What The Senate Bill Does Better, Part 1: Waiver For State Innovation

I have been very negative about the Senate health care reform bill. Frankly, it is a bad bill that is only likely to get worse. It has many problems; I outlined only some of the problems with the Senate in an earlier post.

Still, the bill is not all bad. There are a few parts of the Senate bill that are actually better than the House bill. I will be doing a series explaining each of the Senate provisions I hope eventually make it into the final conference bill, and also offering suggestion on how they could be improved.

Part 1 – SEC. 1332. WAIVER FOR STATE INNOVATION. (page 212)

Section 1332, allowing a waiver for state innovation, is the provision of the Senate bill likely to generate the most interest from the progressive community. Starting in 2017, states could apply for a waiver to replace the new health care system created by the bill with something else.

To qualify for a waiver, the state's replacement plan would need to meet a variety of qualifications. In effect, the state would need to create a new health care system that would provide the same or a greater level of insurance coverage for the same or a cheaper price. It must also not increase the federal deficit.

If the state qualified for the waiver, it could take the money that would otherwise have been granted for health care reform to individuals as affordability tax credits, and use that to pay for their new state-based health care system. The waiver would be good for only five years, but the state could apply for a continuum on their wavier.

Unfortunately, the Secretary of HHS cannot waive “any Federal law or requirement that is not within the authority of the Secretary.” I believe this means the waiver could not be used to create a pure, state single-payer system due to ERISA law, but I could be wrong. What is meant by “authority of the Secretary” leaves much open to interruption.

Overall, I'm fairly happy with the design of this state innovation provision. I think it does a good job ensuring it could only be used to create a better health care alternative at the state level. Even though it might not be usable to create a single payer system, there's plenty of room for dramatic improvement over what this current bill will do.

My biggest problem with the provision (besides the possible issue with ERISA laws) is that it does not start until 2017. This is a very foolish delay. Most of the reforms will not begin until 2014. It seems wasteful to put in place one system in 2014 only to possibly replace it in 2017. If states can come up with a better plan between now and 2014, they should be able to implement it without further delay, and thus avoid going through two different health care transitions.

Another minor change that would be good to see is if there were some short term loan or grant program, or front-loading of funding provisions. The money the state would get instead of the affordibility tax credits would be provided annually. I can easily picture a possible health care system that would require a larger upfront investment in the first year or two, but would save money in the years after that. Being able to get some extra money upfront should help.

Given how bad the Senate bill is and how much room there is for improvement, it is not surprising section 1332 would be a favorite among health care reform activists. Clearly, pushing health care reform at the national level is very difficult. On the other hand, there are some states which are ready to push for more progressive reform, but lack the funding. Getting that money from the federal government will be critical. I don't think many states will apply for the waiver, but the few states that do successfully implement a better alternative will be good examples for later national pushes for greater reform. It is a good idea with basically no downside.

Menendez Is Jumping On The Trigger Bandwagon

NJ.com caught Sen. Robert Menendez (D-NJ) pushing the trigger:

Speaking inside the Hoboken University Medical Center emergency room, Menendez said today a modified public option could draw support from U.S. Sens. Bill [sic - should be Ben] Nelson (D-Neb.) and Joe Lieberman (I-Conn.), who announced their opposition to the elements of the bill over the weekend.

Menendez suggested adding a so-called trigger clause, which would only put the public option into effect if certain conditions are not met in the future. These conditions could include expanded competition in the marketplace or a decrease in insurance premium costs.

"There are other public options possible," Menendez said. "They have only said they oppose the public option in its current version."

First of all this is simply not true about Joe Lieberman. He has stated that he will oppose a public option and even opposes the trigger.

The trigger is not a modification of the public option. It is not like a public option. It does not serve the same function as a public option. It is the same as simply having no public option at all.

The trigger will be designed to make sure it is never pulled, so there will never be a public option. That is the only reason senators who are threatening to kill any bill that contains a public option will support the idea of a trigger. They know supporting a trigger is the same as dropping the public option all together.

