In her floor statement on the Health Care bill, Senator Diane Feinstein, lays out the basic elements. I have exerpted these points from her statement.
Senator Dianne Feinstein
Statement on Health Insurance Reform
December 23, 2009
Mr. President– I rise in support of the Patient Protection and Affordable Care Act of 2009, which will reform our nation’s health care system.
This is our chance to fix a broken system. … Our system is simply unsustainable.
Now this bill is not perfect, and without question, there are items I would like to change. I believe it is a work in progress. However, it accomplishes several important objectives.
o The bill is incremental. There will be time to make needed adjustments before it is fully effective.
o It expands insurance coverage and provides new consumer protections from insurance company abuses.
o It does all this in a fiscally responsible way, reducing the deficit and prolonging the solvency of the Medicare Trust Fund.
Bill is incremental
Throughout this process, I have argued that health reform should be incremental. I believe that in many ways, this bill is incremental.
It leaves the best of our health care system in place. The majority of Americans with coverage continually say they are happy with their insurance. Under this legislation, they can keep what they like.
The bill also will be phased in over the next several years. People in need of coverage will receive immediate help in many forms.
o Beginning in 2010, next year, the federal government will spend $5 billion to establish a high risk pool, which will provide subsidized coverage for those who have been denied private insurance on account of a pre-existing condition.
o Young adults will be able to remain on their parents’ health insurance until age 26. Many young adults currently lose their coverage as soon as they graduate from college; this will allow them to maintain their coverage while they find a job.
o Seniors enrolled in the Medicare prescription drug benefit will receive an additional $500 in drug coverage before they encounter the so-called “donut hole” coverage gap. This is the coverage gap that occurs after seniors spend $2,830 on prescription drug costs. They are then required to pay the full amount out of pocket, until their costs total $4,550. This additional $500 of coverage means that seniors will encounter a small gap in their drug coverage, and pay less out of pocket.
o There will be new limits on the amount of premium dollars that can be spent on non-health care expenses by all health insurance companies. This is very important?”I have long worried that insurance companies spend too much on administrative expenses, like medical underwriting, claims processing, overhead, and profits and salary, and not enough on actual medical care. Starting next year:
o Plans sold in the individual and small group markets must devote at least 80% of premium dollars to health care expenses.
o Plans sold to large groups must spend at least 85% of the premium funds they collect on health care services.
This provision will give people the assurance that most of their premium dollars go to pay for care.
o Also next year, small business can receive tax credits to help cover the cost of covering their employees. These credits will be available on a sliding scale to employers with 25 or fewer employees, with average annual wages of $50,000 or under.
o Expansion of Community Health Centers. Beginning in 2011, the federal program that supports community health centers will begin to receive significant additional funding, totaling $10 billion through 2015.
This expansion of community care helps guarantee that we are providing not just coverage for medical care, but also access. A health insurance card does no good if no physician will accept it. These clinics provide care for all, and in many places, will be the backbone of a reformed health care system.
Finally, in 2014, the full scope of the reform effort will come in place. People will be able to compare their coverage options in newly created Exchanges, and in many cases, they will receive tax credits to help them purchase coverage.
This allows plenty of time to see how reforms are working, and if necessary, for Congress, the Administration, and states to make adjustments to ensure that health reform is effective.
Insurance Reforms and Exchanges
The bill contains several critical insurance industry reforms that will help cover 31 million additional Americans. I am convinced that our country’s for-profit health insurance industry operates with profits, not people, in mind. And this legislation will contain a number of new standards that this industry will need to meet.
o They will not be allowed to discriminate based on gender.
o They will not be able to take away coverage once a person gets sick.
o They will not be able to charge more, or deny coverage entirely, based on an individual’s health history or preexisting conditions.
Insurance will be sold in regulated markets called Exchanges, where consumers can easily compare their different insurance options. Websites allow Americans to easily compare prices when shopping for airline tickets, and this will extend the idea to health insurance.
