SPBA Email Alert – Message from Fred Hunt

Personal observations from SPBA President Fred Hunt      

The descriptions in my recent e-mails about the intents of the various players in health reform right now and heading into the Summit on Thursday all still apply, so take what I say and what you see and hear in the media in that context.  

The $200 billion Congressional Democratic “ping-pong” plan to ram through a Reconciliation version that would make the corrections the House wants to the Senate bill, and then the House pass the Senate bill (meaning that they would pass a superceding corrections bill before passing the underlying bill), thus meaning that both chambers would have passed the Senate version, and it could go directly to the President for signing into law) is still trying, but it assumes a lot of wishful thinking that 51% of the two chambers of  Congress will go along.

Major newspapers are giving pretty good charts & descriptions of the Obama “starting point” proposal for the Thursday Summit.  Don’t drive yourself nuts trying to micro-analyze each provision.  It is essentially like a dealer reshuffling the cards of the existing House & Senate bills and dealing you a new distribution of cards.  Besides, it is just a brainstorming vehicle. 

So, instead of an item-by-item analysis, let me just share some insights about things to which you should be alert during & after the Summit, and the net outcome.

1.  Democrats are approaching the new Obama proposal very cautiously.  It was written in secret within the White House without  Congressional input.  This is a double insult for Congressional Democrats.  First, because Obama is asking them to stake their political futures on something unknown and untested, and features they desire, Obama might abandon.  Second, Congressional Democrats are still resentful that for the past 9 months, Obama kept arm’s-length deniability from the specifics of the Congressional bills,  so they have been battered by angry constituents without any progress to show for it, because Obama never laid out precisely what was and was not his priority items.

2.  The most fierce and divisive issues among Democrats have not been resolved in the Obama proposal, and would tend to generate some “no” votes from needed Democrats in the House & Senate.  For example, the Obama abortion restrictions mirror the Senate bill (which are not acceptable to many House Democrats)  Also, there is no Public Option, instead steering more people into private insurance company policies (via the mandate to have coverage). for regulated MEWA-like self-funded plans for small employers to be allowed.  No such solutions are provided. .   This is one of the Catch-22 provisions in the proposal.  Small employers are forced to have health coverage ….but without any new or streamlined ways for employers to do so.  For example, Republicans for 20 years have been pushing for regulated MEWA-like self-funded plans for small employers.  No such options are made available.

3.  There are more subsidies for low & medium income people, but the trade-of is to subject investment income to Medicare 2.9% taxation for individuals with incomes above $200,000 and couples over $250,000.

4.  The Cadillac tax has become sort of a vestige joke.  To keep unions happy, the family-premium trigger rises to $27,500, but (here’s the kicker) it would not take effect until 2018.  Eight years is a lifetime in politics , so this is mainly window-dressing apt to never happen or in riddled with exceptions. 

5.  The employer mandate is tougher than the Senate version.  Employers with more than 50 employees would be mandated to offer employee health coverage or pay a $2,000 annual fine per employee if even one employee sought federal subsidies. The mandate penalty phases in higher for employers in the 50-80 worker size.

6.  The special deals to Nebraska & Louisiana to subsidize the state’s Medicaid load has been “eliminated” and transformed into more subsidy for all states for Uncle Sam’s share of Medicaid. 

7.  After all the hand-wringing about the necessity to have CBO scoring on every bill & provision, CBO has said that this version is so vague they can’t really issue a precise figure.   You’ll hear the number $950 billion over 10 years and that it does  not add one penny to the deficit, but all of this is like playing with Monopoly money.

A BIG PICTURE LONG-RANGE THOUGHT:  For months, I have had the nagging feeling that  a long-range strategy or outcome of this process will be to drive the insurance companies out of the health market.  If they force mandates of who must be covered and in what conditions, and they impose politically-sensitive veto power over what insurers can charge for that coverage, and they funnel more and more people onto the insurers (such as the mandates) ….does it make business sense and/or can insurers survive for long?  Will insurers voluntarily drop out of the health market state by state or altogether?  That will leave a giant vacuum, and most of self-funding is restricted to employment-related health plans, because ERISA is employment-related law.  Amid much uproar in the country, Uncle Sam would be called upon to come to the rescue with a public option.  This may seem like wild imagination, but I know that single-payer reformers in the past have envisioned this kind of scenario as a strategy if they could not get an instant governmental plan.  I mention this just to have on your radar.


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