Finance Committee Approves Health Reform Bill, Snowe Sides With Democrats
October 13, 2009

With the support of a lone Republican, the Senate Finance Committee today approved a $829 billion health care package that would assure that most Americans would have access to health insurance, end discriminatory insurance industry practices and impose a tax on high-cost, or "Cadillac," employer-based health care plans.

The bill was approved along near party lines, 14 to 9, with only Republican Olympia Snowe, R-Maine, voting with the Democrats. Democrats have been attempting to woo Snowe for months in hopes of giving their legislation at least the semblance of bipartisanship.

"So is this bill all that I want? Far from it," Snowe said in anticipation of the roll call vote. But she said the consequences of inaction–to the health care industry and uninsured Americans–were too grave, and that she wanted to keep the legislative process moving ahead while Senate and House leaders seek an acceptable compromise. "There are many, many miles to go in this national journey," she said.

Snowe said she remains concerned about affordability of coverage under the proposal–a sentiment shared by several committee Democrats.

Sen. Charles Grassley, the committee’s ranking Republican and a longtime Baucus ally, began moving away from the bill in August under pressure from Senate GOP leaders and conservative voters back home. He voted against the measure this afternoon.

"This is our opportunity to make history," said Finance Committee Chairman Max Baucus, D-Mont., at the beginning of the session. "Our actions here will determine whether we extend better health care to more Americans."

Republicans charged that the bill has veered dangerously from a more centrist approach previously discussed and that it violates President Obama’s pledge not to raise taxes on families earning below $250,000 a year or to force Americans to give up their current insurance coverage if the like it. They also contend the bill advances Democrats’ efforts to move towards a government-controlled health care industry.

"It’s clear this bill is already moving on a slippery slope to more and more" government control, said Grassley.

The legislation, the product of months of bipartisan negotiations led by Baucus, D-Mont., represents the package that most closely reflects the approach outlined by President Barack Obama–one that would cost below $900 billions, that doesn’t add to the deficit and that would increase the number of legal residents with insurance coverage, in this case from the current 83 percent to about 94 percent.

The measure would reduce spending on Medicare, Medicaid and children’s’ insurance by $409 billion over ten years. According to the Congressional Budget Office, it will reduce the budget deficit by $81 billion over ten years. Roughly 25 million people would purchase coverage through new insurance exchanges and cooperatives, and there would be roughly
11 million more enrollees in Medicaid than is projected under current law. The bill would subsidize the purchase of health insurance for families and individuals with incomes between 133 percent and 400 percent of the federal poverty level.

But the legislation doesn’t include a public insurance option for competing with private insurance companies, an approach favored by House Speaker Nancy Pelosi, D-Calif., and many liberal Democrats in both the House and the Senate. With few if any Republicans likely to support major health care legislation this year, Senate Democratic leaders have already begun closed door negotiations for reconciling the Finance Committee proposal with another previously approved by the Senate Health, Education, Labor and Pensions Committee that includes a form of the public option.

Democrats and Republicans clashed over a newly released insurance-industry study asserting that, under the Finance Committee bill, insurance premiums could rise faster and higher than projected. Republicans said the PricewaterhouseCoopers study confirmed their suspicions of the bill while Democrats insisted it was a flawed study that ignored many of the bill’s provisions that would control premiums.

As the action now shifts to the Senate floor and House chamber, there are still many disagreements to be worked out–including the ultimate price tag for the legislation, the extent of coverage and subsidies, whether to include a public option and how to pay for the legislation.

Senate advocates of the tax on high-cost insurance plans say it is essential to tamp down medical spending and to help pay for the legislation. That tax is projected to generate more than $200 billion over 10 years, or nearly a quarter of the $829 billion bill. But opponents among House members and labor groups complain that the tax would inevitably hit middle class workers. At least 173 House Democrats, two-thirds of the party caucus, have signed a letter to Pelosi voicing opposition to the insurance tax.

Details, Caveats Of CBO Cost Estimates Emerge
October 8, 2009

The Congressional Budget Office yesterday released its updated cost estimates for the health bill being considered by the Senate Finance Committee.