Let's make this clear for Sen. Menedez. Supporting a “trigger” is no different than supporting the elimination of the public option. The progressive base will not be fooled. The trigger is a worthless piece of theater; its only function is to trick the American people. If you want to drop the public option, don't use some silly gimmick like the trigger to lie to your consituents. If Menedez really supports a public option, he should push for one of the ways to get the public option with a simple majority vote.

You Can't Be A Progressive And Support The Filibuster

A simple fact of politics that is not stated enough: The Senate's relatively new and insane rules about the filibuster are the complete antithesis of the small “p” progressive movement. You cannot claim to be a progressive and support the weird, unconstitutional, 60-vote threshold for legislation in the Senate. It does not matter how liberal a senator's voting record is, or how left-leaning their ideology, if they support the idea of a filibuster, then they are opposed to progressivism. . . and are inherently a conservative.

The filibuster stands for everything that progressives should stand against. It is a tool to thwart the will of the people. It is the great maintainer of the status quo. It prevents even the possibility of progressive legislation ever being passed by "mandating" that it is watered down to a dramatically right-of-center bill.

I have heard only one defense of the filibuster from the “left.” It is people who claim, “but what if we lose Congress, we will then need it to stop the Republicans.” This is not the argument of a progressive. This inherently the argument of a staunch, small “c” conservative trying to wrap themselves in progressive clothing. Fearing the future, fearing change, saying that it is better to keep what we have now instead of taking a risk to try to get something better is the arguments of a conservative. They have no place in the progressive movement for this fear of a change.

An elected representative may ideologically claim to agree with the progressive movement, but as long as they support the single greatest obstacle against change, they are at their heart a conservative. There will never be progressive legislation passed until there is a systematic change to our system of government, which has been perverted to maintain the status quo. Eliminating the filibuster is just one of the biggest and easiest changes that must be made.

If you really want to see progressive change, you need to start holding your elected officials to a higher standard. It is time to stop accepting this myth that the Senate needs 60 votes to pass a bill. At anytime, this rule can be eliminated by a point of order and a simple majority. If a senator claims to support something, but says it will not happen because it needs “60 votes,” he or she doesn't really support it. If Senators really supported something, we would expect them to do everything in their power to make it happen. If a senator decides maintaining a stupid, worthless tradition is more important than the needs of the regular Americans, they are no progressive. There is no excuse. A simple majority is all our Constitution requires for a bill to pass the Senate.

What An Amazing Difference A Primary Makes

It is amazing what a difference a serious primary challenge can make. Representatives in Congress who have serious primary challenges never seem to buck their party. The Politico wrote,

[F]inally, today's study in contrasts: moderate Sens. Michael Bennet and Blanche Lincoln, both of whom face tough races next year. Lincoln, the final hold out on Saturday, has threatened to withhold her support going forward. Bennet on Sunday candidly pledged to support the bill even if he knew it would cost him his seat.

What is the difference between Bennet and Lincoln? Bennet is currently facing a serious primary challenge from Andrew Romanoff, while Lincoln is not currently facing a primary challenge.

Romanoff is the former speaker of the Colorado House of Representatives. This gives him some statewide name recognition and a history of successfully running political campaigns, unlike the political novice Bennet. It is possible Romanoff could beat Bennet in a primary, so Bennet is worried about angering the Democratic base. Bennet claims that he will support health care reform, even if it could possibly cost him his seat, and this may well be true. But what Bennet left unsaid was that he knows opposing health care reform would definitely cost him his seat--thanks to his credible primary challenger.

We have seen the same pattern from Arlen Specter in Pennsylvania that we see from Micheal Bennet in Colorado. It is amazing how quickly a serious primary challenger turns a senator into a reliable vote on the important issues.

Blanche Lincoln's Unprincipled, Cowardly Trifecta of Awfulness

The problem is not that Blanche Lincoln opposes the public option because she has a serious policy concern. If she had real policy concerns, I would be happy to debate the merits of the ideas, and I'm sure the progressive community would be willing to keep an open mind if she were willing to offer a serious alternative. (Hint: Replicate the German system by turning all private insurance companies into highly regulated non-profits run like public utilities)

We know that Lincoln does not have serious policy concerns about the public option because she supported it before she was against it. Before it became the center of a heated political battle, Lincoln endorsed the idea, in fact she still has her endorsement of the public option up on her website. Now that Lincoln thinks the “centristy” position is to be against the public option, she is against the public option. This is pretty much the definition of "unprincipled."

