A Single Amendment Makes ACA Affordable and Sustainable

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This report is superseded by a newer report found at: Exchange Fix Update

The newer report builds upon an interactive ACA Exchange simulator that tracks costs in detail across the population, then “runs” those costs through standard health claims processing. Also included are derivation of premiums and subsidies for low income Exchange members.


Senator Rubio blocked funding of ACA’s “reinsurance”, a key factor in its current crisis. Just one amendment, adding reinsurance back into ACA would do far more than any other to restore ACA to affordability and sustainability.

It greatly reduces insurers’ risk, leading to billions of dollars in lower insurance costs. Those reductions would in turn reduce (also by billions of dollars) premium and co-pay support that ACA provides to the 85% of people who buy insurance on exchanges.

The net result is to shift billions of costs from people to government, in effect bypassing insurers who have been adding 15 to 20% overhead to all the dollars they now handle. The combined savings will provide the bulk of funds needed to cover reinsurance costs.

Ironically, Republicans now support high-risk pools, a less efficient form of reinsurance.


Healthcare costs are extremely skewed with just 1% incurring some 20% of all health costs, and 5% consuming about half. To spread all insurance costs over all members results in less than enthusiastic “return on investment” for most, especially younger and healthier people. Something needs fixing but what. To begin, let us go back to the days before ACA.

Then, health insurers could reject people with pre-existing conditions. This forced millions not only to pay the costs for these conditions but also for all medical attention including ordinary care. ACA prohibiting pre-existing exclusions shifted many billions of dollars of costs to health insurers.

Second, health insurers capped the amount they would pay out in any year or over a lifetime. ACA prohibiting any limits shifted many more billions of dollars to health insurers.

With these huge shifts in costs to insurers, nearly everyone would have to participate in an insurance program in order for insurers to have any hope of financial survival. ACA recognized the need for full participation and included the “dreaded” individual mandate. Note that President Nixon proposed a healthcare reform in the 1970’s that also included an individual mandate and for exactly the same reason.

However, even with full participation, the cost shift to insurers was so great that they would have no choice but to raise premiums and deductibles. ACA also recognized this new imbalance, and added a “Risk Corridor” provision that would provide rebates to insurers who suffered extraordinary losses. The fallacy of this thinking was that after 3 years, the market would stabilize and be self-funding by insurers who had healthier enrollees and who enjoyed extraordinary gains.

In ACA’s first two full years, 2014 and 2015, reimbursable insurers’ losses exceeded $8 billion, but only several hundred million were reimbursed. Senator Rubio had slipped into a spending law a provision claiming to save taxpayers from an “insurance industry bailout.” The chaos from blocked funds was entirely predictable. ACA’s initial concerns became a self-fulfilling prophecy with insurers pulling out of areas with the highest loses and boosting premiums and deductibles in areas where they stayed. Of course, this cannot be sustained.

After years of 60+ failed votes to “repeal and replace” ACA, Republicans went to work with their own plan. One of the key elements in their solution was to fund high-risk pools for people with high medical costs. In effect, by removing high cost people from the general population, costs for the remainder would drop substantially, similar to what existed prior to ACA. Their proposal effectively shifts billions from insurers to the government that would fund these high-risk pools. Ironically, this is 180̊ contradictory to Senator Rubio’s effort to save taxpayers from an “insurance industry bailout.”

However, there is a subtle difference between the ACA and Republican solutions.  With segregated pools, members are either in or out, attaching a stigma to those IN the high-risk pools. It also removes medical confidentiality with regard to members. Finally, if the past is any guide, state run high-risk pools are also prone to manipulation and funding reductions.

On the other hand, ACA reinsurance will allow all members to join in the community pool, and only when an individual’s costs exceed some threshold, reinsurance kicks in and covers those excess costs. This “ceiling” is not a new concept. It is exactly what insurers did when they set annual coverage limits before ACA. Government would assume all payments above some limit. If that limit was still too high for some health insurers, existing private reinsurers could step in to reduce health insurer’s risk. Reinsurers already sell policies to self-insured companies that want to lower their risk.

Reinsurance also offers other advantages. Primary insurers cover everyone’s routine medical costs. Members deal with one insurer for all their healthcare needs. Further, reinsurance requires minimal infrastructure change to process high cost claims. Former insurer “ceilings” simply become thresholds where, instead of denying members’ excess claims, insurers simply forward them to the government for payment.

As noted above, healthcare costs are extremely skewed at the high end. Shifting huge costs from insurers to government lowers insurer’s costs to that near pre ACA. With ACA caps on insurer’s profits, insurers will have to lower premiums and deductibles by billions of dollars. Not only will reductions reflect claims cost transfer to government, but also 15%- 20% overhead that insurers now add to those billions of dollars.

