The Wonk Room

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.

Health Insurance Insider Slams Baucus Bill: ‘An Absolute Gift To The Insurance Industry’

On the eve of the Senate Finance Committee’s release of its much anticipated health care plan, Wendell Potter – the insurance industry whistle blower and former communications director of health insurance giant Cigna – called the Baucus framework “an absolute gift to the industry.” “And if that is what we see in the legislation, [America’s Health Insurance Plans chief] Karen Ignagni will surely get a huge bonus,” Potter said at a briefing for reporters.

The bill establishes a new regulated health insurance exchange and compels every American to purchase qualified health insurance coverage by 2013. Americans with employer-sponsored insurance can stay in their existing plans, while the uninsured would have to enroll in an expanded Medicaid program, a new plan in the Exchange or the now-regulated individual health insurance market. According to a report released by the Congressional Budget Office, the bill would cover 94% of Americans and cost $880 billion over 10 years.

Potter argued that the lax employer requirements would shift the cost and risk of coverage onto the individual and maintained that the bill’s ‘network of cooperatives‘ would be unable to compete in today’s concentrated health insurance markets. “The co-ops won’t stand a chance,” he concluded.

Reform must also do more to regulate insurers, who have agreed to accept applicants with pre-existing conditions but are insisting on benefit and rate flexibility. Potter argued that the benefit package standards in the Exchange and the high deductible option for younger beneficiaries would allow insures to design almost anything that they can sell in the health market place and push the country towards consumer driven health care.

Under the Baucus legislation, private insurers could also charge older individuals up to five times more for coverage. “You’re just using age as a proxy for health status,” Uwe Reinhardt, an economics professor at Princeton University told the New York Times. Reinhardt estimates that “Senator Baucus’s age-rating plan would allow insurers to cover roughly 70 percent of the additional risk they’d take on by being required to accept all comers, regardless of health.”

Baucus: Medicaid Expansion Will Not ‘Cost States Nearly As Much As Was Originally Feared’

Advocates of Medicaid expansion — a program that is financed with state and federal funds — are running into one major problem: how to pay for the expansion without shifting too much cost to the states. “For many members of Congress, as well as for governors and state legislators around the country, Medicaid expansion is even more important than issues like the “public option” or illegal immigrants that have tended to get far more publicity,” the New York Times reports. Sens. Dianne Feinstein (D-CA) and Olympia Snowe (R-ME) have expressed concerns about shifting the costs of the expansion to the states and the Senate Finance Committee has been grappling with the issue.

Today, Senate Finance Committee Chairman Max Baucus (D-MT) hinted that he has worked out a deal in which “the Medicaid costs with expansion are not going to cost states nearly as much as was originally feared.” The Committee is hoping to expand the program to all Americans below 133% of the federal poverty level (FPL) and cover approximately 1/3 of the uninsured:

That’s based on the interaction of lots of other programs too including rebates, drug rebates, which is more expansive, more generous to states compared to current law. I think the changes in the SCHIP program also help states. On that basis, states are going to be pleasantly surprised. There is going to be some additional cost but much less than they originally expected.

Watch it:

So what will the final expansion look like? Below is a table comparing the provisions in the House bill and Baucus’ reform framework:

Under current law, states are required to cover pregnant women and to children under age 6 from families with income under 133% FPL and children 6-18 from families with income below the poverty line. Only 7 states provide Medicaid coverage for low-income childless adults and only 16 states (plus DC) offer parents coverage at 100 percent of the federal poverty level (FPL). In 43 states, adults without dependent children “are ineligible for Medicaid no matter how low their income.”

Despite its flaws, Medicaid provides comprehensive coverage to children, the poor, and the disabled and many policy makers believe that health reform should build on this foundation. As Families USA points out, “Medicaid is cost-effective compared to private health insurance” and offers services that the private insurance market does not. “For example, Medicaid covers transportation to doctors’ appointments, services that help people with disabilities, and services provided at rural and community health centers.”

Olympia Snowe: Trigger Is ‘Not On The Table And It Won’t Be’ In Senate Finance Bill

Earlier this month, the White House was building support for a scaled-back health care bill that would trigger a public health insurance option if private health insurers did not substantially reduce health care costs. Sen. Olympia Snowe (R-ME) — a member of the Senate Finance Committee and the so-called Gang-of-six tasked with producing a bipartisan health care bill — had floated the idea and was negotiating the option with the White House.

But this morning on CBS’s Face The Nation, Snowe suggested that a ‘trigger’ did not generate any bipartisan support. “It’s not on the table and it won’t be,” in the final Senate Finance Committee bill, Snowe said. “We’ll be using the co-op as an option at this point as a means for injecting competition in the process.”

