• House passes sweeping health care reform bill
• House GOP plan would have little effect on number of uninsured
• CBO continues analysis of health care reform bills
• AMA, AARP health reform endorsements urge change in Medicare physician formula

• Wisconsin issues rule expanding health insurance coverage to young adults

• Percentage of employers contributing to CDHPs drops to 63%

House passes sweeping health care reform bill

House lawmakers made good on their promise to pass a sweeping overhaul of the nation's health insurance system, approving the Affordable Health Care for America Act (HR 3962) by a vote of 220 to 215. The historical vote came late on November 7, after lawmakers from both parties spent the day debating the merits of the legislation, including whether funding for abortion should be paid for by federal dollars.

Democratic lawmakers said the measure, which will provide insurance for 96 percent of Americans, is the single most important step in 100 years to address the health care needs of American families.

"This bill will at long last reform the health care system by expanding choices, reducing costs, and providing people with peace of mind about their health insurance," said Rep. Henry Waxman, D-Calif., who chairs the House Energy and Commerce Committee. The bill was a merger of work produced by his committee, as well as the House Ways and Means and House Education and Labor committees. One Republican representative voted for the bill and 39 Democratic representatives voted against it.

GOP lawmakers characterized the legislation as a job killing, big government takeover of the health care system that would disrupt the free market and interfere with doctor/patient relationships. "Taken in full, this government takeover of health care will increase federal health care spending, pile more debt onto the backs of our children, and hurt our economy with job-killing tax increases," said Rep. Tom Price (R-Ga.) chairman of the conservative House Republican Study Committee. "But most disturbingly, it will place Americans' personal medical decisions in the hands of faceless bureaucrats in Washington."

White House reaction. The White House issued a statement of administrative policy on November 6 offering strong support for the legislation, noting that the public option for insurance included in the bill will ensure that Americans benefit from choice and competition in the market. "H.R. 3962 will provide needed insurance reforms for Americans with insurance, expand coverage for those who do not have insurance, lower costs for families and businesses, and begin to reduce the nation's deficit," according to the administration statement.

CBO assessment. According to estimates from the Congressional Budget Office and the Joint Committee on Taxation, the health care bill would cut the federal budget deficit by $109 billion over the 2010-2019 period. The JCT estimated a net cost of $891 billion over 10 years for the health reform legislation. To offset that cost, Democrat lawmakers relied on a combination of cuts in Medicare spending and increases in federal taxes.

The biggest revenue raisers in the legislation are a 5.4 percent surtax on individuals with adjusted gross income (AGI) in excess of $500,000 and for families, with AGI in excess of $1 million. That provision would raise $460 billion. Another $20 billion would come from a 2.5 percent excise tax on the sale of medical devices, approximately $17 billion would come from changes to information reporting requirements for corporations, $6 billion from repealing worldwide interest allocation rules, and $23 billion from changes to a biofuel tax credit used by paper manufacturers.

Medicare changes. The almost 2,000 page bill contains over 600 pages in changes and additions to existing Medicare law, and over 100 pages of changes and additions to existing Medicaid law. The Medicare changes include (1) reduction in annual market basket updates to Part A providers; (2) a possible reduction to Medicare disproportionate share hospital (DSH) payments (due to expanded private insurance coverage); (3) reduction in Medicare Advantage payments to match Medicare fee-for-service payments; (4) the elimination of the "donut hole" under the Medicare Part D prescription drug plan; (5) the establishment of accountable care organizations that would allow various types of Medicare providers to share in the savings earned by providing coordinated care to Medicare beneficiaries; (6) the establishment of a center to promote comparative effectiveness research; (7) modifications to the graduate medical education program; and (8) increased funding to fight Medicare fraud and abuse.

Medicaid changes. Medicaid changes include (1) expanding Medicaid eligibility to individuals with incomes at or below 150 percent of the federal poverty level; (2) expansion of preventive services offered under Medicaid without cost sharing; (3) increasing payments to Part B providers for primary care services; (4) establishing a Medicaid accountable care organization pilot program; and (5) expanding oversight relating to Medicaid fraud and abuse. CCH Washington Bureau, Nov. 8, 2009.

House GOP plan would have little effect on number of uninsured

House Republican members on Nov. 3 released a health care reform proposal aimed at lowering health care costs and increasing access to health insurance, without raising federal taxes or cutting Medicare spending. A Congressional Budget Office (CBO) assessment of the legislation determined that the legislation would lead to a net reduction in the federal budget deficit of $68 billion over 10 years, but would barely reduce the number of uninsured people over that time period.

