ObamaCare Health Reform Update

Introduction

President Obama’s health care legislation was a major topic throughout 2009, and the beginning of 2010 has been no different. Just as 2009 was filled with confusion, debates, and general concerns, 2010 continues on this weaving path toward uncertainty. In fact, a comparison of this update with the previous update and supplement in the November 2009 issue will reveal the paradox used to describe the health care legislation both then and now: while Congress is no closer to approving revised healthcare legislation, many significant developments have taken place in the intervening months. This update will again attempt to provide an understanding of where the process currently stands and briefly touch on the status of some of the legislation provisions.

Status of Legislation

At the end of 2009, the House of Representatives ("House") and the Senate unveiled their respective versions of the health care bill. While the House bill was unveiled, submitted and passed by its members within a relatively short timeframe, the Senate bill was not approved until Christmas Eve.

Following approval, both bills were to be sent to a conference committee to begin the negotiations necessary to produce a single health care bill. Instead of a formal conference, private negotiations were conducted with key lawmakers to address issues relating to the merging of the bills. However, during these negotiations, a major roadblock descended from Massachusetts.

In the Massachusetts’ Special Election to replace the late Edward M. Kennedy in the Senate, Republican Scott Brown defeated Democrat Martha Coakley. This Republican victory resulted in the Democrats losing their 60 member Supermajority voting block; the same 60 member Supermajority voting block that narrowly approved theSenate bill version. Because there were not enough votes in the Senate to likely approve any bill version or prevent a Republican filibuster, new strategies are being examined to determine how health care legislation should move forward. On January 27, 2010, during his State of the Union Address, President Obama reiterated his commitment to the health care legislation, but also indicated that a cooling off period would take place while health care legislation is being reexamined.

Legislation Provisions

Even though the status and direction of the health care legislation as a whole is uncertain, a brief summary of the status of specific provisions within the legislation should be examined. Please note that the following summary is based simply on a comparison of the provisions within the House and Senate bill versions and does not comment on the level of support or disapproval from the Democratic or Republican parties.

It appears that there are several issues on which the House and Senate bill versions are in agreement. First, both bill versions are in agreement when it comes to immediate reforms (i.e. reforms that would become effective immediately upon passage of a final bill). The reforms would include such things as eliminating pre-existing condition exclusions. Second, there is general agreement for the creation of new health insurance marketplaces (i.e. exchanges) for individuals and small businesses to obtain health insurance. Sliding scale subsidies would be provided to make the premiums of the exchange plans affordable. Third, Medicaid eligibility levels would be expanded. Fourth, both bill versions contain individual and employer mandates resulting in tax penalties for the failure to purchase or offer coverage. Finally, there would be limitations on physician ownership in hospitals. Both bill versions would amend Section 1877 of the Social Security Act ("Stark Law") by imposing additional requirements to meet the hospital ownership exception.

While the House and Senate bill versions are in agreement on several issues, the three issues that are conflicting are the most contentious aspects of the legislation. The first issue the bills are in disagreement about is how the legislation will be funded. The House bill desires to impose taxes on high income individuals while the Senate bill aims higher taxes towards insurers and their "Cadillac" plans. The Senate bill additionally proposes a tax on elective cosmetic surgery. Another issue relates to the health insurance exchanges. While the bills agree that the exchanges should be created, there is a difference in the logistics. The House bill would establish a national exchange but allow for the formation of state exchanges in lieu of the national exchange. The Senate, on the other hand, would require each state to establish an exchange. The final issue involves the establishment of a government-run insurance plan. While the House bill aims to create a national insurance option that would be offered through the exchanges, the Senate bill would require the Office of Personnel management to contract with insurers and create at least two multi-state health plans that would be offered through the state exchanges.

Conclusion

When the country embarked on the road towards enacting comprehensive health care legislation the principal theme in any discussion was: wait for the process to become more complete before evaluating what the legislation will entail. As it currently stands at the end of January 2010, that theme has not changed. But given the impact of potential health care legislation, it is imperative to stay informed.

 By Michael S. Byrd and Bradford E. Adatto.

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