Health Care Reform Outline Becoming Clearer as Deadline is Missed

The reality is that Congress will miss President Barack Obama’s August deadline for health care reform. The Administration had wanted each Chamber to pass a bill before Congress recesses in early-August. Members of a Conference Committee would then spend the recess working through differences between the bills and Congress would be in a position to send legislation to the President’s desk in October. That was the plan.

Now there is a strong likelihood Congress will be unable to pass out a bill before the summer recess. Part of the reason is that moderate and conservative Democrats are balking at the price tag for reform and some of the provisions being pushed by their more liberal colleagues. At the same time, the Senate Finance Committee and its Chair, Senator Max Baucus, has not given up on fashioning a bi-partisan bill, no mean feat on legislation as complicated as health care reform.

What this means is that lawmakers will return home in August with numerous questions concerning health care reform unanswered. They will hold town hall meetings, listen to constituents, and return in September to make the final effort to reform America’s health care system. While this will push the work of the Conference Committee back by a few weeks, it does not mean the President’s real deadline — signing a bill into law this year — will be missed. It just means the Conference Committee will have a bit less time to do their work.  (A short civics lesson: a Conference Committee is an ad hoc working group comprised of both Senators and Representatives from both parties whose job it is to reconcile bills on the same topic passed by the Senate and House. Their compromise bill, if approved by both Chambers, is then sent to the President for his signature or veto).

The summer recess will hardly be relaxing for most members of Congress. While home they will be confronted on a daily basis passionate advocates on all sides of all the many issues tied to health care reform. Cost containment, universal coverage, preventive care, taxes, mandates and more will be part of their daily diet. Whether the cumulative effect of this stew of meetings, confrontations and discussions will be to encourage a more progressive or a more moderate approach to reform is an open question. Certainly millions of dollars will be spent by interest groups of all political persuasions, especially in the districts and states of moderate Democrats. The 24-hour cable news networks will be so inundated with health care reform advertising next month they may have no room for their regular fare of prescription drug, debt relief and Vonage commercials.

While the deadline is being missed, what elements are likely to be included in the reform package is becoming clearer. It is all but certain, for example, that an exchange will be created with the intention of helping consumers shop for health insurance will be created (although the nature of this exchange is still to be determined). There is also, surprisingly, a growing consensus on requiring every American to have health insurance. As reported by the Washington Post, the idea of an individual mandate “Is one of the few common threads running through all three bills being considered in Congress, greatly increasing the likelihood it will survive the legislative process.” Given that another virtual certainty is that carriers will be obliged to accept all applications for coverage without regard to pre-existing conditions, this is a good thing. States in which there is a mandate to sell coverage, but not one to buy it, premiums sky rocket. In New York and New Jersey, where this imbalance exists, average premiums for individual coverage are more than twice as high as they are in California which has neither mandate.

Not everyone supports a balanced approach to guaranteed issue. Many Republicans oppose the concept of requiring individuals to buy health insurance. One Republican proposal, The Patients’ Choice Act, introduced by two Senators and two Representatives, all self-proclaimed conservatives, emulates the New York and New Jersey model. Meanwhile some Democrats are concerned subsidies to help low income Americans afford the premiums they’d be required to pay will be inadequate. Nonetheless, as the Washington Post article explains, support for the concept is widespread.

Even President Obama, who opposed the mandate to purchase idea during the campaign has come around as long as there are exemptions for those who simply cannot afford the premiums: “I was opposed to this idea because my general attitude was, the reason people don’t have health insurance is not because they don’t want it, but because they can’t afford it. And if you make it affordable, then they will come,” he said in a recent interview with CBS. “I’ve been persuaded that there are enough young, uninsured people who are cheap to cover, but are opting out. To make sure that those folks are part of the overall pool is the best way to make sure that all of our premiums go down.”

So yes, Congress will miss the August deadline for passing health care reform. At the same time, critical elements of what will eventually emerge in the reforms are becoming increasingly clear. The only deadline that really matters is passing legislation before the silly season of mid-term elections arrives. And that’s a target date Congress is likely to meet.

