Negotiators Prepare To Determine Details of Individual Mandate

On Jan. 12, the Sacramento Bee editorial board called on Gov. Arnold Schwarzenegger (R) to speak out in favor of the individual mandate — a proposal included in both the House and Senate health care reform bills that would require most people to buy health insurance.

It’s an idea that the governor championed as part of his own push for health care reform in California in 2007, and the Bee is holding it out as an element of national health care overhaul plans that Schwarzenegger still can stand behind, despite his vociferous criticism of elements of the bills that would expand Medicaid.

How would the Senate and House bills go about requiring people to maintain health insurance coverage?

Both bills would require the overwhelming majority of U.S. residents to have health insurance and would provide subsidies to help some low-income people purchase coverage. 

The Senate and House bills both would exempt members of some religious groups from the requirement, as well as prisoners, undocumented immigrants and other people who are not citizens or permanent U.S. residents.  The House bill also specifically waives the requirement for U.S. citizens living abroad and residents of U.S. territories.

In addition, both bills would carve out exemptions for people who could not afford coverage, with the Senate defining that threshold as:

• People whose annual income is not at least 100% of the federal poverty level; and
• People whose yearly premiums would be more than 8% of their annual incomes.

People who do not qualify for exemptions laid out in the bills would be subject to penalties.

Under the House bill, people who do not buy health insurance coverage would be subject to a tax of 2.5% on either the national average premium for coverage or their annual modified adjusted gross income in excess of the minimum income level required to file a federal tax return.  The 2.5% tax would apply to the lesser of the two amounts.

The House bill’s penalties would take effect in fiscal year 2014 and would generate $33 billion through 2019, according to the Congressional Budget Office.

Meanwhile, the Senate bill would impose penalties of $95 in 2014 and $350 in 2015.  A Commonwealth Fund analysis of the Senate bill indicates that beginning in 2016, penalties would increase to the greater of the two scenarios below:

• $750 per adult in a household (indexed for inflation); or
• 2% of household income, not to exceed the national average premium for a “bronze” health plan.

CBO projects that penalties would generate about $15 billion through 2019.

Both the Senate and House bills go into greater detail on the specifics of their respective individual mandates than Schwarzenegger’s plan did.  A report by the California Legislative Analyst’s Office indicated that the governor’s proposal did not spell out exemptions to the requirement or what would constitute a minimum level of coverage, but instead would have left those definitions to the regulatory process.

Will the national bills’ specificity move Schwarzenegger to advocate for the individual mandate, or will the governor maintain his combative tone against the proposals unless something is done to scale back what California would be expected to contribute toward a Medicaid expansion? 

While these events play themselves out, here’s an update on the Obama administration’s efforts to boost support for the bill among Democratic governors, and other health care reform news.

Administration News

• On Jan. 7, HHS Secretary Kathleen Sebelius and senior White House adviser Valerie Jarrett spoke with the Democratic Governors Association to encourage the group’s members to actively promote Democrats’ reform legislation (HR 3962, HR 3590), Politico reports. The administration officials urged the governors to describe the bills’ benefits for their states on national and state television (Martin/Smith, Politico, 1/7).
• Sen. Mike Enzi (R-Wyo.) — the ranking Republican on the Senate Health, Education, Labor and Pensions Committee — criticized HHS for failing to disclose that Massachusetts Institute of Technology professor Jonathan Gruber earned $400,000 as a consultant for the agency at the same time he testified before Congress that the Democrats’ health reform plans would not increase premiums, CQ HealthBeat reports. Enzi said both Gruber and Sebelius should have disclosed the relationship, which Enzi said raises questions about the reliability of Gruber’s testimony (Reichard, CQ HealthBeat, 1/11).

Merging the Legislation

• On Jan. 7, House Democrats participated in a caucus-wide conference call to develop their strategy on health reform legislation (HR 3962, HR 3590) before beginning a new congressional session next week, the Washington Post reports (Pershing, Washington Post, 1/8). Around 175 House Democrats participated in the call with Speaker Nancy Pelosi (D-Calif.) and other Democratic leaders (Whitesides, Reuters, 1/7).

What’s in the Bills

• On Jan. 11, Sen. Russ Feingold (D-Wis.) said that a provision of the Senate bill that would have the federal government cover the cost of a Medicaid expansion in Nebraska likely would be left out of the final bill, The Hill‘s “Blog Briefing Room” reports (Zimmermann, “Blog Briefing Room,” The Hill, 1/11).
• The health reform package likely will include hundreds of millions of dollars for the Nurse-Family Partnership, which sends nurses to advise low-income pregnant women on how to stay healthy and raise their children, the Washington Times reports. Supporters say the program helps promote healthy children and better parents, but critics have called the program a back door to in-home family planning (Wetzstein, Washington Times, 1/12).
• A “religious conscience” exemption in the House and Senate versions (HR 3962, HR 3590) of health reform legislation would allow Amish and other religious sects to opt out of an insurance mandate, Politico‘s “Live Pulse” reports (Frates, “Live Pulse,” Politico, 1/11).
• Health advocates say that a provision in the Senate health care bill would allow insurers to increase penalties on workers with chronic conditions who fail to meet certain health standards for conditions such as high cholesterol or obesity, CQ HealthBeat reports. The provision concerns employer wellness programs and would affect up to 150 million U.S. residents who have employer-provided coverage (Norman, CQ HealthBeat, 1/7).
• Tens of millions of U.S. residents with tax-free health care spending accounts could face higher costs for over-the-counter medications under a proposal in reform legislation, the Times reports. The provision would prohibit consumers from using their flexible spending accounts to make health-related purchases without a physician’s approval, which critics argue would further increase health care costs (Haberkorn, Washington Times, 1/6).

