Washington Update

The Obama administration hosted its bipartisan health summit last week, with leading members of Congress in attendance. As expected, the summit yielded more political speeches than agreement. While there were some points of agreement, particularly on cost containment and some insurance market reforms and pooling coverage for individuals and small business, in general the summit publicly highlighted the philosophical differences between the two parties on the issues. The Republicans continuously expressed their desire to start the process over and build a bipartisan bill from the ground up, while the Democrats repeatedly articulated their preference to work with the already-passed measures as a framework. President Obama concluded the day by giving the two sides four to six weeks to come to an agreement, and then strongly suggested that if they couldn’t do so, that the Democrats would go at it alone, allowing the November 2010 elections to determine what the voters think the best course for health care reform in this country should be.  If the president and his party do decide to tackle health reform alone, they face the same challenges that have plagued them for months—keeping their fractured caucus together and finding a procedurally acceptable way to pass a measure that appeals to enough members of Congress from both chambers. The Senate no longer has its 60-vote majority to pass any new legislation through conventional means, and the House Democrats probably do not have the votes to pass the Senate-passed legislation as it currently stands. To move forward, they are demanding that the Senate pass a second health reform bill called a “sidecar” that fixes key concerns with the Senate bill first, using the budget reconciliation process. There are many, many procedural and legal hurdles that would prevent the Senate from passing such a fix bill first under the budget reconciliation rules.

Prior to the summit, the Obama administration released the president’s version of a comprehensive health reform plan to the public. The measure combines provisions included in both the House and Senate-passed health care reform bills and makes some changes and additions. The White House estimates that the new plan would cost the federal government $950 billion over 10 years, but the Congressional Budget Office has not officially scored the proposal. Upon its release, CBO Director Doug Elmendorf released a statement indicating that CBO had been given neither sufficient time nor details to create an accurate cost estimate for the proposal.   It’s important to note that while he refers to his plan as a bill or an act, the president did not actually release any bill language. Instead he released an 11-page summary of his legislation and a website broken down by sections.

The day before the summit,  the House of Representatives voted 406-19 on H.R. 4642, a measure to eliminate the federal antitrust exemption provided by the McCarran-Ferguson Act. The legislation is a stripped-down version of what was initially proposed and only impacts the health insurance industry, not medical malpractice insurance or other property and casualty lines of coverage. A solution in search of a problem, the legislation strips the exemption of its ability to protect insurers against egregious violations of bid-rigging, price fixing and market allocation abuses, all of which are already illegal under federal law. The bill now goes to the Senate, where it is unlikely to be acted upon.

Just hours after passing a limited jobs bill in the Senate that contained no health-related provisions, Majority Leader Harry Reid introduced another jobs-related measure that contains a number of health-related provisions. This new bill is not the same as the bipartisan Baucus-Grassley jobs bill that was released earlier in the month and scuttled by Reid, but it does address a number of similar health-related issues and is expected to be taken up in the Senate in the near future. The new bill extends eligibility for the federal COBRA subsidies to those laid off through December 31, 2010—a 10-month extension of the current deadline of February 28, 2010. Subsidies would last for up to 15 months (this was extended from nine months in the Department of Defense appropriations bill, P.L. 111-118, in December). The bill would potentially create a new class of eligible individuals for the subsidy as well, by clarifying that individuals whose hours were reduced prior to being laid off entirely would become eligible for COBRA subsidies upon loss of employment. It also includes new penalty language establishing the ability of individuals to bring civil action against health plan sponsors and health insurance issuers based on subsidy determinations, and a fine of up to $110 dollars a day for employers or health plan issuers that refuse to comply with federal determinations relative to the subsidy within 10 days of receiving such a determination.   The legislation extends federal unemployment payments and would give the states a six-month extension of their expanded federal Medicaid match payments that was provided as part of the American Recovery and Reinvestment Act of 2009. The bill specifies that these provisions, as well as the COBRA extension, are exempt from the Senate’s pay-go rules to offset new spending with budgetary cuts. The other health-related provisions in the new Reid bill would be paid for by a draw-down of $8 billion from the Medicare Improvement Fund. These provisions include a seven-month fix to the Medicare Sustainable Growth Rate problem by extending the current reimbursement rate fix for Medicare providers through September 30, 2010. However, the bill does not address the Medicare provider payment issue in the long term, meaning, absent further congressional action, Medicare payments to providers would have to be cut by at least 21% on October 1. Currently they are set to be cut on March 1, unless this legislation or something similar is signed into law. In addition, the bill contained a variety of other “Medicare extenders,” such as a full-year extension to the Medicare therapy caps exception process. House Democrats have already expressed disappointment with the bill.