Sam Stein notes that Sen. John Cornyn (R-TX) — who had been cool to the idea of repealing health care reform from the very beginning — is trying to temper expectations for what Republican will be able to achieve if they do win back the House after the mid-term elections. Here he is on the News Hour:

CORNYN: The fact of the matter, though, is that President Obama will remain president of the United States and he could veto any legislation we were able to pass. Even if we controlled the House, unless we controlled the Senate and got 60 votes, we wouldn’t be able to pass any corresponding legislation in the Senate. So I think, we need to keep expectations, again, fairly modest as far as what we can do over the next two years. I think it is a chance to work together with the president if he wants to work with us like President Clinton did following the 1994 election to pass things like welfare reform on a bipartisan basis. But, I think, if the president doesn’t reach across the aisle and actually try to do things on a bipartisan basis, the likelihood is that not a whole lot of legislating will be done.”

Watch it (at 7 minutes):

Indeed, as the administration itself has argued, defunding the law will probably be easier than repealing it, but it’s still unclear that Republicans will try to seriously pursue their Tea Party inspired agenda once in power.

Before signing repeal and replace pledges in preparation for the campaign season, the GOP was far more realistic about what it could and should accomplish. By March, Senate Minority Leader Mitch McConnell (R-KY) reassured CNN’s John King that “repeal and replace will be the slogan for the fall,” but in January the party didn’t want to campaign on full repeal. On January 13th, young guns Eric Cantor (R-VA) and Kevin McCarthy (R-CA) told Politico’s Mike Allen that Republicans “WILL NOT campaign for full health care repeal, but will demand partial repeal, including mandates for health coverage.” And realistically that’s all they’ll be able to accomplish — if they can overcome all of these challenges first.

The Department of Health and Human Services (HHS) announced today that it would distribute $49 million in planning grants to help 48 states — 21 of which are suing the federal government over the constitutionality of the Affordable Care Act — “to invest in research and planning to get the Exchanges up and running” by 2014. “In my month on the job, I’ve been out meeting with the sates and I’ve seen near universal support for the exchanges and a strong state interest for moving forward on a state-by-sate basis,” Joel Ario, director of the Office of Insurance Exchange, said on a conference call with reporters, which the Wonk Room attended. Indeed, just two states, Minnesota and Alaska, did not apply for the grants.

The planning grants will give states up to $1 million each to assess their existing IT system, plan for consumer call centers, hire staff and plan and coordinate “enrollment systems across Medicaid, the Children’s Health Insurance Program (CHIP), and the Exchanges,” but the government doesn’t expect most states to establish the Exchanges until 2011. Besides Massachusetts, Utah, and Oregon, all of which already have insurance exchanges (and California has a bill pending), “for most states it’s a 2011 proposition,” Jay Angoff the Director of the Office of Consumer Information and Insurance Oversight said on the call.

“So we’re we’re really looking at 2011 and we do think it’s a critical legislative year opportunity to establish exchanges themselves and the governing structures so you have a body that’s going down the details as you move down 2012 and 2013.” “But we would expect robust activity in the legislative sessions of 2011.” The 48 states that are receiving the grants did not commit to establish their own exchanges by 2014, but all of the states showed an interest in moving forward, Angoff said.

For those that do — and HHS certainly expects that a handful won’t, allowing the federal government to step in — the Commonwealth Fund released a new report today by Tim Jost outlining the various difficulties states will face as their governing boards begin building the exchanges. The report, which is well worth reading, recommends that among other things, that states issue identical regulations of the individual and small-group market outside and inside the exchange to prevent adverse selection, allow the exchanges to be government by independent agencies, and “offer employers the possibility of an aggregated bill covering the premiums of all employees.”

Last week, during a conference call with bloggers, Nancy-Ann DeParle — the director of the White House Office for health reform — admitted that “any aspect” of the Affordable Care Act “could be defunded” if Republicans gain control of the House after the mid term elections. “But I’m confident that Democrats are going to be running the House in November, and the Senate as well. So I don’t expect to see any of those things. I’m not making plans for that,” DeParle said in response to a question from the Wonk Room.

But today, Bloomberg’s Alex Wayne has an ominous look for what’s to come if the GOP does, in fact, take control of the House:

John Murray, a spokesman for Representative Eric Cantor of Virginia, the second-ranking Republican in the House, said that if control of the House flips, possible targets for defunding may be the insurance exchanges, the new agency set up under the law to compare different drugs’ effectiveness and any added staffing that may be sought to manage coverage expansions.

By vetoing spending measures that don’t include money for the law, Obama may set up a situation similar to the 1995 government shutdown triggered by a spending dispute between the then Republican-controlled Congress and Democratic President Bill Clinton. [...]

Tiahrt said a shutdown wouldn’t necessarily be bad, considering the enthusiasm among Tea Party and Republican activists for limiting the size of government.

The prospect of Congress changing hands the year after passing a law as complex as the overhaul, then attempting to defund the law’s implementation may be unprecedented, said Paul Van de Water, a health-care expert at the nonprofit Center on Budget and Policy Priorities in Washington, D.C.

“I can’t think of any previous attempt to kill a major presidential initiative by not funding it,” he said in an e- mail.

Indeed, denying funds for implementation seems like a real threat and a short-term political win for Republicans: if Americans don’t feel the benefits of health reform, they’ll never support it. But I question the wisdom of the GOP’s strategy of governing towards the most extreme corners of their base and ignoring those who really need health benefits. After all, if they’re freezing reform and perpetuating the status quo, at some point Republicans will have to own all of the headlines about people losing coverage and costs skyrocketing. Defunding may please the Tea Party, but it does nothing to address the existing health system — which has now become a serious political problem for whichever party is in power.

