July 31, 2009

This weekly installment of Hall Render's Health Law Broadcast series on health care reform is designed to provide you with a brief update on significant developments from the previous week.

Focus and Fury: Health Reform Negotiations in Full Swing Before Summer Recess

SENATE FINANCE COMMITTEE

This past week saw the Senate Finance Committee take center stage as negotiations moved forward to finalize an agreement before the summer recess begins.  A bipartisan group of six Senators (three Democrats and three Republicans) met in the office of Senate Finance Committee Chairman, Max Baucus (D - MT) to craft a bill that could be the eventual health reform package to emerge from the Senate.  The "Gang of Six" proposal is likely to be more conservative than both the House reform package and the Senate HELP committee's bill.  As the week comes to a close, it appears the six Senators have not finalized their proposal, and while they have made significant progress on the bill, there will not be a full committee markup until after Labor Day.  Key policy changes worth noting include:

• The Finance Committee has clearly rejected the public option, a policy that was central to the Obama administration's early reform agenda.  Instead, the group has proposed a network of private, nonprofit cooperatives to assist individuals in purchasing health coverage.  
• The Finance Committee proposal will also likely omit the employer mandate - also known as the employer "pay-or-play" option.  To help fund the cost of health care reform, the Senators have considered a tax on high-cost insurance policies, very high income earners and possibly expensive elective procedures, such as plastic surgery.  
• In what was viewed as a positive step, the Congressional Budget Office has estimated that the emerging Finance Committee proposal could cost approximately $900 billion, down from the initial $1.6 trillion price tag initially reported.

HOUSE (Affordable Health Choices Act H.B. 3200)

In the House, leadership came to an agreement with the conservative Blue Dog Democrats on the legislation's estimated ten year cost. The agreement cuts $20 billion by requiring states to assume seven percent of the costs of expanding Medicaid, and another $100 billion by allowing insurance subsidies for families only after they spend twelve percent of their income on insurance premiums.  The agreement also relaxes the mandates that small business owners provide health insurance or pay a fine.  Despite mounting concerns among liberal Democrats, the agreement also unties any public insurance option reimbursement rates from the Medicare fee schedules.  These concessions could make way for the bill to leave the Energy and Commerce Committee.

HELP BILL

The Senate HELP Committee's Affordable Health Choices Act of 2009, continues to wait for its companion piece of legislation to come out of the Senate Finance Committee. Whether or not the House legislation will go to a floor vote before recess seems unlikely until the Senate Finance Committee completes its bill.

Side Bar - Will the Cooperative Model Save Health Reform?

Senator Kent Conrad (D - ND) in the Senate Finance Committee has championed using cooperatives in lieu of implementing a public option.  While the use of a cooperative invites a possible point of agreement to bridge the divide over whether or not there should be a public plan, many of the details have yet to be discussed with respect to how coverage of the uninsured will increase and to what degree, if any, the government will support or subsidize a cooperative program.  Some points of consideration that have emerged regarding cooperatives are outlined below:

• The cooperatives would contract with healthcare providers and negotiate their own rates. Early estimates suggest that a co-op would need approximately 25,000 members to be economically viable and 500,000 members to be able to negotiate competitive rates.  The estimate is that these co-ops could initially attract approximately 12 million members, with more than 40 million people expected to ultimately gain coverage under a reformed health system. "The leading actuaries in the country tell us this cooperative model can secure 12 million members very quickly and be the third largest insurer in the country," Democrat Kent Conrad recently told the NPR radio network.
• The government would pump an initial $6 billion into the co-ops to help them become viable and meet reserve requirements.  Key negotiators have not yet made a formal decision about whether the co-ops would be based nationally, regionally or at the state level.
• Cooperatives would integrate primary care doctors, specialists, clinics and hospital staff.  Proponents believe this coordinated approach would help to drive down health insurance costs.
• Group Health, based out of Seattle Washington, has been identified as a best practice model for cooperatives.  Group Health provides medical coverage and care to more than 580,000 residents in Washington state and North Idaho.  Today, Group Health Cooperative is one of the few health care organizations in the country governed by consumers.  Its eleven member Board of Trustees (all health-plan members elected by other members) work closely with management and medical staff to ensure that the organization's policies and direction put the needs of patients first.  In Washington, Group Health Cooperative offers coordinated-care plans for both groups and individuals; Clear Care®, our Medicare Advantage plans; and plans for residents who qualify for Healthy Options (Medicaid), Basic Health, and the State Children's Health Insurance Plan (SCHIP).
• Care is provided by Group Health Permanente doctors and other clinicians at Group Health-operated medical facilities.  In service areas where Group Health doesn't own facilities and for plans offering more choice, a network of nearly 9,000 community clinicians and forty-one hospitals meets member health care needs.  For more information visit http://www.ghc.org/.