Senate Passes Health Care Bill; Reconciliation Will Bear Final Benefits

On a 60-39 party line vote, the U.S. Senate early Thursday morning passed a bill that will extend health care coverage to more than 30 million Americans. Congress must now reconcile an earlier bill passed by the House with the newly-passed Senate measure.

Health care industry and policy experts say any bill that gets more people insured is good for health care providers and the account receivable management professionals who work for them. 

Health care providers, for example, would have to deal with less bad debt. And medical debt collectors would be able to better identify and locate debtors through the paperwork associated with their doctors and insurers. The American Medical Association has even endorsed the Senate bill. 

But the differences between the House and Senate bills will have to be merged and passed before President Barack Obama can sign it into law. Some things lawmakers already agree on include a requirement that individuals get insurance, barring insurers from denying coverage due to pre-existing conditions, and blocking insurers from charging higher premiums because of gender or medical history. Each bill also limits the total out-of-pocket expenses policyholders must pay annually.

However, the House and Senate have drastically different solutions for paying for coverage delivery and the subsidies that will be offered to low and middle income families. Health care policy experts say that is where the real compromise must occur if the legislation is to become reality.

“It’s less about the benefit package, but what will be the level of subsidies for low to middle income people trying to buy insurance and how it will be paid for,” said Larry McNeely, health care advocate for U.S. PIRG.

The House bill calls for a government health care insurance option and imposes an income tax surcharge of 5.4% on individual income of over $500,000 a year and on families earning more than $1 million annually.  The Senate would increase the Medicare payroll tax on individuals who earn more than $200,000 a year and couples earning more than $250,000 from 1.45 percent to 2.35 percent.  The Senate bill also imposes a 40 percent tax on health care insurance plans valued at more than $8,500 pre year for individuals and $23,000 for families, as well as a 10 percent tax on indoor tanning salon treatments.

Nina Owcharenko, Deputy Director of the Center for Health Policy Studies at the Heritage Foundation, believes neither funding plan is optimal. In her latest blog, she said to fund health care reform Democrats choice is to either “soak the rich or tax everybody.”

Owcharenko said the House’s 5.4 percent tax is structured in a way that over time more and more Americans will be hit by the tax. “Small business owners would be particularly affected,” she said. Meanwhile, the Senate’s financing solution includes a new premium tax on all insurers that will be passed on to all Americans with private insurance, she said.

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McNeely, however, argues that the legislation will bring down costs and lead to more choice for consumers.  He said the Senate bill, in particularly, strikes a good balance by allowing insurers to sell insurance across state lines through the state run insurance exchanges.

“It doesn’t allow anarchy of junk insurance being sold across state lines,” McNeely told Insidearm.  “But it does allow individual and small businesses in the exchange to access new multi-state plans much like the federal employees benefit plans in states that, up to this point, are dominated by one or two insurers and that does increase choice.”  

McNeely doubts the public insurance plan option that the House included in its bill will survive the conference committee that will have to reconcile the two bills. He said a Senate proposal to create an independent payment advisory board could be a bigger sticking point for some members of Congress.

Proposed in the Senate bill, the advisory board would be comprised of doctors and health care policy experts appointed by the President and confirmed by the Senate. Its role in ongoing health care reform would be to recommend to Congress and the President ways to cut costs out of the medical system.  

McNeely says language in the senate bill allows the President to implement the board’s recommendations if Congress doesn’t act in a timely manner on the board’s recommendations or provide alternatives that provides equal or better savings. The main benefit of the board is that Congress wouldn’t be able to delay future action to bring down medical costs, he said.  

“We would not be in the mess we are in today if business as usual in Congress had been enough to lower health care cost. We need this independent board to help make the tough decisions that it will take to bring down costs,” McNeely said.

Many health care policy experts expect some Democrats in the House will have to accept final legislation to essentially mirror the Senate’s bill if it is to pass that chamber again. If it does, only a simple majority vote in the House and Senate are needed for the merged bills to become law.

"There are going to be a few tweaks but I’m sure it’s going to look like the Senate bill on most issues, especially on the public option and abortion," Dean Baker of the Center for Economic and Policy Research told the Financial Times. "But there is too much at stake here. This will be a huge achievement."