Senate Finance Committee Chairman Max Baucus, D-Mont., is floating a draft outline of health care reform that would tax high end insurance plans in order to pay for the legislation, according go an unofficial release of the plan. The proposal was circulated on September 6 among a group of six bipartisan negotiators who have been struggling for the past two months to reach an accord. The draft does not include the controversial government run public option but does provide for nonprofit health insurance cooperatives. Following a Sept. 8 meeting with Finance Committee negotiators, Baucus said sticking points remained and that he had asked members to present their proposals by the morning of Sept. 9 and then meet again that afternoon.
Baucus broadly hinted that time was running out to reach a bipartisan agreement and that he would decide on how to proceed following that meeting. “It’s time to fish or cut bait,” he said, adding that his plan was to get a mark out. He declined to say if he was ready to mark up a bill with only the support of Democrats. “Over the next week or so, the Finance Committee will move forward with health reform legislation. We will deliver on our promise to lower costs and ensure Americans have quality, affordable health care,” said Baucus. Democrats may now be looking at Sen. Olympia J. Snowe, R-Maine as the only possible Republican member of the Committee that could be swayed to approve the Baucus plan.
Ranking member Charles E. Grassley, R-Iowa said that he was concerned about the excise tax on high end health insurance plans, fearing that the surcharge would be passed on to consumers. Baucus said bipartisan agreement within his committee was not possible if the public option was in the final draft, an acknowledgment that politics were holding up reaching a final agreement. Reaching accord now was “a matter of political will,” he said.
The plan is expected to cost less than $900 billion and the bulk of that would be paid for with an excise tax of 35 percent levied on insurance companies and insurance administrators for any health insurance plan that is above $8,000 for singles and $21,000 for family plans. The tax would apply to the amount of the premium in excess of the threshold which would be indexed for inflation.
Small businesses would receive assistance, however, through a temporary tax credit available for tax years 2011 and 2012 for firms with fewer than 25 employees and average wages below $40,000. Qualifying employers could receive the credit for up to two years with a maximum credit of 35 percent. After December 31, 2012, small business tax credits up to a maximum of 50 percent would be available to new businesses and firms newly offering health coverage through an insurance exchange once the exchange is established.
Beginning in 2013, tax credits would be available on a sliding scale basis for individuals and families between 134-300% of poverty to help offset the cost of private health insurance premiums. The plan also takes away or limits certain benefits such as a new $2,000 per year limit on Flexible Savings Account (FSA) contributions. Other measures to raise revenue include elimination of the exclusion from gross income for the subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees. The plan also calls for standardizing the definition of qualified medical expenses for Health Savings Accounts (HSAs), FSAs, and Health Reimbursement Arrangements (HRAs) and an increase in the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 percent to 20 percent.
Medicare and Medicaid changes
The framework would allow states to expand Medicaid coverage to more people than are currently eligible for Medicaid. Prescription drug coverage would become mandatory under each state Medicaid plan. Each state’s disproportionate share hospital allotment would be decreased as a state’s uninsured population decreased. Medicare would cover a health risk assessment and wellness visit with a primary care provider for all beneficiaries every other year. Also, cost sharing for preventive services under Medicare would be eliminated.
The framework proposes a value-based purchasing program for hospitals starting in 2011. Under this program, a percentage of hospital payment would be tied to hospital performance on quality measures related to common and high-cost conditions, such as cardiac, surgical and pneumonia care. Also, groups of health care providers would be able to establish accountable care organizations to help improve the quality of care provided to beneficiaries.
The proposal would direct the Secretary to develop a voluntary pilot program encouraging hospitals, doctors, and post-acute care providers to achieve savings for the Medicare program through increased collaboration and improved coordination of patient care by allowing the providers to share in such savings. Primary care practitioners, as well as general surgeons practicing in a health professional shortage area would receive a 10% Medicare payment bonus for five years. Further, the scheduled 21 percent reduction in Medicare physician payment rates in 2010 would be replaced with a 0.5% increase.
The proposal calls for payment reforms for both the Medicare Part C program and Part D prescription drug benefit program. The proposal includes a provision to establish an independent Medicare Commission (MC) that would have the authority to propose specific changes to the Medicare program that Congress would have the authority to amend; however, the commission’s proposals would go into affect absent any changes from Congress.
The proposal includes specific enhancements related to Medicare and Medicaid program integrity and fraud and abuse.
House reform action
House Majority Leader Steny Hoyer, D-Md., told reporters on Sept. 8 that House leaders have begun the process of writing the compromise health care reform bill. The legislation will be a combination of the separate bills that have already passed the House Ways and Means Committee, Education and Labor Committee, and Energy and Commerce Committee, Hoyer said. The measure will be designed to draw as much support as possible from separate Democratic factions, including both the conservative and progressive wings of the party, he said.
While Hoyer said he personally supports including a public option for health insurance in the bill, he will still support a health insurance reform plan without such an option. Hoyer noted that while Baucus is working toward a bipartisan health bill, House Democrats are unlikely to win any GOP support for their work. The House is not likely to wait for the Senate to act before passing its own bill, Hoyer predicted, but he did not give a timetable for House consideration.
House Speaker Nancy Pelosi, D-Calif., maintained the controversial public option provision is “essential” for House passage. However, if there are alternatives that make health care affordable and accessible, Pelosi said she is willing to consider them. At the same time, the House speaker indicated she is not supportive of a trigger mechanism that would kick in a public option down the road if insurers fail to provide affordable coverage. Pelosi said a public option should be done now to keep insurance companies in check.
CCH Washington Bureau, Sept. 8, 2009
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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