Lincoln decided on Saturday to make a big show of opposing the public option on the Senate floor. She did so because she was afraid that Republicans would attack her. Opposing any idea you once claimed to support because you are afraid of possible political attacks against you is the definition of "coward."

Finally, Lincoln must know how important the public option is to the majority of Democrats in the House and the Senate. She must know it has overwhelming support among the Democratic base and the American people. She must have read the CBO letter that predicts the public option will help reduce health insurance premiums across the board on the new exchange for individuals and small businesses. She must know the public option will help millions of Americans--who would have otherwise been treated poorly by private insurance companies--get quality health insurance.

Blanche Lincoln knows all this and has decided to flip-flop on the public option in hopes of improving her “centristy” street cred. She is willing to force tens of millions of Americans to pay higher premiums for the small possibility it could gain her some political advantage. The way I see it, this is the definition of a jerk. Way to go Blanche, you managed to pull off the trifecta of awfulness.

Really Bad Trade Off Ideas

Nate Silver believes progressives should trade the public option away, but what he wants in return is far more useless and an even tougher political battle.

And the public option, as currently constructed, would only enroll 3-4 million people, according to the CBO. It's a relatively minor provision, and one that, in its present, already-compromised state, I'd happily trade off for more comprehensive subsidies for the working poor, or a more robust Free Choice Amendment.

First the only reason CBO and CMS thinks so few people will sign up for the public option is because they admit that the new exchanges and the other reforms will not work properly. The regulations and the risk adjustment mechanisms are too weak to prevent the private insurance companies from gaming the system. They will still try to cherry pick the healthy and drive away the sick. The only reason the public option will need to charge higher premiums (causing few people to sign up for it) is because it will be the only plan trying to be socially responsible and not treat Americans with health care needs horribly. Even though the public option will need to charge higher premiums because of the lack of a strong risk adjuster, by being a good option for less healthy Americans the CBO says it will still bring down the cost of premiums across the board on the exchange.

Remove the public option, and the exchange goes from a bad place to buy health insurance to an awful, even more expensive place to get health insurance. Why anyone thinks it is a smart trade-off to make the exchange a much worse place to get health insurance (by removing the only socially responsible plan), but increasing the number of people who have access to this terrible insurance market, is a good idea is beyond me.

Both the House bill and the Senate bill have simple mechanisms in place to greatly expand access to the exchange after only a few years. If the exchange is a great place to buy insurance, businesses will quickly flock to it. The reason the CBO says so few people and businesses would use the exchange is not because they can't but because they wouldn't want to. There is no need for the free choice amendment if you can get the exchange right. If people like the exchange, it is designed to grow quickly.

The point of the public option is to make the quality of health insurance on the exchange better and to bring down premiums. The more appreciate trade off, then, would be for things which could serve a similar function; for example, a medical loss ratio of 90%, only allowing non-profit insurance on the exchange, a single reimbursement negotiator, and/or a much stronger Dutch-style risk adjustment mechanism. (The insurance companies and their partners in the Senate will fight these changes equally as hard, and they are even more difficult to explain to the general public.)

Increasing subsidies in exchange for dropping the public option is an equally terrible potential trade. Dropping the public option should increase the overall bill's cost by roughly $20 billion and increase the premiums on the exchange. Therefore, getting more generous subsidies would require a massive increase in price of the bill. Finally, I don't trust the long-term stability of the current subsidy levels in the bill. I can easily see that in 2015 the tax credits would be seen as too low, and Congress would approve a modest expansion. I can equally see a Republican congress in 2015 deciding to slightly cut the size of the tax credits. Either way, I am confident the current level of tax credits in the bill is the one thing most likely to change in the coming years.

