Federal Healthcare Reform Analysis
(Update #1)
The Healthcare Reform debate is intensifying, with policy discussions and general positions now evolving into draft legislation. The process will be extremely fluid as political considerations mix with both the complexity and cost of proposed healthcare reform ideas.
ArlenGroup will provide periodic updates on reform activities, focusing on the solutions that appear to be gaining the most traction as the political process unfolds. This issue of
Insight provides an overview of who to watch, the growing consensus on policy specifics, and an expected
timeline.
 |
KEY PLAYERS |
| White
House |
| Since his campaign, President Obama has consistently named Healthcare Reform as a national necessity. Since his inauguration, he has supported specific policy aspects of the debate and hosted round tables, although he has avoided mandating details required for his signature on a final bill. Recently Obama has expressed interest in becoming more engaged in leading the debate; has held meetings with key leaders from Congress; and has ramped up his speechmaking, including holding a prime time televised 90-minute town hall discussion. Obama has stated that any reform must not come from borrowed funds; Congress must find a way to pay for reform from a combination of cost reductions and tax increases. |
| Senate
Activities |
Healthcare Reform responsibility lies with two Senate committees:
- Health, Education, Labor and Pensions (H.E.L.P.) – Chaired by Ted Kennedy (D-MA). Kennedy has been absent from much of the deliberations dealing with health issues, while his staff and the next ranking committee member, Chris Dodd (D-CT), continue to forge ahead. The HELP committee recently introduced draft legislation, with a projected cost of $1 trillion over ten years. Independent congressional analysis projects the bill would leave 37 million of 46 million still uninsured. This assessment was a significant blow to the policy proposal itself, as well as to supporters of the more far reaching reform initiatives.
- Finance – Chairman Max Baucus (MT) and ranking Republican Chuck Grassley (IA). The finance committee’s work has been more bipartisan, with actual discussion and give-and-take between Democrats and Republicans, as well as acknowledgement of the need for compromise from both sides. Furthermore, the Finance committee has the responsibility of providing specific funding sources for the costs of their reform bill, which may require a more conservative approach.
Baucus has been more moderate on the issue of a public plan, sensing that option may be a “third rail” in the developing debate. The Finance committee’s initial draft bill has also fallen short of expectations, with an initial cost estimate of $1.6 trillion over 10 years. The committee has withdrawn the draft and is working on changes to the legislation to reduce this cost while maintaining the stated goal of eventual budget neutrality. Some initial options to pay for the cost of the bill include caps or reductions in the employer tax exemption for health insurance; fees from employers who do not provide coverage for employees; decreased subsidies for helping cover the uninsured; and delaying some of the proposed coverage expansions and requirements until a 2013 effective date.
|
| House
Activities |
Health Reform responsibility in the House lies with three Committees. The respective committee chairmen have worked together to create a draft bill.
This draft bill was recently introduced to the democratic caucus by the
Ways and Means Committee (Rangel,
D-NY), Energy and Commerce (Waxman, D-CA) and
Education and Labor (Miller, D-CA). This more liberal bill generally tracks with Kennedy’s bill in the senate and represents the more liberal democratic mainstream in the House of Representatives. It has not gathered significant bipartisan support. |
 |
Reform Consensus and Main Focus of Debate |
| The
following points appear to be likely components of
eventual healthcare reform legislation:
|
- Insurance industry reform, including some form of guaranteed issue coverage and the elimination of pre-existing condition limitations.
- An expansion of eligibility for Medicaid benefits.
- Increased funding of wellness and preventive care initiatives, including worksite health risk reduction initiatives.
- Promotion of health information technologies designed to reduce the cost and improve the quality of healthcare.
- Restructuring of Medicare funding and payments, including scaling back Medicare Advantage subsidies for insurers and some changes to physician reimbursement.
|
| The
following points are among the more difficult questions
that will have to be addressed:
|
- Will there be a “public plan” option, and what form will this take? The existence and details of the “public option” continue to be the flashpoint of debate, with Republicans strongly opposed and many moderate Senate Democrats wary and concerned with the structural details.
- Will there be a “pay or play” mandate for employers to provide coverage, and if so, at what level?
- Will there be an individual mandate, requiring all Americans to have medical insurance? How would this be enforced?
- Funding – how do you close a budget gap between the approximately $300B currently identified in the President’s recent budget and the expected $1T - $2T cost of reform? One current focus is on whether to tax employer-sponsored health benefits, and if so, how to structure the tax. The cost issue in particular has caused growing concern among many Democrats as the high cost of draft bills risks substantially increasing sizable federal budget deficits.
|
 |
TIMING |
| House Democrats’ and the Senate HELP committee’s recently released bills are currently being circulated in draft form and have not been submitted to the floor for debate. Both the Finance and HELP committees have indicated they will continue work on the bills after the July 4th recess. The House Ways and Means committee has set a similar timeline. At this time, the general timeline looks to include a formal introduction of bills during the second or third week in July, with committee work and floor debate to follow. This issue will continue to be hotly debated and contested through the summer, with a final bill possible as early as September or October. The President has indicated support for this timeline, and has stated specifically he wants to sign a bill by October 15th, 2009. |
|
Questions
or Comments?
Please submit
your questions or comments regarding this issue to info@arlengroup.com
or call (925) 945-3017.
|
|
