Legislative TrainingLegislative Training

December 16, 2009December 16, 2009

Overview of House ActionOverview of House Action

• House of Representatives passed HR 3962 220-215 on November 7

• House passage is just one step in a lengthy political process

• Whatever passes the Senate must be combined with the House bill

• Differences between the two bills must be resolved in such a way that the legislation will pass both chambers

• The health reform effort is still a long way from over!

Overview of Senate ActionOverview of Senate Action• Health, Education, Labor and Pensions (HELP) and Health, Education, Labor and Pensions (HELP) and

Senate Finance Committee passed their own bills, Senate Finance Committee passed their own bills, which Senators Reid, Baucus and Dodd have which Senators Reid, Baucus and Dodd have negotiated into onenegotiated into one

• H.R. 3590, a 2072-page bill, was released on H.R. 3590, a 2072-page bill, was released on November 18November 18

• CBO official score is $848 billion over first 10-years, but CBO official score is $848 billion over first 10-years, but concedes without budget gimmicks is over $1.2 trillion concedes without budget gimmicks is over $1.2 trillion

• Senate voted 60-39 on the evening of November 21, Senate voted 60-39 on the evening of November 21, after a one-day debate, to move H.R. 3590 to the floor after a one-day debate, to move H.R. 3590 to the floor for considerationfor consideration

• Lengthy floor amendment/debate process began Lengthy floor amendment/debate process began November 30November 30

Senate StatusSenate Status• On December 8 Senate Majority Leader Reid announced he On December 8 Senate Majority Leader Reid announced he

and 10 key Senators had come to terms on a plan that would and 10 key Senators had come to terms on a plan that would replace the public option in the current Senate bill with a new replace the public option in the current Senate bill with a new national insurance plan offered by private insurers and a national insurance plan offered by private insurers and a chance for older Americans to “buy-in” to Medicare. chance for older Americans to “buy-in” to Medicare.

• Proposal has drawn expressions of concern from providers, Proposal has drawn expressions of concern from providers, insurers, business groups, unions, governors, the new insurers, business groups, unions, governors, the new media, the American public and a number of Senators.media, the American public and a number of Senators.

• No legislative language is currently available. Leadership is No legislative language is currently available. Leadership is awaiting CBO score and is said to be still be making changes awaiting CBO score and is said to be still be making changes to address concerns.to address concerns.

• Reid may offer the changes in a “Manager’s Amendment” the Reid may offer the changes in a “Manager’s Amendment” the week of December 14.week of December 14.

• Beyond the compromise discussions, the Senate has Beyond the compromise discussions, the Senate has continued its work this week on amendments to the original continued its work this week on amendments to the original bill, H.R. 3590. bill, H.R. 3590.

TimelineTimeline• Senate floor debate and amendment process began After Senate floor debate and amendment process began After

Thanksgiving Break Thanksgiving Break • Goal is to be done by Christmas- for that goal to be Goal is to be done by Christmas- for that goal to be

reached everything needs to be completed this weekreached everything needs to be completed this week

• 2010 Mid-Term elections2010 Mid-Term elections

• All House SeatsAll House Seats

• 1/3 of Senate, including Reid, Dodd, 1/3 of Senate, including Reid, Dodd,

SpecterSpecter

• 37 Governor’s races37 Governor’s races

• Could effect timing: hesitant to take on Could effect timing: hesitant to take on major legislation in an election yearmajor legislation in an election year

• Resolving contentious issues and gaining consensus Resolving contentious issues and gaining consensus among the Democrats alone continues to be a challengeamong the Democrats alone continues to be a challenge

CBO: Premiums in Senate BillCBO: Premiums in Senate Bill• CBO released new report on premium increases in nongroup CBO released new report on premium increases in nongroup

marketmarket

• Requested by Senator Bayh D-INRequested by Senator Bayh D-IN

• Average nongroup premiums would rise 10-13% by 2016Average nongroup premiums would rise 10-13% by 2016

• Average premium for individuals- $5,800Average premium for individuals- $5,800

• Average premium for a family- $15,200Average premium for a family- $15,200

• Estimated that about 56-59% or purchasers in nongroup market Estimated that about 56-59% or purchasers in nongroup market would receive federal subsidieswould receive federal subsidies

• 18 million subsidized, 14 million left with increased premiums18 million subsidized, 14 million left with increased premiums

• Premium increase because insurers will cover a “substantially Premium increase because insurers will cover a “substantially larger share of enrollees’ cost (on average)…and a slightly wider larger share of enrollees’ cost (on average)…and a slightly wider range of benefits.”range of benefits.”