Finally, dramatically increasing the price of the bill with more generous tax credits or blowing up our current employer health care system with the free choice amendment would be huge political battles. Neither is likely to poll as strongly as the public option. Nor does either have support among the conservative Democrats opposed to the public option. These changes would be an even bigger political lift than the public option. The progressives chose to fight for the public option because it is the most popular tool to ensure more people get better quality and lower cost health insurance.

Most importantly there is no deal or trade off possible. The conservative Democratic senators are not asking for progressives to compromise, they are demanding the capitulate to prove who really has the power in Washington. If progressives give in, it will prove that they have zero power in Congress, and they would end up with nothing in return.

Why Does The Senate Bill Create Two Exchanges?

Unlike the House bill, the Senate bill creates not one but two exchanges. In each state there will be an exchange for individuals and a “Small Business Health Options Program” (SHOP) exchange. What is important is that these are not just two different portals or websites where people can buy health insurance--the two different exchanges will be two distinct markets with two separate risk pools.

(c) SINGLE RISK POOL.—
(1) INDIVIDUAL MARKET.—A health insurance issuer shall consider all enrollees in all health plans (other than grandfathered health plans) offered by such issuer in the individual market, including those enrollees who do not enroll in such plans through the Exchange, to be members of a single risk pool.
(2)SMALL GROUP MARKET.—A health insurance issuer shall consider all enrollees in all health plans (other than grandfathered health plans) offered by such issuer in the small group market, including those enrollees who do not enroll in such plans through the Exchange, to be members of a single risk pool.

This is a very bad idea. First it is unnecessary administrative featherbedding--it is wasteful to have two governmental entities doing the exact same thing in one state.

More importantly, this further divides what was already a small market (those eligible for the exchange) into two smaller markets. This reduces the size of the risk pool, and the purchasing power of the people on the exchanges. A major justification for creating the exchanges was to get a large number of people together where they can collectively get a better deal. Creating both an individual and a SHOP exchange with two separate risk pools would likely end up increasing individual premiums. Long term, it also inhibits the country from moving to a single, unified marketplace where most people select their own health insurance plan. There is no good policy reason to create two exchanges instead of one in each state. There are are plenty of good reasons not to crate a dual-exchange system.

The bill will allow states to merge the two exchanges and two risk pools into one if they want.

(3) MERGER OF MARKETS.—A State may require the individual and small group insurance markets within a State to be merged if the State determines appropriate.

That is good, I guess, but it should be that way by default. I have been unable to find a good reason why the decision was made to create two separate marketplaces.

I have some theories but none are particularly satisfying:

• They may have done it because at one point they planned on limiting something to only the individual exchange where people got affordability tax credits. They may have once planned to only offer the public option on the individual exchange or thought of putting in place more restrictive abortion language for just the individual exchange.


• It is also possible that the two exchanges were done at the request of some small business group. There could be some fear that the previously uninsured people on the new individual exchange would have higher medical costs for the first few years. Some small business group may not have wanted these sicker people in their risk pool.


• There might have been hope that states would start the relatively cheap SHOP exchanges right away, and then create the individual exchange in 2014. This would not cost the government much money because their would be no need to provide affordability tax credits to anyone on the SHOP exchange. Of course, if this were the plan, it could have easily been accomplished in a much better manner.

I honestly don't know why the Senate Democrats are planning to create two separate exchanges with two separate risk pools. It is a bad policy idea, and I have heard no justification for it. It could simply be a poorly thought out design decision. There might be some great reason that I've completely missed, but nine times out of ten, when a strange, bad policy decision makes it into a bill, it was at the request of some lobby. Just one of the dozens of things in the bill I need to watch as this legislation progresses.

Why The House Bill Is Much More Conservative Than The Senate

While the House health care reform bill is the one favored by progressives, it also happens to be more small “c” conservative than that Senate bill. This is not about the public option, the size of government subsidies, or regulation. The House bill is more small “c” conservative because it would do a better job of maintaining a health care system similar to the one we currently have. The reason for this is the employer mandate.

