Legislative Bulletin: HELP Committee Draft Legislation: The “Most Liberal Approach to Health Reform”

On June 9, 2009, Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Ted Kennedy (D-MA) and Sen. Chris Dodd (D-CT) introduced draft health reform legislation, the Affordable Health Choices Act.  The Senators plan a HELP Committee hearing on the legislation on June 11, followed by a markup scheduled to begin on June 16.

“The bill…is by far the most liberal approach to health-care reform being discussed in Washington and potentially is quite expensive.  It does not identify how the expansion of health coverage would be paid for…”

—Ceci Connelly, The Washington Post, June 7, 2009

Executive Summary: The 615 pages of the Affordable Health Choices Act represent a clear vision of government-run health care—one defined by federal regulation, mandates, myriad new programs, and higher federal spending.  The bill would ensure strong control by government bureaucrats over the United States health care system; Members may note that the bill omits a “Declaration of Rights” included in a widely circulated draft made available last week—perhaps because the bill’s authors understand that under the bill’s provisions federal bureaucrats, not patients and doctors, will end up controlling Americans’ personal health decisions.  Many Members may further disagree with the bill’s title, as additional federal mandates and bureaucratic diktats are unlikely to make health care more “affordable,” instead raising costs appreciably for all Americans.  Lastly, Members may note that while the bill’s provisions are rumored to cost as much as $2 trillion, the bill’s only provision to fund this federal spending is a tax on individuals who do not purchase insurance; pay-for provisions within the jurisdiction of the Finance Committee may be added at a later date.

Highlights of major provisions likely to cause Member concern include:

• Insurance regulations that would raise costs for all Americans, particularly young Americans, and confine choice of plans to those approved by a board of bureaucrats;
• Price controls on health insurance companies that allow bureaucrats in the Department of Health and Human Services to force carriers to provide “rebates,” and could impede patient access to important services just because those services do not provide a direct clinical benefit;
• Mandates on insurance carriers to utilize reimbursement structures similar to Medicare—which would tie private business practices to the decisions of a bureaucracy Senate Finance Committee Chairman Baucus has termed “hidebound, not very creative, a crank-turning bunch of folks;”
• Additional federal mandates that would significantly erode the flexibility currently provided to employers—and could result in firms dropping coverage;
• Expansion of Medicaid—fully paid for by the federal government for the first five years—to all individuals with incomes below 150 percent of the Federal Poverty Level, many of whom have existing private health coverage;
• Establishment of bureaucrat-run health Gateways that would likely lead to the elimination of the private health insurance market outside the Gateway—and could permit a single-payer approach that bans all private health insurance from being sold inside the Gateway;
• Creation of a Medical Advisory Council that would empower federal bureaucrats to impose new mandates—including a mandate to obtain and provide abortion coverage—on individuals and insurance carriers;
• Taxation of individuals who do not purchase health insurance that meets the diktats of the bureaucrats on the Medical Advisory Council—with the amount of the tax to be set by federal bureaucrats in the Treasury Department;
• Potential new taxes on employers who cannot afford to provide their workers health insurance, which could result in as many as 1.6 million lost jobs;
• “Low-income” health insurance subsidies to a family of four making more than $110,000;
• Creation of a government-run health plan—the details of which remain to be released—that would “compete” with private insurance and could lead to as many as 120 million Americans losing their current coverage;
• Establishment of a new federal entitlement to long-term care insurance—into which all working Americans would automatically be enrolled—at a time when Medicare is scheduled to be insolvent by 2017;
• Regulation of restaurant menus and vending machines that will increase costs to business and disclose nutrition “facts” which may or may not accurately reflect restaurant meals as actually prepared for customers; and
• Expanded price controls on pharmaceutical products that will discourage companies from producing life-saving breakthrough treatments.

Summary: The HELP Committee draft contains six titles covering matters within its jurisdiction; as noted above, additional policies—including how the as much as $2 trillion estimated cost of the bill will be paid for—are expected to be considered by the Finance Committee.

