Health Insurance Reform EasyToInsureME

October 14, 2009

The Week in Health Reform

Federal Legislative Overview

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Senate
The long-awaited cost estimate of the Senate Finance Committee’s health care reform proposal, “America’s Healthy Future Act,” was released this week by the Congressional Budget Office (CBO).

The CBO concluded that the proposal would cost $829 billion over 10 years – an increase from the previous $738 billion estimate of the revised Chairman’s Mark – and would cover 94 percent of Americans. A more detailed overview of the CBO cost estimate is discussed in the next section of this article.

The Senate Finance Committee waited to vote on its health care reform proposal until the CBO completed its work. On Tuesday October 13, the Finance Committee voted 14 to 9 to approve the legislation. Senator Olympia SnoweOlympia Snowe (R-ME) was the only Republican who voted in support of the measure. This now paves the way for Democratic leadership to begin merging the Senate Finance legislation with the Senate HELP bill (S 1679). Senators Max BaucusMax Baucus (D-MT), Christopher DoddChristopher Dodd (D-CT) and Majority Leader Harry ReidHarry Reid (D-NV) will lead those efforts, working alongside the White House. The blended legislation could potentially be on the Senate floor the week of October 19.

House
House Speaker PelosiSpeaker Pelosi and other Democratic leaders in the House of Representatives continue to meld its three pieces of health care reform legislation into one bill, while aiming to cut its total cost by another $200 billion. Although Pelosi has publicly stated that she will not consider a “trigger option” for the public plan, nor health care cooperatives, she has seemingly become a bit more open to the idea of the creation of a public plan that would be allowed to negotiate provider reimbursement rates, an idea that has more commonly belonged to conservative Democrats in this debate.

This past week, more than 150 House Democrats wrote a letter to Pelosi (D-CA) urging her “to reject proposals to enact an excise tax on high-cost insurance plans that could be potentially passed on to middle-class families.” This letter was in reference to the Senate Finance Committee’s health care reform proposal that includes a 40 percent excise tax on insurers that exceed certain cost thresholds, also known as a tax on “Cadillac plans”. Beginning in 2013, the threshold for individual plans will be $8,000 and $21,000 for family coverage. It is clear that more than half of House Democrats recognize that insurers will be forced to pass on these proposed new taxes to consumers – undermining the shared goal of ensuring affordable health coverage for all Americans.

Overview: CBO Score of Senate Finance Committee Proposal
As briefly mentioned above, the CBO has issue its preliminary analysis of the Senate Finance Committee’s “America’s Healthy Future Act.” CBO estimates that under this legislation, the percentage of legal nonelderly residents covered by health insurance would increase from 83 percent today to about 94 percent by 2019. CBO further estimates that:

* The bill’s coverage provisions would cost $829 billion over ten years. This includes $345 billion in increased spending in Medicaid and CHIP, $461 billion for premium subsidies provided through the exchange and related spending, and $23 billion for small employer tax credits.

* These costs would be offset by increased tax revenues and spending reductions in other areas, resulting in a net reduction in the federal budget deficit that is estimated to be approximately $81 billion over ten years. The bill’s offsets include: $201 billion from the high-cost health plan tax; $117 billion from changes to Medicare Advantage payments; $106 billion from changes to Medicare hospital payments; $23 billion from penalty payments by employers; and $4 billion from penalty payments by individuals.