Thursday, March 25, 2010

Done, And Done

This afternoon, March 25, the Senate passed, by a vote of 56 to 43, a revised version of H.R. 4872, the Health Care and Education Reconciliation Act of 2010, and sent the bill to the House of Representatives. And this evening, the House also passed H.R. 4872, by a vote of 220 to 207, and sent the bill to President Barack Obama, who is expected to sign the bill quickly.

The Patient Protection and Affordable Care Act (P.L. 111-148) and the subsequent reconciliation act are the culmination of more than 70 years of attempts by the federal government to expand health care access and coverage. Passage of the legislation also is the result of an unusual and highly controversial legislative process.*

The reconciliation bill makes tax and revenue changes to the Patient Protection and Affordable Care Act (P.L. 111-148), which was signed by President Barack Obama on March 23.

Republican senators identified two provisions of the reconciliation bill that violated the budgetary requirements of reconciliation and had to be eliminated. These provisions affect Pell education grant provisions in Sec. 2101 of H.R. 4872. Because of these minor changes, the reconcilaition bill had to go back to the House for another vote.

Health Reform Changes

Among other provisions, H.R. 4872 makes the following changes to to the Patient Protection and Affordable Care Act:

  • Reduces the tax penalty for individuals without coverage to the greater of $695 (from $750) per year up to a maximum of three times that amount ($2,085, down from $2,250) per family or 2.5% (up from 2.0%) of household income. Included among those who are exempt from from the tax penalty are individuals whose incomes are below the tax filing threshhold (was below 100% of the poverty level in P.L. 111-148).

  • Employers with at least 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee of $2,000 per full-time employee (up from $750 but also excluding the first 30 employees from the assessment).

  • Effective in 2014, employees who are offered coverage by an employer are not eligible for premium credits unless the employer plan does not have an actuarial value of at least 60% or if the employee share of the premium exceeds 9.5% of income (9.8% in P.L. 111-148).

  • Effective Jan. 1, 2018, an excise tax is imposed on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 (up from $8,500) for individual coverage and $27,500 (up from $23,000) for family coverage. The effective date in P.L. 111-148 is Jan. 1, 2013.

  • Delays until 2013 (instead of 2011) the $2,500 limit on the amount of contributions to a health flexible spending account.

  • Effective six months after enactment grandfathered plans must offer coverage to adult children to age 26 and eliminate waiting periods for coverage of greater than 90 days. Beginning in 2014, grandfathered plans must eliminate lifetime and annual limits on coverage (grandfathered plans in P.L. 111-148 are exempt from these provisions).

  • Effective in 2013, eliminate the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments (2011 in P.L. 111-148).

  • Increase the annual fees imposed on health insurers, which are set to go to $14.3 billion in 2018 ($10 billion in P.L. 111-148). Provisions added to the reconciliation bill :only 50% of premiums are used to calculate the fee for non-profit insurers, and voluntary employee beneficiary associations (VEBAS)are exempt from the fee.

Medicare, Medicaid Changes

  • The Reconciliation Act provides a $250 rebate for all Medicare Part D enrollees who enter the “donut” hole—where the beneficiary must pay for all prescription drug spending out of pocket--in 2010, and will receive their payment no later than the 15th day of the third month following the end of the quarter. Each enrollee is limited to one payment.

  • The Reconciliation Act requires that beginning in 2014, Medicare Advantage (MA) plans spend at least 85 percent of their revenue on medical costs or activities that improve the quality of care, rather than profit or overhead. An MA plan that fails to satisfy the spending requirement would be subject to monetary penalties, membership enrollment postponement, or termination from the program.

  • The Reconciliation Act advances Medicare disproportionate share hospital cuts to begin in fiscal year 2014, instead of 2015. Instead of the amount of disproportionate share hospital payment expected to be received, the Secretary would pay the hospital 25 percent of such amount, plus an additional amount based upon a factor equal derived from: (1) the number of uninsured individuals under age 65 for 2014 through 2017, and (2) the number of uninsured individuals for 2018 and 2019.

  • The Act changes the date from August 1, 2010, to December 31, 2010, after which physician ownership of hospitals to which they self-refer is prohibited.  There is a limited exception for grandfathered physician-owned hospitals that are not the sole hospital in a county and treat the highest percentage of Medicaid patients in their county.

  • The Reconciliation Act eliminates the provision for a permanent 100 percent federal matching rate for Nebraska for the Medicaid costs of newly eligible individuals, and establishes a uniform system federal matching payments for newly eligible individuals in all states.

  • Medicaid payment rates to primary care physicians for furnishing primary care services can be no less than 100 percent of the Medicare payment rates in 2013 and 2014. States would receive 100 percent federal funding for the incremental costs of meeting this requirement.

