Key Republican says on "edge" of US healthcare deal

By Deborah Charles

WASHINGTON, July 29 (Reuters) – Republican and Democratic senators negotiating financial details of healthcare reform have made great progress and are on the verge of a deal, a key Republican senator said on Wednesday.

“We have made great progress. Every day we make some progress,” Senator Charles Grassley, one of the three Republicans from Senate Finance Committee involved in the talks to overhaul the healthcare system, told NPR radio.

“Will we get it done so we can get a bill to the other members by this weekend because there is a certain time you've got to give people to study it? We're on the edge, and almost there,” he said in the interview.

President Barack Obama has pinpointed healthcare as his top legislative priority and has pushed lawmakers to quickly reach a deal to rein in healthcare costs, improve care and cover most of the 46 million uninsured Americans.

Obama had asked both the Senate and House of Representatives to come up with initial draft bills before they leave for the August recess but this deadline looks increasingly unlikely to be met.

Grassley said lawmakers “wanted to do it right,” noting that lawmakers are trying to revamp one-sixth of the economy.


Democrats on the Senate Finance Committee said on Tuesday the six negotiators were close to success in bipartisan talks, even if the full panel does not take up the bill before Congr

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ess goes on a month-long break on Aug. 7.

Senate Finance negotiations have focused on a plan that would use nonprofit cooperatives to compete with private insurers to drive down costs, not the public plan favored by Obama and many other Democrats.

Shares of U.S. health insurers rose broadly on Tuesday on hopes that negotiators were moving away from the public plan idea, which has drawn strong opposition from insurers who fear it would destroy the private marketplace.

The Senate panel also is likely to back a tax on high-cost insurance policies to raise revenue and keep costs down.

Democrats in the House are also trying to reach agreement with conservative members of their own party on their version of the bill, but say a vote is unlikely before they head home on break at the end of the week.

Obama, who has put considerable political capital on the line in the healthcare debate, travels to North Carolina and Virginia on Wednesday where he will hold campaign-style events aimed at telling Americans why insurance reform means more security and stability for them and their families.

The White House said Obama would outline eight specific consumer protections he thinks are needed. They include: no discrimination for preexisting conditions, only reasonable out-of-pocket expenses, no dropping of coverage for serious illness, no gender discrimination, no annual or lifetime caps and extended coverage for young adults.

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The state of the health care debate

Multiple health care proposals are being discussed on Capitol Hill, revised and refined into single proposals in the House and Senate. In the House, three committees have signed off on a reform bill, but the Energy and Commerce Committee has yet to produce its plan, which is likely to feature significant changes. House leaders would like the chamber to vote on a final bill before members leave for August recess. The Senate’s Health, Education, Labor and Pensions Committee has already passed its plan on a party-line vote. A competing plan from the Senate Finance Committee — which must figure out how to cover the cost of reform — is expected within the next two weeks. Once that occurs, the two proposals will be merged by Senate leaders. Below are comparisons of the House bill as it stands and the Senate Health Committee bill.

Senate Health, Education, Labor and Pensions Committee

Most individuals would be required to have qualifying health coverage, with some exceptions. Those who choose not to participate would face a tax penalty of at least 50 percent of the average annual premium cost of the basic plan.

Employers would be required to offer health coverage to workers and pay at least 60 percent of the premium, or pay $750 for each full-time employee not offered coverage. Businesses with 25 or fewer employees would be exempt.

Coverage for individuals and small businesses would be run through state-based “gateways” that would provide consumers with information to help them choose among qualified plans.

Strategies to improve health care services nationwide would include an annual national health care quality report card and the development of quality measures to assess results.

Total cost of the plan is about $1 trillion over 10 years, according to Congressional Budget Office estimates.

House Tri-Committee

Most individuals would be required to have “acceptable health coverage,” with some exceptions. Those who choose not to participate would pay a penalty of 2.5 percent of their modified adjusted gross income up to the cost of the average national premium for individuals or family coverage.

Employers would be required to offer health coverage to workers and pay at least 72.5 percent of the premium for single coverage and 65 percent for family coverage in the lowest-cost qualifying plan, or pay 8 percent of payroll into a health insurance trust fund (smaller employers would pay a reduced amount or nothing).

