The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

For Better or Worse, Senate Makes Health Care Reform History

Posted by Alan on December 24, 2009

What ultimately prevailed was the realization it was now or never. The Senate passed health care reform legislation – a package that few considered ideal, but that Democrats determined was better than the status quo. This was a historical vote – the first time both the House and Senate have passed comprehensive, near-universal health care reform bill. Nonetheless,  Senator Majority Leader Harry Reid summed up the meaning of the event saying “This morning isn’t the end of the process, it’s merely the beginning. We’ll continue to build on this success to improve our health system even more. But the process cannot begin unless we start today … there may not be a next time.”

The legislation has come a long way since earlier in the year when the Senate Health, Education, Labor and Pensions Committee approved far more liberal legislation. As anticipated, moderate Democrats forced a host of changes to the health care reform bill, much to the chagrin of liberals. Now a conference committee will be tasked with merging the Senate version of reform with legislation passed by the House in November.

While the House and Senate bills have much in commons, there are some controversial differences. (For those seeking a more thorough comparison of the two bills I recommend the Kaiser Family Foundation Side-by-Side Comparison).  Given that these differences touch on issues such as taxes, abortion and a government-run health plan, there will be plenty of fodder the cable news networks can use to prevent their commercials from jamming together.

Whatever health care reform bill ultimately emerges from the conference committee it will a product of the Democratic party. Republicans were unanimous in their opposition to HR 3590, the Patient Protection and Affordable Care Act. That is unlikely to change moving forward. This reflects both ideology and a political calculation. While Democrats reached the high water mark of their majority in the 2008 election (meaning they were going to lose seats in 2010 regardless of what happened with health care reform), whether the GOP’s political calculation pays off in the long run will be determined by how independent, moderate voters perceive the health care reform package not in 2010, but in 2012 and beyond. For that verdict we’ll have to wait. In the meantime, for better or for worse, history was made this morning in the United States Senate.


13 Responses to “For Better or Worse, Senate Makes Health Care Reform History”

  1. JimK said

    In today’s NY Times columnist Bob Herbert wrote an op-ed piece describing the potential consequences of the excise tax on the so-called Cadillac Plans. My question on this subject relates to municipal employees. If municipal employees (e.g. School Teachers) receive benefits that would equate to the equivalent of a Cadillac Plan would the municipality or school district, be responsible for the excise tax?

  2. Meg McComb said

    Alan, I am curious for you and readers to comment on this opinion piece by Richard Epstein, “Senate Bill Could Kill Off Private Insurers”:

    If it is credible, the end of private insurance is in sight in America.

    Thank you.

    • Mr. Epstein’s piece further document’s the failings of “liberal reforms” that mandate “stealing from Peter to pay Paul”!….when an outsider…a “do-gooder” stands on the sidelines and tells an affected group “he” will solve their problem by taking away from someone else, we ultimately end up with a fiasco.
      It’s somewhat like a farmer telling chickens and pigs “they have to do more” to solve world hunger….It’s one thing for the chicken to give eggs….but quite another for the Farmer or the chicken to demand the pig provide bacon!….
      Unfortunately, in this case and in Congress, both the Farmer and the Legislator, who is demanding action to solve the problem is neither required to eat eggs nor bacon, nor provide eggs or bacon….they get to order from private dining rooms and send us the bill!

    • JimK said

      The author of the article uses the discarded 90% MLR as the basis for his conclusion. Under the Senate Bill the MLR is 80% for insurance companies in the small group market and 85% for larger insurance companies. At least that is my understanding of this particular provision.

    • JimK said

      On another note, if the end of the private health insurance business was imminent, healthcare stocks would be at or near their 52 week lows. They are currently trading at or near their 52 week highs.

      • Meg McComb said

        Here’s what Janet Trautwein (CEO of National Association of Health Underwriters) commented on Epstein’s piece:

        There are provisions that will make it more difficult but if we can preserve the state and NAIC role we will have a chance to make improvements. Plus we are still working the conference of the two bills. But the carriers will survive. I do not see any way though that the cost of coverage will go down.

