The Trials and Tribulations of Health Care Reform: What President Obama’s Health Care Agenda Means for You
Health care reform has been one of President Obama's key initiatives since his inauguration
on January 20, 2009. In the past year or so, President Obama has experienced successes and setbacks in passing his health care reform agenda.
Health care reform has been one of President Obama’s key initiatives since his inauguration
on January 20, 2009. In the past year or so, President Obama has experienced successes and setbacks in passing his health care reform agenda. On February 4, 2009, he signed the State Children’s Health Insurance Program (SCHIP) re-authorization bill that expanded health care coverage to four million additional children, including children of undocumented immigrants. On February 13, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) passed both houses of Congress, and was later signed by President Obama. ARRA included $144 billion of funding for health care reform. Following the signing of ARRA, in addressing a joint session of Congress on February 24, 2009, President Obama said, “We will pass a bill this year to reform health care.” In this address, he established two goals for health care reform: cut costs and insure everyone. Based on his two major goals of cutting health care costs and insuring everybody, President Obama’s ideal health care plan sees employers, government and individuals sharing the responsibility of paying for coverage, while focusing on the following four key elements:
- Affordable premiums, co-payments and deductibles.
- Enrollment for individuals who do not have coverage through an employer or public plan, or who want new coverage.
- Portability of coverage, enabling participants to change jobs without losing coverage.
- Guaranteed eligibility for all available plans, with no exclusion for pre-existing conditions.
President Obama’s plan also set national consumer protections to curb perceived abuses in the current health care system. Under President Obama’s ideal plan, self-employed persons and small businesses would be able to get coverage through a new kind of insurance purchasing pool, called an “exchange.”
While most Americans would still have private coverage, the government would subsidize premiums for certain “middle-class” families. One of the most controversial provisions of President Obama’s plan would be a new public insurance plan similar to current coverage for federal employees. Individuals would have the option to choose this new public plan or opt for private health insurance plans that meet the exchange’s requirements on costs and health coverages. However, as discussed later in this article, the public plan no longer seems likely.
February 26, 2009: Reserve Fund For Health Care Reform Announced
A White House reserve fund of $634 billion for health care reform over the next 10 years was proposed. This funding request included major cuts in payment to Medicare Advantage Plans, additional savings from hospital expenditures for improved quality, and avoidance of “never” events — mistakes made by doctors or hospitals that should “never” happen, such as operating on the wrong leg.
April 28–30, 2009: Specter Switches Parties; Congress Approves 2010 Budget
On the path to reform, the next critical step was on April 28, 2009, when Pennsylvania Senator Arlen Specter switched to the Democratic Party. With Al Franken (D-MN), the Democrats achieved a 60-vote filibuster-proof majority that, at the time, they believed would accelerate health care reform bill passage, as the Democratic Party could pass the bill without any Republican votes.
On April 30, 2009, Congress approved a $3.4 trillion budget for the 2010 fiscal year, including a $1.2 trillion deficit. Beginning in June, health care reform legislation was introduced in Congress. Initially, at least 10 different packages were presented with the expected cost of reform estimated to be at least $1 trillion over 10 years, providing coverage to over 97 percent of U.S. citizens.
October 29, 2009: House Passes Its Version Of Health Care Reform
Also known as the “House Bill,” the “Affordable Health Care for America Act” (H.R. 3962) was introduced in the U.S. House of Representatives. The House Bill was passed on November 7 by a vote of 220 to 215. There was no bipartisan support for the House Bill, which passed on a straight party vote.
At the time, the Congressional Budget Office estimated that the House Bill would provide coverage to 96 percent of Americans under the $900 billion threshold set by President Obama. The cost of the legislation was to be paid for with new revenue from a 5.4 percent surtax on high-income Americans with a modified adjusted gross income of more than $500,000 filing as an individual or $1 million filing as a family. These limits would be effective January 1, 2011. In addition, an excise tax of 2.5 percent on medical devices sold in the U.S. was proposed to be effective January 1, 2013.
December 24, 2009: Senate Passes An Alternative Version Of Health Care Reform
The Senate also passed a health care bill, the “Patient Protection and Affordable Care Act” (H.R. 3590) (the “Senate Bill”) on December 24, 2009. The Senate Bill has many features in common with the House Bill. It includes a Health Care Exchange and co-op plan (but no public option), and expands Medicaid.
The Senate Bill also includes a prohibition on lifetime and annual limits for coverage and limits pre-existing condition exclusions. As in the House Bill, premium subsidies are available to individuals based on the federal poverty level. In addition, similar to the House Bill, individuals are required to have coverage. If an individual does not have coverage, a tax penalty is imposed, phasing up to two percent of income in 2016 and capped at an average-premium level (as calculated in the Senate Bill).
Under the Senate Bill, most larger employers are required to provide health care coverage to their full-time employees or pay an annual fee. If an employer opts to provide health care coverage to its employees, it must contribute at least 60 percent of the premium cost. If an employer has more than 200 employees, it must also offer automatic enrollment in the group health plan to its employees.
January 27, 2010: Unexpected Loss In The Senate Temporarily Stalls Health Care Reform
The House and Senate were working toward reconciliation of the two bills when Scott Brown,
a Republican, won the former seat of Ted Kennedy in the Senate in January. With Mr. Brown’s election, the Democrats lost their filibuster-proof majority in the Senate and it appeared that the Democrats could no longer pass health care reform without support from the Republicans. In his State of the Union speech on January 27, 2010, President Obama commented on the status of the stalled health care reform legislation and reaffirmed his support for comprehensive health care reform. He stated that he “will not walk away” from health care reform and neither should Congress. He stated that he supports an approach from either party to decrease health care premiums, reduce the deficit and extend coverage to uninsured Americans.
At that point, commentators believed that scaled-down health care reform legislation consisting
of more than one bill would be introduced in the House and the Senate. This legislation would include: (i) limiting the ability of insurance companies to deny coverage to individuals with medical conditions; (ii) allowing young adults to stay on parents’ policies; (iii) helping small businesses and low-income individuals pay insurance premiums; and (iv) implementing insurance industry reforms to curb perceived abuses and promote payment for quality care.
February 25, 2010: President Obama Holds Health Care Summit
While no major breakthroughs or concessions were made between Democrats and Republicans regarding health care reform during President Obama’s summit, President Obama stated that the American people deserve an “up or down” vote on health care reform. It soon became apparent that Congress would use an arcane process — “reconciliation” — to pass health care reform. Through the reconciliation process, the House would pass the Senate Bill as currently drafted, then the House and the Senate would each pass a separate “sidecar” budget bill containing additional changes. Through the reconciliation process, however, the sidecar bill would only require a 51 percent majority for passage.
March 21, 2010: The House Passes the Senate Bill and the Reconciliation Bill
On Sunday, March 21, 2010, the House passed the Senate Bill and the “Health Care and Education Reconciliation Act of 2010” (H.R. 4872) (the “Reconciliation Bill”). On March 23, 2010, President Obama signed the Senate Bill into law. After consideration in both the House and the Senate, the Reconciliation Bill was passed on March 25, 2010. As of press time, the Reconciliation Bill is headed to President Obama’s desk for signature. We will continue to closely follow the health care reform process and advise our clients and other interested parties as to the potential impact of such a reform on employer health costs and benefit programs.