Watch it:

A trigger proposal would activate a public option into the Exchange if private insurers failed to lower premiums by X% over Y years and — if triggered — may lead to greater cost reductions than Sen. Kent Conrad’s (D-ND) proposal to establish a network of consumer driven health care cooperatives.

As Sen. Jay Rockefeller (D-WV) explained this morning on ABC’s This Week, “people talk about a cooperative plan. Health co-ops. And I called the head of the national association really early, and he said, it’s great on water, it’s great on farm, it’s great on electricity, etc, but it really doesn’t work on health care. There are fewer than 20 in the country and there are only two that really work. And one of them is in Washington, the other one is in Minneapolis, Minnesota. And both of these senators from Washington are voting for a public option. So it hasn’t had a future, it goes back to the 30s and 40s, and I don’t think you can take the chance. You have to start a national thing all the way up.”

Senate Finance Committee Chairman Max Baucus (D-MT) is expected to release the official draft of the committee’s bill on Wednesday. Most observers believe that it may be the only legislation that could pass the senate through regular procedure. On Fox News Sunday, however, Sen Orrin Hatch (R-UT) — also a member of the committee — said, “Even with all the work that I give my fellow senators credit for in the Finance Committee…I just do not believe that they’re going to have the Republican support on this type of approach.” Snowe refused to say if she would cast the lone Republican vote for the committee’s health legislation.

How Does The Baucus Framework Compare To The Other Health Care Proposals?

The so-called ‘Gang of Six’ will be meeting today at 2:30pm to consider Sen. Max Baucus’s (D-MT) broad framework for a bipartisan health care bill. Previous reports have indicated that the committee was replacing the employer mandate with a free rider provision, establishing a cooperative in place of the public option, and financing reform by taxing ‘Cadillac’ health care benefits.

In early August, Baucus revealed that the preliminary estimates from the CBO show that the committee’s plan would cover 94% of all Americans, cost some $900 billion. According to media reports, Baucus’ latest framework comes in at around $880 billion over 10 years. The Wonk Room obtained a summary of Baucus’ plan and compiled this comparison of existing legislation:

It’s unclear if Baucus’ outline will attract bipartisan support. Earlier today, during an appearance on C-SPAN, Sen. Chuck Grassley (R-IA) indicated that he would not support Baucus’ bill, saying that “the document Senator Baucus would put out would not fall into that category because it is about $900 billion. I was hoping that something in the $700 billion range would work.” Grassley explained that the town hall meetings — “democracy in action,” he called it — convinced him to “slow down” and support a smaller bill with “offsets that were fairly easily to arrive at.”

Meanwhile, some liberal Democrats may be surprised that the benefits offered to the new Medicaid beneficiaries “would generally be less generous than the comprehensive benefits available to other Medicaid recipients.” The Baucus proposal also offers smaller benefit packages than the House bill, allows for higher limits on out of pocket medical costs, and requires individuals to spend a higher percent of their income on premiums before receiving subsidies.

The bill also establishes “a separate ‘young invincible’” program that “would be targeted to young adults who desire a less expensive catastrophic coverage plan.” While Massachusetts offers similar plans, most health reform advocates believe the coverage to be inadequate. According to the outline circulated by Baucus, this proposal would contain “a requirement that preventive services be covered below the catastrophic amount. Cost-sharing for preventive benefits would be allowed.”

Could Democrats Circumvent The Senate Finance Committee And Move HELP Bill To The Senate Floor? »

Yesterday, during an appearance on MSNBC’s The Ed Show, Sen. Sherrod Brown (D-OH) suggested that if the Senate Finance Committee fails to pass a bipartisan health care bill by the September 15th deadline, Democrats should begin moving the Health, Education, Labor, Pensions (HELP) Committee’s bill through the Senate.

Describing that the HELP bill — which passed committee after 11 days of mark-up and 160 Republican amendments — as a “bipartisan, American bill,” Brown warned that if Baucus tries to satisfy “conservative lawmakers” from small states, “it means a lot of others aren’t [satisfied], including, I think, the majority of the country.” The HELP bill isn’t “bipartisan on the big fundamental issues,” like the public option and the employer mandate, Brown said, “but neither was Medicare. We would have never gotten Medicare 40 years ago if everyone had waited for the conservative Republicans to join on board”:

We had 11 days of mark up, 11 days of considering amendments in the HELP Committee. I’ve been in the House and Senate for a total of 16, 17 years now, and I have never seen a bill, in all this time that had that much attention paid to it, that many amendments, that long a period of mark up. We accepted 160 Republican amendments, this is a bipartisan bill. It’s just not bipartisan on the big fundamental issues, but neither was Medicare. We would have never gotten Medicare 40 years ago if everyone had waited for the conservative Republicans to join on board. It’s a difference in views….There is a deadline of September 15th. We need to enforce it. If Senator Baucus can’t get a deal by then we need to move forward and pass this bill. And we should use the HELP Committee bill, which is mainstream Democratic bill, mainstream American bill, and begin to move it through the Senate.