Title I—Coverage for All Americans

This title would expand existing entitlements and create new entitlements—including a government-run health plan into which physicians would be coerced into participation—in order to cover all Americans.  The title would also impose new federal restrictions on health insurance providers, creating a potentially confusing patchwork of regulations, as well as new mandates on individuals to purchase coverage approved by a board of federal bureaucrats, and on employers to finance that coverage.  Details of the title are as follows:

Insurance Regulations:  The bill would require all carriers in both the individual and group markets to accept all applicants, regardless of age or health status, though carriers may restrict such acceptance to defined “open enrollment” periods.  In addition, carriers could vary premiums solely based upon family structure, geography, benefit values, and age; insurance companies could not vary premiums by age by more than 2 to 1 (i.e., charge older individuals more than twice younger applicants).  As surveys have indicated that average premiums for individuals aged 18-24 are nearly one-quarter the average premium paid by individuals aged 60-64, some Members may be concerned that the very narrow age variations would function as a significant transfer of wealth from younger to older Americans—and by raising premiums for young and healthy individuals, may discourage their purchase of insurance.

Price Controls:  The bill requires carriers to submit annual reports to the Secretary listing the percentage of total premium revenue spent on 1) clinical services; 2) “activities that improve health care quality;” and 3) “all other non-claims costs.”  The bill requires carriers to submit premium rebates to enrollees if the carrier’s percentage of non-claims costs exceed a threshold determined by the Secretary “based on the distribution of such percentages across such carriers.”  Some Members may view this provision as a government-imposed price control, one that could be viewed as ignoring the advice of White House advisor Ezekiel Emanuel, who wrote that “some administrative [i.e. non-claims] costs are not only necessary but beneficial.”  Some Members may further be concerned that the bill would grant sole authority to the Secretary to compel carriers to deliver rebates to the federal government—and allows the Secretary to determine the appropriate level of rebates retroactively.

Benefit Mandates:  The bill requires plans to “develop and implement a reimbursement structure” that includes incentives for chronic care, patient safety, prevention of hospital readmissions, child health measures, and “cultural and linguistically appropriate care” in a manner that “substantially reflects” Medicare payment policy, and requires the Secretary to issue regulations regarding private insurance carriers’ reimbursement policy.  Particularly given Senate Finance Committee Chairman Baucus’ comments calling employees at the Centers for Medicare and Medicaid Services (CMS) “hidebound, not very creative, a crank-turning bunch of folks,” some Members may be concerned by the concept of the bureaucrats dictating business practices to private entities.

The bill requires plans to provide no more than “minimal” cost-sharing requirements for preventive care rated highly by the United States Preventive Services Task Force—a board of federal bureaucrats—as well as other screenings and immunizations.  The bill also includes a so-called “slacker mandate” requiring carriers to offer coverage to dependent children under 27 years of age, as well as a prohibition on annual or lifetime limits on coverage.  As more than half of all individuals currently enrolled in group health plans have some form of lifetime maximum on their benefits, some Members may be concerned that these additional mandates will increase costs and discourage the take-up for insurance.

Status of Current Coverage:  The bill states that the new restrictions and regulations shall not apply to coverage active on the date of the bill’s enactment.  However, some Members may be concerned that the bill would create significant dislocation for those individuals undergoing any future job changes, as these individuals would need to obtain new coverage meeting the bureaucratic standards established in the bill.

ERISA Pre-Emption and New Federal Mandates:  The bill includes a “technical amendment” applying the insurance restrictions noted above to all group health plans covered by the Employee Retirement Income Security Act of 1974 (ERISA).  Some Members may be concerned that these additional federal mandates would raise costs and so encourage employers to drop their current coverage—undermining the promise that “If you like the coverage you have, you can keep it.”

