• House health care reform bill features major reforms for Medicare, Medicaid
• CBO projects 6 million more will be covered by employer plans under health reform proposal
• Government commitment to health care slows in Senate health reform proposal, increases In House bill
• Senate health reform plan with public option goes to CBO
• One-third of group health plans would be subject to health care excise tax in 2019

• Kansas resolution would make employer, individual health insurance mandates unconstitutional
• Massachusetts experience can inform national health reform debate

• Quality of US health care stuck in neutral, according to report

House health care reform bill features major reforms for Medicare, Medicaid

The Affordable Health Care for America Act, H.R. 3962, which was sent to the House floor on October 28, includes substantial reforms to the Medicare program, including the following:

• Reform physician payments, including a pilot to test bundling of payment for all of the services that a beneficiary receives during a course of treatment, as well as for imaging tests such as CAT scans and MRIs that physicians order to provide in their own facilities. Also, the bill would provide incentive payments for selected primary care services.
• Increase reliance on patient referral and management on physician assistants and nurse practitioners.
• Reduce or eliminate payments for excess preventable readmissions to hospitals.
  
• Phase in a payment rate for Medicare Advantage (Part C) plans based on the regional average traditional Medicare fee-for-service costs; limit beneficiary cost sharing, provide beneficiaries information on the plans' administrative costs and loss ratios; and strengthen the Centers for Medicare and Medicaid Services' (CMS) authority to audit and deny plan bids.
• Phase in elimination of the Part D prescription drug plan coverage gap (the so-called donut hole) and lower the annual out-of-pocket maximum; allow the CMS to negotiate with drugmakers for lower prices for covered drugs on behalf of prescription drug plans and Medicare Advantage plans with prescription drug benefits; and prohibit midyear drug formulary changes.
• Pay for "voluntary advance care planning" consultation services once every five years (or more often as necessary) for beneficiaries to discuss with their providers advance directives and their preferences for end-of-life care.
• Implement a demonstration project on use of patient-decision aids to improve shared decision-making for the beneficiary in partnership with medical providers, and to help beneficiaries understand their treatment options.
• Provide coverage at no cost to beneficiaries for preventive care services such as screenings for heart disease, diabetes, prevalent cancers, and diabetes self-management training.
• Implement a Comparative Effectiveness Research Center within the Agency for Healthcare Research and Quality.
• Increase funding and resources to fight fraud, waste, and abuse against Medicare and Medicaid and increase penalties against perpetrators.

Medicaid changes. The legislation would expand Medicaid coverage to anyone with income at or below 150 percent of the federal poverty level ($33,100 per year for a family of four) who is not eligible for Medicare. State would receive full federal funding for the costs of their expanded Medicaid populations in 2013 and 2014. States would have to cover specific preventive services in their Medicaid plan without beneficiary cost sharing. Additional federal Medicaid funding to high unemployment states provided under the American Recovery and Reinvestment Act of 2009 (PubLNo 111-5) would be extended. The legislation would specifically prohibit Medicaid or Children's Health Insurance Program (CHIP) payments for undocumented immigrants.

Physicians and other practitioners seeing Medicaid patients would receive 100 percent of Medicare rates for primary care services, with the federal government paying 100 percent of any increased costs in 2012 through 2014, and 90 percent thereafter.

For further information, see the text of H.R. 3962 at http://docs.house.gov/rules/health/111_ahcaa.pdf.

CBO projects 6 million more will be covered by employer plans under health reform proposal

About 6 million additional individuals would obtain coverage through an employer health care plan under H.R. 3962, the Affordable Health Care for America Act, according to a preliminary analysis by the Congressional Budget Office (CBO) and the Joint Committee on Taxation. H.R. 3962 is expected to be considered by the full House this week.

In general, enacting H.R. 3962 would result in a net reduction in federal budget deficits of $104 billion over the 2010–19 period. In the subsequent decade, the collective effect of its provisions probably would produce slight reductions in federal budget deficits, according to the CBO analysis. The estimate includes a projected net cost of $894 billion over ten years for the proposed expansions in insurance coverage.

The CBO analysis also projects "roughly one-fifth of the people purchasing coverage through the [insurance] exchanges would enroll in the public plan, meaning that total enrollment in that [public] plan would be about 6 million."

As noted by the CBO in earlier analyses of health reform proposals, the "estimates are all subject to substantial uncertainty."

The analysis is available at http://www.cbo.gov/.

Government commitment to health care slows in Senate health reform proposal, increases In House bill

A new comparative review from the Congressional Budget Office suggests that the Senate Finance Committee's health reform proposal will eventually reduce the federal government's outlays for health care, and the analysis also suggests that the health reform proposal being considered in the House of Representatives would continue to increase the government's health care outlays.

The October 30 review, sent in the form of a letter from the CBO to Sen. Max Baucus (Mont.) analyzes the impact on the federal budget in the two health reform bills being considered by the House and the Senate.