Watch it:

Passing the HELP bill through the Senate may present some difficulty. Since the HELP committee doesn’t have jursidiction over Medicare, Medicaid, or financing, lawmakers would have to add the necessary provisions in conference or on the floor, in the form of amendments. Circumventing the Senate Finance Committee, while rewarding the hard work of the HELP Committee, would certainly outrage the defenders of ‘bipartisanship’ and it’s unclear how many senators would be willing to outsource key decisions to a conference committee.

Still, the President is determined to pass a health care bill this year and yesterday, during an interview with MSNBC, he left the door open to Brown’s approach. “You know, I am glad that in the Senate Finance Committee, there have been a couple of Republicans…who have been willing to negotiate with Democrats to try and produce a bill,” Obama said, “but they haven’t yet and I think at some point, some time in September, we are just going to have to make an assessment.” “I would prefer Republicans working with us on that because I think it’s the interest of everybody. That shouldn’t be a partisan issue.”

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Latest Senate Finance Committee Agreement Promises To Begin Reducing Budget Deficits By 2019

This morning, the Washington Post offers fresh details about the Senate Finance Committee’s behind-the-scenes health care negotiations. Previous reports have indicated that the committee was replacing the employer mandate with a free rider provision, establishing a cooperative in place of the public option, and financing reform by taxing ‘Cadillac’ health care benefits.

In today’s Post, Baucus said preliminary estimates from the CBO show that the committee’s plan would cover 94% of all Americans, cost some $900 billion and would “not only pay for itself but would begin to reduce projected budget deficits by 2019.” Below are some more details:

Expanding coverage:

- Insurance market reforms: Prohibits insurance companies from denying coverage for pre-existing conditions. Everyone would be guaranteed coverage at a modified community rating.

- Expanding Medicaid: While eligibility rules are still unclear, an earlier version of of the compromise opened Medicaid to children and pregnant women below 133% of the poverty level ($28,200 for a family of four) and parents and childless adults at or below 100% of the poverty level ($10,800 per year).

- A network of cooperatives in place of a public option: The committee has long abandoned the President’s call for a “robust” public option. According to the Post, Americans will have the option of enrolling in “a network of member-owned cooperatives.”

Financing reform:

- $70 billion — Taxing Cadillac health care plans:The legislation levies an excise tax of “up to 35 percent” on insurance companies and businesses that sell/offer “extremely generous policies worth at least $21,000 a year for family coverage or $8,000 a year for individuals.” About 7 percent of taxpayers hold such polices.

- $180 billion — Increased income tax collections:“With employers paying less for insurance, tax analysts predict, they would pay workers more in wages, increasing income tax collections by as much as $180 billion over the next decade.”

- $500 billion — Savings from Medicare and Medicaid: The legislation identifies $500 billion in savings from Medicare and Medicaid. For example, wealthier seniors would “pay more for prescription drug coverage under Medicare, and they would charge co-payments for clinical lab procedures.” The lab co-pays are potentially lucrative, raising about $20 billion over 10 years.

- $43 billion — Revenue from individual mandate and free rider penalties: Penalties from individuals who fail to obtain coverage and companies that “reimburse the federal government for workers who switch to subsidized coverage through an insurance exchange” could yield “about $43 billion over 10 years.” (By comparison, the CBO estimated that the employer mandate in the House bill would bring in $163 billion.)

Bending the curve of long-term spending:

- Encourage Americans to use less care: Proponents believe that the tax on “Cadillac health care plans” would lead insurers to pass the costs to policy holders and discourage the use of unnecessary services, thus driving down overall health-care costs.

- MedPAC trigger: If reform does not meet a certain target for savings, a new MedPAC-like panel, called the Medicare Preservation Commission, would recommend ways to obtain additional savings. The recommendations would go into affect unless Congress votes down the entire package.

According to negotiators, the committee is still considering how to structure a Medicaid expansion to make it fair to individual states, establish subsidy levels to maximize assistance to the uninsured, squeeze savings from Medicare without imposing an undue burden on seniors or compromising the quality of care and maintain coverage for abortion services.

