Health Care Reform: Proposals

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Health Care ReformProposals Prospects

• Roy Ramthun, Visiting Fellow
• Council for Affordable Health Insurance
• March 8, 2009

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• What will Reform look like?

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Today I want to lay out the details of that plan
a plan that not only guarantees coverage for
every American, but also brings down the cost of
health care and reduces every familys premiums
by as much as 2,500. -- Barack Obama, Speech
in Iowa City May 29, 2007
What Will Reform Look Like?
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What Will Reform Look Like?

• Total healthcare spending would increase by
  122.6 billion to 208.6 billion if uninsured
  were fully covered.
• -- Health Affairs, Jack Hadley et al, Urban
  Institute, August 25, 2008

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What Will Reform Look Like?

• Is there any money left?
• 700B spent on financial services industry
• 800B Economic Stimulus law
• 400B Omnibus Appropriations bill
• Slow economy will likely lead to increased
• Spending on Medicaid, unemployment, and other
  welfare benefits
• Focus on health care costs
• Focus on people who lost coverage
• COBRA subsidies in Economic Stimulus plan

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What Will Reform Look Like?

• President Obamas plan
• Outline released Feb. 26 (in Budget outline)
• More details may be released when Budget is
  officially presented to Congress in April
• Sets aside a reserve fund of at least 630 B over
  10 years that will be dedicated to financing
  health reform efforts, financed by
• Reducing itemized deductions for families with
  annual incomes gt 250,000 (318 B)
• Specific health care savings (316 B)
• Sen. Baucus I think we need to look first for
  resources within the existing health care system.
  I encourage the Administration to dig down
  deeper with the health care system to find
  savings.

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What Will Reform Look Like?

• President Obamas plan
• Specific health care savings come from
• Reducing payments to private insurers providing
  Medicare Advantage plans (177 B)
• Reducing Medicare home health payment (37 B)
• Increasing Medicaid drug rebates (20 B)
• Reducing Medicare payments for hospital
  re-admissions (18 B)
• Expanding the Medicare hospital quality
  improvement program (13 B)
• Encouraging generic versions of biologic drugs
  (9 B)
• Reducing fraud and abuse in Medicare (2 B)
• Reducing Medicare payments for imaging services
  (2 B)
• Reforming the Medicare physician payment system
• Support comprehensive but fiscally responsible
  reform to formula

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What Will Reform Look Like?

• President Obamas 8 Principles for Reform
• Reduce cost and protect people from bankruptcy
• Reduce waste and inefficiency
• Put us on a clear path to cover all Americans
• Provide portability of coverage, reduce job
  lock and guarantee issue of insurance coverage
• Guarantee choice of physicians and insurance
  plans (including keeping employer-based plan)
• Invest in prevention and wellness
• Improve patient safety and quality care (HIT
  CER)
• Maintain long-term fiscal sustainability

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What Will Reform Look Like?

• Pay attention to detailed plans of
• Sen. Baucus
• Sen. Kennedy
• Sen. Wyden (S. 391)
• Rep. Rangel/Stark
• Rep. Waxman/Dingell
• Timing
• Hearings already underway
• Baucus will hold a series of public roundtables
  and private walk-thrus of the legislation,
  starting in late April
• Sen. Baucus hopes to begin to mark up the
  legislation in June to allow a Senate floor vote
  in July
• Waxman said he hopes for a floor vote before the
  start of the August recess

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What Will Reform Look Like?

• Baucus plan (white paper)
• Modeled largely after Massachusetts
• Play or pay mandate on employers
• Tax credit for small businesses
• Individual mandate
• Subsidies based on income
• National Health Insurance Exchange
• Guaranteed issue with no pre-existing conditions
• Expands Medicaid and SCHIP eligibility
• Allows buy-in to Medicare for people 55-64

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What Will Reform Look Like?

• Sen. Baucus is considering limiting the amount of
  employer-sponsored health insurance that is
  tax-free
• Sen. Baucus plans to divide the legislation into
  three areas
• Improvement of health care delivery
• How we pay for what we get should be the driver
  of reform
• Expansion of health insurance
• Reduction of health care costs
• Physician payments should be based on the
  quality of care provided
• Sen. Baucus plans to move legislation in a
  bipartisan manner (doesnt plan to use budget
  reconciliation process)

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What Will Reform Look Like?

• Wyden plan (S.391)
• 13 bipartisan co-sponsors
• Individual mandate
• Insurance would be owned by the employee (not the
  employer) and would be completely portable
  between jobs
• Guaranteed issue with no pre-existing conditions
• Subsidies based on income
• Employer-provided health insurance would become a
  taxable benefit
• Every insured family would be provided with a
  17,000 standard tax deduction

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What Will Reform Look Like?

• Other areas of potential consensus
• Comparative effectiveness system
• in Economic Stimulus bill
• Health IT
• in Economic Stimulus bill
• Medicaid/SCHIP expansion (cover more kids)
• P.L. 111-3 signed by President Obama
• Disease management
• Pay for quality
• Prevention

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What Will Reform Look Like?

• House leaders will likely insist on a new
  Government-run health insurer that could compete
  with private insurers
• Will likely begin with Medicare expansion to
  pre-retirees
• Will likely require subsidies due to adverse
  selection
• Could potentially double the number of people
  subject to Medicare fee schedules and quality
  reporting
• Sen. McConnell sent a letter to President Obama
  this past week opposing a government-run plan

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What Will Reform Look Like?

• A lot depends on whether the Senate can pass a
  bill
• GOP Senators could vote to block legislation and
  force things to be done on a bipartisan basis
• House has rules and majority on its side (can do
  anything it wants)
• Leadership and Committee chairs much more liberal
  than general membership

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Final Thoughts

• Past attempts at health care reform have all
  failed
• One party control of Congress and White House
  does not guarantee success
• Clinton mistakes will not be repeated
• Daschle departure will slow things down
• Medicare becomes more important as the year goes
  on (e.g., SGR fix)
• Obama will likely sign any plan Congress gives him

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Contact Info

• Roy Ramthun, Visiting Fellow
• Council for Affordable Health Insurance
• eMail rramthun_at_cahi.org
• Phone [phone]