The ITUP Spotlight on Health Reform

Head here (and here for Part 2) to watch some of the clearest language from the almost-Surgeon General, explaining the effects of reform for the average American.

Be sure to stay tuned over then next two days for live blogging from the 14th Annual ITUP Conference in Sacto! Also, follow us on Twitter for more live conference happenings.

Kent Conrad revealed a possible timeline for health reform, as Obama today called for a bipartisan discussion before moving forward on a vote. According to budgetary rules, any reconciliation instructions expire once a budget resolution is passed, traditionally an April action. This means Democrats could aim to decide how best to proceed on health reform by the February recess (beginning on Feb. 11), pass a jobs bill shortly after the break, and complete the necessary action for health reform (i.e. a reconciliation bill) by the Easter break. Next week should reveal the process in greater detail.

In the meantime, Anthem Blue Cross has reported that it will raise premium rates for Californians in their individual market (nearly 800,000 lives) by as much as 39% starting March 1, as a result of higher health costs. From the LA Times:

Individual policies are often the only option for those who are uninsured, self-employed or do not receive health coverage through employers. Insurers are free to cherry-pick the healthiest customers in the lightly regulated individual market. They can raise rates at any time as long as they notify the state Department of Insurance and prove that they are spending at least 70% of premiums on medical care. The size of the individual rate increases prompted state Insurance Commissioner Steve Poizner recently to call for a review of Anthem's charges.

To avoid a similar fate, Aetna is planning to force up to 650,000 individuals to drop their coverage next year in an effort to improve on a less-than-anticipated profit margin in 2009. Rest assured, the insurer still managed a 13% profit while spending more than $2 million on lobbying last year.

...is what we spent on health care in the United States in 2009 ($2.5 trillion in total) says the Office of the Actuary, Center for Medicare and Medicaid Services (CMS) in a Health Affairs paper released today. The short piece is required reading for anyone interested in where current/future health care dollars come from and go to. You can read some of the major findings below:

-In 2009 the health share of gross domestic product (GDP) is expected to have increased 1.1% to 17.3%—the largest single-year increase since 1960.

-Slow growth in private market spending (3.0%, $1.5 trillion total) reflects the toll of the recession, while public spending increased markedly (8.7%, 1.2 trillion total) as a result of higher unemployment (9.9% increase in Cobra spending) and Medicaid enrollment (6.5% increase). See below:

-The share of health care dollars paid by government will increase to the 50% milestone by 2012, and 52% by 2019. See below:

-The effects of population growth and the changing age-sex mix are expected to be minor, contributing 0.9% and 0.4%, respectively, to annual growth for 2009–2019.

-By 2020 over 19% of the GDP will be dedicated to health care, about one in five dollars spent in the U.S. totaling $4.5 trillion annually at an annual growth rate of 6.1% (almost 2% faster than inflation).

This trajectory is clearly unsustainable, unless we choose to spend an increasingly larger portion of our economy on health care (without any apparent benefit to actual health outcomes) while also cutting public benefits/raising taxes to keep up....or Congress can pass the health reform bill that begins to address these problems while also providing health security to millions.

The President attended the Senate Democratic Caucus retreat today, and explicitly urged the body to move on health reform while also fielding questions from the group. Below are excerpts from his commentary, and go here to see to the meeting in full (HCR at 11:, 18:, and 37:, and Barbara Boxer at 49: ).

“I’m reminded that when it came to the health insurance reform in particular, I sought out and supported Republican ideas from the start. So did Max Baucus...I think he can testify to spending a little time listening to Republican ideas, you considered hundreds of Republican amendments and incorporated many of their ideas into the legislation that passed the Senate. So when I start hearing that we should accept Republican ideas, let’s be clear: we have. What hasn’t happened is the other side accepting our ideas. And I told them I want to work together when we can, and I meant it. And I believe that’s the best way to get things done for the American people. But I — I also made it clear that we’ll call them out when — when they say they want to work with us and we extend a hand and get a fist in return...I would just suggest to this caucus, if anybody’s searching for a lesson from Massachusetts, I promise you the answer is not to do nothing.

