Fifth Freedom » 3-22-10 Health Care Reconciliation Package Passes House

3-22-10 Health Care Reconciliation Package Passes House

As you have undoubtedly heard by now, the House passed the health care reconciliation package on Sunday. The reconciliation bill passed 219 to 212. Indiana’s Representatives voted along party lines – the five Democrats voted in favor of the reconciliation bill, and the four Republicans voted against it.

Despite the big vote in the House, Congress still has some work to do. There were two bills passed on Sunday: the Senate’s health care reform bill, and the House’s package of changes to the Senate bill. The Senate reform bill will go immediately to President Obama to be signed into law, and the House’s reconciliation package will still have to be voted on by the Senate.

President Obama will likely sign the Senate health care reform bill tomorrow, March 23. The Senate is also expected to begin debate on the House’s reconciliation package the same day. While the House reconciliation bill is about 2,300 pages long, it only contains around 150 pages of changes to the Senate bill. Theoretically, the reconciliation package could be passed on Wednesday, March 24, but debate is likely to continue for some time, pushing a final vote to later in the week.

The reconciliation bill will require a simple majority – 51 votes – to pass. Senate Majority Leader Harry Reid has stated publically that he has promises of votes from 51 Senators.

Some notable changes in the reconciliation bill:

The Congressional Budget Office estimates the reconciliation bill would cost roughly $938 billion over the next decade, about $63 billion more than the Senate bill.

It removes Nebraska’s exemption to paying for its share of increased Medicaid costs. This provision would be replaced by special treatment for several other states: Tennessee hospitals would be given almost $100 million in extra funding, and Arizona, Delaware, Hawaii, Maine, Massachusetts, Minnesota, New York, Pennsylvania, Vermont, Washington State and Washington, D.C., and Wisconsin would split $8.5 billion in extra Medicaid funding.

It also includes the Student Aid and Fiscal Responsibility Act, which would move student loans from private banks to a government-run program. The Congressional Budget Office (CBO) has estimated this would create $67 billion in direct savings over the next decade, which would be used to expand federal student loan programs and the Pell grant program. (The estimated savings assumes that the number of people defaulting on their student loans will not increase. As it is, CBO estimates about $30 billion in default risk, which would take the savings down to $37 billion.)

Effectively changes the eligibility for Medicaid from 133 percent of the federal poverty level to 138 percent, which CBO estimates would result in 16 million added to Medicaid. This is about 1 million more than under the Senate bill.

Both the Senate and House reconciliation bills would tax insurance companies 40% on every dollar they spend on a plan above $27,500 a year. The tax would be passed along to consumers. The Senate bill increases this dollar amount by the rate of inflation plus one percentage point. The House reconciliation bill only increases it by the rate of inflation. As health care costs increase faster than general inflation, over time, this tax will include more and more plans, eventually impacting the middleclass.

Average subsidies for lower-income people (24 million Americans) to purchase health insurance are higher, $6,000/year instead of $5,800/year under Senate bill.

32 million more people would have access to health insurance, or about an 11 percent increase. This is 1 million more than under the Senate bill. 23 million left uninsured.

However, CBO also points out that there are several provisions in the bill that may be difficult to maintain over the next few years. These changes could drive the price of the bill up significantly. For example, the bill would maintain or create some deep cuts to Medicare payments to healthcare providers. CBO notes that it is unclear if these payment cuts would result in healthcare providers becoming more efficient, or if the cuts would result in less access to or lower quality of healthcare. If these cuts were not made, the price of the bill would increase. CBO has estimated in an analysis of another bill that not cutting Medicare payments to physicians would cost roughly $200 billion over the next decade.

In an article in the New York Times, former CBO Director Douglas Holtz-Eakin expresses some doubts about the CBO’s health care reform math.

The bill’s new taxes and fees start immediately, but benefits are not fully enacted for four years. That is, it uses ten years of taxes to pay for six years of benefits.

Discretionary spending is left out of the analysis entirely. For example, the Internal Revenue Service would have to hire thousands of new workers for the new tax work created by the bill, but this expense is not counted.

The long-term care insurance program (CLASS Act) created by the bill will collect billions of dollars in premiums during the first decade but not pay out much in benefits during that time.

Holtz-Eakin estimates that these and other “accounting sleight of hand” maneuvers are hiding an additional $562 billion in deficit spending. Of course, this is assuming that Congress does not fix these budget shortfalls as they arise.

Sources & More Information:

Congressional Budget Office – Letter to Representative Nancy Pilosi

http://cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf

Congressional Budget Office – Letter to Representative Paul Ryan

http://www.cbo.gov/ftpdocs/113xx/doc11376/RyanLtrhr4872.pdf

Congressional Budget Office – Letter to Senator Judd Gregg

http://www.cbo.gov/ftpdocs/102xx/doc10295/Gregg_StudentLoans__09-07-27.pdf

ABC News – Health Care Bill: House Passes $938 Billion Bill, Sweeping Legislation on Its Way to Become Law

http://abcnews.go.com/Politics/HealthCare/health-care-bill-house-passes-sweeping-reform-legislation/story?id=10162080

CNN – Health care reform now faces Senate challenge

http://www.cnn.com/2010/POLITICS/03/22/senate.health.care.ahead/

The Washington Post – Cornhusker Kickback gets the boot in health bill