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SCI Teleconference: Federal Health Reform Update

SCI Teleconference: Federal Health Reform Update. Charles Milligan October 12, 2009. Preview of Presentation. Status Process Policy Endgame. Status. House – HR 3200. Jurisdiction held by three separate committees Passed Education & Labor Committee by party line vote of 26-22

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SCI Teleconference: Federal Health Reform Update

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  1. SCI Teleconference:Federal HealthReform Update Charles Milligan October 12, 2009

  2. Preview of Presentation • Status • Process • Policy • Endgame

  3. Status

  4. House – HR 3200 • Jurisdiction held by three separate committees • Passed Education & Labor Committee by party line vote of 26-22 • Passed Ways & Means Committee by party line vote of 23-18 • Passed Energy & Commerce Committee by party line vote of 31-28 • The version passed by Energy & Commerce included key amendments required by moderate “Blue Dog” Democrats: (a) states share cost of Medicaid expansion; (b) reduce subsidies to population between 133-400% FPL; (c) exempt more small employers from mandate; and (d) require public plan to negotiate provider rates, and to follow same insurance reforms. • The bill awaits action on the floor

  5. Senate • Jurisdiction held by two committees • Passed the Health, Education, Labor and Pensions (HELP) Committee by a party line vote of 13-10 • Sen. Baucus introduced his Chairman’s Mark before the Senate Finance Committee on September 16; SFC vote is scheduled for October 12 • But don’t forget: Senate Budget Committee passed the Budget Resolution by a vote of 53-43 on April 29: • It said: reform must be budget neutral over 10 years

  6. Process

  7. House • HR 3200, as amended in the Energy & Commerce Committee, has advanced to the full House, where versions will be merged via House Rules Committee. • The merged version will be scored by CBO. • Then the House will take up various amendments, and once that process has concluded, a vote by the full House will occur. • Key issue # 1: Whether “Blue Dog” amendments survive • Key issue # 2: Whether House moves toward the Senate version, per pressure from White House. • Passage requires simple majority.

  8. Senate • Senate Finance Committee: • Several amendments were made to the original Chairman’s Mark. (The Chairman’s Mark was the default bill, and only was amended by a majority vote in the SFC.) • Final committee vote scheduled for October 12

  9. Senate continued • Once the bill emerges from SFC, both bills (SFC and Senate HELP) will be merged on the Senate Floor, per Senate Rules Committee, with heavy input. • Then CBO will score the merged bill. • Then the full Senate will address the merged legislation. The full Senate will consider and vote on various amendments, and once that process has concluded, a vote by the full Senate could occur. • Key issue # 1: Will a comprehensive reform bill be able to secure 60 votes? • Key issue # 2: If not, what is achievable through Reconciliation?

  10. Senate “Reconciliation” • Reconciliation: Bill may pass the Senate with simple majority • Key problems with Reconciliation: • Byrd Rule: Can only take up “budget” matters to “reconcile” legislation with Senate Budget Resolution; Senate Parliamentarian decides • Laws are time-limited to 10 year budget window; then sunset • Example: SCHIP – created in 1997, not permanent, nearly died in 2007 • Example: “Bush tax cuts”

  11. Political Problems with Reconciliation • Lack of bipartisanship • Is reconciliation version too far right for the House, because some Democrats are jettisoned to garner a few Republicans? • Is reconciliation version too far left for the House, because moderate Democrats and all Republicans are jettisoned? • Is reform possible when limited to finance only? • Is reform stable if it sunsets?

  12. Conference Committee and Endgame • The version that passes the House, and the version that passes the Senate, will not be identical. • A Conference Committee will be formed to reconcile the two versions, and it will be scored by CBO. • After those deliberations, the Conference Committee’s version will return to the respective Chambers for a final vote up or down vote. • If those versions pass, the bill goes to the President.

