CHN: Congress at Work on Health Reform
Reforming our failing health care system remains one of the top policy priorities of the American public. A Kaiser Family Foundation poll conducted in April 2009 found that despite the economic downturn the majority of Americans (59 percent) think it is more important than ever to reform our health care system, while 37 percent believe we cannot afford to do it at this time. Furthermore, according to a survey conducted in March of this year by the Pew Research Center for the People and the Press, Americans overwhelmingly (76 percent) believe that the health system is in need of fundamental change or should be completely rebuilt. For now it seems possible that Congress and the Administration will answer the public’s outcry and deliver on health reform before the year is out.
Health care reform was one of the top priorities outlined by the President in his fiscal year 2010 budget proposal. In it he listed eight principles that should guide Congress’ work to cover most Americans, including protections for families’ financial health, affordability, a path towards universality, portability of health plans despite job change, choice of health plans, investment in prevention and quality care, and fiscal sustainability of the new system.
Negotiations are well underway in Congress to craft a health reform plan that follows the contours of the Presidents’ principles. The Chairmen of the three House committees with jurisdiction over health reform, Energy and Commerce, Ways and Means, and Education and Labor, have held joint meetings with House Majority Leader Steny Hoyer (D-MD) to discuss what an overhaul plan would look like. The three committees plan to develop one unified bill. The Senate is taking a different approach. The two committees with jurisdiction, Finance and Health, Education, Labor and Pensions, plan to craft their own bills and then join them together into one stand-alone bill by June.
In an effort to foster dialogue on potential health reform initiatives, the Senate Finance Committee has arranged a series of roundtable discussions with policy and industry experts from the health care arena. The second of three of these roundtable discussions took place on May 5, and looked at the issue of coverage. The first roundtable discussion, which occurred on April 21, examined the health care delivery system and the last roundtable, scheduled for May 14th, will focus on financing. Committee Chairmen, Max Baucus (D-MT) and Edward Kennedy (D-MA) hope the discussions will serve as a good venue to gather input and feedback on health reform ideas currently on the table.
Though no detailed plan has emerged from Congress, Members leading the reform efforts have reached accord on some points. For one, they concur on the goal of universal coverage. There is a huge uninsurance problem plaguing the country. A recent report by Families USA found that close to 87 million people were uninsured at some point in 2007 or 2008. There is also consensus on building and improving upon our current health system. This could mean, among other things, expanding public health programs like Medicaid and Medicare and creating mechanisms that force private insurers to adopt better practices so that no one is turned away, including those with pre-existing medical conditions.
Helping Low-Income Uninsured by Expanding Medicaid
Advocates are strongly in favor of expanding and strengthening Medicaid as part of health reform. Medicaid has a proven track record of efficiently serving populations with the greatest need, like children from low-income families and people with disabilities or chronic conditions. Many of those who are expected to gain coverage through health reform will likely be low-income, a population Medicaid has experience covering. Medicaid not only provides affordable, comprehensive health coverage for approximately 60 million people, but it also covers critical services like transportation to doctor appointments that are not typically offered in private health plans. Many agree that Medicaid can provide a strong foundation on which to build a new health system, but in order for it to be most effective some of the program’s current gaps and challenges will need to be addressed. Among them are the eligibility gaps.
To qualify for Medicaid a person must not only have a low income but also belong to a specific eligibility category: children, pregnant women, parents with dependent children, seniors and people with disabilities. These eligibility categories leave many low-income people out, in particular adults without dependent children even if they are penniless. Adults with dependent children also have difficulties qualifying for the program. Families USA reports that only 35 states cover parents with incomes up to the poverty level, and the national median eligibility level for parents is just 67 percent of the poverty level ($12,268 for a family of three) (link to report is listed at end of article). Advocates suggest developing a new national eligibility standard which makes Medicaid available to everyone below a certain income. Other improvements include simplifying and streamlining the enrollment process, increasing provider payments to encourage more providers to participate in the program, and offering 12 months of continuous coverage so that people are not dropped off the program because of fluctuations in family income. Medicaid’s financing structure should also be strengthened so that the program is able to meet needs, especially during economic downturns. To ensure Medicaid’s stability during bad economic times federal support to states should increase automatically during recessions without the need for federal legislation.
Addressing Health Disparities
Other priorities for the advocacy community include ensuring that everyone has access to affordable and quality care and making sure health disparities get addressed in any health reform proposal. Significant disparities exist for communities of color, immigrants, and individuals with disabilities. Just as an example, almost half (45.8 percent) of people of color under the age of 65 went without health coverage for some or all of the two-year period 2007-2008 and disparities in coverage persist even as income increases (See Families USA, Health Care Reform: Critical to Closing the Gap for Communities of Color). Advocates have developed various principles and recommendations to help guide health care reform. Among them are improving the capacity and number of providers in underserved communities, greater access to language services, and ensuring continuity and comprehensiveness of service for people with disabilities and their families. Assuring equitable access to affordable care and eliminating discriminatory practices are some other key principles. (For more details on principles for reform see listing at end of article.)
