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.

Stabenow On Hatch’s Abortion Amendment: ‘As A Woman, I Find It Offensive’

The Baucus health bill maintains federal restrictions on abortion funding by preventing federal money from funding any abortions beyond reasons of life-endangerment, rape or incest. Under the mark, women wouldn’t be able to use subsidy dollars for the procedure and would finance the operation only with private premiums.

This morning, Sen. Orrin Hatch (R-UT) introduced amendment Hatch C14, requiring that “no funds authorized or appropriated under this Mark may be used to pay for any abortion or to cover any part of the costs of any health plan that includes coverage of abortion.” Under Hatch’s amendment, women who purchase comprehensive private insurance packages — that include abortion services — would have to pay for the entire cost of the package (even if they qualify for subsidies) and obtain a separate rider for abortion coverage.

Responding to Hatch’s amendment, which ultimately failed in a vote of 10-13, Sen. Debbie Stabenow (D-MI) said, “with all respect to my friend, as a woman, I find it offensive”:

In fact, with all respect to my friend, as a woman, I find it offensive that in here– any woman, any family purchasing through the exchange, if they did not receive any tax credit, would be prohibited from having the full range of health care options that they may need covered….This is an unprecedented restriction on people who paid for their own health care insurance…the assumption that somehow a woman or family would say, ‘you know some did we may have an unintended pregnancy, so we’ll get a separate rider or maybe my pregnancy is going to have a crisis, many, many crises, and so we’re going to find some other rider.’ In my judgment, I don’t even know how that would work.

Stabenow explained that Hatch’s ‘extreme’ amendment would drastically change existing law and levy an undue burden on women who want access to abortion services. Watch it:

While the Baucus amendment establishes a firewall between public dollars and private dollars for abortion services, some advocates believe that the existing language would jeopardize the abortion coverage for women moving from employer sponsored plans (the majority of which cover abortion services) to insurance within the Exchange. They point to present federal policy which subsidizes employer-sponsored plans without restricting abortion coverage.

The mark requires each state-based exchange to contain at least one plan that does not cover abortion and a separate policy that does.

Grassley Flustered When Challenged By Schumer On Public Option

During this morning’s debate over Sen. Jay Rockefeller’s (D-WV) public plan amendment, Sen. Debbie Stabenow (D-MI) reminded senators that “if you go back and look at the debate on Medicare, the very same arguments were used, in the 60s. That we couldn’t have Medicare for seniors because it would destroy the private markets. It would destroy the private insurance system and that’s not what happened.” “Replay to today, same arguments again.”

Indeed, at one particularly contentious moment, Sen. Chuck Schumer (D-NY) challenged Sen. Chuck Grassley’s (R-IA) claim that the public option would lead to single payer health care. The exchange flustered Grassley. He admitted that Medicare is part of the “social fabric” of America and praised the competition between traditional Medicare and Medicare Advantage. He could not explain why younger Americans should be afforded the same choice of coverage. Watch it:

According to a Congressional Budget Office analysis of Rockefeller’s amendment — which establishes a plan that reimburses providers at 5% above Medicare rates for the first two years — the public option would save the government an estimated $50 billion. Only eight million Americans would sign-up for the program, leaving the overwhelming majority of Americans to private coverage.

For Grassley, choice is a one-way street: he wants Americans to move from public to private coverage, but would deny Americans in private coverage the right to choose a public plan. Grassley fought to preserve access to Medicare Advantage and argued that Medicaid recipients should be able to enroll in private coverage. A shift from private to public coverage, however, is unacceptable.

During the debate, several senators reminded Grassley that under Rockefeller’s amendment, the public option would be self-sustaining and charge competitive rates after the first two years. “What are we afraid of,” Sen. John Kerry (D-MA) asked, “that Americans would like a plan that pays for itself and provides a good service?” As Schumer pointed out, Republicans are against government health care, but they have introduced numerous amendments to preserve Medicare. “That’s not fair, and it does not add up,” he said.

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.

Transcript: More »« Less

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.