Health Insurance Reform Update

As you probably know, the House and Senate have begun the process of trying to reconcile their two bills. There appears to be no issue about the starting point; the Senate bill is it because all 60 votes are necessary, and Senators Lieberman and Nelson -- at least -- refuse to vote for any plan that includes a public option.

Typically, at this stage, there is a formal conference of chairs and ranking members of both Houses to reconcile the two bills. However, it appears that, in this case, the process will be less formal, mostly because formal conference establishes several procedural hurdles in the Senate that would cause further delays.

There are several issues up in the air. I probably won't catch them all, but here are some highlights:

1. Effective date -- House says 2013, Senate says 2014

2. Amount of subsidies -- progressives are pushing to make them higher

3. Should the Exchange -- the marketplace for buying insurance -- be national (House version) or state (Senate version)?

4. Nebraska's special Medicaid deal -- to get Senator Nelson's vote, Senator Reid provided that Nebraska (Nelson's state) would not have to pay any share of Medicaid expansion. Needless to say, Senators from other states are fuming. Nelson now says the deal should be extended to all states, but that would break the budget neutrality of the bill as a whole, and that can't happen. Hmmm.

5. How to pay for this - the Senate's so-called Cadillac tax, a 40% excise tax on plans that cost more than $8500 for an individual and $23,000 for a family, hurts union members, so there are lots of liberals against it. However, the President is for it because he believes it will lower health care costs in general. He believes that if we patients have to pay more for health care, we won't use it as much, as if that's a good thing. We've written Congressman Joe Courtney of Connecticut, who's leading the charge against this tax, laying out how ridiculous this is for people with chronic illnesses. First, if we don't get the care we need, we will get sicker, which makes our care more expensive, not less so. Second, do you know anybody with a chronic illness who goes to a doctor more often than absolutely necessary? Bunk!

Other revenue issues -- the House wants a millionaire's tax -- a tax on people who earn over a certain amount (they're talking about the amount). The Senate has an increase in the Medicare tax for the wealthy.

6. There is a really bad provision that allows employers and insurers to require people to participate in wellness programs, and that would result in higher premiums -- as high as 30% extra -- for people who don't meet wellness program goals. Um, I thought we were getting rid of pre-existing condition penalties?

7. Although lifetime caps on benefits are eliminated, there's still an issue about annual caps, at least as applied to plans that currently exist (grandfathered plans). We joined with a coalition of groups to press the Senate for elimination of annual limits, and we did get a change -- annual limits would have to be within restricted amounts, as determined by the Secretary of HHS, which is better than letting the insurers set "reasonable" caps, as the previous version allowed. We're now trying to make sure this ends up in the final version.

Those are some of the highlights. Since this is all happening behind closed doors, it's hard to say what else is up in the air. The leadership is really threading a needle at this point. The cost of the bill can't exceed over $900 billion over a 10 year period or it will not be budget neutral, breaking one of the President's main promises. The Senate bill is estimated to cost $871 billion over 10 years, whereas the House bill would cost $1 trillion. Once you eliminate the public option -- a significant money-saver -- you're looking at cutting about $150 billion from the House bill, or adding no more than $30 billion to the Senate bill. That means everybody can't have what they want.

There still are a whole lot of people -- a lot of my friends who aren't talking to me right now because of the letter to the editor I sent to the NY Times -- who think we should kill any plan that doesn't have a public option. It's true that any of the compromises on the table will benefit the insurance industry at least as much as anybody else. I continue to believe, though, that anybody who answered the phones at Advocacy for Patients for a day or two would agree that just having subsidies, just eliminating pre-existing condition exclusions, is better than no change at all.

The compromises on the table are very, very far from perfect. They contain way too many concessions to industry -- not only insurers, but pharmaceutical manufacturers and health care providers. But as long as Joe Lieberman and Ben Nelson are needed to get to 60 votes, there is nothing big to be done. Hopefully, there will be favorable tweaks to some of the provisions outlined above. But even without that, we will be better off with reform than without it. Jennifer