Republicans responded to the release of the House health bill by criticizing the sheer size of the legislation. House Minority Leader John Boehner (R-OH) began the Republican press conference by carrying out the 1,990 page bill and positioning the stack between the two microphones on the podium, in full view of the cameras.

“Now tell me how we’re going to fix the health care system with 1,990 pages of government bureaucracy. Now this is what the American people have been saying over the last few months, ‘enough is enough,’” he said.

Watch a compilation:

The original Medicare legislation was a mere 15 pages. Today, Congress regularly produces legislation that that is thousands of pages long. So what happened? It’s the result of the “polarization of American politics,” Congressional historian Ross Baker told the Wonk Room. In the last 50 years, “the total number of pages of legislation has gone up from slightly more than 2,000 pages in 1948 to more than 7,000 pages in 2006.”

The trend started during the 1980s, once the Regan administration began padding various committees with industry cronies and taking full advantage of the vagueness of the legislative language. Congress began writing longer bills to ensure that its intent would be properly enforced. Lesley Russell, currently a visiting Fellow at the Center of American Progress, but at the time a member of the professional staff of the House Energy and Commerce Committee, recalls how in 1987, her committee, along with Ways and Means, produced an unusually large bill governing nursing home regulations.

The Reagan administration had sought to “repeal the federal rules that governed nursing homes,” including “basic requirements that nursing homes maintain a safe and sanitary environment and respect the privacy and dignity of residents.” Congress enacted moratorium prohibiting the repeal and the Institute of Medicine was commissioned to study the conditions of nursing homes.

The report concluded that “individuals who are admitted receive very inadequate — sometimes shockingly deficient — care that is likely to hasten the deterioration of their physical, mental, and emotional health,” and Congress responded by writing “broad reform legislation, commonly referred to as the Nursing Home Reform Act.” For the first time, “the law placed a new focus on resident rights. It gave nursing home residents the right to choose a personal attending physician, to participate in planning their own care and treatment, and to be free from physical and mental abuse, corporal punishment, involuntary seclusion, and “any physical or chemical restraints imposed for purposes of discipline or convenience.”

“We knew, when we were writing this needed legislation, that it was intrinsically opposed by the administration and so we were very conscious of the need to insure that all the provisions were fully enacted as Congress intended,” Russell said. “This is my earliest recollection of Congress deliberately putting a lot of detail into legislative language,” Russell said.

Baker explained that large multi-paget bills allow Congress to hide controversial provisions, but dismissed the oft-cited argument that smaller bills would help the public better digest legislation and enhance the Democratic process. “It’s a quaint thought to think that the public would read smaller bills,” but there is really no correlation between the size of the bill and the willingness of Americans to read it, he insisted.

A rough analysis of the affordability measures in the House and Senate conducted by Sonia Sekhar at the Center for American Progress Action Fund demonstrates that the House health bill provides more affordable coverage than the latest available version of the Senate legislation. While the chart below does not provide a perfect comparison between the amount an average family of four would spend on coverage within the exchange, it’s the first actual representation of the premium differences under the two bills.

Both measures provide subsidies on a sliding scale. Under the Senate bill, families between 133-300%FPL have to spend between 2 and 12% of their income on premiums, while families between 300-400%FPL, spend 12% on premiums. In the House legislation families between 150 – 400% of the federal poverty line would spend between 1.5 and 12% of income on premiums. Cost sharing amounts also vary.

The chart below estimates what families will pay for coverage (premiums and cost sharing) in the Exchange in year one, 2013:

The chart relies on the language in the Chairman’s Amendment to the Senate Finance Committee bill and the the text of the House bill (H.R. 3962). It comes with several caveats. First, we took the projected premiums and average out-of-pocket costs of a “silver” plan from the CBO’s analysis of the Baucus bill and deflated both amounts (using the CBO’s CPI projections for premiums and cost sharing) to 2013 dollars. Note that the actuarial value of the silver plan in the Senate Finance bill is 70%, while it’s 75% in the House bill, a difference we did not control for. The premiums and cost-sharing amounts will be slightly different for each bill, though not significantly so.

Read the rough affordability tables HERE.

GOP wordsmith Frank Luntz has penned another self-aggrandizing memo advising Republicans how to talk about health care reform. The new memo is the same as the old memo: admit the health care system is in crisis but remind Americans that the Democratic proposals would lead to a government-takeover of health care. “Suggestion: So far, most of the ads featuring concerned patients have been women. It’s time to include men in these ads, too. Treatment of prostate cancer can be delayed just as much as for breast cancer when the government takes over care – and American men deserve to know about that,” he writes.

Luntz points to poll numbers that demonstrate unease with the Democrats’ proposals:

Public anger is REAL (note to certain media outlets & bloggers who will eventually savage this memo: the town hall phenomenon is NOT manufactured). A majority of Americans (55%) agree that “When it comes to the healthcare reform debate in Washington, I’m mad as hell and not going to take it anymore.” Only 26% disagree (leaving 19%). Nearly one in five Americans strongly agree.

But it’s not that Americans are scared of exchanges, subsidies, insurance regulations or the public plan. They’re frightened by the alleged death panels, rationing and the government interference. They’re frightened by Luntz, not Obama.

Since the election, Republicans have tapped into a paranoid corner of the American electorate that sees the President as a communist intent on redistributing the wealth and outsourcing our national defense to Bill Ayers. Now, the party hopes to convince Americans that Obama will turn over the health care system to Dr. Kevorkian. That strategy lost the election and it will fail to stop health care reform.

The Congressional Budget Office analysis of the recently released House health bill has concluded that the bill costs $894 billion over 10 years and reduces the deficit by $104B over 10 years.

The public option would attract about 6 million enrollees by 2019 and charge premiums that are “somewhat higher than the average premiums for the private plans in the exchanges.” This is because the public option would “engage in less management of utilization” by its enrollees and “attract a less healthy pool of enrollees,” the office concludes. Moreover, since the House bill expands Medicaid up to 150% of the federal poverty line, it’s possible that the enrollees that would have enrolled in the public option went into Medicaid instead.