McDonald’s is denying reports that it plans to cancel health insurance for almost 30,000 workers unless federal regulators loosen requirements for plans to spend 80 to 85 percent of premium dollars on health care costs. “Media reports stating that we plan to drop health care coverage for our employees are completely false,” a McDonald’s spokesperson told Politico’s Pulse. “These reports are purely speculative and misleading.”

But according to the Wall Street Journal, a senior McDonald’s official informed “the Department of Health and Human Services that the restaurant chain’s insurer” won’t meet the new requirements, called medical-loss ratios (MLR), since they are “unrealistic” for the kind of mini-med plans the company provides to many of its hourly restaurant workers. The plans, which often restrict the number of covered doctor visits or impose a relatively low maximum on insurance payouts in a year, have “high administrative costs owing to frequent worker turnover, combined with relatively low spending on claims“:

McDonald’s, in a memo to federal officials, said “it would be economically prohibitive for our carrier to continue offering” the mini-med plan unless it got an exemption from the requirement to spend 80% to 85% of premiums on benefits. Officials said McDonald’s would probably have to hit the 85% figure, which applies to larger group plans. Its insurer, BCS Insurance Group of Oak Brook Terrace, Ill., declined to comment. [...]

“Having to drop our current mini-med offering would represent a huge disruption to our 29,500 participants,” said McDonald’s memo, which was reviewed by The Wall Street Journal. “It would deny our people this current benefit that positively impacts their lives and protects their health—and would leave many without an affordable, comparably designed alternative until 2014.”

The law allows companies to apply for exemptions from the MLR requirements — which are still being drafted — and HHS “says it has already given the carrier for McDonald’s and others the chance to seek exemption from new annual limits on benefit payouts.” “This story is wrong,” HHS spokeswoman Jessica Santillo told Pulse. “The new law provides significant flexibility to maintain coverage for workers. Additionally, this story is premature as guidance on the new medical loss ratio rules has not even been issued. The Administration is working closely with businesses like McDonald’s that are committed to providing health benefits to protect health coverage for their employees.”

Indeed, insurance commissioners met with President Obama last week to request that certain plans in the individual market be allowed several years to comply with the MLR standard and at least two states Maine and Iowa, have also “asked for a waiver from the rules until 2014 to give health insurers more time to adapt.” Exempting mini-med plans in order to protect the (limited) benefits of some 30,000 employees may make sense, particularly since these policies will probably end by 2014. Then, workers could enroll in more comprehensive health coverage through the Exchanges since mini-med plans would not meet the actuarial value of creditable coverage.

And as Aaron Carroll points out, that’s probably a good thing. After all, mini-med plans only work for healthy individuals and usually don’t provide enough coverage for anyone with a serious medical condition. “One of the things the ACA does is try and eliminate under-insurance. It tries to regulate the insurance companies so that you can’t get sold a plan that provides too little coverage when you need that. That costs money,” Carroll concludes.

In July, following GOP allegations that states would be able to use federal dollars to cover none-Hyde abortions in the temporary high risk insurance pool program, HHS issued regulations prohibiting states from covering the procedure. “The (high-risk pool) program,” the regulation states, “is Federally-created, funded, and administered (whether directly or through contract); it is a temporary Federal insurance program in which the risk is borne by the Federal government up to a fixed appropriation. As such, the services covered by the PCIP program shall not include abortion services except in the case of rape or incest, or where the life of the woman would be endangered.”

Progressive pro-choice advocates felt betrayed. Since there is no over-arching law that prevents states from using federal dollars to fund abortion services, the administration was not required to alter the state’s proposals. Writing at RH Reality Check, CAP’s Jessica Arons accused the administration of applying the Stupak amendment to the high risk pools and going beyond the bargain it struck. Now, 19 national pro-choice groups have “signed on to public comment, submitted Monday, urging HHS to ‘revise this rule and remove the ban.’” The group, Raising Women’s Voices has released a video and letter writing campaign, “highlighting stories of women with pre-existing conditions who have had abortions,” urging Sebelius to “lift the harmful abortion restrictions”:

My doctor said my health is at risk. Here is a Catch-22. My insurance will pay for the pregnancy that can seriously injure me, but it won’t cover the abortion that can protect my health. I don’t get it.

Watch it:

It’s unclear if the group can change the rules after it’s been written, but it’s fairly obvious that the pro-choice community was outmaneuvered by the Right. Few realized that Nelson’s amendment did not apply to every federal dollar in the health care law, and the administration seemed unprepared to fight once conservatives organized around the issue. In fact, when I spoke to some state sources who were implementing the pools, they were surprised to learn that the Hyde restrictions did not apply to the federal funds earmarked for the program. But what’s disappointing is that the administration felt so compelled to issue its restrictive regulations so quickly and reactively. If it was hoping to appease conservatives, then it overestimated the GOP’s willingness to recognize its concessions and underestimated its supporters ability to just accept the slight (yet again).

Public comment on the high risk pools closed Tuesday at midnight.

This morning, while defending Sen. Mike Enzi’s (R-WY) resolution to eliminate regulations that would dissuade insurers and employers from shifting costs to plan beneficiaries, Republicans proudly regurgitated insurance industry talking points about premium increases and unfair mandates. Without probing the reasons behind the new premium requests, Republicans simply bought the insurers’ explanation that the health care law was primarily responsible for the recent increases and criticized the administration’s efforts to review their rates. Sen. Pat Roberts (R-KS) even accused the HHS Secretary Kathleen Sebelius — who asked the industry to stop misattributing the hikes to the law — of creating an “enemies list” of insurers and gagging the industry’s free speech rights:

ROBERTS: [Sebelius] is threatening to shut down private companies for exercising their First Amendment right to free speech and she’s keeping a list it reminds me of the days with a previous administration with an ‘enemies list’ … they’re more subtle than this in Caracas, Venezuela…Stop the gag orders and the administration…don’t tread on the First Amendment.

