Financial Resource

DECEMBER 23, 2009

This Week in Health Reform

Senate Majority Leader Harry Reid (D-NV), may just reach his goal of getting a health care reform package approved by the Senate by Christmas. This past week, Sen. Reid clinched the 60th vote needed to pass the legislation. As of this communication, he has scheduled the final Senate vote for 7 a.m. on Christmas Eve day. In an effort to shore up votes, Sen. Reid and his colleagues struck deals to overcome hot-button issues such as abortion funding.

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Senate Negotiations

Senate Eyes Finish Line: After weeks of rancorous debate and more than 20 straight days and nights spent negotiating on Capitol Hill, Senate lawmakers cleared all three major procedural hurdles prior to a final vote on the legislation.

* The first procedural motion passed on a 60-40 vote early Monday morning , ending debate on Sen. Reid’s proposed amendments, called the “manager’s package,” and cutting off a Republican filibuster. The “manager’s package” represented a series of last-minute deals and compromises to shore up support for the legislation.
* The second procedural motion to approve the “manager’s package” passed 60-39 on Tuesday morning.
* The third motion came Wednesday and ended debate on the final legislation in a 60-39 vote, setting up the reform bill for a final vote just in time for Sen. Reid’s Christmas deadline.

Sen. Reid Carves Out State-Specific Deals to Secure the 60 Votes: On Saturday, Sen. Reid secured the 60 votes needed to pass the historic legislation, winning over Sen. Ben Nelson, (D-NE), with an amendment to prevent federal subsidies from being used for abortions. Under the new abortion provisions, states can opt out of allowing coverage for abortion. If states do offer coverage, enrollees must pay for abortion coverage separately – a compromise that has sparked criticism from both sides of the abortion divide. Sen. Nelson also secured other benefits for the state of Nebraska, including:

* Millions of dollars from the federal government to pay for the proposed cost of the Medicaid expansion in his state; and
* An exemption for Blue Cross Blue Shield of Nebraska from an annual fee on insurers.

Throughout his amendment package, Sen. Reid included several other state-specific deals to secure the 60 votes. Such last-minute deals have been criticized by Republicans, including:

* For Sen. Max Baucus, (D-MT), the package included a provision to help 2,900 residents of Libby, Mont., sign up for Medicare benefits. Many residents have asbestos-related illnesses;
* For Sen. Christopher Dodd, (D-CT), it included a measure to provide 0 million for the construction of a hospital at a public university;
* Sen. Patrick Leahy, (D-VT), negotiated for 0 million in additional Medicaid benefits for his state over 10 years;
* Sen. Bernie Sanders, (I-VT), got a billion increase for community health centers over a number of years;
* Sen. Mary Landrieu, (D-LA), procured at least 0 million in 2011 from the federal government for help with Medicaid; and
* For Sen. Bill Nelson, (D-FL), the package included a measure allowing some 800,000 Florida senior citizens currently enrolled in private Medicare Advantage plans to keep their extra benefits.

Sen. Reid’s negotiations also included:

* The removal of a 5 percent tax on elective cosmetic surgeries, and the inclusion of a 10 percent tax on indoor tanning services;
* 12 years of patent protection for the makers of brand-name biotech drugs;
* An increase in the Medicare payroll tax percent of an additional 0.9 percent of income for those making 0,000 as an individual and 0,000 for couples;
* An exemption from taxes on high-value insurance plans for those with certain professions, such as firefighters, policemen, construction workers, emergency first responders and longshoremen;
* A provision allowing for doctors and hospitals in Montana, North Dakota, South Dakota, Utah and Wyoming to get paid more than providers elsewhere; and
* About billion extra in Medicaid payments for visiting nurses and other in-home or community services.

CBO Updates Estimates on Health Care Bill’s Impact: In a letter sent to Sen. Reid, the Congressional Budget Office (CBO) said that it had over-estimated the latest Senate health care bill’s impact on deficit reduction during the second decade of enactment. The original estimate indicated the overhaul would yield deficit reductions by one-half percent of GDP; the revised estimates indicate a reduction of between one-quarter and one-half percent of GDP. The CBO confirmed that its estimate over the first 10 years remains accurate, reducing the deficit by up to 2 billion by 2019.

