Joseph R. AntosWilson H. Taylor Scholar in Health Care and Retirement PolicyAmerican Enterprise Institute

Health Reform: Déjà Vu All Over Again?

Health Care Forecast Conference

University of California, Irvine

February 25, 2010

And speaking of vu…

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Growing problem of obesity

House

7/14 – TriComm – 1,018 pages

10/29 – HR 3962 – 1,990 pages

11/7 – Engrossed bill – 2,016 pages

Senate

6/9 – HELP – 615 pages

10/19 – SFC – 1,502 pages

11/18 – Reid HR 3590 – 2,074 pages

12/24 – Engrossed bill – 2,409 pages

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So many pages, so little time

Perfectibility of regulation— if not of man

Attempt to solve every conceivable problem

Solution Problem Solution …

But the bills are incomplete

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Scores of new advisory and regulatory bodies

Obama plan continues this strategy

Conflicting policy objectives

Expand insurance coverage—cut the deficit

Expand benefits—lower costs

Allow everyone to keep what they have—change what insurance is required to do

Promote choice—keep most people in ESI

Lower premiums—eliminate underwriting

Cut Medicare payments—maintain program benefits

Promote economic growth—tax business

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Building blocks of House, Senate bills

Health insurance exchange

Insurance regulation

Mandates

Subsidies

Medicare cuts

Tax increases

Earmarks

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Broad similarities

Big money Coverage: House $891 B, Senate $871 B Medicare cuts: H $453 B, S $438 B Taxes1: H $806 B, S $638 B

Big regulation Mandates – individual and employer Guaranteed issue, no pre-ex, no rescissions, rating bands,

minimum benefit package, medical loss ratio Insurance exchanges Tax credits, Medicaid expansion “Nice” ideas: ACOs, medical home, bundled payment,

prevention, CER, quality measures, fraud/abuse, FOBs, etc.

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1Excludes tax credits which reduce net revenue: H $25 B, S $140 B

Major disagreements

Millionaire’s tax vs. Cadillac tax H: 5.4% surcharge, income>$1 M (joint)

– $460.5 B S: 40% excise tax, coverage>$8,500/$23,000

– $148.9 B, supplemented by add’l 0.9% HI payroll tax on wages>$250,000 (joint) ($86.8 B), insurer fee ($59.6 B), Pharma fee ($22.2 B), others

National vs. state-level insurance exchange

Public option vs. none

Permanent fix, SGR vs. none H: $209 B—but hidden in separate bill

Part D donut hole phase-out vs. one-time fill-in H: Rx discount + duals rebate; S: Discount + $500 reduction

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Other differences

2:1 Age rating 3:1

No Young invincibles Yes

2.5% of AGI in 2013 Individual penalty $750 in 2016

Payroll tax 2-8% Employer penalty $3000/employee getting tax credit

Greater for income<300% FPL

Individual subsidy Greater for income 300-400% FPL

To 150% FPL Medicaid expansion To 133% FPL

No Medicare commission Yes

Non-health $43.1B Taxes Tanning $2.7B

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Why the stalemate?

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The Republicans are our opposition. The Senate is our enemy. Rep. Anthony Weiner (D-N.Y.), January 27 after SOTU