Governor Points to Cost Concerns in Dialing Back Support for Reform

Necessity is the mother of invention, the old saying goes.  If you’re one of the millions of people who would say the U.S. is in dire need of health care reform, the question you might be asking yourself is, “But how long will it take?”

Gov. Arnold Schwarzenegger (R) is firmly in the camp of people who believe that the U.S. health care system needs an overhaul, but as the reform debate has continued, he’s become less supportive of the proposals that have emerged.

In an appearance on ABC’s “Good Morning America” on Dec. 15, Schwarzenegger said that the current proposal being debated in the Senate would be a financial hardship for California: “This is the last thing we need, another $3 billion of spending when we already have a $20 billion deficit.”

A big part of that increase in spending would come as a result of a proposed expansion of Medicaid, called Medi-Cal in California.  The federal government would pick up the costs for the expansion early on, but over time part of those costs would have to come out of California’s beleaguered general fund.

But Schwarzenegger doesn’t want to rush the process, urging senators against pushing ahead just to meet a timeline. Schwarzenegger said, “There’s no rush from one second to the next. Let’s take another week or two and come up with the right package.”

Schwarzenegger’s concerns about the long-term cost of the proposal echo the central argument a team of Harvard professors put forward in a Dec. 9 perspective published in the New England Journal of Medicine.

The researchers acknowledge the emphasis that President Obama and other stakeholders in the debate have placed on health care reform being budget-neutral, but they also called for careful attention to be paid to the costs of the plan beyond the 10-year window that the Congressional Budget Office and other entities have used to frame their cost estimates.

Specifically, the authors assert that a number of 10-year cost estimates include one-time savings that would not have a major effect on the long-term trend toward greater spending on health care.  The researchers recommend prioritizing the creation of “institutions that will allow future cost containment to be successful.”  

But what do those institutions look like and how will they function? Who will oversee them?

These are just a few of the questions lawmakers continue to ask as they hammer together overhaul legislation.

More news on Senate votes on amendments and efforts to shape the debate appear below.

News From the Administration

• During an interview on CBS’ “60 Minutes” on Dec. 13, President Obama expressed confidence that the Senate would be able to vote on its health care reform bill (HR 3590) by Christmas, Roll Call reports (Koffler, Roll Call, 12/13).
• On Dec. 11, the White House announced its offer to help eliminate a provision in the Senate bill that would have allowed health insurance companies to set annual dollar limits on the coverage of patients with serious medical problems, such as cancer, the AP/Atlanta Journal-Constitution reports. The AP/Journal-Constitution reports that the provision would permit the annual coverage cost caps as long as they are not “unreasonable,” but it does not indicate the level of limits that would be allowable (Alonso-Zaldivar, AP/Atlanta Journal-Constitution, 12/11).

Amendments

• On Dec. 15, the Senate fell short of the votes needed to pass an amendment to the chamber’s health reform bill (HR 3590) that would have permitted the importation of lower-cost prescription medications from Canada and other foreign countries, Roll Call reports (Pierce/Drucker, Roll Call, 12/15). The amendment, by Sen. Byron Dorgan (D-N.D.), would have waived current restrictions on the importation of the medications by licensed companies and individuals for personal use (Ethridge, CQ Today, 12/15).
• On Dec. 10, Sen. Bernie Sanders (I-Vt.) announced that he would offer an amendment to strip an excise tax on high-cost insurance plans and replace it with a tax on high-income U.S. residents, CQ HealthBeat reports. The excise tax would apply to coverage that annually costs more than $8,500 for an individual and $23,000 for a family (Norman, CQ HealthBeat, 12/10).
• On Dec. 10, Sens. Richard Durbin (D-Ill.) and Herb Kohl (D-Wis.) offered an amendment that effectively would ban pharmaceutical data mining, a tactic drug companies use that involves buying prescription records to target sales pitches to physicians, the AP/Atlanta Journal-Constitution reports (Perrone, AP/Atlanta Journal-Constitution, 12/10).
• On Dec. 8, the Senate voted 42-57 to reject an amendment to the chamber’s health reform bill (HR 3590) that would have sent the measure back to the Senate Finance Committee with an order to restore the extended benefits provided to all beneficiaries in the Medicare Advantage program, CQ Today reports. Two Democrats — Sens. Ben Nelson (D-Neb.) and Jim Webb (D-Va.) — and all 40 Republican members voted for the amendment, which was sponsored by Sen. John McCain (R-Ariz.) (Ethridge, CQ Today, 12/8).

