, exclude funding for abortion and ensure that illegal immigrants are note eligible for coverage.

But once presented with legislation that met many of these demands, the GOP demurred, refusing to meet Baucus half-way:

REPUBLICANS ASKED FOR – NO PUBLIC OPTION: “I urged the President to take the public option off the table because it’s universally opposed by all Republicans in the Senate…it is a roadblock to building the kind of consensus that we need to move forward.” [Sen. Olympia Snowe (R-ME), 9/13/2009]

BAUCUS BILL – NO PUBLIC OPTION: The Baucus bill replaces the public option with a network of consumer driven cooperatives. As the Congressional Budget Office explains, “The specifications include provisions to establish health care cooperatives that would provide insurance coverage and operate as nonprofit organizations.” [pg. 32-38 in Baucus mark]

REPUBLICANS ASKED FOR – POLICIES ACROSS STATE LINES: “Interstate competition allowing people to buy insurance across state lines.” [Sen. John Thune (R-SD), 9/8/2009]

BAUCUS BILL – POLICIES ACROSS STATE LINES: Starting in 2015, states may form ―health care choice compacts to allow for the purchase of individual health insurance across state lines…. Once compacts have been agreed to, insurers would be allowed to sell policies in any state participating in the compact.” [pg. 12]

REPUBLICANS ASKED FOR – HIGH RISK POOLS: “Senator McCain has a proposal sometimes called high-risk pools at the state level…These are efforts I think we can have bipartisan agreement on and deal with the question of pre-existing conditions.” [Rep. Eric Cantor (R-VA), 9/10/2009]

BAUCUS BILL – HIGH RISK POOLS: “Within a year of enactment, any uninsured individual who has been denied health care coverage due to a pre-existing condition can enroll in a high-risk pool….The high-risk pool will exist until 2013,” until the Exchange is established. [pg. 2]

REPUBLICANS ASKED FOR – VERIFICATION OF CITIZENSHIP: “Because what the Republicans want was some verification between illegal and documented.” [Michael Steele, 9/10/2009]

BAUCUS BILL – VERIFICATION OF CITIZENSHIP: “In order to prevent illegal immigrants from accessing the state exchanges obtaining federal health care tax credits, the Chairman‘s Mark requires verification of the following personal data…” [pg. 21]

REPUBLICANS ASKED FOR – NO PUBLIC FUNDS FOR ABORTION: “I’m not going to do anything that allows a health care bill to make more abortions permissible. And if I had my way, I would do something to make them less permissible, because I’m pro-life. And I believe that the — life is pretty important.” [Sen. Chuck Grassely (R-IA), 8/6/2009]

BAUCUS BILL – NO PUBLIC FUNDS FOR ABORTION: “No tax credit or cost-sharing credits may be used to pay for abortions.” [pg. 26]

REPUBLICANS ASKED FOR – HIGH DEDUCTIBLE POLICIES: Ways for “individuals and businesses could purchase high deductible policies, create a fund for their first dollar benefits could be greatly expanded.” [Rep. Mike Pence (R-IN), 6/28/2009]

BAUCUS BILL – HIGH DEDUCTIBLE POLICIES: A separate ―young invincible policy would be available for those 25 years or younger. This plan would be a catastrophic only policy in which the catastrophic coverage level would be set at the HSA current law limit, but prevention benefits would be exempt from the deductible. [pg. 21]

Republicans, in other words, have moved the goal posts on reform. Despite Baucus’ many concessions, the GOP is still arguing that the proposal “simply leads to more government, more spending and more taxes” and “spends too much.”

“The chairman’s health care proposal (known as the “chairman’s mark”) that was released by Sen. Max Baucus (D-Mont.) in advance of next week’s Finance Committee Markup is just more of the same big government policies that have been proposed by this Congress and this administration for months,” Sen. Jim Demint (R-SC) wrote on his website.