        Janet Trautwein, CEO, National Association of Health Underwriters (NAHU)

        • Meg McComb said

          Here is what NAHU’s President, Russ Childers said about Epstein’s piece:

          If the article were correct in its details, it might be correct in its assumptions, but it is not.
          MLR (they call it the “rebate program”) in the final bill are 80% in individual and SG and 85% in large group (it was at 90% before a lot of work by our coalition). Also the new taxes (all taxes actually) don’t count as non-claims payments, so that helps too. It would be a lot better at 75% in individual and SG but 80 is probably livable.

          The “public utility” discussion has some merit between the new regs and taxes and profit limits but remember that a lot of people make a lot of money selling electricity and gas.

          One of the things we need to be careful about are the premium increases that will come due to the bill’s provisions. I would expect that we will lobby carriers to itemize the costs of various provisions of the bill for future premiums. In Georgia, that would include itemizing 3% of the bill for the federal tax on carriers, so much for GI, so much for community rating, etc. It may be hard to do but otherwise we (insurers and those working with them) will get blamed for the costs and in 5 years or so folks will be calling for Govt take over. We just need to be very deliberate in communicating to employers and employees where the premium increases are coming from.

          Hope this helps and Happy New Year. We are not through with our attempts to change provisions of the bill, so stay tuned to write your members.

          Russ Childers
          Americus, Georgia

  3. namaste said

    It may be another boondoggle for the insurance-pharmaceutical-healthcare industry, but with the political reality of corporate influence on legislators, how will we ever get adequate healthcare for the uninsured and under-insured unless thes interests get something in the deal? It may be disgusting, but given the influence of money in our political system, it will be nigh impossible to get from here to there without wetting the beaks of those rich and powerful special interests. So, the real question is will the bill that becomes law improve the delivery of healthcare to more Americans without sending the economy back into recession.

  4. What concerns me is how the government will now become involved in the checks and balances of the new delivery system. All the new committees and governing agencies that will be created to regulate the new legislation- how much will all of it cost to administrate? and how will that trickle down to premium costs?
    It looks to me like there will be a whole new government department created with governing advisory boards, committees, etc. Are the tax payers ready to pay for this because the government obiviously sustains itself upon the backs of the tax payers unless they just decide to print more money?

  5. The legislation passed by each house is more accurately described as Health Insurance Reform…But what must come out of the joint Senate and House reconciliation is Health Care reform….
    This means they must not only look into regulating the Insurance companies who administer the various programs, but they must also find a way of controlling the costs doctors, hospitals and other providers charge and deliver services.
    Today, the emphasis is on the naive belief that by regulating and strictly controlling the insurance carriers, health costs will go down…..
    This is NOT going to happen!
    Costs will not go down until Doctors and Hospitals charges go down…and there is nothing apparent in this legislation that could lead one to believe Doctors and Hospitals are going to charge less…in fact, if the normal laws of supply and demand prevail, they will charge more because there are not enough doctors in the pipeline to treat everyone in a timely manner, so as their services become more “scarce”, their charges may well tend to go up.
    And, since Medicare and Medicaid payments appear to be a constant and never-ending point of contention between for doctors and hospitals, leading doctors and hospitals to turn away from accepting these plans, increasing their numbers won’t do anything but exacerbate the problems.

