Senate Finance Committee Moves Forward on Health Care Reform

The Senate Finance Committee voted 14-9 on Tuesday to approve the Chairman’s Mark of the America’s Healthy Futures Act, as amended. NAHU’s analysis of this measure, comparing it with the legislation that has been passed by both the Senate Health, Education, Labor & Pensions (HELP) Committee and H.R. 3200, as passed by the three House committees of jurisdiction, can be found here.

Senator Olympia Snowe (R-ME) voted with all of the committee’s Democrats to approve the measures while the rest of the GOP committee members voted in opposition. Senator Snowe made it clear that her vote for the mark in committee does not guarantee her vote for final passage and that she expects to be actively involved as the mark is combined with the legislation passed by the Senate HELP Committee in July.

Floor consideration of a combined bill is expected to begin as early as the week of October 26 and will last a minimum of three weeks. The House may begin floor consideration of their version of health care reform as early as the first week of November. Senate Finance and HELP Committee staff are now actively working with lead negotiators Senator Max Baucus (D-MT), Senator Chris Dodd (D-CT) and Senate Majority Leader Harry Reid (D-NV) to combine the two bills. One of the stipulations Snowe and other Finance Committee members insisted on was that the combined legislation be given a score by the Congressional Budget Office (CBO) and that the combined bill be made available to members of Congress and the American public for at least 72 hours prior to consideration on the Senate floor.

Prior to the final Finance Committee vote, a number of senators expressed concern about the cost of the measure to the federal government beyond the initial 10-year budget window in their questioning of CBO Director Doug Elmendorf. Senator Orrin Hatch (R-UT) also questioned him as to why the CBO had not also done any cost projections on the long-term cost impact of the bill on American families and businesses beyond the level of new government spending. This type of analysis has been done on previous major pieces of health legislation like the Clinton health reform bill, the patient’s bill of rights and others.

NAHU has a number of key concerns relative to the Finance mark as passed that we would like to see addressed when this measure is combined with the HELP legislation. We have asked all NAHU members to contact their senators this week via Operation Shout! and also ask clients, friends and family members to get involved.

Some of our top concerns relative to the Finance mark include:

· The cost impact of the measure on health insurance premiums for American businesses and families

· The weakening of and lack of effective enforcement provisions for the individual mandate requirement, which will result in adverse selection and high cost increases

· The structure of the modified community rating requirements, particularly the limited age bands and the overall limited cap on premium rates

· The structure of the risk-spreading provisions and their lack of federal funding

· The high actuarial value limits and the heavy mandates in the essential benefit plan package designs, which are not reflective of current individual market product offerings and could have a limiting impact on the sale of qualified high-deductible health plans and Health Savings Accounts

· The negative impact of the legislation on FSAs

· The financing of the measure through cuts in Medicare Advantage, taxes on high-cost health plans and fees to the health care industry, including $6 billion in new taxes on insurers that will be passed on to consumers

We also continue to be concerned about the following points in the HELP legislation:

· The inclusion of a government-run public plan

· The structure of the gateways, or exchanges

· The inclusion of an employer mandate to provide coverage

· The creation of a new publicly funded long-term care program

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Insurer Studies Highlight Cost Increases

Two studies released this week by health insurance trade associations confirm that if the enforcement of the individual mandate provisions of this legislation are not strengthened, and the strict rating requirements, guaranteed-issue provisions with no late enrollment penalties and heavy mandated benefits are retained, the legislation will have a significant price impact on what American businesses and families are currently paying for coverage, above and beyond the measure’s cost impact on the federal budget.

The AHIP study, conducted by PricewaterhouseCoopers, shows that the cost of the average family policy is approximately $12,300 today and will rise to $15,500 in 2013 under current law and to $17,200 if these provisions are implemented. By 2019, a policy would be $21,900 under current law and would rise to $25,900 if these provisions are implemented.

The Blue Cross Blue Shield Association (BCBSA) released a much more detailed report done by Oliver Wyman that confirms that the current proposals will drive up private health insurance premiums, not reduce them. Oliver Wyman Inc. estimates that, without strong individual mandates, average annual medical claims for new individual market purchasers five years after reform are expected to be 50% higher compared to today, not including the impact of medical inflation. This would translate into premium increases of approximately $1,500 annually for single coverage and $3,300 for family coverage in today’s dollars for people purchasing new policies. The study also shows high premium increases for small employers purchasing new policies in the reformed market. With an ineffective mandate, such small businesses will experience premiums that are up to 19% higher in year five of reform (not including the impact of medical inflation).

The health insurance trade associations have received considerable backlash from leading Democratic officials over their analyses. Some House members even threatened to eliminate antitrust protections from insurers in retaliation. AHIP sought to soften the blow this week by sending a letter to outline ways in which the insurers believe the cost and adverse-selection issues caused by the current draft legislation, including late enrollment penalties, further cost-containment measures and avoiding new taxes will further increase the cost of coverage.

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House Committee Makes a Procedural Move on Reconciliation

This week House Ways & Means Committee members passed their version of H.R. 3200 in a way that will allow the Senate to eventually consider it under budget reconciliation rules if Senate leadership elects to pursue that course. This action is widely seen as a procedural move, and Senate leadership has indicated in recent days that the passage of legislation through the Finance Committee significantly decreases the likelihood that an attempt to pass legislation under the reconciliation rules will be made.