However, in a Wednesday letter to Sen. Jeffery Sessions, (R-AL), the CBO indicated that the current Senate bill may potentially double count the savings from Medicare as a means to pay for the Senate health care bill. In the letter, CBO Director Doug Elmendorf writes: “The key point is that the savings to the (Hospital Insurance) trust fund under the (Patient Protection and Affordable Care Act) would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.” Republicans quickly jumped on the letter as proof that the Senate’s bill will not decrease the federal deficit over time, but rather add to it.

Late last week, the CBO estimated that the revised Senate bill will cost 1 billion over the next decade to extend coverage to the uninsured. It would dramatically expand Medicaid and offer federal subsidies to those who lack affordable coverage through employers. The nation will pay for the overhaul with about 0 billion in new taxes and about 0 billion in cuts to programs such as Medicare.

Sen. Snowe Indicates “No” Vote: Despite many weeks of negotiations with Republican Sen. Olympia Snowe of Maine and several one-on-one meetings with President Barack Obama, Sen. Snowe indicated that she will vote against the Senate’s legislation without significant changes. Sen. Snowe has been a pivotal figure in the health care reform debate as the only Republican to have voted for the Senate Finance Committee’s bill, which passed in October. The loss of Sen. Snowe’s support comes as a blow to Democratic leaders who were hoping to achieve some level of bipartisan support.

Other Activities

AMA, AHA, AARP and FAH Show Support; AHIP Opposes: On Monday, both the American Medical Association (AMA) and the American Hospital Association ( AHA) sent letters to Sen. Reid indicating support for the latest version of the Senate health care bill, while highlighting requests for changes. The AMA, for example, hopes to see changes to the independent board that would be created to slow the growth of Medicare costs. Among other adjustments, the AHA requested a change that would lower Medicare payments to hospitals with high readmission rates. Endorsements also came from AARP and from the Federation of American Hospitals (FAH). In contrast, a statement Friday from America’s Health Insurance Plans (AHIP) voiced opposition to the bill, citing cuts to Medicare Advantage programs and caps on insurers’ administrative costs as problematic.

Public Opinion

December Polls Show Americans Disapprove: As a final vote on the Senate’s health care reform package nears, Americans are increasingly wary of its impact. The December Kaiser Health Tracking Poll found that:

* Only 35 percent of Americans said they would personally be better off if health care reform passes – down from 42 percent last month;
* Only forty-five percent of voters said the country would be better off with health reform – down from 54 percent last month.

The latest poll results released Tuesday from Quinnipiac University show that:

* Americans “mostly disapprove” (53 percent to 36 percent) of the Senate’s plan;
* A majority (56 percent to 38 percent) disapprove of President Obama’s handling of health care reform;
* Voters oppose (72 percent to 23 percent) using any public money in the health care overhaul to pay for abortions;
* Americans support (56 percent to 38 percent) giving people the option of coverage by a government health insurance plan; and
* A majority (64 percent to 30 percent) support allowing younger people to buy into Medicare.

As a volatile year in health care reform comes to a close, an average of monthly polls since April shows that 82 percent of Americans say an overhaul of the nation’s health care system is important for recharging the economy. However, in the most recent Robert Wood Johnson Foundation poll taken in November, 60 percent said an overhaul will not affect their personal access to health care or their family finances, and only about 40 percent said a revamping will improve access to care in the nation overall. Further, only about 30 percent believe health care reform will help the county’s financial status.

Looking Ahead

Senate lawmakers are expected to vote on their final health care reform legislation early Thursday morning, setting the stage for reconciliation with the House bill passed in November. When lawmakers return from holiday break in January, the conference committee between the two chambers is expected to begin discussions about merging the two bills. Leaders of the House and Senate had hoped to have a final bill

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