The Los Angeles Times : "The nonpartisan Congressional Budget Office calculated that the legislation, written by Sen. Max Baucus (D-Mont.), would cost $829 billion by 2019. But because that tab would be offset by spending cuts elsewhere and by new revenue, the bill actually would lower the deficit by $81 billion over the next decade–and potentially even more in later years–the budget office concluded. At the same time, the bill would expand the percentage of Americans with health insurance from 83% to 94%, according to the estimate."

"The preliminary CBO report sets the stage for the finance panel to vote on Baucus’ healthcare blueprint later this week or next–a key step in the Democratic campaign to send President Obama a healthcare overhaul bill by the end of the year." Senate Majority Leader Harry Reid will then merge the bill with one from the Senate Health Committee and send it to the Senate floor for debate (Levey, 10/8).

The Washington Post : "White House budget director Peter Orszag applauded the analysis, saying the bill ‘demonstrates that we can expand coverage and improve quality while being fiscally responsible,’ and (Reid) (D-Nev.) called the CBO report ‘another important step down the road toward enacting comprehensive health insurance reform.’ But senior Republicans seemed only to harden in their opposition to the measure." The bill would cover an additional 29 million Americans–not illegal immigrants–by 2019 by extending Medicaid to more people and subsidizing private insurance for low- and middle-income Americans (Montgomery and Murray, 10/8).

The Associated Press : "While generally positive about the legislation’s effects, the report contained important caveats. One noted that the estimate does not include the costs of proposed payment increases for doctors serving Medicare patients, roughly $200 billion through 2019. Additionally, a so-called fail-safe mechanism to hold spending in line could result in cuts as large as 15 percent in federal subsidies designed to help the poor afford insurance, CBO said" (Espo, 10/7).

The New York Times : "The projected 10-year cost of the bill did increase, from $774 billion in Mr. Baucus’s original proposal. But the new costs were more than offset, and the budget office found that the latest version would reduce deficits by $32 billion more than the original plan. … The budget office found that the Finance Committee would reduce payments to private Medicare Advantage plans by $117 billion over 10 years while cutting the growth of Medicare payments to other health providers by $162 billion" (Pear and Herszenhorn, 10/7).

Kaiser Health News: "Roughly 23 million people would purchase health insurance through the health insurance exchanges and there would be roughly 14 million more enrollees in Medicaid and CHIP" (Carey, 10/8).

The Wall Street Journal’s Health Blog: "The CBO estimates that only
$3 billion of an allotted $6 billion will be spent for the non-profit insurance co-ops described in the bill. . . . CBO says ‘they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments’" (Goldstein, 10/7).

Roll Call: "However, Republicans and other critics are likely to highlight one portion of the CBO’s letter, which states that the cost estimate of Baucus’ bill is preliminary pending an analysis of the final legislative language" (Drucker, 10/7).

The Associated Press/New York Times has a primer on all the major health reform proposals, including an outline by House Republicans. Versions of the primer have been previously published by the AP , but Wednesday night’s edition reflects the latest estimates on Senate Finance Committee’s overhaul legislation (10/7).

Insurers Change Course, Attack Health Care Reform, Predict Huge Premium Increases
October 12, 2009

Insurers who backed Democratic attempts to reform the health care system in America are now attacking the Senate Finance Committee bill, saying it would cause premiums to increase.

The Associated Press reports: "Late Sunday, the industry trade group America’s Health Insurance Plans sent its member companies a new accounting firm study that projects the legislation would add $1,700 a year to the cost of family coverage in 2013, when most of the major provisions in the bill would be in effect."

For single people, premiums would increase $600 more than without health care reform legislation. In 2019, the insurance companies say family premiums could be $4,000 higher. The Senate Finance Committee votes tomorrow on the bill (Alonso-Zaldivar, 10/12).