Finally, when premiums and deductibles are lowered, so will premium supports and co-pay help of which some 85% of enrollees receive. With net enrollee payments unchanged, all reductions in insurers’ costs reduce enrollee support costs. Overall, net federal spending increases should be modest.

The solution? Since ACA’s Risk Corridor” has “expired”, all one needs to do is replace it with [a] “Excess of Loss Treaty Reinsurance”, [b] with permanent government financing, and [c] with thresholds adjustable for inflation. One Amendment would have a multi-billion dollar favorable impact on ACA.

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Senate Filibusters Reveal Deliberate Obstruction

Download PDF Report >>> Senate Filibusters Reveal Deliberate Obstruction


Americans are holding Congress in low esteem because there is little getting done to solve the nation’s problems. Neither party is blameless. Americans want results, but that requires both parties to govern. One cause analyzed here is the recent dramatic increase in use of the filibuster which has reached extraordinary levels. The source of all graphs is one table from U.S. Senate Archives: Senate Action on Cloture Motions

As much as this huge increase in filibusters stands out, even more striking has been their success or failure. For 93 years, the majority of cloture motions to end filibusters failed. In the 2013-2014 session however, 74% of all filibusters were overridden by super majorities of the Senate.

This is not the majority trampling on the wishes of a large minority, but a small minority trying to impose their wishes on a super majority. Clearly, this was not the intent when the Senate set filibuster rules. Rather, this is simply obstruction by a small group abrogating their responsibility to govern.


When the founding fathers created the constitution, they put no restrictions on the senate as to debates. Having no limits was one way to restrain a bare majority from ignoring a large minority. Filibusters offered a protection. While there were some lengthy debates in the 19th century, it was during World War I when filibusters got a bit out of hand as some tried to limit U.S. involvement in the war. But so little else got done that President Wilson urged some limits on debate.

“In 1917, senators adopted a rule (Rule 22) … that allowed the Senate to end a debate with a two-thirds majority vote, a device known as “cloture.” The new Senate rule was first put to the test in 1919, when the Senate invoked cloture to end a filibuster against the Treaty of Versailles.”  In the next 42 years cloture was invoked just 4 times.

The Senate posts its cloture data back to its origin in 1919. First, it is noted that only one senator is needed to start a filibuster. Senate archives track three items: [1] cloture motions filed by at least 16 senators to end a filibuster or debate. Motions are not a vote on the legislation itself, but simply a vote to limit further debate on legislation; [2] votes on cloture that for years this required 2/3 or 67% of all senators, later reduced to 3/5 or 60%; [3] cloture invoked whereby this super majority of senators vote to limit debate to 30 more hours thus ending the filibuster.

The current senate filibuster rule began 95 years ago, and through 2014. 1,624 motions have been filed to end debate. But its use has not been uniform. In its first 50 years, only 49 cloture motions were filed. Prior to 1971, senate filibusters were rarely used with cloture motions averaging about one per year. Rarity was no longer the case from 1971 through 2014 as shown in Graph 1 below. For 36 years, cloture motions trended upwards. However, in the last 8 years, they first jumped to over 100 and then in the last session, rose past 250. In short, the use of filibusters in the last two years was unprecedented in senate history.


    Graph 1                                                    

An obvious question is what is behind this fairly drastic increase in the use of filibuster. This analysis explores multiple aspects to identify root causes.

The first aspect explored was whether the parties of the President and Senate could explain the use of filibusters. Graph 2 above modifies Graph 1 by color coding the party of the President and Senate for each session. The solid blue bars represent both a Democratic President and Senate. The red blue bars represent both a Republican President and Senate. The green and gold bars represent a mix with the President’s party having a minority in the senate.


    Graph 2                                                     

For all but the last bar, both parties engaged in filibusters to restrain senate legislation. Save for the last session, it is fair to say that both parties used the filibuster to require the majority to consider the minority. Motions were filed, votes were taken, and filibusters were or were not sustained.

This graph shows that both parties increasingly relied on filibusters. In 2007-08, the senate majority changed from the party of the President and it was Democrats who were behind the doubling of cloture motions. In 2013-14, motions doubled again, but something else occurred as shown in Graph 3.

Graph 3 is the same as Graph 1 showing motions filed, but adds yellow bars for the filibusters overridden. For all but the last session, attempts to end filibusters failed over half the time which means they achieved their purpose of enabling minority senators to apply some brakes on the majority.


