The Committee for a Responsible Federal Budget reiterated an important point that can not be understated: Health Care Reform is a Continuous Process and Will Require Continued Vigilance from Policymakers. The legislation passed last week will eventually secure the long-sought goal of near-universal coverage, the moral imperative that was arguably the core of this year's effort. But most recognize that the cost-containment methods are modest at best. Health reform round 2 will focus on this, because it must.

While the CBO predicts the Affordable Care Act will reduce the deficit ($154 billion by 2020, and $1.3 trillion in the second decade), CRFB recognizes that Medicare and Medicaid are still unsustainable and these savings are very vulnerable to repeal or watering down. The main drivers of deficit reduction (see graph below) are the excise tax and the Independent Payment Advisory Board, IPAB.

The excise tax (now delayed until 2018) is designed to put downward pressure on health spending by offsetting some of the effects of the employer provided insurance tax exclusion (which drives up costs). It does this by virtue of being indexed at general inflation, which is much lower than medical inflation, thus including more plans over time. Meanwhile, the IPAB will oversee Medicare cost growth and set savings targets in the program and suggest further reform. The authors note that the strengths of the two mechanisms are also the catalysts of opposition, but stress that they should not be weakened. The issue of the 'doc-fix,' or Sustainable Growth Rate (SGR) formula, was also removed from the legislation because of its high costs and will surely need to be addressed.

The CBO actually estimated the effect of health reform if it included a deficit-financed doc fix, a repeal of the excise tax and IPAB, and if insurance subsidies grew with the same formula after 2018 as before (under the current law, they are scheduled to slow after 2019). It's not pretty:

The authors conclude that as this helps demonstrate, the very features that make these provisions difficult to sustain is also what makes them so important for bringing down costs. These provisions must be maintained or even expanded - rather than becoming victims of the political system. When policymakers move to "round two" of health care reform, they may need to start by revisiting some of the cost control proposals that were not included in the final package, including medical malpractice reform, broader cost sharing, and real reforms to the employer-sponsored insurance tax exclusion. Many important pilot programs in the legislation will offer important lessons as well, and comparative effectiveness research will indeed help guide needed value efficiencies.

In the wake of successful passage of the most comprehensive federal health legislation since Medicare, the focus now comes back to the states for effective implementation. California is in the midst of an unprecedented fiscal crisis, and many state health programs face an uncertain future. For California's uninsured population and safety net system, it is of the utmost importance to connect the dots between the state budget, program financing, the §1115 waiver, and public-private partnerships as a bridge to full federal reform implementation. This blog will allow our readers to be better informed on all issues regarding reform's incremental induction, in addition to the latest developments out of Sacramento and from around the state. Stay tuned for regular updates, and as always, your comments and questions are welcomed!

For our first order of business, we have prepared two documents that you may find helpful:

Reform Implementation: High-Risk Pools describes a well-funded, immediate vehicle in the Affordable Care Act to expand coverage to the uninsured, which will soon provide $5 billion for temporary high-risk pools. The paper summarizes California's current high-risk pool MRMIP and makes recommendations regarding crucial next steps so as to maximize the new funds.

California's §1115 Waiver and Federal Reform is a slide set describing how the waiver can prepare counties for swift implementation of reform.

At 2:35am ET, Republican points of order persuaded the Senate Parliamentarian to strike 16 lines from the Reconciliation Act that deal with technical aspects of federal Pell (education) grants. This afternoon, the Senate ended the amendment process and voted in favor of the Reconciliation Act 56-43. The changes mean the bill goes back to the House for a final (yes, FINAL) vote, expected to pass within the hour before Congress takes off for Spring recess. The vote will mark the end of an unprecedented effort...and the beginning of a new fight.

The law will be tweaked and re-worked for years to come, and many provisions will need to be defended from dismantling. As we have long advocated, coverage expansion is the first and foremost priority in health reform and at its core the law will finally bring the American health care system to near universal coverage, along with the rest of the industrialized world. The next three years of implementation will be crucial to set the foundation, particularly at the state level. Building blocks such as the 1115 Waiver will help bridge that coverage gap while also improving the safety net infrastructure. The unchecked growth in health spending will continue to be a burden on our economy, and though the new law begins to address rising costs we will undoubtedly be forced to meet the growth more head on. Long-term endeavors in cost-containment will take decades, but the short-term benefits of reform will be tangible for millions of Americans.