Individuals and employers would be able to buy coverage through a National Health Insurance Exchange with public and private health plan options. The public option would meet many of the same requirements as private plans and offer basic, enhanced and premium coverage options.

New agencies would be created to study the effectiveness of health care services and to identify and develop health care best practices. Increased Medicaid payments and Medicare bonus payments would be available to primary care providers to improve care coordination.

The total cost of the plan is about $1 trillion over 10 years, about half of which would be covered by Medicare and Medicaid savings, according to the CBO. The remainder would be covered by a surcharge paid by families with incomes above $350,000 and individuals with incomes above $280,000.

Other proposals

The Senate Finance Committee is considering a provision that would allow people ages 55-64 who otherwise wouldn’t qualify for Medicare to “buy in” to the program for a limited time.

Senate Finance Committee members are considering taxing insurance companies as a mechanism for funding the health care plan.

In terms of requiring employers to provide coverage, many Democrats and Republicans want to ensure in final language that small businesses are exempted from having to provide health care or pay a penalty.

Some on the Senate Finance Committee advocate establishing insurance cooperatives, run by and for the benefit of its members, rather than a government-run public option.

Conservative Democrats on the Energy and Commerce panel want rural health care providers to be reimbursed by the government at higher rates, which would help ensure all Americans have access to quality care. Also, the panel is considering an amendment that would have the Centers for Medicare & Medicaid Services monitor doctors, reporting back to them how the cost of their care compares to their peers.

Senate Finance Committee members have considered, but could reject, a proposal that would tax high-end insurance plans offered by employers, which would have the effect of taxing well-off Americans who choose premium care.

In the House, the floor for a surtax on income to pay for health care could be raised to $500,000 for individuals.,0,1415531.story

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5 freedoms you'd lose in health care reform

If you read the fine print in the Congressional plans, you'll find that a lot of cherished aspects of the current system would disappear.

By Shawn Tully, editor at large
July 24, 2009: 10:17 AM ET

NEW YORK (Fortune) — In promoting his health-care agenda, President Obama has repeatedly reassured Americans that they can keep their existing health plans — and that the benefits and access they prize will be enhanced through reform.

A close reading of the two main bills, one backed by Democrats in the House and the other issued by Sen. Edward Kennedy's Health committee, contradict the President's assurances. To be sure, it isn't easy to comb through their 2,000 pages of tortured legal language. But page by page, the bills reveal a web of restrictions, fines, and mandates that would radically change your health-care coverage.

If you prize choosing your own cardiologist or urologist under your company's Preferred Provider Organization plan (PPO), if your employer rewards your non-smoking, healthy lifestyle with reduced premiums, if you love the bargain Health Savings Account (HSA) that insures you just for the essentials, or if you simply take comfort in the freedom to spend your own money for a policy that covers the newest drugs and diagnostic tests — you may be shocked to learn that you could lose all of those good things under the rules proposed in the two bills that herald a health-care revolution.

In short, the Obama platform would mandate extremely full, expensive, and highly subsidized coverage — including a lot of benefits people would never pay for with their own money — but deliver it through a highly restrictive, HMO-style plan that will determine what care and tests you can and can't have. It's a revolution, all right, but in the wrong direction.

Let's explore the five freedoms that Americans would lose under Obamacare:

1. Freedom to choose what's in your plan

The bills in both houses require that Americans purchase insurance through “qualified” plans offered by health-care “exchanges” that would be set up in each state. The rub is that the plans can't really compete based on what they offer. The reason: The federal government will impose a minimum list of benefits that each plan is required to offer.

Today, many states require these “standard benefits packages” — and they're a major cause for the rise in health-care costs. Every group, from chiropractors to alcohol-abuse counselors, do lobbying to get included. Connecticut, for example, requires reimbursement for hair transplants, hearing aids, and in vitro fertilization.

The Senate bill would require coverage for prescription drugs, mental-health benefits, and substance-abuse services. It also requires policies to insure “children” until the age of 26. That's just the starting list. The bills would allow the Department of Health and Human Services to add to the list of required benefits, based on recommendations from a committee of experts. Americans, therefore, wouldn't even know what's in their plans and what they're required to pay for, directly or indirectly, until after the bills become law.

