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Senate Finance Committee Passage of Health Reform Proposal

By admin | October 20, 2009

The Senate Finance Committee has approved the America’s Healthy Future Act of 2009 October 13, 2009, by a vote of 14 to 9, with Sen. Snowe (R-ME) joining Committee Democrats in supporting passage of the measure.

Sen. Snowe emphasized her vote in Committee was designed to move the process forward despite her continued concerns about affordability of coverage under the plan, and she would not commit her future support at this point. She also secured a promise from Chairman Baucus (D-MT) to obtain a Congressional Budget Office (CBO) cost estimate of the final legislative language before the bill comes to the Senate floor.

Following is a synopsis of the final day of the Finance Committee mark-up.

Chairman Baucus

SFC is gathering for the eighth day. During the markup, the Committee adopted 41 amendments. He reported that the bill reduces deficit within 10 years and raises the share of Americans with health insurance coverage.

The Ranking Member Grassley commended the Chairman for his work on the legislation. He noted that there are some provisions in the bill that raise concern. He stated that the bill expands Medicaid, imposes unprecedented federal mandate for coverage enforced by the IRS, increases the size of the government, gives the HHS Secretary the power to define benefits for every private plan and redefine the benefits annually, cause health care premiums for millions to increase, tightens the federal rating bans, imposes new fees and taxes totaling $500 billion. He called the bill a leftward march.

Senator Rockefeller stated that insurance companies have been laughing all the way to the bank for years while individuals suffer. Asked Dr. Elmendorf and Dr. Miller a question insurance companies have claimed that premium increases are out of their control. In the absence of health care reform, how much have insurance companies increased premiums over the year. Dr. Elmendorf responded that he does not have a number. The Senator informed him that premiums have risen 133%. He asked whether there are steps that insurance companies that they can voluntarily take in order to reduce costs and beneficiary premiums, such as reducing executive compensation, negotiating drug prices, and focusing on quality. Dr. Elmendorf stated that a number of options exist. The Senator asked whether insurance companies have a choice about whether to increase premiums. Dr. Elmendorf responded that economists generally believe that when costs rise they are passed on to consumers.

Senator Hatch stated that the real bill is being written in the dark corners of the Capitol and at the very least he hopes to have time for full public review. The Senator stated that the bill fails President Obamas own tests for health care reform. President Obama has stated that if individuals like their current plan, they will be able to keep it. The Senator stated that the bill does not guarantee his assertion. The bill cuts the Medicare Advantage plans, which will negatively impact beneficiaries, particularly in rural areas. The President has pledged to not mess with Medicare. However, he stated that the bill stripes funding from MA plans. According to CBO, the value of additional benefits will decline 70 percent.

Senator Conrad stated that if Congress fails to act, the deficit will reach 400% of GDP by 2020. In addition, if Congress fails to enact health care reform, in the next decade there will be 54 million people uninsured and millions more that will lack quality coverage. He highlighted the CBO score, which indicates that the legislation will reduce the budget deficit. The Finance Committee plan meets key health care reform benchmarks fully paid for, expands coverage, bends the cost curve, contains major insurance market and delivery system reforms, promotes choice and competition, prohibits insurers from denying coverage based on pre-existing conditions, establishes non-profits co-ops to compete with private plans, and improves the quality of care. The bill does not cut Medicare benefits, cover illegal immigrants, expand federal funding for abortion services, or create death panels.

Senator Snowe noted that the Senate Finance Committee bill is not the final Senate bill because it will be merged with the Senate HELP Committee. She noted that the merged bill should be scored prior to floor consideration. She asked Dr. Elmendorf for advice to drafting staff to ensure that CBOs assumptions are properly captured in legislative language. Dr. Elmendorf noted the intrinsic difficultly of drafting legislative language that matches assumptions and conceptual language. He noted that he is unsure of how to advise staff. The Senator asked whether there is discussion between staff and CBO. He responded that there is a dialogue among CBO, Congressional staff, and CMS staff who understand implementation. Chairman Baucus noted that he is even more vigilant regarding Senator Snowes concerns regarding intent and scoring than ever before.

Senator Bingaman noted that one of the major components of the reform legislation is the goal of bending the cost curve. He stated that the 40 percent excise tax on Cadillac plans is the most important way to bend the cost curve and national health expenditures. Dr. Elmendorf responded that CBO has not been able to evaluate the effect of the proposal on national health expenditures.

Senator Kyl asked whether the score considers the technical changes. Dr. Elemndorf stated that CBO scored the changes posted on October 8, technical corrections, and additional clarifications. Senator Kyl stated that the technical changes are substantive changes and that the Committee did not debate and adopt such changes. He cited that the revised Chairmans mark does not index fees to inflation, but the staff presented it as a technical change. Chairman Baucus responded that the changes are, in fact, clarifications. The Chairman asked whether the clarifications reflect the underlying mark as amended.