Today, the Senate takes up amendments on H.R. 4872, The Health Care & Education Affordability Reconciliation Act of 2010, with a final vote as early as tomorrow preceding the President’s signature. If even one word were changed, the bill would have to go back to the House for an additional vote on the new language. Republicans are expected to offer some 32 amendments this afternoon, though lawmakers could have hundreds more in waiting, as there is no rule on maximum number of amendments. Democrats will not offer amendments, and voting requires a simple majority for acceptance/denial.

Early reports show that some of the amendments are meant to put Democrats in an awkward position in voting ‘No,’ such as Senator Tom Coburn’s expected amendment to “prohibit coverage of Viagra for child molesters and rapists.” Most, though, will be challenges to budgetary aspects of the bill, where the Senate Parliamentarian could rule against any specific provision in the bill. The bill’s authors are certain that they have crafted the legislation to meet all budgetary requirements. Any changes shouldn’t be a major setback for the legislation as they would most likely not be substantial enough for House members to vote differently if needed, though the bill’s proponents would much prefer to have the Senate vote be the final chapter in this saga.

Here is our summary of the changes within the Reconciliation Act

The sheer complexity of the health reform bill Law can make it a bit daunting to understand all the benefits. The major pillars of the Law (the individual mandate, health insurance exchanges, Medicaid expansion, and insurance subsidies) don't activate for a number of years, but there are numerous provisions that go into effect much sooner.

For example, as soon as the President's pen(s) signed the bill, small businesses became eligible for a 35% tax credit to offer their employees health insurance and seniors in the 'doughnut hole' became eligible for a rebate to help pay for the costs of prescription drugs. Effective immediately are also a number of new funding streams for nurse-managed health clinics, the National Health Service Corps, fellowship training grants in public health, and many more health-relate endeavors.

In September, health insurance companies will be forever banned from dropping coverage for individuals who get sick and denying coverage to children with pre-existing conditions, and dependents will be able to stay on their parents' insurance until their 26th birthday.

In January, primary care physicians will be eligible for a 10% bonus payment in Medicare, a public long-term care insurance program will become available, and health insurers will be required to cover tobacco cessation programs for pregnant women.

These are just a handful of the short-term implementations, and you can read through our more comprehensive list here:

Implementation Timeline for Health Reform, 2010-2011

We have also updated our health reform legislation summary matrix, which now includes the Senate bill, reconciliation bill, and manager's amendment:

Federal Health Reform Summary

Yesterday, the House passed the Patient Protection and Affordable Care Act by a 219-212 vote, to be signed into law tomorrow. The landmark legislation establishes a fundamental social precedent, putting our country on the path toward a healthier future for all Americans. After nearly 100 years of debate, we finally decided as a society that health care is not merely a privilege of the few, but a right for all.

In the coming days, we have many to thank personally and just cause to celebrate. This moment could not have been achieved without the steadfast leadership of our elected officials and the tireless efforts of countless health advocates. We sincerely thank all of our colleagues, supporters and readers for making coverage of the uninsured a priority in their lives. The law's passage is truly only the beginning and we are even more motivated to begin the critical process of implementation, looking forward to the day when America's universal health care system will be the world's finest.

"Americans can always be counted on to do the right thing...after they have exhausted all other possibilities." -Winston Churchill

Reconciliation Bill (Legislative Text)

Reconciliation Bill (Section-by-Section Summary)

CBO Score (pdf)

CBO Score (blog)

You can now start the 72 hour clock for public viewing before the likely vote in the House on Sunday. Reports indicate that leadership is within 5 votes of passage. Also, head here to see a useful side-by-side comparison to the original House and Senate bills.

