Just days before a bipartisan White House summit on health care, President Obama unveiled a proposal that closely tracks the Senate-passed health legislation with some modifications. For example, the size of a high-cost “Cadillac” health insurance plan subject to an excise tax would be raised and the tax would not be levied on any health insurance plan until 2018. Subsidies would be increased for some low-and-middle-income individuals to help them purchase coverage, and states would receive more financial assistance from the federal government to help pay for a Medicaid expansion.
JACKIE JUDD: Good day. I am Jackie Judd with Health on the Hill. This is a big week for health care reform and whether Democrats can eventually push a Bill through Congress. Just this morning, the White House released its overhaul plan which will serve as the starting point for discussions at Thursday’s Bipartisan Summit.
Here to discuss the week ahead are Mary Agnes Carey of Kaiser Health News and Julie Rovner of National Public Radio. Welcome to you both. As I said, a lot to review. Julie, let’s start with you. Generally, the President’s Bill follows the Senate Bill with one dramatic departure, and that is with the establishment of a regulatory board at the federal level. Tell us about it.
JULIE ROVNER: Well, this is something new. This is something that wasn’t in either the House or the Senate Bill or has been negotiated since December when the Senate Bill passed, and it’s something I think the administration has picked up on just in the last few weeks. Of course, it grew out of this 39-percent rate hike that Anthem Blue Cross of California had proposed that is now on hold, I might add, in the individual market, and I think this is something that sort of regular people can get a grip on.
We have seen a lot of big rate hikes in the last year or so among insurers. This obviously is a very dramatic one and people say we really don’t like this Bill that the Democrats have been putting forward. But interestingly if you look at polls, what you find is if you take the individual elements of these Bills and do polls on them, people support them.
So here is something that the President can latch onto and say we are going to create this board that would examine proposed rate hikes and perhaps reject them, and that would be something that perhaps the public could really relate to. So here is something in this Bill that normal people could latch onto that would be perhaps difficult for Republicans to say that’s a terrible idea. Although, I wonder if it’s redundant perhaps to the exchanges that are already in the Bill that are supposed to do the same sort of thing.
And by the way if everybody’s required to get health insurance, which they would be, then the reason for these rate hikes, Anthem said the reason they are having to increase rates so much in the individual market is that healthy people have been dropping out because of the recession. Only sick people remain, therefore, there are fewer people to spread the premiums across.
JACKIE JUDD: And if the Board were to be created, what would happen to the state regulators? What does their role become? Has that all been spelled out yet or not?
JULIE ROVNER: No. Absolutely not. We have no idea how this Board would interact with state regulators, with the exchanges. According to the Administration, they are not doing the national exchange the way the House Bill would do. It is, as you mentioned, based on the Senate Bill which does have mostly state based exchanges.
JACKIE JUDD: And so it was to a degree done in response to the kind of populist outrage out there over the proposed rate hike.
JULIE ROVNER: Absolutely. I mean, this is something, certainly to give the public something to really understand about why it is, I think, that the President and Congress want to move forward with a Health Overhaul Bill, that rates are going up and in fact, even without this rate regulation board, this is the kind of Bill that would help take care of that sort of rate increase.
You probably wouldn’t need this Board to do that, but the idea is that you would have this Board that perhaps could, even though it would, as I mentioned, probably be redundant and it is not at all clear how it would work in the context of the rest of the Bill.
JACKIE JUDD: And we should say that as we are speaking, the Bill has only been out there for about an hour. So, in that hour what has stuck out at you, Mary Agnes, in terms of what overlaps with the Senate Bill?
MARY AGNES CAREY: For example, they would keep this excise tax on the Cadillac Plans, but they are going to raise the threshold and then not phase this tax in for all health plans until 2018, before just the Union Plans had been exempted. So that has been taken care of because they are going to delay it for all plans.
They would follow the Senate in expanding Medicaid eligibility to 133-percent of the poverty line, but they would add more money to help state governments pay for that, and as we know state governors have been very upset about this Medicaid expansion and about financing, and so they are going to try to help that. Also, a nod to the House would be more generous subsidies for some lower and moderate income folks.
JACKIE JUDD: To meet the individual mandate.
