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The
Washington
Post
Kennedy Details
Vision for Health Care
Government Subsidies
Would Help Families;
Insurance Firms'
Profits Could Decline
By Ceci Connolly,
from the Web, June 6, 2009
Three months after he was diagnosed
with incurable brain cancer, Sen. Edward M. Kennedy (D-Mass.) vowed in an
emotional Democratic National Convention address last summer that health reform
would be "the cause of my life."
Nearly a year later, Kennedy, rarely seen in public, has put that vision to
paper in legislation that would provide generous government subsidies to
families buying coverage, place significant responsibilities on employers,
create a new long-term-care program for millions of people with disabilities,
and perhaps reach into the profits of insurance companies.
The 170-page bill, still labeled a draft, is by far the most liberal approach to
health-care reform being discussed in Washington and potentially is quite
expensive. It does not identify how the expansion of health coverage would
be paid for, except to require businesses to provide insurance for workers or
pay penalties.
After spending "scores of hours in the Kennedy workhorse meetings" that
assembled a diverse range of stakeholders, Neil Trautwein, a vice president of
the National Retail Federation, said he was surprised and disappointed that the
team had resorted to a "lot of the same old tired ideas we have fought against
for many years."
Much of the business community will "do everything we can to block" the proposed
employer mandates, he said.
A source who has met often with Kennedy aides said they have estimated that the
"employer mandate" could raise $300 billion over a 10-year period, which would
suggest either high levies, a program that targets even the smallest businesses
or a combination of the two.
On the House side, by comparison, Democratic leaders have examined an employer
requirement that would raise $50 billion to $200 billion over a decade. In
other respects, however, House Democrats are following the Kennedy outlines but
at perhaps smaller levels.
"Senator Kennedy is on the cusp of achieving his dream, a fight he has led for
four decades," said Sen. Ron Wyden (D-Ore.), who has his own bipartisan health
bill. "What's needed now is a lot of heavy lifting to make sure the
legislation creates a path to affordable coverage."
The bill "reflects a revamping of the whole insurance system," said Charles N.
Kahn III, president of the Federation of American Hospitals.
It would prohibit the denial of coverage based on preexisting conditions and
would insist that any insurance policy that includes children must provide that
coverage through age 26.
Most striking, the legislation would require that insurers report to the federal
government how premiums are being spent -- clinical services, claims processing,
etc. -- and give a rebate to beneficiaries if a percentage of the premium does
not go to patient benefits. Insurers would be forced to clamp down on
administrative costs or profits.
Over the long run, the industry would probably adapt to the new standards, but
in the short term it "takes a harsher edge with insurers," said Dan Mendelson,
president of Avalere Health, a research and consulting firm.
Noting that firms have a "fiduciary responsibility" to shareholders, he said:
"Why limit their profits and not the profits of the defense industry?"
At the same time, insurers would acquire millions of new clients, Mendelson
said, pointing to the proposed expansion of the Medicaid program to 150 percent
of the poverty level of $16,000 for an individual. That provision would
create 20 million more insurance customers, according to Mendelson's modeling.
The chief spokeswoman for the insurance industry declined to comment yesterday.
Kennedy spokesman Anthony Coley said aides would not discuss details while
Democrats are "still actively engaged with Republicans in trying to find common
ground."
As expected, the draft includes creation of a new government-sponsored insurance
program that would pay doctors and hospitals Medicare rates, plus 10 percent.
That could be good news for physicians, said Mendelson, since most reform plans
aim to tighten doctor payments.
But Kahn said it might be problematic for hospitals, which are less likely to
benefit as greatly from millions of newly insured who are younger and healthier.
Modeled after a Massachusetts reform implemented three years ago, the Kennedy
approach would insist that everyone buy insurance, though subsidies would be
given to people who could not afford it. The draft document suggests
offering premium aid to people earning as much as 500 percent of the poverty
level, or $110,000 for a family of four. That idea has Republicans
outraged and fellow Democrats nervous about the cost.
Rep. Jim Cooper (D-Tenn.) said the draft by Kennedy aides and other ideas
circulating among party leaders are unrealistically generous, while an employer
mandate hurts workers and consumers.
"Congress just doesn't get it," he said.
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