7 Features in The New Filibuster-Proof Senate Healthcare Bill

Some interesting horse-trading took place late on Friday night as Harry Reid bought Ben Nelson’s crucial 60^th vote. Some of the new HR 3590 features are good, some are head-scratchers, and some are gut-checks. The major contention continues to be over the already-in-place ‘alternative’ to a public option, though. Here is a review of healthcare reform’s current status in the Senate.

Good Features

1. Medicare Payroll Tax: Another 0.4% increase over the previously proposed 0.5% for individuals making over $200,000 and couples making over $250,000, making a total 0.9% tax. That will help keep Medicare solvent for future generations. I’m actually surprised the income thresholds aren’t higher.
2. Medical Loss Ratio: This is the percent of premiums insurers must spend on your care. It was increased to 80% for individual plans and to 85% for group plans from the previously proposed 75% and 80%, respectively. That brings group plans back to where they are now, and improves the situation slightly for those in individual plans (some of which now spend as little as 66% on your care, but average 74%.)

Head Scratchers

1. Pre-Exisiting Condition Exclusion: The legislation bars insurers immediately from denying coverage to children based on a pre-existing condition. However, they are still free to do it to adults until 2014. Besides being a blatant exception to immediate consumer protections, this one is a true head-scratcher. Except for expensive risk pools, adults in the individual insurance market with pre-existing conditions have nowhere to go until 2014. Yet the coverage mandate begins in the 2013 tax year. So what are folks supposed to do in 2013? Take out a second mortgage to pay for health plan coverage that won't cover their pre-existing conditions (the risk pool requires going bare for 6 months, activating a 12-month pre-exisiting condition coverage exclusion) or pay a fine, just  because lawmakers wanted a better CBO score?
2. Botax to Tan-Tax: So, the “Botax” on cosmetic surgery is no more. But now there’s a 10% tax on those using tanning salons. It’s not clear on whether that’s just the UV type (does anyone use these anymore?), or whether spray-on tanning centers also qualify. I’d love to have been a fly on the wall for that negotiation, which spared the usual culprit: cigarettes. Does it come close to bringing in the same revenue as a cosmetic surgery tax?
3. Nebraska’s Federal Medicaid Subsidy: Nelson bargained his state out of shouldering any costs from the expanded Medicaid program. Other states’ senators are probably not going to roll over on this one, as state budgets are already strapped due to the economy and Medicaid is chronically under-funded. So did we gain one more senator just to lose a few more?

Gut Checks

1. State Anti-Abortion Opt-In: Until now, federal money wasn’t allowed to be used for abortions except in life-threatening cases, rape, or incest. Now, in addition to that firewall, states can opt to pass a law barring abortion coverage within their insurance exchanges. So now it’s not just those who can least afford abortion services that are being denied them, it’s potentially every woman buying coverage within an exchange.
2. OPM Non-Profits as Public Option Alternative: There is the obvious Blue Cross Blue Shield conundrum, where its non-profit status hasn’t deterred it from member financial abuses that match those of for-profits. Beyond that, there is the assumption of exchange-based competition driving down costs when precedents in both the Federal Employee Health Benefit Plan and Massachusetts exchanges have shown otherwise. Even more troubling is that the federal Office of Personnel Management, which merely negotiates FEHBP rates with insurers and has a poor track record as an effective negotiator, has never 1) had a plan oversight role, or 2) dealt with the Wild West of individual plans.

Robert Moffitt, former assistant director of OPM under Reagan, adds another dimension to this hot-button issue, regarding benefits, plan types, and premium determination: “[OPM's] philosophical approach is going to reflect the policy of the White House. These [legislators] don't realize it's kind of a two-edged sword. They have the Obama administration, but you may also have the Palin administration.” For more wildly divergent and very interesting expert opinions on OPM’s qualifications to “replace” a public option, see this Kaiser Health News feature.

Stay tuned tomorrow when we'll cover what's left to fight for in the healthcare reform battle, so you can bend your representatives' ears.

UPDATE: Get more on the manager's amendment and how it compares to the original Senate bill at the Wonk Room.

Photo Tobias Higby, From Democracy Means Fair Employment Practices Pamphlet No. 198, CIO Education Department, October 1951.