SPBA Alert – Health Care Reform – What is Really Happening


SPBA Email Alert – February 12, 2010

Health Reform Insights & Talking Points
Personal observations from SPBA President Fred Hunt

Sorry; this is a long e-mail, because there is so much swirling around right now.

COBRA ARRA Extension in the Works – The draft bill would extend the eligibility period from February 28, 2010 to May 31, 2010.

Announcement:  SPBA is moving to a new broadcast email system.  TPA firms will need to tell their technology people to permit SPBA emails from the following email address: spba@XMR3.com.  Today’s email will be sent twice: once from the old system and another one from the new system.     
SPBA has been involved in about a dozen sure-to-pass health reform wars over the years, dating back to 1975.  This one takes the prize for most twists & turns and characters reinventing themselves.  It is like one of those TV series like “Lost” or a reality show, in which there is a new plot every week.  Here is the new show:
THE BIPARTISAN SUMMIT scheduled for February 25th for half a day with Democrat & Republican Congressional leaders has a warm-fuzzy sound to it.  We envision the leaders finally coming together, putting aside the old points of national divisiveness, and working out a deal.  However, it is only a political posturing PR event.  Why?  First of all, President Obama has already said that the end result will be no significant change to the mega 2,700 page bill now stuck in Congress.  Second, how much can be done in half a day if a year’s work has ended in deadlock even with only one party involved??  Third, it will be fully on TV, and politicians always gear every words and actions for the cameras, not constructive negotiation.  Both liberal Democrats and Republicans are very leery of this Summit because they don’t trust Obama’s motives.
For PRESIDENT OBAMA, this tactic has multi-win potential.  He will have half-a-day of TV coverage to portray himself to the American public as an open-minded post-partisan statesman, and since he is the host of the meeting, he can set the agenda and way the meeting plays out.  He can then claim that he and his health reform effort listened carefully to Republican input.  He also hopes that his new warm-fuzzy aura can attract even one or a few Republican votes for the mega bill.  Even one Republican would allow the bill to be called “bi-partisan” and would give several worried Democrats political cover if they vote for it.  If he can’t lure any Republicans, he can at least try to use the event to paint the Republicans as the “party of no”.
He can also say he is fulfilling his campaign promise to have health reform deliberations on TV.  (He seems to like TV coverage of these deliberations when there are Republicans around.  He is the one who surprised House Republicans at the last moment at their retreat in Baltimore by saying that he wanted to bring TV with him.)
As I alerted you last week, he also is hoping for a slam-dunk to be ready for him right after the Summit .  I described the secret dealings going on to have the House Democrats pass a Reconciliation version with the changes they would want if they were voting on the Senate-passed version of the mega bill. Pass that, get the Senate to pass it, and then the House would be happy to vote on the Senate-passed version of the mega bill (because they would have already changed the net outcome to their liking via the Reconciliation).  Since House & Senate would be in agreement on the same bill (Senate/Reid version), there is no need for another Senate vote (so Brown is irrelevant), so it can “ping pong” straight to the President and be signed in 24 hours.  Done.  (Funny formality:  Even though the Reconciliation “correcting/changing the main bill will be passed first, the mega bill would need to be signed by the President first, because you can’t have Reconciliation corrections to a bill that had not yet been signed.)

