OP-ED

What’s Next? Follow the Money

By ROBERT LASZEWSKI

With the passage of the Senate Finance bill the health care effort now moves to a critical stage with the Senate Majority Leader and the House Speaker now clearly in charge. The more important effort will be Reid’s. Pelosi’s final product will be more predictable (very liberal) but Reid’s will have to be more practical. Every inch Reid moves away from the more moderate Baucus bill will cause problems.

The big issue is going to be money—just whose taxes are going to get raised to the tune of $500 billion to pay for it.

The Senate Finance bill has the $211 billion “Cadillac” benefits tax. Dead on arrival. No way the party that put the unions ahead of the Chrysler bondholders is going to cross their traditional allies on this one. The $40 billion tax on medical device makers is also under pressure and likely to at least shrink.

And, don’t think the insurance underwriting reform issue is behind us. That one is just beginning and it will create its own pressure to increase the cost of any bill by improving insurance subsidies so an individual mandate is workable.

The Finance bill also ignores the Medicare physician payment problem. Don’t fix that and you risk alienating the docs. The House did fix it and it cost them $240 billion they still haven’t found the money for.

The Senate Finance bill minus the “Cadillac” tax, fewer medical device taxes, the imperative to improve the subsidies, and in need of a doc fix has about a $500 billion hole in it.

The House solves that problem with a $500 billion tax on “millionaires”—defined as families making more than $500,000 a year. But lots of Democratic Senators think that is really just a tax on small business and job creators.

If the House tax could have passed the Senate yesterday afternoon Baucus would have had it in his bill rather than the “Cadillac” tax placeholder he did have.

Bottom line: The Democrats have to figure out a way to get 60 Senators to vote for a tax scheme that will raise at least $500 billion.

The public option, employer mandates, a turbo-charged MedPAC? These are not the biggest issues. The White House will take any deal they can get and will quickly pressure liberals to back off wherever necessary.

The biggest issue they face by far is just whose taxes are going to get raised $500 billion. This is the make or break issue.

Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog, where this post first appeared.

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Gary LampmanPeterarizona dentistRyszard Rokickiundecided Recent comment authors
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Gary Lampman
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Gary Lampman

Bankruptcy is just a reorganization and Insurance has become too Big To Fail.AIG for example was too Big To Fail and we Bailed them out with the Public’s money.Those responsible with the recession are still receiving multiple millions of dollars for their risky behavior. Universal Health Care can be accomplish but we would have to cut out the excessive fat and entitlements of Health Insurance and their brokers. Its OK to bankrupt families for services and turn away those who have difficulty affording services? The nation shall Not go bankrupt over this one issue!However, a rich nation like ours has… Read more »

Dan Smith
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Dan Smith

“The insurance industry is a problem only in how it restricts access to healthcare, it is not the main driver of costs.” I agree with your comments 100%. Take a second look at the Medical PSC idea above. A Medical PSC (MPSC) would push both sides in the right direction. Doctors/hospitals would have to prove-in their charges because the commission would be checking their prices. Also the commission would be investigating patient complaints about wrong doing. On the insurance side, the MPSC eliminates the provider network and insures that each insurer is billed the same for identical provider services. This… Read more »

Peter
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Peter

“Now if the healthcare insurance industry is the problem why are rates increasing across the board even for employees of self-insured companies?” The insurance industry is a problem only in how it restricts access to healthcare, it is not the main driver of costs. But the insurance industry does not do anything to add value to their service, they are happy passing cost increases on to premium payers and skimming their % off the volume. Keeping insurers in control of payments and collections does not provide for a system that creates the necessary cost controls to make/keep healthcare affordable. Shifting… Read more »

Dan Smith
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Dan Smith

I was reading another blog on healthcare today and this one was railing against the healthcare insurance industry for causing all our problems. Then I remembered that my former employer was large enough to self-insure and did not purchase healthcare insurance. However, every year that I can remember the premium charged by the comapany for its health plan increased. In the last few years of my recent employment, this premium was increasing in step with everyone else’s who had private insurance. Now if the healthcare insurance industry is the problem why are rates increasing across the board even for employees… Read more »

Peter
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Peter

arizona dentist, do you really think reform is just about the uninsured, no matter what % number you pick? With projected healthcare spending approaching 20% of GDP by 2018 don’t you think this is an issue for everyone trying to pay for their healthcare, insured or not? But I guess as a dentist you can just raise your rates to adjust for your own healthcare costs – even if you get your preferred coverage through a dental group.

MD as HELL
Guest
MD as HELL

I am betting that the demand from citizens for care will clash with the political types who don’t want to pay for it. Of course, the citizens don’t actually want to pay for it either. But they are used to getting what they want. No one has ever told them “no” because no one was ever paid to tell them “no”. In the old HMO days a doc got to keep a trifle if he denied a test, but it was not enough to compensate for the added liability. Anyway, I look for the voter to clash with the payor… Read more »

arizona dentist
Guest

National health care will totally bankrupt this nation. If they truly wanted to solve the problem all they have to do is give care to the 15% without health insurance. They don’t have to completely take over the entire system.

Ryszard Rokicki
Guest

I think that are a lot of elements which could cut health care cost in US. I would like to mention one, which I have found mentioned anywhere before, namely the FDA decision making power to implement rules based on Citizen Petitions. In my opinion the FDA decision makers should act faster and more boldly on petitions with actual merits. When I mention petition with actual merits I mean two kinds of petition. First is “common knowledge petition” with unquestionable rightness proved time and again by hundreds of research performed around the world in last several decades which when implemented… Read more »

undecided
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undecided

Last week, I found a great way to get healthcare reform on the right track: send all members of Congress and the Administration to Disney World. When they see the waistlines there, they will get great insight into what’s driving our healthcare costs.

Dan Smith
Guest
Dan Smith

Full-blown competition will only occur in the healthcare field if service provider contracts between the doctors/hospitals and insurance companies are eliminated. These contracts limit access, quality, competition and raise prices. Also these contracts make it harder for new insurance providers to enter a state since these contracts are used to build the insurance companies’ service provider network. A new insurance company would lack the network and find it difficult to recruit local providers who are already fully booked by established insurance carriers. The key is to eliminate the service provider contracts and require the doctors and hospitals to accept patients… Read more »

Dan Smith
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Dan Smith

Its time to dust off an old tried and true solution to solve a problem like healthcare that the free market cannot solve. In the past when competition was not sufficient to control prices on big ticket items like the price of electricity, price of land-line phone service, and the price of natural gas service, our state governments instituted public service commissions (PSCs) to arbitrate fair pricing. We need a PSC for healthcare to set medical charge code prices billed to insurance.

MD as HELL
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MD as HELL

There is nothing for the average American citizen in this so-called reform effort except the bill and the loss of freedom. How’s that hope and change working for you?
If history is calling, as Senator Snow speculated, it is our founding history, calling for us to wake up and smell the tyrant.

Dr. Rick Lippin
Guest

As the bills head into conference it will be the moral fiber of our new young President who will make a decision to lead or compromise to a point of producing a bill probably not worth signing
I’m betting on Obama stepping up to the plate to make history by insisting on genuine change. This is his moment.
Dr. Rick Lippin
Southampton,Pa

Online Pharmacy
Guest

Robert, thank you for your thoughts. I have a question for you, if I may. Because of the wide-spread opposition to the healthcare bill, do you think details such as this are potentially being overlooked in order to pass the bill while it stands a chance? I agree this is not the best solution, but perhaps that’s why this is happening?

healthcareDev
Guest
healthcareDev

And your commentary are the predictable excretions of an insurance industry shill.