Below is a comparison of the relevant provisions in the House and Senate Finance Committee legislation:

	CBO Score Of House Bill	CBO Score Of Baucus Bill
Costs	Reduce deficits: $104B/10yrs Cost: $894B/10yrs Spends on subsidies: $605B/10yrs On Medicaid/CHIP: $425B/10yrs On Small Employer Credit: $25B/10yrs	Reduce deficits: $81B/10yrs Cost: $829B/10yrs Spends on subsidies: $461B/10yrs On Medicaid/CHIP: $345B/10yrs On Small Employer Credit: $23B/10yrs
Insured	Uninsured reduced by: 36M Uninsured in 2019: 18M In Exchanges: 30M | Public Plan: 6M In Medicaid: 15M	Uninsured reduced by: 29M Uninsured in 2019: 25M In Exchanges: 23M In Medicaid: 14M
Revenue	Mandate penalty: $33B/10yrs Pay-Play penalty: $135B/10yrs New taxes: $572B/10yrs	Mandate penalty: $4B/10yrs Free rider penalty: $23B/10yrs New taxes: $196B/10yrs
Medicare and Medicaid	Total savings: 426B/10yrs Medicare Advantage: $170B/10yrs	Total savings: 404B/10yrs Medicare Advantage: $117B/10yrs

This morning, Rep. Mike Pence (R-IN) characterized the entire House health care bill as a “government run insurance 2.0.” “I mean, what we are seeing here is, you know, government-run insurance, mandates for businesses, an enormous tax increase, most of which or at least half of which will be paid for by small business owners.” But Pence and the Republicans should actually read the bill before dismissing it. For while the party may oppose the bill’s provisions to tax the top 0.3% of Americans to fund reform or the new fees imposed on the pharmaceutical industry to help close the donut hole in Medicare Part D, on the whole, the 1,990 page bill is a fairly moderate proposal that incorporates numerous conservative policies.

Here are just 10 reasons for why Republicans should support the House health bill:

1. REPUBLICANS ASKED FOR – DEFICIT NEUTRAL BILL: “Do the American people believe that this almost 2,000 page bill won’t add to the deficit?” [Rep. Eric Cantor, 10/29/2009]

HOUSE BILL – DEFICIT NEUTRAL BILL: According to the Congressional Budget Office, the House bill costs $894 billion over 10 years and actually reduces the deficit by $30 billion and continues to reduce the deficit over the second 10 years.

2. REPUBLICANS ASKED FOR – REDUCE COSTS OVER LONG TERM: “Nevertheless, House Republicans recognize the need to lower health care costs.” [Rep. Mike Pence (R-IN), 9/9/09]

HOUSE BILL – REDUCES COSTS OVER LONG TERM: Encourages payment reforms that can help lower costs. Requires the Department of Health and Human Services to establish specific benchmarks for expansion of the Accountable Care Organization, Payment Bundling, and Medical Home pilot programs. The bill will also slow the rate of growth of the Medicare program from 6.6% annually to 5.3%.

3. REPUBLICANS ASKED FOR – POLICIES ACROSS STATE LINES: “Interstate competition allowing people to buy insurance across state lines.” [Sen. John Thune (R-SD), 9/8/2009]

HOUSE BILL – POLICIES ACROSS STATE LINES: Allows for the creation of State Health Insurance Compacts – permits states to enter into agreements to allow for the sale of insurance across state lines.

4. REPUBLICANS ASKED FOR – MEDICAL MALPRACTICE REFORM: “Why not bring about reasonable restrictions and limits on medical malpractice claims to end the era of defensive medicine?” [Rep. Mike Pence (R-IA), 9/9/2009]

HOUSE BILL – ENCOURAGES MALPRACTICE REFORM: The bill establishes a voluntary state incentives grant program to encourage states to implement “certificate of merit” and “early offer” alternatives to traditional medical malpractice litigation.

5. REPUBLICANS ASKED FOR – HIGH RISK POOLS: “Senator McCain has a proposal sometimes called high-risk pools at the state level…These are efforts I think we can have bipartisan agreement on and deal with the question of pre-existing conditions.” [Rep. Eric Cantor (R-VA), 9/10/2009]

HOUSE BILL – HIGH RISK POOLS: To fill the gap before the Exchange becomes available in 2013, the bill creates an insurance program with financial assistance for those uninsured for several months or denied policy due to preexisting conditions.

6. REPUBLICANS ASKED FOR – ALLOW YOUNG PEOPLE TO STAY ON PARENTS’ POLICIES: “Recognizes that not all high school and college graduates are able to find a job that offers health care coverage after graduation. By allowing dependents to remain on their parents’ health policies up to the age of 25, the number of uninsured Americans could be reduced by up to 7 million.” [Republican Health Solutions Group]

HOUSE BILL – ALLOW YOUNG PEOPLE TO STAY ON PARENTS’ POLICIES: The bill requires health plans to allow young people to remain on their parents’ insurance policy until they turn 27.

7. REPUBLICANS ASKED FOR – NO PUBLIC MONEY FOR ABORTION: “The American people will not stand for government-run insurance that uses taxpayer money to fund abortions in this country.” [Rep. Mike Pence (R-IN), 10/16/2009]

HOUSE BILL – NO PUBLIC MONEY FOR ABORTION: The bill prohibits abortion services from being made part of essential benefits package and prohibits federal funds from being used to pay for abortion (except in cases of rape, incest, and to save life of the woman).

8. REPUBLICANS ASKED FOR – PROTECT SMALL BUSINESSES: “Helps employers offer health care coverage to their workers by reducing their administrative costs through a new small business tax credit.” [Republican Health Solutions Group]

HOUSE BILL – PROTECTS SMALL BUSINESSES: The bill exempts 86% of businesses from the requirement to provide coverage. Businesses with payrolls below $500,000 are exempt while firms with payrolls between $500,000 and $750,000 would pay a graduated penalty. Small businesses would also receive a tax credit that helps cover 50% of their health care expenses.

9. REPUBLICANS ASKED FOR – PROMOTE JOB WELLNESS PROGRAMS: “Promotes prevention and wellness by giving employers and insurers greater flexibility to financially reward employees who seek to achieve or maintain a healthy weight, quit smoking, and manage chronic illnesses like diabetes.” [Republican Health Solutions Group]

HOUSE BILL – PROMOTE JOB WELLNESS PROGRAMS: The bill establishes a grant program to help small employers create or strengthen workplace wellness programs.

10. REPUBLICANS ASKED FOR – DELIVERY SYSTEM REFORM: “Uses new and innovative treatment programs to better coordinate care between health
care providers, ensuring that those with chronic disease receive the care they need and do not continue to fall through the cracks.” [Republican Health Solutions Group]

HOUSE BILL – DELIVERY SYSTEM REFORM: The bill requires the Department of Health and Human Services to establish specific benchmarks for the expansion of the Accountable Care Organization, Payment Bundling, and Medical Home pilot programs.

This morning, Speaker Nancy Pelosi will unveil the re-tooled Affordable Health Care for America Act (HR 3962). (Read the bill HERE.) Coming in at around $900 billion over 10 years, the legislation will extend coverage to 36 million Americans (6-7 million more than the Senate Finance version), include a national public option that reimburses physicians at negotiated rates and require individuals to acquire coverage and large employers to provide it. The bill is paid for with a surtax on the wealthy, changes to Medicare and Medicaid, and taxes on the health care industry.

