Senate Reform Bill a Work in Progress

Even though there’s nothing shocking about the health care reform bill currently under debate on the Senate floor, say Employee Benefit Adviser’s reform watchers, there remains much room for improvement.

The Council of Insurance Agents & Brokers is greatful for the exclusion of proposed legislation found in the House bill that would have potentially repealed health and medical malpractice insurers’ antitrust protection and permitted the Federal Trade Commission to prepare studies and reports on the industry. “The good news was seeing the exclusion of McCarran-Ferguson and FTC provisions that could have been significantly harmful to the insurance industry — and we’re grateful for the efforts of Sen. Ben Nelson on this front,” says Joel Kopperud, The Council’s director of government relations.

While Kopperud has “little doubt” that reform will pass this year, the final shape of the bill is “very much up in the air.” Specifically, it “needs clarification regarding the role of brokers in state exchanges on several fronts — particularly defined compensation models and the role we would play as exchange navigators,” he says.

Obstacles to the bill passing the Senate include highly contentious abortion and immigration language, “sideshows” that Kopperud hopes will fade in favor of a real discussion over the issue of cost containment, which he’d like to see “re-emerge as the primary driver of the legislation.”

The Senate bill met the expectation of the Association of Health Insurance Advisors that it would be an improvement over the House bill, but lingering areas of concern include the inclusion of the CLASS Act, long-term care legislation that “creates a sense of false security,” and potential “devastating results of allowing individuals to purchase coverage after they are ill or injured — essentially leaving everyone in the system ‘on claim,’” says Diane Boyle, executive vice president, AHIA-NAIFA Health & Employee Benefits.

Skeptical of the Congressional Budget Office’s estimate that the bill would cost $849 billion over 10 years to cover 31 million uninsured and reduce the federal budget deficit by $127 billion, Dave Lapka, president of logistics consulting company D360, believes it disguises taxpayer costs rather than clarifies them. “Realistically, even federal budgets are done on a yearly basis, this scoring involves 10 years of taxpayer funding but only seven years of service provision,” he says. “I'd like to see annual breakouts of cost versus benefit payout. That will be the reality of this bill's impact.”

Director of the Shupe Center for Healthcare Reform and President of Tennessee benefits consulting firm ESPinc, Bob Shupe sees the legislation as more of a “watered down version” of the House bill designed to get enough votes for passage, and is also concerned about the reliability of the CBO score: “Keep in mind that these are the same estimators who said in 1965 that Medicare would cost $60 billion in the 1990s.”  

Also citing the initial Medicare cost projections against actual expenditures as “a picture of what this reform could do to our country,” Tom Schuetz, co-president of Iowa’s Group Services, calls the legislation “a very subtle march toward government control of health care.”

However, as a supporter of universal health care, Kris Marohn, administrator with Texas-based McCall, Parkhurst & Horton L.L.P., contends the bill “needs more teeth.” As for a proposed individual mandate with a fine for noncompliance that will grow from $95 in the first year to $750 by 2016, “the fine will be cheaper than the insurance. That system won’t fly,” says Marohn. Neither will the option for each state to opt out of a government-run plan: “I don’t believe there should be an ‘opt-out’ provision. We need the public option so that everyone in America can get health care.”

Kopperud agrees that the individual mandate needs improvement. “The mandate was weakened in the legislative process to ensure that working class citizens were not unduly penalized for not purchasing unaffordable plans,” he says. “Rather than weakening the penalty, the focus ought to be on increasing affordability. This is achieved by widening the age-based premium variation cap to a 5:1 ratio rather than the 2:1 ratio.”

Although the bill is a “terrific work of consolidation,” it does not adequately address systemic issues of lack of coordinated care, engagement and management, says Cyndy Nayer, president of the Center for Health Value Innovation. Nor does it focus enough on outcomes, she adds. With the year coming to a close, Nayer believes it will be “well into the second quarter of next year” before President Barack Obama has a bill to sign, citing his State of the Union address and February financial indicators as potential obstacles.

This story has been reprinted with permission from Employee Benefit Adviser.