We recently compiled a county-by-county comparison on the effects of reform in California, estimating the extent of coverage expansion and subsidies at the county level. Below are the overview and spreadsheet describing our findings:

Before and After Reform: A County by County Comparison (pdf)
County Statistics (xls)

The House Committee on Energy and Commerce released similar district-level comparisons today, which you can scroll through on their website.

A recent UCLA Center for Health Policy Research report found that over 2 million Californians lost their health insurance since the beginning of the recession, an increase of 28% since 2007. According to the report, 8.2 million Californians, nearly one-quarter of the nonelderly, lacked health insurance for all or part of the year in 2009.

Head here and here for some useful tools exhibiting up-to-date whip counts in the House with sortable information on Representatives.

Today: The House Budget Committee 'marks up' the reconciliation bill, effectively moving it to the Rules Committee after a 48 hour waiting period

Tonight/Tomorrow: The legislative language and CBO score of the reconciliation bill are made public

Wednesday, March 17 - Thursday, March 18: The House Rules Committee takes up the actual reconciliation bill, where the rule will be made on how the bill will specifically be voted on. The options include:

1) Voting TWICE, where the House votes once on the Senate bill and once on the reconciliation bill

2) Voting ONCE, where the House votes simultaneously on the Senate and reconciliation bill

3) Voting ONCE, where the House votes only on the reconciliation bill and deems the Senate bill passed (the preferred version by Speaker Pelosi and others, as there is technically not a recorded vote on the Senate bill's 'special deals')

Early reports indicate the reconciliation bill removes the special deals for Nebraska and Florida, though preserves the appropriations for Louisiana Medicaid and a Connecticut hospital. It also modifies the Cadillac tax to only those making more than $250,000 and increases the medical device industry tax from 2.5% to 2.9%. The bill will also likely include a student loan overhaul ($62B in savings), which will result in additional offsets toward health reform spending.

Friday, March 19 - Sunday, March 21: The reconciliation bill goes to the House floor for limited debate, with passage at any time (using one of the above options) before Sunday to send to the Senate

Despite last week's reports, it is still not entirely clear whether the President must sign the Senate bill into law before a reconciliation bill can be voted on in the Senate.

Two powerful associations indicated their strong support of passage today, including the American Geriatrics Society (representing over 16,000 geriatric health care professionals) and the AAMC (representing every American medical school, 128,000 faculty members, 75,000 medical students, and 110,000 resident physicians).

New numbers released by the state indicates that January was the worst on record for joblessness in California at a rate of 12.5%, with eight counties experiencing at least 20% unemployment. Yesterday the Senate passed the "American Workers, State, and Business Relief" Act, which will bring some much needed help to California and its fifth highest unemployment rate (behind Michigan, Nevada, Rhode Island, and South Carolina). The bill:

-Extends the 65% COBRA subsidy from the stimulus act to the end of 2010, saving unemployed beneficiaries in California $720/month

-Extends the enhanced federal matching rate for Medicaid (FMAP) for 6 months to June 2011, providing California $1.5-2B for the 2010-2011 budget

-Delays the scheduled 21% SGR payment rate cut for providers treating Medicare patients

In health reform news, the Senate Parliamentarian ruled as expected today that the reform bill must become law before a Reconciliation bill can be moved. The CBO and legislative language are expected as early as tomorrow, and numerous sources point to the final process starting on Monday, where the House Budget Committee will begin marking up the reconciliation bill. As for the question of Senate support, peruse this letter sent to minority leader Mitch McConnell today from Harry Reid.

A: That same insurance covering only 48% of your medical expenses.

This was the case for persons buying insurance in the individual market from 2004-2007, according to a new KFF analysis. By now most have heard about the recent premium hikes to individuals in the nongroup market, but less known is what follows the hike; to 'console' the victim, insurers will suggest that the beneficiary can avoid this increase by switching to a 'lower-cost policy'. Known as buy-downs in the industry, moving to the 'lower-cost policy' means receiving a higher deductible policy with lesser benefits, or put simply, more money for less coverage. And here is the kicker...the trend is not isolated to the individual market, as employer-based insurance is also seeing a greater take-up of high-deductible plans in the face of increasing costs:

In wonky terms, the amount of medical costs covered by the insurance company is called Actuarial Value (AV). The health reform legislation includes important baselines for insurance AV, based on income level. For example, a family of four earning $88K must have at least 70% of their medical costs covered by their plan while a family earning $33K are only responsible for 3% of costs (where the plan has a 97% AV). Cost sharing is a useful mechanism, though high deductibles can be a significant deterrent for individuals who avoid needed care (particularly low-income individuals).