Democrats successfully lowered the price tag of the original House legislation from $1.04 trillion by expanding the Medicaid program to Americans with incomes 150% of the federal poverty line and removing the SGR fix from the bill. “A permanent doc fix will be carved out of the reform bill and introduced separately today without pay-fors,” Live Pulse reports. (Read the SGR bill text HERE)

Most of the bill’s benefits won’t start until 2013 and House leaders are introducing “a temporary government program” that would “help people turned down by private insures because of medical problems.” The Senate Finance bill includes a similar provision, a high-risk pool that would be available to Americans between 2010 and 2013.

The re-tooled House bill will also “strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price fixing and bid rigging” and “give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.”

While Democrats are still negotiating with moderate Democrats over abortion and immigration, Speaker Pelosi hopes to have the legislation on the floor next week, with a final vote before “Veterans Day,” November 11th. At the moment, “House Democrats do not have firm commitment from enough lawmakers to guarantee passage of their bill.” One whip count has shown 23 centrist Democrats intend to vote against any health bill. Assuming that all Republicans vote against it, the bill can lose at least 38 Democrats and still pass the chamber.

Speaker Nancy Pelosi (D-CA) has scheduled a press conference tomorrow morning at 10am to release the final House health care bill with hopes of voting on the legislation sometime next week. According to early reports, the bill will cost approximately $900 billion/10 years, include a national public option that will reimburse providers at negotiated rates, cover 36 million Americans (6-7 million more than the Senate Finance version) and “be paid for, in part, with a 5.4 percent surtax imposed on those with incomes over $500,000 for individuals, $1 million for families.”

But while media attention has focused on these top line compromises, behind the scenes, some observers are concerned that an impasse over abortion funding could derail the entire reform effort. Yesterday, during an appearance on Washington Journal, Rep. Bart Stupak (D-MI) said said he is “considering teaming up with Republicans to block House health reform legislation (HR 3200) unless Democratic leaders allow a floor vote on an amendment that would add new restrictions on the use of federal funding for health plans that cover abortion with private dollars”:

STUPAK: I still gets down to, under HR 3200 — the house bill, the one I am most familiar with — there is these affordability credits. In other words you’ll get a refund if you will from the federal government to help pay for this tax, to help pay for this health care. So, what we’re saying is, if you are receiving an affordability credit, tax payer subsidies, you cannot buy a plan that has abortion coverage in it and we just can’t get by that. They once said, “no no,” if you get a subsidy from the federal government you should be allowed to buy abortion coverage with that subsidy. And that’s where we can’t go. It’s called the Hyde Amendment — no public funding for abortion. It’s been the law since 1976. If you wanna do health care that’s one thing but let’s not be changing the law on abortion coverage.” [...]

Somewhere in this process we have to have an opportunity to vote our conscious, in other words we have to have a vote or we’re gonna try and take down the rule. If we do not have the vote most members of the forty will not vote for the bill.

Watch it:

But Stupak is misrepresenting the House legislation and the existing federal restrictions on abortion funding. Currently, the House bill contains what’s called the Capps Amendment — a compromise that maintains Hyde Amendment restrictions. The arrangement protects Hyde by specifying that subsidy dollars could only be used to abort pregnancies that threaten the life of mother or result from rape or incest (Hyde allows for this). Other kinds of abortions would have to be funded with private premiums. The provision also requires that at least one plan in each market area offer abortion services and one plan not. No abortion services—even those allowed by the Hyde Amendment — can be mandated as part of a minimum benefits package.

Stupak and his allies want to go beyond Hyde. They’re arguing that the current firewall between public and private money is inadequate. If a woman uses federal subsidies to pay for a basic benefit, she would have more private money available to fund her abortion, they claim. Or, alternatively, “premiums paid to that plan in the form of taxpayer-funded subsidies help support that abortion coverage even if individual abortion procedures are paid for out of a separate pool of privately-paid premium dollars.” Sen. Orrin Hatch (R-UT) proposed a similar amendment, during the Senate Finance Committee’s mark-up, leading Sen. Debbie Stabenow (D-MI) to say, “with all respect to my friend, as a woman, I find it offensive.” Stabenow stressed that further restrictions on abortion funding would drastically change existing law and levy an undue burden on women who seek access to abortion services. Under Hatch’s amendment, women who purchase comprehensive private insurance packages — that include abortion services — would have to pay for the entire cost of the package (even if they qualify for subsidies).

As Pelosi prepares to unveil the bill, “leadership aides admit that they still need to find compromise wording on abortion but are confident the issue will be resolved by the time the bill gets to the floor.” Reps. Tim Ryan (D-OH), Mike Doyle (D-PA), Rosa DeLauro (D-CT) and Lois Capps (D-CA) are hoping to find a compromise before the measure comes to a vote, but conservatives are already organizing around the Stupak provisions.

Transcript: Read more

This afternoon, Sen. Joe Lieberman (I-CT) appeared on Fox News to defend his intention to filibuster any health care reform bill that includes a national public option. Lieberman argued that a public plan would “stifle” the economic recovery and increase “the debt.” “It’s just unnecessary,” Lieberman said. The public option is “a new entitlement program and the tax payers and the premium payers are going to end up paying for it, or else the debt will go higher.”

Responding to proponents of the public plan who argue that it would actually lower costs, Lieberman insisted that if the public option paid lower reimbursement rates than private insurers, medical providers would shift costs to Americans with private coverage:

If the public option, the government run health insurance company negotiates hard to lower the reimbursement — the money it’s paying to hospitals, doctors — they’re [providers] going to have to get that money somewhere. And where they’re going to get it is from the 200 million Americans who today have private health insurance. Premiums will go up. It’s exactly what’s happened with Medicare and Medicaid….When people hear public option, I think they think it’s for free. It’s not for free. Somebody is going to have to pay for it and you can bet it’s going to be the taxpayers and the people who pay health insurance premiums now.

Watch it:

Contrary to Lieberman’s claims, the public option envisioned by Majority Leader Harry Reid (D-NV) would be required to compete on a level playing field with private insurers and charge premiums “in an amount sufficient to cover expected costs.” Instead of stifling the “economic recovery” and increasing “the debt,” the Congressional Budget Office concluded that the self-sustaining public option (similar to the one envisioned by Reid) could actually save the government money and slightly lower premiums.

Like Lieberman, America’s Health Insurance Plans (AHIP) — the insurance industry’s lobby — and the Business Roundtable have also argued that a public option that reimburses providers at lower rates than private payers would force providers to raise costs for Americans with private coverage in order to make-up the difference. MedPAC, the Congressional Budget Office, and numerous actuarial studies dispute the insurers’ claims.

The problem is, these critics confuse cost shifts with price differentials. Economists point out that “price differentials are not necessarily the recouping of losses from one payer by overcharging another”; providers often “charge different prices to different market segments” to maximize profits, not to shift costs. In fact, MedPAC has concluded that “hospitals that are forced to run efficiently are adequately funded by Medicare payments. That is, Medicare payments are sufficient to cover costs but some hospitals run inefficiently and make it appear otherwise.” Therefore, increasing Medicare payments to hospitals would not reduce rates providers charge to private insurers. The research suggests that hospitals “are raising prices when they have the market power to do so,” not because they are reimbursed at Medicare rates. As the Congressional Budget Office points out, periods of increased competition between providers have “led to a limited amount of cost shifting and also encouraged hospitals to adopt cost-containment measures.”

