Date: 08/31/2009

Update on Federal Health Care Reform Legislation


Votes: View--> Action Taken:

09:03 AM -- Update on Federal Health Care Reform Legislation

Senator Boyd called the meeting to order and introduced Joy Johnson Wilson with the National Conference of State Legislatures. Ms. Wilson distributed a copy of her presentation to the committee (Attachment A). She noted that Congress is in recess until September 8, 2009, but health care reform efforts have continued during the recess. Ms. Johnson described health care reform efforts considered by Congress in the past 25 years. She stated that it is important that health care reform efforts occur at this time, because it may be a while before there will be the momentum to make changes. Ms. Wilson described the complexity of rebuilding the health care system.


09:12 AM

Ms. Wilson described the key committees that are considering health care reform legislation in Congress. In the House, the relevant committees are the Energy & Commerce, Education & Labor, and Ways & Means committees. In addition, the House Rules committee will combine the bills that have passed out of the three house committees into one bill. The House Rules committee also determine which amendments can be offered during floor debate and set the time of debate. The Senate committees with jurisdiction over health care reform include the Health, Education, Labor, and Pensions committee and the Finance committee. Ms. Wilson described the role of the Congressional Budget Office (CBO). The CBO is responsible for determining the costs and savings of each piece of legislation, a process called scoring. Ms. Wilson noted that this process is especially important because the president has said that health care reform must be deficit neutral. She described the President's role in the passage of health care reform legislation. She explained that the federal Health and Human Services and Labor departments have been working with the Congress regarding implementation of any legislation that is passed.

09:20 AM

Ms. Wilson described the stakeholders in health care reform, including state and local governments, providers, insurers, the pharmaceutical industry, large and small employers, senior and disability advocates, advocates for children's health, and many others. Ms. Wilson described the differences in stakeholder participation during health care reform efforts this year, versus in previous years. She stated that perspectives on the uninsured have changed since the downturn in the economy; however, many people are especially sensitive about costs as a result of the economy. She stated that Congress has a difficult job in both bringing uninsured individual into the system and creating a system that will serve the majority of people who are happy with their current coverage. Ms. Wilson responded to questions from Representative Massey regarding any change that may be made to Consolidated Omnibus Budget Reconciliation Act (COBRA) provisions by the federal legislation. She further responded to questions from Senator Schwartz regarding the extent to which people are happy with their current insurance.

09:28 AM

Ms. Wilson explained that in the House, 218 votes are required to pass a bill. In the Senate, 60 votes are needed because filibusters can occur in the Senate and 60 votes are required to end debate. She stated that there is talk of using the reconciliation process in the Senate to pass legislation. The reconciliation process only requires a majority of votes to pass legislation. However, the topics that can be considered during reconciliation are limited. Issues considered in reconciliation must be germane, and some issues would be excluded, such as insurance reforms, if the legislation was passed through reconciliation.

09:35 AM

Ms. Wilson described the general points of consensus regarding health care reform, which include: maintaining the employer-based system; expanding Medicaid to include nontraditional groups with incomes at or below some percentage of the Federal Poverty Level (FPL); adopting insurance reforms to make insurance more accessible and affordable; requiring individual coverage, and establishing a premium subsidy/tax credit program to make health insurance affordable. She described the goal of health care reform, which is essentially to provide health insurance coverage to all or most Americans. Some of the groups that are not covered now include: low-income individuals/families; individuals with pre-existing medical conditions; people who work for employers that do not provide health insurance benefits; retirees, before they are eligible for Medicare; young adults who choose not to purchase coverage; and people who do not want to spend the money. She described the elements of the legislation designed to increase coverage, which include insurance reforms, a requirement that individual purchase coverage, and expansion of public health care programs. Some of the insurance reforms being discussed include a mandate for individuals to purchase coverage, with some exceptions; a requirement that employers contribute to the cost of coverage; and various insurance rating reforms.

09:43 AM

Ms. Wilson described proposals for "health insurance exchanges," which are mechanisms through which individuals can compare health insurance options and choose among competing plans. She noted that there has been no agreement on whether the exchanges should be national or regional. She noted that there has been much discussion of a so-called "public option," or a government sponsored health insurance plan. Some of the controversy regarding the public option is whether it will be able to compete on the same level as other plans, such as in setting rates. She stated that the House legislation as introduced included a public option with preferred treatment, but a House committee removed those provisions from the bill. The final House bill hasn't been determined, and thus, it is not known what the final public option will look like. She also noted that cooperatives have been discussed as an alternative to the public option, but there are not a lot of details as to how the cooperatives will function. Responding to a question from Representative McCann, Ms. Wilson noted that families with incomes up to 400 percent of the FPL could receive subsidies to purchase health insurance through the exchange, and clarified how individuals could purchase insurance, either through a private insurance company or through the public option, through the exchange. In response to a question from Senator Schwartz, Ms. Wilson explained that all plans offered through an exchange must offer a minimum set of benefits, and that all plans offered through the exchange would be guarantee issue. Ms. Wilson responded to a question from Representative Massey regarding how current state insurance regulations could be affected by federal health care reform legislation.