These Exchanges will work on behalf of consumers, to negotiate lower prices and to ensure that participating plans meet high standards. Consumers will receive clear information about what is covered and how much it will cost. They will have several different levels of coverage from which to choose.
Every Exchange will also offer two national plans, overseen by the federal Office of Personnel Management. This office ensures that federal workers and members of Congress have good health plan choices. One of the included plans will be offered by a non-profit company. For consumers in highly concentrated markets with only a few choices, these national plans will provide a new option for quality coverage.
Most importantly, these Exchanges will consider the previous behavior of insurance plans. If a company raises rates unfairly over the next several years, Exchanges will consider this, and decide whether or not they should be allowed to sell in these new markets.
This is a strong incentive for plans to treat consumers fairly.
All of this is accomplished in a fiscally responsible manner. The bill saves money, and it saves Medicare.
It is clear that we cannot afford to continue on our current path.
It expands coverage to an additional 31 million Americans while reducing the federal budget deficit by $132 billion by 2019. Deficit reduction increases in the second ten year period that the bill will be in effect.
Now this is a major point of contention. I continue to hear the other side say that this bill will cost $2.5 trillion over 10 years. Even the Republicans’ own analysis shows that the bill will reduce the budget deficit. The Budget Committee’s Minority staff released an analysis that examines the bill’s net cost and savings over the next several decades.
o The Republican staff projects that the bill will reduce the deficit by $176 billion from 2014 to 2023.
o This number grows to $1.032 trillion from 2020 to 2029.
o The total net deficit reduction, according to Republicans, is $1.165 trillion from 2010 to 2029.
Let me say it again: these are partisan estimates, produced by Republican staff. And they show significant, meaningful deficit reduction.
The bill also takes a first step at prolonging the solvency of the Medicare program. Without action, Medicare will be insolvent in 2017. That is 9 short years from now.
This bill extends Medicare’s solvency by approximately 4 to 5 years. Make no mistake, more must be done. The Chief Actuary at the Centers for Medicare and Medicaid estimates that it extends solvency to 2026. And I believe this bill lays the groundwork to help make Medicare more sustainable.
o It contains a Medicare Commission, which will examine the program and make recommendations to Congress on an expedited basis.
o Creates Accountable Care Organizations, in which physicians work together to provide more efficient care for patients, while sharing in some of the savings they generate for the Medicare program.
Controlling Entitlement spending must be a priority, and I believe this is an important step in the right direction.
Throughout the health reform process, I have emphasized the importance of a health reform bill that meets the needs of large and complex states like California.
My state, without question, has one of the largest and most complex health care systems. As a result, we face some of the most complex challenges.
Over 6.6 million Californians are uninsured. The state is experiencing an unprecedented budget crisis. And even after health reform, the state will still have as many as 2 million undocumented, which will continue to strain public hospitals, emergency rooms, clinics and other providers.
California’s public hospitals play a key role in meeting these needs and care for the poorest of the poor. These hospitals rely on payments called Medicaid Disproportionate Share Hospital (DSH) funding to cover their costs, both for the uninsured that they cover, and the very low reimbursement rates their receive from the Medicaid program. DSH funding accounts for, on average, 40% of public hospitals’ total funding.
I am pleased that the managers’ amendment has slightly reduced the annual cut to Medicaid DSH funding that California and other states that use their full allotments will receive.
Under the original bill, California would have received a 50% cut in Medicaid DSH once the rate of the uninsured in the state dropped by 45%.
o Under this version, the state’s allotment will only be cut by 35%.
o This reduces a $550 million cut to $385 million, for a savings of approximately $165 million per year to California.
States are now guaranteed to keep at least 50% of their current Medicaid DSH allotments, which will provide long-term stability to this critical program.
I am grateful to Senator Reid for making these adjustments, and I will continue to work with my colleagues in the House to keep as much of this critical funding intact as possible as the process moves forward.
The cost to California from the expansion of Medicaid remains a serious concern.