The Washington Post : "Industry officials said they intend to circulate the report prepared by PricewaterhouseCoopers on Capitol Hill and promote it in new advertisements. That could complicate Democratic hopes for action on the legislation this week." The insurers say premiums could increase cumulatively between 2010 and 2019 about $20,700 for a typical family under the reform instead of keeping the current system. Democrats assailed the report for not taking into account cost-saving measures like a $25 billion reinsurance fund to keep the industry from heavy losses incurred if pools of patients are more unhealthy–and need more care–than healthy (Connolly, 10/12).

The New York Times : "Scott Mulhauser, a spokesman for Democrats on the Finance Committee, said: ‘This report is untrue, disingenuous and bought and paid for by the same health insurance companies that have been gouging consumers for too long. Now that health care reform grows ever closer, these health insurers are breaking out the same tired playbook of deception. It’s a health insurance company hatchet job.’" The study says the new costs would also come from new fees on insurers, an excise tax on high-cost insurance plans and cuts to the growth of Medicare, which could force doctors to charge more to private insurers (Pear, 10/12).

Politico has the complete, 26-page study and reports that one of its main tenets is that the "overall impact of these provisions will be to increase the cost of private insurance coverage for individuals, families, and businesses above what these costs would be in the absence of reform" (Budoff Brown, 10/11).

Democrats Attack Insurers’ Claim That Health Premiums Will Rise
October 13, 2009

White House officials and Democratic lawmakers are fighting assertions from insurers that the Senate Finance Committee health bill would push health insurance premiums higher.

The Associated Press : "The health insurance industry’s top lobbyist in Washington stood her ground. In a call with reporters, Karen Ignagni, president of America’s Health Insurance Plans, pointedly refused to rule out attack ads on TV featuring the study, though she said she believed the industry’s concerns could be amicably addressed." Democrats, including Senate Finance Committee Chairman Max Baucus to White House spokeswoman Linda Douglass, lambasted the study that said health insurance premiums will sharply increase if the Finance Committee bill passes (Alonso-Zaldivar, 10/13).

Politico : "White House and Senate officials hinted at the possibility of legislative payback for releasing a report Democrats described as deeply flawed and self-serving. At the very least, officials said, it will help Democrats close ranks behind the Finance Committee bill, which had come under fire from the progressives as too moderate. They also predicted liberal lawmakers will go harder after the insurers, perhaps by proposing a cap on premiums or solidifying support for the government insurance plan. ‘They have opened themselves up,’ said a senior Senate Democratic aide. ‘It is an incredibly stupid strategic blunder. If you are going to fire a shot like this, you fire a good shot.’"

Republicans didn’t come to the aid of the study that was attacked vigorously throughout the day Monday, Politico reports. "Senate Minority Leader Mitch McConnell (R-Ky.) issued a tepid embrace of the report Monday, referring to it with the phrase ‘outside experts’" (Budoff Brown, 10/12).

The New York Times : "Senator Michael B. Enzi, Republican of Wyoming, said, ‘This report confirms what I have been saying all along: the combined impact of new taxes, mandates and entitlement expansions in the Baucus bill will substantially increase the price that many Americans pay for their health insurance.’" But the agency with oversight to "score" the bill remains mum on the subject: "While supporters and opponents make conflicting projections, the nonpartisan Congressional Budget Office has said it cannot calculate the ‘net effect’ of the proposed legislation on overall health care premiums because there are too many uncertain factors" (Pear and Herszenhorn, 10/12).

The Washington Post : "Until now, Obama had succeeded in keeping most of the major interest groups at the bargaining table with the lure of up to 50 million new customers. But insurers have grown increasingly critical of the Finance bill, saying it does not do enough to bring healthy young people into insurance risk pools. . . . White House budget chief Peter Orszag, citing estimates by the Congressional Budget Office, said that a new insurance marketplace, dubbed an exchange, could attract 22 million customers by 2015. ‘It’s hard to see how that doesn’t provide adequate risk pooling and scaling,’ he said in an interview Monday" (Connolly, 10/13).