During the Senate Finance Committee’s mark-up, Sen. John Kerry (D-MA) introduced an amendment that would have allowed the state based insurance exchanges to act as prudent purchasers on behalf of consumers. Kerry eventually withdrew his amendment, but his idea has already been implemented in Massachusetts, where the Commonwealth Care — which offers subsidized coverage to those who qualify — engages in prudent, selective purchasing of insurance. The Care exchange negotiates with plans for lower bids, encourages “plans to form select networks, and exclude plans that do not offer good value and cost-effectiveness.”

Yesterday, the Wonk Room sat down with Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector Authority, and asked him to explain how the Massachusetts exchange lowers costs.

“You have to be selective in the plans that you offer,” Kingsdale said, and suggested that the exchange can choose plans that deliver quality care even more efficiently than a national public health insurance option. The Finance Committee’s bill “really sets up an exchange as what I call an automated yellow pages.” “Literally, any insurance plan that is licensed and meets some basic sort of specifications of benefits would be offered, and yet none of the administrative savings of actually centralizing enrollment, billing, collection etcetera, would actually be achieved through the Exchange.” “It is virtually an automated yellow pages, which is virtually useless,” Kingsdale sad.

We estimate that we’ve done about 6 percent reduction in premiums and saved about $140 million a year on subsidized care for about 180,000 people. Because we’ve been able to a) be aggressive in selecting and setting rules for health plans and b) set up an Exchange that translates the various costliness of their networks into a price that the consumer understands. The consumer doesn’t understand the price of a visit or the price of a procedure, or the price of an x-ray and can’t shop on that basis, but can shop annually for a premium, or monthly. And the trick with the Exchange is to translate the generators of cost and value and quality into a package called a health plan from which consumers have a choice and they have both funding but they are the price differences. And so with that program, we’ve been able to do it and have substantial impact.

Watch a compilation:

Kingsdale implied that the Senate Finance Committee should limit consumer choice within the exchanges. Focus groups conducted by the Massachusetts Connector revealed that consumers felt that too much choice was “confusing” and “overwhelming.” “Participants expressed a desire a for manageable numbers of plans (e.g. three to four) offered by four to six carriers. In addition, consumers expressed difficulty making plan comparisons under the existing model.” “Instead, consumers preferred for information to be presented in a simple and standardized format that clearly distinguished between different benefit design options.”

The current structure of the exchanges in the Finance Committee represents “the lowest common denominator that will have the least political opposition. But since cost containment always involves political opposition, it will have the least impact on cost,” he said. “Senator Kerry’s amendment would change that into an exchange that would certify health plans as good value, would rank them, and pass the price differences on.”

Transcript: Read more

As support for a government-run insurance plan reaches an all time high, Sen. Joe Lieberman (I-CT) today moved closer to stripping the public plan from the merged Senate legislation.

Citing concerns that the public option would create “trouble for the taxpayers, for the premium payers and for the national debt,” Lieberman said that he was “inclined” to vote to allow health care reform legislation to be debated on the Senate floor, but would “vote against cloture” if “the bill stays as it is now.” TPMDC has Lieberman’s comments:

“I told Senator Reid that I’m strongly inclined — I haven’t totally decided, but I’m strongly inclined — to vote to proceed to the health care debate, even though I don’t support the bill that he’s bringing together because it’s important that we start the debate on health care reform because I want to vote for health care reform this year. But I also told him that if the bill remains what it is now, I will not be able to support a cloture motion before final passage. Therefore I will try to stop the passage of the bill.“

Contrary to Lieberman’s claims, the public option envisioned by Reid would be required to compete on a level playing field with private insurers and charge premiums “in an amount sufficient to cover expected costs.” Instead of increasing the national debt, the Congressional Budget Office concluded that the self-sustaining public option (similar to the one envisioned by Reid) could actually save the government money and slightly lower premiums.

But Lieberman isn’t interested in the policy details. Earlier this month, the senator registered his opposition to the Baucus bill, which did not contain a public option. During today’s conference call, Lieberman opened the door to supporting a plan “set up and run by the states,” giving Reid breathing room to introduce an amendment that would fund state-based public plans.

In fact, given the public’s strong support for the option and Reid’s decision to include the plan in the bill, the final Senate legislation will likely include some kind of public option provision. That proposal could mirror The New America Foundations’ proposal to establish a series of independent public options based on already existing state-employer health plans (currently offered in 30 states). The federal government would offer states start-up funds to establish a program that would compete on a level playing field.The public plan would have to be actuarially sound, would not leverage Medicare to force providers to participate or use Medicare payment rates, and would likely adhere to the same rules regarding reserve funds. Patients who are weary of private providers would likely enroll in the public plan.

Responding to Lieberman’s statement during his weekly press conference, Reid said, “Joe Lieberman is the least of Harry Reid’s Problem.”

Lieberman’s opposition may also influence negotiations in the House, where moderate to conservative House Democrats may now abandon their wavering support for a (robust) national public plan (after all, if it won’t be law, why vote for it?).

The opt-out public option that Majority Leader Harry Reid (D-NV) sent to the Congressional Budget Office (CBO) would establish “a national insurance plan with government seed money and be run by a private, not-for-profit board,” Fox News reports. The plan would negotiate its own reimbursement rates with providers and allow state legislatures to opt out of the option by 2014 if they can provide comparable coverage in order to exit out of the federal plan.” States may also choose to establish a consumer-driven cooperative, although “states that opt out of the public plan could not offer co-ops.”

The comprise was developed by Sen. Chuck Schumer (D-NY), who converted Sen. Tom Carper’s (D-DE) original state-based opt-in proposal into a national opt-out option, and is far more conservative than the robust public option being considered in the House.

If the option is modeled on the provision in the HELP Committee’s bill, the plan would only save about $25 billion over 10 years, without significantly lowering health insurance premiums. It would likely lack Medicare’s market clout or leverage to significantly lower health care costs, but would still represent a not-for-profit alternative that can begin spearheading critical delivery system reforms.

Since both Senate bills establish state and regional based exchanges in lieu of a single national structure, it’s likely that the compromise in the merged Senate bill will establish 50 different options, all controlled by the Secretary of Health and Human Services. The public plan would have to attract a network of providers, charge premiums “in an amount sufficient to cover expected costs,” and meet all solvency and reserve fund requirements.

If Reid follows HELP’s template, then within each state or region the Secretary would negotiate reimbursement rates on behalf of the pubic option that would likely mirror the rates used by private insurers (the legislative language states that rates “shall not be higher, in aggregate, than the average reimbursement rates paid by health insurance issuers offering qualified health plans through the Gateway”). The HELP language also allows the public option to “develop or encourage the use of innovative payment policies that promote quality, efficiency and savings to consumers,” a critical provision that would allow the public option to invest in payment and delivery system reforms.

