Health Care Reform Update

Volume 1 Issue 3
November ~ 2009

The Health Care Reform Update is a publication intended to provide objective information on the health care reform updates from Washington DC. Many businesses report health care as their second and fastest growing expense. With all the headlines and discussions, we know that it is difficult to separate fact from fiction. We will periodically send articles to help you maintain a knowledgeable position on the topic. We believe in building relationships with our clients; solving their problems, exchanging information, ideas and resources with them and providing them with value-added services. This is our way to share great information with you and it is our mission to continue to improve upon these philosophies. Enjoy this issue of the Health Care Reform Update and thank you for reading it. It was our pleasure putting it together for you.

Senate Majority Leader Harry Reid set the stage for a climactic debate in the Senate over health care by unveiling a 10-year, $848 billion bill that would extend insurance to 31 million Americans without coverage.

Mr. Reid's proposed legislation, 2,074 pages, is the Senate's answer to a bill that narrowly passed the House Nov. 7. The two bills have differences on taxes, abortion coverage and a public-insurance plan and would require considerable work to reconcile if Congress hopes to pass some form of health care overhaul -- the centerpiece of President Barack Obama's domestic agenda.

The Senate bill needs 60 votes to proceed to a floor debate, and Mr. Reid is expected to call a vote later this week, perhaps Saturday if not sooner. If the tally gets to 60 -- which was still uncertain Wednesday, that would open perhaps the most critical period of legislative action on American health care since Congress created Medicare in the 1960s. The debate would end with a vote on the bill by the full Senate. Nearly every Republican in Congress still opposes the overhaul effort, and there are still sharp disputes among Democrats about central provisions.

"This is yet another trillion-dollar experiment, but it is not what Americans bargained for," said Senate Minority Leader Mitch McConnell (R., Ky.)

The $848 billion cost is below the $1.05 trillion cost of the health overhaul passed by the House this month. But the figures aren't likely to win over Republicans, who say the bill adds costly new benefits for some Americans as the federal debt reaches new heights.

Funding the bill is proving troublesome. Mr. Reid decided to pare back a proposed tax on high-value insurance plans, bowing to liberal and union complaints that the measure would hit middle-class families. Under his proposal, the tax would fall on plans valued at more than $23,000 for couples, up from $21,000 in legislation written by the Senate Finance Committee. The tax was estimated to raise $149 billion over ten years, far less than earlier envisioned.

To help make up for the lost revenue, Mr. Reid inserted a provision that would raise Medicare payroll taxes on couples with income of more than $250,000 a year. For those families, the levy would be raised to 1.95%, up from 1.45%. Overall, the proposal would bring in $54 billion over ten years. Mr. Reid is also proposing a new tax on elective cosmetic surgery, generating $5 billion.

Both the House and Senate bills make hundreds of billions of dollars in proposed cuts in spending on Medicare. But the two chambers differ on how to raise revenue. The House legislation relies largely on an income surtax on the wealthy. The Senate bill would raise money across a range of health care sources.

Nearly every American would be required to obtain insurance, either through work, the newly created exchange or some other program. Low and middle income individuals and families would in many cases qualify for government assistance, such as the new tax subsidies that would be created. But if they chose not to obtain insurance, they could face a penalty up to $750.

To help ease the financial burden on workers, Mr. Reid lowered the maximum amount the bill would require them to spend on premiums, capping premiums at 9.8% of income, down from 12%.

Under the Senate bill, the employer-provided health insurance system would still continue. But any company that decided not to cover its workers would have to pay a fine to help cover the government's cost of covering those individuals.

The Wall Street Journal, November 19, 2009

Democratic leaders finally moved their sweeping health bill to the Senate floor, where wheeling and dealing over major unresolved and divisive issues likely will shape the legislation before its next big test.

A handful of Democrat centrists say they can't support the government-sponsored health-insurance plan -- known as the public option -- that is included in the bill. Another growing concern even as the bill progresses is the political heat on Democrats over expanded government spending amid rising unemployment and deficit concerns.

