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White House Talks Up Cost-Savings Plans To Bolster Reform

Perhaps fearing a repeat of the demise of the 2007 health care reform effort in California, the White House is making a deliberate effort to play up provisions of Democratic health care reform bills aimed at controlling health care costs.

Legislation aimed at overhauling California’s health care system went down in flames in January 2008 after a report from the state Legislative Analyst’s Office projected that the overhaul would leave the state with a $4 billion shortfall within five years if costs exceeded expectations.

On Oct. 26,  White House Office of Management and Budget Director Peter Orszag blogged that provisions in the Senate Finance Committee’s proposal and reform plans in the House would directly tackle health care costs in part by:

  • Creating an excise tax on high-cost health insurance plans;
  • Penalizing hospitals with high, preventable 30-day admission rates;
  • Encouraging the creation of accountable care organizations; and
  • Bundling payments for high-cost, chronic conditions.

Those proposals and others aimed at “bending the cost curve” could likely be the key to getting health care reform legislation through Congress this year.  In a time of record budget deficits, it should come as no surprise that so many members of Congress are paying close attention to the Congressional Budget Office’s cost projections.

And in some cases, lawmakers are second-guessing CBO and asking it to take a second look.  On Oct. 21, West Virginia Democratic Sen. Jay Rockefeller challenged CBO’s most recent projections of the cost savings that could stem from enacting tort reform. 

In an Oct. 9 letter to Sen. Orrin Hatch (R-Utah), CBO projected that tort reform would cut federal spending by $41 billion over 10 years and reduce the federal deficit by $54 billion. These reductions were attributed to a decrease in so-called defensive medicine, or unnecessary medical services that doctors provide to protect themselves against lawsuits.

But Rockefeller said that the numbers provided to Sen. Hatch run counter to previous CBO findings on malpractice reform.  Rockefeller laid out eight questions for CBO, including whether a reduction in medical services would compromise Americans’ health in any way.

CBO’s numbers aren’t the only ones drawing criticism on Capitol Hill.  On Oct. 22, WellPoint — the parent company of Anthem Blue Cross of California — released a study projecting that health care reform proposals would result in higher health insurance costs.  In the report, the insurer presented a series of case studies for a number of states where it does business.

For California’s individual market, WellPoint estimates that premiums will increase by 122% for younger/healthy people and by 53% for people of average age/average health.  Older, less healthy people would see premiums decrease by 37% on the individual market, according to WellPoint.

Democrats in Congress roundly criticized the report, much as they have other data health insurers have released in recent weeks.

This week’s “Road to Reform” has more on the administration’s push for health care reform and the latest on insurers’ efforts to influence the debate. 

Administration’s Message

  • During a fundraiser in New York City on Oct. 20, President Obama touted health reform and urged Democrats to stay focused on the reasons why it is needed, the AP/Fresno Bee reports. Obama told attendees that even the least popular health reform bill would extend coverage to 29 million U.S. residents (AP/Boston Globe, 10/20).
  • In a letter sent to HHS Secretary Kathleen Sebelius on Oct. 20, Sen. Chuck Grassley (R-Iowa), the ranking member of the Senate Finance Committee, raised concerns that an HHS Web site might violate rules against government-funded propaganda because it urges visitors to sign an e-mail in support of Obama‘s health reform efforts, Roll Call reports. The Web site is accessed through a button that says “state your support,” and the e-mail includes language praising Obama’s efforts and asks for the signatories’ contact information (Stanton, Roll Call, 10/20).  David Cade, HHS’ acting general counsel, said that “there is nothing secretive, and therefore nothing improper, about it” (Stanton, Roll Call, 10/21).


  • On Oct. 26, House Majority Whip James Clyburn (D-S.C.) said that House Democrats likely would back a public insurance plan that would give states the option not to participate, The Hill‘s “Blog Briefing Room” reports (Romm, “Blog Briefing Room,” The Hill, 10/26). Clyburn’s comments came ahead of an announcement by Senate Majority Leader Harry Reid (D-Nev.) that the chamber had completed its final health care bill, which contains a public option with the opt-out clause (Pear/Herszenhorn, New York Times, 10/27).