    When are we going to learn, there is no free lunch… now that we have decided we are treating health care and access as a right and not a privilige we must realize what we are doing…this is a complete departure from the way we have operated through-out our history….
    The solution is not just health insurance reform….the solution is in developing a completely new and improved delivery system….
    This means Patients will have to be re-educated in how their lifestyle choices affect their health and the costs they will incur..
    This means Doctors and Hospitals will have to be re-educated on how there patients are guided towards healthy lifestyles…and we will have to develop and implement a completely new payment system…one that rewards doctors and hospitals for keeping us healthy and not on continuous treatment…
    Insurance companies don’t make their money from selling health insurance…insurance companies make their money from investing the reserves they hold to pay future claims….if these reserves are restricted or eliminated, then Insurance companies become a “utility”….one that no longer has a desire for continual improvement or implementing cost controls…
    Employer sponsored plans are now obselete and “problematic”…they serve no viable, efficient purpose and must be eliminated…
    Our Tax laws must be overhauled to reflect the necessity of allowing people to spend tax free dollars to provide for their health care as individuals and families….and removing health insurance benefits from Employer’s cost of goods and services sold will make them more competitive in the world market….
    Treating health care as a right is a dramatic change….
    We, in the USA, have faced dramatic changes in the past and our form of government working within a framework of regulated Capitalism has proven to be a World Class Problems solver…..
    Now that we believe the solution is expected from the private sector, there is a good chance we can do it again!
    Joseph Schumpeter coined the phrase “creative destruction” when he described our economic system and how it differs from socialism and communism….
    If we review what has worked in the past we might find pathways to follow that will lead to improved healthcare at lower costs…..
    We might want to create “health care oligopolies”….Independent networks and collaborations where patients can select from several, competing “programs” that offer multi-specialty solutions….
    Networks that are administered by “Insurance companies” that link doctors, hospitals, patients and ancillary providers into a seamless system…..
    One can envision an Aetna, a Blue Cross Blue Shield, a Cigna, a Humana, a Kaiser Permanente, a United Healthcare program that each competes for patients and offers healthcare goods and services, including clinics for preventive and routine wellness checks, doctors with various specialties, drug plans, out-patient treatment and surgical centers and skilled nursing facilities….big hospitals may well disappear…..Emergency treatment Centers may have to be centralized and shared in conjunction with emergency services we routinely expect from fire and police emergency responders…..
    The “program” and its sponsors that provide better outcomes at lower costs with grow and prosper…those that do not will have to improve or perish!
    Let’s hope we can get all this done in a timely fashion….
    There are plenty of examples where it has worked, but it is always very disruptive….
    Changing from gas to electricity to light our city streets was a clear improvement and the least painful major shift in how we do things…
    Changing from the horese and buggy to automobiles improved transportation but displaced many a blacksmith…
    Changing from bias-ply technology to radial technology tore the heart of the rubber and tire industry out of the USA and made it a global business, much to the chagrin of American workers…
    Changing from the large furnace based steel industry to small, specialty mills also radically changed the number of Americans working in that industry….
    Changing from a manufacturing based economy to an information based economy changed the 90’s and we are still adjusting to it….
    When we take away the ability of a doctor to hold a “golden ticket” to financial security for himself and his family, will be see as many foreign doctors emigrating to our shores?
    We’ve opened up the possibility of many changes….let’s hope that the unintended consequences of this legislation are not another example of a tipping point leading to more severe and serious problems much the way a sunami can be the consequense of an unseen earthquake, far out at sea!

    • Nosedoc said

      Mr. Breton, while I believe your heart and mind are, overall, in the right place, I need to respectfully point out a few areas in which I disagree or wish to comment.

      1. Physician income. Here is one link on average physician income:

      I don’t believe that $150K to $300K in annual income, the right side of the bell curve, represents a “golden ticket” by today’s standards, especially when one takes into account the personal and financial sacrifices involved in becoming a physician, not to mention the incomes and lifestyles of alternative careers that potential medical school candidates may be considering. I need to emphasize that most physicians do not begin their careers until age 29 or older, while often having a six-figure education debt to pay off.

      2. What a physician or hospital charges for a given service are meaningless numbers except to insurers paying out-of-network rates and non-impoverished, uninsured patients. I don’t believe these exceptions represent a substantial portion of our overall health care expenditure pie, but I welcome any data to the contrary. For in-network physicians, meaning those that participate in Medicare, Medicaid and provider networks of the private insurers, reimbursements are substantially lower than the meaningless numbers listed on the EOB’s as the charges, and the providers have little to no leverage in getting these fee schedules increased. The cost containment “fix” our nation so desperately needs can only come from reduced consumption of medical services. One colleague of mine, who has been a practicing radiologist for the past 45 years, told me he estimates that 30% or so of radiographic studies are unnecessary, with most of them being ordered to avoid potential litigation, however remote the possibility of the study revealing a significant finding might be. I believe he is probably not far off in his assessment. The Government Accounting Office has agreed that liability reform would result in substantial savings in health expenditures. Unfortunately, tort reform is not part of either bill before Congress right now.

