Reg's Blog

Post-Acute and Healthcare News and Topics

Healthcare Reform: Now the House Version

Earlier today, Speaker Pelosi introduced the re-tooled House version of healthcare reform, now titled The Affordable Health Care Act.  The 2,000 page bill is the result of weeks of backroom negotiations designed to forge a possible consensus, principally among Democrats, and to financially wrangle, a targeted budget neutral spending level.  According to Pelosi, the Bill will head to the floor next week for debate and perhaps, a vote by Saturday or early the week following. 

As the Bill has not been released publicly at this point, analysis has not yet been done and the CBO (Congressional Budget Office) has yet to officially “score” the legislation and project a cost.  Based on news wire and some insider information, here’s what I do know.

  • The Bill includes a public option or a government controlled health insurance plan.  The wrinkle is that the Government will have to negotiate with providers to establish rates.  Prior versions of the House public option pegged reimbursement at Medicare rates or Medicare plus 5%.
  • The Bill requires everyone to purchase insurance by 2013, either via an employer option or plan, a government plan or through a government established “health insurance exchange”.  Tax credits would be used to assist lower-income individuals with purchasing insurance through the exchange.
  • Medicaid eligibility would be expanded from 100% of the poverty limit to 150% of the poverty limit.
  • Employers would be required to offer insurance (payrolls of $500,000 or more) or face penalties for eliminating coverage or failing to offer insurance.
  • During the interim years or phase-in years, a temporary government program would be in-place to assist people in finding and obtaining insurance if for some reason, they were uninsurable.
  • The Bill provides for the same “insurance reforms” as originally introduced – no pre-existing condition clauses, no reduction of coverage for bad claim experience, no life time maximums, etc.
  • Per Pelosi, the cost is $900 billion and reduces the deficit by $30 billion in the first ten years – 2010 to 2019.
  • Major sources of financing include $500 billion in Medicare spending reductions (per Pelosi, program reforms) and a new tax on wealthy individuals ($500K or more in annual income, couples with an income of $ 1 million or more) equal to a surtax of 5.4%.

Ahead for this Bill are three major steps that need to be overcome or dealt with prior to a vote.  The first is the CBO test and what numbers will come forth.  If the numbers are not in agreement or support of Pelosi’s contention, conservative Democrats may surely waffle when it comes to vote time.  Second, complete policy analysis of the text and all of the provisions needs to be completed.  The Bill is a monster and as we saw with HR 3200, there are tons of provisions that go beyond the overview points or talking points.  These provisions will assuredly gain or lose votes and may mean the difference between passage as is or redrafting prior to a vote.  One such provision is the issue around government payment for abortions.  Third, and unlikely to be viewed in the “public” are the crucial inter-party negotiations that will go on between the House Democrats and Senate Democrats and the White House.  The House can ill afford to pass a bill that will not in major portion, be supported in the Senate.  In as much as this is a House bill, the Senate will pass something as well and if the divide between the two is significant, even the best conferees (conference members between the House and the Senate) will struggle to create a workable, passable and ultimately signable bill.

My quick take, not having read the Bill as of yet, is that fundamental flaws still remain that are possible “black holes” for this legislation.

  • The Bill is not going to be budget neutral or deficit reducing unless one uses extraordinarily fuzzy math.  The estimated revenue from the “wealth surtax” will in no way amount to the total Pelosi is targeting.  The wealthy did not become wealthy by being stupid and as such, will typically quickly execute tax planning strategies to lower their exposure or eliminate it.  Wealth transfer schemes have historically never panned out and such will be the case here.
  • No matter what language Ms. Pelosi uses, the Bill contains $500 billion in Medicare cuts.  This number will assuredly raise the wrath of providers and seniors.
  • The Medicaid expansion is going to be huge issue for the states.  States, without significant additional Federal money, have no financial means to accommodate such a radical expansion.  Additional Federal money not accounted for within the Bill will only add to the deficit.
  • The issue of physician payments under Medicare will need to be addressed and to my knowledge, the Bill does not do so.  If in fact, this issue is pushed aside with tacit promises to the medical community of make-up outside of the reform process, expect Republicans and conservative Democrats to raise “heck” about the true costs of healthcare reform.  The “doctor fix” has price tag alone of between $250 to $500 billion, depending on how complete the “fix” is.

As I have said before, this process will only become more interesting in the days and weeks ahead as more and more details become visible and the fog of Washington back-room politics begins to lift.


October 29, 2009 - Posted by | Policy and Politics - Federal | , , ,

Sorry, the comment form is closed at this time.