Shaping the Legislation

The House of Representatives spent much of May and June formulating a single piece of legislation that was debated in the three major House Committees that have oversight responsibilities for various health and welfare programs. The result was a bill brought forward in July known as the Tri- Committee Health Reform Plan or the House Plan. The Senate Committee on Health, Education, Labor and Pensions approved its bill this month, while the Senate Finance Committee continues to work on a similar plan. All plans share some similar provisions with a goal of attaining near-universal health care coverage, but differ on the implementation and cost.

Some of the legislation includes numerous changes to existing Medicare and Medicaid programs in an attempt to create “savings” to help pay for the new programs. Other changes to these current government programs are pending in many separate pieces of legislation that also are being weighed by the same legislative committees considering overall health reform.

The President’s Promise - Is it Now Just a Dream Deferred?

Despite President Obama’s clarion call to the Congress to enact health care reform – and to do so before the end of this year, is the signature item on the President’s domestic agenda starting to slip from his grasp?

Late last week, Senate Majority Leader Harry Reid announced what was considered a foregone conclusion by most: the Senate would not vote on a health care reform bill prior to its August recess. Then, the President received more bad news. The fate of the Tri-Committee bill in the House of Representatives is languishing on life support in the House’s Energy and Commerce Committee as the committee’s conservative Democrats and their more liberal colleagues seem hopelessly at odds on the scope of health care reform legislation and how to pay for it. The strong differences just among House Democrats make it, at best, a remote possibility that the House will vote on a bill before its August recess.

Given all of the uncertainty in the last week of July, are the prospects for health care reform dire?

We think not – at least, not yet. The President may not be signing legislation into law as early as September, but it appears that we still are progressing toward health care reform. Despite the sharp divides in Congress over various measures introduced to accomplish effective health care reform, there are some common themes emerging from the various health care reform bills around which there appears to be growing – albeit not unanimous – consensus. At this juncture, we anticipate that final health reform legislation will include the following features:

Coverage of the Uninsured: Health insurance coverage was extended to a large percentage, but not all, of the 46 million uninsured Americans, a number which is surely growing as unemployment numbers continue to rise.

Medicaid Expansion: Medicaid would be expanded to cover more of the working poor.

Health Insurance Exchange: All health insurance likely would be sold through an exchange to assist individuals who shop for appropriate health care coverage. Presumably, all health insurers would be required to negotiate with the exchange concerning pricing and benefits. All information would be presented in a standard format with complete transparency being the ultimate goal.

  • Whether a government-run public plan would be an option in the exchange is a matter of intense debate. Although the American Medical Association (AMA) recently announced its support of a public plan option, it is strongly opposed by the health insurance industry and many members of Congress from both sides of the aisle.

Individual Mandates: Each American would be required to purchase health insurance or be subject to a tax or financial penalty. Although this was a feature against which Candidate Obama campaigned, President Obama has been persuaded that it is important to require young healthy adults to be included among the risks which insurers are underwriting. Furthermore, this feature is being pushed hard by the hospital, health insurer and drug company lobbies.

Elimination of Pre-Existing Conditions: Health insurers would be required to accept all applications for coverage, irrespective of an individual’s pre-existing medical conditions.

Subsidies for the Poor: There appears to be growing support for government subsidies to assist poor and working class individuals and families purchase health insurance.

Employer Mandates: Large employers would be required to provide health insurance for their employees or pay a penalty. Notably, Wal-Mart was one of the first large employers to recently endorse this “play or pay” feature.

In addition to the above features, the President is adamant about including cost containment measures in health care reform legislation, which concept is still absent from the bills that have been introduced. The goal of such measures would be to influence provider behavior to deliver better and more effective health care, and to discourage wasteful, duplicative and ineffectual procedures. In addition, final legislation very well may include cuts to Medicare payments to hospitals and physicians, or the establishment of a council with the authority to implement such cuts, a measure which appears critical to maintaining the support of moderate and conservative Democrats.

Fraud Enforcement Remains Key Element of Reform

News of investigations, enforcement cases and settlements starkly convey the fact that healthcare fraud enforcement remains a priority for DOJ, OIG and state regulators. While this is not new, these efforts will be further escalated in the ongoing initiative to reform the health system, with increasing efforts to underwrite costs of reform measures using initiatives to root out and prosecute fraud, waste and abuse. In this regard, it is understood that Medicare and Medicaid enforcers (supported by relator whistleblowers) will continue to aggressively prosecute providers, payors and other healthcare organizations deemed to fall outside of regulatory compliance.

A reflection of the role that fraud enforcement is playing in the current reform effort is the recent (July 13, 2009) Senate Committee on Health, Education, Labor and Pensions amendment that would increase penalties under the False Clams Act. Introduced by Senator Bernie Sanders (I-VT), the amendment was unanimously approved and would allow imposition of civil penalties ranging from three to six times the amount of fraudulent billings made under the new health exchanges created by the reform bill.

Following recent testimony by the Inspector General for Health and Human Services addressing the billions lost to healthcare fraud every year, Senator Sanders argued the amendment was necessary to address the drug companies, private insurance companies and hospitals that have engaged in "massive health care fraud over the past decade." The amendment was approved 23-0.

Progress This Week?

Crafting health care reform legislation which will pass both Houses of Congress has a lot of moving pieces, not the least of which is how to pay the price tag which tops $1 trillion over 10 years, and will encounter more bumps in the road before it is passed. Please stay tuned to this weekly update as the process toward achieving health care reform legislation continues to unfold.

Coming Up

House Energy and Commerce Committee will continue its markup of reform-related legislation this week. The Committee has prepared a district-level analysis for each member of the impact of the House Plan on small businesses, seniors in Medicare, health care providers, and the uninsured that also includes an estimate of the impacts of the surtax used to pay for the legislation.