10:01 AM

Ms. Wilson continued her presentation by describing the penalties that individuals who do not obtain coverage may face. Failure to comply with the requirement to obtain qualified coverage could result in a penalty of 2.5 percent of modified adjusted gross income, up to the cost of the average national premium for self-only or family coverage under a basic plan in the health exchange. There are exceptions for dependents, religious objections, and financial hardship. Military personnel and veterans would not be required to participate in the exchange. Ms. Wilson described the premium subsidies available to individuals with incomes up to 400 percent of the FPL. Such individuals may also receive cost-sharing credits. She described the required contribution for employers, which is 72.5 percent of the cost of the premium for individuals and 65 percent of the premium for family coverage. Employers who choose not to pay the required premium cost must pay 8 percent of their payroll into the Health Insurance Exchange Trust Fund. The legislation provides for a hardship exemption for employers that would be negatively affected by job losses as a result of this requirement. For small employers, the payroll contribution is pro-rated based on aggregate wages.

10:13 AM

Ms. Wilson described the benefits that may be included among the "essential benefits" that must be offered in insurance policies. Some of the benefits for which coverage may be required are: hospitalization; outpatient hospital and clinic services, including emergency services; services of physicians and other health professionals; services, equipment, and supplies incident to the services of a physician or other health professionals; prescription drugs; rehabilitative and "habiliatative" services (services for individuals with developmental disabilities); mental health and substance abuse services; certain preventative services and vaccines; maternity care; well baby and well child care; oral, health, vision, and hearing services, equipment, and supplies for those under age 21; Early Periodic Screening, Diagnosis, and Treatment (EPSDT) services, and durable medical equipment, prosthetics, orthotics, and related supplies.

10:18 AM

Ms. Wilson described Medicaid reforms that are included in the health care reform legislation. A minimum eligibility floor of either 133 or 150 percent of FPL would be set. The legislation would require coverage for single, childless adults and parents. The legislation requires states to maintain the coverage that is in place in states as of June 16, 2009. There is an enhanced match to cover the costs of coverage for the new individuals covered as a result of the legislation. Under the current legislation, the federal government will pay 100 percent of the costs for FY 2013 to FY 2015 for individuals with incomes between the current income standard and 133 percent of the FPL. After FY 2015, and for subsequent fiscal years, the federal government will reduce the enhanced match from 100 to 90 percent. States are prohibited from using an asset or resource test for determining or redetermining Medicaid eligibility for most eligibility categories. It also eliminates the use of income disregards, and income eligibility would be based on modified adjusted gross income.

10:27 AM

Ms. Wilson explained that under current proposals, the State Children's Health Insurance Program (SCHIP) program would end in 2013, and the families would then receive coverage through Medicaid or through the exchange. She discussed possible reductions to Medicaid Disproportionate Share Hospital (DSH) payments beginning in 2017. She described the logic behind such reduction, stating that if health care reforms make an impact on the number of individuals without insurance, then DSH payments may not be as necessary. Ms. Wilson explained that the DSH debate has also focused on the need to provide some care to illegal immigrants. She explained that hospitals are lobbying for the continuation of the DSH program to provide funding for treatment costs for illegal immigrants. She discussed proposed rate increases for Medicaid providers, noting that the federal government will provide enhanced matching funds for these costs. An additional provision of the legislation provides enhanced funding for graduate medical education. She discussed another prohibition which disallows reimbursement through Medicaid for hospital-acquired infections.

10:40 AM

Ms. Wilson discussed options for financing health care reform. Options include a tax on millionaires, a tax on high-end health plan premiums, Medicare and Medicaid savings, administrative savings, and savings through a primary care and prevention strategy. Ms. Wilson responded to questions from Representative Massey regarding the state costs of Medicaid expansions, and how states will manage costs after federal stimulus funding to states ceases. Representative McCann asked for more information on how the health care reform proposals will contain costs. Senator Foster commented on a single-payer health care system. Representative Kerr commented at the speed with which health care reform legislation is being considered. Senator Schwartz asked if a letter of support for certain aspects of health care reform would be helpful, and Ms. Wilson stated that it would be. Ms. Wilson especially encouraged the committee to comment on the provisions of the legislation regarding Medicaid expansions and the impact to states of ending federal stimulus funding.