NAHU Washington Update - 07/02/2009
Details Still to Come on Health Overhaul Plans
Senators negotiating a bipartisan health care reform plan in the Finance Committee left for the July Fourth recess without any consensus, but Finance Chairman Max Baucus said he has developed ways to pay for legislation that would cost less than $1 trillion over 10 years.
Limiting the bill’s spending to $1 trillion is a significant step for the committee, which has been seen as the main arena for those in the Senate hoping to get a bipartisan health care bill. However, Baucus, who is not in election cycle and opted to stay in Washington during recess to work on health reform, did not provide details and gave no indication of when he will be ready to mark up a bill.
While Baucus continues to work behind the scenes on the yet-to-be-introduced bipartisan bill, last week the Senate Health, Education, Labor and Pensions (HELP) Committee continued toiling through titles of a draft bill that is still missing many sections. Senator Chris Dodd adjourned the mark-up on June 25, saying the panel will reconvene July 6 with the goal of finishing by July 10.
The Finance and HELP Committees share jurisdiction over broad portions of the proposed health care overhaul, and it is not clear yet how their separate efforts will be integrated into a single legislative package. Work in the House is also in the initial stages, with three committees that have jurisdiction over parts of the legislation holding hearings last week.
HELP Committee Marks up Kennedy/Dodd Bill
Over the past two weeks, the Senate HELP Committee has worked on marking up sections of the Kennedy/Dodd bill dealing with preventive care, care quality, workforce issues, accessibility and cost control. Today, the committee issued the missing language on the core issues of creating a public plan to provide an alternative to private insurance and requiring employers to offer coverage or pay a penalty.
The new draft creates a government-run public program option to be offered through state gateways called the Community Health Insurance Option. The plan specifies that physicians will be paid based on negotiated fees rather than Medicare rates and are not compelled to participate. These entities would be non-profit and subject to state solvency rules as well as newly created federal solvency rules. These new plans would initially begin with federal money. Although they would be subject to state consumer protections and in some limited cases state benefit mandates, there is no mention of whether they would have to comply with other state rules, such as paying state premium taxes.
The employer mandate provisions specify that employers with more than 25 employees must offer coverage to both full- and part-time employees and must pay 60% of the cost (pro-rata share for part-time employees) or $750 annually for each employee ($375 for part-time employees).
The new draft also contains some positive changes to the previous minimum loss ratio provision, changing it to a reporting requirement as well as some enhancements to the grandfathering provisions that would allow changes to cost sharing and benefits as long as they were not significant. Additional positive changes were made to the risk adjustment provisions, which now appear to adjust risk over entire markets rather than just inside the gateway and specifies that risks for the individual and group markets will be pooled separately while including participants both inside and outside the gateway.
A small change was also made to the navigator provisions to specify that, for enrollment purposes, the job of the navigator is to facilitate enrollment but not assist with the enrollment process, which is a big improvement over the original draft. What this means is that the navigator would help people understand where to enroll but would not actually enroll individuals in coverage.
The change we have been seeking to allow groups over 50 to use claims experience in the rating process was not included, and the modified community rating provisions remain at two to one. We will seek additional amendments as the mark-up continues.
Dodd said his committee considered close to 216 amendments during the mark-up. Of those, the committee has accepted 87 and rejected 22 amendments presented by Republicans.
Like the Finance Committee proposal, the HELP draft has been hampered by extremely high cost estimates. Today they received a cost estimate on the provisions in the parts of the bill subject to their jurisdiction of $611 billion over 10 years, a reduction from the previous estimate due to program cuts made to the previous draft.
Meanwhile, initial cost estimates have emerged on a new voluntary long-term care insurance program included in the Senate HELP Committee draft.
The Community Living Assistance Services and Supports (CLASS) Program―a long-time priority of Senator Edward Kennedy―would save nearly $58 billion over 10 years, including a $2.5 billion reduction in Medicaid spending, according to a cost analysis released June 26 by the Congressional Budget Office and Joint Committee on Taxation.