The bill will cover the full cost through 2016 generated by opening the program to all adults who earn less than $14,400 per year, which is 133% of the Federal Poverty Level (FPL). However, California will need to maintain this expansion, and will also have to find a sufficient number of doctors willing to take patients newly eligible for Medicaid.
This will cost money. Health reform should not bankrupt large states like California. Ensuring that health reform works for my state will be a top priority as this legislation moves to conference.
I am also concerned that the structure of the annual tax on the health insurance sector may have unintended consequences that will have a disproportionate impact on California. This tax will generate roughly $60 billion over the next 10 years.
The impact of this provision would be disproportionate on states such as California, which have a high proportion of fully-insured coverage. For example, 77 percent of the commercially enrolled population in California is enrolled in fully-insured health plans. This includes public employee plans such as CalPERS and the City and County of San Francisco.
The net result is that California would pay upwards of one-third more than the average state on a per capita basis. Many integrated non-profit health plans, some of which have been cited as models of efficiency, would face additional expenses and consumers would be impacted through higher premiums and limited choices.
Now, an exemption is provided for non-profit insurers in the managers’ amendment. For example, non-profits with an overall medical loss ratio of 90 percent or better, or non-profits in a state which regulates premium increases could be exempt from the tax.
But, this would have a limited impact in California and our two largest non-profit insurers (Kaiser Permanente and Blue Cross/Blue Shield) may not qualify for the exemption. And, because California lacks an entity to regulate premium increases, the only way non-profit insurers in our state will likely qualify for an exemption is by meeting the medical loss ratio requirements (set at 90 percent overall in the bill). This is a high hurdle to meet and I worry these additional costs could appear in the premiums paid by Californians.
Need to Control Premium Increases
The most important component of successful health reform remains controlling health insurance premium increases. I remain concerned that companies will attempt to take advantage of the period of time between the passage of legislation, and 2014, when Exchanges are up and running with new consumer protections. We have seen this with credit card companies since credit card reform legislation passed, and I fear health insurance will be no different.
I proposed an amendment to create a Medical Insurance Rate Authority, and to ensure that all insurance companies are subject to some type of rate review.
The amendment asks the National Association of Insurance Commissioners to produce a report, detailing the rate review laws and capabilities in all 50 states. The Secretary of HHS will then use these findings to determine which states are capable of doing sufficient rate reviews to protect consumers.
o In states where Insurance Commissioners have authority to review rates, they will continue to do so.
o In states without sufficient authority or resources, the Secretary of HHS will review rates, and take any appropriate action to deny unfair requests.
o This could mean blocking unjustified rate increases, or requiring rebates, if an unfair increase is already in effect.
This will provide all American consumers with another layer of protection from an unfair premium increase.
The amendment would also require the Secretary of Health and Human Services to establish a Medical Insurance Rate Authority as part of the process in the bill that enables her to monitor premium costs.
The Rate Authority would advise the Secretary on insurance rate review and would be composed of seven officials that represent the full scope of the health care system including:
o At least two consumers.
o At least one medical professional.
o And one representative of the medical insurance industry.
o The remaining members would be experts in health economics, actuarial science, or other sectors of the health care system.
Unfortunately, this amendment was not included, at the insistence of one member of our caucus. I look forward to working with conferees to find some way to ensure that more Americans are protected from unfair premium increases.
With all the debate over offsets, CBO projections, premiums and matching funds, it is easy to forget that at the end of the day, we are talking about people. The bill we are debating, I believe, will save lives.
A lack of health insurance is more than an inconvenience, it can be deadly. Americans age 64 and under who lack health insurance have a 40 percent higher risk of death than those who have coverage (Dr. David Himmelstein/ Harvard Medical School Study, September 2009).
These are real people, who die earlier than they need to because of problems getting coverage, and problems with our health care system. Expanding health coverage is a moral issue, one that, I believe, reflects the character of our nation. In the richest country in the world, no one should die because they cannot afford health coverage.
For all of this bill’s imperfections, I am convinced that it will mean the difference between life and death for some people. And it is not every day that we can say that about a piece of legislation.