ObamaCare Update

Introduction.

Health Care reform has been grabbing headlines for months now in the national media. The road to health care reform has been a long and arduous process that still requires significant work if the legislation is to pass. While media coverage has been  revalent, it has been deficient in providing Americans with a clear understanding of what the reform will accomplish. This can probably be attributed to three things:

1) the reform is a heavily politicized issue inevitably inviting slanted views and general mistrust; 2) in order for a bill to be  successful it must navigate through an extensive and complicated legislative process; and 3) numerous procedures between now and the completed bill will transform the specific details involved.

This update strives to provide an educational background of the status of the proposed legislation. While an examination of the specific provisions of the legislation are beyond the scope of this article, this article will provide a general overview of what is attempting to be accomplished and highlight those areas that are the source of contention. Regardless of the reader’s political affiliation or current view, it is clear that legislation of this magnitude (if passed) will dramatically impact the way we, as patients, receive health care and the way physicians provide care to their patients. Additionally, it will dramatically impact businesses through all sectors, including physician practices.

Status of Health Care Bills House of Representatives.

The proposed bill that began the health care reform is titled “America’s Affordable Health Choices Act of 2009” (“H.R. 3200”) and was introduced in the House of Representatives (“House”). When it was introduced into the House it was distributed to three different committees: 1) Education and Labor; 2) Ways and Means; and 3) Energy and Commerce. All three committees took time to review, change, cut, add and amend H.R. 3200 (this is known as “markups”), and each ultimately passed their own versions of the bill. The last committee completed their markups at the end of July. Democratic leaders in the House have been working with the three marked-up versions of H.R. 3200 to prepare a finalized version of the bill to be voted on by the entire House. As of October 19, 2009, a complete bill had not been presented to the House and there had been no timetable given for its completion. A copy of H.R. 3200 as originally drafted can be found here: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3200ih.txt.pdf

Senate.

Instead of introducing a bill within the Senate and distributing it to different committees, two committees within the Senate were tasked with drafting a version of the bill: 1) Health, Education, Labor and Pensions (“HELP”); and 2) Finance Committee (“FC”). HELP completed and approved their version in mid-July while FC approved their version on October 13, 2009. Now that both committees have passed their respective bills, Senate Majority Leader Harry Reid is charged with combining both bills into a one complete bill to be voted on by the entire Senate.

A copy of the HELP bill can be found here:
http://help.senate.gov/BAI09A84_xml.pdf

A copy of the FC bill can be found here:
http://finance.senate.gov/sitepages/leg/LEG%202009/091609%20Americas_Healthy_Future_Act.pdf

Next Step – Conference.

Assuming that the House and Senate are both successful in creating and passing a bill in their respective chambers, both bills will be sent to conference where Congress members will negotiate and iron out the differences between the bills to create a single reform bill (“Conference Bill”). Once complete, the Conference Bill will be voted on by the House and the Senate and if approved
by both, it will be given to President Obama to sign into law.

Health Care Bill Provisions.

As might be anticipated with such a complex process, the actual bills themselves are confusing. Given that five committees in two different chambers of Congress have either drafted their own bills or added their own amendments, it becomes understandable why uncertainty and misinformation are prevalent. For this reason, it is important to remember that any discussion surrounding an issue should be paired with a reference to a committee version.

With this in mind, the below summary is an overview of what the health care bills intend to accomplish and highlights the contentious issues between the three versions: FC, HELP and House. We are referring to the House as one bill since the tri-committee markups took place on the same fundamental bill. For the purpose of this summary, we will hold off on making comments on the bills until the Senate and House bills are in a more complete form.

1. Purpose

All three bill versions of the reform are striving to achieve the same goal: provide affordable, quality health care for all Americans and reduce the growth in health care spending.  Despite this drive to the same end result, the bills attempt to arrive there in different ways. Most of these differences are buried in the details and would distract from the overall purpose of this article. Rather, the remainder of this article will focus on the three primary areas affected by the reform: the health insurance industry, employers, and individuals.

2. Health Insurance Impact

The proposed legislation will impact the health insurance industry primarily in three broad areas. First, the rules on private insurance to individuals will be significantly tightened to bolster coverage options. Second, a health insurance exchange is proposed to similarly help individuals and small businesses obtain coverage. Last, but certainly not least, the bills put forth various forms of a public health insurance plan. The public health insurance plan is the most debated in the media, as this concept has been the flagship of President Obama’s initiative.

