Insight, analysis & opinion from Joe Paduda


Health reform reconciliation – What’s on the table

The finish line is in sight, but it’s uphill and the path is icy.
The Senate and House conference committee will be working overtime to try to get to a health reform bill acceptable to 218 Representatives and 60 Senators by the end of the month. There are three main issues that will generate lots of outrage/posturing/excitement; abortion, funding, and the public option.
The cost of the two bills is also a major difference, with the House version priced at about $150 billion more over ten years (leaving aside the many criticisms, some justified, about the pricing process and methodology, at least it provides comparative differences). The difference is not as significant as it seems at first blush; according to the CBO, both bills would result in a net reduction in future federal deficits.
However, neither addresses the real problem – the coming battle over Medicare physician reimbursement. If this is resolved in favor of docs, we’re looking at the addition of a quarter trillion dollars to the deficit. That’s big money, even in Washington…
Public option
Deader than dead. There’s been so much hype from both sides on this issue, for reasons I still cannot fathom, when we could have been talking about and perhaps even addressing underlying cost drivers. The public option would not have materially hurt private insurers, nor would it have solved the cost/access problem. Downright amazing how much political capital and press has been expended on something so insignificant.
There are significant differences between the two bills on funding; the House version has a 5.4% income surtax on individuals earning more than $500,000 and couples earning more than $1 million; the Senate version uses two sources, an excise tax on so-called ‘Cadillac’ insurance policies along with higher Medicare payroll taxes for individuals earning more than $200,000 and couples earning more than $250,000. House Dems (and others) protest that the ‘cadillac’ tax unfairly charges some for living in high-medical-cost areas, such as Boston and New York, while those with richer benefits that live in cheaper areas get a break. There are other taxes, such as an excise tax on medical devices that will likely be on the table as well.
Expect the ‘cadillac’ tax to be modified in reconciliation.
For the life of me I can’t see the logic in the arguments against using taxpayer dollars to pay for a legal procedure. This country is ostensibly a democracy where majority rules, a nation ruled by law and not by men and women. Except when it comes to abortion. I understand some people are vehemently opposed to abortion, some are opposed to abortion in certain instances, and others believe it is none of the government’s business. Regardless, abortion is the only issue where politicians have been able to prevent the use of taxpayer dollars to fund something that is entirely legal.
Jehovah’s Witnesses’ tax dollars pay for medical services, pacifists’ taxes fund the military, vegans pay taxes that promote US pork production and export, all expenditures that are anathema to those groups of individuals. Yet somehow abortion is different. If Sen Nelson, Rep Stupak et al are successful in maintaining the bastardized health benefit plan constructed to meet their demands, they will be building a case for every other group to protest the use of their dollars for things they don’t like. In addition to increasing the administrative expense load for health plans in the same legislation that establishes legal limits on those expenses.
Alas, it isn’t for me to understand. Given the political sensitivity of the issue and the need for every vote, there’s little doubt some version of the Stupak/Nelson amendments will become the law of the land.
There are several other key issues that may well determine the effectiveness of the bill in controlling cost and expanding coverage. I’ll address those tomorrow.
What does this mean for you?
Another trip to the sausage factory.

3 thoughts on “Health reform reconciliation – What’s on the table”

  1. It is unfortunate that CSPAN’s request to broadcast the debate on the details between both houses has not been granted. Wasn’t it President Obama’s pledge during his campaign to promote transparency and allow Americans to see first hand our elected officials at work? No doubt there are many of us who would like to see how this sausage is being made!

  2. Not sure why the abortion matter puzzles you. It is “different” because the numbers are different — there are a lot more people who think abortion is wrong than there are Jehovah Witnesses, pacifists, or vegans. So they have more votes, so the politicians respond to them. You may argue that the principle is the same — the majority can force the minority to pay for things they disagree with — but while some people might with that principle in a quiz, almost no-one agrees with it in practice. All interest groups do everything they practically can, politically, to avoid paying for things they disagree with. If the vegans could accomplish having their taxes reduced by the amount used for pork production, you don’t think they’d vote for it? Of course they would.
    By the way, one of the main reasons the founders created a limited central government was to minimize the number of times your principle can occur. They did not believe simple “majority rules” was what they were accomplishing; what they tried to build was “majority rules with a whole lot of gridlock built in to prevent the majority from stealing from the minority”.
    Also, “rule of law” is not a synonym of “majority rules”. That’s simplistic. In fact, they can be opposites — again the founders thought “rule of law”, which for them started with a written Constitution not easily amended, was a check AGAINST the rule of the majority of the moment — which they often called “the mob”.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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