This is an incredibly useful talking point for those skeptics in your life 'who are happy with their insurance', as this trend will directly effect more and more of the population in the years to come, resulting in millions becoming underinsured while foregoing care because of increased financial obligation.

We are in the defining final weeks for federal health reform, and the path before us is clear; first pass the Senate bill as-is in the House and then create a package of budgetary fixes requiring only majority support in the Senate. House members are reluctant to pass the Senate bill before action is taken on the smaller bill, but this is the sole option as a reconciliation bill can only amend existing law. As such, House Representatives are asking for assurance from a majority of Senators that the reconciliation process will be aggressively pursued.

That goal was apparently reached today as the 50th Senator to indicate support for the reconciliation process was achieved. A CBO score of the smaller bill’s legislative language is expected this week, which should allow Representatives to indicate their final stance.

Below is a set of slides for your reference, analyzing many of the effects of federal health reform in California. The slides exhibit current trends in health costs and coverage, estimate the degree of coverage expansion and subsidies in California as a result of reform, and highlight next steps in the reform process. As always, questions or comments are welcomed.

Federal Health Reform in California (PDF)

Federal Health Reform in California (PowerPoint Slide Show)

The President's speech today issued a clear path toward reform's passage, calling for an effective end to this legislation's journey and an up-or-down vote within weeks. Obama rejected the idea of piecemeal reform, recognized fundamental partisan divides over an incredibly complex and personal issue, and relayed a rightful sense of urgency for all those facing medical and financial peril. Most importantly, he reminded the nation that legislation has already passed a majority in the House and a supermajority in the Senate, and that "America deserves a final vote."

It is clear that the House must first pass the Senate bill before considering a reconciliation 'fix,' as a law must exist before it is amended. Though not explicitly using the word 'Reconciliation' he referenced other vital legislation that has followed that very path, including welfare reform, CHIP, COBRA, and the Bush tax cuts. Legislative language on the companion bill could go to the CBO as early as the end of the week, and once the House receives assurance from the Senate that this process will be pursued (most likely through a 51-Senator-signed letter), we can expect reluctant House members to publicly state their position. You may wish let your Congressional representatives know your views on this path forward.

Below are the President's comments in full. Added emphases are mine.

"Good afternoon. We began our push to reform health insurance last March with the doctors and nurses who know the system best, and so it is fitting to be joined by all of you as we bring this journey to a close.

Last Thursday, I spent seven hours at a summit where Democrats and Republicans engaged in a public and substantive discussion about health care. This meeting capped off a debate that began with a similar summit nearly one year ago. Since then, every idea has been put on the table. Every argument has been made. Everything there is to say about health care has been said and just about everyone has said it. So now is the time to make a decision about how to finally reform health care so that it works, not just for the insurance companies, but for America’s families and businesses.

Where both sides say they agree is that the status quo is not working for the American people. Health insurance is becoming more expensive by the day. Families can’t afford it. Businesses can’t afford it. The federal government can’t afford it. Smaller businesses and individuals who don’t get coverage at work are squeezed especially hard. And insurance companies freely ration health care based on who’s sick and who’s healthy; who can pay and who can’t.

Democrats and Republicans agree that this is a serious problem for America. And we agree that if we do nothing – if we throw up our hands and walk away – it’s a problem that will only grow worse. More Americans will lose their family’s health insurance if they switch jobs or lose their job. More small businesses will be forced to choose between health care and hiring. More insurance companies will deny people coverage who have preexisting conditions, or drop people’s coverage when they get sick and need it most. And the rising cost of Medicare and Medicaid will sink our government deeper and deeper into debt. On all of this we agree.