Reid aides stressed that the legislative language for the opt-out provision was a “work in progress” that has yet to be scrutinized by the Congressional Budget Office. The aide said “Reid delivered a menu of proposals to the CBO for review and will make a final decision about what the Senate measure will include once he receives cost estimates for the various policies, which could come within a week.”

The merged Senate public plan would still have to be reconciled with the House, where liberals “are keeping up their pressure on key Democrats — including President Barack Obama — and urging them to embrace a robust public insurance option” that reimburses providers at five percent above Medicare rates. (The Congressional Budget Office has concluded that the option could save approximately $85 billion more than a level-playing field proposal.)

Rep. Raúl Grijalva (D-AZ) — co-chairman of the Congressional Progressive Caucus — explained that there is “a big difference” between the Senate’s proposal and the Progressive Caucus’ demand. “‘My state would opt out immediately,’ [out of the Senate's public plan] he said, predicting that Texas and other conservative states would as well, despite having some of the highest rates of uninsured people in the country. “Without protections for those people who would be left behind, I would have a hard time,” Grijalva said. “Without the robust plan, based on Medicare plus 5 [percent], there is no competition, there is no mechanism to drive down costs for insurance companies and you hurt coverage,” Grijalva said.

This afternoon, the House Republican Health Caucus hosted “a Policy Forum exploring the options for making health coverage affordable for individuals with pre-existing conditions.” At the event, Karen Ignagni — the President and CEO of America’s Health Insurance Plans (AHIP)– asserted that the health care bills before Congress contain “no cost containment” provisions:

First, we’re looking at pieces of legislation with no cost containment. There is no bending the curve, as Doug [Holtz-Eakin] indicated, in these pieces of legislation. I have a hunch that members of Congress, as they’re thinking about constructing proposals, are going to come back to that curve bending discussion, as you indicated in your opening remarks and I think that’s going to be very important.

Watch it:

Ignagni — who recently released a now discredited report claiming that health reform would increase premiums — went on to criticize the Senate Finance Committee’s weak individual mandate requirements and the excise tax levied on high-cost health care plans.

Ignagni is right to argue that Congress should strengthen the individual mandate requirement, but her central claim is demonstratively false. In fact, many economists believe that the very policy measures she opposes would bend the cost curve downward.

As Christina Romer explained this morning during a speech at the Center for American Progress, the excise tax on high cost plans “will discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers’ wages. A policy such as this is probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health care costs.”

Secondly, the Senate Finance Committee’s bill (along with the House legislation) goes a long way towards “reining in costs” and controlling spending (over the long term and the short term). It restructures payments to Medicare Advantage plans (to base payments on plan bids with bonus payments), establishes an independent Medicare Commission to submit proposals for reducing excess Medicare cost growth by targeted amounts, reduces Medicare DSH payments by an amount proportional to the percentage point decrease in the uninsured, reduces payments for preventable hospital readmissions in Medicare, and establishes a hospital value-based purchasing program in Medicare to pay hospitals based on performance on quality measures. The House and Senate Finance bills also invest in critical delivery system reforms.

Ignagni is dismissing cost containment policies that undermine insurer profits and pretending that the industry is not at least partly responsible for the trend in spending. But just because she refuses to see them, doesn’t’ mean they don’t exist.

Transcript: Read more

This afternoon, Senate Majority Leader Harry Reid (D-NV) announced that the merged Senate health bill would establish a national public option that allows states to opt out of the plan by 2014. Reid did not indicate that he had 60 votes in support of the opt-out, but said that he would not submit competing public option compromises to the Congressional Budget Office. The answer suggests that the Senate would not use the trigger or any other compromise as an alternative if the opt-out measure fails to obtain the 60 votes needed for cloture.

Reid said that the final legislation will also provide seed money for states to establish consumer driven cooperatives:

As we’ve gone through this process I’ve concluded — with the support of the White House, Senators Dodd and Baucus — that the best way to move forward is to include a public option with the opt out option for states. Under this concept, states will be able to determine whether the public option works well for them and will have the ability to opt out if they so chose….We’ve spent countless hours in the last few days in consultation with Senators who have shown a general desire to reform the health care system and I believe there is a strong consensus to move forward in this direction.

Watch a compilation:

The opt-out compromise, initially floated by Sen. Tom Carper (D-DE), is loosely modeled on Medicaid, which originally allowed states to “opt-out” of the program and today enjoys the participation of all 50 states. Supporters of the plan believe that if the public option proves itself in states where it’s functional, then legislators from conservatives states would be hard pressed to exempt their states from the program. After all, why reject an option that offers lower premiums and saves the state billions in health care costs? Rhetoric about a ‘government-takeover’ of health care may sound good on television, but it loses its appeal when you’re trying to balance your books.

But whether or not the public option will actually lower health care costs will depend on how it’s structured and how it pays providers. The public option has to be large enough to sway large provider groups to lower health care costs and initiate delivery system reforms.

So what are the states opting out of? Below are two basic options:

- A national plan that pays 5% above Medicare rates: A robust public option that initially reimburses providers at 5% above Medicare rates and strongly encourages all Medicare doctors to participate, was originally part of the House bill. This kind of plan would take advantage of Medicare rates, providers, efficiencies and administrative simplifications. According to the CBO, a robust public option could save $110B/10yrs, lower premiums by 10%. A second alternative would allow the public option to reimburse at higher than Medicare rates but could trigger the lower Medicare reimbursements if costs increased. This plan could also initiate greater delivery and payment reforms.

- A national public plan that negotiates payment rates with providers: A so-called level playing field public plan that reimburses providers at market rates would take advantage of Medicare efficiencies and administrative simplifications, but would not piggy-back off of Medicare-established reimbursements or provider reach. This kind of plan was part of the HELP bill. According to the CBO, the option would save $25B/10yrs but would not lower premiums within the exchange. This plan could also initiate greater delivery and payment reforms.

POLITICO is reporting that currently, Reid “has between 56 and 57 votes for the opt-out, which is being pushed by Sen. Charles Schumer, according to Democratic aides. A public option with a delayed “trigger” — supported by the White House and Maine Republican Sen. Olympia Snowe — has between 58 and 59 backers.” Reid dismissed competing public option proposals, telling reporters “We hope that Olympia will come back, she has worked hard, she is a very good legislator. I’m disappointed that the one issue, the public option, has been something that that’s frightened her.”

Of course, the other possibility — less likely given Reid’s reluctance to ask the CBO to score the proposal — is to combine the opt-out public option with a trigger — ensuring that states could only opt out of the public option if the private market offers meaningful and affordable coverage. Any opt-out proposal should also provide for a simple ‘opt-back-in process’ (mandating that state legislatures vote on the opt out every year, for instance.)