"We simply cannot ignore the growth in the federal government," said Sen. Blanche Lincoln of Arkansas, one of those centrists. She was the last Democrat ahead of the vote to declare her support, ensuring Democrats would have the 60 they needed to overcome Republican stalling tactics. But she and other holdouts warned that doesn't mean they'll support final passage.

The 60-39 vote Saturday night set the stage for as many as three weeks of debate and compromise in December and perhaps more in January, a struggle that is sure to color the 2010 fight for control of Congress. If the bill passes the Senate, it will then need to be reconciled with a version already passed by the House and then the final bill will have to pass the entire Congress before being sent to President Barack Obama for his signature.

Republicans, even in the minority, have leverage to shape the Senate debate. They portray the legislation as a huge long-term liability for U.S. taxpayers. "It raises premiums," said Sen. Lamar Alexander (R., Tenn.) on "Fox News Sunday." "It raises taxes. It cuts Medicare."

Groups with a stake in the legislation -- insurers, drug makers, small businesses, unions -- are also gearing up for one of their final chances to change the health bill.

Senate Majority Leader Harry Reid will be at the center of the deal making, balancing contention with compromise on major components of the bill and smaller matters that might win over senators wavering in their support.

The four senators most skeptical of the public-insurance option are Ms. Lincoln, Ms. Landrieu, Sen. Ben Nelson (D., Neb.) and Sen. Joseph Lieberman of Connecticut, an independent. With varying degrees of firmness, all four have said their votes can't be counted for a final bill with a public plan as proposed by Sen. Reid. They say it would get the government too involved in health care and fear it wouldn't be self-supporting as planned, forcing the government into an expensive bailout.

If the holdout senators stick to their guns, some kind of change to the public plan is likely to come to the floor. But even after a change, the broader bill would again need 60 votes to pass, putting Mr. Reid in a tough spot since liberal senators want to avoid weakening the bill. 

Unions are still fighting a proposed tax on high-value insurance plans. Many health-policy specialists say the tax will discourage private employers from offering "Cadillac" plans that do little to control health costs. Currently those plans enjoy the same favored tax status as thriftier plans.

"The idea that this tax will curtail rising premiums is just dead wrong," said Jim Hoffa, president of the International Brotherhood of Teamsters.

Small businesses, which the White House is courting, are lobbying for more generous tax credits. Under the bill, businesses with 10 or fewer employees who earn an average of $20,000 or less would be eligible for tax credits worth up to 50% of the employer's insurance costs. The National Federation of Independent Business, a trade group, wants to extend the reach of those credits.

"To get it through for us, it's going to have to show that it's going to do more to lower the costs for small businesses," said federation president Dan Danner.

Drug makers plan to fend off attempts by Democrats to make them offer additional discounts for prescriptions the government provides to people who are eligible for both the Medicare and Medicaid insurance programs.

The Wall Street Journal, November 23, 2009 

Health Proposals Fail to Curb Inefficiency: Dr. Toby Cosgrove, leader of the Cleveland Clinic, predicts that in the next four to five years Americans will demand another health reform bill because the proposals now moving through Congress will have done little to control costs.

“The House bill and two Senate proposals fail to make the health system more efficient and do not do enough to help Americans get health,” Cosgrove said.  “Without controlling obesity and without controlling smoking and without dealing with wellness, it’s going to be very difficult for us to ever control the cost of health care in the United States, and the current bills do very little along those lines.”

American Support Slips for Passing a Health Care Reform Bill: A new Gallup Poll released last Monday shows that Americans have moved in a more negative direction on whether or not a new bill should be passed into law. Thirty-eight percent of Americans now say they would advise their member of Congress to vote against a new health care bill this year, while 29 percent would advise their member to vote for it.

If the legislation clears this week’s hurdles, a month of debate likely looms in December, with Republicans vowing to take advantage of every opportunity to slow the process.  Senate Republicans said Democrats are trying to rush action on the bill before the American public, already uneasy, turns completely against the White House-backed initiative