So the question is, what do we do about it?

On one end of the spectrum, there are some who have suggested scrapping our system of private insurance and replacing it with government-run health care. Though many other countries have such a system, in America it would be neither practical nor realistic.

On the other end of the spectrum, there are those, including most Republicans in Congress, who believe the answer is to loosen regulations on the insurance industry – whether it’s state consumer protections or minimum standards for the kind of insurance they can sell. I disagree with that approach. I’m concerned that this would only give the insurance industry even freer rein to raise premiums and deny care.

I don’t believe we should give government bureaucrats or insurance company bureaucrats more control over health care in America. I believe it’s time to give the American people more control over their own health insurance. I don’t believe we can afford to leave life-and-death decisions about health care to the discretion of insurance company executives alone. I believe that doctors and nurses like the ones in this room should be free to decide what’s best for their patients.

The proposal I’ve put forward gives Americans more control over their health care by holding insurance companies more accountable. It builds on the current system where most Americans get their health insurance from their employer. If you like your plan, you can keep your plan. If you like your doctor, you can keep your doctor. Because I can tell you that as the father of two young girls, I wouldn’t want any plan that interferes with the relationship between a family and their doctor.

Essentially, my proposal would change three things about the current health care system:

First, it would end the worst practices of insurance companies. No longer would they be able to deny your coverage because of a pre-existing condition. No longer would they be able to drop your coverage because you got sick. No longer would they be able to force you to pay unlimited amounts of money out of your own pocket. No longer would they be able to arbitrarily and massively raise premiums like Anthem Blue Cross recently tried to do in California. Those practices would end.

Second, my proposal would give uninsured individuals and small business owners the same kind of choice of private health insurance that Members of Congress get for themselves. Because if it’s good enough for Members of Congress, it’s good enough for the people who pay their salaries. The reason federal employees get a good deal on health insurance is that we all participate in an insurance marketplace where insurance companies give better rates and coverage because we give them more customers. This is an idea that many Republicans have embraced in the past. And my proposal says that if you still can’t afford the insurance in this new marketplace, we will offer you tax credits to do so – tax credits that add up to the largest middle class tax cut for health care in history. After all, the wealthiest among us can already buy the best insurance there is, and the least well-off are able to get coverage through Medicaid. But it’s the middle-class that gets squeezed, and that’s who we have to help.

Now, it’s true that all of this will cost money – about $100 billion per year. But most of this comes from the nearly $2 trillion a year that America already spends on health care. It’s just that right now, a lot of that money is being wasted or spent badly. With this plan, we’re going to make sure the dollars we spend go toward making insurance more affordable and more secure. We’re also going to eliminate wasteful taxpayer subsidies that currently go to insurance and pharmaceutical companies, set a new fee on insurance companies that stand to gain as millions of Americans are able to buy insurance, and make sure the wealthiest Americans pay their fair share of Medicare.

The bottom line is, our proposal is paid for. And all new money generated in this plan would go back to small businesses and middle-class families who can’t afford health insurance. It would lower prescription drug prices for seniors. And it would help train new doctors and nurses to provide care for American families.

Finally, my proposal would bring down the cost of health care for millions – families, businesses, and the federal government. We have now incorporated most of the serious ideas from across the political spectrum about how to contain the rising cost of health care – ideas that go after the waste and abuse in our system, especially in programs like Medicare. But we do this while protecting Medicare benefits, and extending the financial stability of the program by nearly a decade.

Our cost-cutting measures mirror most of the proposals in the current Senate bill, which reduces most people’s premiums and brings down our deficit by up to $1 trillion over the next two decades. And those aren’t my numbers – they are the savings determined by the CBO, which is the Washington acronym for the nonpartisan, independent referee of Congress.

So this is our proposal. This is where we’ve ended up. It’s an approach that has been debated and changed and I believe improved over the last year. It incorporates the best ideas from Democrats and Republicans – including some of the ideas that Republicans offered during the health care summit, like funding state grants on medical malpractice reform and curbing waste, fraud, and abuse in the health care system. My proposal also gets rid of many of the provisions that had no place in health care reform – provisions that were more about winning individual votes in Congress than improving health care for all Americans.