  • The Reconciliation Act will lower the reduction in federal Medicaid DSH payments from $18.1 billion to $14.1 billion and advance the reductions to begin in FY 2014. The Secretary of HHS must develop a methodology for reducing federal DSH allotments to all states in order to achieve the mandated reductions. The federal DSH allotment for a state that has a $0 allotment after FY 2011 would be extended through FY 2013.

  • The Act raises the caps on federal Medicaid funding for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for the period beginning July 1, 2011, and ending on September 30, 2019, by such amounts that the total additional Medicaid payments would equal $6,300,000,000. Territories will have the option to establish a Health Benefit Exchange and will be treated as a state for payment purposes.

* Here’s a brief history--

The modern era of government involvement in health began in 1965, when President Lyndon Johnson signed the Social Security Act of 1965, which established the Medicare program for individuals ages 65 and older and the Medicaid program for low income individuals.

During the next four decades, Congress and the White House attempted a variety of health care reforms, some successful, some not. Enacted legislation included the following:
  • Medicare as secondary payor to employer plans, 1980

  • Disproportionate Medicaid payments, 1981

  • Medicare prospective payment system, 1983

  • COBRA Continuation of Coverage, 1986

  • IRC Sec. 89, which included qualification and nondiscrimination rules for health care plans, 1986 (repealed in 1989)

  • Medicare Catastrophic Coverage Act (MCCA), 1988 (repealed in 1989)

  • Mandated Medicaid coverage for children birth to age 18, 1989 and 1990

  • Health Insurance Portability and Accountability Act (HIPAA) restricts use of pre-existing conditions in health insurance coverage determinations, sets standards for medical records privacy, and establishes tax-favored treatment of long-term care insurance, 1996.

  • Mental Health Parity Act, 1996, 2008

  • Medicare Drug, Improvement, and Modernization Act (MMA), creating a voluntary, subsidized prescription drug benefit under Medicare, 2003.


In 2009, comprehensive health care reform became a priority both for President Barack Obama and the 111th Congress.

Between July and October 2009, five Congressional committees reported out versions of health care reform: H.R. 3200, America's Affordable Health Choices Act, with versions reported by the House Ways and Means, Energy and Commerce, and Education and Labor Committees; S. 1679, Affordable Health Choices Act, reported by the Senate Health, Education, Labor, and Pensions Committee; and S. 1796, America's Healthy Future Act, reported by the Senate Finance Committee.

The full House then considered H.R. 3962, the Affordable Health Care for America Act, which combined the earlier proposals from the three House committees. The House passed the legislation on Nov. 17, 2009 by a vote of 220-215. The Senate passed its own health reform legislation, H.R. 3590, the Patient Protection and Affordable Care Act, by a vote of 60-39 on Dec. 24, 2009. Substantial differences in the two bills included the structure of a health insurance exchange, the nature of a public option, and financing mechanisms. This set the stage for the Congress to reconcile the differences between the two bills.

Congressional Democrats had virtually no Republican support for either the House or the Senate version of health reform (only Republican Rep. Joseph Cao (La.) voted for the House bill), and the passage of national health care reform suffered another significant blow in January 2010 when Massachusetts, the only state with recently passed comprehensive health reform legislation (and the lowest number of uninsured of any state), elected state senator Scott Brown as the Senate's 41st Republican, effectively ending the Democrats' filibuster-proof majority and its best hope for passage of a compromise reform bill worked on in early 2010 by Senate and House Democrats.

After considering several alternatives, House Democrats agreed to vote on the existing H.R. 3590 and also to consider a series of changes to that bill in a budget reconciliation bill, H.R. 4872, the Health Care and Education Reconciliation Act of 2010. Both House and Senate Democratic leadership, and the White House agreed to the changes proposed in the reconciliation bill, which only included budgetary changes, such as to taxes and spending.

Subsequently, on March 21, 2010, the House approved H.R. 3590 by a vote of 219 to 212, and President Barack Obama signed the bill into law on March 23 (P.L. 111-148). Immediately after passing the Affordable Care Act, the House passed, by a vote of 220 to 211, the Health Care Reconciliation Act of 2010. No Republicans voted for either bill.

Many antiabortion Democrats opposed H.R. 3590 because of a perceived weak ban on abortion funding, but President Obama promised to sign (and did sign on March 24) an executive order to establish “an adequate enforcement mechanism to ensure that Federal funds are not used for abortion services (except in cases of rape or incest, or when the life of the woman would be endangered), consistent with a longstanding Federal statutory restriction that is commonly known as the Hyde Amendment.”

Under budget reconciliation rules, the Health Care Reconciliation Act then went to the Senate, which needed only a 51 majority vote for passage (that is, the budget reconciliation is not subject to the 60-vote filibuster rules for other legislation considered in the Senate). The Senate passed the reconciliation provisions, with two minor changes in education provisions, on March 25, by a vote of 56-43. That reconciliation bill then was returned to the House, which passed the bill, also on March 25 by a vote of  xxx-xxx, and sent the bill to the President for his signature.

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