Roberts and his colleague Sen. John Ensign (R-NV) are repeating the talking points of the insurance industry. Watch a compilation:

To be clear, premiums do follow underlining health care costs, but the new health benefits are responsible for only a very small fraction of the increase. According to actuaries at Hewitt Associates, a global consulting firm, “the most immediate reforms under the law — including the new protections known collectively as the Patient’s Bill of Rights — will contribute ‘approximately 1 percent to 2 percent of the 8.8 percent projected increase for 2011′” — far less than what the insurers are claiming.

The Enzi resolution to eliminate the new grandfather regulations ultimately failed in a procedural vote of 40 to 59, but not before the GOP invented a new stat for attack. Enzi claimed that “there will be 100 pages of regulation for each page of that bill.” “There are 2,700 pages in that bill. That means there are going to be 270,000 pages of regulation,” he said. (Sen. McCain came up with a different estimate, 121 pages of regulation for every 2 pages in the bill.)

But as Sen. Tom Harkin (D-IA) asked, “where did that come from? It sounds like it came from the health insurance industry to me.”

Paul Bedard of U.S. News and World Report previews Former Senate Majority Leader Tom Daschle’s new book, Getting It Done: How Obama and Congress Finally Broke the Stalemate to Make Way for Health Care Reform. The book is due out October 12th, and if this excerpt about 10 Healthcare Reform Pitfalls is any indication, we’re in for a good dose of honesty about the future politics of reform:

1. Higher premiums. While he says that “there is little risk” that everyone’s health insurance premium will go up, “it is unrealistic to expect that none of us will see any increases.”

2. Preexisting condition gap. 2010 will see that children with preexisting conditions can’t be rejected by health insurance companies, but adults won’t get that benefit for another four years.

3. Shrinking Medicare payments to doctors. 2011 will see payments to Medicare Advantage plans frozen and payments to providers will increase at a slower rate as it becomes official policy to expect healthcare providers to become more efficient.

4. Increased senior premiums. In 2011 more high-income seniors will start paying higher premiums. They will also get less of a subsidy for prescription drug coverage.

5. Cuts in Medicare Advantage. In 2012, Obama’s reelection campaign year, Daschle says that “there will be some significant healthcare events this year that are not politically safe.” Such as: Payments to Medicare Advantage plans will now be cut, not just frozen.

6. Mediare-cutting panel. Also in 2012, Obama will have to appoint a board charged with “tightening Medicare spending even more.” Daschle concedes that “in an election year, the appointment of the board is sure to lead to a new round of overheated charges about what the board might to do seniors’ care.”

7. Medicare tax boost. Come 2013, Daschle reports that individuals earning more than $200,000 a year and couples earning $250,000 a year or more will see a boost in Medicare taxes, ironically called the “HI tax,” short for hospital insurance tax. s.

8. Change in healthcare deduction. Also in 2013, the healthcare spending deduction will change. Where you can now deduct anything spent over 7.5 percent of your income, the new base will be 10 percent of annual income. Seniors get an extension on the 7.5 percent rate until 2017.

9. Employer tax. If employers have more than 50 full-time workers and do not provide coverage, they will be fined $2,000 for each employee. If they provide “expensive” coverage, they’ll also pay a fine.

10. Individual penalty. In 2016, with most of the reforms, in place, individuals who don’t have health insurance will be fined $695 a year, or 2.5 percent of annual income, whichever is greater.

Talk about spilling cold water on the much touted Democratic belief that Americans will fully embrace health care reform once it becomes law. Daschle’s perspective offers a more realistic take on the long road to not just selling reform to the public, but also dealing with many of the challenges that it brings for different constituents. Universal coverage won’t be painless and the cost containment provisions — excise tax, medicare panel — will generate tougher headlines than anything we’re seeing today. The question for lawmakers will be: do we stick with these policies or abandon them for short-term political gain. The history on this is mixed — with Congress, patching one cut, but offsetting it with others — but it’s also worth arguing that many of these cuts (particularly the Medicare adjustments that will come from the board) are actually politically advantageous since they do not directly target benefits.

Jonathan Cohn lays out the benefits of California’s new exchange legislation — currently sitting on the Governor’s desk — and suggests that insurers’ opposition to the measure probably means that the state is doing something right:

Under two bills that the California legislature passed and Schwarzenegger is apparently expected to sign, the state’s exchange authority would have explicit permission to “contract with carriers so as to provide health care coverage choices that offer the optimal combination of choice, value, quality, and service.” That mandate, combined with the bills’ other provisions, means the exchange authority would be able to negotiate pretty aggressively over price and quality, excluding plans that don’t serve consumers well. That’s more or less what corporate benefit departments and the managers of public employee programs, like the Federal Employee Health Benefits Program, do for their members.

The California model would follow the Massachusetts example, where the exchanges have the authority to include only the most efficient and quality-centric issuers into their connectors. Massachusetts has controlled costs for the expanded population (although costs have gone up in the entire system) and increased consumer satisfaction. Jon Kingsdale, the former director of the Massachusetts Connector Authority told Cohn that allowing any plan that hits minimum standards to sell in the exchanges “would be like telling your grocery store they have to offer every single kind of bread baked by every single bakery. … The exchanges would be nothing more than an automated Yellow Pages.”