Now, despite all that we agree on and all the Republican ideas we’ve incorporated, many Republicans in Congress just have a fundamental disagreement over whether we should have more or less oversight of insurance companies. And if they truly believe that less regulation would lead to higher quality, more affordable health insurance, then they should vote against the proposal I’ve put forward.

Some also believe that we should instead pursue a piecemeal approach to health insurance reform, where we just tinker around the edges of this challenge for the next few years. Even those who acknowledge the problem of the uninsured say that we can’t afford to help them – which is why the Republican proposal only covers three million uninsured Americans while we cover over 31 million. But the problem with that approach is that unless everyone has access to affordable coverage, you can’t prevent insurance companies from denying coverage based on pre-existing conditions; you can’t limit the amount families are forced to pay out of their own pockets; and you don’t do anything about the fact that taxpayers end up subsidizing the uninsured when they’re forced to go to the Emergency Room for care. The fact is, health reform only works if you take care of all these problems at once.

Both during and after last week’s summit, Republicans in Congress insisted that the only acceptable course on health care reform is to start over. But given these honest and substantial differences between the parties about the need to regulate the insurance industry and the need to help millions of middle-class families get insurance, I do not see how another year of negotiations would help. Moreover, the insurance companies aren’t starting over. They are continuing to raise premiums and deny coverage as we speak. For us to start over now could simply lead to delay that could last for another decade or even more. The American people, and the U.S. economy, just can’t wait that long.

So, no matter which approach you favor, I believe the United States Congress owes the American people a final vote on health care reform. We have debated this issue thoroughly, not just for a year, but for decades. Reform has already passed the House with a majority. It has already passed the Senate with a supermajority of sixty votes. And now it deserves the same kind of up-or-down vote that was cast on welfare reform, the Children’s Health Insurance Program, COBRA health coverage for the unemployed, and both Bush tax cuts – all of which had to pass Congress with nothing more than a simple majority.

I have therefore asked leaders in both of Houses of Congress to finish their work and schedule a vote in the next few weeks. From now until then, I will do everything in my power to make the case for reform. And I urge every American who wants this reform to make their voice heard as well – every family, every business owner, every patient, every doctor, every nurse.

This has been a long and wrenching debate. It has stoked great passions among the American people and their representatives. And that is because health care is a difficult issue. It is a complicated issue. As all of you know from experience, health care can literally be an issue of life or death. As a result, it easily lends itself to demagoguery and political gamesmanship; misrepresentation and misunderstanding.

But that’s not an excuse for those of us who were sent here to lead to just walk away. We can’t just give up because the politics are hard. I know there’s a fascination, bordering on obsession, in the media and in this town about what passing health insurance reform would mean for the next election and the one after that. Well, I’ll leave others to sift through the politics. Because that’s not what this is about. That’s not why we’re here.

This is about what reform would mean for the mother with breast cancer whose insurance company will finally have to pay for her chemotherapy. This is about what reform would mean for the small business owner who will no longer have to choose between hiring more workers or offering coverage to the employees she has. This is about what reform would mean for the middle-class family who will be able to afford health insurance for the very first time in their lives.

And this is about what reform would mean for all those men and women I’ve met over the last few years who’ve been brave enough to share their stories. When we started our push for reform last year, I talked about a young mother in Wisconsin named Laura Klitzka [KLITZ kah]. She has two young children. She thought she had beaten her breast cancer but then later discovered it spread to her bones. She and her husband were working – and had insurance – but their medical bills still landed them in debt. And now she spends time worrying about that debt when all she wants to do is spend time with her children and focus on getting well.

This should not happen in the United States of America. And it doesn’t have to. In the end, that’s what this debate is about – it’s about the kind of country we want to be. It’s about the millions of lives that would be touched and in some cases saved by making private health insurance more secure and more affordable.