Debate Over an Excise Tax

  • A proposal in the Senate Finance Committee‘s bill (S 1796) that would impose an excise tax on high-priced “Cadillac” insurance policies would significantly affect working people with individual and family plans by the time it is fully implemented in 2019, according to a report by the Joint Committee on Taxation, CQ HealthBeat reports. The report was released on Oct. 20 by Rep. Joe Courtney (D-Conn.), who leads a group of 180 House Democrats who oppose the tax (Rubin, CQ HealthBeat, 10/20).
  • On Oct. 26, AFL-CIO President Richard Trumka reiterated organized labor’s opposition to the Senate Finance Committee’s proposed formula for an excise tax on high-cost health plans but said unions might support such a tax if it did not affect middle-class families, CongressDaily reports. “If you wanted to tax Goldman Sachs plans, I’d say that’s fine,” he said, adding, “If you show me a definition of a Cadillac plan that hits the Cadillac plans and not the middle class, then we’d take a look at that” (Hunt, CongressDaily, 10/26). Senate Majority Leader Harry Reid (D-Nev.) is working to address organized labor’s concerns about the excise tax in the final Senate reform bill (Bolton, The Hill, 10/26).
  • During a speech at the Center for American Progress on Oct. 26, Christina Romer — chair of the White House Council of Economic Advisers — said that an excise tax on high-cost health plans would be an effective way to raise revenue and curb health care cost growth, CQ HealthBeat reports (Norman, CQ HealthBeat, 10/26). “A policy along these lines, designed carefully, will encourage both employers and employees to be more watchful health care consumers,” she said (CongressDaily, 10/26).

Insurers at the Table

  • On Oct. 22, Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that insurers still are committed to aiding the passage of a health reform bill this year, despite increased tensions between the industry and Democratic lawmakers over the past few weeks, the AP/Boston Globe reports. At an annual conference with AHIP members in mid-October, Ignagni said that insurers “can continue to make a major contribution” to the overhaul effort, adding, “Yes, we can achieve reform” (Fram, AP/Boston Globe, 10/22).
  • AHIP spent $2.4 million on lobbying during July, August and September, up from $1.9 million for the second quarter of this year and $2 million during the first quarter, the AP/Globe reports (AP/Boston Globe, 10/21).  Analysis by the Center for Responsive Politics indicates that AHIP spent more in the third quarter of this year than it did in the first two quarters combined, while drug companies’ lobbying costs decreased by 10% from the previous quarter (Frates, “Live Pulse,” Politico, 10/22).

Shaping the Debate

  • On Oct. 20, Capitol Hill offices received more than 200,000 calls in support of health reform as part of a push by the group Organizing for America and its allies, the Philadelphia Inquirer reports. OFA is an offshoot of President Obama’s 2008 presidential campaign (Fitzgerald, Philadelphia Inquirer, 10/20).
  • Religious leaders gathered outside the Capitol on Oct. 20 to urge elected officials to draft health reform legislation that does more for impoverished groups, the Boston Globe‘s “Political Intelligence” reports. They argued that under the Senate Finance Committee’s reform bill (S 1796), insurance still would cost too much and not offer enough benefits for low-wage workers (Rhee, “Political Intelligence,” Boston Globe, 10/20).
  • Unions representing workers in dangerous professions, particularly meatpackers and longshoremen, are urging lawmakers to review a proposed excise tax on high-priced health insurance policies that such workers often depend on for coverage, CQ Today reports. During markup, the Senate Finance Committee added a trigger for taxing plans for workers in “high-risk professions” after some Democrats and labor groups asserted that the tax would affect some families more than others (Rubin, CQ Today, 10/22).
  • Owners of restaurants, retail chains and other businesses that have high employee-turnover rates are urging lawmakers to revise the definition of “full-time” workers in health reform legislation, CongressDaily reports. According to the business owners, without the revised definition, reform legislation would penalize them for not providing insurance coverage to temporary and short-term workers (Dann, CongressDaily, 10/22).


  • Support for health reform is slipping, with 49% of U.S. residents favoring the overhaul and 49% of U.S. residents opposing it, according to a new CNN/Opinion Research Corp. poll, the Boston Globe‘s “Political Intelligence” reports. Last month, 51% of respondents favored the overhaul (Rhee, “Political Intelligence,” Boston Globe. 10/21).
  • Concerns about the cost and quality of health care after reform are rising among U.S. residents, although a majority still trusts President Obama more than Republicans to change the system, according to a USA Today/Gallup poll, USA Today reports (Fritze, USA Today, 10/21).
  • A Robert Wood Johnson Foundation poll conducted in September and released on Oct. 20 found that about one-third of U.S. residents said they are concerned about losing their current health coverage, an increase from 29% in August, the AP/Miami Herald reports (Alonso-Zaldivar, AP/Miami Herald, 10/20).

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