Congress has set an aggressive schedule for accomplishing health reform. Both the House and Senate want to have completed floor action before the August recess. However, a number of issues could ensnare the process; among them are how to pay for reform and whether to create a new public program to compete with the private insurance market.
Financing Health Reform
Financing will be one of the thornier issues of health care reform debate. Health reform will likely be financed by a combination of cost saving measures and changes to the tax code. The Congressional Budget Office estimates that it will cost over $1 trillion over 10 years to fix our health care system. Each financing option that is proposed is bound to face opposition from some constituency.
One of the cost saving measures that has been discussed is curbing payments to private Medicare Advantage health plans. These private plans are paid more per patient than traditional Medicare programs. In his budget, the President estimated that reducing these payments will save $177 billion over 10 years. For some time now, advocates have criticized the higher payments to these private insurance companies, which place publicly provided Medicare at a competitive disadvantage. Not surprisingly, the private plans now benefiting strongly oppose this proposal.
On the revenue-generating front, several ideas have been floated. President Obama proposed reducing the tax subsidy high-income households receive for every dollar of their deductible income from 35 cents on the dollar to 28 cents. This proposal to cap deductions for those earning over $250,000 a year would generate $318 billion over 10 years. Significant players have objected to this tax deduction change out of fear that it would curtail charitable contributions. The Center on Budget and Policy Priorities estimates that the impact on contributions to charity would be small (about 1.3 percent), and would be substantially offset by the value of increasing health insurance coverage, since those extra dollars in the health care system not only add to the public good, but specifically benefit hospitals, who might gain more from that new income than they would lose from contributions. (See Center on Budget and Policy Priorities, Proposal to Cap Deductions For High-Income Households Would Reduce Charitable Contributions By Only About 1.9 Percent: Would Help to Finance Universal Health Coverage) Key Congressional leaders have voiced opposition to this potential revenue source.
Another potential revenue source could come from capping the amount of employees’ health benefit that is not subject to taxes. Currently, people with employer-provided health care plans exclude what they pay for premiums from their taxable income and what their employers pay does not have to be counted regardless of the amount. Under this proposal employer health benefits would remain largely tax-free but if the value of the plan exceeds a cap that is set in legislation, the amount by which it exceeds the cap is added to employees’ salaries and is taxed. Besides serving as a source of revenue, proponents contend that limiting the amount of money that can be excluded from income taxes can actually help drive down the cost of health premiums as employers seek to reduce the impact on their employees. Taxing insurance premiums is a controversial issue, which some unions with generous health plans may oppose.
Creating a New Public Plan Option
Congress plans to set up an entity, often referred to as an exchange market that would allow individuals to purchase insurance from a selection of health plans. This exchange market would standardize benefits and serve as a buying pool. There have been discussions around creating a new public health plan, perhaps modeled after Medicare, to compete with private insurers in this exchange market. There is almost complete unanimity among Democrats in creating a new public program that provides an affordable choice of coverage for the uninsured. Many advocates support the creation of a public plan. Such a plan can help contain costs because public health plans typically have smaller administrative costs and are better positioned to negotiate lower payments to providers. Furthermore, it would encourage private insurers to provide more competitive rates. Many Republicans are strongly opposed to the creation of a new public health plan, claiming that it places private insurers at a competitive disadvantage and fearing that it would create a path towards a single-payer health care system.
These points of contention must be resolved this summer if Congress is to pass health reform through regular order. According to the final Budget Resolution passed by Congress on April 29, if Members are not able to come to agreement on a bill then health reform will be moved through Congress in a reconciliation bill by October 15. Using the reconciliation process would make passage easier because such bills are filibuster-proof and only require a simple majority in the Senate, but it could also limit the scale of reform. Policy changes unrelated to costs or savings would be ruled out of order. There are improvements some Members want that may not meet these requirements. Democrats have stated a desire to pass health care legislation through the regular process and avoid using reconciliation.
Medicaid and Health Reform:
- Covering the Uninsured in Medicaid, fact sheet from Families USA
- Improving Medicaid as Part of Building on the Current System to Achieve Universal Coverage, Center on Budget and Policy Priorities
- Building on a Solid Foundation: Medicaid’s Role in a Reformed Health Care System, Georgetown University’s Center for Children and Families
Principles for Addressing Disparities in Health Reform:
- Principles for Health Care Reform from a Disability Perspective, Consortium for Citizens with Disabilities
- Policy Statement on Equity for People and Communities of Color, Healthcare for America Now,
- Principles of Immigrant Integration in Health Care Reform, Coalition for Immigrant Equity in Health Care
Americans at Risk: One in Three Uninsured, Families USA