Health Care Law Reform : Health Care Lawyer & Attorney : McDermott Will & Emery Law Firm : Managed Care, Product Regulations

The Facts

After months of heated debate and an unprecedented all-day White House health reform summit on February 25, 2010, President Obama has begun the final push toward passage of comprehensive health reform.  Current negotiations involving Senate Democratic leader Harry Reid and House Speaker Nancy Pelosi are focused on the president’s proposal, which is largely based on the bill approved by the Senate on December 24, 2009, but which also reflects compromises reached between Senate and House Democrats.

On March 2, 2010, the president submitted a letter to congressional leaders indicating that he is open to further examining the following four issues raised by Republicans during the summit:

• Engaging medical professionals to conduct undercover investigations of health care providers to combat fraud, waste and abuse within federal reimbursement programs
• Establishing “health courts” to resolve medical malpractice claims
• Encouraging the use by individuals of high-deductible health plans
• Increasing physician reimbursement—in response to expanding Medicaid to cover more people—in a fiscally responsible manner. 

Click here for the letter.

And, on March 3, 2010, just a little under a year after his initial speech announcing his intent to overhaul the health care system, President Obama made it clear during his 20-minute speech that he intends to utilize the reconciliation process, resulting in an up-or-down vote on a merged measure.  Click here for the speech transcript.  The president also made it clear that he expects Democrats to support this strategy, regardless of their re-election prospects and concerns.

What’s at Stake

Succeeding with this strategy, however, will not be easy.  Not only will Speaker Pelosi have difficulty rounding up the necessary votes in the House, but Senate Republicans may attempt to forestall the process by offering a myriad of amendments.  However, if the president and bipartisan negotiations are successful, a health reform plan may be enacted by early April 2010. 

Steps to Consider

All in the health sector, including health care consumers, should analyze any revisions to the president’s proposal and should continue to closely monitor the progress of the health reform debate.

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The Facts

Although Senate Democrats recently lost their filibuster-proof supermajority, President Obama reiterated in his January 27, 2010, State of the Union address that he is intent on achieving health reform this year. The president exhorted Congress not to “run for the hills,” and invited Congress to instead “come together and finish the job for the American people.” In an effort to encourage Republicans and Democrats to work together, the president invited congressional leaders to a bipartisan, half-day summit on health reform on February 25, 2010. Click here for the president’s invitation letter and invitation list.

House Speaker Nancy Pelosi proclaimed: “You go through the gate. If the gate’s closed, you go over the fence. If the fence is too high, we’ll pole-vault in. If that doesn’t work, we’ll parachute in. But we’re going to get health care reform passed for the American people.” Senate Majority Leader Harry Reid’s spokesman underscored these sentiments, stating: "We remain confident we will pass health reform this year.”

Whether comprehensive legislation, piecemeal legislation or no health reform legislation is passed this year will affect not only the health sector and health care consumers, but also the mid-term elections this November.

What’s at Stake

Given the comprehensive nature of health reform legislation, every aspect of health care is at stake.

Steps to Consider

Providers, plans, pharmaceutical manufacturers, device makers, and all in the health sector or affected by the health sector, including health care consumers, should continue to carefully monitor the progress of the health reform debate and evaluate the impact of the various proposals. 

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The Facts

While the reform plan unveiled on November 18, 2009, by Senate Majority Leader Harry Reid (D-NV) contains revenue-raising provisions that closely track those of the Senate Finance Committee bill put forth by Chairman Max Baucus (D-MT), the Reid bill also includes new revenue raisers not seen in earlier versions of either Senate or House reform proposals. Like the Senate Finance bill, Reid’s bill relies most heavily on a 40 percent excise tax on “Cadillac” policies. By contrast, the House bill would impose no such excise tax, instead relying primarily on a 5.4 percent income tax hike on high-earning individuals. Reid’s bill incorporates all three sector excise taxes from the Senate Finance bill, with annual levies of $2 billion on medical device manufacturers, $6.7 billion on health insurers, and $2.3 billion on branded pharmaceutical manufacturers. By contrast, the House bill imposes only a 2.5 percent excise tax on medical devices. The Reid Bill has several provisions in common with both the House and Senate Finance bills:

• Placing new restrictions on Health Savings Accounts, including capping them at $2,500 per year
• Eliminating the deduction for expenses allocable to Medicare Part D prescription drug plans for retirees
• Requiring information reporting on most payments over $600 to corporations

Reid’s bill adds several new revenue raisers present in neither the Senate Finance nor the House bills: 

• A 0.5 percent increase in the Medicare tax rate on taxpayers earning over $200,000 (or $250,000 for joint-filers)
• A 5 percent excise tax on elective cosmetic surgery
• Denying a deduction for compensation exceeding $500,000 for executives at insurers

Unlike the House Bill, the Reid bill lacks provisions codifying the economic substance doctrine, repealing the reform of interest allocation for multinationals, limiting tax treaty benefits or excluding “black liquor” from the cellulosic biofuel tax credit.

What’s at Stake

The tax impact of the Senate bill will fall mostly on health-care-related sectors, while the House bill would have more effect on businesses far removed from health care. 

Steps to Consider

All businesses should carefully monitor the progress of the health reform debate and consider the possible impact of competing revenue raising proposals.

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The Facts

Neither the House nor the Senate will pass health reform legislation before adjourning for the summer recess.  Despite a breakthrough deal yesterday with fiscally conservative Democrats that allowed the House Energy and Commerce Committee to resume markup of its health reform bill on July 30, 2009, health reform legislation will not be considered on the House floor until September, at the earliest, according to House leadership.  Meanwhile, Senate Majority Leader Harry Reid (D-NV) announced July 23, 2009, that health reform legislation also will not be considered on the Senate floor until after the summer recess.  The Senate delay is intended to give a bipartisan group of Senate Finance Committee members additional time to negotiate a bipartisan health reform proposal.  Finance Committee Chairman Max Baucus (D-MT) announced July 29, 2009, that the group of six Finance Committee senators working behind closed doors are nearing an agreement.  Chairman Baucus hopes for a near-term agreement from the bipartisan talks, which could allow for a public committee markup of the agreement the week of August 3, 2009, the final week the Senate is scheduled to be in session prior to recess.

What’s at Stake

Passage of systemic health reform, which is expected to make sweeping changes to the health sector, is at stake.  While the president had earlier pressed for passage by the House and Senate before the August congressional recess, the president's rhetoric has recently recalibrated and now both he and congressional leaders speak of passing health system reform by the end of the year.  However, these delays will make completion of health reform legislation this year a challenge.  An enormous amount of work remains before a bill can be ready for the president's signature, and there now will be a short amount of time in which to complete that work.

Steps to Consider

Watch for the emerging Finance Committee bipartisan agreement and evaluate how its concepts would affect your operation.  Contrast the impact of the bill approved by the Senate HELP Committee and House committees and the expected Finance bipartisan agreement.  Assess the impact of the bills working their way through the House.

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