2. Freedom to be rewarded for healthy living, or pay your real costs

As with the previous example, the Obama plan enshrines into federal law one of the worst features of state legislation: community rating. Eleven states, ranging from New York to Oregon, have some form of community rating. In its purest form, community rating requires that all patients pay the same rates for their level of coverage regardless of their age or medical condition.

Americans with pre-existing conditions need subsidies under any plan, but community rating is a dubious way to bring fairness to health care. The reason is twofold: First, it forces young people, who typically have lower incomes than older workers, to pay far more than their actual cost, and gives older workers, who can afford to pay more, a big discount. The state laws gouging the young are a major reason so many of them have joined the ranks of uninsured.

Under the Senate plan, insurers would be barred from charging any more than twice as much for one patient vs. any other patient with the same coverage. So if a 20-year-old who costs just $800 a year to insure is forced to pay $2,500, a 62-year-old who costs $7,500 would pay no more than $5,000.

Second, the bills would ban insurers from charging differing premiums based on the health of their customers. Again, that's understandable for folks with diabetes or cancer. But the bills would bar rewarding people who pursue a healthy lifestyle of exercise or a cholesterol-conscious diet. That's hardly a formula for lower costs. It's as if car insurers had to charge the same rates to safe drivers as to chronic speeders with a history of accidents.

3. Freedom to choose high-deductible coverage

The bills threaten to eliminate the one part of the market truly driven by consumers spending their own money. That's what makes a market, and health care needs more of it, not less.

Hundreds of companies now offer Health Savings Accounts to about 5 million employees. Those workers deposit tax-free money in the accounts and get a matching contribution from their employer. They can use the funds to buy a high-deductible plan — say for major medical costs over $12,000. Preventive care is reimbursed, but patients pay all other routine doctor visits and tests with their own money from the HSA account. As a result, HSA users are far more cost-conscious than customers who are reimbursed for the majority of their care.

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The bills seriously endanger the trend toward consumer-driven care in general. By requiring minimum packages, they would prevent patients from choosing stripped-down plans that cover only major medical expenses. “The government could set extremely low deductibles that would eliminate HSAs,” says John Goodman of the National Center for Policy Analysis, a free-market research group. “And they could do it after the bills are passed.”

4. Freedom to keep your existing plan

This is the freedom that the President keeps emphasizing. Yet the bills appear to say otherwise. It's worth diving into the weeds — the territory where most pundits and politicians don't seem to have ventured.

The legislation divides the insured into two main groups, and those two groups are treated differently with respect to their current plans. The first are employees covered by the Employee Retirement Security Act of 1974. ERISA regulates companies that are self-insured, meaning they pay claims out of their cash flow, and don't have real insurance. Those are the GEs (GE, Fortune 500) and Time Warners (TWX, Fortune 500) and most other big companies.

The House bill states that employees covered by ERISA plans are “grandfathered.” Under ERISA, the plans can do pretty much what they want — they're exempt from standard packages and community rating and can reward employees for healthy lifestyles even in restrictive states.

But read on.

The bill gives ERISA employers a five-year grace period when they can keep offering plans free from the restrictions of the “qualified” policies offered on the exchanges. But after five years, they would have to offer only approved plans, with the myriad rules we've already discussed. So for Americans in large corporations, “keeping your own plan” has a strict deadline. In five years, like it or not, you'll get dumped into the exchange. As we'll see, it could happen a lot earlier.

The outlook is worse for the second group. It encompasses employees who aren't under ERISA but get actual insurance either on their own or through small businesses. After the legislation passes, all insurers that offer a wide range of plans to these employees will be forced to offer only “qualified” plans to new customers, via the exchanges.

The employees who got their coverage before the law goes into effect can keep their plans, but once again, there's a catch. If the plan changes in any way — by altering co-pays, deductibles, or even switching coverage for this or that drug — the employee must drop out and shop through the exchange. Since these plans generally change their policies every year, it's likely that millions of employees will lose their plans in 12 months.