Senator Kerry noted his concern related to a lack of an employer mandate and expressed that he will offer an amendment on the floor if it is not addressed in the merged bill. He referenced a Price Waterhouse Coopers (PWC) report released on Monday is a powerful argument for why we need to have a public plan. The report does not take many of benefits of the reform into consideration. For example, the report ignores the subsidies for small businesses. He suggested that insurance companies are part of the problem, not the solution.

Senator Bunning pointed out that 25 million people will remain uninsured under this proposal. The Senator stated that the cost of the bill is not appreciated because many provisions do not go into effect immediately. CBO states that millions of people will lose employer-based coverage as a result of the bill. The bill cuts $517 billion from Medicare and Medicaid funding. He stated that the bill breaks the promises the President Obama made, including no tax increases on middle-class Americans, allowing Americans to keep the plans they have (not true if you have an MA plan, employer-based coverage, HSA, FSA), containing costs. He criticized the Committee for modifying his veterans protection amendment to a study. Chairman Baucus responded that he asked the VA and CBO and they concluded that they cannot score the amendment as written because there is no data. Dr. Elmendorf clarified that CBO did not advocate that the amendment be modified.

Senator Crapo asked for clarification about what people are referring to when people say bending the cost curve. Mr. Elmendorf clarified that CBO evaluated the 10 year effects, but not the effect on national health expenditures. CBO has not made a statement on bending the health care cost curve. Senator Crapo asked whether CBO concluded that the proposal will drive health care premiums up. Dr. Elmendorf clarified due to many factors, CBO has not been able to draw a conclusion about effect on health care premiums. Dr. Barthold noted that the Joint Committee on Taxation does not draw such conclusions. He asked whether the mark will increase spending on health care. Dr. Elmendorf stated that is correct, but CBO focused on the net effect on the deficit.

Senator Roberts stated his opposition to the bill, but acknowledged that many colleagues view this as the moderate option in comparison to the House and Senate HELP Committee bills. He highlighted the Medicaid carve-outs for select states.

Senator Ensign noted that many people lose under this proposal, including individuals with an FSA, from a state with financial trouble, etc. He stated that taking funding from Medicare to fund an expansion is wrong. He also highlighted the decrease in the value of benefits for seniors who have MA plans. Senator Ensign stated that the bill does raise taxes for families, contrary to President Obamas promise. He counted seven new taxes. He stated his concern for expanding Medicaid to 133% of FPL. The Senator reported that he will be voting against the bill because Nevada cannot afford the bill.

Senator Wyden engaged with Dr. Elmendorf regarding CBOs charts related to affordability and consumer choice. He asked how many families would seek the affordability waiver. Dr. Elmendorf responded that he does not have an estimate.

Senator Enzi stated that he has concerns that the bill takes funds away from Medicare to fund the expansion and then creates a Medicare Commission to help ensure program solvency. Senator Enzi noted that physicians are continuing to call his office requesting tort reform. Mr. Barthold noted that the Joint Committee on Taxation estimates that the excise tax could have an effect of increasing insurance premiums. He noted that he will reserve additional questions for the next round.

Senator Nelson highlighted the cost of inaction and also pointed to the flaws in the PCW report.

Senator Cornyn referred to a Wall Street Journal called Lessons of State Health Care Reform. He asked Dr. Elmendorf if CBO considers the actual experience of Massachusetts. Dr. Elmendorf stated that CBO does.

Senator Cornyn asked whether his understanding is correct that the Committee will provide report language after the Committee votes on the conceptual language. The report language will include legislative language. Chairman Baucus stated that Committee members will be able to look at the legislative language as soon as possible. Senator Cornyn asked why the legislative language would not be made available before the vote.

Senator Menendez stated his support for the proposal. He stated that the bill is fair for families and highlighted his amendment that would provide consumer assistance for those who are denied coverage. He urged the Committee to continue to address affordability issues. Senator Menendez noted that the bill does not include a public plan option. He reported that the insurance industry is threatening that insurance premiums could rise as a result of the reform. The Senator expressed hope that the final Senate bill will include a public plan option. He stated that a vote against the reform bill is a vote for status quo.

Senator Carper highlighted the creation of the CMS Innovation Center. He noted that wellness and incentivizing wellness is critical to reigning in the cost of health care costs.

Senator Lincoln stated that she is pleased that CBO confirmed that the bill is deficit neutral. Preserving the status quo in health care is unsustainable. She requested that the bill, its score, and all amendments be made available to the public.

Sen. Grassley asked Dr. Elmendorf if the projected deficit reduction included interest on the national debt. He stated that the reduction includes only non-interest components of the budget.