And Massachusetts residents agree. For instance, focus groups conducted by the Massachusetts Connector revealed that consumers felt that too much choice was “confusing” and “overwhelming.” “Participants expressed a desire for a 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 Connector’s Fiscal Year 2009 report concluded.

The for-profit insurers are weary that they may be excluded from the market and are asking the Governor to veto the bills. But the exchanges are one of the only ways states can protect consumers from plans that do not offer good value and cost-effectiveness. As Kingsdale explained to me during our interview in October, “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,” Kingsdale said. “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.”

Back in June, HHS unveiled interim final regulations to exempt health insurance plans in existence before March 23, 2010 — the day the Affordable Care Act became law — from many of the new regulations, benefits standards and consumer protections that new plans now have to abide by. The goal is to allow a consumer to keep their existing plan, while also ensuring that there are some basic patient protections built into these plans. But the exclusion comes with conditions. If the plans or employers make changes that undermine the spirit of the health law and significantly burden enrollees with lower benefits and increased costs, they have to come into compliance with all consumer protections:

- Insurers will lose their grandfathered status if they cancel coverage when a person becomes ill or impose lifetime limits on benefits.

- Insurers will lose their grandfathered status if they eliminate all benefits for a particular condition or if it increases deductibles or co-payments by more than the rate of medical inflation plus 15 percentage points.

- Insurers will lose their grandfathered status if an employer reduces its contribution so that its share of the total cost of coverage declines by more than 5 percentage points.

- Insurers will lose their grandfathered status if they increase co-payments for doctor’s visits to $45, from $30 — a 50 percent increase — while medical inflation was 8 percent.

- Insurers will lose their grandfathered status if they reduce the cap for covered services each year.

Insurers and self insured employers make policy adjustments all the time and over the last few years they’ve been slowly shifting the risks and costs of coverage to the individual. The grandfather regulations don’t really prevent these shifts as much as they discourage employers and insurers from stiffing beneficiaries with very high costs and insufficient benefits and shield consumers from drastic benefit cuts or cost shifts. In other words, they help you like what you have, but not necessarily keep exactly the plan you have. In fact, HHS estimates that a good percentage of small business plans and policies in the individual market will lose their grandfather status and look for cheaper coverage that already meets the new requirements. In this way, the grandfather regulations also serve as a bridge to gradually moving everyone into plans that have the kind of consumer protections that Americans say they want. By 2014 almost all plans will be in full compliance.

Republicans have long claimed that this violates President Obama’s pledge of ‘if you like what you have you can keep it‘ and tomorrow Sen. Mike Enzi (R-WY) plans to offer a privileges resolution that will try to strike the grandfather regs. It would only require a majority vote:

The Enzi resolution targets the agency’s “grandfathering” rule, which allows plans that existed before March 23, 2010 — the date the healthcare law was signed — to be exempt from certain consumer protections enacted in the law, as long as plans do not significantly reduce benefits or raise consumer costs. HHS estimated that approximately 40 percent to 70 percent of all employer-provided plans will maintain “grandfather” status through 2013.

Enzi argues the provision breaks President Obama’s frequent promise that Americans could keep their health insurance if they liked it.

“An estimated 80 percent of small businesses are expected to lose their grandfathered status based upon the regulations the Administration wrote,” Enzi said in a statement. “That means the small firms that do offer health insurance won’t be able to afford what they now provide.”

The amendment is more about message than substance. Republicans aides are telling Congressional Quarterly that they expect Majority Leader Harry Reid to successfully table the resolution and it will certainly fail if it moves forward. The GOP is using this as yet another opportunity to chip away at reform and rather than proposing its own grandfather standards, the party would allow any existing plan to avoid the new consumer protections, no matter how dramatically they cut benefits, raise co-pays, or lower employer contributions. Sadly, they’d be cutting off the very regulations that will help bring about the popular consumer protections they proclaim to support.

Yesterday, RealClearPolitics reported that “just five weeks away from a tougher Senate race than he expected against Republican John Raese,” West Virginia Governor Gov. Joe Manchin (D) was retreating from his support of the Affordable Care Act, and is now saying that he would join Republicans in repealing parts of the law. I asked the Manchin campaign about the Governor’s new position, pointing out that despite some reservations about Medicaid expansion, the Governor had said in March that he would have voted for reform and even argued that conservatives should allow the effort to succeed. The Manchin campaign sent me the following statement:

The Governor felt it was important to move the ball forward on healthcare reform and that something had to be done to help more working people obtain health insurance, so he said at the time that he would vote to do that. However, as more details have come out about what was included in the final version of the healthcare reform bill, there are several sections that he would now vote to repeal, including any provisions that allow for the funding of abortions and the provisions that are cumbersome to small businesses. He also believes people’s personal responsibility and healthcare choices should not be taken away by overreaching regulations. So knowing what he knows now, he would have fought for changes to the final version of the bill before voting and he would not have voted for it in its current form.

This obviously isn’t very specific (which abortion provisions are you referring to, governor?) and some of it, like the last part about individual responsibility, is downright nonsensical. But what we do know is that Manchin is more in the mold of Ben Nelson and less in the mold of his predecessor Robert Byrd.

Earlier last week I wondered how the federal government could prevent insurers from ending child-only policies, speculating that it can do relatively little to assuage issuers’ fears about sicker children flooding the market. Today, Politico’s Pulse informs me that aside from writing yet another strongly-worded letter, HHS is saying that insurers could increase rates for sicker applicants:

HHS also issued new regulatory guidance that could make it easier for insurers to sell the policies. The agency said insurers could raise rates based on health condition — though doing so will be illegal beginning in 2014; issue different rates for child-only policies and dependent children; impose a surcharge for dropping coverage and subsequently reapplying; and instituting rules to preventing “dumping” the policies. The moves are likely to drive premiums up, if insurers choose to start selling the policies again.

