On November 19, 2009, Senate Majority Leader Harry Reid (D-NV) released health reform legislation, the Patient Protection and Affordable Care Act, that combines the bills reported out of the Finance and Health Education, Labor and Pensions (HELP) Committees. CBO is projecting that the bill’s spending provisions would total  $849 billion over ten years and that the bill would reduce the federal budget deficit by $127 billion over the first ten years.  CBO further estimates that the bill would cover 94 percent of Americans and reduce the number of uninsured persons by 31 million after ten years.

The combined Senate bill retains most provisions from the Finance legislation and adds several new ones. The merged legislation calls for state-based exchanges and includes a public option with a state opt-out feature. The legislation also provides start-up funding to establish a member-operated cooperative that would participate in the exchanges.  The merged bill includes all of the industry fees defined in the Senate Finance legislation for manufacturers and health plans, but cuts the device manufacturer fee in half. The bill keeps the health plan industry assessment at the same level, but now includes insurers’ administrative services fees for managing self-insured business.

The first crucial vote on the Senate floor – a cloture vote on a motion to proceed to consideration of the bill – may occur Saturday night, November 20, at 8 pm. If 60 senators vote for cloture on the motion to proceed to the bill, this will pave the way for the Senate floor debate on health reform after the Thanksgiving recess – on or about November 30. At this time, 2-4 weeks of debate are expected. Although opponents of the bill previously had signaled that they planned to slow down the legislative process by calling for a full reading of the bill (all 2,074 pages), it now is our understanding that they will not pursue this strategy.

Immediate Reforms — The following reforms would take effect within the first year after the bill’s enactment:

• a ban on lifetime limits and unreasonable annual limits;
• a prohibition on rescissions except in cases of fraud;
• an option for unmarried individuals through age 25 to remain on their parent’s coverage as dependents;
• a benefit mandate for preventive services;
• reporting requirements on medical loss ratios and administrative costs;
• rebates to be paid by plans with non-claims costs exceeding 20 percent in the group market and 25 percent in the individual market (or a lower percentage established by the state);
• a premium justification process established by the HHS Secretary in conjunction with the states, including discretionary authority to exclude plans from the health insurance exchanges that have had unjustified premium increases in the 2010-2014 period;
• a $5 billion temporary high-risk health insurance pool program to provide coverage to uninsured individuals with preexisting conditions;
• a $5 billion temporary reinsurance program for employer-based plans providing coverage for early retirees; and
• an internet portal to provide consumer information on coverage options.

Other key issues concerning this legislation can be found in this attachment.

Insurance Market Reforms
Individual Coverage Requirement
Government-Run Plan
Health Care Cooperatives
Exchanges
Excise Tax on High-Value Health Plans
Health Insurance Premium Tax
Interstate Sale of Insurance
Benefit Options
Medicaid Eligibility Expansion

The following documents pertaining to the Senate bill can be found on-line:

• Legislative language at http://democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf
• CBO score at http://www.cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf
• JCT revenue estimates at http://www.jct.gov/publications.html?func=startdown&id=3635

Late Saturday night the House of Representatives approved its version of health care reform by the slim margin of 220 to 215 (218 was the minimum needed). The core of the approved House bill remained unchanged from the version the Speaker introduced a few weeks ago and includes: an employer mandate to provide and pay for coverage; a fairly strong individual coverage requirement; a public plan option set up by government that would pay “negotiated” rates to providers; and insurance reforms, including guaranteed issue and modified community rating. It does not include the “Cadillac” plan tax or the insurer tax provisions currently in the Senate bill. The House bill would be paid for in part with cuts to Medicare Advantage, Medicare overall and a surcharge on the “wealthy.” If you want to see how your Member of Congress voted, you can go to the Washington Post site linked here: http://projects.washingtonpost.com/congress/111/house/1/votes/887/

Some highlights from the bill include:

By a vote of 240 to 194, the House approved an amendment by Reps. Bart Stupak (D-MI) and Joseph Pitts (R-PA) addressing coverage of abortion services. This amendment would prohibit federal funds from being used to pay for abortion services under the government-run plan, and it would prohibit the affordability credits from being used to pay for plans that cover abortion services. Individuals would be permitted to use their own funds to purchase supplemental coverage for abortion services.