The House bill has a mandate that large businesses provide their employees health insurance or face a penalty. For large businesses, the penalty for not providing health insurance is 8% of payroll. That is a serious penalty. Employers would also now have a new and very easy way to give their employees “employer-provided health insurance.” They would be able to simply provide their employees with vouchers to use toward the purchase of any plan they wanted on the new exchange.

The ease of providing insurance, the size of the penalty, and the tax-free status of employer-provided health benefits combine to create little financial incentive for companies to stop providing health insurance. I suspect if the House bill were to become law, we would still have a health insurance system built primarily on employer provided and funded health insurance for years to come. This lack of radical change is what makes the bill so small “c” conservative.

The Senate bill does not have an employer mandate. It has a very weak modification of the “free rider” provision. In practice, if a large company decided to stop providing health insurance, they would face only a $750 per employee fine. This is a pittance compared to the House's employer mandate, or the cost of providing health insurance.

If reform works properly and everyone is able to get decent, relatively affordable health insurance on the new exchange (this a big "if," given how poorly the reform bill is designed), businesses are going to start rethinking why they are providing incredibly expensive health insurance. Why keep paying for your employees health care if the government will help make sure they get health insurance anyway?

I can easily picture a mass dropping of employer-provided health insurance in the future if the Senate bill becomes law. It will not happen right away. Businesses are still stuck in their old ways, and no one really knows if the exchange will work. But during the next economic downturn, the cost-cutting solution by businesses might be a massive dropping of health insurance benefits instead of massive layoffs. Because the Senate bill has the serious potential to undermine our current employer provided and funded health insurance system, the Senate version is the truly radical bill.

I'm no defender of employer-provided health insurance--I want to see it eliminated--but passing a bill that will encourage its collapse without a real plan to replace it in a fiscally sound manner seems like pure madness. (And it is going to be a real fight when Congress needs to pick up the pieces.) Big business doesn't want to be forced to provide their employees health insurance, but also doesn't want the country to move away from the employer-provided health care system. It is a schizophrenic catch-22. The House bill would at least encourage us to gradually move from an employer-selected insurance system to simply an employer-funded insurance system (like many industrialized nations).

While Senators like to claim their bill is more “moderate,” in reality, they are refusing to adopt the most small “c” conservative health care reform idea: a strong employer mandate. The Senate also expands insurance coverage 12% less cost effectively than the House bill. The Senate bill is not more moderate, it is only more beholden to wishes of big business.

Washington Post Reporters Don't Know How To Read Simple Reports On The Public Option

It appears the crack team of reporters at the Washington Post don't know how to read. They make the ridiculous claim that the public option would not be able to keep down costs:

The decision to permit states to opt out of the public plan is partly to blame for the Reid proposal's lack of reach, as it would leave about a third of the people in the country without access to the program, according to the CBO's calculation. But even the national plan approved by the House this month would attract only about 6 million people, the nonpartisan group has said, primarily because it would lack the tools to keep costs and premiums down.

This is not really what the CBO said about the public option in the House bill. It said:

The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the “risk adjustment” procedures that would apply to all plans operating in the exchanges.)

If that is not clear enough, here is what the CMS said about the public option in the House bill. They are the government's experts on health care:

We estimate that the public plan would have costs that were 5 percent below the average level for private plans but that the public plan premiums would be roughly 4 percent higher than private as a result of antiselection by enrollees.

...

The impact of antiselection is estimated as the amount remaining after risk adjustment is applied.

The problem here is not the public option. The weaker negotiated rates public option would still have the tools to keep cost down. It would need to charge higher premiums because every other part of the reform plan is broken. The whole goal of reform was to prevent private insurance companies from cherry picking only healthy people and dropping their sick customers. That will only happen if there is a stronger risk adjustment mechanism. It is critical for a managed competition health care system.

A well designed risk adjustment mechanism makes sure there is no profit in trying to only sign up healthy people and taking steps to drop sick customers. Since it redistributes money based on the cost of covering each person with a set of conditions, an insurance company has equal reason to sign up a healthy thirty-year-old or a fifty-five-year-old with diabetes.