Sebelius also said she welcomes state laws that would force insurance companies to cover these children if the company offers similar coverage to adults. Insurers won’t have to cover all adults regardless of pre-existing conditions until 2014 under the health reform law.

The agency has already said insurers could establish an open enrollment period — say, of approximately a month — in which insurers could sell policies and still legally close access the rest of the year. HHS said Friday that it would consider a uniform open enrollment period “only if it would result in issuers selling new child-only policies.

State regulatory efforts are particularly the kind of oversight that insurers themselves are promoting. “The McCarran-Ferguson Act entrusted states with the responsibility for the comprehensive regulation of the business of insurance,” Ignagni wrote in 2009. “States have met this responsibility by regulating health insurance in every area.” Consequently, they should welcome New Hampshire’s announcement that “insurers who sell in the individual market can’t insure adults and not children” and California’s effort to keep insurers that cancel child-only plans out of the exchanges for a period of 5 years.

That second state proposal also brings up an important question: under the Affordable Care Act, states can exclude certain insurers from the exchanges if they demonstrate a pattern or practice of excessive or unjustified premium increases. Since the government is now suggesting that insurers should raise premiums rather than cancel their child-only policies, will it have to exclude that increase when calculating their pattern of premium increases? If so, that that sets a fairly significant precedent.

RealClearPolitics is reporting that “just five weeks away from a tougher Senate race than he expected against Republican John Raese,” West Virginia Governor Gov. Joe Manchin (D) is retreating from his support of the Affordable Care Act, and is now saying that he would join Republicans in repealing parts of the law — making him the first Democratic Senate candidate to endorse some part of the GOP’s health care ‘Pledge.’ From the RealClearPolitics interview:

“I believe in health care reform. I don’t believe in the way this bill was passed,” Manchin said Sunday afternoon. “Why they overreached, I don’t know.”

Pressed on his support for repeal, Manchin clarified that he favored “repealing the things that are bad in that bill.” He ticked off a list of reforms in the law that he supports and asserted there is broad agreement in both parties for many of them. “Can’t you keep that as a good base?” he said, adding, “It’s a great bill.” He emphasized that he’s not calling for wholesale repeal and just wants to roll back parts of it but said, “You do need to.”

But Manchin’s newfound opposition to parts of the law is peculiar, given his past support for the President’s reform efforts. In 2009, Manchin expressed concerns about what Medicaid expansion “would do to the budgets” but said he saw merits in the idea, since poor uninsured families and individuals often “end up using emergency rooms or only seek medical attention when they have costly, catastrophic medical needs.” “This week, [Obama will] say this is what I think America needs and this is what we’re going to fight for. And I’m behind that. I’m totally behind health care reform,” Manchin said that year.

During a March 17 panel on health care at the National Governors Association, Manchin reiterated his worries about the costs associated with expanding Medicaid, but stopped short of calling for repeal. Instead, he said the law should be given a chance to work and Congress should make adjustments if costs grow out of control. “I’m hoping that in four years time period that they’re saying we’re going to pay for everything and if this thing mushrooms out of control, they’re going to have to make some adjustments in that period of time,” he said. When TIME reporter Karen Tumulty asked the governors if they would vote for the health care bill, Manchin said that he would:

MANCHIN: I’d be for it. I think you’ve got to move the ball. Ted is exactly right. You have to move this ball forward right wrong or indifferent. I have never, since I’ve been in the legislative process and since I’ve been governor, I’ve never gotten a perfect bill. I’ve never gotten a bill exactly the way I’ve wanted it….Let’s try, let’s try to make this. Bring us all in. Let’s make it work.

Watch it:

Yesterday, the National Association of Insurance Commissioners (NAIC) released draft guidelines for how insurers should calculate their expenditures to meet new regulations that require issuers that don’t spend 80 to 85 percent of premium dollars on health care expenditures to send rebates to their customers. These percentages are calculated from a ratio of “health expenditures” to other expenses and since reform became law, insurers have pressured the NAIC to calculate include certain administrative expenses as medical costs, exclude all federal taxes from their revenue (the denominator in the MLR ratio), and allow insurers to aggregate the ratio across plans and markets.

Consumer advocates I’ve spoken to tell me that yesterday’s draft regulations — which are now in an open comment period until October 4 — are somewhat of a mixed bag for all parties involved. On the crucial issues:

- TAXES: NAIC rejected the Congressional Committee chair’s statement that they only meant to allow issuers to deduct those taxes that are specifically related to the Affordable Care Act. It ruled that issuers can exclude all federal taxes but those on investment income.

- DEFINING HEALTH COSTS: NAIC rejected insurers’ suggestion that services like anti-fraud and “utilization review” be included in the definition of “medical expenses,” included other services that have not been traditionally classified as “medical,” and required issuers to substantiate why certain services improve care quality.

- AGGREGATION: Insures wanted the NAIC to calculate their MLRs across different units and markets. This would have allowed insures to group their plans together to mask the low MLRs of some of their plans. The draft guidelines would require issuers to break them down and account for the MLRs separately at every business unit in every state.preventing them from obscuring some low MLR plans.

Insurance commissioners also met with the President on Wednesday to ask that plans in the individual market be allowed several years to comply with the new MLR requirements, something the administration could allow if it believes that immediate compliance could lead to serious market disruption. A large concern here is the state of insurance brokers, whose salaries make up a large portion of non health care related spending. Similarly, two states Maine and Iowa, “have asked for a waiver from the rules until 2014 to give health insurers more time to adapt.”

The regulators hope to finalize the rules at an Oct. 21 meeting in Orlando, Fla., and then the Department of Health and Human Services will have the final say.

