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Community Catalyst Health Reform Insider

Insurance Industry Takes the Gloves Off

While the Insurance industry has been using “guerrilla” tactics behind the scenes to undermine aspects of health reform all along – opposing strong Exchanges, a decent minimum benefit standard and eliminating discrimination based on age and health status –  a report commissioned (and heavily advertised) by the insurance industry and released late Sunday night that attacks the Senate Finance proposal is the first public shot across the bow against reform.

The report, produced by PricewaterhouseCoopers, is problematic for a several reasons—it doesn’t make an “apples to apples” comparisons, it looks only at selected parts of the bill, not the bill in total, and it makes unjustified assumptions about some of the provisions.

For example, the report ignores all of the cost-containment provisions, the positive effect on the risk pool of providing subsidies or the potential for administrative savings through benefit standardization.  And it is, to say the least, disingenuous for the industry to oppose provisions that would lead to more effective cost-containment, such as a public option or an Exchange that can negotiate actively with insurers, and then complain that cost-containment efforts do not go far enough.  Hopefully, lawmakers will see through the report’s flaws and not make concessions to the industry that has finally stopped playing nice.

Food Fight

Insurers aren’t the only interest group turning up the volume as reform lurches forward.  Watch for worried governors to further press their case for Medicaid help.  Govs got the Finance Committee to move from temporary to permanent enhanced federal matching funds for the expansion population, but many remain nervous about new costs their states would have to shoulder under reform.  Governors like Schwarzenegger, who represent a much-sought-after bipartisan voice could be particularly influential, and some Senators have already committed themselves to finding extra help for the states.  Another group turning up the heat is the hospitals, upset that SFC would leave them with a substantial uncompensated care burden while slashing federal funding to hospitals that provide that care.

What this also means is that we can expect a fierce food fight for the remaining $70 billion in “headroom” – the difference between what President Obama said he would support and the CBO score of the Senate Finance bill.  Additional affordability improvements are one way that space could be filled (if revenue or savings measures can be agreed to), but others include the above-mentioned additional help for states, or rolling back fees on health industry stakeholders that are in the SFC proposal now and that have provoked vocal opposition from Senators in both parties.

House inching closer

The House continues to grapple with divisions within the Democratic caucus, aiming to send a combined House bill to CBO this week.  The key divisions remain over the revenue provisions and the public option.  House leaders are likely to scale back the surtax on wealthy households, raising the threshold to perhaps as high as $1 million, but they have yet to agree on how they would plug the resulting revenue hole.  Don’t look for a bill to hit the House floor for another couple of weeks.

Meanwhile, join us for another installment of:

As the Public Option Turns

The ongoing debate over public options sometimes feels like soap opera – lots of drama but not much plot advancement.  Previously on As the Public Option Turns, we found the importance of the issue elevated by a White House commitment to keep cost of reform under $900 billion.  That means Congress must find ways to make reform more cost effective unless they are willing to sacrifice affordability.

We now join our hero, Public Option, in the House, where the latest whip count shows the House Democratic caucus overwhelmingly in favor of a strong public option with rates based on Medicare payments, but close doesn’t count.  They have to get to 217 votes for passage and it’s those last few that will be the hardest to lock down.

While back in the Senate…

Last week Sen. Carper offered a proposal that would allow states to opt out of the public option.  This week, Sen. Schumer is floating a counterproposal which would make inclusion of the public option the default position but allow states opt out instead of having to opt in.  Schumer is also actively working to defang the Republicans’ number one emerging attack line: that the individual mandate non-compliance penalties constitute a tax increase on the middle class.  Schumer proposes to blunt that attack by changing the penalty from a fee paid to government to a required contribution that an individual could use to purchase insurance at a later date.

In a separate but related plot line, another public insurance plan is getting a second look.  In their search for more a more cost-effective proposal, House leaders are considering a further Medicaid expansion, up to 150 percent of the FPL.  Even if the federal government paid 100 percent of the cost, expanding Medicaid is more cost-effective than putting people in private plans.

It’s Beginning to Look a Lot Like Christmas (or later)

The goal in the Senate is to have a bill on the floor next week, but it is not certain Majority Leader Reid will be able to complete the combination of the HELP and Senate Finance bills as fast as originally thought. Sen. Reid has indicated that he would like a CBO score on the blended bill, which could also slow things down depending on how extensive changes are. (It’s worth noting that combining the bills started even before the SFC final vote).

Add on three weeks of floor debate (maybe even more to account for procedural delays) and, assuming House can match the generally more slow-moving Senate, bills could clear the floor by Thanksgiving.  (That assumes the Senate remains on track for a 60-vote strategy and doesn’t have to pull the bill off the floor to adjust it for Budget Reconciliation).

This leaves only a few weeks before Christmas for what promises to be a protracted and challenging conference committee and final votes in each chamber. As an example just one of those contentious issues that will have to be resolved in conference, more than half of House Democrats have signed a letter opposing the primary financing source in the Senate proposal.  With multiple and similarly thorny issues to resolve, don’t be surprised if health reform spills over into the new year.