[/update

Governors are worried that the proposed expansion of Medicaid — the most efficient way to cover lower income Americans — would strain local budgets and force states to “either raise taxes or make further cuts to state budgets.”

But today, in a speech delivered today at the Center for American Progress, Christina Romer, the chairwoman of President Obama’s Council of Economic Advisers (CEA), stressed that the savings from health reform would outweigh the costs of Medicaid expansion:

Indeed, we believe our measured expenditures are a reasonable estimate of the actual savings, even taking into account that reform will not eliminate all uncompensated care. This is true because we are virtually certain that there is a substantial amount of state and local spending on care for the uninsured that we have not yet identified. Expanding our projections to all fifty states and the District of Columbia implies savings of roughly $116 billion to state and local governments between 2014 and 2019.

For example, CBO estimates that under the Senate Finance Committee proposal, states will spend about $33 billion on increased Medicaid and the Children’s Health Insurance Program (CHIP) over the same 2014-2019 period. Even taking account of this cost, there is therefore a net savings to state and local governments of some $83 billion over six years. When you consider that we are paying for all of the Federal expenditures with other savings and revenue increases, this is $83 billion of additional government saving.

In other words, expanding Medicaid is cheaper than paying for the same population in the emergency room. Recent CEA research of health care spending in 16 states found that those states are spending “at least $4.2 billion on care for the uninsured each year.” “We estimated that they are spending another $600 million on higher insurance premiums for state and local government employees because of the hidden tax uncompensated care adds to all private insurance premiums. All told, the states in our sample are spending at least $4.2 billion on care for the uninsured each year.”

“Health care reform that expands insurance coverage will greatly reduce these state and local expenditures for uncompensated care,” Romer predicted.

First Read is reporting that “Senate Democratic leader Harry Reid has a health-care reform bill ready and will send it to the Congressional Budget Office today for an evaluation of costs.” Insiders tell the Wall Street Journal that the measure will include an opt-out public option and a free-rider employer provision, similar to the one included in the Senate Finance Committee’s bill. Under the merged bill, “employers with more than 50 workers wouldn’t be required to provide health insurance,” the Journal writes, “but they would face fines of up to $750 per employee if even part of their work force received a government subsidy to buy health insurance.”

The policy is designed to protect businesses and their employees from the costs of mandate compliance, but for many progressives, it’s a solution looking for a problem — that creates problems of its own. Progressives have long portrayed the free rider as a discriminatory policy that disadvantages lower-income workers and minorities. The well-respected Center on Policy and Budget Priorities (CBPP) has argued that since the free-rider mandate only requires employers to partly finance the coverage of lower income workers (workers who qualify for subsidies in the Exchange), it may discourage employers from bringing on new lower income hires:

- It would make it considerably more expensive for employers who do not offer health insurance to hire workers from lower-income families. Employers would have strong incentives to tilt hiring toward people who have a spouse/parent with a good income. Poor parents with children in one-earner families would be particularly disadvantaged.

- Since minorities are more likely to have low family incomes than non-minorities, a larger share of prospective minority workers would likely be harmed.

- This provision would be very complicated to administer. Employers would need to maintain ongoing data exchange with state health insurance exchanges.

A pay or play provision — which requires large employers to offer creditable coverage or pay a fine — is more equitable. The provision establishes the principle that while individuals should be responsible for purchasing health insurance coverage, large businesses that do not directly provide health care to their employees should pay into a public pool to help finance their employees’ coverage. The mandate enhances the existing system of employer-based coverage, levels the playing field between employers “that provide insurance and those competing with them that do not,” reduces “crowd-out of private coverage by new public programs,” and preserves the employer contribution — an important source of funding for health care reform. Large employers like Walmart, Target, and even the Business Roundtable have endorsed the mandate.

The Finance Committee considered the mandate option but ultimately rejected it, fearing that businesses would transfer the costs of the mandate into lower take-home pay for workers and job losses. But this is somewhat overstated. The overwhelming majority of American businesses would not face higher costs. The pay-or-play provision in the House bill, for instance, exempts some 87 percent of American businesses from any requirement, but ensures that large employers don’t drop their existing coverage. States — like Massachusetts or Hawaii — already require large employers to provide coverage and have found no evidence of reduced employment.

In a ‘pay-or-play context,’ some large employers would have to pay more under reform, but they would also see concrete savings. With increased access to care, all firms would benefit from the reduction in unpaid medical bills incurred by the uninsured and the savings due to a reduced rate of health-care cost growth and greater labor productivity. On the whole, the consequences of failing to reform health care reform far outweigh concerns about costs to businesses and low income workers. In fact failing to act would hurt the very same businesses and low income individuals that critics are trying to protect.

While the merged bill may include the free rider, Sen. John Kerry (D-MA) introduced an amendment to replace the provision with a pay-or-play mandate during the Finance Committee’s mark-up process and promised to debate the issue on the Senate floor.

Sen. Jay Rockefeller (D-WV) doesn’t believe the Congressional Budget Office (CBO) when it says that tort reform could reduce the use of ‘defensive medicine’ and save the federal government $54 billion over 10 years. In a six page letter to ‘Doug’ (Elmendorf, the director of the CBO), Rockefeller points out that the CBO recent conclusion reverses years of precedent and relies on academic studies that actually undermine the budget office’s final conclusion:

CBO’s recent letter to Senator Hatch creates more questions that it answers. The several cited reports contain conflicting data, which tends to support CBO’s prior conclusion that the evidence available on the issue of defensive medicine is “inconsistent” and “mixed.” It is impossible for CBO to conclude that we will see cost savings from a reduction in health care services without analyzing the effects on patient health.

“CBO has repeatedly concluded that cost savings associated with medical malpractice reforms would be minimal and the at evidence concerning defensive medicine is ‘inconsistent,’” Rockefeller writes, noting that the budget office has previously determined that “the effect of medical malpractice reform “would be relativley small — less than 0.5 percent of total health care spending” and would “save [only] $5.6 billion over 10 years.”

Indeed, states that have adopted tort reform have failed to significantly lower health care costs. When Texas capped non economic medical malpractice damages to $250,000 in 2003, most conservatives argued that the reform would free doctors from having to prescribe unnecessary treatment. It didn’t happen. According to the Dartmouth research on disparities in health care spending, many Texan doctors are still prescribing aggressive treatments that don’t improve outcomes. In fact, as of 2006, Texas was still at the top of the list of high-spending states.

A physician’s motivation for engaging in ‘defensive’ behavior or overtreatment is far more complicated than the fear of lawsuits, health expert Maggie Mahar explained during an interview with the Wonk Room:

It may be that he saw a case like this once before and it went sour, and he doesn’t know why and so he wants to be extra careful. It may be that he has been seeing Ms. O’Connell for years, she is a dear person and he really cares for her and he just wants to make sure that no stone is left unturned. Could be that he has been seeing Ms. O’Connell for years, she is a pain in the ass, and he knows that if he doesn’t order every treatment that her neighbor says he needs, he’s going to be hearing from her. And it could be that he is afraid of being sued. If I were the doctor, I wouldn’t be able to untangle my motives and say to what degree fear of malpractice suits is driving my actions.

