Perspective
Senate's Reform Package Wrapped Up in Time for Christmas
N Engl J Med 2010; 362:e4January 14, 2010
- Article
With no votes to spare — because every Republican stood in opposition — the normally fractious Senate Democrats cast aside their differences to pass a landmark health care reform bill by a vote of 60 to 39 on Christmas Eve, the 25th straight day of debate over the measure. The Congressional Budget Office (CBO) estimated the bill's cost at $871 billion over 10 years — divided among public subsidies to help lower-income people pay for private insurance, expansions of Medicaid and the Children's Health Insurance Program, and tax credits for small businesses. The measure would provide coverage to about 31 million people, leaving uninsured some 23 million nonelderly Americans, one third of whom are undocumented immigrants. It would require most legal U.S. residents to carry health insurance and employers with more than 50 employees to provide it or face penalties. It would also create insurance exchanges through which millions of eligible people could purchase subsidized benefits and would prohibit insurance carriers from denying coverage to applicants with preexisting conditions or imposing other unpopular restrictions.
Before passing the bill, Democrats knocked down a series of procedural hurdles that were introduced by Republicans who had battled against the reform legislation from the start — out of opposition to increasing the role of government, resistance to incurring the high cost of reform, and the belief that such a stance would enhance their party's prospects in the 2010 election. After the bill was passed, Democratic leaders said they would soon begin efforts to reconcile differences between the reform measures approved by the House and those approved by the Senate. Democrats do not plan to convene a formal House–Senate conference with Republican participation because the GOP remains strongly opposed to both measures, but White House officials will play a key role. The Democrats' goal is to forge a compromise bill, win its approval in both chambers, and place the final measure on President Barack Obama's desk for signing before he delivers the State of the Union address in late January or early February. Once again, Senate Majority Leader Harry Reid (D-NV) will have to secure 60 votes to win the bill's approval in the Senate.
The Senate-approved measure does not address the highest priority of organized medicine — eliminating a 21.2% reduction in Medicare's physician fees that is scheduled to take effect January 1, 2010, and replacing the formula on which it is based. Nevertheless, the American Medical Association (AMA) supported the measure, as did the Association of American Medical Colleges and the American Hospital Association. The AMA's action was based in part on a pledge made by Reid to introduce separate legislation to eliminate the fee reduction and work to replace Medicare's current payment formula, the sustainable growth rate (SGR). Congress delayed the effective date of the fee cut until March 1, 2010, by attaching it to a defense appropriations bill.
The AMA let Reid know it was dissatisfied with Congress's inability to address the Medicare fee issue beyond this 60-day extension, which the association's chief executive officer, Michael Maves, characterized as a temporary Band-Aid in a December 21 letter. Maves added: “Congress must replace the SGR early next year in order to achieve the access, payment and delivery reform goals envisioned by [the House bill]. We will not support a final conference report without a clear pathway for passage of a permanent repeal of the SGR formula early next year.”
The overriding focus of the 2733-page Senate bill, the Patient Protection and Affordable Care Act, is on expanding coverage, but it also includes other important policies, such as eliminating unpopular business practices of private insurers and securing the revenues necessary to pay for reform. These revenues would derive largely from an excise tax on “Cadillac” health plans and substantial reductions in the growth of Medicare payments to hospitals, nursing homes, home health agencies, and other providers, but not to physicians. The bill would also reduce Medicare and Medicaid payments to hospitals that serve a large number of low-income patients — known as disproportionate share hospitals — by about $43 billion over 10 years. Payments to Medicare Advantage plans — private health insurers that contract with Medicare to enroll its beneficiaries — would be reduced by about $119 billion over the next decade. (By comparison, the House bill would reduce Medicare Advantage payments by about $160 billion.)
During the period from 2010 through 2019, the net cost of the coverage expansions ($831 billion) would be more than offset by increased tax revenues and reductions in the growth of Medicare and Medicaid. The CBO estimated that through this combination of sources, the Senate bill would cover the cost of the expanded coverage while reducing the federal deficit by $132 billion over a decade.
Starting in 2014, the bill would require legal U.S. residents to obtain insurance and, in many cases, would impose a financial penalty on people who have not done so. Employers with more than 50 employees that do not provide coverage would be subject to fines as well. The bill would also establish insurance exchanges through which individuals and families with income between 133% and 400% of the federal poverty level (up to $29,326 per year for an individual and $88,200 for a family of four) could purchase coverage with the help of income-related public subsidies. The subsidies would account for more than half the bill's cost — $436 billion over 10 years. Health insurers that offered their benefit packages through insurance exchanges would have to accept all applicants and could not deny coverage to people with preexisting conditions nor vary premiums to reflect differences in enrollees' health.
Recognizing that most people with low incomes could not afford private insurance, both the Senate and the House bills call for a vast expansion of the Medicaid program. For individuals with incomes below 133% of the federal poverty level (Senate bill) or 150% of the federal poverty level (House bill), restrictions on Medicaid eligibility would be eliminated so that people who do not have a disability, are not pregnant, or do not have another qualifying condition would be able to obtain Medicaid coverage. The Senate bill's threshold would expand Medicaid coverage to an additional 15 million low-income people, according to the CBO, bringing total Medicaid enrollment to about 75 million — considerably larger than Medicare.
Although the vast Medicaid expansion has serious implications for future state budgets, some 20 states that had already expanded their Medicaid programs were slow to recognize, or at least speak out about, the long-term effects of this aspect of the reform bills. In the early years of the expansion, the federal government would cover, or nearly cover, the costs of expansion. After that, however, the federal share of spending would vary on the basis of federal and state payment arrangements, so that many smaller states would have 95% of their Medicaid costs covered, whereas states such as California and New York would receive only 82% of program costs by 2019. In effect, states that have already expanded their Medicaid programs would be penalized. Reacting to the bills' effect on New York, Governor David Paterson said, “We are, in a sense, being punished for our own charity.”1
The legacy of the late Senator Edward Kennedy (D-MA), who championed universal health coverage throughout his career, was recognized in the Senate debate and final vote. Kennedy's widow, Victoria Reggie Kennedy, was in attendance for the vote, and when Senator Robert Byrd (D-WV) was called on, he prefaced his “Aye” with a dedication: “This is for my friend Ted Kennedy.” Of more practical significance was Reid's retention in his reform bill of the Community Living Assistance Services and Supports Act — the last chapter in Kennedy's pursuit of a larger social safety net. Previously, 51 senators (including 11 Democrats) had voted to strip the act from the reform bill, but 60 votes were required to delete it.
Senator Max Baucus (D-MT), chairman of the Senate Finance Committee and a key architect of the Senate reform bill, said the most difficult questions to answer in reconciling it with the House measure would be how to pay for the expansion of coverage and what language to include to ensure that no federal funds would be used to pay for abortion-related services. Though these and other divisive issues remain, it is highly unlikely that Democrats would now let the enactment of reform legislation slip through their grasp. Nevertheless, Senate Minority Leader Mitch McConnell (R-KY) said in departing the chamber after the vote, “Our members are leaving happy and upbeat. The public is on our side. This fight is not over.”
This article (10.1056/NEJMp0912667) was published on December 28, 2009, at NEJM.org.
Source Information
Mr. Iglehart is a national correspondent for the Journal.
- References
- Citing Articles (1)
Citing Articles
1
B. D. Gupta, A. Purohit. (2011) A Clinical Study of Hospitalized H1N1 Infected Children in Western Rajasthan. Journal of Tropical Pediatrics 57:2, 87-90
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