FOR THE past year President Barack Obama’s healthcare reform plan has been the dominant issue in US politics. Yet until yesterday no one had seen a written version of the plan.
The President’s Proposal is the title of an 11-page document that was put on the White House website in the morning. It more closely follows the Senate healthcare Bill that passed on Christmas eve than the House version voted in November, and seeks to bridge differences between the two.
The document is meant to be the basis for the bipartisan healthcare summit that Mr Obama will host on Thursday. But it was immediately rejected by Republicans as “the same massive government takeover of healthcare”.
The biggest innovation in Mr Obama’s plan – present in neither the House nor Senate Bills – is a provision for the federal government to regulate insurance premium increases.
Anthem Blue Cross insurance company in California handed the president a public relations coup by writing to 700,000 customers recently to announce rate hikes of up to 39 per cent. Mr Obama began his weekly radio address on February 20th with what he called this “jaw-dropping news”.
At a press conference last week, health and human services secretary Kathleen Sebelius cited a half dozen similar examples across the nation.
The insurance companies have tried to justify the increases by saying that because of the recession healthy people have stopped buying insurance, leaving insurers with a pool of sick clients and rising costs.
The insurance hikes have given the White House a new argument. “The bottom line is that the status quo is good for the insurance industry and bad for America,” Mr Obama said in his radio address. “Over the past year, as families and small business owners have struggled to pay soaring healthcare costs, and as millions of Americans lost their coverage, the five largest insurers made record profits of over $12 billion.”
At Thursday’s healthcare summit, Republicans risk giving the impression they are siding with greedy insurance companies if they attack Mr Obama’s proposal. For the first time, the health and human services secretary would have the authority to review and block proposed increases in insurance premiums.
A newly created federal Health Insurance Rate Authority would issue an annual report recommending reasonable increases.
Like the Senate and House Bills, Mr Obama’s plan bans insurers from rejecting clients with pre-existing conditions. And like both Bills, it requires that all individuals purchase insurance (the “single mandate“). But the plan includes a provision for those who cannot afford insurance to obtain a waiver.The presidential proposal was as significant for what it left out as for what it included. Liberal Democrats had hoped the president might restore the “public option” or government-run insurance plan, which was excised from the Senate Bill. He did not.
Republicans are demanding tort reform – a limit to lawsuits against doctors – on grounds that doctors now practise defensive medicine, driving up healthcare costs by ordering unnecessary CAT scans, blood tests and ultrasounds to protect themselves in the of being sued for malpractice.
The Republicans also want insurance firms to be able to compete across state lines. Neither of these measures is in Mr Obama’s plan, but he implied in his radio address that interstate insurance markets might be a good idea.
Mr Obama has prepared a last big push for the emblematic reform that has so far eluded his administration.
If the Democratic majority in the House adopts the Senate Bill as it is, Mr Obama’s plan can be used as a blueprint for the controversial process known as reconciliation, which would require 51 rather than 60 Senate votes.
The President’s Proposal
The 11-page healthcare proposal published by the White House yesterday would:
- Establish a federal Health Insurance Rate Authority to review unreasonable rate increases and other unfair practices of insurance companies.
- Prohibit discrimination against Americans with pre-existing conditions.
- Require all Americans to carry health insurance, with exemptions for hardship cases.
- Increase tax credits to middle class families who pay insurance premiums.
- Close the "donut hole", in which senior citizens on Medicare must pay out of pocket for prescription drugs.
- Raise the threshold for tax on so-called "Cadillac plans" costing $23,000 or more annually for a family to $27,500. Mr Obama's plan would also delay this tax from 2013 to 2018. (Labour unions opposed the tax on "Cadillac plans" because healthcare insurance is a crucial part of workers' remuneration.)
- Retain language from the Senate Bill banning the use of federal funds for abortion, but drop more restrictive language contained in the House Bill.
- Extend the special Medicaid deal that was given to Sen Ben Nelson of Nebraska in exchange for his Yes vote to all states.
- Enact 14 different measures (three of 11 pages of the plan) to crack down on waste, fraud and abuse in government-run Medicare and Medicaid systems.
The White House claims reductions in overspending, waste, fraud and abuse will cut the deficit by $100 billion over the next decade, and about $1 trillion over the second decade.