Experts believe that the current reimbursement structure does more to shape practice patterns than fear of liability. “The current health system reimburses doctors, hospitals, and other health care providers based on the number of visits and procedures that are done. As a result, health care providers’ revenues and profits increase when they deliver more services and the cost of health care goes up,” Ellen-Marie Whelan, a Senior Policy Analyst at the Center for American Progress, wrote in a recent report.

The current reform legislation attempts to re-align the incentives in the current system. It encourages providers to coordinate primary care services, expands pilot programs that reimburse providers in bundles and for episodes of care and allows the Secretary of Health and Human Services or the Center for Medicare and Medicaid Services to expand successful models. These kinds of reforms have saved money in places like Cleavland Clinic and the Mayo Clinic and will likely do more to reduce defensive medicine than the largely unsubstantiated reliance on tort reform.

Wellpoint, the nation’s largest insurer, has issued 14 reports on how health care reform would affect the premiums in 14 states. The insurer claims that the low individual mandate penalties in the Senate Finance bill and narrow age rating bands, will lead to higher premiums for Americans currently purchasing coverage in the individual and small group markets. “[W]ithout a strong individual mandate, the market reforms will have a direct impact on premiums and we believe will exceed any aggregate savings that can potentially be achieved through other elements of proposed legislation,” the report concludes:

Currently, a young and healthy individual may purchase comprehensive health insurance coverage for $107 per month in the individual market, and it is very reasonable that in the absence of a strong individual mandate, other elements of reform cannot overcome the impact of insurance market reforms and will multiply this premium for those purchasing coverage post-reform. We believe the pages that follow reflect a reasonable, honest assessment of the impacts those purchasing coverage would see post-reform. As shown, we do expect some individuals that currently exhibit higher risks to experience a drop in premiums as the result of reform. However, most purchasers will face higher premium costs post-reform, and as shown, purchasers of average age and average health are expected to face higher premiums post-reform.

If policy makers don’t require enough younger and healthier applicants to join the risk pool (and offset the costs of covering sicker applicants), premiums will increase for everyone, Wellpoint says. And it’s a valid point: modified community rating and guarantee issue can only lower costs if the size of the risk pool is expanded and the healthy balance out the costs of the sick. The merged senate bill should certainly adopt stronger mandate measures. But comparing today’s individual market policy with a post-reform product from the exchange (or even in the remaining individual market) is apples to oranges. If properly designed, the post-reform insurance plan will not be the porous, inadequate, high deductible policy currently available in the non-group market. Americans would be purchasing regulated policies from insurers that can’t rescind coverage or deny certain basic benefits. In other words, if you’re paying more, you’re getting a better plan.

The reality is, some reform provisions would tend to make premiums higher than current-law premiums; other provisions would “tend to make them lower.” Americans from different income brackets will pay different amounts for health care, but on the whole an analysis of Congressional Budget Office data suggests that reform will offer health insurance policies that are more affordable than what is currently available in the individual market.

If premiums do increase, however, insurers bear a fair share of the blame. As Families USA points out, insurers are “like a poker player who complains about his hand when, in fact, he is the dealer.” For all their concern about health care costs, Wellpoint has a poor track record of controlling prices or providing adequate coverage. According to a 2008 study by the American Medical Association, “WellPoint controls the largest market share in 9 of 42 states studied (CA, GA, IN, KY, ME, MO, NY, OH, and VA), dominating 71 percent of the market in Maine, 58 percent of the market in Indiana, and over half the market in Georgia, Kentucky, and Virginia.” It is the poster child for why progressives want to force large for-profit conglomerates to compete with a public option that places people before profits.

Wellpoint is heavily invested in the individual health insurance market and “has been among the most aggressive in pursuing healthy customers who are less likely to use benefits to pay for medical care.” The company has a “long history of putting its bottom line ahead of the welfare of its policyholders and their health care providers”:

- WellPoint Inc. has been barred from adding customers to Medicare plans after it denied prescription drugs to the elderly, endangering their lives.

- In 2006, WellPoint’s profits increased 34% as premiums and fees surged.

- WellPoint Inc., the nation’s largest health insurer that covers about 1 in 10 people in the U.S., fared the worst among its peers in a survey gauging how quickly HMOs process and pay claims to doctors.

- In March 2007, the state’s Department of Managed Health Care fined Blue Cross of California and its parent company, WellPoint, $1 million after an investigation revealed that the insurer routinely canceled individual health policies of pregnant women and chronically ill patients.

- California regulators uncovered more than 1,200 violations of the law by the company in regard to unfair rescission and claims processing practices.

- In December 2007, Insurance Commissioner Steve Poizner announced his office was imposing a $12.6 million fine against Blue Shield, saying the company had “committed serious violations that completely undermine the public trust in our healthcare delivery system.

Consider the source, but also understand the criticism. If we want to ensure affordable and comprehensive coverage we have to improve affordability standards (by injecting some real competition into the marketplace) and hold insurers accountable.

Most news outlets are reporting that Majority Leader Harry Reid (D-NV) may include an opt-out public option in the merged Senate legislation. “Mr. Reid met with President Obama at the White House Thursday to inform him of his inclination to add the public option to the bill, but did not specifically ask the president to endorse that approach, a Democratic aide said.”

Here the reports diverge. The NYT is reporting that Obama “asked questions” about the opt-out, “but did not express a preference at the meeting.” POLITICO quotes a ‘Democratic source’ as saying that Obama “appeared” to prefer a trigger option. And The Plum Line’s Greg Sargent clarifies, via a White House response, that “Reid was specifically raising the possibility of a public option with an opt-out clause as one potential route.” “Reid has not made a final decision to take this route,” Sargent reports.

At this point, Reid may not have the votes to move a national opt out off of the floor; he is introducing a national opt-out with the understanding that it would become a state-based ‘trigger’ when the Senate formally takes up the measure. The maneuver is meant to satisfy progressives — Congress tried — but the final bill will include a mechanism that triggers a state-based public option if a certain affordability threshold is not satisfied (if 5% of the state population does not have access to at least two “affordable” options, for instance). The policy will then be presented as ‘the best deal we could get’ and embraced by both Reid and the White House.

But a state-based approach won’t have the ability to significantly lower health care costs or change delivery patterns. Progressives point to existing state-based employee ‘public options’ or Medicaid programs that contract out to private insurers and thus don’t provide a meaningful alternative or competition. A state triggered public option, would lead to the same outcome, they argue.

