Healthcare Overview

Today, the nation’s health care system focuses primarily on treating illness and not improving population health. Additionally, health care spending and premiums are rising at a rate that is unsustainable for our nation’s families, businesses, and governments. Growth in health care costs is much higher than growth in wages and gross domestic product (GDP). Consequently, despite a wider range of better medical treatments becoming available, more and more people are struggling to afford even the most basic levels of care.

Particularly in the face of the recent economic downturn, growing numbers of people are losing their jobs and the health benefits those jobs provide. Many others are finding that they can no longer afford to pay monthly insurance premiums and out-of-pocket cost sharing for needed medical services. Rising cost trends also extend to public health care programs, with states forced to cut other services, including education, to maintain their Medicaid programs. The federal government’s long-term fiscal problem is largely related to cost and demographic trends that are causing unsustainable spending growth in Medicare, Medicaid, and the “tax expenditure” for employer-provided health insurance. While the U.S. health system features some of the best medical capabilities in the world, many Americans do not consistently receive high quality care or achieve good health outcomes.

On the campaign trail, Barack Obama strongly touted healthcare reform as one of his top legislative priorities. Included in his campaign proposals were:

  • Changes to current models of health insurance coverage
  • Funding of health information technology
  • Tax credits to low-income citizens and small businesses
  • Increased quality initiatives
  • Importation of Prescription drugs
  • Increased funding for prevention and wellness programs
  • Increased funding and research for autism initiatives and the global fight against HIV/AIDS
  • Research initiatives on comparative effectiveness
  • Increased funding to the Veterans Administration for recruitment of health professionals and expansion into rural areas
  • Attract more doctors to rural areas
  • Sign a “universal” health care bill
  • Negotiate health care reform in public sessions televise on C-Span
  • Create a public plan option for a new National Health Insurance Exchange

When President Obama took office, his number one priority took fruition in the form of the American Recovery and Reinvestment Act (aka the Stimulus Bill). That legislation was designed to fund a number of various initiatives throughout the country, including healthcare, with the end goal of boosting the economy and creating jobs.

Key provisions for healthcare in the Stimulus Bill included increased funding for: Medicaid; health information technology; prevention and wellness programs; Veteran’s Health Administration; Community Health Centers; comparative effectiveness research; clinical training and education, and healthcare services on Indian reservations. Also included were subsidies for the COBRA program for unemployed Americans and research and construction of the National Institute for Health (NIH) healthcare facilities.

Once the ARRA bill was passed, the Obama administration and Congress quickly turned their attention to more comprehensive health care reform. Despite touting the components of his healthcare bill, President Obama left the development of healthcare bills up to key members in the House and the Senate. Between the two chambers are five committees that have jurisdiction over healthcare legislation: Senate Health, Education, Labor and Pensions (HELP), Senate Finance, House Energy and Commerce, House Ways and Means and House Education and Labor. The Senate committees each drafted their own bills, while the House committees produced one “Tri-Committee bill” that would ultimately be reviewed and marked up in the individual House committees.

The House of Representatives Tri-Committee unveiled its healthcare plan on July 14.

  • Total Cost Estimate: ~$1 T
  • Potential coverage: 97% of Americans
  • Key Legislative Proposals:
    • Employer Mandate:
      • Beginning January 1, 2013, employers must offer health coverage and contribute to that coverage or pay an 8% payroll tax to a Health Insurance Exchange Trust Fund.
      • An employer may auto-enroll employees and employees may opt out.
    • Individual Mandate:
      • Individuals failing to obtain acceptable coverage by January 1, 2013 will be taxed equivalent to 2.5% of income.
      • Acceptable coverage includes: Qualified Coverage, Grandfathered Coverage, Medicare, Medicaid, VA or TRICARE.
    • Public Plan Option:
      • Creates a public health insurance option to be offered through a Health Insurance Exchange, beginning in 2013.
        • Public option must meet the same requirements as private plans regarding benefit levels, provider networks, consumer protection and cost-sharing.
        • Cost of coverage and administrative costs will be financed through geographically-adjusted premium revenues.
      • Sets provider payment rates at Medicare rates and allows bonus payments of 5% for three years to providers who participate in both Medicare and the public plan.
      • Instructs the HHS Secretary to adopt “innovative payment mechanisms and policies” which may include: Patient-centered medical homes, accountable care organizations, bundling of services, direct contracting with providers, performance or utilization based on payments and others.