Kennedy Health Care Reform Bill Launches New Phase of Debate

The health care reform debate moved to a new phase Senator Edward Kennedy and his fellow Democrats on the Senate Health, Education, Labor, and Pensions Committee (HELP) introduced sweeping legislation. Senator Kennedy is Chair of the ccommittee. What is significant is not what is in the bill — it’s general outline has been known for awhile — but the publication of the bill itself. It marks the beginning of the move from discussions on generalities to negotiations on specifics.

The HELP Committee Legislation is entitled the “Affordable  Health Choices Act.” (Virtually every piece of health care reform legislation will include the word “choice” as the lack of choice — see as evidence The Patients’ Choice Act four Republican lawmakers are planning to introduce. The reason is that many in Washington believe opponents framing of the Clinton Administration’s health care reform plan as limiting choice was a leading contributor to it’s downfall.) The HELP Committee press release proclaims the legislation “reduces health care costs, allows Americans to keep the coverage they have if they want it, and makes health insurance affordable to those who do not have it today.”

That remains to be seen. The 615 page draft health care reform bill covers a lot of territory and it will take some time to sort through its many provisions. A quick skim, however, indicates that it generally hews to the outlines Senator Kennedy has been talking about in recent days. It would create state gateways through which individuals and some businesses could purchase coverage and a government-run carrier would compete with private carriers  Individuals earning up to 150 percent of the Federal Poverty Level ($16,245 for an individual in 2009) will be eligible for Medicaid. Insurance premiums for those earning up to 500 percent of the federal poverty level (currently $110,250 for a family of four) so their payments do not exceed 10 percent of their gross adjusted income.

At this stage, the details actually are not all that important. Discussions among the HELP Committee’s Democrats and Republicans continue (now those would be interesting to watch). And several other bills by different committees in both the House and the Senate are due. All will wind up in the sausage making process. What any one draft contains is not necessarily what will emerge at the end.

For now, Senator Kennedy is anchoring the left in the debate. (Anchoring a position is done by both liberals and conservatives. It is a negotiating tool in which the anchor calls for extreme provisions in the hopes of having any compromise which emerges from moving too far toward the other side). I don’t mean this cynically. Senator Kennedy is no doubt sincere in supporting the provisions of his committee’s legislation. However, he is a practical policitian and knows compromise is inevitable. Being the first Congressional committee to issue a draft, there is no need for him to introduce a watered down bill. After all, he would be foolish to negotiate with himself. Better to stake out his ideal position and see what the other committees produce.

A public hearing on the HELP Committee bill is scheduled for June 11, 2009 and the committee will begin editing the bill at a June 16, 2009 meeting. The Democrat’s press release emphasized that negotiations with GOP members of the committee are ongoing so it will be interesting to see what changes emerge  once mark-up begins.

All this is important and interesting. But again, the details of the Affordable Health Choices Act are less important than the existence of the Affordable Health Choices Act. A new phase of the journey toward comprehensive health care reform has begun. The debate continues.

Health Insurance Brokers to the GOP: “Et Tu?”

Health insurance brokers are appropriately worried about the impact health care reform will have on their livelihood. That’s human nature. Politics is about the management of self-interest. When it comes to health care reform, the list of concerned onlookers is long. Patients, doctors, hospitals, carriers, government bureaucrats, health insurance agents, employers, lawyers, dentists, chiropractors, pharmaceuticalfirms and, well, you get the idea.  Anymeaningful change is going to require sacrifice by most all of these stakeholders. 

When it comes to balancing all these competing interests, the partisan nature of American politics usually comes into play. Public policy flowing from the Democratic party tends to benefit some at the expense of others. The same holds true with the Republican party.

Health insurance brokers, for example, tend to rely on the GOP to promote policies supportive of their profession. One reason for this connection is political. I’ve no empirical data, but long experience in working with health insurance brokers leads me to believe that the majority vote Republican. Another reason, however, is ideological. Republicans tend to support market-based health care reform solutions  and brokers are integral to making the market work. Brokers take competing health plans and interpret them to their prospects and clients. One method they use is to take the different explanations of benefits used by different competitors and put them into a consistent template. They serve as consumer’s advisers and, when needed, their advocates to assure they get full value from their health plans.

As President Barack Obama’s Administration works with the Democratic majority in Congress to fashion health care reform, many brokers are relying on Republicans in Congress to stand firm against a public plan (which most brokers believe would eventually drive private plans out of existence — and take brokers down the drain with them). And they are trusting Republicans will make the case for the value brokers add to the system.