Given the outstanding issues and the reluctance of Republicans to support a popular Democratic initiate, an agreement is far from certain. On Wednesday, Sen. Chuck Grassley (R-IA) said the talks may still fall apart. “Who knows, we may not have a product,” he said. “But sometimes that’s the result of negotiations.”

What Is The ‘Free Rider’ Provision In The Senate Finance Bill?

In today’s POLITICO, Sen. Olympia Snowe (R-ME) explained that the group of six senators negotiating the Senate Finance Committee health care bill included a free-rider provision because they feared an employer-mandate could “create a perverse incentive where employers drop coverage”:

There is not a broad-based employer mandate. … There are approximately 170 million Americans that receive coverage through employers. That is a significant percentage of the population. We don’t want to undermine that or create a perverse incentive where employers drop the coverage because their employees could potentially get subsidies through the exchange.”

It’s unlikely that an employer mandate would lead employers to stop offering insurance. To the contrary, in the context of comprehensive reform, an employer mandate would preserve employer coverage and keep the employer contribution in the system. In fact, in response to Republican criticisms, the Congressional Budget Office said on Sunday that the House bill, which includes a strong employer mandate, would “drive 9 million people off of employer-provided insurance plans but that 12 million people who do not have such coverage now would get it — a net increase of 3 million people insured through their employers.”

The “perverse incentives” may be created through the free-rider approach. An earlier version of the Finance Committee’s bill required employers with workers receiving a subsidy in the Exchange or Medicaid coverage to pay 50% of the national average Medicaid costs on behalf of their Medicaid workers and/or 100% of the tax credit for workers in the Exchange.

But if employers are paying 50% of the national average Medicaid costs, then employers in low cost areas would be subsidizing workers in high cost areas, and vice versa. What’s more, since the free-rider mandate only requires employers to partly finance the coverage of lower income workers (workers who qualify for subsidies in the Exchange or Medicaid), it may discourage employers from bringing on new lower income hires. As the Center on Budget and Policy Priorities explains:

- It would make it considerably more expensive for employers who do not offer health insurance to hire workers from lower-income families.

- Employers would have strong incentives to tilt hiring toward people who have a spouse/parent with a good income. Poor parents with children in one-earner families would be particularly disadvantaged.

- Since minorities are more likely to have low family incomes than non-minorities, a larger share of prospective minority workers would likely be harmed.

- Employees (or prospective employees) might be discouraged from applying for Medicaid or subsidies because they know their employer would be charged and fear angering the employer, and might forgo needed health care as a consequence.

- The proposal also could discourage the hiring of low-income people with disabilities who have no choice but to enroll in Medicaid.

- Another concern is that this provision would be very complicated to administer. Employers would need to maintain ongoing data exchange with state Medicaid programs and state health insurance exchanges.

Senate Finance Committee Bill Lacks Public Option And Employer Mandate »

The Senate Finance Committee may be closer to a deal on health care reform legislation. According to the New York Times, three Democrats and three Republicans have crafted an agreement that replaces the employer mandate with a free rider provision, establishes a cooperative in place of the public option, and partly funds reform by taxing ‘Cadillac’ health care benefits.

While Senate officials are stressing that “no agreement has been reached on a bipartisan measure, and…there is no guarantee of one, with numerous key issues remaining to be settled,” Sen. Olympia Snowe (R-ME) who is part of the negotiations, confirmed that Senators are moving away from a “broad based mandate” and explained that “it is safe to say it [a non profit cooperative] is probably one that will remain in the final document.”

Last night, during an appearance on MSNBC’s The Rachel Maddow Show, former Gov. Howard Dean (D-VT) criticized the “so-called compromise” for not going far enough to reform the health care system:

You know, this is going to be a hell of an issue in 2010 cause honestly, what’s the point of having a 60 vote majority in the United States Senate, if you can’t produce…health care reform. You can get health insurance reform. This bill is going to cost us a lot of money and it isn’t going to do anything, if this so-called compromise is true. This compromise does nothing, except it will reform insurance. That’s a good thing to do, but they ought to strip the money out of it cause we reformed insurance like this in Vermont 15 years ago. It’s a fine thing to do, but it doesn’t insure more people

Watch it:

The compromise has changed little from June, when the Washington Posts’ Ezra Klein first leaked details of the emerging proposal. That draft replaced the public option with Conrad’s co-op compromise, offered subsidies to Americans making up to 300 percent of the Federal Poverty Line (FPL), expanded Medicaid to children and pregnant women up to 133% of FPL ($28,200 for a family of four) and parents and childless adults up to 100% of FPL ($10,800 per year), and also included the free-rider provision.