Under CLASS, participants would have to contribute monthly premiums for five years before qualifying for benefits that are triggered by evidence of functional limitation, including cognitive impairment.
Premiums would average $65 per month, adjusted for age, although students and those with incomes less than 100% of the federal poverty level would pay $5 per month.
While the long-term care program would be a government-run insurance plan, it is intended to complement private long-term care insurance, not compete with the products, Democratic aides claim. Benefits under the program are intended to only cover about half the average cost of long-term care, according to a summary distributed by HELP staff.
NAHU shares the HELP Committee Republicans’ concerns about the long-term costs of the Democrats’ proposal and the wide and unspecified latitude it would give to the Health and Human Services secretary to manage the program. Republicans generally would rather provide people tax deductions for private long-term care insurance premiums or tax credits to purchase services directly, an approach NAHU supports.
The program’s benefits would be at least $50 per day, according to the committee summary. Many of the program’s details would be left to the secretary, who could, for example, raise and lower premiums, set benefit levels and determine eligibility for benefits. She could also close enrollment to the program or even ask Congress to repeal it if she determines that it is on track to become insolvent. [return to top]
House Expected to Take Action on Tri-Committee Proposal
On the other side of the Capitol, after narrowly passing a controversial “cap and trade” energy bill and a week of hearings on the House Democratic leadership’s tri-committee draft proposal, Democrats came no closer to winning GOP support for their health bill, although that does not seem to be a priority.
The House Ways and Means Committee plans to mark up its portion of health care overhaul legislation starting the week of July 13, and the Energy and Commerce and Education and Labor Committees are likely to follow similar schedules. This is perfect timing to coincide with our popular Washington fly-in with other agent and broker groups.
Democrats are narrowing their options and are beginning to confront the difficult issues of how to raise hundreds of billions of dollars to fund the overhaul.
Ways and Means Committee Chairman Charlie Rangel said he is aiming for an approximately $1 trillion package, paid for about equally by cost savings and revenue increases. He said he still does not have estimates from the Congressional Budget Office on the cost of the bill, which would impose mandates on individuals to purchase coverage and require employers to provide it. The bill would give subsidies to low-income individuals and small businesses and make a variety of changes to the Medicare payment system.
Representatives are considering a variety of revenue-raising options, including a surtax on the adjusted gross income of top earners as well as taxes on sugary sodas and alcohol. [return to top]
Wal-Mart Comes Out in Favor of Employer Mandate
Wal-Mart Stores Inc., the nation’s largest private employer, announced Tuesday that it would support a mandate on businesses to help expand health care coverage, an about-face from other employer groups that have strongly opposed any such requirement.
Wal-Mart’s support adds backing to the idea of a mandate, which Democrats want to add to health care overhaul legislation. The company issued a statement in support of the mandate along with the Service Employees International Union and the Center for American Progress, two liberal-leaning groups that have been pushing for a health care overhaul.
“We are for shared responsibility. Not every business can make the same contribution, but everyone must make some contribution. We are for an employer mandate which is fair and broad in its coverage, but any alternative to an employer mandate should not create barriers to hiring entry level employees,” the groups said in a statement.
Other employer groups led by the U.S. Chamber of Commerce have been firmly opposed to any form of employer mandate or requirement that employers pay substantially to help expand health care coverage. NAHU has long aired similar concerns.
But Wal-Mart’s backing comes with some conditions, spokesman Greg Rossiter said. According to Rossiter, Wal-Mart wanted an employer mandate that would have companies pay in based not on how many employees they have but on “profit per employee.” That would favor companies such as Wal-Mart with high numbers of low-wage employees by lowering the per-employee cost of any mandate.
If an employer mandate is constructed otherwise, “it certainly could become a disincentive” to support it, Rossiter said. He added that a mandate should also come along with “affordable options” for people to buy health care coverage as well as tax credits for small businesses to help them provide coverage for their employees.