By a vote of 258 to 176, the House defeated the Republican substitute amendment, which included provisions addressing the following topics: federal funding for state high risk pools and reinsurance programs to cover persons with pre-existing conditions; a nationwide marketplace for individual health insurance; improvements to HSAs; association health plans; independent review and new restrictions on health plan rescissions; administrative simplifications; medical liability reforms; FDA approval of generic biologics; and repeal of the Federal Coordinating Council for Comparative Effectiveness Research.

By a vote of 247 to 187, the House defeated a motion to recommit the bill to the committees of jurisdiction with instructions to amend the bill to include medical liability reforms and to protect seniors from Medicare Advantage funding cuts. This motion was offered by House Republican Whip Eric Cantor (R-VA).
Now that the House has passed its bill, all eyes will be focused on the Senate. The schedule for the Senate floor debate is highly uncertain, as senators are still waiting for Congressional Budget Office (CBO) to complete its scoring of the bill it received from Senate Majority Leader Harry Reid (D-NV) early last week. The Senate is scheduled to be in session just two days this week, Monday and Tuesday, before leaving for the Veterans Day recess. If CBO sends a score to Leader Reid next week, the Senate floor debate potentially could begin during the week of November 16. However, there also is a possibility that the Senate debate may not begin until after Thanksgiving.

Once the Senate acts, then the House and Senate go to a Conference Committee to reconcile the two bills before each has to pass the final bill again. Then – the President gets a bill to sign. All these actions may push us into early next year given the Congressional calendar and the issues remaining to be resolved.

Friends, we are at a crossroads with Health Care Reform and Government in general – big things are happening in our country with legislation, government oversight, and government control. With that said, I want to begin keeping you updated on what is going on with health reform, written from my perspective as a benefits professional .

To begin, I do believe that we need some reform for health care. Here are a couple areas that I think work needs to be done:

1. Portability – I still see people who leave their jobs and employer sponsored health plan get declined for individual insurance. There are times when people get in a bind for coverage if they have a pre-existing condition and either can’t afford COBRA or COBRA runs out. We need to address individual medical plans giving credit for prior coverage and credit for pre-existing conditions if the applicant is moving from one health plan to another.
2. Pricing/Underwriting control. Here in Texas, employers that have 2-50 employees have rules that protect them. They must be given a proposal for insurance. They cannot be declined for coverage. There is a maximum percentage the rates can be increased at final underwriting. They can request detailed claims reports on how their plan is running. I think that some of these rules, and other good rules like this in other states, should be adopted on a Federal level to help all size employers with their insurance.
3. COBRA and Medicare. I’ve seen many employers get into situations where 1 or 2 employees with medical conditions keep that employer from getting affordable health plans, or even alternate proposals. We need to give those employers a way to get options and control their exposure – this can be done with Medicare rules, reinsurance, or other legislation.
4. Early retirees – employees who retire prior to age 65 (Medicare age) have a real hard time finding affordable health coverage. If an employee retires at 55, COBRA will only cover them for 18-36 months. So that person will still need insurance, and the medical premiums are really high. Carriers are trying to create programs to address this, but legislation might help.
5. Government assistance with large claimants. As a follow up to #2, many employer’s health plans get hit with huge increases and limited options because of an employee who has an expensive ongoing medical condition. What about having the government step in to help pay these claims, and get them off the books for the employer/insurance carrier? All the government has to do is provide a reinsurance policy to pay these claims. They could set up a plan that when anyone goes over say $50,000 in claims, the government steps in an picks up the rest of the tab. The insurance company would still be responsible for watching that claim to make sure all discounts are applied and there is no abuse of the program, and legislation can require this. The government could also legislate insurance pricing to prevent carriers from taking advantage of the relief. This would take the pressure off of employers and help with renewals.
6. We need legislation, we don’t need a Public Plan option. Congress says a “public plan” will keep the insurance carriers on their toes to control profits. The Public Plan will compete with the Insurance Companies in the marketplace. Congress is saying that this competition will lower the cost because insurors will have to trim the fat from profits. The problem is, Congress is proposing legislation to eliminate underwriting factors that help control cost, which makes it difficult or impossible for insurors to correctly price the health coverage. The insurance companies can only lose so much before they start going out of business, because they have limited funds and depend on the public buying their plans. The Public Plan does not have this issue – if the Public Plan starts going belly up, the government just gets more money from taxpayers. So the Public Plan can keep going after all their competitors have gone out of business, and guess what? At that point there is a “single payor” and one choice for your healthcare – the Federal Government.