    Graph 3                                                    

However, the same cannot be said for the 2013-2014 session where attempts to end filibusters succeeded 74% of the time rather than failing over half the time. This is not the majority trampling on the wishes of a large minority, but a small minority trying to impose their wishes on a super majority. Clearly, this was not the intent when the Senate set filibuster rules. Rather, this is simply obstruction by a small group abrogating their responsibility to govern.

It also demonstrates that blame for recent senate gridlock is not evenly divided between the two political parties. Rather, the evidence clearly places responsibility on a small group of Republicans sometimes associated with the Tea Party. To be clear, this is not to blame Republicans in general, but only a few disruptive Senators and only in the last session.

Another aspect is to view filibusters by President, regardless of the party of the senate. The next Graph 4 shows motions filed per year for Presidents Kennedy through Obama.


   Graph 4                                                     

In this graph there was less than one cloture motion/year (28 in 42 years) to end filibusters from inception up to President Kennedy in 1961. Motions almost doubled under Presidents’ Reagan & Bush 39, then nearly doubled again under Presidents’ Clinton & Bush 41. Finally, under President Obama, motions doubled yet a third time to over 80 per year and more than four times versus President Reagan. Filing   motions to invoke cloture sometimes ends the filibuster.

Failing withdrawal, the Senate then votes on the cloture motion. Graph 5 below shows a fairly flat trend in percent of motions that went to a vote.

Taking votes on cloture has had little effect on filibuster usage. As suggested in Graph 3 above, the same cannot be said for percent success in ending filibusters.


   Graph 5                                                     

Graph 6 below shows the percent of filibusters defeated by president. For both President Bush 41 and Obama, percents are heavily affected by their two latest years in office. But only in Obama’s presidency is the overall average of filibuster defeats approaching a super majority. Clearly, many minority senators are voting with the majority to at least end debate and allow a vote on the actual legislation. And voting yea or nay is the responsibility of governing.


   Graph 6                                                     

Yet another view of filibusters is to compare the first six years of Presidents Nixon, Reagan, Clinton, Bush 41 and Obama, the last five presidents who had a second term. In Graph 7 below, the red bar is the number of motions filed. The blue bar is the number of cloture votes which alone suggests strong opposition to the filibuster. Finally, the green bar is the number of filibusters overridden, with 2013-2014 Senate having more overrides than all four previous presidents.

The key takeaway of this graph is that both Democratic Presidents had filibusters more than double over the same period of the Republican presidents before them. Again, this exhibits a greater reliance by Republicans to use filibusters to restrain the incumbent President.


    Graph 7                                                   


Americans are holding Congress in low esteem because there is little getting done to solve the nation’s problems. Neither party is blameless. Americans want achievement, but that requires both parties to govern. Each party blames the other for the gridlock, but is blame really equal? This analysis shows that with regard to filibusters, recent blame falls more heavily on a small group of Republican senators.

Once a rarely used tool, the Senate’s increased use of the filibuster not only has reached extraordinary levels but differs significantly from history. The current senate filibuster rule began 95 years ago, and through 2014, 1,624 motions have been filed to end debate. But its use has not been uniform.

In its first 50 years, only 49 cloture motions were filed. In the 24 years from President Nixon through Bush39, 427 motions (18 per year) were filed. In the 8 years from President Clinton through Bush41, motions increased to 643 (40 per year). Finally in 6 years of President Obama, 505 motions were filed (84+ per year).

As much as this huge increase in filibusters stands out, even more striking was their success or failure. For 93 years, the majority of cloture motions to end filibusters failed. In the 2013-2014 session however, 74% of all filibusters were overridden by super majorities of the Senate.

This is not the majority trampling on the wishes of a large minority, but a small minority trying to impose their wishes on a super majority. Clearly, this was not the intent when the Senate set filibuster rules. Rather, this is simply obstruction by a small group abrogating their responsibility to govern.

Still another apparent trend is for Republicans to sharply increase use of the filibuster when the presidency changes from Republican to Democratic. While not conducive to results, it is a method Republicans have felt very free to use.

Download PDF Report >>> Senate Filibusters Reveal Deliberate Obstruction


Filibuster and Cloture

Institutional Development

Senate Action on Cloture Motions







While most senate filibusters are initiated by the minority party, the most controversial filibusters were initiated by senators in the majority, not minority party. “During the 1930s, Senator Huey P. Long effectively used the filibuster against bills that he thought favored the rich over the poor. The Louisiana senator frustrated his colleagues while entertaining spectators with his recitations of Shakespeare and his reading of recipes for “pot-likkers.” Long once held the Senate floor for 15 hours. The record for the longest individual speech goes to South Carolina’s J. Strom Thurmond who filibustered for 24 hours and 18 minutes against the Civil Rights Act of 1957.”