To avoid this scenario, the White House needs to stop sending clarification statements to Sargent and stake out a firm position — they will never find the votes if they don’t whip them. Why not start on higher negotiating ground and embrace the HELP bill’s (relativley) strong public plan (it establishes state-based public plans that are controlled by the Secretary)? If Reid was to include the HELP bill’s plan in the merged Senate legislation, he could conceivably negotiate it down to an opt-out public option with a trigger — ensuring that states could only opt out of the public option if the private market offers meaningful and affordable coverage. Similarly, the public plan could start paying providers at market rates but convert to Medicare-like reimbursements if costs don’t decrease.

That kind of compromise preserves the integrity and goals of the public plan and presents the final product as a compromise of warring factions. That kind of compromise lowers the cost of the bill and makes coverage more affordable for families. It becomes ‘the best deal we could get’ and it’s better politics and policy. It scores better and it looks better (Congress made coverage more affordable and struck back at insurers and their self-serving reports). Starting the debate with the state-based approach cedes too much ground and does very little to improve the actual policy in the bill.

Of course, all of this is based on the premise that the public option is subject to change. Some observers believe that Reid won’t have enough votes to amend the public plan during floor debate. They think that whatever he inserts into the bill will stay there. Then the question becomes: will the national opt-out sink the entire effort?

The policy is still up in the air, but so far, the opt-out is winning mixed reviews from moderate Republicans and centrist Democrats: Read more

After the Senate failed to pass the Sustainable Growth Rate (SGR) patch to help doctors avert a 21% cut in Medicare reimbursements, Majority Leader Harry Reid (D-NV) accused Republicans of deliberately voting against the bill to undermine health care reform. The amendment, which was not paid for, failed 47-53, “13 short of the 60 needed to advance the measure” to a final vote. Thirteen Democrats joined all Republicans to oppose the measure.

“One of the sponsors of this legislation, one of the Republican leaders is not supporting this legislation,” Reid said referring to Sen. Jon Kyl (R-AZ). “How do you like that? This is another effort of the Republicans to slow down, divert, and stop what we’re trying to do with health care and basically everything else.” Reid suggested that Republicans were keeping the issue alive to divert broader health reform and and accused them of hypocrisy:

I want everyone here to know, we’re going to take care of Medicare. If the Republicans here in the Senate don’t want to do it the way we’ve done it in the past by doing this doctors’ fix, then we will, when we finish the health care legislation, we’ll come back and we’ll take care of a multiple-year fix for the doctors and senior citizens….but I think it’s really too bad that suddenly they’ve gotten religion. They never worried in the past about all these tax cuts being paid for. They never worried about the drug manufacturers getting all this free stuff they got. They never worried about any of this. They now are suddenly being very frugal, very frugal when they find it’s a way that they can slow down what we do here.

Watch it:

The vote underlines the GOP’s duplicitous strategy and also reveals the diminishing power of the American Medical Association (AMA). “We were told by the American Medical Association and others, that we would get help by the Republicans to take care of senior citizens so they could have doctors to take care of them,” Reid lamented. The vote is a defeat for the AMA, which spent some $2 million dollars lobbying for the SGR fix in the last 2 weeks.

This afternoon, Congress failed to protect physicians who treat Medicare patients from a scheduled 21% reduction in payments. The so-called Stabenow amendment would have reversed the cuts scheduled under the statutory Sustainable Growth Rate (SGR) and given doctors “$247 billion more than they would otherwise get for their Medicare services over the next 10 years.” The amendment was not paid for and failed 47-53, “13 short of the 60 needed to advance the measure” to a final vote. Thirteen Democrats joined all Republicans to oppose the measure.

Congress created the SGR in 1997 to check rising health care costs. According to the formula, “the amount Medicare pays doctors for an average Medicare patient can’t grow faster than the economy as a whole.” In 2002, medical inflation outpaced economic growth and Congress stepped in to avert the cuts. Between 1999 and 2008, Congress patched the SGR formula six different times.

This year, as Democrats attempted to patch the cut by offering a floor amendment outside of the major health care reform bills, Republicans and some conservative Democrats argued that “the $247 billion Medicare bill would violate Mr. Obama’s vow that health care legislation not add ‘one dime’ to the budget deficit. Senate Majority Leader Mitch McConnell (R-KY) accused Obama of breaking his campaign pledge:

And now the Democrats in Congress are proposing that we put another quarter of a trillion dollars on the government charge card in order to prevent a cut in the reimbursements for doctors who treat Medicare patients. All of us want to keep this cut from happening, but the American people do not want us to barrow another cent to pay for it. And they don’t want Democrats to pretend that this quarter of a trillion dollars isn’t part of the cost of health care reform. Because it is. It is also a clear violation of the President’s pledge that health care reform wouldn’t add a single dime to the deficit over the next decade.

Watch it:

But McConnell supported paying for the SGR patch with deficit spending before he opposed it. Since Congress began fixing the formula in 1999, he — and the majority of the Republican party — rarely objected to barrowing “another cent to pay for it.” McConnell has voted to patch the SGR five different times, three of his votes resulted in increased deficits:

Year	Name Of Bill	Provisions	Vote	Did It Add To Deficit?
1999	Incorporated into an omnibus bill	Eliminated Medicare reimbursement cuts for 2000 through 2002.	Senate: 74-24 House: 216-210	NO
2003	The Medicare Modernization Act of 2003	Eliminated Medicare reimbursement cuts for 2004 and 2005.	Senate: 54-44 House: 220-215 Nays	YES, provision added 600M in 2004; $1.2B in 2005.
2005	Deficit Reduction Act of 2005	Averted a scheduled 4.4% cut.	Senate: 51 – 50 House: 212-206	NO, generated $39B 2006-2010.
2006	Tax Relief and Health Care Act of 2006	Averted a scheduled 5.0% cut.	Senate: 79-9 House: 367-45	YES, added $29 billion.
2007	Medicare, Medicaid, and SCHIP Extension Act of 2007	Averted a scheduled 10.1% cut.	Senate: Unanimous Consent House: 411-3	YES, full bill added about $1.4B.
2008	Medicare Improvement for Patients and Providers Act of 2008	Averted a scheduled 11% cut.	Senate: 70-26 House: 383-41	NO, Congress overrode Bush’s veto; Reduce deficits by $0.1B

Ultimately, the SGR fix has little to do with health care reform. After all, the patch is not adjusting unsustainable growth in health care spending or some other system imbalance. It is fixing a failed complex formula that Congress created to control health care spending.

The formula is ineffective in holding down physician expenditures because it “does little to counter the inherently inflationary nature of fee-for-service payment” (which encourages physicians to prescribe more care) and treats every physician in every region exactly the same. “It neither rewards physicians who restrain volume growth nor punishes those who prescribe unnecessary services.”

Congress should eliminate the scheduled pay cut and fix the formula, but physicians should not receive a blank check. Instead, they should be required to adopt efficiencies and delivery system reforms. After all, if the purpose of the SGR is to reduce health care spending, physicians should play their part.