So many of us campaigned on the idea that we were going to change this health care system. So many of us looked people in the eye, who had been denied because of a pre-existing condition or just didn’t have health insurance at all or small-business owners in our communities, who told us that their premiums had gone up 25 percent or 30 percent. And we said we were going to change it.

Well, here we are with a chance to change it. And all of you put extraordinary work last year into making serious changes that would not only reform the insurance industry, not only cover 30 million Americans, but would also bend the cost curve and save a trillion dollars on our deficits, according to the Congressional Budget Office.

There’s a direct link between the work that you guys did on that and the reason that you got into public office in the first place. And so as we think about moving forward, I hope we don’t lose sight of why we’re here. We’ve got to finish the job on health care."

I also wanted to mention another addition to the FY2011 federal budget, which will extend Cobra coverage for workers who lose their job through the end of 2010. The budget would subsidize 65% of the premiums and could continue for up to 12 months. The program has become increasingly popular since the its inception in the stimulus bill, improving enrollment of eligible employees from 19% to 39%.

Below is a letter that we recently developed and distributed to our California Congressional leadership, representing a unified voice of diverse groups from around the state. We urge our readers to continue to express your support and concerns with the health reform legislation to your local representatives, for sustained advocacy is a necessity now more than ever.

You can also have the chance to sign on to the letter below at our 14th annual Conference in Sacramento next Wednesday, February 10th. If you haven't yet registered please do so NOW as the deadline for online registration is today!

February 1, 2010

Congresswoman Nancy Pelosi
235 Cannon House Office Building
Washington, DC 20515

Congressman Henry Waxman
2204 Rayburn House Office Building
Washington, DC 20515

Congressman George Miller
2205 Rayburn House Office Building
Washington, DC 20515

Congressman Pete Stark
239 Cannon House Office Building
Washington, D.C. 20515

Senator Barbara Boxer
112 Hart Senate Office Building
Washington, DC 20510

Senator Dianne Feinstein
331 Hart Office Building
Washington, DC 20510

Dear Speaker Pelosi, Senators Boxer and Feinstein, and Congressmen Miller, Stark, and Waxman:


You have brought us so close to comprehensive federal reform of our fractured health care system. We urge your continued support of the original legislative goal to create a system built on the pluralistic strengths of our existing system while assuring quality, affordable care for all Americans.

The social and economic toll of failure to enact reform cannot be understated. Employer-sponsored insurance will continue to degrade, paralleling the increases in health care costs and premiums. The number of uninsured will continue to rise, and the amount of uncompensated care and medical bankruptcies will multiply. These effects will disproportionately burden California, the epicenter of the nation's uninsured population. Small business, the driver of our state's job creation, will continue to face unaffordable growth in premiums and hundreds of thousands of individuals will continue to suffer exclusions from coverage in the medically underwritten individual market. The failure to enact federal reform will have adverse consequences on our state's public coverage programs that are already threatened by proposed budget cuts to millions of beneficiaries including low-income children, their working parents, the elderly, the disabled.

The bills are not perfect, additional compromises will be necessary to draw more unified support. However, we encourage you to bring the first stage of reform to fruition. We thank you for your continuing efforts to cover the uninsured, and urge you to finish the job.



Sincerely,

Lucien Wulsin
Insure the Uninsured Project

John Arensmeyer
Small Business Majority

E. Richard Brown
UCLA School of Public Health

Leona Butler
Retired CEO, Santa Clara Family Health Plan

Carmela Castellano
California Primary Care Association

Michael Cousineau
USC Center for Community Health Studies

Joel Diringer
Diringer & Associates

Hector Flores
Family Care Specialists Medical Corps

Peter Harbage
Harbage Consulting

Scott Hauge
Small Business California

Howard Kahn
LA Care Health Plan

Wendy Lazarus
The Children’s Partnership

John Ramey
Local Health Plans of California

Gloria Rodriguez
Community Clinic Association of Los Angeles County

Sergio Sanchez
SEIU

Walter Zelman
CSU Los Angeles


*Affiliations listed for identification and do not necessarily
represent that of the accompanying organizations*

The President's budget proposal was released today, which includes a combination of spending increases/decreases, tax cuts for the lower and middle class, and allows some high-income tax cuts to expire. In all, the 2011 budget totals $3.8 trillion and would reduce deficits by $1.25 trillion over 10 years compared to current policies.