The CBO's estimates imply that the Senate proposal would increase the "federal budgetary commitment to health care" by about $85 billion over the 2010–2019 period. The proposal would increase the federal budgetary commitment to health care by about $11 billion in 2019; but in subsequent years, the effects of the proposal that would tend to reduce that commitment would grow faster than those that would increase it. As a result, according to the CBO, "The net increase in the government's commitment to health care near the end of the 10-year budget window would turn into a net decrease during the subsequent decade, when the proposal would reduce the sum of net federal outlays and tax expenditures for health care (relative to the amounts anticipated under current law)."

Regarding the House proposal, the CBO estimates the bill would increase the federal budgetary commitment to health care by about $598 billion over the 2010–2019 period. The proposal would increase the federal budgetary commitment to health care by about $104 billion in 2019. The legislation would also increase the federal budgetary commitment to health care (relative to that under current law) in the decade after 2019.

For a copy of the October 30 letter, go to http://www.cbo.gov/.

Senate health reform plan with public option goes to CBO

On October 26, Senate Majority Leader Harry Reid (Nev.) announced that he was sending to the Congressional Budget Office (CBO) a health reform bill that blends elements of two Senate committee proposals and that includes a public plan option to compete with private insurance plans.

The proposal being sent to the CBO for budget scoring combines elements of S. 1679, the Affordable Health Choices Act, from the Senate Health, Education, Labor, and Pensions (HELP) Committee; and America's Healthy Future Act, S. 1796, from the Senate Finance.

The blended reform proposal includes a provision that would allow individual states to opt out of the public plan. Mr. Reid said that the blended bill was the result of discussions among the White House, Senate Finance Committee chairman Sen. Max Baucus (Mont.), and Sen. Christopher Dodd (Conn.), who directed the HELP Committee's work in passing its version of health reform.

Mr. Reid said that while the public option "is not a silver bullet, it is an important way to insure competition and create a level playing field for patients with the insurance industry."

Mr. Baucus said in a prepared statement, "I included a public option in the health reform blueprint I released nearly one year ago, and continue to support any provision, including a public option, that will ensure choice and competition and get the 60 votes needed to pass the Senate."

Mr. Dodd also supported Mr. Reid: "Majority Leader Reid has made a bold and right choice to endorse the HELP Committee public option, along with a provision allowing states to opt out. At its core, health care reform is about making insurance more stable and affordable for those who have it, and available to those who don't, while improving quality and lowering costs. I believe that the public option is a key component to successful reform, and I will continue to lead the fight for it on the Senate floor."

Karen Ignagni, president of America's Health Insurance Plans, noted in a prepared statement, "A new government-run plan would underpay doctors and hospitals rather than driving real reforms that bring down costs and improve quality. The American people want health care reform that will reduce costs and this plan doesn't do that.

"The divisive debate about a government-run plan is a roadblock to reform. It's time we focus instead on broad-based reforms that will ensure the affordability and sustainability of our health care system."

One-third of group health plans would be subject to health care excise tax in 2019

As provided by the Senate Finance Committee's America's Healthy Future, the excise tax on "Cadillac" high-cost group health plans would affect about one-third of group health plans in 2019, according to an estimate by the House's Joint Committee on Taxation (JCT). The study was prepared at the request of Rep. Joe Courtney (Conn.).

The 40% excise tax would apply to the value of the amount in excess of $8,000 for individual coverage and $21,000 for family coverage. According to the JCT analysis, the excise tax would produce the following effects:

• The total number of individual and family plans affected by the excise tax would grow from 19% to 30% and 14% and 31%, respectively, between 2013 (the year when the tax would become effective) and 2019.
• The total number of family plans affected by the excise tax would grow from 12.7 million to 31 million between 2013 and 2019.
• The average tax increase for all households would increase from $918 to $1,318 between 2013 and 2019.
• For the middle-class income brackets, the number of households affected by the tax would double, and in some income brackets it would nearly triple, by 2019.

The tax would be paid by insurers and third party administrators for self-funded health care plans, and most likely would be passed on to insureds. The JCT explained that the employer would be responsible for aggregating the amount subject to the excise tax allocable to each insurer and plan administrator and for reporting these amounts to each insurer, administrator, and the Internal Revenue Service. Each insurer and plan administrator, in turn, would be required to calculate, report, and pay the applicable excise tax, which would not be deductible from taxable income.

It also is anticipated that employers and employees will move to lower-cost health care plans in order to avoid the excise tax. In these instances, the JCT wrote that it would expect that workers would have to pay more taxes as a result of reduced nontaxable benefit amounts.

For more information, visit http://courtney.house.gov/UploadedFiles/JCT_Excise_Tax_Review.pdf.

Kansas resolution would make employer, individual health insurance mandates unconstitutional

Kansas state senator Mary Pilcher-Cook, House Health and Human Services Chair Representative Brenda Landwehr and Assistant House Majority Leader Peggy Mast, along with several supporters from each Chamber, have announced that they will be filing a House and a Senate Concurrent Resolution (HCR, SCR) to preserve constitutionally the right and freedom of Kansans to provide for their health care.