This trust may be misplaced.

Last week four leading Republicans put forward “The Patients’ Choice Act.” The Act is their call to action for fixing what they refer to as America’s broken health care system while at the same time seeking to preserve much of the current market driven arrangement. The authors of the proposal, Senators Tom Coburn and Richard Burr and by Congressmen Paul Ryan and Devin Nunes, are leading voices within their party on health care reform. It’s not clear whether the Patients’ Choice Act is the official position of the Republican caucuses in Congress, but no other proposal has been forth by the GOP. And the media is certainly treating it as the “Republican health care reform plan.”

Not suprisingly, the GOP lawmakers explicitly reject a public health program. Indeed, while acknowledging other factors leading to runaway costs (new technology, an aging population) their document proclaims the primary reason America’s health care system fails so many patients is “government intervention.”

Nonetheless, there are several elements of the Patients’ Choice Act which occupy common ground with Democrats (more on these in a future post). Some of what’s in The Patients’ Choice Act summary is, suprising and even amusing. For example, Republicans have taken to accusing Democrats of seeking to move America to “European-style socialism.” Yet, in justifying some of their ideas the sponsors of the Act turn to similar programs working in — wait for it — Europe.

Some elements of the reform package are just foolish. For example, under the Patients’ Choice Act carriers to accept all applicants regardless of their health condition (often referred to as “guarantee issue”). However, explicitly reject requiring individuals to obtain coverage stating that “if individuals do not want health insurance, they will not be forced to have it.” In fact, they go so far as to suggest that individuals be able to purchase coverage at any time “through places of employment, emergency rooms, the DMV, etc.”

In taking this position it appears the the Republicans have adopted the greatest flaw in then candidate-Obama’s health care reform plan — and made it worse. Why would anyone purchase coverage before they need it? Any reasonable person would wait until they’re on their way to the doctor, stop by the DMV and purchase coverage. In case of an accident, all they would need to do is go to the emergency room (the most expensive place to receive care), sign up at the receiving desk and enter the facility as a fully insured patient. As soon as they’ve recovered, it would be safe to drop the coverage.

(I find it hard to believe the Republicans are taking such a naive view of insurance. And, to be fair, the Patients’ Choice Act is somewhat lacking in details. However, what I’ve described comes from the Republican lawmakers’ own document. If they are creating safeguards to prevent such gaming of the system, there’s no evidence of it yet.)

As with any health care reform proposal, there’s elements to like and to dislike in the the Patients’ Choice Act. What will be most troubling for brokers, however, is the GOP’s call for creating state-based exchanges. The benefits of such exchanges includes a “one-stop marketplace for health insurance. Individuals would get a hassle-free opportunity to choose the plan that best meets their needs through an Exchange.” Most brokers believe that’s their role in the current system. To have Republicans propose a state agency to take on this responsibility is disconcerting at best; a betrayal at worst.

Then there’s the “auto-enrollment” feature touted by the Republicans allowing individuals to obtain health insurance at the DMV and other locations. Apparently the GOP sees little value in having consumers work with licensed, regulated agents and brokers, not when there’s a clerk at the DMV available.

To be fair, the Republicans are not explicitly excluding brokers from their version of a new health care system. In fact, they are expected to remain a part of the system. In the GOP’s “Patients’ Choice Act Q&As they write, “Whether an individual uses an insurance broker, an internet [sic] comparison page, or calls a toll free number, individuals are provided the information needed to choose a plan tailored to their individuals [sic] needs.” This basically equates the knowledge, skills and expertise of  independent brokers to what can be delivered by an Internet site or a customer service rep at the state Exchange. How comforting.  Perhaps they are relying on the Exchange to standardize health insurance so much that professional guidance is no longer required. Although if coverage is that standardized, then perhaps calling their proposal the Patients’ Choice Act might be somewhat misleading.

The National Association of Health Underwriters, the primary professional organization for health insurance brokers, is working hard to educate lawmakers concerning the value independent brokers add to the system — value which should be preserved in whatever reform package emerges from Washington.  To the extent the Patients’ Choice Act represents Republican thinking on health care reform, relying on the GOP as an ally in this effort could be a painful path to disappointment.