This ping-pong + Reconciliation scheme assumes several wishful thinking scenarios, but Obama & staff + Pelosi are pushing hard to make it happen.  It would mean that Obama would know that he could activate it right after the Summit .  It would allow him to either praise his Summit and claim that the legislation had bi-partisan participation ….or ….say that Republicans are obstructionists against helping people.  Even if the scheme failed because the Senate Democrats could not muster even 51 votes, Pelosi would still get bragging rights that the House is better than the Senate.  (Remember: never underestimate the side effects of the fierce ego competition between the House & Senate.)
DEMOCRATS, especially liberals and early proponents of health reform, are worried or angry on several levels.  First, they are angry that several of their most prized provisions have already been thrown aside (such as public option).  Second, they are angry & frustrated that unlike past Presidents, Obama has never put his personal clout on the line to tell Congressmen precisely what he wants.  He talks the talk, but always keeps arm’s-length deniability, so he can disclaim anything that causes voter anger later, and he can and does throw his Democrat Congressmen under the bus.  They feel he has fumbled a once-in-a-lifetime opportunity to get major health reform.   Third, they fear that if Obama does allow Republicans to have some say in the bill to make changes, add, or delete anything, it will probably be things important to liberal Democrats …and paying attention to Republicans heightens the resentment of the lack of interaction Obama had with Democrats on specifics. They still believe that the public opinion will change, and that if passed, Americans will love health reform by the time  of the November election, and they don’t want to share the credit with Republicans.
REPUBLICANS are leery for all the reasons mentioned above in the Obama description.  The odds are stacked against them for being “had”.  One thing in their favor is that the White House and Congressional Democrats apparently believed their own press releases that the Republicans had no ideas to offer.  Instead, Obama has been caught off-guard with a long list of Republican solutions based on tax incentives and state innovations, but little new federal action.  Their ideas rely on the market.  Republican leaders hope to get these ideas some visibility in the big national bi-partisan Summit TV audience.  Of course, the President & Democrats don’t want that to happen.
So, the Summit will be like a strange play in which the characters’ strategy is perfect for them …but in major conflict with all the other players.  If it weren’t going to be so boring, it would be a good TV show.

One thing to keep in mind is that any bill based on the Senate or House mega-bill versions would probably continue to include the various “incentives” (such as the Nelson, Landrieu, etc. etc. etc. special deals).  Senator Kerry has very righteously said that they should be pulled out ….except, of course for the $500 million in there as a special goodie for his state.

If you think that the President & Congressional leadership got the wake-up call from the Scott Brown Massachusetts election and VA & NJ, think again.  Last week, the White House and some Democrat House members negotiated a deal to exempt federal workers (but not Congressmen or political appointees) from the Cadillac tax.
(1).  HEALTH COMPANY BUSINESS WORRIES:  If the mega-bill fails and there is some last-minute thrown-together bill passed to be claimed as “health reform” (and/or if there are state-by-state reforms), there will be plenty of mandates and prohibitions and restrictions on insurers, HMOs, (and snagging self-funding by accident or on purpose??), it can cause chaos both in functions as well as the business/financial stability of insurers, health companies, HMOs, drug companies, and hundreds of other health businesses.  All the insider deals insurers, drug companies hospitals etc. etc. made with the White House or Congress would be null and void.  The executive offices of those insurers & businesses are probably biting their fingernails now.

On the other hand, some health industry businesses will be helped by the jobs bill’s emphasis on helping small innovative companies.  Most of the new companies exploring new types of treatments are small businesses, so they will not only see their markets growing, but also some government business & hiring benefits.

(2).  Anthem’s large price increases in California has renewed the emotional argument that insurance companies are selfish and charge big prices and pay their execs big bucks, so that’s why we need health reform.  It is a handy scapegoat chant.  This means that everyone involved in self-funding needs to quickly and repeatedly educate their Congressmen and media at all levels that self-funded plans make zero, nada profit and most have no executives getting paid a penny.  They MUST hear this hundreds of times and think of self-funding as different and a good deal for plan participants.  Or else, we’ll get swept up in whatever punitive programs they come up with for insurers.  Do it.
(3). JOBS BILL:  A bi-partisan jobs bill has been in the works.  However, at the last minute, totally without warning, Senate Majority Leader Reid came up with his own bill, blocked the bi-partisan bill from even being introduced, and hopes to ram through his version on a Feb. 22 vote, the day the Senate will be returning from a week recess.  Needless to say, both Democratic & Republican Senators who had been working together are shocked & miffed.  This will be yet another drama to watch unfold. 

The Reid bill seems to be a trimmed-down version of the bi-partisan version (which I note, below, had lots of add-ons). With an eye to his own reelection, he is aiming for instant-job-satisfaction However, it does still include such non-job issues as the “doc-fix” provision described below, which is the pay-off to the AMA to keep them as a supporter of health reform.