As for the health related provisions, the budget includes some notable increases in spending in order to help cash-strapped states preserve vital programs, improve infrastructure investments, and initiate other projects. These increases are a testament to the necessity for comprehensive health reform (and may actually substitute for some of the larger bills' anticipated spending) in order to provide security and stability for Americans who are paying more and more for less and less high quality health care. The budget also properly frames health reform as the only path to long-term deficit reduction, and actually assumes $150B in deficit reduction in anticipation of the pending health reform bill passing.

Below are the health-related highlights from a useful OMB Fact Sheet, and you can find an informative HHS budget overview here.

-$25.5 billion for an additional 6 months of Federal Medicaid assistance to help states maintain their Medicaid programs and ensure access to health care for millions of Americans. (CA could receive $2-3B of the total)

-$2.5 billion for health centers to provide affordable high quality primary and preventive care to underserved populations, including the uninsured. This will allow health centers to continue to provide care to the 2 million additional patients they served under Recovery Act and support approximately 25 new health center sites. In 2008, health centers provided direct health care services to 17 million people.

-$110 million for continuing efforts to strengthen health IT policy, coordination, and research activities.

-$286 million for research that compares the effectiveness of different medical options, building on the expansion of this research begun under Recovery Act.

-New Medicare demonstration projects that evaluate reforms to provide higher quality care at lower costs, improve beneficiary education and understanding of benefits offered, and better align provider payments with costs and outcomes.

-$169 million in the National Health Service Corps (NHSC) to place providers in medically underserved areas to improve access to needed health care services. Under the NHSC, primary health professionals such as physicians, nurse practitioners, and dentists serve in a medically underserved community in exchange for having a portion of their student loans paid off.

-Add 400 NHSC clinicians to the more than 8,100 who will provide essential primary and preventative care services in health care facilities across the country.

-$20 million to fund a new effort in up to 10 of the largest U.S. cities to reduce the rates of morbidity and disability due to chronic disease.

-$10 million to improve workforce capacity of state and local health departments.

-$10 million for the federal employee workplace wellness initiative.

-Increase enrollment in the Children’s Health Insurance Program by 7 percent (more than 500,000 children) from 2008 to 2011.

"We're going to get it done this year. It would have been much easier to pass it in July. It would have been easier to pass it in November. But again, as the president said, it’s hard. We don’t give up just because things are hard in this country. And we shouldn’t give up – elected officials and leaders in the Congress should not give up just because it’s hard...There’s just a lot of technical questions, given the [reconciliation] process, that have to be answered. To get the little pieces to work you’ve got to have the main pieces of legislation that holds those together...We’ll go when we believe we have a bill that holds together and achieves the goals of reform and has the votes.”

Also watch this fascinating back-and-forth between the President and House Republicans (especially the Q&A) at the GOP Conference in Baltimore today, much of which harps on the health reform struggles (at 45:, 49:, and 80: ).

There have been varied reactions to the President's remarks last night on health reform, but advocates are generally satisfied with the tone that Obama established. He expanded further in a Town Hall today (after Min. 35), linking health reform as the key to effective deficit reduction. If you desired greater clarity, read Speaker Pelosi's comment from today's press briefing:

"You go through the gate. If the gate’s closed, you go over the fence. If the fence is too high, we’ll poll vault in. If that doesn’t work, we’ll parachute in. But we’re going to get health care reform passed for the American people.”

Head here for a great reflective piece by Anthony Wright, who describes the death of several health reform efforts in California and predicts a better future for the current federal effort. In response to the volume of misinformation out there, ITUP has developed a two-page Fact Sheet that describes what reform could tangibly mean for California, with footnotes to FACTUAL sources.