Leslie Dach, Wal-Mart’s head of government relations, stated that a mandate should not be written in a way that makes it harder to hire low-wage workers. “We believe the mandate should cover as many businesses as possible and cover part-time as well as full-time employees,” Dach said. “Any alternative to an employer mandate should not create barriers or disincentives to hiring workers with disabilities, entry level employees or people from low-income families.”
Currently, Democrats are drafting legislation that seems certain to include some sort of employer mandate. A draft of health care overhaul legislation in the House has a “pay or play” requirement that would require employers to offer coverage or pay into a fund to help people buy insurance. The Senate HELP Committee draft contains a similar proposal, and the Senate Finance Committee is also examining some version of the policy. [return to top]
CMS Suspends Agent/Broker Compensation Policies for Further Review
On June 26, the Centers for Medicare and Medicaid Services announced that it is suspending implementation of the agent and broker compensation requirements set forth in a June 5 memorandum titled “2009 Medicare Advantage and Prescription Drug Program Agent and Broker Compensation Refinements and Compensation Rate Adjustment for 2010.”
CMS’s actions are in response to issues and concerns raised by NAHU and other stakeholders regarding the requirements, and confusion over whether an initial compensation fee should be paid for 2009 enrollments from a PDP to an MA plan.
NAHU will be weighing in with the agency in the next week before it issues a memo clarifying which enrollments in 2009 are eligible for the higher compensated initial broker commissions.
A key point of confusion has been whether or not agents will qualify for an initial commission when they enroll into Medicare Advantage plans beneficiaries who have previously had traditional Medicare or a stand-alone prescription drug plan. Otherwise, such a beneficiary would be considered a renewal and the agent would receive the lower renewal compensation level.
CMS is weighing guidance surrounding the definition of a “like plan type” in that an agent moving a beneficiary into a “like” plan receives the lower renewal compensation.
For 2010, however, CMS said agents and brokers should be paid an initial fee for enrollments from a PDP to an MA plan. [return to top]
HHS Rescinds Bush Medicaid Rules
The Health and Human Services Department rescinded three controversial Bush administration regulations governing Medicaid on Monday and said it would postpone and possibly change or rescind a fourth.
The regulations were among seven that the Bush administration tried to implement in 2007 and 2008 that sent health care providers, state governments and advocates for the poor into a lobbying frenzy. Critics charged that the administration was trying to shift the burden for about $19.6 billion in Medicaid spending over five years from the federal government to the states.
The department’s action was not unexpected. Democrats have been particularly critical of the regulations and introduced several bills in the 110th Congress to stop them. A series of congressional moratoria delayed implementation of most of the regulations until June 30.
One of the regulations the department rescinded narrowed Medicaid payments for what are called “case management services” that some states offer to Medicaid clients. Another prohibited Medicaid reimbursement for administrative costs incurred by schools and for transporting Medicaid-eligible children to school. A third narrowed the definition of “outpatient services” under Medicaid to medical treatment performed outside a hospital or clinic. The regulation that was postponed limited taxes that some states assess on health providers to help pay the state portion of Medicaid expenses.
That regulation cannot take effect before June 30, 2010, and HHS Secretary Kathleen Sebelius said that the Centers for Medicare and Medicaid Services may “give additional consideration to alternative approaches.” Sebelius also said she ordered the three regulations rescinded because they might have harmed Medicaid beneficiaries. [return to top]
Results of New CNN Poll Suggest Lack of Support for Health Reform
According to a new national poll released this week, “most people worry that their health care costs would go up if the Obama Administration’s proposals were enacted into law and only one in five thinks that his or her families would be better off under the Obama plan.”
The poll suggests that 55% of Americans think the U.S. health care system is in need of a great deal of reform, with four in 10 saying only some reform is needed. [return to top]
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