• Effect on employer-based coverage is negligibleEffect on employer-based coverage is negligible

The Deal Heard Round the WorldThe Deal Heard Round the World• Last Tuesday Senator Reid announced that Last Tuesday Senator Reid announced that

moderate and liberal Democrats had reached a dealmoderate and liberal Democrats had reached a deal• Schumber (NY), Feingold (WI), Rockefeller (WV), Harkin Schumber (NY), Feingold (WI), Rockefeller (WV), Harkin

(IA), Nelson (NE), Carper (DE), Pryor (AR), Landrieu (LA), (IA), Nelson (NE), Carper (DE), Pryor (AR), Landrieu (LA), and Lincoln (AR)and Lincoln (AR)

• Legislative language of the “deal” has not yet been Legislative language of the “deal” has not yet been released, but is being scored by CBO released, but is being scored by CBO • Removes the public option currently in the bill, but does Removes the public option currently in the bill, but does

create a trigger optioncreate a trigger option• New national insurance plan, offered by private insurers New national insurance plan, offered by private insurers

(similar to the FEHBP)(similar to the FEHBP)• Opens enrollment for Medicare to 55+Opens enrollment for Medicare to 55+• 90% medical loss ratio90% medical loss ratio• Reauthorization of Children’s Health Insurance Program Reauthorization of Children’s Health Insurance Program

(CHIP)(CHIP)

Senate DebateSenate Debate• Key AmendmentsKey Amendments

• Hatch (R-UT)/Nelson (D-NE) Amendment to prohibit Hatch (R-UT)/Nelson (D-NE) Amendment to prohibit public funding for abortion-related services through public funding for abortion-related services through subsidies in the exchange. 54-45 to table amendment- subsidies in the exchange. 54-45 to table amendment- killed it from further considerationkilled it from further consideration• Nelson has made it clear to leadership that without that Nelson has made it clear to leadership that without that

amendment he might vote against ending the debate on the amendment he might vote against ending the debate on the overall bill overall bill

• Thune (R-SD) amendment that would have stripped Thune (R-SD) amendment that would have stripped CLASS Act Provisions (new long-term care insurance CLASS Act Provisions (new long-term care insurance program) from the bill. Rejectedprogram) from the bill. Rejected• Senate did approve measure that states premiums collected Senate did approve measure that states premiums collected

for proposed LTC insurance are set aside to ensure program for proposed LTC insurance are set aside to ensure program solvencysolvency

• McCain (R-AZ) amendment to strip bill of Medicare McCain (R-AZ) amendment to strip bill of Medicare cuts, nearly $500 billion over 10 years. Defeated 42-58cuts, nearly $500 billion over 10 years. Defeated 42-58

Key Amendments Still to Come…Key Amendments Still to Come…• Wyden (D-OR)/Collins (R-ME) three bipartisan Wyden (D-OR)/Collins (R-ME) three bipartisan

amendmentsamendments• Variation of the “Employee Free Choice Amendment”Variation of the “Employee Free Choice Amendment”• Expand exchange- allow individuals who are not Expand exchange- allow individuals who are not

eligible for a subsidy to purchase a catastrophic plan eligible for a subsidy to purchase a catastrophic plan in the exchangein the exchange

• Establishes a fee structure on the national premium Establishes a fee structure on the national premium tax imposed on health insurance carriers to create tax imposed on health insurance carriers to create incentive to hold down rates; does not change the incentive to hold down rates; does not change the $6.7 billion annual amount from the tax$6.7 billion annual amount from the tax

ImplementationImplementation

• Implementation of health reform will take Implementation of health reform will take years- and probably include significant years- and probably include significant action on the state levelaction on the state level

• Revenue-related items begin immediately, Revenue-related items begin immediately, including the new taxes on health including the new taxes on health insurance premiums, which have not been insurance premiums, which have not been factored into 2010 play year contracts.factored into 2010 play year contracts.

Key ConcernsKey Concerns• Health Care Cost ContainmentHealth Care Cost Containment

• Neither the House nor Senate bills adequately address Neither the House nor Senate bills adequately address underlying cost driversunderlying cost drivers

• Coverage AffordabilityCoverage Affordability

• New rules in both bills will make private health insurance New rules in both bills will make private health insurance premiums go up. Rating requirements could particularly premiums go up. Rating requirements could particularly impact middle-size employersimpact middle-size employers

• Mandated benefit requirements and minimum coverage Mandated benefit requirements and minimum coverage levels exceed typical market offerings todaylevels exceed typical market offerings today

• Senate: Ambulatory patient services, emergency services, Senate: Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health hospitalization, maternity and newborn care, mental health and substance use disorder services (behavioral health and substance use disorder services (behavioral health treatment included), prescription drugs, rehabilitative treatment included), prescription drugs, rehabilitative services, laboratory services, preventative and wellness services, laboratory services, preventative and wellness services, pediatric services (oral and vision)services, pediatric services (oral and vision)

• House: hospitalization, outpatient hospital and clinic House: hospitalization, outpatient hospital and clinic services, emergency department services, prescription services, emergency department services, prescription drugs, rehabilitative services, mental health, behavioral drugs, rehabilitative services, mental health, behavioral health and substance use services, durable medical health and substance use services, durable medical equipment, prosthetics, maternity care, well baby and well equipment, prosthetics, maternity care, well baby and well child care, oral health, vision, and hearing services, child care, oral health, vision, and hearing services, equipment and supplies up to 21 years of ageequipment and supplies up to 21 years of age

Key ConcernsKey Concerns• Ineffective Individual MandateIneffective Individual Mandate

• An effective and enforceable individual mandate is necessary to An effective and enforceable individual mandate is necessary to control costs due to the insurance market reforms included in the control costs due to the insurance market reforms included in the billsbills

• The included mandate is too weakly enforced The included mandate is too weakly enforced • Senate Bill: Excise tax Senate Bill: Excise tax • House Bill: Tax penaltyHouse Bill: Tax penalty

• Will encourage many to wait to seek coverage after they are Will encourage many to wait to seek coverage after they are sick.sick.