-Below is the State of the Union transcript related to federal health reform:

Now let’s be clear – I did not choose to tackle this issue to get some legislative victory under my belt. And by now it should be fairly obvious that I didn’t take on health care because it was good politics.

I took on health care because of the stories I’ve heard from Americans with pre-existing conditions whose lives depend on getting coverage; patients who’ve been denied coverage; and families – even those with insurance – who are just one illness away from financial ruin.

After nearly a century of trying, we are closer than ever to bringing more security to the lives of so many Americans. The approach we’ve taken would protect every American from the worst practices of the insurance industry. It would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market. It would require every insurance plan to cover preventive care. And by the way, I want to acknowledge our First Lady, Michelle Obama, who this year is creating a national movement to tackle the epidemic of childhood obesity and make our kids healthier.

Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan. It would reduce costs and premiums for millions of families and businesses. And according to the Congressional Budget Office – the independent organization that both parties have cited as the official scorekeeper for Congress – our approach would bring down the deficit by as much as $1 trillion over the next two decades.

Still, this is a complex issue, and the longer it was debated, the more skeptical people became. I take my share of the blame for not explaining it more clearly to the American people. And I know that with all the lobbying and horse-trading, this process left most Americans wondering what’s in it for them.

But I also know this problem is not going away. By the time I’m finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Patients will be denied the care they need. Small business owners will continue to drop coverage altogether. I will not walk away from these Americans, and neither should the people in this chamber.

As temperatures cool, I want everyone to take another look at the plan we’ve proposed. There’s a reason why many doctors, nurses, and health care experts who know our system best consider this approach a vast improvement over the status quo. But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know. Here’s what I ask of Congress, though: Do not walk away from reform. Not now. Not when we are so close. Let us find a way to come together and finish the job for the American people.

Early reports indicate that the President's State of the Union address will provide some needed clarity amidst the plethora of speculation surrounding the fate of health reform. Though unlikely to prescribe a timed path, Obama should (hopefully) be able to negate the 'alternative' paths like a pared-down bill, or multiple 'popular' bills. Here is an early excerpt of the speech:

By the time I’m finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Co-pays will go up. Patients will be denied the care they need. Small business owners will continue to drop coverage altogether. I will not walk away from these Americans. And neither should the people in this chamber.

In Congress, Speak Pelosi floated a two-track strategy that is showing major support in the House. She verified that she would indeed have enough votes in the House through amendments in the reconciliation process, but also intends to fashion additional non-budgetary bills to ease her Caucus' concerns. For example, the repeal of the anti-trust exemption (a wildly popular provision in the House, but absent from the Senate bill) would not qualify as a budgetary issue under reconciliation but could be fast tracked as a separate bill to be voted on while the Reconciliation Bill develops and the Senate bill waits.

This would make House members uneasy with the Senate bill happier in the short run, provides tangible results for a disgruntled public, gives reconciliation a little breathing room to come to fruition, and most importantly keeps positive momentum towards comprehensive health reform. Like legislative appetizers before the main course.

All signs point to the reconciliation process in order to pass a companion bill that allows for House majority support of the Senate version. Here are the major changes that are expected to be in the companion (which look quite similar to those compromises reached during the conference committee process):

- Raising the Medicare payroll and unearned income tax on families making more than $250,000 to 2.35 percent, which could raise up to $125 billion.

- $50 billion more in subsidies to help lower and middle-income people afford insurance. Democrats had said earlier this month they hoped to increase the number by $100 billion.

- About $150 billion in cuts to privately administered Medicare Advantage programs. The Senate bill proposes $120 billion in cuts while the House comes in with a $170 billion reduction.

- A deal with labor unions to delay a tax on expensive insurance plans until 2018 for state and local government workers and those with collective bargaining agreements The threshold at which the 40 percent tax would kick into effect was raised from $23,000 for a family to $24,000.

- Removing the so-called “Cornhusker Kickback” that ensured Nebraska would never have to pay for reform’s Medicaid expansion with state money.

- Closing the gap in seniors’ prescription drug coverage.

