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An Update on the Senate Health Reform Bill

By December 23, 2009 Health

On Saturday, December 19, Senate Majority Leader Harry Reid (D-NV) released his manager’s amendment to the Patient Protection and Affordable Care Act of 2009, or H.R. 3590.
The Congressional Budget Office and Joint Committee of Taxation also released their revised cost estimate for the legislation, stating that the cost to the federal government over the next 10 years would be $871 billion.
NAHU’s analysis of the major provisions contained in the manager’s amendment can be found here.
Over the course of the weekend, through a series of deals with various senators, the Democratic leadership secured the 60 votes they needed to move forward with the legislation on the Senate floor. At about 1:15 a.m. this morning, the Senate voted 60-40 on a cloture vote on the manager’s amendment to H.R. 3590. This vote sets the Senate procedural clock hurling toward an eventual vote on the entire reform bill later this week. Unless a Democratic senator agrees to switch his or her vote and oppose the overall bill, H.R. 3590 will pass this week and a conference committee with the House will begin in the New Year.Very late yesterday night, just prior to the cloture vote that occurred early this morning, NAHU sent a formal letter expressing our opposition to H.R. 3590 to the Senate leadership. In it we detail our specific concerns with H.R. 3590 as currently structured and encouraged senators to instead work together on a bipartisan basis to develop an affordable and responsible means of achieving the needed reforms to our nation’s health care delivery system. We encourage you to contact your senators today and urge the same things. Some positive changes in the manager’s amendment include:
• The elimination of the provision that would have required the secretary of Health and Human Services to set agent/broker commissions in the exchange.
• The indexing of the $2,500 FSA contribution cap for inflation.
• The elimination of the government-run public plan option.
Some of our most serious concerns with H.R. 3590, as amended, include:
• A minimum loss ratio requirement that applies to all fully insured plans, including grandfathered plans, as of January 1, 2011. This will negatively impact coverage choice and affordability, especially during the transition time prior to 2014 when insurers will have all of the same expenses they have today plus transition expenses. The MLR in this bill is now set 85% fo

r large group plans and 80% for individual and small-group plans (100 and below). This rate must be lowered to 75% at least in the individual market to allow an adequate transition period.
• A completely ineffective individual mandate requirement that will make it more financially advantageous for many healthy Americans to forgo coverage until they are sick and then utilize the guaranteed-issue protections to temporarily obtain coverage and then drop it again.
• Strict modified community premium rating requirements (including age bands of 3:1) that now apply to all fully insured plans. This means all fully insured groups are required to abide by the modified community rating provisions, regardless of their size.
• State-based exchanges that create costly and confusing layers of dual regulation. The exchange structure proposed in the bill gives too much authority to the secretary of Health and Human Services, and makes the exchanges unnecessarily complex for consumers and costly to for states administer.
• New employee voucher provisions to allow choice between employer coverage and the exchange, which could actually hurt participation in employer-based health insurance plans. These provisions will require employers to give a vouchers to use in the individual market or exchange to certain lower-income employees who would normally be ineligible to purchase subsidized coverage through the exchange instead of participating in the employer-provided plan.
• An expansion of the federal Medicaid program to individuals up to 133% of the Federal Poverty Level (FPL). This will be financially crippling in the long run to our already struggling state governments, displacing millions of Americans from private coverage and further exacerbating the public program cost-shift to privately insured Americans.
• The creation of a huge new federal long-term care program that threatens the private long-term care insurance market and is inadequately financed. There is widespread and bipartisan agreement that the CLASS Act will be a financial albatross for our nation once it is fully implemented.
• Financing mechanisms that would significantly, and negatively, impact the health care industry, consumers, employers and our overall economy.
• New annual health insurance premium taxes of over $6 billion per year to be enforced on 2010 contracts that have already been priced and sold prior to the enactment of the bill and taxes. This means that the taxes were not included when pricing plans. In 2011, there will be a new tax liability. So when pricing health insurance for 2011, consumers will be hit with taxes for two years at one time.
• The 40% federal excise tax on high-cost health plans ($8,500 for individuals and $23,000 for families) is not properly indexed for inflation, and this bill does so little to control the medical care costs that are the true drivers of health insurance premiums, eventually all plans may fall under this excise tax umbrella.
• Massive proposed cuts in funding to Medicare, particularly the Medicare Advantage program. The Process Moving Forward
The Senate recessed early this morning and will reconvene at noon today to continue discussing H.R. 3590. Since the Democratic leadership has filled the “amendment tree,” no substantive changes to the bill are likely to be considered. That means the bill as it stands with the manager’s amendment changes is what the Senate is likely to pass as a final bill. There will be a series of procedural votes this week before a scheduled vote on final passage, which will in all likelihood occur on Thursday, December 24. Before leaving for Christmas, in addition to the health care reform bill, the Senate also needs to consider the legislation to raise the debt ceiling. However, the debt ceiling measure will not be addressed until there is a final vote on the health care reform bill.NAHU is working, in conjunction with industry and coalition partners, on a conference committee strategy and will continue to keep you informed of any breaking developments as they occur. If you have any questions, please feel free to contact our Government Relations Department staff.