Senate Gridlock – the Filibuster Factor 2012

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For decades, filibusters served Congress well as a method for the minority to put some checks on the majority. But the nation’s founders never envisioned this turn of events. The constitution requires the VP to break Senate vote ties clearly indicating that 51 % is a majority. Republicans recent reliance on the filibuster has effectively raised the votes needed to pass to 60%, a super majority. Using the filibuster to wrestle power back is not a recipe to reduce people’s frustration with gridlock.


This is a mid 2012 post updating earlier posts that record actual data through summer 2012. Americans of all political persuasions are more and more frustrated with the gridlock that has almost brought Washington to a standstill. This analysis focuses only on the Senate and the filibuster.

The Senate posts filibuster data back to 1919. Records track three items.

  • First, cloture motions to end debate which occur when a minority of senators threaten or actually filibuster. That sometimes ends the filibuster.
  • Second, once a motion has passed, there is a cloture vote.
  • Third is recording the cloture vote. If the vote succeeds, cloture is invoked and the filibuster is overridden.

When a filibuster is overridden, then the Senate still has to vote on the actual bill. But then, only a simple majority or 51% is required for the legislation to pass.

cloture motions

Republicans’ use of filibuster has reached unprecedented levels with no signs of abating. But it was not always so. In the graph above, only 56 cloture motions were filed over 52 years from 1919 through 1970. At just over one per year, filibusters were rarely used. 420 cloture motions were filed over the next 22 years, from 1971 to 1992, a sharp increase to 19 per year.

1993-1994 saw Republicans’ “Contract with America” that escalated partisanship to higher levels. From 1993-2006, motions nearly doubled to 36 per year. Cloture motions took an even more dramatic upturn in 2007 when Republicans lost control of the Senate. Cloture motions again jumped sharply through mid 2012 to average nearly 70 per year. Clearly, filibuster has become the weapon of choice for Senate Republicans.

Republicans accuse Democrats of filibustering, and there is some truth to that. But as the graphs show, Republicans (red bars) initiated each spike and have now taken filibustering to an absurd new level. Virtually every major piece of legislation now runs the filibuster gamut. Motions to end filibusters is only the first part. The senate then needs to vote and this occurs about 75% of the time. Of those times when no vote is taken, either a compromise is reached or the bill is withdrawn.  The graph below shows the trend in cloture votes taken.

cloture votes

Americans hold Congress in low esteem because of gridlock. Americans want achievement, but that requires both parties to compromise. Neither party is blameless but neither is the blame 50/50. The frequency of filibuster and threats of it does not reflect well on Republicans’ acting in good faith.

Credit Republicans with discipline. They threaten any of their own party who don’t tow the party line and vote out of office those who compromise, not in the general election but in the Republican primaries. While that increases the effect of their filibuster threats, it is essentially a negative strategy. They’re short on their own ideas. They’re adamant about their own ideas while they just say “NO” to all Democratic ideas.

cloture invoked

As the above graph shows, those filibustering do not always get their way. Since 1960, filibusters have been overridden less than 45% of the time. However, in the past 5 ½ years with Republicans filibustering, overriding those filibusters has succeeded almost 60% of the time.

For decades, filibusters served Congress well as a method for the minority to put some checks on the majority. But the nation’s founders never envisioned this turn of events. The constitution requires the VP to break Senate vote ties clearly indicating that 51 % is a majority. Republicans lost majority through the ballot. Their reliance on filibuster has effectively raised the votes needed to pass to 60%, a super majority. It’s ironic that Republicans should blame Senate Democrats for not passing legislation, even though Democrats are in a majority. Using the filibuster to wrestle power back is not a recipe to reduce people’s frustration with gridlock.

Download PDF Report >>> Filibuster Trends 2012

Source Document shown below: http://www.senate.gov/pagelayout/reference/cloture_motions/clotureCounts.htm

filibuster history

Senate Gridlock – the Filibuster Factor – Update

This Analysis has been replaced with a new version: Senate Filibusters Reveal Deliberate Obstruction


Individual Healthcare Mandate Was a Republican Idea

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There has been much controversy about the Patient Protection and Affordability Care Act (PPACA or ACA) that became law in 2010.  Some concern is over how it was passed, though that is more about form than substance.

Regarding substance, critics have claimed that this is a government takeover of healthcare and an over-reach into private affairs.  One item getting particular attention is a mandate that all people buy health insurance or pay a fine. Some, including judges, say this is unconstitutional, others say it is not.  Insurers are not happy either, not because there is a mandate, but because the mandate does not go far enough to deter potential abuse.