  13. Policy

  14. General Areas of Agreement across Proposals • Coverage expansion • Expand Medicaid to an across-the-board eligibility floor, particularly to help childless adults, probably to 133% FPL • Provide tiered subsidy to others; up to somewhere between 300-400% FPL • Create Exchange/Connector/Gateway • Purchasing pool model for individuals, small employers, and those without access to ESI • Individual mandate • With hardship exception • “Medical home” • Workforce development grants

  15. General Areas of Agreement across Proposals (continued) • Employer engagement • For large employers (pay or play mandate; or weaker “free rider” penalty) • For “larger” small employers, with concomitant tax credits for some • Insurance market reforms • Community rating rules (e.g., tobacco use; age; family size) • Guarantee issue/pre-existing condition underwriting prohibition • No annual or lifetime benefit caps • No rescission • Process to define qualifying “minimal benefit package” • Necessary for purchasing products in the Exchange, and to know whether the individual mandate has been met; pre-empt state rules

  16. General Areas of Agreement across Proposals (continued) • New revenue from: • Taxing “high benefit” plans • Penalties on individuals and employers who violate mandates • Savings from: • DSH (Medicare and Medicaid) • Medicare Advantage plans • Medicaid Rx rebates (including inside managed care) • Invest in Comparative Effectiveness research • But limit use of results

  17. Major Areas of Disagreement • Public option • Stealth single payer, or necessary where carriers have monopoly or oligopoly? • Will it set provider rates (ala Medicare and Medicaid FFS, or negotiate provide rates? • Magnitude of expansions, subsidies, tax credits • The lower the subsidies and credits, the more people will be exempted from the mandates • Involvement with large employers • Leave them alone as qualifying plans, or make them conform over time to federally proscribed minimum benefits?

  18. Major Areas of Disagreement (continued) • Federalism: House wants stronger federal role; Senate decentralizes more roles to states: • Insurance oversight • Locus of Exchange • Financing for Medicaid expansion (how much $$ from states; match rate for expansion) • SCHIP: Alive and well, or RIP? • “Affordability” assumptions for middle class • Other forms of revenue (tax on insurers? The wealthy?)

  19. Major Areas of Disagreement (continued) • Payment reform • Allow Medicare gain-sharing for “Accountable Care Organizations”? • Increase primary care rates relative to specialty care? • Cut Medicare payments attributable to avoidable hospital readmissions? • Tie some portion of hospital money (in Medicare) to quality/performance? • Medicare regional rate re-alignment, per Dartmouth Atlas? • Malpractice reform included? • If so, with mandate, or merely “Sense of the Senate”?

  20. Endgame

  21. Scenario #1:Democrats cannot get to 60 votes in Senate, and Reconciliation is used • In all likelihood, this would limit the scale to financial reforms only, such as: • Coverage expansions, including subsidies • Medicare payment reform (e.g., cut MA rates and maybe more) • Tax “high cost benefit plans” • Reduce DSH (Medicaid and Medicare) • Increase Medicaid Rx rebates, especially inside managed care • Pay for comparative effectiveness studies • Create tax credits for small businesses and others • Workforce development grants • Net costs must be offset with net savings, in 10 years, to reconcile with Senate Budget Resolution

  22. Scenario #1continued • What likely could not be achieved in Reconciliation: • Individual mandate • Employer mandate • Insurance market reforms • Creation of Exchange/Connector/Gateway

  23. Scenario #1continued • The less-controversial elements that are not appropriate for Reconciliation could be included in a companion (separate) bill: • Insurance market reforms • Yet, AHIP released a report on October 11, 2009 arguing that rates will climb much faster than status quo with market reform and no Individual Mandate; AHIP says premiums stay affordable only with all healthy people in the risk pool, or through use of underwriting tools • Bless creation of Exchange/Connector/Gateway as a purchasing pool vehicle

  24. Scenario #2:Democrats can get to 60 votes in Senate, and Reconciliation is not needed • In all likelihood, this would mean a “moderate” version of reform • Coverage expansions with low federal price tag • Cost shift more Medicaid to states • Smaller subsidy and tax credits for others • No public option, unless with (very) limited trigger • Similar array of revenue increases, Medicare cuts, and Medicaid cuts as “Reconciliation” version • Establish federal benefit benchmark for qualifying plans (and as comparison point for satisfaction of individual mandate)

  25. Scenario #2continued • “Moderate” version of reform, continued • Individual mandate • More expansive “hardship” exception for individual mandate, given likelihood of reduced subsidies to keep federal $$ down • Employer mandate • Attachment point only at larger employers • Insurance market reform • Community rating rules • Prohibition on pre-existing condition exclusions/guarantee issue • No annual or lifetime caps • No rescission

  26. Contact Information Charles Milligan Executive Director The Hilltop Institute University of Maryland, Baltimore County (UMBC) 410.455.6274 cmilligan@hilltop.umbc.edu www.hilltopinstitute.org

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