- A package to extend a number of non-controversial tax credits for things like research and development. Most of the credits expired at the end of the last year and one source saw their inclusion more as legislative housekeeping than a move to sweeten the bill to win moderate votes.

The bill will most likely be created in the House (with significant Senate and White House input) before it is voted on and goes to the Senate. Democratic Senators Evan Bayh, Blanche Lincoln, and Ben Nelson have already proclaimed they will vote 'No' on any health bill that goes through reconciliation, but thats a-ok since it would only need 51 'Yes' votes.

The reconciliation bill can only contain provisions that effect the federal budget and not increase the deficit, and the one person who decides what qualifies as a 'budgetary issue' is the Senate Parliamentarian, the soon-to-be power-monger celebrity named Alan Frumin. The former Parliamentarian Robert Dove recently commented on the process, and added an interesting tidbit on this authority:

"Vice President Biden is the ultimate decider. But no vice president has tried to play that role in reconciliation. We haven’t had vice presidents that have tried to play important procedural roles for a very long time. The last one was Nelson Rockefeller, in 1975, and before him Hubert Humphrey, in the 1960’s. But no vice president has ever tried to play a role in reconciliation....If he were to show up, and he wants to make these decisions, yes. He has the authority to do that. He is the president of the Senate."

Also head to a recent CBPP article for an overview of the history and use of reconciliation, where 19 bills have utilized the process since 1980 including:

1985 Continuation of Employer-Sponsored Coverage (COBRA)
1996 Welfare Reform
1997 Children's Health Insurance Program (CHIP)
1997 Medicare Advantage Program
2001 Tax Cuts
2003 Tax Cuts

CBPP Conclusion: Since rising health costs are the single largest reason for projected long-run deficits, it is appropriate that health reform be considered through the reconciliation process.

The absence of exit polling in the Massachusetts special election has allowed for rampant speculation of voter intentions, but a recent post-election poll indicates that health reform is still widely supported by constituents in the Bay State (where the effects of health reform can already be seen). The poll was conducted by the Kaiser Family Foundation, the Harvard School of Public Health, and The Washington Post and finds that:

- Only 11% of voters, including 19% of Brown voters, want Brown to “stop the Democratic agenda“:

- 52% of voters were enthusiastic/satisfied with Obama administration policies.

- 44% of voters believe “the country as a whole” would be better off with health care reform, but 23% believe Massachusetts would be better off.

- 68% of voters, including 51% of Brown voters, approve of Massachusetts’ health care reform.

As Speaker Pelosi has indicated she does not currently have the votes to pass the Senate bill, it is again time to call your local California Representative. Below are the critical Congresspeople, first being those Progressives who have vowed to oppose any bill that doesn't contain a public option, followed by the centrist Blue Dog Democrats who have issues with the Senate abortion language.

Public Option Coalition
Bob Filner (CA-51)
Michael Honda (CA-15)
Barbara Lee (CA-09)
Grace Napolitano (CA-38)
Laura Richardson (CA-37)
Lucille Roybal-Alard (CA-34)
Linda Sanchez (CA-39)
Jackie Speier (CA-12)
Pete Stark (CA-13)
Maxine Waters (CA-35)
Diane Watson (CA-33)
Lynn Woolsey (CA-06)

Blue Dogs
Loretta Sanchez (CA-47)
Adam Schiff (CA-29)
Jane Harman (CA-36)
Jim Costa (CA-20)
Dennis Cardoza (CA-18)
Joe Baca (CA-43)

You can find their contact info and your Rep's phone number here.