The GOP plan would expand state-based high-risk pools and reinsurance programs so that any individual, regardless of pre-existing conditions or past illnesses, have access to health insurance coverage. Premiums in plans offered in the high-risk pools could be no more than 150 percent of the average premium for applicable standard risk rates in a given state.

The legislation also would all individuals to purchase insurance across state lines, allow dependents to stay on their parents' health insurance plans through age 25, and enact medical liability reforms.

The CBO determined that the legislation would reduce the number of nonelderly people without health insurance by about 3 million by 2019, leaving 52 million nonelderly uninsured, the same number the CBO estimates would be uninsured in 2019 if no health care reform plan was enacted.

The text of the GOP legislation is at http://rules-republicans.house.gov/Media/PDF/RepublicanAlternative3962_9.pdf. CCH Chicago Office, Nov. 5, 2009.

CBO continues analysis of health care reform bills

In the last week, the Congressional Budget Office (CBO) released three reports analyzing different aspects of health care reform proposals offered in the House and the Senate. The reports address the overall impact of the "Affordable Health Care for America Act" (HR 3962); premium subsidies for the purchase of health insurance through the new insurance exchanges; and the possible effects on the federal budget deficit of reform proposals from both the House and the Senate Finance Committee.

HR 3692. "The Affordable Health Care for America Act" (H.R. 3962) would result in a net reduction in federal budget deficits of $104 billion over the 2010-2019 period, according to a letter sent by CBO director Douglas Elmendorf to Rep. Charles Rangel (D. N.Y.) on October 29, 2009. The net cost of the legislation would be $894 billion over 10 years for the proposed expansions in insurance coverage. That net cost reflects a total of $1.055 billion in subsidies provided through insurance exchanges, increased net outlays for Medicaid and the Children's Health Insurance Program (CHIP), and tax credits for small employers. These costs would be offset partly by $167 billion in collections of penalties paid by individuals and employers. State spending on Medicaid would increase by about $34 billion over 10 years as a result of provisions affecting insurance coverage. The number of nonelderly people who are uninsured would be reduced by about 36 million, leaving about 18 million nonelderly residents uninsured. About one-third of these uninsured are unauthorized immigrants.

Over the 2010-2019 period, permanent reductions in the annual updates to Medicare's payment rates for most services in the fee-for-service sector (other than physicians' services) would yield budgetary savings of $229 billion; changes in Medicare Advantage payments would create $170 billion in savings; and increasing Medicaid's payment rates to physicians and other health care professionals for the provision of primary care services to Medicaid beneficiaries would cost about $57 billion.

Federal budget deficit. In an October 30, 2009, letter to Senate Finance Committee chairman Max Baucus (D. Mont.), Elmendorf noted that the health care reform proposal approved by the Senate Finance committee would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period. The House health care reform proposal, H.R. 3962, would result in a net reduction in federal budget deficits of $104 billion over the same period. The "federal budgetary commitment to health care," which describes the sum of net federal outlays for health programs and tax preferences for health care, would be $85 billion over 10 years under the Senate Finance Committee bill, and $598 billion over 10 years under H.R. 3962.

Premium subsidies. In a November 2, 2009, letter to Rep. Rangel, Elmendorf said that the approximate national average under H.R. 3962 for premium subsidies for a lower-cost reference plan purchased through an insurance exchange would be about $5,300 for single policies and about $15,000 for family policies in 2016.

Individuals who purchase insurance through an exchange under the House bill are likely to be somewhat sicker than people who purchase insurance through similar exchanges outlined in legislation approved by the Senate Finance Committee, according to Elmendorf, in part because the House bill offers greater subsidies for cost sharing, which would be more valuable to people with health problems and thus would tend to attract a less healthy mix of enrollees. Average premiums and cost-sharing payments for enrollees in the exchanges under the House bill would be slightly higher than those for enrollees in the exchanges under the Finance Committee's proposal. CBO Letter to Rep. Charles Rangel (premium subsidies), Nov. 2, 2009; CBO Letter to Sen. Max Baucus (federal budget impact), Oct. 30, 2009; CBO Letter to Rep. Charles Rangel (H.R. 3692), Oct. 29, 2009.

AMA, AARP health reform endorsements urge change in Medicare physician formula

In their endorsements of the House health reform proposal, H.R. 3962, both the American Medical Association (AMA) and AARP also urged Congress to pass the Medicare Physician Payment Reform Act of 2009 (H.R. 3961) to permanently repeal the physician payment formula.

