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Elements of House Health Care Reform Bill Echo California Efforts

House leaders are working behind the scenes to negotiate final agreements aimed at securing swift passage of the chamber’s legislation (HR 3962) to overhaul the U.S. health care system, and some provisions of the proposal call to mind legislation that Gov. Arnold Schwarzenegger (R) has vetoed in recent years.

For example, a provision of the House plan would require health plans in the small- and large-group market to spend at least 85% of premiums on medical care.  That provision would take effect immediately.

In 2008, Schwarzenegger vetoed SB 1440 by former California Senate Health Committee Chair Sheila Kuehl.  The bill would have adopted the same medical-loss ratio.

Another case is the governor’s veto last month of AB 2 by Assembly member Hector De La Torre (D-South Gate).  The legislation would have limited the circumstances in which insurers could rescind individual health insurance policies.

Language in the House bill would prohibit insurers from rescinding individual or small-group coverage without evidence of fraud.  The provision also would call for an independent third-party review of such fraud allegations.

All of this is not to say that the House’s overhaul legislation is chock full of ideas Schwarzenegger opposes. To the contrary, the bill includes a number of provisions that the governor specifically endorsed in a letter to congressional leaders in late October, as well as elements of Schwarzenegger’s own 2007 health care reform proposal.

In his letter last week, the governor took a strong stand against shifting the cost of the proposed Medicaid expansion to states, warning that California’s Medi-Cal program already is on shaky ground. 

An analysis of the bill in the journal Health Affairs‘ blog indicates that the House bill “goes a good distance toward reducing the burden of Medicaid expansions on the states,” including through measures that would have the federal government cover the full cost of the proposed expansion in 2013 and 2014 and 91% of the cost after 2015.  In addition, the House bill calls for the federal government to shoulder most of the cost of aligning Medicaid reimbursement rates for primary care physicians with Medicare reimbursements by 2012.

And, like Schwarzenegger’s 2007 plan, the House bill would require individuals to buy health insurance coverage and would direct employers to offer health care benefits to workers.  There is some leeway in both elements of the House bill, concessions intended to ease passage of the bill.

More on the effort to shape health care reform legislation is provided below. 


  • There is growing uncertainty among some Senate insiders that the Democratic leadership will be able to finalize a health reform bill before the end of this year, prompting some to speculate that the bill might be delivered to President Obama just before the State of the Union speech next year, Politico reports. Senate Majority Leader Harry Reid (D-Nev.) is waiting on the Congressional Budget Office‘s cost analysis while attempting to gather the 60 votes he needs to begin a floor debate (Budoff Brown/Frates, Politico, 11/3).

What’s in the Bills?

  • A provision in the Senate Health, Education, Labor and Pensions Committee bill (S 1679) would require insurers to consider covering the cost of Christian Science prayer treatments, the Los Angeles Times reports. The provision — introduced by Sen. Orrin Hatch (R-Utah) with support from Sen. John Kerry (D-Mass.) and the late Sen. Edward Kennedy (D-Mass.) — would require the same insurance coverage for the prayer treatments as clinical medicine. The prayer treatments can cost about $20 per day, and coverage would apply only to insurance plans offered through not-for-profit exchanges (Hamburger/Geiger, Los Angeles Times, 11/3).
  • Health reform legislation in Congress would cap the amount workers could contribute to their tax-free, flexible spending accounts at $2,500 annually, the AP/Philadelphia Inquirer reports. The change in policy could raise more than $13 billion in taxes over 10 years.  The proposal sparked an opposition ad campaign from Save Flexible Spending Plans — a coalition of insurers, employers that offer FSAs, other businesses and one union  (Werner, AP/Philadelphia Inquirer, 11/2).
  • Senate Majority Leader Harry Reid (D-Nev.) has revised the threshold for the proposed excise tax and eliminated an employer mandate in favor of penalty fees in the bill that he submitted to the Congressional Budget Office, according to sources familiar with the developments, CQ Today reports.  The original tax proposal — which the Senate Finance Committee included in its bill (S 1796) as a key revenue-generating source — would have enacted a 40% excise tax on insurance companies that offer coverage plans costing $21,000, indexed to inflation plus 1%, annually for families. Reid raised the limit to $23,000 with the same growth of inflation plus 1%, the sources said. According to CQ Today, the change would likely result in less revenue, which lawmakers would have to cover by other means. Under Reid’s revision, employers with more than 50 workers would not be expected to provide health coverage. However, companies could face fines of as much as $750 per worker if anyone on their staff requires federal assistance (Armstrong, CQ Today, 10/28).

Shaping the Debate

  • In a letter sent to Senate Majority Leader Harry Reid (D-Nev.) on Oct. 29, all 40 Senate Republicans requested that the bill Reid submitted to the Congressional Budget Office be publicly released to allow lawmakers and the public to review it, Roll Call reports.  Democrats have chosen not to release the bill yet because it could give Republicans a chance to criticize costly portions of the legislation that might not be in the final version, according to Roll Call (Stanton, Roll Call, 10/29).
  • Last month, a group of nine Senate Democrats and one independent senator sent a letter to Reid asking him to expand access to the public health insurance plan included in the chamber’s health reform legislation, The Hill reports. The letter urges Reid to allow workers who have employer-sponsored coverage to obtain coverage under the public option or through plans offered in not-for-profit insurance exchanges (Bolton, The Hill, 10/30).
  • The Medical Device Manufacturers Association is scheduled to run a $200,000 campaign that urges lawmakers to drop levies on complex, non-retail medical devices from health reform plans, Roll Call reports. The advertisements will run in Capitol Hill newspapers and a Washington, D.C., news radio station.  The Senate Finance Committee‘s bill includes $40 billion in levies on medical devices over the next 10 years (Roth, Roll Call, 10/29).
  • The Business Roundtable, an association of CEOs, has begun meeting with lawmakers to try to persuade them to remove the public option from the final Senate bill.
  • On Oct. 28, the U.S. Chamber of Commerce began airing television advertisements in seven states claiming that a public option would increase taxes and the national debt. 
  • Some representatives for small businesses are also coming out against a public plan. For example, the National Federation of Independent Business, which represents 350,000 small firms, has opposed the Senate bill because members are skeptical of large government programs, according to the Wall Street Journal.
  • However, the Small Business Majority has publicly endorsed a public plan as an alternative for small businesses, which often face high group insurance prices because their small pool of employees compromises their negotiating power (Adamy, Wall Street Journal, 10/29).
  • The four members of the Divided We Fail coalition — the Business Roundtable, the NFIB, AARP and the Service Employees International Union — are no longer a united front but rather are each pursuing their own health reform agendas, Roll Call reports. Representatives from the groups, initially brought together to promote the need to overhaul the health care system, said it was always assumed that they would part ways once health care legislation was drafted (Roth, Roll Call, 11/2).


  • Forty-eight percent of U.S. residents say they favor a public health insurance option while 42% say they oppose it, a new Wall Street Journal/NBC News poll found, the Journal reports. In August, support for the public option stood at 46% while opposition stood at 48% (Davis, Wall Street Journal, 10/27).

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