Broad consensus surrounds the viable path that should now be taken in Congress: Pass the Senate Bill and Fix it Through Reconciliation. Paul Krugman lays it out quite bluntly , and 47 of the nation's leading health policy experts have signed on, as well. Below are our thoughts for your reference, and a reminder of what will occur if Congress falters:

Weighing the Options in Federal Reform
Op-Ed on How to Restore California to Greatness

The Consequences of Reform Failure

From the White House Council of Economic Advisers:

-Health care expenditures would likely rise from their current level of 18 percent of GDP to 28 percent in 2030 and 34 percent in 2040
-The number of uninsured people in the United States would rise from 46 million in 2007 to 72 million in 2040
-Essentially all of the rise in average employee compensation due to increasing productivity over time would go to health insurance, and essentially none would go to take-home wages
-Steeply rising Medicare and Medicaid spending will be amplified by a 65% increase (25 million people) in the 65+ population resulting in unsustainable increases in the budget deficit

From the Urban Institute Health Insurance Policy Simulation Model:

-The amount of uncompensated care would more than double in 45 states
-Every state would see Medicaid/CHIP spending rise by 75%
-Every state would see the employer-sponsored insurance (ESI) population degrade
-27 states would see ESI premiums double, and 46 states would see employer costs increase by 60%
-The number of uninsured would increase by more than 30% in at least 27 states

No big developments on the Federal front today, though advocacy groups are stepping up efforts to push Congress on a plan of action. I thought that some good news would be nice:

The California Department of Managed Health Care (DMHC) recently released a set of first-in-the-nation consumer protections for those covered by HMOs. The Consumer Time Elapsed Standards will ensure timely access of care for many Californians, and those who feel they have been denied care can now report complaints to DMHC. Below are some of the new time limits:

10 business days for non-urgent primary care and mental health appointments.

15 business days for non-urgent appointments with a specialist and for lab tests, X-ray and other ancillary services.

96 hours for urgent-care appointments that require special authorization.

48 hours for urgent-care appointments with no authorization.

24-hour telephone screening or triage, seven days a week.

30-minute wait times for telephone triage.

10-minute wait times to speak with the HMO's customer service representative.

Waking up today, federal health reform became a completely different beast. Seemingly inevitable legislation that would fundamentally transform the American health care system for the better is now showing signs of mortality. It would be too easy to lament on the "if only"s, and even easier to kick the can down the road. The fact is, though, both houses of Congress have already passed health reform legislation. Forever forward, regardless of the outcome, there is no escaping 'Yes' votes from those Congressmen that are fearful for his or her reelection as opposing candidates are going to use it against them in either case. That being said, the political risks of abandoning the plan are far greater than reaching compromise and sending a bill to the President. Substantive disagreements are debatable, but futility guarantees defeat.

So the question is, then, what are the next steps? To reduce the shock value and bring this situation back down to earth, read the latest from David Leonhardt. He posits that "the bills before Congress are politically partisan and substantively bipartisan" and explains the need to unify around an already centrist bill. How will this be done?

It's hard to say. The day has been filled with speculation, suggestion, and prognostication. Rumors of the bill being chopped up into pieces or vastly scaled down were rampant, though a White House memo indicates this is not likely. Persuading moderate Republicans in either the Senate or House is equally unlikely.

The greatest consensus, even backed by labor in SEIU's Andy Stern, would be to have the House pass the Senate version and attach a provision guaranteeing improvement (like the excise tax modifications and increased subsidies) through budget reconciliation from the Senate side. Kent Conrad expressed support for this as well, and Pelosi vowed the House would move forward with reform. Looking at this option, it appears that a group of House liberals (led by Raul Grijalva) are unwilling to accept the Senate bill as-is. It is quite possible that Pelosi would be willing to lose some liberals in favor of a more centrist bill if she can pick up enough moderate Dems along the way (remember that 39 Ds voted 'No' on the more robust House version).

We should be clearer on the chosen path in the next few days, as Congressional leadership and the White House appear committed to the cause they already own.

As I have mentioned in the past, health reform requires 60 votes in the Senate, and the progressiveness of the bill is based on that fact. Here are the alternatives, some realistic and some not:

1) Ron Pollack's idea. Have the House pass the Senate bill as is, but only after the crafting of a separate budget reconciliation bill that deals with the financing and subsidies. The House would then vote on both measures before sending the budget bill to the Senate where it would only requires 51 votes. Both bills could then be signed by the President simultaneously. This could conceivably create a more generous bill in terms of financing and affordability (as the reconciliation bill could disregard centrist Senate Democrats like Lincoln, Landrieu, and Nelson), but would also preserve troublesome Senate provisions like state-based Exchanges, the abortion language, and other non-budgetary aspects that were better on the House side. Here is how reconciliation would work according to Jeff Davis.

