Healthcare Financial News

Democrats in the U.S. House of Representatives have released their healthcare bill, which represents the work of three committees under the leadership of Henry Waxman (D-Calif.), Charles Rangel (D-N.Y.), and George Miller (D-Calif.). The 850-page bill provides for a public health insurance plan that would be run by HHS and would include up to four different options with varying benefits, reports the New York Times.

The public plan’s payment would be 5 percent above Medicare rates initially, but after three years, the HHS Secretary would negotiate rates with physicians and hospitals. The government would also be charged with reducing geographic variation in medical care and remedying racial and ethnic disparities in care. After receiving start-up funding from the government, the public plan would eventually be financed only by its premiums. According to a summary of the bill, the public health plan will “be empowered to implement innovative delivery reform initiatives,” such as value-based purchasing, accountable care organizations, medical homes, and bundled payments.

The bill would also reform Medicare by decreasing preventable hospital readmissions through payment incentives, closing the “doughnut hole” on drug coverage, eliminating overpayments to Medicare Advantage plans, bundling acute and post-acute provider payments, and changing the sustainable growth rate “with an update that wipes away accumulated deficits, provides for a fresh start, and rewards primary care services, care coordination and efficiency.” The bill also provides for an expansion of Medicaid that will be federally financed and includes increased payment to primary care physicians.

The proposed legislation also requires that employers provide health insurance for their employees or pay a fee equal to 8 percent of their payroll, but small businesses would be exempted from the mandate. And individuals who do not purchase health insurance would pay a penalty based on 2 percent of their adjusted gross income. Credits to purchase health insurance would phase out at 400 percent of the federal poverty level, or $88,000 for a family of four. In addition, out-of-pocket spending will be capped to prevent bankruptcies from medical expenses. According to the Times article, the cost of reform would be covered by reducing Medicare growth and through new taxes that weren’t specified.

Read a summary of the bill or the full text.

Members of the Senate Finance Committee held closed-door talks to find ways to lower the cost of healthcare reform, which the Congressional Budget Office now estimates at $1.6 trillion, reports the New York Times. The influential Senate committee, now in the midst of drafting proposed reform legislation, is contemplating using “an automatic mechanism” to curtail the growth of Medicare, similar to one employed to close military bases. If a Medicare spending goal that “ensures continued sustainability and bends the Medicare cost curve” fails to be met, spending reductions would automatically take place.

The Finance Committee also discussed having the Medicare Payment Advisory Committee recommend to Congress Medicare savings strategies. “Congress would take an up-or-down vote on the recommendations, which could cut payments to hospitals, managed care plans and other health care providers,” says the Times. This strategy was questioned by Sen. Pat Roberts (R-Kan.), who reportedly stated, “More cuts to Medicare? Let’s not do that right now, please.”

The Senate committee is also debating a change in the proposed employer mandate to provide insurance to workers. A new option would require employers to pay “50 percent of the national average Medicaid costs for workers enrolled in Medicaid” or pay for private health insurance for low-earning employees, but not require companies to provide insurance for all their workers. After the discussions, Sen. Max Baucus (D-Mont.), who chairs the Finance Committee, said, “There’s no doubt in my mind that we will have a bipartisan bill.”

Read the New York Times article.