Bloomberg reports on the American Medical Association’s reaction to the back-and-forth on Monday: "The American Medical Association ‘will stay constructively engaged in the legislative process to ensure that the final bill improves the system for patients and their dedicated physicians,’ said James Rohack, president of the Chicago-based group, the largest organization for doctors" (Gaouette and O’Leary, 10/13).

CBS News reports on the AARP reaction: "’I really don’t think it’s worth the paper it’s written on,’ AARP Executive Vice President John Rother told reporters Monday. ‘If anyone believes it, that’s a problem’" (10/12).

NBC News : "White House Office of Health Reform director Nancy Ann DeParle told NBC’s Chuck Todd today that she felt ‘blindsided’ by the health insurance industry’s study today criticizing what it concluded would be rising premiums under proposed reform plans. . . . Citing the estimates of cost reduction, DeParle said ‘the CBO believes that the reforms that are going to be put in place will bring costs down over time,’ adding: ‘they say the high cost tax on high cost plans will only be borne by plans for a limited amount of time’" (Weinberg, 10/12).

The NewsHour with Jim Lehrer interviewed DeParle, who said she thinks its more an effort to have a new negotiating tactic than an effort to kill the bill. The NewsHour also spoke with Ignagni, who said: "We have worked very hard from the beginning of this year to enter the health care reform discussions with legitimate proposals . . . the experience at the state level indicates that you have to have everybody participate. A number of policy analysts have come to the same conclusion that we have. And what happened in the states was exactly the following, that, in states that enacted market reform without everyone participating, you had rate shock. You had people leaving the pool who were young and healthy, spiraling up the costs for everyone else. This is not a projection. This is what happened at the state level" (Warner, 10/12).

The Wall Street Journal reports that AHIP is planning television ads citing the findings of the report. "the group still backs efforts to pass health legislation. But [Ignagni] said the combined changes made to the Finance bill will increase costs, not lower them. ‘Congress, too early, gave up on the goal of bending the cost curve,’ she said" (Hitt and Adamy, 10/13).

AHIP partly blames two amendments from Sen. Chuck Schumer "one exempting 2 million people from being required to buy health insurance, and another that weakened and phased in penalties for those who do have to buy it," Newsday reports (Brune, 10/12).

Time examines the insurers’ case: "One problem with the industry-funded report is that it bases its prediction on provisions in the bill that increase costs, while ignoring others that seek to mitigate those costs–such as subsidies to help many currently uninsured Americans purchase coverage. . . . Still, behind all the debunked and debated facts lies one irrefutable truth: even Finance Committee staff admit they do not know the precise effect the bill will have on private-insurance premiums" (Pickert, 10/13).

One leading health economist rebuts the findings, according to The New York Times in a separate story. MIT’s Jon Gruber was asked by Senate Democrats to look at the study and said "the industry report failed to take into account administrative overhead costs that he said will ‘fall enormously’ once insurance polices are sold through new government-regulated marketplaces, or exchanges" (Herszenhorn and Stolberg, 10/13).

Health Bills In Congress Won’t Fix Doctor Shortage
October 12, 2009

Even as Congress moves to expand health insurance coverage to millions of Americans, it’s doing little to ensure there will be enough primary care doctors to meet the expected surge in demand for treatment, experts say.

The American Academy of Family Physicians predicts that the shortage of family doctors will reach 40,000 in the next 10 years, as medical schools send about half the needed number of graduates into primary care medicine. The overall shortage of doctors is expected to grow to nearly 160,000 by 2025, according to the Association of American Medical Colleges.

"I don’t see anything in the legislation that will greatly increase the primary care pipeline," said Dr. Russell Robertson, chairman of the Council on Graduate Medical Education, which advises Congress. In addition to making sure patients have access to care, increasing the number and proportion of primary care doctors is crucial to lowering health costs, he said. Primary care doctors make up about a third of all physicians, though in most industrialized nations they make up half.

"We can’t bend the cost curve without increasing primary care providers," said Robertson, who is also chair of family and community medicine at Northwestern University’s Feinberg School of Medicine in Chicago.

