 House of Representatives Health Care Bill (HR 3962)
CBO: Preliminary analysis of H.R. 3962, the Affordable Health Care for America Act
Gene's position
I am opposed to the current health care reform bills being debated in Congress.
However, I am a co-sponsor of two bills in Congress that will help bring down health care costs.
- Allowing the government to use its purchasing power to lower the cost of prescription drugs. (HR 684)
- Forcing greater competition from insurance companies by eliminating their exemption from the nation's anti-trust laws. (HR 1583)
In addition, I also support a greater use of generic drugs unless a doctor advises otherwise.
The current health care system offers high quality care to many Americans, but at very high cost. We have allowed a system in which the private sector provides coverage while people are young, healthy, and employed, and then shifts them to government programs when they are older, have chronic health problems, or are poor.
About 54% of health care spending is paid by private insurance and individuals’ out-of-pocket costs, while 46% of the health care spending is paid by the federal, state, and local governments. Because Medicare and Medicaid cover the elderly and the poor, the government pays for the majority of spending on hospital care, nursing home care, and home health care in the United States. The retirement of the baby-boom generation will substantially increase the costs of Medicare. The current economic recession has added to the Medicaid population.
More than $2.5 trillion will be spent on health care in the United States in 2009. Health care spending will account for more than 17 percent of U.S. Gross Domestic Product (GDP), which means that one of every six dollars spent in America will be spent on health care. By 2018, health care is projected to take 20% of GDP, or one of every five dollars. By 2025, health care spending is projected to take one of every four dollars spent in America.
I do not believe that it is economically possible for one-fourth of all spending in the United States to be spent on health care. It also is not possible for the federal government to keep spending more and more every year on health care. There are just too many other needs for individuals, families, communities, and the nation that would have to be neglected for us to afford to spend so much on health care. We should not pass legislation that will increase costs. We have to make our health care system more efficient, without compromising the quality of care, and we have to improve our efforts at preventing and curing chronic medical conditions and diseases.
There are three major concerns about health care – access, quality, and cost – but they often conflict with each other. The only way that health care reform can work for taxpayers and consumers is to put cost containment first, ensure the quality of care, and then using the savings to improve access to care for people without insurance.
There are several ways to make health care more efficient without increasing costs. I am a cosponsor of H.R. 684, the Medicare Prescription Drug Savings and Choice Act, introduced by my good friend and fellow Blue Dog Representative Marion Berry of Arkansas. This bill would require Medicare to operate at least one drug benefit plan and negotiate prices directly with drug manufacturers. H.R. 684 also encourages the use of generic drugs instead of more expensive alternatives unless the prescribing physician says that a name brand drug is medically necessary.
When Congress passed the Medicare prescription drug benefit in 2003, Rep. Billy Tauzin (R-LA), then the chairman of the Energy and Commerce Committee, added language that prohibits Medicare from negotiating with drug companies for lower prices. A few years later, Tauzin retired from Congress to become President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry he had helped as committee chairman.
The bill also did not add the prescription benefit to regular Medicare benefit package. The Bush Administration insisted that Medicare would have to contract with insurance companies to offer prescription drug benefit plans. Instead of Medicare negotiating lower prices for its 45 million beneficiaries, Medicare pays insurance companies and the insurance companies pay the drug companies. This adds administrative costs and unnecessary profits with the result that Medicare pays higher prices than the Department of Veterans Affairs, which negotiates prices directly with the drug companies.
I also am a cosponsor of H.R. 1583, legislation to repeal the insurance industry’s antitrust exemption. The insurance industry was granted a temporary exemption in the McCarran Ferguson Act in 1946, but the industry has successfully lobbied to make it permanent. Repeal of the antitrust exemption would force health insurers to compete with one another in a competitive market on the basis of price, service, and value.
The biggest challenge of health care reform will be to create incentives for doctors, hospitals, and other health care providers to reduce the costs of care. There are several promising approaches that deserve further study. For example, I would support demonstration projects to establish Accountable Care Organizations (ACOs) to determine whether they can lower Medicare costs. Under an ACO, a local network of doctors and hospitals would agree to provide medical care to a specific population of Medicare beneficiaries. If the ACO can provide the care at less cost than regular Medicare, the doctors and hospitals would receive bonuses from the savings.
We also need to encourage individuals and families to be more aware of prevention and early diagnosis of medical problems in order to reduce health care costs and improve their lives. Medicare, Medicaid, and private insurance spend hundreds of millions of dollars each year in Mississippi treating preventable illnesses. Our state has a high rate of obesity, which increases the risks of diabetes, heart disease, and other chronic medical conditions. We need much better prevention and management of those and other illnesses.
The health care reform bill that currently is being debated in the House is H.R. 3200, American’s Affordable Health Choices Act of 2009. The bill would require all individuals to enroll in a health insurance program. Individuals in households with incomes up to 133% of the poverty level would be eligible for Medicaid. Those from 133% to 400% of the poverty level could receive some government assistance to help pay their premiums. That assistance could be used to enroll in the public health plan or in a private insurance plan that participate in the insurance exchanges that would be developed.
Federal poverty guidelines are based on household size and are adjusted every year. For example, the poverty level in 2009 for a 2-person family is $14,570. Under H.R. 3200, two-person families with incomes below $19,378 (133% of poverty level) would be eligible for Medicaid. Two-person families with incomes between $19,378 and $58,280 (400% of poverty level) would receive federal premium assistance on a sliding scale. For families making about $20,000, the government would pay most of the cost. For those with incomes above $50,000, the government assistance would be a cap on how much of their income they would have to spend.
The bill would allow anyone who receives health insurance from an employer-provided plan to keep their current coverage. The public insurance plan would be an option for people who do not receive insurance through their employers. Those individuals also could choose a private insurance plan that agrees to provide the basic benefit package required by the government.
The bill gives employers the option to “pay or play.” Employers could either offer health insurance to their employees or pay 8% of their payroll into a government fund to help insure their employees. The bill exempts small businesses with payrolls below $250,000 from the requirement. Other businesses could apply for a hardship and delay for up to two years.
The proposal is partly funded by a new tax on individuals whose total annual income exceeds $280,000 and for joint filers whose total income is over $350,000. It would not increase taxes on other taxpayers. The bill also makes changes in Medicare that are estimated to save $50 billion over the next ten years. The savings include provisions to freeze some Medicare payments and increase other payments by less than they would increase under current formulas. Some of the provisions have been negotiated with hospitals, doctors, and drug companies.
I oppose the House bill. We cannot add an expensive new subsidized health care program on top of the huge current debt that is $11 trillion and growing rapidly.
H.R. 3200 is currently under consideration by House committees. Some changes are being negotiated, but I do not believe it can pass Congress without substantial changes. This is the beginning of the debate over health care policy. Congress and the American people will be dealing with this issue for much of the next twenty years until we figure out how to manage the costs much more efficiently.
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