MARY AGNES CAREY: Right, and also to afford their health coverage in the exchanges. Speaking of exchanges, they are going to follow the Senate model, which are state based exchanges, not a national exchange, and also again following the Senate Bill, not the House Bill, there is no public option.
So, it’s pretty consistent that there are a lot of nods to the Senate Bill because that is the one of course that can be viewed as passing the Senate, and then they may have a separate reconciliation package with changes, but that is unclear yet whether that decision would be made, is there support for it? I mean, a lot of this is up in the air.
JACKIE JUDD: Is there a price tag yet?
JULIE ROVNER: There is not a specific price tag. We did ask about that in a conference call with reporters and they hedged a little bit. It is thought that these changes add about $200 billion to the cost to the Senate Bill. That would bring it up pretty close to $1 trillion over a decade. It is all paid for. They insisted.
They did say there are a number of changes, a number of added “pay fors” if you will. One of the ones that sort of jumped out is there is an additional $10 billion on branded pharmaceuticals, as they say. That would probably break the deal that was cut last year with Pharma, with the prescription drug industry.
JACKIE JUDD: This would be an added charge to the pharmaceutical companies?
JULIE ROVNER: Yes although I haven’t seen exactly how that would work or what it would be or how they would assess that, but that is one of the things. More fraud and abuse crackdowns, things in fact the President proposed in his budget for next year, that would be another way to make back some of the money.
JACKIE JUDD: Well, it is early yet, but is there any reaction from Democratic or Republican leaders yet?
MARY AGNES CAREY: In the House, Dave Camp, who is the ranking member on the House Ways and Means Committee, said this about the President’s plan, and I’m just giving you a partial quote, he described as the tip of the iceberg that will sink our economy and wreck the health insurance millions of Americans have and like.
JACKIE JUDD: Okay so that should set the stage nicely for the Thursday Summit with Democratic and Republican congressional leaders. What do you expect from that and I guess more to the point, what do congressional leaders expect from this event? Is it theatre or is it substance? Julie, what are you hearing?
JULIE ROVNER: Well, it was always intended to be theatre. This was the idea.
JACKIE JUDD: The President wouldn’t say that.
JULIE ROVNER: That’s right. The President in his weekly internet address said he doesn’t want it to be theatre, but I think this really grew out of the President going off to Baltimore to the Republican Issues Retreat and having that sort of British Prime Minister question time exchange with the Republicans and it really was a good exchange.
Someone said I’m sure you have to go, and he said no, I’m having fun. [Laughter] And he was. And they were good, hard questions. It was kind of a health policy long fest, but I think that’s what he really wants more of, where there are real serious exchanges of policy differences and the President is going to say here is my plan and say to the Republicans, put your plan on the table and you tell me why your plan can cover 30 million people and be paid for, which I think he knows at this point the Republicans plans, the last time CBO looked at them I think covered about nine million people.
They are just much less comprehensive plans that the Republicans have. The Republicans want a chance to say that the public will like their plans better. The Democrats want a chance to say the Republican plans are so much smaller and so much more minimal, so I think this is a chance to really air everybody’s plans in public.
It’s also the President’s chance to make up a little bit for perhaps his ill advised promises on the campaign trail that all of the negotiations would be aired on CSPAN, so it does that. I don’t think anybody really thinks that there is going to be a negotiated deal out of this or if anybody does I think they should disabuse themselves of that notion now.
JACKIE JUDD: Mary Agnes, from the conversations you have been having with Republicans in particular on the Hill, what is their game plan?
MARY AGNES CAREY: I think they want to stick to many of their talking points. They say to the Democrats you need to start over and to the President let’s start over and move forward together. And if there’s a reluctance from the President or Democrats to do that, they will say that you are not really sincere about working with us and if you want to do that, you need to do it.
They feel the Democrats’ Bill and President Obama’s proposal will simply be too big, too much for the American public, and by not starting over you are ignoring the American public. So I think this is absolutely going to be a battle of the talking points and lots of political theatre from everyone.
JACKIE JUDD: Okay, more later this week. Thank you both very much. Thank you for joining us. I’m Jackie Judd and this has been Health on the Hill.