Add More Residents? ‘Dead on Arrival’

Almost everyone agrees on how to build up the supply of primary care physicians: create more residency positions at teaching hospitals for family doctors and internists to complete their training and significantly increase how much primary care doctors get paid by Medicare and other insurers. But there’s resistance to these steps because of their costs.

A proposal backed by Senate Majority Leader Harry Reid, D-Nev., and the teaching hospital lobby to add 15,000 Medicare-funded medical residency positions–a 15 percent increase that would favor more primary care training–was considered dead on arrival because of its $10 billion price tag over a decade. Proponents said it was a small price to pay, in legislation that could run as high as $1 trillion, to ensure that patients have access to doctors.

Instead, the House and Senate overhaul bills would redistribute about 1,000 unfilled residency positions to teaching hospitals that commit to creating more primary care residencies. The Senate Finance Committee bill would give 15 mostly southern and western states preference for those positions because they have a high proportion of doctor shortages or a low percentage of medical residents. Ten of these states have representatives on the Finance Committee.

Proposals to significantly increase Medicare payments for primary care doctors have gone nowhere in part because the money would come from payments to higher-paid specialists–who, not surprisingly, oppose a pay cut.

As they now stand, the House and Senate overhaul bills call for a 10 percent bonus for primary care doctors for five years, an increase in Medicare payment rates that most experts say would have only a slight impact on encouraging new doctors to go into primary care careers. Family doctors on average make about $173,000, less than half of what specialists such as cardiologists earn, according to physician recruiters Merritt Hawkins & Associates.

Dr. Darrell Kirch, CEO of the Association of American Medical Colleges, said the extra training slots emanating from the redistribution of unfilled residency position would amount to a "drop in the bucket." Kirch noted that after Massachusetts in 2006 required residents to have health insurance, the demand for care quickly overwhelmed the state’s doctors. "It’s a huge issue that concerns us greatly," said Kirch, whose association represents all 130 medical schools and nearly 400 major teaching hospitals.

Money Goes To Specialist Training

Dr. Ted Epperly, a Boise, Idaho, family doctor who is president of the American Academy of Family Physicians, said family doctors would need about a 30 percent increase in pay to encourage more young physicians to enter primary care. "The bills are anemic," he said, "but at least a step in the right direction."

Some medical workforce experts applaud Congress for trying to target how it spends billions in medical education funds to help states with the biggest needs and to promote primary care over specialty care. "It’s good to see Congress for the first time step to the plate to work on rebalancing the physician supply," said Dr. Mark Kelley, executive vice president of the Henry Ford Health System in Detroit and member of the Council on Graduate Medical Education. But like Kirch, Kelley said the redistribution of 1,000 residency slots will only make a small dent in the shortage problem.

The number of residency training positions for all doctors has been flat for years. That’s because in a budget-cutting move in 1997, Congress froze the number of Medicare-funded medical residency positions. Since then, the U.S. population has increased by more than 30 million–making the need for additional medical residents particularly acute, according to the Association of American Medical Colleges. While some teaching hospitals have added residency positions using their own money, those slots have largely gone to train specialists who can improve the facilities’ bottom line.

Obama administration officials say the Democratic health bills are doing more than paying lip service to the physician workforce issues. An official from the Health and Human Services Office of Health Reform said the
10 percent bonus to primary care doctors, additional loans and scholarships and a medical home pilot project will all help. In the medical home pilot, primary care doctors get paid extra money to coordinate care to the patients.

The bills would also increase funding to the National Health Service Corps, where primary care doctors can get up to $50,000 to help repay loans in exchange for working two to four years in a federally-designated physician shortage area.

Whatever the impact of those measures, they don’t address the main issue raised by experts such as Ken Raske, president of the Greater New York Hospital Association. Giving millions of Americans health insurance, while not increasing the doctor supply is a recipe for trouble in his view. "Providing a benefit that you can’t deliver the product on will be a real problem," he said. "Without expanding the number of residency slots you are not increasing the pipeline."

This information was reprinted from with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.

*We would like to thank Nicole DiMaria, Esquire (Wolff & Samson, West Orange, NJ), for selecting the articles for this week’s update.

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