Legislative Training December 16, 2009

1. Legislative TrainingDecember 16, 2009

2. Overview of House Action • House of Representatives passed HR 3962 220-215 on November 7 • House passage is just one step in a lengthy political process • Whatever passes the Senate must be combined with the House bill • Differences between the two bills must be resolved in such a way that the legislation will pass both chambers • The health reform effort is still a long way from over!

3. Overview of Senate Action • Health, Education, Labor and Pensions (HELP) and Senate Finance Committee passed their own bills, which Senators Reid, Baucus and Dodd have negotiated into one • H.R. 3590, a 2072-page bill, was released on November 18 • CBO official score is $848 billion over first 10-years, but concedes without budget gimmicks is over $1.2 trillion • Senate voted 60-39 on the evening of November 21, after a one-day debate, to move H.R. 3590 to the floor for consideration • Lengthy floor amendment/debate process began November 30

4. Senate Status • On December 8 Senate Majority Leader Reid announced he and 10 key Senators had come to terms on a plan that would replace the public option in the current Senate bill with a new national insurance plan offered by private insurers and a chance for older Americans to “buy-in” to Medicare. • Proposal has drawn expressions of concern from providers, insurers, business groups, unions, governors, the new media, the American public and a number of Senators. • No legislative language is currently available. Leadership is awaiting CBO score and is said to be still be making changes to address concerns. • Reid may offer the changes in a “Manager’s Amendment” the week of December 14. • Beyond the compromise discussions, the Senate has continued its work this week on amendments to the original bill, H.R. 3590.

5. Timeline • Senate floor debate and amendment process began After Thanksgiving Break • Goal is to be done by Christmas- for that goal to be reached everything needs to be completed this week • 2010 Mid-Term elections • All House Seats • 1/3 of Senate, including Reid, Dodd, Specter • 37 Governor’s races • Could effect timing: hesitant to take on major legislation in an election year • Resolving contentious issues and gaining consensus among the Democrats alone continues to be a challenge

6. CBO: Premiums in Senate Bill • CBO released new report on premium increases in nongroup market • Requested by Senator Bayh D-IN • Average nongroup premiums would rise 10-13% by 2016 • Average premium for individuals- $5,800 • Average premium for a family- $15,200 • Estimated that about 56-59% or purchasers in nongroup market would receive federal subsidies • 18 million subsidized, 14 million left with increased premiums • Premium increase because insurers will cover a “substantially larger share of enrollees’ cost (on average)…and a slightly wider range of benefits.” • Effect on employer-based coverage is negligible

7. The Deal Heard Round the World • Last Tuesday Senator Reid announced that moderate and liberal Democrats had reached a deal • Schumber (NY), Feingold (WI), Rockefeller (WV), Harkin (IA), Nelson (NE), Carper (DE), Pryor (AR), Landrieu (LA), and Lincoln (AR) • Legislative language of the “deal” has not yet been released, but is being scored by CBO • Removes the public option currently in the bill, but does create a trigger option • New national insurance plan, offered by private insurers (similar to the FEHBP) • Opens enrollment for Medicare to 55+ • 90% medical loss ratio • Reauthorization of Children’s Health Insurance Program (CHIP)

8. Senate Debate • Key Amendments • Hatch (R-UT)/Nelson (D-NE) Amendment to prohibit public funding for abortion-related services through subsidies in the exchange. 54-45 to table amendment- killed it from further consideration • Nelson has made it clear to leadership that without that amendment he might vote against ending the debate on the overall bill • Thune (R-SD) amendment that would have stripped CLASS Act Provisions (new long-term care insurance program) from the bill. Rejected • Senate did approve measure that states premiums collected for proposed LTC insurance are set aside to ensure program solvency • McCain (R-AZ) amendment to strip bill of Medicare cuts, nearly $500 billion over 10 years. Defeated 42-58

9. Key Amendments Still to Come… • Wyden (D-OR)/Collins (R-ME) three bipartisan amendments • Variation of the “Employee Free Choice Amendment” • Expand exchange- allow individuals who are not eligible for a subsidy to purchase a catastrophic plan in the exchange • Establishes a fee structure on the national premium tax imposed on health insurance carriers to create incentive to hold down rates; does not change the $6.7 billion annual amount from the tax

10. Implementation • Implementation of health reform will take years- and probably include significant action on the state level • Revenue-related items begin immediately, including the new taxes on health insurance premiums, which have not been factored into 2010 play year contracts.

