Health Reform Chasm Between Democrats, Republicans As Wide, And Deep, As Expected

On May 20, Sens. Tom Coburn (Okla.) and Richard Burr (N.C.) and Reps. Paul Ryan (Wis.) and Devin Nunes (Cal.) introduced the Patients’ Choice Act of 2009 (S. 1099, H.R. 2520), the first legislative proposal from Republicans trying to provide an alternative to the upcoming health reform proposals from Senate and House Democrats.

No surprises here, but a confirmation that the Democrats wan to guarantee health care coverage through legislation, while Republicans want to encourage coverage through expansion of the existing free market system.

The major provisions in the Republican legislation have no chance of being enacted. Among other things, the Patients’ Choice Act proposes the following:

--Encourage, but do not require employers or employees to have health insurance coverage. Democrats will compel coverage in one form or another, either immediately or in stages.

--Replace the current tax exclusion for employer-provided health coverage with an income-related, refundable tax credit.. The “Medi-Choice” rebate would be worth about $2,300 for individuals and about $5,700 for families. Democrats may modify the tax exclusion but will not eliminate it.

--Create voluntary state health insurance exchanges with the following characteristics:
One-stop marketplace for health insurance. Individuals could choose the plan that best meets their needs through a state exchange.
Plans offering coverage through an exchange would have to meet the same statutory standard used for the health benefits given to Members of Congress.
A state exchange would require all participating insurers to offer coverage to any individual— regardless of patient age or health history.

An exchange is almost a certain component to Democratic offerings—but it won’t be voluntary.

--Establish a non-profit, independent board to oversee prices and penalize insurance companies that cherry pick healthy patients while rewarding companies that seek patients with pre-existing conditions. Democrats will expand on existing comparative effectiveness research provisions and will provide overall limits on what insurers may change for health care coverage.

Probably the best example of the differences bewteen the Democrats and the Republicans is in provisions concerning health savings accounts (HSAs). Republicans The would allow health insurance premiums to be paid tax-free from an HSA as well as increasing the amount of tax-free dollars an individual can keep for their health care. They also would allow high-deductible health plans to cover preventive services, maintenance costs of chronic diseases, and concierge-style primary care services.

Democrats would like to restrict or even eliminate HSAs.

The gap between most Republicans and most Democrats is as wide as anticipated, and it now is even more likely that the Democrats will have to use the reconciliation process to pass health reform legislation.

Under the recently approved budget resolution, Congress has until October 15 to pass deficit-neutral health care reform legislation under the normal rules of the House and the Senate, which would in essence require a 60-vote majority in the Senate for passage that avoids a filibuster.

If reform is not passed by that date, deficit-neutral health care reform legislation could be attached to the budget reconciliation bill, which would require only simple majorities in the House and the Senate for passage.