2) Push the conference package through Congress before Brown is sworn in, probably on January 29th. This is somewhat unrealistic given the potential backlash, though today's official scheduling of the State of the Union Address for January 27th gives it some merit.

3) Get back Olympia Snowe. This will push the bill back towards the Finance Committee's version, though it is doubtful she will come on board.

4) Pass the Senate bill. The House can pass the Senate version verbatim and send it straight to the President, though numerous House members have reservations about this. Encouragingly, Speaker Pelosi and House Majority Leader Hoyer have indicated this would be a viable last resort as something is better than nothing.

Meetings in the White House continued this afternoon after the conclusion of yesterday's 1 a.m marathon. Discussion centered around the types and extent of subsidies and benefits, though the President and Congressional leaders were unable to finalize a bill before the end of today's session. Talks are expected to continue tomorrow, though tangible progress was made today:

Biologics
Some more Presidential arm-twisting today, where it appears that Obama was able to reduce the exclusivity period of expensive biologic drugs (a $300B industry over the next 20 years) from 12 years to 10 years before introduction of generic versions.

Health Insurance Exchange
Though not finalized it appears the Exchange will be a hybrid of the two bills' versions, meaning a state-based structure with significant federal regulation and oversight (details to come).

Medicaid Financing
In the wake of the Nebraska debacle, Ben Nelson has called for the removal of his state's special treatment and it appears that Obama and lawmakers intend to increase the amount of federal aid to all 50 states for the Medicaid program (revenue for full financing is still being explored).

Insurance Subsidies
Aiming to improve affordability, it appears that an additional $10B in fees will be imposed on medical device manufacturers to provide additional subsidies for low-income individuals and families in the Exchange.

Insurer Antitrust Exemption
Here is a letter from a large group of Senators (including CA's Dianne Feinstein) calling for repeal of the exemption (in the House bill, not in the Senate bill):

Dear President Obama, Majority Leader Reid, and Speaker Pelosi:

The White House reached an agreement with Labor leaders today over the controversial excise tax. Unions had major concerns with the tax on high-cost plans, as collective bargaining agreements have historically resulted in more generous benefits as opposed to an increase in wages. In addition, these agreements are often multi-year deals (as opposed to year-to-year agreements in non-union firms) and as a result labor advocates felt that the tax would unfairly hit many middle-class families for years to come. Below are the changes, and now that the revenue provision is supported by groups like the SEIU and AFL-CIO the House should similarly follow suit:

-Excise tax threshold INCREASED from $8,500/$23,000 for individuals/families to $8,9000/$24,000, begins in 2013.
-Indexing of threshold UNCHANGED at CPI (inflation)+1% (important cost-containment mechanism as health inflation is comparatively greater)
-After 2015, tax threshold EXCLUDES dental and vision plans for ALL Americans (around a $2,000 value)
-INCREASED threshold adjustments for plans with high number of older workers, women, high risk individuals and qualified retirees.
-Delay of tax until 2018 for unions and state/local employee plans to be able to re-negotiate their collective bargaining agreements
-Open the Exchange to ALL employer plans by 2017

The final clause is extremely significant, as it establishes validity that the future Exchange will not just be another high-risk pool subject to adverse selection for those outside the group market. When large companies enter the Exchange, new-found bargaining power can better hold insurers to adequate consumer protections and high-value care. Insurers will want to go after the increased market share, and more customers in a regulated market means more effective innovation and competition. When companies that have been successful at holding down health care costs (like Safeway) are able to quickly enter the Exchange, transparency mechanisms within can translate these effective practices across organizations and industries.

