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The Latest News On Healthcare Reform

Bipartisan summit or partisan theater?

The big story out of Washington for the past week has been that Washington is broken - or, as Time magazine's cover story puts it, "Washington is frozen." The morning news shows, the Sunday news shows, the newspapers and magazines are full of stories saying that Congress and the administration are too polarized, too partisan, too politicized for any real work to get done.

In fact, the President, in his weekly address, focused on the problem of doing "what it takes, all of us - Democrats and Republicans - to build a better future for ourselves, our children, and our country."

"What's being tested here," he said, regarding health care reform, "is not just our ability to solve this one problem, but our ability to solve any problem. Right now, Americans...want to see us focus not on scoring points, but on solving problems; not on the next election but on the next generation."

This highly charged atmosphere, then, is the backdrop for Thursday's so-called "bipartsian summit" on health reform. The President and congressional leaders from both parties will meet at Blair House starting at 10 a.m. EST. The President's purpose in calling this meeting, he said, is to make some progress on health reform. He can do that either by winning over some Republicans or by convincing Democrats of the need to go ahead and act alone. He has said he's open to Republican ideas, but his starting point and focus are on the Democratic plans. The event will be covered by CSPAN.

There are few people who believe the summit will produce any real bipartisan progress. Most believe it will produce partisan theatrics instead.

But the President has posted his plan online, and has urged Republicans to do the same. His plan is a framework that includes mostly provisions already passed by the Senate and the House (see below). Meanwhile, Democrats in the House and Senate are working to come up with a plan that both chambers can pass in the budget reconciliation process without a single Republican vote. Passing a bill through reconciliation would require 218 House votes and 51 in the Senate (budget reconciliation bills cannot be filibustered).

Republicans do not seem compelled to do what the President asked: deliver a comprehensive plan that "protects people from insurance problems, makes sure that the costs are controlled and people who don't have health insurance are covered." In fact, they have said they believe changes should not be comprehensive but incremental - that the country can't afford the cost of a comprehensive bill.

Last Thursday, Senate Minority Leader Mitch McConnell also told the Louisville Rotary Club that he wasn't afraid of Republicans being called "the party of 'no.' " "I make no apologies for saying, 'no,' " he said. He criticized the reform bills' costs and the deals cut with members of Congress to win votes, and he argued that Republicans were fighting "an agenda designed to turn us into a Western European country," implying that the Democrats' plan is socialized medicine.

What is the President's plan?

First of all, the President's "plan" is a framework or a statement of principles. It contains no legislative language. It doesn't include enough detail for the Congressional Budget Office to be able to score it - that is, to assign it a price - although the White House estimates the cost at $950 billion over 10 years.

The President's plan sticks largely to the version passed by the Senate on December 24, but offers some concessions to the House. For example, the Senate's tax on so-called Cadillac health plans - which House Democrats opposed, largely because it would hit union members - has been scaled back. It would be delayed from 2014 to 2018 and wouldn't kick in for a family of four until the health insurance benefit is worth $27,500 instead of $23,000.

The Obama plan also:

• Contains no public plan
• Removes the Medicaid deal Ben Nelson got for Nebraska; improves reimbursement rates for new Medicaid eligibles to all states
• Offers the same basic insurance reforms that are in the Senate and House bills: no more excluding people for pre-existing conditions; no more charging people more because of health status or gender; no more lifetime limits on benefits; imposes medical loss ratios of 80 to 85 percent
• Although the details vary slightly, the overall approach is the same: Everyone must have insurance, with government subsidies for those who make less than $88,000 for a family of four
• Does not require businesses to provide health insurance to employees, but penalizes those with more than 50 employees that don't
• Closes Medicare drug benefit "donut hole" coverage gap by 2020
• Contains a new provision in neither the House or Senate bill: the creation of a Health Insurance Rate Authority to provide "assistance and oversight to states in conducting reviews of unreasonable rate increases and other unfair practices of insurance plans"
• Appears to contain administered pricing for Medicare Advantage plans, with some bonuses for quality and enrollee satisfaction, although no specifics were given
• Includes pilot and demonstration projects for delivery system reforms and cost savings
• Delays until 2014 the premium assessment on health plans

Read the summary of the Obama plan here.