Sen. Grassley proceeded to ask several questions about coverage and costs. He concluded that half of newly insured people are in tax payer funded government programs. Sen. Grassley stated that half of newly insured people are in tax payer funded government programs. Additionally, he stated his concern that the CBO score is based on legislative language.

Sen. Rockefeller stated that health reform is about providing tangible solutions for families. Bill still falls short of what people need and what is expected of the Committee. Medicaid is not a political bargaining chip for insurance companies or governors.

Sen. Hatch urged the Committee to take more time for CBO analysis.

Sen. Conrad discussed the public option and it being tied to Medicare levels of reimbursement. His state has the lowest reimbursement levels.

Sen. Snowe stated it is clear the Committee has struggled with the equilibrium of health care reform. Should contemplate all the decades of inactionthis country has a problem that is growing worse, not better. We can anticipate spending $33 trillion on health care in the next decade. Frustrated over arbitrary guidelines by the Committee and the Administrationshe requested more time. Best way to allay peoples concerns is systematically address these issues. The mark before us includes some bipartisan reforms, such as new provisions on the insurance companies and individual and small-business exchanges, which creates powerful marketplace. Concerned about creating new, massive bureaucracies. Affordability remains her paramount concern. Other concerns are Medicaid expansion, Medicare reimbursement for home care and nursing home care. Consequences of inaction, dictate the urgency of Congress to act. Many miles to go on this legislative journey. Nervous about the future merging of the bills. Must be done in strict accordance with the SFCs provision so we maintain the integrity of the score of the mark. Must have final CBO score on a public website before vote to consider the merged bill on the floor. Confirmed that the Majority has the votes in the House and Senate. Her vote does not forecast what her vote will be on the floor. Sen. Baucus called her statement very thoughtful. Sen. Baucus agreed that a final score on the bill will be obtained before a vote on the final bill.

Sen. Kyl stated that he cannot support this bill because of taxes on middle class, as well as Medicare cuts and rationing of care. He stated that the bill cuts Medicare by $449 billion over ten years and declared that such massive cuts cant be made without limiting seniors care.

Sen. Cantwell stated that affordability is key as the bill continues to develop in the Senate.

Sen. Bunning wanted to ask the Joint Tax Staff. What will go to tax payers and income tax liability and what portion will go to tax payers not as an income liability. Staff stated that the percentage of the exchange subsidy is an average of 75 percent. CBO usually account those portions as outlays.

This bill does not correct the problems of the current health care system, therefore he will not vote for the legislation.

Sen. Crapo stated that about 75% of exchange subsidies are spending and 25% tax relief and get to total cost of coverage to $829 billion. Dr. Elmendorf confirmed for Sen. Crapo several offsets within the bill.

Sen. Stabenow this bill covers all stages of life by offering affordable coverage for health care. Supportive of legislation.

Sen. Ensign asked Joint Tax staff clarification questions about the distribution of excise tax. He mentioned the CBOs analysis of the savings of tort reform and his intent to discuss this issue more on the floor.

Sen. Schumer stated must continue to cut health care costs or Medicare will go broke. We can cut costs and preserve health care for everyone. Wants to make changes to excise tax on the Senate floor and in conferenceneed appropriate safeguards for the middle class. Supportive of the bill.

Sen. Wyden requested that Chairman Baucus continue to work on more choice and more affordability in the bill. Stated he will support to advance this bill, but urges process to continue tin a bipartisan way.

Sen. Enzi concerned about inadequate Medicare payments to physicians and that cuts to hospitals will put hospitals out of business in Wyoming.

Sen. Cornyn stated the bill does create steps in the right direction by realigning incentives, but need to do more. This bill does nothing to stop defensive medicine.

Sen. Kerry concerned about medical device tax. Worried that this tax will curb innovation and there will be a cost shift to patients who benefit from these devices.

Sen. Crapo concerned this bill does not bend the cost curve.

Sen. Grassley asked Dr. Elmendorf clarification questions to confirm that some seniors may receive a reduction in benefits and premiums may rise under the current bill.

Sen. Rockefeller stated he thinks the insurance industry gets too sweet a deal in this bill, especially because the medical loss ratio is at 75 percent. He declared that a public option is necessary. Does not see it has a government take over, but as government assistance for people who are getting hurt by major premium increases. Noted the Committee has never had a discussion on co-ops. Large employers should be under the same restraints as small businesses. Medicare Commissiononly long-term way to save Medicare.

Senator Rockefeller noted that he is disappointed that the Committee did not discuss end-of-life care. He noted that he will vote in support of the proposal.

Chairman Baucus stated that the technical corrections and clarifications do not need to be adopted, but in the spirit of fairness asked for members to vote to adopt them. A roll call vote was requested.

The technical corrections and clarifications posted on the Finance Committee’s web site on October 5 were adopted 13-10 (by a strict party-line vote).

Motion to order the Mark reported was approved 14-9 (Sen. Snowe voting in favor).

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