The purpose of this analysis is not to debate whether the ACA is unconstitutional or an over-reach into private affairs. Its purpose is to highlight that much of ACA was actually promoted and supported by Republicans in years past.  In some respects, Democrats “stole” Republican ideas, not once, but twice. Continue reading

Affordable Care Act – Table of Contents

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The Affordable Healthcare Act for All Americans is without a doubt, a large and complex piece of legislation at just over 2,400 pages.  But how big is 2,400 pages when wide margins, lines numbered, text double spaced, large font,  multiple levels of indent, and more than a few references to other documents?  The sample page below (standard 8.5 inch wide paper) is indicative of the 2,400 page document. The actual content is but a small fraction of a page. AHA legal text sample

Aside from the claims of too lengthly and complex, Republicans argued that this was a Democratic bill rammed through congress.  Interestingly, AHA includes more than 160 Republican amendments accepted during the month-long mark-up through just one committee (HELP), one of the longest in Congressional history.

Critics have claimed it’s a government takeover of our health system.  It may be news to those critics but half of the health system is already government-run.  And the great bulk of the reform bill deals with steps to improve existing government systems that has hardly drawn any attention.  The following provides a quick breakdown of the law sections.  The PDF report that can be viewed/downloaded shows the entire table of contents.

There are 10 “Titles” or major topics in the bill.  Only the first, at 374 pages, less than one sixth of the entire bill deals with changes to how the private sector handles health care. Yet, this is the section that has garnered nearly all the criticism. The bulk of Title I deals with prohibiting abuses by the insurance industry, which, if you ask on an issue by issue basis, most people will agree with the new provisions. Nothing in the bill involves a “takeover” of private insurers.

The next three Titles [II,III,IV] deal with improving Medicare and Medicaid programs and comprise 852 pages, one-third of the bill.  These Titles address reduction of waste, fraud and abuse, and pilot new payment methods towards a “results” oriented method common in most other industrialized countries.  There are few objections to this section.

Title V, at 256 pages, addresses anticipated shortages of primary physicians and other healthcare workers due to services that will be required by aging baby boomers.  This is totally opposite the “death panels” that ration healthcare that unfortunately got too much press for a falsehood.

Title VI uses 323 pages to improve transparency and integrity, yet more efforts to reduce waste, fraud and abuse in both the public and private health sectors. Who objects to efforts like this?

Title VII  improves Access To Innovative Medical Therapies, with focus on lowering the cost of drugs

Title VIII addresses ‘‘Community Living Assistance Services and Supports Act’’ or CLASS Act. This title The purpose of this title is to establish a national voluntary insurance program for purchasing community living assistance services and supports.  Moving people from higher cost hospitals and nursing homes to assisted living lowers costs, a laudable goal.

Title IX includes the revenue provisions that include provisions to raise revenue to pay for the expanded coverage.

The final Title X addresses 1) Medicaid and CHIP, 2) Support for pregnant and parenting women, and the major section 3) Indian health care improvements.  None are controversial issues.

Title I——-Quality, Affordable Health Care For All Americans [374 pages – 14%]

Title II——Role Of Public Programs [221 pages – 8%]

Title III–—Improving The Quality And Efficiency Of Health Care [501 pages – 19%]

Title IV–—Prevention Of Chronic Disease And Improving Public Health [130 pages – 5%]

Title V——Health Care Workforce [256 pages – 9%]

Title VI–—Transparency And Program Integrity [323 pages – 12%]

Title VII-—Improving Access To Innovative Medical Therapies [65 pages – 2%]

Title VIII—Class Act [53 pages – 2%]

Title IX—–Revenue Provisions [93 pages – 3%]

Title X——Strengthening Quality, Affordable Health Care For All Americans [373 pages – 14%]


Download PDF Report >>> Senate bill TOC


Key Healthcare Provisions – Kaiser Foundation

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Kaiser Foundation Source

Some of the items that go into effect in the first year include:

NEW HELP FOR SOME UNINSURED: People with a medical condition that has left them uninsurable may be able to enroll in a new federally subsidized insurance program that is to be established within 90 days. The legislation appropriates $5 billion for this, although that may not be enough to cover all who apply; it’s not clear how much consumers would pay as their share of the cost. About 200,000 people are covered in similar state programs currently, at an estimated cost of $1 billion a year, says Karen Pollitz, a research professor at Georgetown University.

DISCOUNTS AND FREE CARE IN MEDICARE: The approximately 4 million Medicare beneficiaries who hit the so-called “doughnut hole” in the program’s drug plan will get a $250 rebate this year. Next year, their cost of drugs in the coverage gap will go down by 50 percent. Preventive care, such as some types of cancer screening, will be free of co-payments or deductibles starting this year.