5. Freedom to choose your doctors

The Senate bill requires that Americans buying through the exchanges — and as we've seen, that will soon be most Americans — must get their care through something called “medical home.” Medical home is similar to an HMO. You're assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.

Under the proposals, the gatekeepers would theoretically guide patients to tests and treatments that have proved most cost-effective. The danger is that doctors will be financially rewarded for denying care, as were HMO physicians more than a decade ago. It was consumer outrage over despotic gatekeepers that made the HMOs so unpopular, and killed what was billed as the solution to America's health-care cost explosion.

The bills do not specifically rule out fee-for-service plans as options to be offered through the exchanges. But remember, those plans — if they exist — would be barred from charging sick or elderly patients more than young and healthy ones. So patients would be inclined to game the system, staying in the HMO while they're healthy and switching to fee-for-service when they become seriously ill. “That would kill fee-for-service in a hurry,” says Goodman.

In reality, the flexible, employer-based plans that now dominate the landscape, and that Americans so cherish, could disappear far faster than the 5 year “grace period” that's barely being discussed.

Companies would have the option of paying an 8% payroll tax into a fund that pays for coverage for Americans who aren't covered by their employers. It won't happen right away — large companies must wait a couple of years before they opt out. But it will happen, since it's likely that the tax will rise a lot more slowly than corporate health-care costs, especially since they'll be lobbying Washington to keep the tax under control in the righteous name of job creation.

The best solution is to move to a let-freedom-ring regime of high deductibles, no community rating, no standard benefits, and cross-state shopping for bargains (another market-based reform that's strictly taboo in the bills). I'll propose my own solution in another piece soon on For now, we suffer with a flawed health-care system, but we still have our Five Freedoms. Call them the Five Endangered Freedoms.

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ABC Evening News with Charles Gibson

ABC Evening News with Charles Gibson featured the July 15 joint agent fly-in, when over 1000 insurance advisors, agents, brokers, consultants and employee benefit specialists from 49 states met with nearly 400 Senate and House offices on Capitol Hill. View the clip.

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Could this be what our Single Payor system would look like?

“Truth or Consequences—the Beth Ashmore Chronicle” demonstrates through the personal experiences of Beth Ashmore and her mother why the purported advantages of a single-payer health care system are really myths. The Beth Ashmore Chronicle offers real world evidence of the inadequacies of the single payer concept versus the quality and expediency of our current private market health care system.


Click here to watch Video

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What is going on regarding Nationalized Healthcare?

The debate over comprehensive health reform in Washington, DC, gets more intense with each passing day. Legislation is on schedule to be voted on by the entire House of Representatives at the end of July. The Senate is working on two major bills at a slightly slower pace, but President Obama is actively pressing for a bill to hit his desk by the fall. Through our professional trade association, the National Association of Health Underwriters, keeps up to date on all of the latest legislative happenings and how the bills being drafted could impact our clients.

Government-Run Public Plan

One of the most contentious ideas being considered is whether or not reform should include a government-run health insurance option to compete with private health plans. Proponents say that a government-run plan is needed to provide real competition to the private market and that it will bring down costs. But, on the flip side, the opposing team’s quarterback can’t also be the referee. Since a government-run public plan would not be subject to the same rules for financial solvency and would not be required to pay taxes as private health insurance companies are required to do, its initial operating costs would be less, creating the potential for price competition. However, other aspects of a government plan’s structure would make it unlikely to result in a lower total cost over time. The government-run plans currently being proposed would be undercapitalized in a way that never would be permitted for private companies operating in the regular insurance market. Its structure creates the likelihood that, over time, there would be another potential government bailout of a struggling program. Additionally, because these plans would operate with advantages not available to private plans, the unlevel playing field could eventually force everyone to be covered under the government plan (which is hardly fair to any business). Having everyone covered by a government plan has resulted in waiting lines and rationing in Canada and Great Britain, which could become the norm in the United States if this plan becomes a reality.

