EasyToInsureME Health Insurance Quotes Reform Weekly

Oct. 30, 2009

This Week in Health Care Reform

This week, lawmakers fine-tuned their reform proposals and, once again, the public option became the central issue of the health care reform debate.

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Senate and House Negotiations

Senate Majority Leader Announces Senate Bill that Includes Public Option: On Monday, Senate Majority Leader Harry ReidSenate Majority Leader Harry Reid (D-NV) announced that the health care reform package from the Senate is expected to include a public option with an opt-out provision should a state choose to not participate in the government plan. While liberal Democrats cheered the inclusion of the government-run plan, some moderates - including Sens. Joe LiebermanJoe Lieberman (I-CT), Blanche LincolnBlanche Lincoln (D-AR), Evan BayhEvan Bayh (D-IN) and Mary Landrieu (D-LA) - all voiced concerns.

Sen. Lieberman said that he would vote to block the passage of the Senate health care reform bill in Sen. Reid's proposed form. In addition, Sen. Olympia SnoweOlympia Snowe (R-ME), the only Republican to vote in favor of any health care reform legislation to date, stated that she is "deeply disappointed" with the inclusion of the public option.

This backlash comes as a blow to Sen. Reid and calls into question whether he has the 60 votes needed for final passage of the bill without an anticipated Republican filibuster. Sen. Reid has delivered a variety of proposals to the Congressional Budget Office (CBO) for cost estimates as he works to finalize the legislation.

Pelosi Unveils House Health Reform Bill: On Thursday, following weeks of negotiations to merge three bills passed by House committees last summer, House Speaker Nancy PelosiNancy Pelosi (D-CA) unveiled the House's 1,990-page health care reform legislation.

The merged legislation includes a version of the public option, favored by moderate Democrats, that uses reimbursement rates negotiated with private insurers rather than the option favored by liberal Democrats that pegs rates to Medicare. The bill also includes:

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Mandates for individuals and employers to purchase coverage (with some exemptions)
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Subsidies to help lower-income individuals purchase insurance
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An expansion of Medicaid eligibility to include individuals and families with incomes of up to 150% of the federal poverty level
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Taxes on the wealthy of 5.4% for individuals who earn more than $500,000 and for couples who earn more than $1 million
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Significant insurance market reforms
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Fees collected from the medical device industry totaling $20 billion

The House bill does not include the "Cadillac Tax," a controversial tax on high-end insurance plans. And, House Democrats indicated that party leaders have yet to resolve long-standing disagreements regarding coverage for abortion and illegal immigrants.

This bill is estimated to cost just under $900 billion over the next 10 years. However, the legislation does not address Medicare physician payments and instead moves this portion of the proposal to a separate bill, which is anticipated to increase the U.S. budget deficit by more than $200 billion over 10 years.

Senate and House Propose Lower Medical Device Industry Fees: In the bill originally passed by the Senate Finance Committee, fees collected from the medical device industry would have totaled $40 billion over 10 years. Lawmakers from both the Senate and the House are proposing lower fees. In the emerging Senate legislation, Sen. Reid is expected to adjust the fees to between $15 and $20 billion over 10 years. By comparison, the House version includes a tax that would be imposed at the point of sale, thereby spreading its impact across manufacturers, wholesalers and distributors, and would yield $20 billion between 2013 and 2019.

Additional Activities

U.S. Business Group Opposes Public Option: On Wednesday, The Business Roundtable, comprised of chief executives at Verizon Communications, JPMorgan, General Electric, Wal-Mart and other companies, said the federal government is inefficient and would underpay providers while driving up costs for employers and their workers.

Public Opinion

American Opinion on Public Option Remains Steady: The October Kaiser Family Foundation poll found that 55% of Americans believe that it is now more important than ever to take on health care reform, while 41% say the country cannot afford it, results that are unchanged from the previous month. Other findings include:

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Americans' support for taxing the wealthy to pay for reform decreased slightly in October, while support for taxing insurance companies increased.
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Americans still worry about the potential impact of the reforms on measures such as wait times, cost and choice of providers.
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Most Americans believe that health care reform will deliver changes immediately. About half of Americans believe that if Democrats pass health care reform legislation, help for the uninsured and consumer protections in the insurance market will begin within a year. In actuality, however, most of the reform provisions will take years to kick in.

Looking Ahead

Sen. Reid awaits CBO financial estimates to finalize the Senate bill before bringing it to the Senate floor. The House bill will be submitted to the full House for debate as early as next week.