The administration is always saying that the Affordable Care Act will encourage doctors and hospitals to provide care more efficiently and using various new demonstration projects develop ways of lower health care costs without sacrificing profits or rationing care. In today’s Fiscal Times, Merrill Goozner points to a program that’s already doing just that. It’s saving money by encouraging sick patients to take the steps necessarily to avoid repeat and unnecessary follow-up care:

A new study published this week in the New England Journal of Medicine claims there is a better way to engage patients that almost immediately achieves lower health care costs. The approach involves systematic telephone outreach to patients at high risk of serious health problems by trained nurses, who provide them with information about the risks and benefits of their therapeutic options.

A randomized, controlled study with nearly 175,000 participants found that the intervention lowered health care costs by 3.7 percent in the first year compared to those who didn’t get the calls or receive follow-up information. The main savings came from reduced hospitalizations – down 10.1 percent in the group receiving the intervention compared to those who received usual care. Pharmacy costs also fell by 3.6 percent. If this program reached the 160 million Americans with private health insurance, the savings could be huge – more than $10 billion in the first year alone.

In this model, the “staff targeted people considered at high risk of incurring new health care costs – people with chronic diseases like diabetes, chronic asthma, pulmonary disease and heart disease, for instance, or people recently discharged from the hospital.” The nurses made sure that the patients were going through with their prescribed treatments — thus forestalling more expensive complicaitons.

The staff also relied on “electronic medical records to identify patients considering such procedures as prostate, hip, knee, back or uterine surgery, and coronary revascularization” and provided them with “web links, video and print materials before the operation, comparing the risks and benefits of surgery with options like watchful waiting, bedrest, anti-inflammatory drugs and diet and exercise changes.” When fully informed, patients usually choose the less expensive and riskier treatment model.

I agree with Avik Roy that there are substantial differences between the Affordable Care Act and the GOP health care ‘replacers’ in the ‘Pledge To America’ but in almost all instances the former is a better deal for consumers than the latter.

My comparison table from yesterday may have obscured those differences but it was not meant to suggest that Republicans would replace the law with identical proposals of existing provisions and regulations. Rather, it was to emphasize that the law is, in fact, a child of bipartisan policy compromise and includes more moderate versions of common health care solutions. Undoubtedly, the ideas in the Pledge are in many instances slightly different and more conservative than those contained in the law. Consider:

1. Insurance across state lines:

ACA: Insurers can sell policies within the confines of state compacts. The states will designate one primary state whose laws shall govern the issuer.

PLEDGE. The document is short on specifics, but if the GOP’s past proposals are any indicator, then Republicans would allow insurers to designate a primary state — they will presumably chose one with the skimpiest regulations — and market policies to other states without adhering “to all of the consumer protection laws or restrictions on rate changes of the state.” The House Republican alternative from 2009 also expanded the definition of state to allow insurers to sell policies from the Virgin Islands, Guam, American Samoa and the Northern Marianas.

2. High-risk insurance pools:

ACA: Here I agree with Roy. The law’s “high-risk pools are seriously underfunded and have essentially no chance of succeeding.” The high premiums are preventing more sick people from enrolling. Subsidies will likely be needed for this to become a viable coverage option.

PLEDGE: Unfortunately, the GOP alternative is really not any better. Again, if you turn to the House alternative, Republicans wanted to fund the pools to the tune of $15 billion over 10 years — that’s still not nearly enough. And, they capped off premiums at no higher than 150% of (state) average; ACA sets them at no higher than the average person of that age would pay for insurance in the private market. Still, covering large groups of sick people is expensive, inefficient, and probably bad policy.

3. Pre-existing conditions:

ACA: Insurers cannot turn away individuals with pre-existing conditions, a policy that should keep costs in check if applied in conjunction with an individual mandate and other system efficiencies.

PLEDGE: Insurers would have to waive the pre-existing condition exclusion only for those individuals who have had prior coverage. Everyone else would go into the underfunded, poorly functioning, high-risk insurance pool.

4. State innovation:

ACA: States can receive waives from certain requirements if they can cover the uninsured and lower health costs in a more innovative manner.

PLEDGE: It’s unclear what Republicans would do to spur state innovation. In the past they’ve offered bonuses for states that lower premiums, number of uninsured. The House Republican alternative established state innovation program grants to reward states for lowering the cost of their premiums. Included bonus for reducing the number of uninsured.

5. Abortion:

ACA: Insurers that choose to offer abortion services in the exchanges must segregate their funds to ensure that public dollars don’t go towards non-Hyde restricted abortions. The high risk insurance pools and the community health center dollars are also under similar restrictions. Other federal dollars are not.

PLEDGE: Republicans want to codify Hyde restrictions — only abortions in cases of incest, rape, life of mother — in all federal funding.

The larger point here is that Republicans don’t really have too many new or revolutionary health care ideas; just more conservative twists on current law. If they really wanted to get creative they would have proposed something to decouple insurance from the employer system, innovative individual market reforms and real cost controls. But that would have been a little harder to message.

This afternoon, MSNBC’s Norah O’Donnell asked Rep. Mac Thornberry (R-TX) if the GOP’s ‘Pledge‘ to “repeal and replace” the health care law would eliminate all of the new health provisions that go into effect today and if he approved of the new benefits. Thornberry initially refused to say if he supported prohibiting insurers from denying coverage to children with pre-existing conditions and charging co-pays for certain preventive services, but awkwardly explained that Republicans would repeal all of them and then restore some of them:

O’DONNELL: I want specific answers from you on this — one of the things that went in place today, coverage for kids with pre-existing conditions. You want to repeal that? Yes or no?