      3. The “oligopoly” insurance market you illustrated above is similar to the Dutch model, and with a fair and reasonable system in place for settling disputes, could certainly work well in the United States. My perception (which may be skewed by where I live) is that the current trend in the U.S. is that the large insurers, rather than sharing every market in the country, have more or less carved up the country into regional monopolies. This is what drove Olympia Snowe to break with her party when she voted in favor of Senator Baucus’ bill in the Senate Finance committee (70% market share for Wellpoint). Whether or not the bill that will ultimately pass and be signed into law has the teeth to force the industry to increase the amount of competition for every market to an adequate level remains to be seen, and may depend in part on the role those of us with the intellect and the drive to both critically review the legislation under consideration and use our mouths and keyboards to communicate with our elected officials what our expectations are of them choose to take in pushing this process along.

      • Dear “Nosedoc”….
        Pleased you read my comments…
        In rebuttal….
        1. I did not say nor ,meant to imply Doctor’s are “over-paid”…..the Golden Ticket I mentioned refers to the ability of Practitioners to assure themselves financial security by becoming MD’s…..In every other profession, the “outcomes” delivered by the services provided determine whether a person will succeed or fail….That is not the case with MD’s…..they are essentially “guaranteed” a viable income simply by hanging a shingle…. This is not BAD…and you are absolutely correct in pointing out they invest a tremondous amount of time and money into securing their ability to practice, for which they should receive a good return….
        2. The point I am trying to make, though, by the nature of your comments, missed is this….”WHY are doctor bills and hospital bills so high?” What cost factors do Doctors and Hospitals have to absorb and include in their bills that cause these to be so high? We all recognize they have the debt service or their education…the premiums for their malpractice insurance…the costs associated with staff and overhead…..
        If we are going to truly reduce the cost of healthcare, we need to understand these costs and find ways to reduce them….
        Also….we must find ways of dealing with the “third rail” in the medical profession”….that is….What can we do to improve care and the quality of life while making a meaningful impact in the fruitless spending during the last month of life? Estimates from reliable sources range from 30% to 50% of ALL the money spent on healthcare in a person’s lifetime is spent well within the last few months of life….
        3. The reason various companies have dominant market shares in certain regions or States has more to do with “restraint of trade” practices legislated by the Federated system of NAIC (National Association of Insurance Commissioners), Congress (National & State) and State Insurance services coupled with the lack of understanding of what “insurance” really is, not to mention the lack of standardization of what is a minimally acceptable coverage…the elimination of “limited benefit plans”…
        Finally….we must stop looking for “scape goats”, who, once exposed, will “mend their ways” either voluntarily or through legislation and realize “the health care system” must be analyzed and optimized…..
        In all other “economic” ventures….we have learned that continual improvement is the outcome achieved when we better understand and manage the various components and segments of the systems and processes that transform resources into the final goods and services we strive to achieve….Why do we not apply similar concepts to healthcare?
        One of the by-products of my life’s efforts in “corporate” life is the realization that to achieve real “success” one must LEAD PEOPLE….and MANAGE systems and processes…..
        Today, the supposed leaders we have in government do not appear to act in ways that examplify they are so interested in improving the lot in life of their constituents but to improve their own stature and well-being…One only needs to review the “shameless” way Harry Reid effectively cajoled Senators who DID NOT “sell out” their principles for their votes….In other times we might have called this “prostitution”….He calls “being a good Senator”….

  6. How can they use the words “Affordable Care Act” in this legislation when they have only put in provisions that will increase cost and none to address the real problem of skyrocketing health insurance premiums. This is just the next thing that Washington has made a mess of to please their corporate buddies.

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