COVERAGE OF KIDS: Parents will be allowed to keep their children on their health insurance plan until age 26, unless the child is eligible for coverage through a job. Insurance plans cannot exclude pre-existing medical conditions from coverage for children under age 19, although insurers could still reject those children outright for coverage in the individual market until 2014.

TAX CREDITS FOR BUSINESSES: Businesses with fewer than 25 employees and average wages of less than $50,000 could qualify for a tax credit of up to 35 percent of the cost of their premiums.

CHANGES TO INSURANCE: All existing insurance plans will be barred from imposing lifetime caps on coverage. Restrictions will also be placed on annual limits on coverage. Insurers can no longer cancel insurance retroactively for things other than outright fraud.

GOVERNMENT OVERSIGHT: Insurers must report how much they spend on medical care versus administrative costs, a step that later will be followed by tighter government review of premium increases.

Some of the major changes the reconciliation proposal would make to the Senate-passed bill:

HEFTIER SUBSIDIES: Compared to the Senate legislation, the reconciliation bill would provide more generous subsidies to low- and moderate-income Americans to help them buy health coverage.

THE “MASERATI” TAX: The levy on high-cost insurance plans is scaled back and delayed, rendering it more a “Maserati” than a “Cadillac” tax. It would apply only to the portion of plans costing more than $10,200 a year for individuals, up from $8,500, and $27,500 for families, up from $23,000. The tax wouldn’t kick in until 2018, reducing the projected revenue to the government by 80 percent. Over time, however, the tax would hit more and more plans, because the tax’s threshold is set to increase at the rate of inflation while premiums are expected to continue to grow much more quickly than that.

CLOSING THE DOUGHNUT HOLE: Unlike the Senate bill, the reconciliation measure would eventually close the coverage gap, called the “doughnut hole,” for Medicare beneficiaries enrolled in Part D drug plans. (Currently, seniors who hit the gap must bear the full cost of their medications until they spend a certain amount, when coverage kicks back in.)

Under the new bill, seniors who hit the gap this year would get $250 to help cover the costs of their medications. Starting next year, they’d get a 50 percent discount on brand-name drugs, with the cost borne by the drug industry. In subsequent years, the discounts would expand and begin covering generic drugs, with the expense picked up by the government. By 2020, the discounts would reach 75 percent.

SHIFT IN MEDICARE ADVANTAGE PAYOUTS: Government payments to Medicare Advantage, the private-health plan alternative to traditional Medicare, would be cut back more steeply than under the Senate bill: $132 billion over 10 years, compared to $118 billion.

The government currently pays the private plans an average of 14 percent more than traditional Medicare. The new bill, besides reducing payments overall, would shift the funding; some high-cost areas would be paid 5 percent below traditional Medicare, while some lower-cost areas would be paid 15 percent more than traditional Medicare. The Senate’s plan that would have shielded some areas of the country such as South Florida from major cuts was largely eliminated.

A RAISE FOR DOCTORS: Primary care doctors would get a Medicaid payment boost in the reconciliation bill. Beginning in 2013 and 2014, the doctors’ payment rates would be on par with Medicare rates, which typically are about 20 percent higher than Medicaid. The goal is to ensure that there will be a sufficient number of doctors willing to care for the millions of additional people who would become eligible for Medicaid under the health care overhaul.

PUSHING UP THE MEDICARE TAX: The Senate bill adds a 0.9 percentage point to the Medicare payroll tax on earned income above $200,000 for individuals, or $250,000 for couples. Under the reconciliation bill, starting in 2013, people in those income brackets also would face a 3.8 percent tax on investment income, such as interest, capital gains and dividends.

PENALTY FOR NOT HAVING INSURANCE: Under the new bill, most Americans without insurance would face an annual penalty, starting in 2014 at $95 – the same as in the Senate bill. But in following years, the penalties in the reconciliation bill are slightly different. Those without insurance in 2016, for example, would pay the greater of two alternatives: a flat fee of $695, down from the Senate’s $750, or 2.5 percent of their income, up from 2 percent in the Senate bill.

EXPANDING MEDICAID: The reconciliation package differs from the Senate-passed bill in several ways. It would delete a provision dubbed the “Cornhusker kickback” that would have exempted Nebraska from paying any cost of a Medicaid expansion included in the bill. But it would provide full federal funding to all states for newly eligible Medicaid recipients for three years. And it would give additional funding to states like Vermont and Maine that have already moved to cover adults without children, which isn’t required under the Medicaid program.

MEDICARE SPENDING BOARD: The Senate bill would create an independent, 15-member board to recommend ways to control Medicare spending. The board remains in the reconciliation package, but would be expected to produce just about half of its original projected savings of $23 billion in the Senate bill. That’s because the new proposal would make greater cuts in Medicare Advantage plans.