THORNBERRY: Look at the document itself. It says when we repeal Obamacare, part of the replacement is protection for people with pre-existing conditions. It’s in the document itself.

O’DONNELL: So that’s a yes?

THORNBERRY: Read it.

O’DONNELL: What about a ban on lifetime benefit limits? Yes or no, Do you want to repeal that?

THORNBERRY: We want to repeal all of the Obama health care proposal and begin to replace it. We laid out four or five specific things to replace it with immediately.

O’DONNELL: This is a simple question. It’s a yes or no. I asked you about expanded coverage for young adults. Everybody up to the age of 26 can stay on their parents’ health care insurance. Do you want to repeal that? Yes or no?

THORNBERRY: If you would let me answer the question. What I was about to say was this is a first step. This is not the whole answer to health care. It does not try to solve all of the problems about young adults who don’t have coverage personally. I support that. I have two kids about that age. But what’s in this plan is what people are talking about now. And it’s a first step towards greater — towards further steps on health care, budget reduction, and all the other issues.

Watch it:

Thornberry told O’Donnell that she misunderstood the document as a comprehensive health care proposal. It’s not. “It is not a party blueprint for everything we would do if given the opportunity in another Congress,” he said. “It is, again, a first step that we want to do now and now we would start with repealing the whole health care bill.”

Taken at face value, the GOP’s ‘replace’ proposal is full of regulatory loopholes, much like the the health plan Republicans offered last year. The Congressional Budget Office estimated that proposal would increase the number of uninsured to 52 million in 2019.

Starting today, insurance companies can no longer discriminate against children with pre-existing conditions, drop coverage because of a simple mistake on an application, institute lifetime caps, limit choice of doctors, charge more for emergency services obtained out of network, or levy deductibles, co-payments or co-insurance for certain preventive benefits. Children will also be able to stay on their parents’ plans until their 26th birthday and everyone will have the right to appeal insurer decisions to an independent third party.

Ironically, today Republicans are also unveiling a new ‘Pledge To America,’ an agenda which promises to “repeal” all of these benefits — as well as the entire health care law — and replace it with “reforms  that  lower  costs  for   families  and  small  businesses,  increase  access  to  affordable,  high-­‐quality  care  and  strengthen  the  doctor-­‐patient   relationship.” The document provides almost no specifics about what the party would do to control health care spending, improve quality, or pay for its reforms. And at least 7 of the GOP’s ideas on health care are already included in the health care law:

	Affordable Care Act	GOP’s ‘Pledge To America’
Insurance 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. (SEC. 1333; p. 100-101)	“We  will  allow  individuals  to  buy  health  care   coverage  outside  of  the  state  in  which  they  live. ” (p. 15)
High-Risk Insurance Pools	The states and the federal government have already established high-risk insurance pools to provide temporary coverage to individuals with pre-existing conditions until 2014. (SEC. 1101; p. 30-33)	“We  will  expand  state  high-­‐risk  pools,   reinsurance  programs  and  reduce  the  cost  of  coverage” (p. 15)
Pre-Existing Conditions	Children cannot be denied coverage starting today, but beginning in 204, insurers must accept everyone who applies. (SEC. 2702-2705; p. 46-51)	“We  will  make  it  illegal  for  an  insurance   company  to  deny  coverage  to  someone  with  prior  coverage  on  the  basis  of  a  pre-­‐existing  condition.” (p. 15)
Lifetime and Annual Caps	A health insurer cannot impose lifetime limits and will be prohibited from placing annual limits on plans beginning in 2014. (SEC. 2711; p. 14)	“[E]liminate  annual  and  lifetime  spending  caps” (p.15)
Recissions	A health insurance issuer cannot rescind a policy except for in cases of fraud. (SEC. 2712; p. 14)	“[P]revent  insurers  from  dropping  your  coverage  just   because  you  get  sick.” (p.15)
State Innovation	States can receive waives from certain requirements if they can cover the uninsured and lower health costs in a more innovative manner. (SEC. 1332; p. 98-100)	“We  will  incentivize  states  to  develop  innovative  programs  that  lower   premiums  and  reduce  the  number  of  uninsured  Americans.” (p.15)
Conscience  Protections	The law does not affect existing conscience protections or discriminate “on the basis of the willingness or refusal to provide, pay for, cover, or refer for abortion or to provide or participate in training to provide abortion.” (SEC. 1303; p. 67)	“We  will  also  enact   into  law  conscience  protections  for  health  care  providers,  including  doctors,  nurses,  and  hospitals.” (p.15)

The document doesn’t detail how Republicans plan to offset the $140 billion deficit increase that will result from repealing the ACA or how they’ll lower health care spending. The Congressional Budget Office estimated that the GOP’s previous very similar health care plan — presented by House Minority Leader John Boehner (R-OH) as an alternative to the House health care bill — would increase the number of uninsured to 52 million in 2019 and reduce the deficit by only $68 billion over the 2010–2019 period.

Moreover, as conservative health care blogger Avik Roy points out, “the Pledge says almost nothing about the biggest and most difficult questions in health policy: Medicare and Medicaid reform.” “It criticizes PPACA’s ‘massive Medicare cuts’ without offering an alternative solution for putting the program on stable long-term footing.” CMS estimated earlier this month that under the health law, Medicare spending will decline $86.4 billion from previous projections due to reforms. “Specifically, average annual Medicare spending growth is anticipated to be 1.4 percentage points slower for 2012–19 than we projected in February 2010. By 2019, it is projected to grow 7.7 percent—0.9 percentage point more slowly than we projected in February 2010,” the report concluded. Repealing the law would increase in Medicare spending. How do the Republicans plan to hold down those costs? On that their document is absolutely silent.