The compromise sacrifices $60B of revenue over 10 years, so lawmakers will have to include another source (most likely the increased Medicare payroll/investment tax). This was the snowball-at-the peak though, as the rest of the spending differences couldn't be addressed until the financing was there. As such, a bill may be score-able enough to be sent to CBO by tomorrow while Congress works out non-budgetary differences (that Obama will be sure to address in today's Issues Conference {Obama's remarks at 7:30 in the video} with the House Democratic Caucus). The CBO may need as many as 10 days to score the bill, though, and some reports indicate that the President's Signature/State of the Union Address combo may even get pushed back to February 9th.

Top Congressional leaders have just ended eight hours of negotiations in the White House Cabinet Room with President Obama and members of his Administration in order to reach agreement on a final health care bill. The attendees included Representatives Pelosi, Rangel, Steny Hoyer (Md.), James Clyburn (S.C.), George Miller (Calif.), and Henry Waxman (Calif.) in addition to Senators Chris Dodd, Harry Reid (Nev.), Dick Durbin (Ill.), Max Baucus (Mont.) and Tom Harkin (Iowa). Union leaders were also in attendance.

The President continued his newfound 'executive influence' today by calling for a National Health Insurance Exchange, and this is now the central fighting point for the House. In addition to the compromises reached earlier this week with a combination scaled-back Excise tax (also supported by Obama)/Medicare payroll tax expansion, it appears that the House is now willing to remove their employer 'pay-or-play' requirement in favor of the less-robust Senate version. The Senate employer shared responsibility provision protects many employees from unaffordable insurance, but there may be some market distortion issues that you can read about here and here.

Provisions still on the table:

-133% FPL Medicaid expansion (more likely) vs. 150% Medicaid expansion
-Degree of income-related insurance subsidies (which may now be lowered to the Senate's level as revenue will be lost as a result of the employer requirement agreement unless new revenue sources are created)
-Fate of insurer anti-trust exemption
-Fate of Medicare Independent Payment Advisory Board
-Extent of Medicare Advantage payment reductions

The House reconvened on Capitol Hill today, with a promising development that may reconcile the differences in reform financing between the House high-income tax and the Senate excise tax on high-cost insurance. For the first time, lawmakers are considering extending the Medicare payroll tax to go beyond the pay-stub and now include dividends and other investment income for high-income earners.

The current law imposes a 1.45%/1.45% tax on employer/employee, and the Senate bill raises the worker contribution to 2.35% for individuals making more than $200,000 a year and couples making more than $250,000 a year. The compromise will extend the tax to sources such as capital gains, stock dividends, and interest (while excluding pensions and retirement accounts). The Finance Committee briefly considered the idea, finding that 80% of the funds would come from the top 5% of income earners and 64% of the funds from the top 1%. If this idea holds, the compromise will most likely also scale back the limits of the excise tax (though not remove it) and possibly eliminate the high-income tax so as to keep all mechanisms within the health care system.

Following up on yesterday's Health Insurance Exchange resources, I thought I would include some experienced words from the newly elected California Congressman John Garamendi in a press call today, expressing his (and my) preference for a nationally regulated Exchange:

"Under health reform, 30 million people will buy their insurance through the Exchanges. I spent years as insurance commissioner in California, chasing after the insurance company scoundrels. You’re going to toss 30 million Americans to these sharks unless there is a real strong regulatory environment [like the House's Exchanges]...

State governments vary in their ability to enforce regulations, and insurance company influence also varies. You can wind up with a commissioner in a state that has no interest in protecting consumers. To deal with that, you need a broad based Exchange that’s strong enough to overcome the insurance companies. That’s the role of the federal government. To make sure the insurance sold is valuable, claims will be paid, and companies will play by the rules."

Here are three pieces recently put together by the ITUP team:

-A Summary of Differences between the House and Senate bills (including sticking points like the structure of the Health Insurance Exchange...head here for more useful materials on this topic), and where we think the final legislation should be heading.

-An Open Letter assessing our regional constituents' thoughts on how best to transition to a 'reform ready' state using the 1115 Medicaid Waiver.

-A brief overview of the Budget Proposal put forth by Governor Schwarzenegger, highlighting the vast cuts to Health and Human Services programs like Medi-Cal in order to close the state's budget gap.