Unfortunately, the risk adjustment mechanism in all the bills is too weak. Even after reform, it will still be more profitable to only sign up healthy people and avoid the sick. Instead of competing on quality or efficiency, the private insurance companies will compete on risk selection. They will game the system and skirt the regulations. They will design plans to only attach young healthy people and hassle their unprofitable sick customers until they switch to another company. These are the "tools" to keep the down premiums that the Washington Post is referring to, and it is a good thing the public option would not be using these "tools."

The public option will attract these sicker people treated poorly by the insurance companies because it is trying to be socially responsible and play by the rules. The risk adjuster will not probably redistribute funds on the exchange, so the public option will need to charge slightly higher premiums.

The problem is not that the public option lacks the tools to keep down costs. It would have the tools to keep down cost.

The real problem is that reform does not take away the “tools” private insurance companies will use to keep down premiums. The bill will ban rescission and denying people coverage because of pre-existing conditions. Unless there are stronger risk adjustment mechanisms, the CBO and CMS are promising us that the private insurance companies will come up with a whole new bag of tools to screw over unprofitable sick people.

Is Harry Reid Laying The Ground Work To Betray Progressives For Snowe's Vote?

The more I look at the merged Senate bill, the more I'm afraid that Harry Reid might have been laying the ground work to betray progressives on the issue of the public option, and gain the support of Olympia Snowe. Many of Snowe's top demands managed to make their way into the bill.

Harry Reid decided to take the terrible “free rider” provision championed by Snowe from the Senate Finance committee bill instead of the employer mandate from the HELP bill. Reid went with a very much weaker individual mandate more in keeping with the wishes of Snowe. He also kept the terrible “nationwide plans” from the SFC bill. Snowe strongly backs the nationwide plans and claimed it was one of the reason she voted for the bill in committee.

Reid did not just go with the provisions from the SFC bill strongly favored by Snowe. He took the unusual step of even further watering down provisions that Snowe wanted changed. He dramatically reduced the minimum requirement for what qualifies as insurance. He reduced the actuarial value of bronze level plans to 60%. That is even lower than it was in either of the committee bills. The merged bill would also allow people up to the age of 29 to buy extremely low value catastrophic plans. The SFC bill would only let people 25 and younger buy these low value plans. Both changes were championed by Snowe.

The other issue of concern is the design of the public option's opt-out provision. It does not seem well thought out. There is no restriction on when states can start opting out. At the very least there should have been a clause, so that people currently on the public option would get to remain on it, at minimum, until the next open enrollment period if their state opts out. Reid may not have put a lot of work into designing the opt out provision because he did not plan for it to remain.

Tom Carper has recently began working with Snowe to bring back a new, re-designed trigger. Reid is aware of these efforts. Even if Reid has not directly endorsed Carper's plan, he doesn't seem to be trying to put a stop to it either. Just today, Reid took the very strange step of taking reconciliation off the table.

It is possible I'm just being paranoid and reading too much into these changes. They may have nothing to do with Snowe. It could also be that Reid has made these changes in the hope of convincing her to at least not filibuster a bill with a public option. He might think that by giving her 90% of what she wants, she will be willing to accept the opt-out public option.

Either way, this is something I plan to keep a very close eye on. If progressives find out that Reid's support of the public option was purely for show, while at the same time he secretly worked with Snowe to kill it with a trigger, that would not go over well with the base. Reid does have the power to get a public option passed, there is no good excuse for failure.

Carper Working With Snowe To Bring Back The Trigger

Like a monster in some B horror movie, the trigger is a terrible idea that just will not die. I guess as long as you have a massive heath insurance lobby willing to spend millions to keep your pet creature alive, it will never truly meet its end. Tom Carper is now working with Olympia Snowe to bring back the trigger, which he has comically named the “hammer.”

Indeed she and Carper have discussed his plan, but she remains pessimistic that it'll ever be adopted.

"Tom and I have been working on it, we've had discussions and so on, but, you know, we haven't got down in concrete terms, and he'd like to have my affordability language and so on," Snowe said. "But nevertheless it's still going to require 60 votes so I don't know when that would happen, and frankly I would have preferred that to happen at the outset of this process, rather than going through this convoluted procedural gymnastics."