The bi-partisan Jobs bill:  Senate Democrats were quietly circulating a 362 page draft Jobs bill.  Ironically, it has very little to create jobs, but has become a gift list for lobbyists of business, doctors, etc.  Reid hopes to introduce the jobs bill this week, before the Senate goes into recess until February 22nd.  The main provisions in the circulating draft are:
(a). Extend the ARRA COBRA Subsidy + unemployment benefits. The draft bill would extend the eligibility period from February 28, 2010 to May 31, 2010.
(b).  Renew the various business tax breaks that expired in 2009.  These are mostly items that are renewed year by year.
(c).  Exempt employers from paying the employer’s share of Social Security taxes for new hires if they are unemployed and hired this year (length of time unknown yet).
(d). The $200 billion “doc fix” (thus undercutting the guts of the 1997 health reform to gradually cut Medicare payments to doctors). This will prevent the scheduled 21% cut until Sept. 30, 2010.   Why such a temporary period??  The doc fix is the sop to the American Medical Association to buy their support for health reform.
(4). PUBLIC OPTION REBIRTH??  Liberal Democrats are actively plotting how to sneak, push, or whatever is needed to get a robust Public Option back into health reform, into a Reconciliation version, or what ever else that will make it law.  I have warned you all along to beware of things that would raise a ruckus if passed in the open, but are quietly slipped into other laws.  For example, the recent Credit Cardholders Bill of Rights had a provision snuck in to allow people to carry guns in national parks.  Go figure!!  Several years ago, there was a major employee benefits provision that had been fought back over an over.  One night, at 3AM, the Federal Boat Safety Act was coming up for final vote. The boat act was “amended” by removing all the boating language and simply replacing it with the employee benefits language.  No hearings, nothing.  It passed a few minutes after the “amendment”.  
So, the moral of this story is that bad things have a way of sneaking back, so you need to have your Congressmen so well educated on what is important to the employers and workers in his state or district that if something comes up, even at 3AM in the morning, alarms will go off in his/her head.  The power rests with you.
(5).  UNCEL SAM CIRCUMVENTING FEDERAL LAW:  CMS and CDC are not allowed to use data such as hospital-acquired infection rates as a measure of hospital performance.  However, CMS is considering ways to make CDC information available to states who will then use it for the hospital performance ratings. The moral of this story is that the federal government will find a method to have its way, even if federal law seems to prohibit it, so be alert, and never assume “it’s over”.

(6).  US BECOMES MAJORITY HEALTH PAYER:  Next year, Uncle Sam will be the majority health payer in the nation; projected to pay 50.4% of all health spending in 2011. 

By 2020, it is projected that 1 in 5 of every dollar spent in the US will be for health care ….soon approaching put-up-or-shut-up of raise taxes or cut benefits.

By 2030, when all of the baby boomers will be over 65, Medicaid, Medicare & Social Security will be 60% of federal spending, which will crowd out almost anything else the government wants to do. 

At the start of this e-mail I mentioned that this is about the 12th time that SPBA has guided members through a major health reform onslaught.  That gives SPBA, and thus you great historical perspective.  For instance whenever anyone tells you that the current proposal is the one-and-only solution, ask them how come all the other times reform has been pushed, there has been a completely different solution each time proclaimed to be the one-and-only solution.  So, tell them that with your psychic powers, you can pr4edict that the next time there will be a big push for health reform, the proponents will scoff at the current proposal (as they do at all the other past ones), and proclaim some very different approach as the one-and-only perfect solution.  (See, with SPBA membership you also get psychic powers J )

P.S. – After all this gloomy foreboding talk, it may give you comfort to know that the U.S. Government has been closed Monday, Tuesday, Wednesday and Thursday due to our double-whammy of snow.  Maybe lobbying dollars should be spent, instead, on snow-making machines.

P.P.S – To keep yourself on the cutting edge of developments on all issues, so you can look like a brilliant guide to your clients, and you have the inside advance knowledge to best guide your firm to survive and thrive, register to attend the SPBA Spring Meeting, April 14 -16, 2010 in Washington DC.  The sessions start promptly at noon on the 14th, and should end by 11 AM on Friday the 16th.  REGISTRATION INFORMATION IS ON THE MEMBER WEBSITE.


Comments are closed.