Private Insurance to Individuals All three bills will impose new rules on insurers providing coverage options to individuals (who do not have employer- sponsored or public program insurance). Specifically, each version will require insurers to guarantee coverage and renewal of coverage. The insurance companies would have to accept every applicant for coverage and could not deny coverage or renewal based on the individual’s health status (but would still be allowed to deny coverage/renewal for fraud, nonpayment of premiums, etc.). Furthermore, the bills would prohibit insurers from precluding coverage based on pre-existing conditions. All three bills would also define and mandate standard benefits packages (minimum services to be covered).

Health Insurance Exchange.

Next, all three bills propose creating a Health Insurance Exchange to facilitate insurance purchasing for small businesses and individuals (who do not have employer-sponsored insurance). While the House bill would require an exchange be established nationally, the FC and HELP bills would require each individual state to set up an exchange. However, the House bill would allow states to form their own exchange in lieu of the national exchange as long as it follows the same federal rules. This promises to be a major topic of debate as the legislators work to create a final bill. Given the financial impact of this concept, many states (including Texas) have voiced strong opinions about the exchange.

“All three bill versions of the health care reform are striving to achieve the same goal: provide affordable, quality health care for all Americans and reduce the growth in health care spending.”

Public Option Plan

Finally, what has been and what is likely to continue to be the most discussed, vital issue in achieving health care reform is how to implement a public health insurance plan. The House and HELP bills desire to create a Public Option Plan that will be made available through its Health Insurance Exchange. The Public Option would be essentially another insurance plan option for the uninsured and small employers. It would be governed by the Department of Health and Human Services and be self-funded (except for an initial start-up loan that would be paid back over time). The FC bill desires to create a Co-op Plan. The Coop Plan involves the formation of nonprofit, member-run health insurance companies to sell insurance in competition with private companies. Approximately $6 billion of Federal funds would be given to the co-op program to be distributed as loans and grants to assist these companies with start-up costs. This difference in ideology for a public health insurance plan will be an important issue and ply a significant part in the success or failure of the health care reform.

3. Employer Impact

Besides the health insurance industry, employers will also be affected by the bills. Under the House and HELP bills, certain employers (based on size) will be required to offer employees and their family health insurance coverage and contribute to that coverage. There will be a penalty (“contribution in lieu of” payment) imposed on employers when employees decline this offer of coverage and obtain coverage through the Health Insurance Exchange. Under the FC bill, employers would not be required to offer health insurance coverage. However, certain employers (based on size) would be required to pay a fee for each employee that receives certain tax credits for health insurance through a state exchange. This is expected to be another area where extensive negotiations will take place before the legislation can be finalized.

4. Individual Impact.

Finally, individuals will be affected. With all three bill versions, all U.S. citizens and legal residents will be required to have health insurance. Tax penalties will be imposed on individuals who fail to obtain coverage. Also, no matter which bill version prevails, individuals currently with insurance will not be required to change their insurance.

5. Reform Funding.

As always, a key issue in any type of legislation revolves around the financing. A discussion on the HELP bill is not included because it does not explicitly address financing the way the House or FC bills do. The House bill proposes to finance the reform utilizing surtaxes from 1% to 5.4% on income $350,000 or greater for joint returns (individual returns = $280,000). The FC bill proposes to impose an excise tax on insurers of health coverage exceeding a threshold amount. Beginning in 2013, a tax of 35% would be levied on the aggregate value that exceeds $8,000 for individual coverage and $21,000 for family coverage. These amounts would be indexed to the Consumer Price Index for Urban Consumers. Additionally, the FC bill proposes to impose fees on medical devices, health insurers and clinical laboratories. Reform financing threatens to be a polarizing issue and poses a large obstacle to the entire initiative.

Conclusion.

There is still a long process to complete before a final health care reform bill is enacted. Though there is more clarity today as to the potential legislation, nothing will be clear until the final bill is complete. Until then, understanding the political process will assist in following the legislation. If you have any questions or concerns and want to contact a Congressional Representative you can visit: http:/ /www.congress.org/ cong r es sor g / d i re c tor y / c o n g d i r . t t ? action=myreps_form

Given the impact of any health care reform, it is imperative to stay informed as to what is being done in both the House and the Senate.

By Michael S. Byrd and Bradford E. Adatto

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