Dollars and Cents

• Groups such as the American Enterprise Institute and the Urban Institute are among those saying that billions of dollars in savings and revenue being touted as part of health care reform legislation might not ever materialize, USA Today reports. However, other groups, including Families USA, have countered those claims and have pointed to a Congressional Budget Office report that estimated the Senate bill would reduce the federal deficit by $132 billion over 10 years (Fritze, USA Today, 1/11).
• Proposals in the House bill (HR 3962) to extend insurance coverage to more low-income U.S. residents would increase federal spending on safety-net programs by more than $1 trillion over the next 10 years, according to a RAND study released on Friday, CongressDaily reports. The report also found that the House bill would help 24 million additional U.S. residents obtain coverage and raise health spending by 3.3% over the next decade, while premium costs for employer-sponsored insurance would decrease by 2% and by 4% for individual plans (Hunt, CongressDaily, 1/8).
• By slowing the growth of health care costs, reform legislation would allow employers to create between 250,000 and 400,000 new jobs annually during the next decade, according to a report released on Jan. 8 by economists at Harvard and USC, the Los Angeles Times reports. Provisions that enable greater competition in the insurance marketplace, better coordination of care and lower administrative costs would free up money that employers could use to hire new employees, the researchers found (Helfand, Los Angeles Times, 1/8).
• Considering the conflict between employing an excise tax or a surtax, congressional Democrats have begun looking at subjecting high-income U.S. residents’ investment income to the Medicare payroll tax as another way of funding health reform, CongressDaily reports. The lobbying group Citizens for Tax Justice first put forth the idea of applying the Medicare payroll tax to investment gains and other “unearned income” over the summer (Cohn, CongressDaily, 1/6).
• Some married couples would pay thousands of dollars more for the same health insurance coverage as unmarried people who live together under current reform plans in Congress, the Wall Street Journal reports. The so-called “marriage penalty” results in part because subsidies for purchasing insurance through an exchange are tied to federal poverty guidelines, thereby limiting subsidies for married couples because they have a combined income (Vaughan, Wall Street Journal, 1/6).

Shaping the Debate

• The Campaign Media Analysis Group has found that television spending on all sides of the health care reform debate has topped $200 million, and no previous advocacy campaign the firm has tracked has reached even one-quarter of that sum, the Washington Post‘s “44” reports. Reform supporters have outspent opponents by a more than 2-to-1 margin through July 2009, but opponents have started to narrow the gap since then (Pershing, “44,” Washington Post, 1/6).
• In a letter to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.), the American Hospital Association endorsed the House’s provisions for covering the uninsured, CQ HealthBeat reports. If Democrats do not adopt the House provisions, the letter stated that congressional leaders should reduce planned cuts in Medicare hospital payments (Reichard, CQ HealthBeat, 1/8).
• On Jan. 6, the National Association of Insurance Commissioners sent a letter to Pelosi and Reid arguing that an antitrust exemption for health insurers included in the House bill (HR 3962) likely would not result in lower premium costs or greater competition in the insurance market, CQ Today reports (Perine, CQ Today, 1/7). The letter also stated that NAIC supports the creation of insurance exchanges and that states should administer the exchanges (Commins, HealthLeaders Media, 1/7).
• In a final effort to derail the Democratic health overhaul, on Jan. 6, House Minority Whip Eric Cantor (R-Va.) sent a memo to the Republican caucus and “interested parties” to establish a whip operation aimed at some Democratic congressional members in an effort to turn their votes against the legislation, Roll Call reports. Cantor said in the memo that his whip team has identified 37 House Democrats who “can be persuaded to vote against a final health care agreement” (Kucinich, Roll Call, 1/6).
• A spokesperson for the Congressional Hispanic Caucus refuted an earlier report from Talking Points Memo that the group had dropped its objections to health reform in exchange for a promise that the White House and congressional leaders would push for immigration reform this year, Politico reports. The spokesperson said the group continues to oppose provisions in the Senate health reform bill (HR 3590) that would “negatively impact immigrants” (Smith, Politico, 1/5).
• Nevada Gov. Jim Gibbons (R) recently sent a letter to Reid that accuses the senator of aiding special interests at the cost of Nevada residents and for not allowing more transparency in the reform process, Politico‘s “Live Pulse” reports (Shiner, “Live Pulse,” Politico, 1/7).

Poll

• A new CBS News poll has found that President Obama‘s approval rating on his handling of health reform has declined to 36%, an all-time low, CBS News’ “Political Hotsheet” reports. Fifty-four percent of those surveyed disapprove of how he has handled reform efforts. In December 2009, 42% of respondents approved of Obama’s handling of health reform, down from 47% in October 2009 (Condon, “Political Hotsheet,” CBS News, 1/11).