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Where Are We On Health Reform

The following is one of the best synopses of where we are on health reform, the potential approaches and the pitfalls. This piece was written by ERIC, the ERISA Industry Council.

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Question #1:  Did anybody out there miss the fact that, as a result of the election this past Tuesday in Massachusetts to fill the seat of the late Ted Kennedy, the Democrats no longer have a 60-vote supermajority in the Senate? 

Question #2:  Does anybody know what this means for healthcare reform?

If you answered “no” to both of the above questions, then we’re in the same camp. 

Here’s what we do know so far.  First, as a result of last Tuesday’s election, Scott Brown will soon become the 41st Republican in the Senate, giving the GOP the ability to filibuster legislation they oppose.  At the moment, this would include comprehensive healthcare reform legislation. 

Most Democrats in the Senate would like to take the bill that they approved on Christmas Eve and ram it through the House.  Democrats in the House are distinctly unenthusiastic about this approach, however, and there is little likelihood of it happening.  There is also little talk of taking the compromise that the president had been hammering out with Congressional Democratic leadership and running it through the House and then the Senate before Senator-elect Brown is seated.  Passage via that scenario would be a long shot, to say the least, and more likely to leave Democrats even more vulnerable than they already are to the charge of turning a deaf ear to the voters in Massachusetts.

So where does that leave us?  I would say that there are only two avenues that offer any possibility of passing more-than-incremental healthcare reform legislation in the near future, and both are probably long shots. 

The “sidecar” approach:  First, there is the “sidecar” approach.  Under this scenario, the Democrats take the final healthcare reform bill approved by the Senate and pass it through the House.  At the same time, they pass a bill in the House that essentially would conform the Senate bill to what the president and Congressional Democrats have agreed to, such as curtailing the excise tax on high-cost plans and possibly raising subsidies for low-income individuals.  After passage in the House, the Senate would take up this sidecar bill under the reconciliation process, meaning that it would need only 51 votes to pass.  What would be created through this complicated process would be a bill that largely resembled the Senate healthcare reform measure, modified by the minimum number of changes necessary to win House support while not leaving too many Senate Democrats behind. 

This sidecar approach is problematic for a couple of reasons.  First, it is procedurally very burdensome.  The reconciliation process is not a pretty picture and could result in a long, drawn-out imbroglio in the Senate where various aspects of the bill (such as the insurance market reforms or creation of an exchange) would be subject to procedural challenges to inclusion on the ground of not being “germane” to the bill.  The process would also be time-consuming, as at least potentially the bill would need to go through the original committees of jurisdiction in both the House and the Senate.  Possibly most important, it does not seem clear at this point that Democrats in either the House or the Senate have the stomach for a difficult political fight, particularly if it involves diving back into the formidable issues that separated the House and Senate healthcare reform approaches. 

The “slimmed-down” approach:  The second approach mimics the “Biggest Loser” pattern of chopping 50 pounds off a comprehensive reform measure.  To pursue a bad analogy, it probably would mean being left with a legislative carcass that had a heart and a left hand – although missing the other vital organs – but which could, if pressed, still be referred to as healthcare reform. 

Under this approach, the goal would be to create a bill that focused more narrowly on the “popular” provisions of healthcare reform and, possibly, build on bipartisan support.  Popular measures might include, at a minimum, cost containment efforts and insurance market reforms.  The problem with the latter, however, is that probably the most highly sought market reform provision is one that would restrict the use of preexisting condition exclusions.  To ban these exclusions without causing a significant increase in premiums, however, would probably entail an individual mandate, which in turn would require providing subsidies for low-income people, which then would likely mean that measures would be needed to raise the money to finance these subsidies – such as the excise tax on high-cost plans. Which leaves us more or less where we started, with nobody happy with the bill. 

Other measures that conceivably could be bundled into a slimmed-down approach might include consumer protections, allowing young adults to stay on their parents’ policies until age 26 or 27, helping small businesses and low-income people pay premiums, and closing the Medicare prescription drug donut hole.  As with other provisions that would require offsetting provisions to “pay” for them, measures to reduce the number of the uninsured would face more of a challenge to be included in this type of package. 

The timeline:  Congressional Democrats are feeling serious pressure to attend to other issues that resonate with voters, such as job-creating and deficit reduction legislation.  Healthcare fatigue in general also appears to be motivating certain Members of Congress to take a break from reform legislation for several weeks.  The problem with any significant delay is that it becomes increasingly more difficult to deal with issues such as healthcare reform as the November midterm election gets closer; I would guess that it would be virtually impossible to deal with an issue of this magnitude after the July 4th Congressional recess. 

On a more immediate note, we should have a better idea of what Democrats plan after the president delivers his State of the Union speech this Wednesday night.  Initially President Obama seemed to favor the slimmed-down approach, but his press secretary downplayed this commitment shortly after the president made his comments.  It is not at all clear at this point what approach he will favor on Wednesday night and how committed he will be towards pressing Congress to enact healthcare reform in the near future.

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January 25, 2010 - Posted by | Federal Government, healthcare | , ,

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