• Historic Health Care Reform Bill to be Signed into Law
  • March 31, 2010 | Author: Laura E. Loeb
  • Law Firm: King & Spalding LLP - Washington Office
  • On Sunday, March 21, 2010, the House by a vote of 219-212 approved the health care reform legislation passed by the Senate on December 24, 2009, H.R. 3590. No Republican voted for passage of the legislation in either the House or the Senate. The Senate bill was approved in the Senate by 60 votes prior to the Democrats losing the seat in Massachusetts.

    The President needed to issue an Executive Order clarifying that no federal funds would be used for abortion coverage in order to obtain the votes of eight pro-life House Democrats at the last minute. Also on Sunday, March 21, the House narrowly approved budget reconciliation legislation that makes changes in the Senate-passed health care reform bill which were necessary to persuade a majority of the House to vote for the health care reform legislation.

    The changes mandated by the legislation that will take effect in 2010 relate primarily to coverage of the uninsured. For example, beginning shortly after the President signs the reform legislation into law, insurers will not be able to have annual or lifetime dollar caps on how much a health plan will cover. Also $5 billion has been set aside for high risk pools to provide temporary coverage to the uninsured with pre-existing conditions until the health care exchanges are up and operating in 2014.

    The Senate now must approve the budget reconciliation bill passed by the House. In the Senate, under the Byrd rule, named after Senator Robert Byrd (D-WV), only provisions that have an impact on the budget and that do not alter Social Security may be included in a budget reconciliation bill. Sixty votes are needed to waive a Byrd rule point of order, and the Democrats have only 59 members. Thus, if the Parliamentarian decides that any provision in the bill violates the Byrd rule, it will likely be struck from the bill.

    This would mean that the entire reconciliation bill would have to be passed again by the House in there is even a single word change in the budget legislation before the President could sign that bill into law. However, the health care reform bill itself will be signed into law regardless of the fate of the reconciliation legislation. President Obama is expected to sign the health care reform legislation on Tuesday.

    Perhaps the major provision in the reconciliation package most susceptible to being dropped under the Byrd rule is the change to the tax on high-cost insurance policies, the so-called Cadillac policies. This change was needed to maintain labor union support of health care reform. The issue being decided by the Senate Parliamentarian is whether this provision would affect the Social Security Trust Fund in violation of Senate rules for the reconciliation process.

    Assuming that the Parliamentarian rules that this provision should remain, 20 hours of debate will begin on Tuesday, March 23, where Republicans are expected to object to further provisions that they believe violate the Byrd rule. Thus, the Senate is not expected to finish its voting on the budget reconciliation legislation until Friday or Saturday.

    Significant provisions in the budget reconciliation bill include:

    • Improves the insurance subsidies for individuals with incomes up to 400% of the federal poverty level;
    • Reduces the fine that individuals who choose to remain uninsured pay;
      Improves the transition to the employer responsibility for providing insurance for employers with 50 or more workers;
    • Closes the Medicare Part D prescription drug “donut hole” by providing a $250 rebate for all Medicare Part D enrollees who enter the donut hole in 2010 and then building on the pharmaceutical manufacturers' 50% discount on brand name drugs beginning in 2011 to completely closing the donut hole with 75% discounts on brand name and generic drugs by 2020;
    • Freezes Medicare Advantage payments in 2011 and, beginning in 2012, reduces Medicare Advantage benchmarks relative to current levels;
    • Ensures Medicare Advantage plans spend at least 85% of revenue on medical costs or activities that improve quality of care, rather than on profit and overhead;
    • Changes to December 31, 2010 the date after which physician ownership of hospitals to which they self-refer is prohibited and provides a limited exception to the growth restrictions for grandfathered physician-owned hospitals that treat the highest percentage of Medicaid patients in their county (and are not the sole hospital in a county);
    • Sets the assumed utilization rate at 75% for the practice expense portion of advanced diagnostic imaging services;
    • Strikes the provision for a permanent 100% federal matching rate for Nebraska for the Medicaid costs of newly eligible individuals and provides federal Medicaid matching payments for the costs of services to newly eligible individuals at the following rates in all states except expansion states: 100% in 2014, 2015, and 2016; 95% in 2017; 94% in 2018; 93% in 2019; and 90% thereafter.
    • Requires that Medicaid payment rates to primary care physicians for furnishing primary care services be no less than 100% of Medicare payment rates in 2013 and 2014 (the first year of the Senate bill’s Medicaid coverage expansion to all individuals with incomes under 133% of poverty). Provides 100% federal funding for the incremental costs to States of meeting this requirement.