At stake right now is not just our ability to solve this problem, but our ability to solve any problem. The American people want to know if it’s still possible for Washington to look out for their interests and their future. They are waiting for us to act. They are waiting for us to lead. And as long as I hold this office, I intend to provide that leadership. I don’t know how this plays politically, but I know it’s right. And so I ask Congress to finish its work, and I look forward to signing this reform into law. Thank you."

President Obama issued a letter to Congressional leadership today, outlining the Republican priorities that he agrees with and wishes to pursue in his Compromise 2.0 to be released tomorrow. These include 1) undercover health professionals to deter fraud and waste in Medicare and Medicaid, 2) additional appropriations for state malpractice reform, 3) increasing reimbursements under Medicaid, and 4) inclusion of high-deductible plans into the Exchange, in conjunction with Health Savings Accounts (HSAs).

The final provision is the most noticeable, and has it pros and cons. High-deductible plans are often not adequate in providing sufficient comprehensive coverage, though the inclusion of 'young invincible' policies in the federal reform bills do mandate preventive services. If ultimately included, the combination with HSAs could make individuals more cost conscious of their health care, but it is necessary that individuals do not become underinsured and are protected with cost-sharing maximums. The letter ends with strong language recognizing the major rifts between the Democrats and Republicans, but rejects the case for piecemeal reform. Read the full letter here.

A 3-step timeline has also been proposed in a memo obtained by Inside Health Policy:

According to the Democratic memo, the timeline may be:

Step one: The House passes the Senate's health reform bill by March 19. The bill then goes to the president for signature without going through conference.

As part of this step, there are reports that House leaders want to see a letter signed by at least 50 Senate Democrats committing to passing tweaks to the Senate bill worked out between the two chambers, but a Democratic policy consultant says such a letter is unlikely to transpire. More likely, the source said, Senate Majority Leader Harry Reid (D-NV) would privately vow to House Speaker Nancy Pelosi (D-CA) that he has the votes.

Step two: After the Senate bill becomes law, the House then amends the Senate bill through a reconciliation bill, to be passed by March 21.That bill would be the only opportunity to amend, add or strike provisions in the Senate bill.

Step three: The Senate begins debate on the reconciliation bill by March 23. Debate is limited to 30 hours. Votes begin March 26, the first day of Easter recess, at which point Reid announces that the Senate will stay in session through recess to consider all amendments. Vote on final passage follows consideration of the last amendment.

The goal is to pass health reform before the Spring recess (March 29-April 9), so as to avoid a repeat of last year's brutal August break, sources said.

Senate whip count update: 43 Senators are now on record in support of reconciliation and 35 support inclusion of a public option.

A new study released in Health Affairs highlights a potential cause of out-of-control growth in health care expenditure. The interesting trend, taking California as a bellwether case-study, suggests that cost growth is a result of an increased integration/consolidation of provider market share in response to low public payment rates. These health system 'mergers' (such as hospital acquisitions, IPAs and HMOs) increase market power, thus allowing for a 'monopolized' increase in payment rates. Insurers argue that these increases in costs result in a parallel increase in premiums.

More interesting, the study suggests that the proposed Accountable Care Organizations (ACOs) and other care integration models in federal health reform could result in similar higher rates for private payers. Interviews in the study suggest that the ultimate intention of care coordination/disease management (from a provider perspective) may simply be increased market share. The authors also suggest that current antitrust policy has not been effective in challenging hospital mergers. They conclude that "unless market mechanisms can be found to discipline providers’ use of their growing market power, it seems inevitable that policy makers will need to turn to regulatory approaches, such as putting price caps on negotiated private-sector rates and adopting all-payer rate setting."

Maryland just so happens to have a working all-payer rate setting regulation (coupled with relief for lower hospital Medicare/Medicaid reimbursement rates), and as seen by the graph below has effectively been able to control cost growth without jeopardizing quality. Read more about the mechanism in a recent post.

In other news, sources indicate that a revised White House 'Compromise 2.0' bill will be unveiled on Wednesday that will most likely include Republican ideas from last week's Health Care Summit like easing the interstate sale of insurance and stronger malpractice reform language. The bill is intended to be a modest package, and Obama will likely outline that it be pursued through reconciliation to be passed into law alongside the Senate bill.