Carper's worthless trigger is nothing more than a fig leaf to pretend that they did not kill the public option. But killing the public option has always been the whole point of a trigger. If someone opposes the idea of a public option for some reason, then they should be equally opposed the idea of a real trigger that would put the public option in place a few years later. The only reason politicians who oppose a public option claim to support a trigger is because they know the trigger will be designed to never be pulled. Supporting a trigger is therefore the same thing as completely opposing a public option.

The fact that Carper felt the need to give the “trigger” a new, stronger sounding, rhetorical name, the “hammer,” only proves how worthless it really is. The only hammer his proposal calls to mind is the bright blue hammer that comes in the Fisher price “laugh and learn toolbench.”

How The Senate Abortion Language Differs From Stupak

The language on abortion in the original version of House health care reform bill, before it was amended on the floor, and the Senate language on abortion are very similar. Both say that:

• No federal funds will be used to pay for abortions, but as provided by the Hyde amendment, exceptions are made for rape, incest, and the life of the mother;


• Any plan that covers abortion must use money from a special segregated account funded only with private premiums to pay for the procedure;


• In every region, there must be at least one plan on the exchange that covers elective abortion (the so-called "pro-choice option") and one plan that does not (the so-called "pro-life option");


• There could be no discrimination against an insurance plan that does not cover abortion;


• Abortion could not be mandated as part of the minimum coverage requirements for an insurance plan.

The original House language and the Senate language did differ slightly on how the public option could cover abortion: While both would require that no federal funds are used by the public option to cover abortion beyond what is allowed in the Hyde amendment, the Senate bill does take additional steps to ensure that if elective abortion is covered by the public option, no federal funds are used and the government would bare no insurance risk.

The Stupak amendment, which was voted into the House bill, is a radical departure. It goes beyond original House and Senate language, mandating that no federal funds pay for an abortion (except those allowed by the Hyde amendment). It does not accept the idea that funds can be segregated. It prohibits federal funds from being used in any way to help operate an insurance plan that does cover abortion. If a plan uses even one federal dollar to help pay for any aspect of its overall operation, it can not cover abortion.

The Stupak amendment would technically allow for the sale of insurance plans or riders that cover abortion on the exchange--but only if no federal money even tangentially helped pay for their administrative functions. In effect, this restriction would make it practically impossible for any insurance provider to offer abortion coverage on the exchange for a variety of financial and legal reasons.

The broad language could also force many large employer-provided health insurance plans to drop the abortion coverage they already provide. The bills would provide a small amount of federal money to many large employer plans to help them pay for for things like wellness programs. Because of the Stupak amendment, this tiny drop of federal money could taint the entire insurance plan.

House Health Bill 12% More Cost-Effective Than Senate’s

While a lot is going to be made of the fact that the Senate bill's price tag for expanding coverage is smaller than the House's ($848 billion vs $1,052 billion), this does not even begin to tell the full story. The Senate bill is cheaper simply because it does less. It covers many fewer people, and for less time. The Senate bill is not a good bargain.

On a per uninsured person gaining coverage per year basis, the House bill is a substantially better value. The House plan is 12% more cost effective. Over the next ten years, the House bill expands the number of people who will have coverage in a given year, and does so for an extra year, so the number of person-years of coverage expands by 226 million [PDF warning]. On the other hand, the Senate bill starts its coverage expansion one year later, and covers fewer people each year. It will only expand coverage an a per person per year basis by 161 million [PDF].

The House bill is spending, on average, roughly $4,650 per year per individual who gains health insurance. The Senate bill is spending 12% more. It costs roughly $5,270 per year per individual to expand coverage under the Senate bill.

The Senate bill's price tag maybe smaller, but that should not fool anyone. Its cheaper price tag is simply due to the fact that it helps fewer people, helps them for less time, and gives them less help obtaining affordable health insurance. The House bill is a much better bargain, and provides much more health insurance per dollar. When looked at in this light, the Senate bill is clearly the fiscally irresposible way to expand health insurance.