Unlike the employer-mandate, which requires all large employers to offer coverage or pay a fee, the free-rider provision only targets employers whose workforce is eligible for subsidized coverage in the Exchange or through Medicaid. Under the provision, employers who drop coverage for employees would “have to cover the cost of any government subsidy their employees would qualify for under reform.”

Most progressives will likely be disappointed, but as Jonathan Cohn points out, “I’m not sure it makes sense to kick and scream about all of this right now. Getting a bill out of Finance, any bill, will move things along. There’s always the Senate floor–where the Finance bill must be merged with the bill from Senate Health, Education, Labor, and Pensions Committee–and then conference committee.” In other words, this “deal” isn’t at all surprising, and it’s by no means the final word on health care reform.

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Baucus And Grassley Preview What Bipartisan Health Reform Will Look Like

The Senate Finance Committee is meeting behind closed doors today to consider a series of health care delivery reforms that could potentially improve health care quality and lower costs. Yesterday, Sens. Max Baucus (D-MT) and Chuck Grassley (R-IA) released ‘Description of Policy Options: Transforming the Health Care Delivery System – Proposals to Improve Patient Care and Reduce Health Care Costs,’ a compilation of recommendations for how to reform the way Medicare and Medicaid reimburse providers:

– Paying for health outcomes: Currently, the system pays hospitals and providers for reporting data on quality, the Senate Finance Committee (SFC) is proposing to pay for actual improved outcomes. That means paying hospitals that meet certain quality performance standards and lowering preventable hospital readmission by reducing payments to hospitals with high preventable readmission rations.

– Encouraging care coordination through payment reform: SFC is proposing developing payment innovations that encourage independent health care providers to work cooperatively for the benefit of the patient. They would bundle hospital stays with post-acute care services, allow groups of providers who voluntarily meet quality thresholds to share in the cost-savings they achieve for the Medicare program, and pay for a health care professional to help patients transition out of the hospital.

– Expanding electronic health records: Electronic health records lower medical errors, improve care quality and reduce health care spending, but many providers are reluctant to invest in a system with limited national standardization and slow financial return. Nationally, less than 25 percent of hospitals, and less than 20 percent of doctor’s offices, employ health information technology systems (HIT). The stimulus provided $19 billion to encourage providers to implement electronic health records and SFC is looking to expedite health care’s push into the 21st century by “exploring the possibility of expanding eligibility” for electronic health records by offering incentive payments not just to doctors but also to nurse practitioners, physician assistants and other providers.

– Improving comparative effectiveness research: The stimulus bill already includes $1.1 billion for research that compares the effectiveness of different treatments and procedures. SFC would establish “a private, non-profit corporation that would generate and synthesize evidence on what works in health care.” The institute would remain independent and diverse “so that no stakeholder interest dominates” and would “establish a national agenda for research priorities.” To ensure patient safety, Medicare “could be allowed to use the findings only in circumstances where the process by which it uses the information is transparent, relies on all available evidence, considers the potential effects on subpopulations of beneficiaries, and allows for public comment on any draft proposals that use the information.”

– Dealing with the shortage of primary care providers: Some studies have shown that “the trajectory of the supply of primary care physicians for adult patients is now falling behind the growth of the adult population” and HHS estimates that “by 2020 there will be a shortage of 66,000 primary care doctors nationwide.” Lower primary care salaries discourage medical students from practicing primary care and residency slots for primacy are physicians have decreased in recent years. SFC is proposing redistributing unused residency slots to encourage training in primary care and general surgery and establishing bonuses payments “for general surgeons practicing in newly defined rural general surgeon scarcity areas.” Primary care providers could also receive 10 percent bonus payments.

– Linking Medicare Advantage payments to quality: Currently, the federal government subsidizes private insurers to provide Medicare beneficiaries with some extra benefits and care in rural areas. But numerous studies have demonstrated that rather than using the extra federal dollars to provide better quality care (and coordinated care), insurers are pocketing the extra dough. SFC is promising to tie “some portion of payment” “to performance and quality measures,” modify payment to encourage plans to provide care more efficiently and play plans a bonus for chronic care management.

Individually these reforms seem small. For instance, the document places some restraints on the use of data obtains from comparative effectiveness research (for instance, considering effects on ’subpopulations’ may very well prevent CMS from making serious reimbursement decisions) and does not call for the elimination of Medicare Advantage overpayments. But collectively, these reforms start the slow process of re-orienting the system from one that encourages providers to over-prescribe treatments, to one that rewards quality care and outcomes.