If the Senate leadership does decide to try to pass health reform legislation under the budget reconciliation rules, an option they can now elect to do, they could, in theory, pass a bill with only a 51-vote majority and limited debate. However, the only provisions allowed in a bill passed under those rules are those deemed directly relevant to the federal budget. Any senator could challenge any provision of the bill on its applicability to the federal budget, and challenges are made outside of the limited debate window. The non-partisan Senate parliamentarian would be charged with making a ruling on all challenges, and a 60-vote majority is required to override a challenge.

Many reform elements considered to be crucial to the Democrats would likely be stricken from the bill under such a scenario. For example, it is difficult to understand how pre-existing condition limits, health insurance policy rating restrictions or mandated benefit requirements are directly relevant to the federal budget. The Democratic leadership would have no recourse unless they could persuade all 60 members of their caucus to vote with them to overrule challenges, which would again be very difficult since numerous leading Democratic Senate leaders, including ailing Senator Robert Byrd (D-WV), Senate Finance Committee Chairman Max Baucus (D-MT) and Senate Budget Committee Chairman Kent Conrad (D-ND), have publicly voiced their disapproval for the use of budget reconciliation rules as a means to pass health reform.

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	Senate May Consider a Free-Standing Medicare Fix Bill

Senate Majority Leader Harry Reid stated on Thursday that the Senate will consider free-standing legislation next week to pour $240 billion into Medicare to address the physician payment reimbursement cuts. However, the legislation does not contain any offsets to pay for the elimination of these cuts. In contrast, the Finance Committee’s health reform legislation would fix these cuts for one year, and provides the needed financing. Conservative Democrats like Senate Budget Committee Chairman Kent Conrad (D-ND) and Evan Bayh (D-IN) have already voiced their objections about adding to the federal deficit in this way. These Democrats and the GOP agree the physician reimbursement situation under Medicare needs to be addressed long-term, but feel the legislation by Senator Debbie Stabenow (D-MI) that Reid will bring to the floor is fiscally irresponsible and violates President Obama’s promise to pass deficit-neutral health reform legislation. The American Medical Association is planning an extensive grassroots and media campaign to generate support for the Stabenow bill. [back to the top]

Congress Takes Aim at Insurers' Antitrust Exemption

Congress is taking renewed interest in repealing a federal antitrust exemption of the health insurance and medical malpractice insurance industries.

A bill introduced by Senate Judiciary Chairman Patrick Leahy (D-VT) was the focus of a hearing this week which included testimony by Reid and Assistant Attorney General Christine Varney. NAHU member Lawrence S. Powell, Ph.D., who is the associate professor and Whitbeck-Beyer chair of insurance and financial services at the University of Arkansas College of Business, also provided testimony.

Varney said her department is “generally opposed” to antitrust exemptions, which she said must be granted sparingly. Overhauling the health insurance system should include measures that encourage strong competition, she added. Though Varney said repealing the 1945 McCarran-Ferguson Act would help, she noted the Justice Department was taking no formal position on how and when Congress should act.

Senator Charles Schumer (D-NY) said Leahy’s language should be included in the broader health care package as it heads to the floor. But Judiciary Antitrust Subcommittee ranking member Orrin Hatch (R-UT) said he has not seen enough evidence to justify a complete repeal of the insurance exemption, warning that such action could curb collaboration among small providers, inhibiting their ability to compete. Hatch said he remains “open to considering many reform measures” and made a pitch for tort changes that he said would reduce the federal deficit and result in big private-sector savings.

Insurers continue to dispute the need for lifting the exemption. America’s Health Insurance Plans President Karen Ignagni recently wrote to Leahy and House Judiciary Chairman John Conyers (D-MI), who introduced a companion bill, stressing that the current antitrust exemption does not prevent the regulation of insurance companies and that it allows individual states to play a critical role in overseeing the industry.

“Health insurance is one of the most regulated industries in America, at both the federal and state level,” AHIP spokesman Robert Zirkelbach said today. He called the focus on repealing McCarran-Ferguson “a political ploy designed to distract attention away from the real issue of rising health care costs.”

A very good overview of the legal history of McCarran-Ferguson can be found in this 2005 Government Accountability Office.

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Co-ops

The Alliance for Health Reform recently put together a toolkit on health insurance cooperatives. It provides overview, insight and resources on what they are, what their track record has been, why proponents like them, and the objections opponents have.

The 20-page PDF can be accessed here.

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	Genetic Nondiscrimination Act Interim Rule

Our friends at Groom Law Group provided this overview of the interim final regulations implementing Title I of GINA, which were released last week. [back to the top]

GRIP

We know many of you have been extremely active with legislative issues and we want to thank you for your hard work and assure you that it is making a difference. We are seeing some inroads on the legislative front and continue to work diligently with Congress to keep things on the right track.

The next few months will be the most intensive of times for our association's government affairs efforts. We have every reason to believe that health system reform legislation will move forward, and we need to preserve the role for agents and brokers and ensure continuance of the private market. It is for these reasons that we have decided to reinstate our Grass Roots Initiative Program. GRIP is a voluntary donation program created some years ago for our legislative expenses at the national level. We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

Please click here to make a donation to GRIP today.

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