Rate hikes the focal point

The proposed 39 percent rate hike by Anthem Blue Cross of California has had a huge impact on the run-up to the President's health care summit. In fact, it has provided the administration with a new rallying point for why comprehensive health reform is necessary.

In response to Anthem's announcement, Secretary of Health and Human Services Kathleen Sebelius released a report called "Insurance Companies Prosper, Families Suffer." "Leading experts have predicted that, without reform, these increases will continue," her report says. "All the while, insurance companies and their CEOs continue to thrive... While insurance companies enjoy increasing profits and CEOs take in millions, American families struggle to find and maintain affordable, quality insurance coverage." Read Sebelius' report here.

The next day, Sen. Dianne Feinstein, D-Calif., announced she would introduce legislation "to create a Medical Insurance Rate Authority to prevent egregious premium rate increases, like the one recently announced by Anthem Blue Cross of California."

She called the rate hike "unconscionable...The insurance industry reaps soaring profits by piling massive financial burdens onto consumers." Then over the weekend, the Obama administration said it would include Sen. Feinstein's Rate Authority in its health care plan.

From coast to coast, the media jumped on the rate-hike story, saying, as the Louisville Courier-Journal did last weekend, that "Despite a struggling economy, the nation's five largest health insurance companies increased their profits by a combined 56 percent last year, to $12.2 billion." But as Alwyn Cassil, public affairs director for the Center for Studying Health System Change, told the writer of that story, the five companies' profits amounted to less than half a percent of the total spending, "less than a rounding error."

"I am no apologist for the insurance industry, believe me," she said. "But this idea that (taking) this $12 billion that they have in profits...would fix our health-care spending problems is just a pipe dream." Read the Courier-Journal story here.

On Monday, Karen Ignagni, president and CEO of America's Health Insurance Plans, responded, "There is an enormous amount of attention being paid right now to premium increases for people who obtain coverage in the individual insurance market...The central policy question that should be asked is: What is driving these increases and whether the measures being proposed will work."

She continued, "But there is a heavy dose of politics at work here. There has been a strenuous effort to focus on health plans because very few policymakers want to take on the real issue of why costs are rising..." Those reasons, she said, include the poor economy, which is causing young and healthy people to drop their insurance; increased utilization of medical care (the Centers for Disease Control announced last week that the use of high-tech diagnostic imaging had tripled between 1996 and 2007); and increased spending for hospitals, physicians and clinical services.

Ignagni continued, "To suggest that cost containment can be achieved by singling out health plans ignores the very inconvenient truth that premium increases reflect increases in the underlying cost of medical services. Regulating premiums won't do anything to reduce the soaring costs of medical care. This would be like capping the prices auto makers can charge consumers, but letting the steel, rubber, and technology manufacturers charge the auto makers whatever they want." Read her entire statement here.

Fortune magazine's list of the 53 most profitable industries placed health insurance and managed care at No. 35, based on 2008 profits that were 2.2 percent of revenue. Yahoo! Finance ranked the 3.4 percent profit margin for health care plans as 88th among 215 industries.

Meantime, two important opinion pages took the rate hikes as evidence of opposite things. A New York Times editorial saw the rate hikes as proof that the Democratic reforms should be passed, while a Wall Street Journal editorial saw them as evidence of what is to come if those reforms do pass, since they don't address underlying costs.

On the horizon

Medicare Advantage plans would see a small increase in payments from the federal government under preliminary rates released last Friday. The Centers for Medicare and Medicaid Services announced that it estimates a 1.38 percent increase in payments for 2011 prior to any regulatory reductions or adjustments. The final rate will be announced in early April.

Get involved. Contact Congress about health reform at MyHealthReform.org.

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