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July 10, 2009

Congressional Activity
With the release of the Senate Health, Education, Labor and Pensions (HELP) Committee's language on a public plan, the primary focus of political activity over the past week has been on whether a public plan is a deal breaker for national health care reform. After White House Chief of Staff Rahm Emanuel indicated the Administration's openness to a proposal that does not include a public plan, Senate Majority Leader Harry Reid and Speaker Nancy Pelosi entered the media fray to state the strong desire of Democrats on Capitol Hill that a public plan be included. Sensing the need to speak to the core of his party, President Obama released a statement from Russia reiterating his support for the public plan.

Given the 4th of July recess, all action over the past week was in the Senate, as detailed below.

Senate HELP Committee
On Wednesday, July 1st, new legislative language was released for the Title I coverage provisions of the draft Senate HELP Committee bill. This new language proposes the creation of a government-run health insurance plan and also includes significant provisions addressing the role of employers.

Major additions and changes to the revised HELP Committee bill include:

• The creation of a new government plan, "the Community Health Insurance Option," run by Health and Human Services (HHS) to compete with private plans. HHS would retain all risk, meet various state standards (solvency, consumer protection, benefits requirements) and negotiate provider rates capped at average regional rates. Providers would not be required to participate in the government plan, nor could they be penalized for non-participation. HHS could contract with non-profit entities for administrative services.

• The establishment of an employer "pay or play" mandate that would require employers to make payments to the HHS Secretary for each employee who is not offered qualifying coverage and on behalf of whom the employer is not contributing at least 60 percent of the monthly premium. The payment would initially be an annual fee of $750 for full-time employees and $375 for part-time employees. (Firms with 25 employees or less would be exempted.)

• Reduced individual eligibility for federal subsidies from 500 percent of the federal poverty level to 400 percent. The amount those in the top subsidy bracket increased from 10 to 12.5 percent (e.g. a person making $40k would have to pay up to $6k for coverage vs. $3200 as in the previous draft).

• Mandated integration of the entire insured group market (large and small groups).

• Requiring loss-ratio reporting rather than setting minimum loss-ratio requirements with consumer rebates.

• The development of minimum benefit standards by HHS and the elimination of a new federal Medical Advisory Council that previously had been assigned this task.

Along with the new bill language, Senate HELP Committee Chairman Edward Kennedy (D-MA) and Senator Christopher Dodd (D-CT) released a "Dear Colleague" letter stating that the Congressional Budget Office (CBO) has estimated this latest version of the HELP Committee bill would cost $611.4 billion over 10 years. This new estimate is significantly less than the earlier version that estimated costs of over $1 trillion. However, because the Medicaid provisions are not within the jurisdiction of the HELP Committee, that part of the score (cost-estimate) is not included and would likely bring the bill cost to over $1 trillion.

The HELP Committee plans to mark up this provision of the bill this week.

Senate Finance Committee
The Senate Finance Committee still has yet to release actual legislative language as it continues to try to build bipartisan consensus and reduce the overall cost of the bill. The three public plan proposals under consideration include: the Conrad "co-op" proposal; the Schumer "level playing field public plan"; and the Snowe "trigger" plan (public plan triggered if certain benchmarks not met by insurers). In addition to the public plan conflict, the Senate Finance Committee continues to struggle with the question of whether to tax employee health benefits and, if so, at what level.

Legislative language is expected "any day" from the Senate Finance Committee. The Committee will quickly move to mark up the bill thereafter, merging the bill with the Senate HELP Committee's bill to bring combined language to the Senate floor before August 8th.

Outlook
Next week will bring a great deal of activity from both the Senate and the House as policy proposals continue to come together during the hearing process. The President will return from Russia and the G-8 Summit and will be focused on advancing the legislative process of national health care reform so that lawmakers can remain as close to the legislative/political timeline as they can to ensure that it passes this year.

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