The resolution, The Health Care Freedom Amendment, gives Kansas citizens the right to choose whether or not to join any health care system, allowing them to manage their own health care options. The legislation also allows citizens to pay directly for medical care without penalties or fines, which is not allowed in some single-payer countries.

"Some lawmakers in the federal government are on a radical path to take away Americans' health care freedom," said Sen. Pilcher-Cook. "To protect citizens' liberty in our state, this proposed constitutional amendment lays out simple principles that will preserve the freedom of Kansans to provide for their health care."

Under the legislation, any state attempt to require an individual to purchase health insurance --or forbid an individual from purchasing services outside of the required health care system --would be rendered unconstitutional. The measure may also cause a federalism clash if Congress passes a law with either of these provisions.

"This is not a battle that hasn't been fought before or won before," said Christie Herrera, health policy director for the American Legislative Exchange Council, a state legislator group coordinating the effort. "States are allowed to give greater constitutional protection than what is provided for in the U.S. Constitution. The U.S. Constitution provides a floor, not a ceiling, for the preservation of individual rights."

Health care providers would also gain some constitutional protection in the state of Kansas, as the provision would safeguard the providers' ability to receive direct payment for their services without fear of penalty or fines.

Source: Senator Mary Pilcher-Cook Press Release, October 27, 2009.

Massachusetts experience can inform national health reform debate

In 2006, Massachusetts enacted health reform that has increased its insured citizens to 97.3% of state residents. While some say that this health reform has been too costly, a recent article in the New England Journal of Medicine (NEJM) indicates that the experience in Massachusetts can help inform the national debate over health reform.

Massachusetts' Health Care Reform Act requires individuals, businesses, and the government to take steps to ensure that every Massachusetts resident has health insurance coverage. The law includes an individual mandate, where every state resident was required to obtain health care coverage by July 1, 2007 or pay an annual tax penalty. In addition, employers are required by the law to offer health care coverage to employees or pay a fair share contribution, as well as to offer an IRC Sec. 125 cafeteria plan to employees.

The NEJM article states that "the philosophy of shared responsibility behind [the Massachusetts] reform provides a sense of fairness and allows government spending to be leveraged to accomplish societal goals. The individual mandate works hand in hand with employer incentives to expand private coverage, as long as government subsidies are available for low-income individuals.…If national reform were to include policies that achieved rates of employer offers and employee take-up similar to those in Massachusetts, it could have a substantial effect on spreading the costs and reducing the government's burden."

In addition, the debate about the cost of national health reform "should be framed in terms of new expenditures and predictable funding streams that can be redirected to other uses. These should include, at a minimum, projected savings, at all levels of government, from potential reductions in the costs of paying for public clinics and uncompensated care. Savings from the latter should also accrue to private entities."

The NEJM article concludes, "Finally, national reform must support the gains made in Massachusetts by supporting the building blocks that made change successful: expansion of Medicaid eligibility, subsidies for the poor, the individual mandate, and fair-share employer contributions."

For more information about the NEJM article, Massachusetts Health Care Reform—Near-Universal Coverage at What Cost?, visit http://healthcarereform.nejm.org/?p=2135&query=TOC.

Quality of US health care stuck in neutral, according to report

A report released October 22, 2009, by the National Committee for Quality Assurance (NCQA) finds that the quality of US health care was virtually stagnant in 2008, a disturbing slowdown after a decade of improvements. The across-the-board trend was seen in care provided to people with private insurance coverage as well as in Medicare and Medicaid. The report also examines the link between higher health care spending and quality, finding little to no connection, which has significant implications for the current health care reform efforts.

"As Congress works to shape a final health reform bill, lawmakers must be certain that the legislation includes significant provisions to improve the quality and efficiency of care," said NCQA President Margaret E. O'Kane. "This includes requiring quality reporting by all health plans and providers, not just those who do so voluntarily today."

In the report NCQA calls on Congress to: reform payment systems that undermine efforts to improve care; expand quality measurement to the 60% of Americans not currently covered by accountable health plans; invest in measure development, implementation and maintenance to expand what we know about quality; and revitalize the nation's primary care system. Many of these issues are addressed by the health reform bills now being debated in Congress, but the outcome of those debates remains uncertain.

Improving health care quality would have significant benefits beyond the health care system itself. NCQA estimates that were all health plans able to perform at the level of the top 10 percent of plans, the U.S. would avoid up to 115,000 thousand deaths and save at least $12 billion in medical costs and lost productivity every year.

NCQA's full State of Health Care Quality 2009 report is available on the web at: http://www.ncqa.org/sohc. Much of the data from the report is used in NCQA's online Health Plan Report Card, which allows consumers to compare health plans based on NCQA Accreditation results and HEDIS quality scores. To see the Health Plan Report Card, visit http://reportcard.ncqa.org.