The bill moving rapidly through the House of Representatives includes a government-run public plan option as described above. This version of the government-run public plan would compel all doctors and hospitals that serve Medicare patients to participate. In the Senate, one of the bills on the table, which is being offered by Senator Ted Kennedy, also includes a government-run plan option. The Senate Finance Committee is still drafting its final proposal, but either a government-run plan or a compromise where the federal government would help start new non-profit cooperative health plans are the ideas it is actively considering. Many employers that already provide private health insurance to their employees have concerns about the cost burden a public plan would place on all Americans, especially those who want to keep their private coverage. Existing public health programs like Medicare and Medicaid pay providers a reduced rate for their services. To compensate, doctors and hospitals shift their remaining costs onto private payers. Studies show this cost-shift is already costing the average American family of four over $1,788 per year in higher health insurance premiums. If a new government-run plan was created, this cost-shift onto privately insured people and businesses would go up exponentially.

Take Action

If you have concerns about a government-run public plan option and how it could impact your coverage options as an employer, go to to send a message to your congressional representatives.

Shared Responsibility—Employer and Individual Mandates

Another idea that’s receiving a great deal of congressional attention is sharing responsibility for obtaining coverage among employers, individuals and the government. All of the bills under active consideration contain requirements that people obtain health insurance coverage, which is also known as an individual mandate. In addition to the individual mandate, the House bill and Senator Kennedy’s bill include requirements for employers of more than 25 people to provide employees with qualified health insurance coverage. The Senate Finance Committee is also discussing including an employer mandate requirement in its draft proposal. Employers that already provide health benefits to their employees may not think that these potential new requirements would impact them, or may even level the playing field between their company and those that do not currently offer coverage. But, like most things from Washington, the devil is always in the details, so it is important to examine the employer-mandate provisions under discussion very closely.

The House bill, for example, would not only require employer provide coverage, also require employers to pay 72.5% of each employee’s premiums for acceptable coverage (and 65% of the cost of those employees’ family coverage premiums). It would also mandate coverage for part-time employees and require employers to pay for a portion of the costs on a pro-rata basis. Many employers now can’t afford such generous contributions to their employees’ health plan costs. Plus, “acceptable coverage” would include a wide range of mandated benefits, which are likely to be more expensive than what many employers are providing now. Employers that fail to comply would incur a penalty of eight percent of the company’s payroll, along with the potential for additional payments and penalties down the road. An individual mandate would bring millions of more people into the coverage system, which we believe is ultimately good for the stability of the market and would benefit everyone. But if the mandate contains overly prescriptive requirements as to what constitutes acceptable coverage, it could also have a similar, although probably less expensive, impact on employers. Employers that don’t offer coverage that meets the standards necessary would be under extreme pressure to modify their plans and increase the level of benefits they provide. Rather than imposing a complicated and expensive standard of coverage on all Americans, it would be better to use the standard of creditable coverage in current law that all employer plans follow.

Take Action

If you think employers should be able to continue to decide if and what health benefits they can afford to provide for their employees, go to to send a message to your congressional representatives.

Will You Really Be Able “to Keep the Coverage You Have” if You Like It?

President Obama has repeatedly promised that if an employer or individual likes the coverage that they currently have, they will be able to keep it. But Congress doesn’t seem to be as committed to that promise. In the House, the bill under discussion would let employer group plans keep their current coverage and phase in reform requirements over five years. But, eventually, all employer plans would have to change to meet the terms of the proposed individual and employer mandates. That means changes the way group health insurance policies are rated, changes to their plan designs and mandatory inclusion of certain benefits. In the Senate, more inclusive grandfathering provisions are being discussed, but there would still be changes to the way polices are priced, new mandatory required benefits, and new requirements on health plans structures. In both the House and the Senate, changes to the way health insurance policies are to be priced would be particularly significant for companies with more that 50 employees that do not self-insure their coverage. Under the current versions of the bills, these employers would no longer be able to price their plan based on the actual claims experience of their group, but would be forced into the same premium structure that applies to individuals and small groups. This would reduce pricing accuracy and potentially make coverage costs increase significantly.

Take Action

If you think Congress should let individuals and employers keep their current health coverage if they like it and not impose expensive new requirements on group health insurance plans, go to to send a message to your elected officials.

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