What’s in the Bills

• A provision in both chambers’ health reform bills that would allow young adults to remain on their parents’ health insurance plans until their mid-20s has bipartisan support, but some critics question whether it would be effective at reducing the number of uninsured, CQ HealthBeat reports. One-third of U.S. residents ages 19 to 29 do not have health insurance (Norman, CQ HealthBeat, 12/11).
• The current Senate bill (HR 3590) omits a proposal included in the Senate Health, Education, Labor and Pensions Committee’s legislation (S 1679) that would prohibit insurers from imposing annual coverage limits on medical care for people with illnesses that are costly to treat, such as cancer, the AP/Atlanta Journal-Constitution reports. The current language would permit annual limits on the dollar value of medical care as long as the limits are not “unreasonable.” The bill would instruct administration officials to determine the level of such limits (Alonso-Zaldivar, AP/Atlanta Journal-Constitution, 12/11).
• A provision in the Senate bill would establish a $375 million education program aimed at promoting responsible lifestyles, such as “financial literacy” and healthy relationships, Politico reports. Under the five-year program, states would receive funding to teach adolescents about abstinence, contraception and other “adult preparation subjects,” as well as strategies to be more financially responsible. Some critics say the provision would fund or establish programs that are unnecessary or would duplicate existing ones (Raju, Politico, 12/14).
• Sen. Tom Carper (D-Del.) is developing a proposal focusing on premium cost growth as an alternative to the proposed excise tax on high-priced insurance plans in the Senate reform bill, CongressDaily reports (Cohn, CongressDaily, 12/9). The current 40% excise tax would apply to health plans with annual premiums of more than $8,500 for individuals and $23,000 for families, with exceptions for employees in high-risk jobs and high-cost states (Cohn, CongressDaily, 12/4). Senate Democratic aides said that Carper’s plan would levy a 40% penalty on the plans if they grow at a faster rate than a national standard each year, which would be defined as annual economic growth plus a specified percentage. An aide said that preliminary estimates suggest the new plan would raise between $100 billion and $200 billion. Carper has circulated the plan to Senate Democratic leaders and workers’ unions, which have opposed the current excise tax proposal (CongressDaily, 12/9).

Shaping the Debate

• On Dec. 15, Republican Sens. Richard Burr (N.C.), Tom Coburn (Okla.) and Jim DeMint (S.C.) and numerous conservative organizations were slated to lead the “Code Red” rally at the Upper Senate Park in Washington, D.C., to protest the Senate health care reform bill (HR 3590), Roll Call reports. Organizers and participants describe the event as an “emergency rally” that will have “‘tea party’ trimmings and plenty of muscle, including grassroots support from six states” (Yehle, Roll Call, 12/14).
• On Dec. 14, Republican National Committee Chair Michael Steele announced the launch of a multi-platform advertising campaign and town-hall meetings that target moderate Democratic senators in six states who have remained noncommittal in their support for the Senate bill, The Hill‘s “Blog Briefing Room” reports. The television and internet ad campaign and town-hall events are scheduled to take place in the home states of Sens. Kent Conrad (N.D.), Mary Landrieu (La.), Joseph Lieberman (I-Conn.), Blanche Lincoln (Ark.), Ben Nelson (Neb.) and Jim Webb (Va.) (Romm, “Blog Briefing Room,” The Hill, 12/14).
• Earlier this month, Democratic Reps. Raul Grijalva (Ariz.) and Lynn Woolsey (Calif.), leaders of the House Progressive Caucus, sent a letter to Obama requesting a meeting to discuss the fate of health care proposals favored by liberals. In the letter, Grijalva and Woolsey wrote that they are “very concerned that the overall strength of the House bill (HR 3962) will be damaged by proposed changes in the Senate,” where the prospect of passing a public insurance option seems increasingly unlikely. The letter also included a list of items that House progressives say “must” be included in a final bill, including a public option, affordability credits and an overhaul of the health insurance market (CQ Today, 12/14).