Health Care Reform Memo - Special Edition: September 10, 2009

A Deloitte Center for Health Solutions publication

Health Care Reform Memo - Special Edition: September 10, 2009 The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the new administration and implications for the C-suite and various stakeholder groups.

Re-cap: President Obama’s address on health reform to joint session of Congress Wednesday, September 9

President Obama provided details about his proposed $900 billion health reform bill in a 40 minute address carried on all major network and cable news outlets. The speech had three sections:

Section One: The White House plan to cover the uninsured while reducing costs with a deficit neutral plan:

The President proposed the following major elements of his plan:

Individual mandates for individuals to purchase insurance with subsidies to assist lower income individuals (up to 300 percent of the federal poverty level) to purchase
An employer pay-or-play mandate for large employers
A new commission to identify areas of waste, fraud, and inefficiency to reduce long-term costs of Medicare
An insurance exchange for small businesses and individuals to facilitate shopping for low-cost insurance plans
Insurance industry reforms including elimination of pre-existing conditions, limits on annual and lifetime out-of-pocket payments by individuals, preclusion of cessation of coverage by insurance companies for sick/injured enrollees, and mandatory coverage of preventive health services (colonoscopy, mammography, etc.)
A public option that would be used to stimulate competition among plans in communities/states where competition is minimal and premiums costly (the President alluded to the state of Alabama where 90 percent are covered by one plan). Notably, the President referred to the public option as a means to an end of increasing access to affordable insurance for the underinsured and uninsured, and for small businesses

In outlining his plan, the President addressed three “distortions” that have been the focus of debate:

Coverage for illegal immigrants: The president indicated his plan did not offer coverage or subsidies for illegal immigrants
Federal funding for abortion: The President said no federal money will be used to fund abortions, and current laws (conscience provisions for physicians, the Hyde amendment covering Medicaid enrollee abortions) would remain in place
Death panels: the President called the “death panel” a “lie” suggesting “nothing in my bill puts a bureaucrat from government or an insurance company between you and the care you need.”

The President challenged parties to refrain from misinformation and said he would “call them out”.

Section Two: Paying for the President’s plan

President Obama’s reform bill is estimated to cost $900 billion over the next decade. Its funding will come from (1) improved efficiency and reduced waste in the current system, (2) reduced payments to insurance companies for Medicare Advantage plans, (3) taxes on insurance companies for “Cadillac” benefits plans, and (4) savings from pharmaceutical companies to offset benefits to seniors for prescription drug coverage. Notably, the President reinforced his goal that the majority of funding for the reforms would come from efficiency gains and waste reduction, and acknowledged that potential savings from malpractice reforms would be studied and pilots expanded. The President indicated a one-tenth reduction in health spending each year would reduce the deficit by $4 trillion by the end of the decade.

Section Three: The moral imperative of health reform

Calling attention to the health care legacy of recently deceased Senator Ted Kennedy in seeking universal coverage as a “moral issue” and a test of the “character of our country”, the President‘s closing comments called health reform an imperative this year. In first person declaratives, he reinforced his commitments—

“Too many are counting on us… We came to this chamber to shape the future… Sometimes government must step up.”

Observations

The tone of the President’s remarks was sharply critical of the insurance industry, more so than of any other sector in the current system.

The major networks (ABC, NBC and CBS) returned to regular programming at 9 p.m. EDT without additional commentary.

Commentators on cable news seemed to agree the speech would serve to shore up the Democratic base necessary for a Fall vote on a reform bill, but would likely not garner any Republican votes.

The President did not mention a timeline for a bill. The only reference to a timeline was a reference to the Senate Finance Bill (Baucus) that would be introduced next week.

More to come next Monday, September 14 in our next health reform memo.