So What Happens Now--- Forecasting What's Possible

Insuring Resources Commentary:
Now that Senate Democrats have lost their Supermajority and only
have 59 votes they are quickly assessing the art of the possible to save face.

Here's my view of what we'll get:

These are definitely out
Public Option
Employer Mandate

I believe these might be in (Analysis follows)
Elimination of Pre-x exclusions
Individual Mandate
State Pilot Health Insurance Exchanges
Expand Medicaid in states at their option
Reduced tax on Cadillac Plans


Let's assess what I believe might be in from the list above:

Eliminate pre-x conditions- This is a must but insurers must have flexibility to deal with adverse selection of millions of uninsureds suddenly getting tremendous coverage for many for the very first time. Treatment costs may go through the roof and cost-shifting may be drastic upon the employer side.

Individual Mandate See above, but also what penalty will be set and will it be in proper balance to be both a carrot and a stick?

State Pilot Health Insurance Exchanges

I think we'll see Congress want to test this and not go with it nationwide. That will be a compromise both sides may be able to live with and I believe there will be employer "penalties" that they must pay if their employees access coverage through the HIE. Again, those penal;ties must be in the proper balance.

Medicaid Expansion


Ok' let's start with some state examples to set the stage.
Wisconsin: currently covers most adults and children up to 200% of the federal poverty level. Nebraska (which got the 'Cornhusker Kickback' thanks to Senator Nelson only covers up to 100% and the Senate Bill requires 133%. The House bill required 150%.

Louisiana I've heard is far below 100%.

I think the final bill will allow state's to experiment with some additional matching funds from the Feds. Currently most state Medicaid programs are 60% funded by the individual state and then they receive the remaining 40% from the feds. There are some nuances to this but that's the basics. I think the feds may sweeten that match within select pilots and allow a few states to experiment on a limited basis a la BadgerCare, except it might be a better financial deal for states to have waited.

But what about those with existing employer coverage?

I believe there will be a reduced tax on the so-called Cadillac plans as a compromise. Reform will probably include minimum required standard benefit plans which set a floor for the employer market. Employers may also be mandated to provide several options based on how many employees they have.

Employer size for inclusion in the Exchange will be interesting since I don't feel there will be a mandate if a compromise is found in the next few weeks. The impact on small businesses is perhaps the hardest issue to predict. If there's no mandate I think employees without coverage will be allowed in the Exchanges and the employer may face a fee because of that but what level of fee, what amount of payroll might be set for that. All these questions remain.

There also appears to be little impact on self-funded employer plans except in the areas of multi-state regulations, standard benefit plan offerings and a few other items that may or may not be included. If an employer's self-funded plan is deemed a Cadillac plan there may be a tax on the benefits.

What should happen but most likely won't

>Large Lean Efficiency pilots in multiple states- I won't harp on my pet issue again today.

Change health care reimbursement to episode of care basis, not fee-for-service.

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Obama Weighs Options
1/21/10- The Wall Street Journal
Inside the White House, top aides to the president said Mr. Obama had made no decision on how to proceed, and insisted that his preference was still to win passage of a far-reaching health care measure, like the House and Senate bills, which would extend coverage to more than 30 million people by 2019.

On Capitol Hill, Democratic leaders said they were weighing several options. But some lawmakers in both parties began calling for a scaled-back bill that could be adopted quickly with bipartisan support, and Mr. Obama seemed to suggest that if he could not pass an ambitious health care bill, he would be willing to settle for what he could get. In the interview with ABC, he cited two specific goals: cracking down on insurance industry practices that hurt consumers and reining in health costs.

“We know that we need insurance reform, that the health insurance companies are taking advantage of people,” Mr. Obama said. “We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up, and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements to this bill.”

Republican Congressional aides said a compromise bill could include new insurance industry regulations, including a ban on denying coverage based on pre-existing medical conditions, as well as aid for small businesses for health costs and possible steps to restrict malpractice lawsuits. But as Mr. Obama noted on ABC, a pared-down package imposing restrictions on insurers might make coverage unaffordable, which is one reason he prefers a broad overhaul.

As the full Congress returned to Washington to start a new legislative year on the first anniversary of Mr. Obama’s inauguration options were limited and there were signs of a divide between the White House and Democrats on Capitol Hill. House leaders signaled that they had effectively ruled out the idea of adopting the Senate bill, which would send it directly to the president for his signature. Yet close advisers to the president said such a move was still on the table.

Mr. Brown’s victory in Massachusetts on Tuesday denies Democrats the 60th vote that they need to surmount filibusters and advance a revised health measure. Senate leaders said they would not risk antagonizing voters by trying to rush a bill through before Mr. Brown could be sworn in, and Mr. Obama agreed.

“People in Massachusetts spoke,” the president told ABC. “He’s got to be part of that process.”

Another option considered by Democrats would be to use the procedural maneuver known as reconciliation to pass chunks of the health care bill attached to a budget measure, which requires only a simple majority. But there appeared to be little appetite for such a move on Capitol Hill.

Senior Republicans showed little new willingness to collaborate with the Democrats. Asked where he might be willing to work across the aisle, the Senate Republican leader, Mitch McConnell of Kentucky, offered praise for Mr. Obama’s strategy in Afghanistan but not a single example on domestic policy.

Mr. McConnell was asked if the health care bill was dead. “I sure hope so,” he said.

Senator Susan Collins, Republican of Maine, said she was eager to work with Democrats in devising an alternative to the health care bill passed four weeks ago by the Senate on a party-line vote.

“What I hope the White House will do is start from scratch and, instead of pushing this bill through the House, work with a bipartisan group of senators to achieve a consensus bill that would have widespread support,” Ms. Collins said. “There are many provisions of the bill that have bipartisan support. And I believe the president would be wise to draft a new bill that he could get through both the House and the Senate with supermajority votes.”

Robert Pear contributed reporting.