The Senate HELP committee (one of the two Senate committees responsible for drafting health reform legislation) unveiled its healthcare plan on July 15.

  • Total Cost Estimate: ~$1.1 T
  • Potential Coverage: 97% of Americans
  • Key Legislative Proposals:
    • Employer Mandate:
      • Beginning in 2011, businesses with 25 or more employees who don’t offer health insurance or who do not contribute at least 60% of the monthly premium will be required to pay the government $750 per full-time worker/ $375 for part-time workers.
      • Employers must notify each employee of the existence of the American Health Benefits Gateway, a new state-based insurance exchange.
    • Individual Mandate:
      • All legal residents would be required to carry health insurance beginning in 2011.
      • Penalties for not participating will be enforced through taxes; amount not specified.
      • A few exemptions apply if qualified coverage is not available, the individual is a member of an Indian tribe, has an income below 150% of federal poverty level or is exempt due to “financial hardship.”
    • Public Plan Option:
      • Creates a public health option to be offered through the Health Insurance Exchange.
      • Credits provided to individual and families would be reduced based on income up to 400% of the federal poverty level.
      • The HHS Secretary would negotiate payment rates for health services and products and set premiums accordingly.

On October 13, the Senate Finance Committee passed an $829 billion health care overhaul bill on a vote of 14 to 9. The bill won unanimous Democratic support on the committee and also picked up Republican Senator Olympia Snowe's vote. The Finance Committee bill is being merged with legislation passed earlier by the Senate HELP Committee.

  • Total Cost Estimate: ~$830 B
  • Potential Coverage: 95% of Americans
  • Key Legislative Proposals:
    • Employer Mandate:
      • No broad employer mandate.
      • Employers must provide coverage for prevention services, no “unreasonable” annual or lifetime limits, beginning in 2010.
      • Maximum out-of-pocket limits cannot be greater than current HAS law limits.
    • Individual Mandate:
      • Would require all citizens to have health coverage when affordable options are available, including employer plans, the possible co-op plan, private plans, Medicare, Medicaid, or SCHIP.
      • Those not carrying health insurance, must pay an annual penalty of up to $750.
      • No criminal penalties would be imposed for non-compliance.
      • Young invincible plans would be offered providing coverage to young adults < 25 that must cover preventive services below the catastrophic amount with cost sharing and out of pocket HSA’s.
    • Public Plan Alternative:
      • The federal government would provide $6 billion in start-up funds and the Health and Human Services secretary would appoint an interim national board to set policy for the co-op network, which could form on the state, regional and national level.
      • Actuaries estimate that it could attract 12 million people, making it the third-largest insurance provider in the country.

On October 26, Senate Majority Leader Harry Reid (D-Nev.) announced that he has settled on a final health care reform bill that will include a proposal for a public insurance option with an opt-out provision for the states. Floor action on health care reform legislation in the House and Senate is expected in early to mid-November.

Republicans have responded to the recent healthcare discussion with the following:

  • House Republicans will oppose any effort to pass a sweeping government takeover of health care and are committed to working with the president to fix what is broken.
  • Democrats want to pass a government takeover of health care, paid for in part with more than $800 billion in new tax hikes and that will destroy up to 5.5 million jobs.
  • An independent analysis by the non-partisan Lewin Group found that as many as 114 million Americans would lose their current health insurance.
  • A recent study published in the journal, Health Affairs, found that a government-run plan could cause annual insurance premiums for a family of four to increase by more than $4,500.
  • Forcing families to spend up to 30 percent of their income on government-run health care - more than many families spend on their mortgages - is a middle-class tax increase and breaks the president's promise for "no new taxes."
  • The Congressional Budget Office (CBO) has said the Democrats' health care plan will increase government spending, increase our national debt, and even increase seniors' Medicare prescription drug premiums by 20 percent over the next decade.
  • House Republicans have a plan for reform that expands access to affordable health care and gives families the freedom to choose the health care that fits their needs.
  • We need meaningful medical liability reform to help deter junk lawsuits, and people should be allowed to buy health care across state lines to help deliver greater choice and affordability.
  • The president and Democrats in Congress need to start over on their health care plan.

The Show-Me State series, along with the Republican Party, supports health care reforms that would lower costs, preserve quality, end lawsuit abuse and maintain quality healthcare. We oppose government–run healthcare, which won’t protect the physician-patient relationship, won’t promote competition and won’t promote quality and choice.

Click here for more information on healthcare in the United States.

Sources: HHS.gov; NAM.org; GOP.gov; Thomas.gov