Health Care

Does the New Senate Health Care Bill Get the Job Done?, Pt 1

by Tim Foley

categories: For Profit Insurance, National Health Exchange, Obama And Congress

Published November 19, 2009 @ 01:05AM PT

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Senate Majority Leader Harry Reid scheduled a press conference for this Thursday to formally unveil the long, long, LONG-anticipated full Senate bill. Which of course means it all leaked semi-intentionally Wednesday night. (Man, I’m glad the Senate isn’t in charge of keeping state secrets… oh wait…)

The initial reporting will largely focus on the sheer scope of reforms in the bill and the superficial price tag as scored by the Congressional Budget Office -- $848 billion over 10 years while reducing the deficit by nearly $130 billion. Democrats will champion the expansion of coverage to 94% of Americans and how the cost-controls in the bill reduce the deficit even more past the 10-year window. Republicans will blast the sheer length of the bill (2,074 pages, which honestly seems like a bargain considering the complexity of the issue) and their usual nonsense about government takeovers, death panels, and how cutting a single dollar from Medicare waste will make the Virgin Mary cry. And of course those not content to actually talk about reforming our morally and economically bankrupt health care system will get drawn into sideshows about Reid reverting to the same abortion language we’ve talked about all year, or the titillation of something we’ll all come to know as “the Botox tax.”

But before the madness of political punditry overtakes us, allow me to focus on one key question that will unquestionably get lost in the shuffle. Does this new Patient Protection and Affordable Care Act do enough to put quality health care coverage affordable to low- and middle-income families? At the end of the day, if we haven’t made standard, comprehensive coverage within reach of the pocketbooks of working families in America, we just haven’t gotten the job done.

I’ll say this for Reid -- clearly he’s been focused on the affordability question, and he’s made some substantive improvements over the mess that was the Senate Finance Committee bill. For ease of reference, I’ve broken my snap analysis into three categories: “Wooho!”, “Meh” and “Aw crap!”

Under “Woohoo!”, we see some downright surprising strength to this new bill. For those who will purchase their insurance plans through the one-stop-shops known as the Health Exchange in each state, they’ll find the tax credits to help subsidize the cost of their premiums to be much more generous than the previous Senate Finance bill, more generous than the previous Senate Health, Education, Labor and Pensions bill and yes, even more generous than the House bill! The credits are offered on a sliding scale based on income, and go all the way up to 400% of the poverty line (about $88,000 for a family of 4) -- much better than the Finance bill and equivalent to the HELP and House bills. On the low end, individuals and families will only need to pay 2.8% of their income on premiums for a comprehensive plan. On the high end, it’s 9.8% -- an improvement over the 12% maximum in the House bill.

Indeed, the Senate bill is unquestionably more generous on premiums than the House for middle-income families. As an example, let’s use 2009 dollars and some back-of-the-napkin math. A comprehensive family insurance plan today averages $13,375, according to Kaiser Family Foundation. If we waved a magic wand and had the Exchanges this year, a family of 4 making $44,000 wouldn’t notice much difference between the two bills: the House premium would be roughly $2,400, the Senate about $2,100. But a family making $77,000 would see a huge difference: $8,500 for the House and $6,000 for the Senate. Who saw that coming? I’ll tell you who -- Olympia Snowe. One of her main critiques of the Finance bill she helped put together was that it wasn’t doing enough for families above $66,000, who received no subsidy at all. I think Harry Reid got her attention!

Another major weakness/”giveaway to the insurance companies” in the Finance bill was the weakness of the regulations against price gouging people because of age. The House and HELP bills limited premiums based on age to a 2:1 ratio (e.g., a plan being sold to a 25 year-old for $5,000 couldn’t be sold to a 60 year-old for more than $10,000), but the Finance bill allowed a leap of 4.5:1. The new Senate bill is closer to the House with a ratio of 3:1, and includes a modest 1.5:1 ratio for tobacco users. Of course, all the bills would eliminate different pricing based on gender, occupation, health status or salary -- regulations that are long, long overdue. Even better, it maintains the strong regulations against discrimination on the basis of pre-existing conditions, rescissions, refusing to renew coverage because the customer gets sick, makes lifetime benefits caps illegal and has a host of regulations to foster transparency and efficiency. Just as in all previous bills, co-pays and deductibles for preventative care will be no more. But you don’t hear about them that much, largely because they’re not controversial.

That’s a strong start, but the story doesn’t end there. Check back later for the affordability provisions that made me say, “Meh” and “Aw Crap.”

Update:

Read Part 2 -- the "Meh" policies

(Photo credit:  public domain)