Download PDF Report >>> Key Healthcare Provisions

Senate Gridlock – the Filibuster Factor

This Analysis has been replaced with a new version: Senate Filibusters Reveal Deliberate Obstruction


Healthcare Bill – Initial Reforms

Download PDF Report >>> Healthcare bill-Senate initial reforms


This article was written before final passage of the bill.  The provisions noted here are all in the final bill.  Like all legislation compromises find their way into the Senate bill.  Nevertheless, there are still many good reforms that deserve passage of the bill. Below are nine good reasons that occur just in 2010 to justify passage.


Howard Dean suggested senators reject the current form of the senate bill as not offering an alternative to private insurance and thus, unable to control costs.

One senator disagreed saying that while we wanted to build a nice house, all we can afford is a cottage.  But that cottage has a very solid foundation.  In time, we can make additions, but if we do not have a foundation, no additions or changes will even be possible.

This article addresses just a few foundation items that take effect early in the program.  Though one should not stop pressing for greater reform, not passing any bill would have even greater adverse consequences.

The following page lists excerpts from the senate bill as published earlier.  The comments below hopefully “translate” some of that legalese into layman’s language for the rest of us.  Hopefully, they provide encouragement to continue to press for better and better reform, but not to throw the baby out with the bath water if it seems reform does not go far enough. Below are nine good reasons that occur just in 2010 to justify passage

Actions Effective when Reform Bill is Enacted

  1. Section 1003 establishes in each state a process for review of unreasonable premium increases, approval of increases, and disclosure by insurers of justifications for their increases.  While this does not lower rates, it should constrain unreasonable increases and create transparency. Insurers are open to embarrassment if they press for extreme increases.  This section further provides a $250 million fund to the states to enforce this provision and give it some teeth.

Actions Effective within 90 Days of Enactment

  1. Section 1101 provides creation of a high risk pool for immediate access by uninsured with preexisting conditions. It requires enrollees to pay only “normal” premiums with cost deficits covered by a $5 billion appropriation.  It also includes an anti dumping clause to prevent plans from discouraging anyone from remaining enrolled. In effect, neither insurers nor companies could offload their high cost persons onto this subsidized high risk pool.
  2. Section 1102 effectively extends COBRA coverage for “retired” employees ages 55 and older. To protect employers extending COBRA, it provides them a reinsurance plan whereby if a retiree’s claims exceed $15,000, the government will reimburse the employer 80% of costs in excess of the $15,000.

Actions Effective within 6 Months of Enactment

Section 1001 contains 6 key subsections that are not practical to enforce immediately but are too important to delay for a whole year.

  1. Sec. 2711 prohibits insurers from setting lifetime or unreasonable annual dollar value limits on what they will pay under a plan
  2. Sec. 2712 prohibits insurers from rescinding coverage once an enrollee is covered under a plan
  3. Sec. 2713 prohibits insurers from imposing cost sharing (deductibles or copayments) for preventative services, immunizations, and preventative services for young children
  4. Sec. 2714 extends coverage of dependent unmarried children until age 26
  5. Sec. 2715 requires Uniform Explanation of Coverage Documents and Standard Definitions.

(a)    Establish strict disclosure rules including limiting documents to 4 pages of 12 point font (no fine print), understandable language, and clear benefits description and cost.

(b)    Preempt states with lower standards

  1. Sec. 2718 is designed to bring down costs

(a)    Establish accounting rules that standardize and segregate medical claims and  non-medical costs

(b)    Set minimum MLRs (according to rules in (a).  MLRs are already in the legislation, though their levels are similar to today’s actual MLRs (85% for groups, 80% for individuals).  Excess margins would be rebated to customers. MLRs could be made more stringent in the Senate-House reconciliation.

(c)    Require hospitals to “establish and make a list” of standard charges. The provision removes some of the secrecy and multiplicity in hospital pricing. By making them public, people can make more informed decisions about costs.

Subtitle A — Immediate Improvements in Health Care Coverage for All Americans

Sec. 1001. Amendments to the Public Health Service Act. (effective 6 months after enactment)

  • Sec. 2711. No Lifetime or Annual Limits.

Insurers may not establish—(1) lifetime limits on the dollar value of benefits for any participant or beneficiary; or (2) unreasonable annual limits

  • Sec. 2712. Prohibition on Rescissions.

Insurers shall not rescind such plan or coverage with respect to an enrollee once the enrollee is covered under such plan or coverage involved

  • Sec. 2713. Coverage of Preventive Health Services.