12. Key Concerns • Health Care Cost Containment • Neither the House nor Senate bills adequately address underlying cost drivers • Coverage Affordability • New rules in both bills will make private health insurance premiums go up. Rating requirements could particularly impact middle-size employers • Mandated benefit requirements and minimum coverage levels exceed typical market offerings today • Senate: Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services (behavioral health treatment included), prescription drugs, rehabilitative services, laboratory services, preventative and wellness services, pediatric services (oral and vision) • House: hospitalization, outpatient hospital and clinic services, emergency department services, prescription drugs, rehabilitative services, mental health, behavioral health and substance use services, durable medical equipment, prosthetics, maternity care, well baby and well child care, oral health, vision, and hearing services, equipment and supplies up to 21 years of age

13. Key Concerns • Ineffective Individual Mandate • An effective and enforceable individual mandate is necessary to control costs due to the insurance market reforms included in the bills • The included mandate is too weakly enforced • Senate Bill: Excise tax • House Bill: Tax penalty • Will encourage many to wait to seek coverage after they are sick. • Will increase costs for all who have coverage – Actuarial studies predict as much as a 50% increase for individual coverage • Government-run public plan option is included in both bills • No matter how limited, never can truly be level competition • No taxes, including state premium taxes • Interest free start up capital • Negotiated rates no higher than average of private plans • Senate opt out still requires all tax payments by the state

14. Key Concerns • Employer mandate to provide coverage is included in both bills • Unnecessary - 85% in the private market are covered here • Those not providing coverage are mostly exempt • Would have a devastating economic impact – cost current and future jobs • Minimum benefits would increase costs of current plans - ERISA • House Bill—72.5% employee coverage, 65% dependents, part-time workers, kicks in at $500K payroll, 8% payroll penalty • Senate Bill—No direct mandate but 50+ employers not offering coverage at specified standards/affordability levels pay a $750/employee fine. • Exchange structure • Potential for government rate-setting of agent and broker commissions on policies sold through the exchange • Subsidies only through the exchanges up to 400% of the FPL, with a 2.8-7% cap on beneficiary costs as a percentage of income • Expansion to large groups (100+) in three years • Potential crowd-out of employer-market

15. Key Concerns • LTC • The creation of a new national opt-out federal long-term care program (CLASS Act provisions) with a limited daily benefit • Financial nightmare in out-years and does not promote private insurance • Medicaid Expansion • Should be limited to medically needy – upped to 150% in the House, 133% in the Senate. • Will also increase the cost-shift to private insurers • Financing • House – Primarily through a 5.4% surtax on high earners and cuts to Medicare Advantage • Senate – Excise tax on high cost plans, .5% increase in Medicare tax*, new taxes on insurers and providers, cuts to Medicare reimbursement and MA plans

16. NAHU Action House • Formal letter and press statement opposing H.R. 3962 • Grassroots support to thank “no” voters • Meetings and HUPAC action to key House moderates to prepare for conference Senate • Formal letter on agent issues. • Targeted action to grass tops and members with Moderate Senators • Senate meetings and HUPAC action to key moderates • Behind the scenes suggestions to negotiating staff • Working on potential floor amendments • Assisting with material for floor debate Overall • Outreach to employers • Work with coalition partners • Media interviews • Press Statements • Op Eds/LTES • Social media

17. Danielle JaffeeManager of Government Affairsdjaffee@nahu.org703.276.3839