"In less than 60 days, Medicare physician payments are scheduled to be cut by 21%, with more cuts in years to come," said J. James Rohack, AMA president. "According to a recent AARP poll, nearly 90% of people age 50 and older are concerned that the current Medicare physician payment formula threatens their access to care."

H.R. 3961 would restructure the sustainable growth rate (SGR) formula, which determines the updates to payment rates for physician services, in several ways:

• The update for 2010 would be the percentage increase in the Medicare economic index, which is 1.2%, as specified in final regulations.
• Beginning in 2011, there would be separate target growth rates and conversion factor updates for two categories of service: evaluation, management, and preventive services, and all other services.
• The new SGR formula would take into account spending for each category of service since 2009 or (beginning in 2014) for the past five years. (The current SGR formula takes into account spending since 1996.)
• Finally, only physician services, and not other services provided incident to the physician visit (such as laboratory services), would be counted in each category.

The AMA and AARP endorsements may be found at http://www.ama-assn.org/ and http://www.aarp.org/.

Wisconsin issues rule expanding health insurance coverage to young adults

Wisconsin Governor Jim Doyle has announced an emergency rule from the Office of the Commissioner of Insurance (OCI) implementing a new state law expanding health insurance coverage for young adults under age 27. Young adults will be able to receive coverage through their parents' health care plans.

"This emergency rule ensures that young adults, a group that traditionally has high levels of uninsurance, will have access to affordable health insurance coverage through their parents," Governor Doyle said. "Questions were raised regarding provisions of the new law. The rule provides needed clarity to ensure eligible young adults have quick access to heath care coverage."

The emergency rule clarifies a new law, passed in June 2009, requiring health insurance policies to cover eligible young adults up to age 27. The law applies to individual and group health benefit plans and a self-insured plan of the state, or a county, city, village, town or school district, including limited scope plans, such as vision and dental plans.

The rule clarifies: the calculation for eligibility based on premium costs; eligibility for military personnel; eligibility for students; eligibility for non-resident young adults with resident parents; and eligibility for young adults previously dropped from coverage because of their age.

To be eligible for this coverage young adults must be over age 17 but less than 27 years of age; not married; and either ineligible for health coverage through the young adult's employer or have premium contribution for employer coverage that exceed the additional premium amount the parent is required to pay to add the young adult to the parent's health plan. Additional eligibility rules apply to young adults who are called to federal active duty in the National Guard or reserves while a full-time student. The statute goes into effect for health insurance policies issued or renewed beginning on January 1, 2010.

The emergency rule can be viewed at OCI's website at http://oci.wi.gov/rules/0334em09.pdf.

Percentage of employers contributing to CDHPs drops to 63%

The percentage of employers making contributions to employees' health reimbursement arrangements (HRAs) and health savings accounts (HSAs) dropped from 67% in 2008 to 63% in 2009, according to research from the Employee Benefit Research Institute (EBRI). The November 2009 EBRI Notes also reported that the percentage of workers with employee-only coverage reporting that their employer contributed $1,000 or more to their account fell from 37% to 32%. In addition, the percentage of workers with employer contributions of less than $200 increased from 3% to 8%.

However, EBRI found that among workers with family coverage, the percentage of workers receiving an employer contribution of $1,000 or more increased from 59% in 2008 to 73% in 2009.

The EBRI survey noted that the amount of money that individuals have accumulated in their HRAs or HSAs has grown over time. The percentage of individuals reporting an account balance of at least $1,000 increased from 25% in 2006 to 47% in 2009. Also, the percentage of individuals reporting that they had nothing in their account declined from 14% in 2006 to 6% in 2009.

The EBRI survey also found the following:

• Approximately 5 million Americans with private health insurance, or 4% of the population, was enrolled in an HRA or HSA in 2009, up from 1% in 2006.
• Among individuals with employer-sponsored health insurance and a choice of health care plans, 39% were eligible to enroll in a consumer-driven health plan (CDHP) in 2009, up from 33% in 2006.
• The amount of money that individuals have rolled over from year to year has grown, according to EBRI. Those reporting a rollover of $1,500 or more increased from 13% in 2006 to 31% in 2009.

For more information on the article, Availability, Contributions, Account Balances, and Rollovers in Account-Based Health Plans, 2006–2009, visit http://www.ebri.org.