Insurance coverage shall provide coverage for and shall not impose any cost sharing requirements for—Preventative services, Immunizations, and preventative care for infant, children and adolescents

  • Sec. 2714. Extension of Dependent Coverage.

Policies covering dependent coverage of children shall continue to make such coverage available for an adult child (unmarried) until the child turns 26 years of age

  • Sec. 2715. Development and Utilization of Uniform Explanation of Coverage Documents of Standardized Definitions.

SUBSECTION (a) In GeneralNot later than 12 months after the date of enactment … develop standards … in compiling and providing to enrollees a summary of benefits and coverage explanation that accurately describes the benefits and coverage under the applicable plan or coverage.  The standards include:

  1. Appearance – not more than 4 pages
  2. Language –utilizes terminology understandable to an average enrollee
  3. Contents – must include:
    1. Uniform definitions so customers may compare
    2. Description of coverage including cost sharing for –Each category of benefit

1)      Exceptions, reductions, limitations

2)      deductible & co-payments

3)      Continuation provisions

4)      Examples to illustrate common benefits

SUBSECTION (e) PREEMPTION.—The standards developed under subsection (a) shall preempt any related State standards that require a summary of benefits and coverage that provides less information to consumers

  • Sec. 2718. Bringing Down the Cost of Health Care Coverage

a)      Clear accounting for Costs – annual report concerning the percentage of total premium revenue that such coverage expends—

1)      on reimbursement for clinical services provided to enrollees under such coverage;

2)      for activities that improve health care quality; and

3)      on all other non-claims costs, including an explanation of the nature of such costs, and excluding State taxes and licensing or regulatory fees.

b)      Ensuring That Consumers Receive Value for Their Premium Payments.— Requirement To Provide Value For Premium Payments.—rebate to each enrolled amount exceeding

  1. Group market – 20%
  2. Individual market – 25%

c)      STANDARD HOSPITAL CHARGES.—Each hospital operating within the United States shall for each year establish and make a list of the hospital’s standard charges

Sec. 1003 – (and Sec. 2794) Ensuring that Consumers Get Value for their Dollars. (effective when enacted)

(a)    Initial Premium Review Process.—

1)      IN GENERAL.—The Secretary, in conjunction with States, shall establish a process for the annual review, beginning with the 2010 plan year … of unreasonable increases in premiums for health insurance coverage.

2)      The Secretary shall ensure the public disclosure of information on such increases and justifications for all health insurance issuers.

(b)    Grants in support of process

  1. Premium Review Grants During 2010 Through 2014.—The Secretary shall carry out a program to award grants to States during the 5-year period beginning with fiscal year 2010 to assist … in carrying out the ….. reviewing and approving premium increases
  2. Funding – ‘(A) IN GENERAL.— appropriated to the Secretary $250,000,000 to be available for expenditure for grants

Subtitle B—Immediate Actions to Preserve and Expand Coverage (effective within 90 days)

Sec. 1101. Immediate Access to Insurance for Uninsured Individuals with a Preexisting Condition.

a)      IN GENERAL.— the Secretary shall establish a temporary high risk health insurance pool program ending 01/01/14

e)      Protection Against Dumping Risk By Insurers.— (1) IN GENERAL.—The Secretary shall establish criteria for determining whether health insurance issuers and employment-based health plans have discouraged an individual from remaining enrolled in prior coverage based on that individual’s health status.

g)      FUNDING; appropriated $5,000,000,000 to pay claims against the high risk pool

Sec. 1102. Reinsurance for Early Retirees.

a)      Administration — (1) IN GENERAL.— the Secretary shall establish a temporary reinsurance program to provide reimbursement to participating employment based plans for a portion of the cost of providing health insurance coverage to early retirees (and to the eligible spouses, surviving spouses, and dependents of such retirees) during the period beginning on the date on which such program is established and ending 01/01/14

Download PDF Report >>> Healthcare bill-Senate initial reforms

Government takeover of Insurance

Question #1:  Would you vote for this proposal?

  • The government would manage this federal insurance program
  • It would be introduced and sponsored by Democrats
  • The insurance would be optional for Americans
  • The insurance would be sold above cost but likely for less than private insurers
  • The insurance would have no pre-existing exclusions
  • The insurance program would be priced to be actuarially self sustaining

Sound like the health care “public option?”  You would be correct. Democrats proposed this public option but it was not in the final bill.

Question #2:  Would you vote for this proposal?

  • The government would manage this federal insurance program
  • It would be introduced and sponsored by Democrats
  • The insurance would be mandatory for some Americans and optional for other Americans
  • The insurance would be sold at below cost
  • The insurance would have no pre-existing exclusions
  • The government would subsidize the program with billions of taxpayer dollars

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