Obama health reform proposal builds on previous legislation

The plan further develops provisions from Senate and House bills, but Republicans found much to criticize in advance of a White House summit.

By Doug Trapp — Posted March 1, 2010

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President Obama released his most detailed proposal yet for health reform on Feb. 22, but the plan is not dramatically different from bills adopted by the House and Senate late last year.

Obama's 11-page plan would increase federal regulation of health plans beyond provisions in the House and Senate bills. It proposes a middle ground on the two bills' caps on individual premiums and out-of-pocket costs. It also would expand coverage under the Medicare prescription drug benefit, increase taxes on brand-name pharmaceuticals and beef up anti-fraud efforts.

Obama said on Feb. 20 that recent reports of insurance premium hikes are evidence that Americans can't afford to wait longer for health reform.

"We'll see more and more Americans go without the coverage they need. We'll see exploding premiums and out-of-pocket costs burn through more and more family budgets," he said. Obama released the proposal in advance of a bipartisan White House health reform summit scheduled for Feb. 25.

The House and Senate bills would create health insurance exchanges to offer wider coverage choices. They also would end preexisting condition exclusions but impose penalties on individuals who can afford coverage but don't obtain it.

Senior White House officials said the plan would cost $950 billion over a decade and reduce the federal deficit by $100 billion in the same period. But Congressional Budget Office Director Douglas Elmendorf wrote in a Feb. 22 blog entry that more details and time are needed before the agency can give an official estimate of the proposal's cost.

Obama's plan would create a federal Health Insurance Rate Authority that could reject premium hikes it deems excessive, a proposal that insurers said ignores the underlying problem of rising health costs.

Three of the Obama proposal's 11 pages were devoted to reducing fraud, waste and abuse in the health system, with several provisions borrowing from Republican ideas. The efforts include:

  • Creating a central database listing Medicare and Medicaid fraud sanctions against health care professionals, suppliers and others.
  • Ending limits on Medicare contractors' ability to conduct random reviews or prepayment reviews of Medicare Part A and Part B claims.
  • Requiring people who bill Medicare and Medicaid to undergo background checks.
  • Requiring health care professionals to repay fraudulent Medicare claims, even after declaring bankruptcy.
  • Ending "pay-for-delay" arrangements, under which generic pharmaceutical companies are compensated for delaying efforts to move forward on generic drugs.

Kathleen Jaeger, president and CEO of the Generic Pharmaceutical Assn., said ending pay-for-delay deals could hold up settlements in patent lawsuits, which in turn could delay new generic drugs from reaching the market. Jaeger also said her association is disappointed the president's proposal did not include a provision to create a pathway for generic biologic drugs.

American Medical Association President J. James Rohack, MD, said a weakness in the Obama plan is that it doesn't define the scope and authority of the Senate bill's proposed Medicare payment advisory board, designed to limit Medicare spending increases. Still, Dr. Rohack welcomed the president's effort. "Today's proposal from President Obama helps put health coverage for all Americans and insurance reform back on the front burner where they belong."

But many Republicans renewed their call for Obama to abandon the framework of the House and Senate bills in advance of the Feb. 25 talks. "It's disconcerting that the president has called for a bipartisan health care summit while refusing to abandon his big-government approach," said Sen. Orrin Hatch (R, Utah).

Sen. Mike Enzi (R, Wyo.) said he would prefer separate votes on bill provisions with bipartisan support. "Since most changes in health care reform don't start for four years ... we can beat the time by doing significant piece after significant piece."

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Seeking common ground

President Obama's newest plan for health reform proposes revising or expanding certain provisions in the Senate- and House-adopted bills. The proposal would:

  • Create a federal Health Insurance Rate Authority to review and possibly reject premium increases if they are deemed unjustifiably large.
  • Close the gap in coverage in the Medicare prescription drug benefit by 2020.
  • Institute $33 billion in fees on brand-name pharmaceuticals over a decade, $10 billion more than in the Senate bill.
  • Ban "pay-for-delay" arrangements between brand-name drug companies and generic drug makers.
  • Institute the Senate bill's tax on high-cost health plans, but increase exemptions by about 20% and implement the tax in 2018, five years later than in the Senate bill.
  • Reach a middle ground between the House and Senate bills on the total annual premiums and amount of cost-sharing health plans could charge.
  • Eliminate a provision in the Senate bill that would cover Nebraska's entire cost of a Medicaid expansion.
  • Provide community health centers $11 billion over five years, $2.5 billion more than in the Senate bill but $1 billion less than in the House measure.
  • Provide $1 billion to the Obama administration to implement the proposal.

Source: The White House (link)

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