• Will increase costs for all who have coverage – Actuarial studies Will increase costs for all who have coverage – Actuarial studies predict as much as a 50% increase for individual coveragepredict as much as a 50% increase for individual coverage

• Government-run public plan option is included in both billsGovernment-run public plan option is included in both bills• No matter how limited, never can truly be level competitionNo matter how limited, never can truly be level competition• No taxes, including state premium taxesNo taxes, including state premium taxes• Interest free start up capitalInterest free start up capital• Negotiated rates no higher than Negotiated rates no higher than averageaverage of private plans of private plans• Senate opt out still requires all tax payments by the stateSenate opt out still requires all tax payments by the state

Key ConcernsKey Concerns• Employer mandate to provide coverage is included in both billsEmployer mandate to provide coverage is included in both bills

• Unnecessary - 85% in the private market are covered hereUnnecessary - 85% in the private market are covered here• Those not providing coverage are mostly exemptThose not providing coverage are mostly exempt• Would have a devastating economic impact – cost current and Would have a devastating economic impact – cost current and

future jobsfuture jobs• Minimum benefits would increase costs of current plans - ERISAMinimum benefits would increase costs of current plans - ERISA• House Bill—72.5% employee coverage, 65% dependents, part-House Bill—72.5% employee coverage, 65% dependents, part-

time workers, kicks in at $500K payroll, 8% payroll penaltytime workers, kicks in at $500K payroll, 8% payroll penalty• Senate Bill—No direct mandate but 50+ employers not offering Senate Bill—No direct mandate but 50+ employers not offering

coverage at specified standards/affordability levels pay a coverage at specified standards/affordability levels pay a $750/employee fine. $750/employee fine.

• Exchange structureExchange structure• Potential for government rate-setting of agent and broker Potential for government rate-setting of agent and broker

commissions on policies sold through the exchangecommissions on policies sold through the exchange• Subsidies only through the exchanges up to 400% of the FPL, Subsidies only through the exchanges up to 400% of the FPL,

with a 2.8-7% cap on beneficiary costs as a percentage of with a 2.8-7% cap on beneficiary costs as a percentage of incomeincome

• Expansion to large groups (100+) in three yearsExpansion to large groups (100+) in three years• Potential crowd-out of employer-market Potential crowd-out of employer-market

Key ConcernsKey Concerns• LTCLTC

• The creation of a new national opt-out federal long-term care program The creation of a new national opt-out federal long-term care program (CLASS Act provisions) with a limited daily benefit(CLASS Act provisions) with a limited daily benefit

• Financial nightmare in out-years and does not promote private Financial nightmare in out-years and does not promote private insuranceinsurance

• Medicaid ExpansionMedicaid Expansion• Should be limited to medically needy – upped to 150% in the House, Should be limited to medically needy – upped to 150% in the House,

133% in the Senate.133% in the Senate.• Will also increase the cost-shift to private insurersWill also increase the cost-shift to private insurers

• FinancingFinancing• House – Primarily through a 5.4% surtax on high earners and cuts to House – Primarily through a 5.4% surtax on high earners and cuts to

Medicare AdvantageMedicare Advantage• Senate – Excise tax on high cost plans, .5% increase in Medicare tax*, Senate – Excise tax on high cost plans, .5% increase in Medicare tax*,

new taxes on insurers and providers, cuts to Medicare reimbursement new taxes on insurers and providers, cuts to Medicare reimbursement and MA plansand MA plans

NAHU ActionNAHU ActionHouse House

•Formal letter and press statement Formal letter and press statement opposing H.R. 3962opposing H.R. 3962•Grassroots support to thank “no” votersGrassroots support to thank “no” voters•Meetings and HUPAC action to key Meetings and HUPAC action to key House moderates to prepare for House moderates to prepare for conferenceconference

SenateSenate•Formal letter on agent issues.Formal letter on agent issues.•Targeted action to grass tops and Targeted action to grass tops and members with Moderate Senatorsmembers with Moderate Senators•Senate meetings and HUPAC action to Senate meetings and HUPAC action to key moderateskey moderates•Behind the scenes suggestions to Behind the scenes suggestions to negotiating staff negotiating staff •Working on potential floor amendmentsWorking on potential floor amendments•Assisting with material for floor debateAssisting with material for floor debate

OverallOverall•Outreach to employersOutreach to employers•Work with coalition partnersWork with coalition partners•Media interviewsMedia interviews•Press StatementsPress Statements•Op Eds/LTESOp Eds/LTES•Social mediaSocial media

Danielle JaffeeDanielle JaffeeManager of Government AffairsManager of Government Affairs

djaffee@nahu.org703.276.3839703.276.3839