Health Care Reform
Legislative Issue Update - October 2007
Association/Small Business Health Plans:
Enactment of association/small business health plan (AHP/SBHP) legislation to permit the formation and multi-state operation of association-sponsored health plans has topped NAW’s health policy agenda for a decade. During that period, the House of Representatives has repeatedly passed NAW-supported AHP/SBHP legislation only to see the issue stall in the Senate. The 109th Congress was no exception: the House passed the Small Business Health Fairness Act in the summer of 2005 with strong bipartisan support. Its Senate companion measure was never even considered. An alternative, penned by the then-Chairman of the Health, Education, Labor and Pensions (HELP) Committee, Senator Mike Enzi (R-WY) with NAW’s support, was approved by the committee but failed cloture in the full Senate in a vote that broke nearly exclusively along party lines.
AHP/SBHP legislation is not likely to be considered in either house of the 110th Congress.
During the first session of the 109th Congress the House of Representatives passed the NAW-backed Help Efficient, Accessible, Low Cost, Timely Healthcare Act (“HEALTH Act”) by a vote of 230 – 194. Among the significant reforms proposed by the HEALTH Act were proposals to:
- Limit non-economic damages and punitive damages;
- Establish a national statute of limitations;
- Replace joint and several liability with several (or “fair share”) liability;
- Establish a standard of punitive damages liability; and
- Establish a compliance with government standards defense to punitive damages claims against manufacturers and sellers of medical products.
The HEALTH Act was not considered by the Senate; however, two medical liability bills were called up in the Senate in the spring of 2005 but failed to obtain the 60 votes necessary to invoke cloture.
Medical liability legislation is not likely to be considered in either house of Congress during the 110th Congress.
Value-Driven Health Care:
Health insurance costs have for several years been the top concern of American employers. Double-digit increases in group health insurance costs earlier in this decade placed unsustainable burdens on the bottom lines of both larger and smaller employers, leading many employers to embrace strategies which shifted a greater share of their employees’ health care and insurance costs to the employees themselves. Not surprisingly, a growing number of workers, particularly younger and healthier workers, rejected the higher insurance costs and, as a consequence, the number of medically uninsured Americans has risen to 47 million persons. This condition contributes to higher medical costs for consumers of health care products and services, including insurance.
There is better news from the immediate past: recently the cost of group health insurance programs has grown at a much slower pace – down to 6.1% in both 2005 and 2006, according to data compiled by Mercer Health & Benefits LLC. What’s changed? Many observers believe that consumers of health care products and services have become more discerning “shoppers” as their own economic responsibility for their health care has grown, particularly in the wake of the growing attractiveness to employers of lower-cost consumer-driven health plans.
The basic concept behind “consumerism” in health care is both simple and familiar: to bring market forces to bear in making health care choices.
Today, all the incentives move our health care “system” in precisely the opposite direction; i.e., health care products and services provided to a consumer (the patient) are largely paid for by a third party (insurance) that is itself heavily subsidized by a fourth party (the employer). In short, traditional forces at play in a competitive free marketplace are largely absent in the health care sector.
For a market-driven approach to work, injecting the greatest degree of efficiency into the system is critical, as is informational transparency; i.e., enabling consumers of health care to make value-based decisions rooted in reliable information about service quality and cost.
Also necessary for the success of “consumerism”; i.e, a more orthodox competitive marketplace in health care, is the leadership of the largest consumers. There is no larger consumer than the Federal Government through its various health programs such as Medicare, the Veterans Affairs health system, the Federal Employees Health Benefits Plan and others; and this led President George W. Bush last August to sign an Executive Order committing the Federal Government to the four “cornerstones” of “Value-Driven Health Care”:
- Interoperable health information technology.
- Quality of care reporting.
- Price transparency.
- Providing incentives for quality care at competitive prices.
Implementation of the Executive Order and outreach to the private sector to build on this initiative is being overseen by the Department of Health and Human Services under the leadership of HHS Secretary Michael O. Leavitt.
NAW has embraced the cornerstones in the President’s Executive Order as an essential step toward an efficient market-driven, rather than a bureaucracy-laden big-government directed health care system. NAW is working with the Department of Human Services and our 14 colleagues in the Partnership for Value-Driven Health Care to encourage acceptance of the four cornerstones by employers nationwide.
Mental Health Parity: [added June 2007]
The employer community and health insurance industry have opposed bipartisan legislative efforts to expand the mental health parity requirements enacted in 1996 as part of the Health Insurance Portability and Accountability Act (HIPAA). That has changed as a result of the 2006 mid-term elections that gave majorities in both houses of Congress to the Democrats.
A compromise measure (S. 558, the “Mental Health Parity Act of 2007”) has been written by a bipartisan group of Senators led by Sen. Pete Domenici (R-NM) and the Chairman and Ranking Minority Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Sens. Edward Kennedy (D-MA) and Mike Enzi (R-WY). Fifty-two Senators have co-sponsored this bill, which has also been endorsed by leading employer trade associations, NAW included, and several patient advocacy groups.
The House of Representatives is also active on this issue but its legislation has not evolved as has its Senate counterpart. In March, Rep. Patrick Kennedy (D-RI-1) introduced NAW-opposed H.R. 1367, the “Paul Wellstone Mental Health and Addiction Equity Act of 2007”. The bill currently has a bipartisan group of 255 cosponsors and is pending in the Energy and Commerce, Ways and Means, and Education and Labor Committees.
Two key differences between the Senate compromise and H.R. 1367 that render the House bill unacceptable are:
- The Senate compromise preempts state rules on parity for mental health and substance abuse. H.R. 1367 does not.
- The Senate compromise gives employers greater latitude in deciding what services its plan will cover. H.R. 1367 is broadly prescriptive in this regard.
S. 558 was approved by the Senate HELP Committee in mid-February and could see floor action shortly.
ERISA Preemption: [added June 2007]
The Employee Retirement Income Security Act (ERISA), enacted in 1974, includes a preemption provision (i.e., ERISA preempts virtually all state laws that “relate to any employee benefit plan”) that has facilitated employer-sponsored group health insurance plans. By enabling employers to operate uniform health insurance plans across state lines, employers and their employees enjoy the benefits of flexibility in plan design, and economies of scale that yield the lowest possible premium and administrative costs. Largely due to ERISA, today 160 million Americans receive health insurance coverage through employer-sponsored group plans.
Because the ranks of the medically uninsured have risen to more than 45 million Americans, and the difficulty the Federal government has experienced in responding to this crisis, states have been working on dealing with the problem within their own jurisdictions. The limiting effect of ERISA on these state initiatives has led some to advocate a weakening of ERISA preemption.
Legislation to facilitate this has been introduced in both houses of Congress; H.R. 506, the “Health Partnership Through Creative Federalism Act,” and S. 325, the “Health Partnership Act.” The major purpose of both bills is to provide grants and ERISA waivers to states to facilitate state initiatives approved by a Federal commission the Secretary of Health and Human Services is required to establish. The House Education and Labor Subcommittee on Health, Employment, Labor, and Pensions conducted a May 22 hearing on “Coordinating Federal and state initiatives to cover the uninsured” which included a discussion of ERISA preemption and the merits of H.R. 506.
Given the realities of the nation’s current health insurance delivery system, NAW supports ERISA preemption as providing its essential foundation and have joined with our colleagues in the ERISA Protection Coalition in its defense.