Several large health insurers have announced that they would suspend child-only insurance plans “rather than comply with a new federal healthcare law that bars them from rejecting youngsters with preexisting medical conditions.” Most Democrats have remained mum about how to address the problem, but this afternoon Rep. Loretta Sanchez (D-CA) appeared on MSNBC’s Chris Matthews and suggested that states should prohibit such “bad faith” insurers from participating in the exchanges in 2014. Under the health care law, states can exclude certain insurers from the exchanges if they demonstrate a pattern or practice of excessive or unjustified premium increases.

Sanchez said that states — rather than the federal government — would be primarily responsible for holding insurers accountable and encouraged Gov. Arnold Schwarzenegger to sign a California bill that would prohibit insurers that stop offering child-only policies, from participating in the exchanges for a period of five years:

SANCHEZ: So obviously, one of those things is when we do set up exchanges in three years, we are going to get to choose. We are going to have a commission that is going to get to choose what policies are put in there. Certainly, I would call a company that is not writing children’s insurance a bad faith company and I would suggest they wouldn’t be found in that new 30 to 40 million-person market that we will create.

Watch it:

Some insurers may have decided to leave the child-only market because the new take-all-kids regulation made that product less profitable, but it’s also possible that other companies suspended their plans in order to avoid possible premium increases (that could have made them ineligible for the exchanges.) Still, the very notion that members of Congress are calling on states to use their regulatory authority to clamp down on “bad faith” insures, is quite encouraging.

Despite bragging that they had proposed and supported “new insurance market rules and consumer protections to achieve universal coverage, remove restrictions on preexisting conditions,” insurers across the country are preparing to suspend child-only insurance plans “rather than comply with a new federal healthcare law that bars them from rejecting youngsters with preexisting medical conditions.” Insurers had first challenged the law’s pre-existing requirements in March, insisting that the provision would increase premiums and was not required by the law. Pressed by HHS Secretary Kathleen Sebelius, however, AHIP, the industry’s lobby, eventually relented. Karen Ignagni issued a letter promising to “fully comply with [the] regulations.”

But that has not been the case. Some insurers began pulling out of the market even after the administration tried to alleviate concerns of adverse selection by establishing a defined enrollment period, and now many others are following suit. The Wall Street Journal:

“The new federal rules required guaranteed-issue coverage for individuals under 19 without regard to affordability,” said Matt Wiggin, an Aetna spokesman. “So folks seeking coverage would be those who need immediate services for high-cost conditions.” [...]

Golden Rule also recently discontinued the sale of policies to children individually. “Given current health-insurance market dynamics and regulations, it is necessary to require a parent to be on a policy in the same manner as is required on an employer group plan,” said Ellen Laden, a spokeswoman. “We continue to believe that regulations can be structured that will enable child-only plans to be offered and we are working toward that goal.”

Addressing bloggers on a call yesterday, Nancy-Ann DeParle — Director of the White House Office of Health Reform — implied that there is nothing else the administration can do to prevent issuers from leaving the market. “Our response is one of disappointment and displeasure,” DeParle said. “I think the important thing to remember is that families will have more options now than they did before. And the family policy — which is a more desirable form of coverage and what most children get — they can’t be discriminated against. So going forward, if you’re getting a family policy you can’t have an insurer say, ‘we’ll cover your family except for the child who has a heart murmor. And there is also expansions of the CHIP program and other ways this law makes children’s coverage more affordable and more accessible overall.”

Peter Harbage, a health care policy consultant, agrees. He told me that there is little else the White House could have done, outside of limiting benefits, allowing insurers to increase premiums, or making the application process somehow more complicated — in other words, allowing issuers to throw children under the bus. Moving forward, the administration will have to focus on enrolling eligible children into Medicaid, CHIP, and possibly the new high risk insurance pool programs, he says.

But given the political context, this is also an opportunity for the plans to reiterate the importance of the mandate. They may be hesitant to dramatically increase premiums for fear of being excluded from the exchanges, but weakening support for the law is not entirely without benefit.

Yesterday, during a conference call with bloggers about the new health care benefits that will begin tomorrow, Nancy-Ann DeParle — the director of the White House Office for health reform — said that the White House was not worried about GOP efforts to defund or repeal the law, but suggested that any part of it could be defunded. Replying to a question from the Wonk Room, DeParle admitted that “any aspect of this could be defunded,” but reiterated her belief that Democrats will retain control of the House and the Senate, forestalling that possibility:

DEPARLE: Through the appropriations process, what they can do and something they’ve done in the past with reforms. So they would defund in the appropriations bill maybe spent program that would be spent to issue regulations on competitive bidding program for dual medical equipment, so they can do things like that. Any aspect of this could be defunded. There is funding in here for insurance authorities to do a better job of rate review. They can take that away. So there are things they can do. But I’m confident that Democrats are going to be running the House in November, and the Senate as well. So I don’t expect to see any of those things. I’m not making plans for that. We are looking forward towards implementing the law.

Similarly, DeParle told the Huffington Post’s Sam Stein that HHS was not concerned about the constitutional challenges to the health care law, insisting that the administration will prevail in court. She argued that the lawsuits aren’t “occupying a whole lot of time and space” as implementers in some states are busy establishing exchanges and “getting legislation enacted in their legislatures.”

Should they regain power, however, the Republicans have pledged to pursue different channels to undermine the health care law. As the New York Times reported yesterday, the GOP could “withhold money that federal officials need to administer and enforce the law,” “prevent aggressive enforcement of the requirements,” “scale back the expansion of Medicaid” and even “override or rewrite some of the regulations issued by the Obama administration without a full opportunity for public comment.”