Medicaid Provisions:  While the Finance Committee retains jurisdiction over Medicaid, the HELP Committee draft contains a series of assumptions regarding a Medicaid expansion.  Specifically, the draft assumes that existing populations would remain eligible—and states would be required to cover these individuals—while Medicaid would simultaneously be expanded to include all individuals with incomes below 150 percent of the Federal Poverty Level (FPL, $33,075 for a family of four in 2009).  The expansion would be fully paid for by the federal government until 2015, at which point the federal share would phase-down until reaching the existing Federal Medical Assistance Percentage (FMAP) formula in 2020.  States that have already expanded their Medicaid programs would be eligible for an increased FMAP.

Some Members may be concerned by both the cost and scope of this unprecedented expansion of Medicaid to millions more Americans.  Some Members may believe the 100 percent federal match through 2015 would provide a strong disincentive for States to take appropriate action to control costs, as well as fraud and abuse, in their Medicaid programs.  Members may also note that a plurality of individuals (44 percent) with incomes between one and two times the poverty level have private health insurance; expanding Medicaid to 150 percent FPL would provide a strong incentive for these individuals to drop their current coverage and enroll in the government-run plan.  Moreover, given Medicaid’s history of poor beneficiary access to care, some Members may believe that Medicaid itself needs fundamental reform—and beneficiaries need the choice of access to quality private coverage rather than a government-run plan.

Health Gateways:  The bill authorizes grants to establish State health Gateways to facilitate the purchase of insurance.  Gateways would be established by one or more States, and funded by surtaxes on plans of up to 3 percent of premiums; a State may establish multiple Gateways within a State, but each must be confined to its own geographic area.  If a State does not establish its own Gateway, and bring its insurance laws into compliance with the federal statute within four years, the Secretary would be required to establish that State’s Gateway, and the insurance market changes established in the federal statute would take effect regardless.  Some Members may be concerned that this provision could be viewed as an unconstitutional breach of State sovereignty on a subject (i.e., insurance regulation) which has generally been regulated at the State level.

The bill would permit both eligible individuals—defined as those without access to employer-sponsored coverage, unless such coverage does not meet the Medical Advisory Council’s criteria for either cost or affordability—and eligible employers—defined as those with fewer than 10 employees—to purchase coverage from Gateways.  The Gateway would be required to include access to the government-run plan for all participants.  The bill would authorize grants for Gateways to contract with certain navigators (e.g., trade and industry organizations) to increase awareness about plan choices.

Gateways would establish ways, using the Internet and other methods, to make information about plan choices available to individuals—including the availability of government programs like Medicaid and the State Children’s Health Insurance Program (SCHIP).  Gateways would require carriers to consider each enrollee “to be a member of a single risk pool,” but would further facilitate risk adjustment among high-risk and low-risk plans; the Secretary would issue guidance on risk adjustment, including “criteria and methods similar to the criteria and methods utilized” for the Medicare Part D prescription drug benefit.

Gateways would be required to certify health plans as “qualified,” such that plans do not “employ marketing practices that have the effect of discouraging the enrollment in such plan by individuals with high health needs,” “ensure a wide choice of providers,” meet certain standards with respect to plan disclosure and appeals procedures, include a minimum benefit package determined by the Medical Advisory Council discussed below, and have a reimbursement structure that meets federal regulatory guidelines.  Gateways may permit plans to offer coverage that does not meet other benefit mandates, provided that the coverage meets the standards set by the Medical Advisory Council.  However, the Gateway could refuse to certify any plan meeting the other requirements, as it must also determine that “making the plan available…is in the interests of qualified individuals and qualified employers.”

Some Members may be concerned at the levels of bureaucracy established by the bill’s Gateway structure.  Bureaucrats would be required to approve plans’ reimbursement structure, benefit package, marketing plans and practices, and consumer transparency—and could still reject the plan’s inclusion if the bureaucrats running the Gateway felt it was not “in the interests of qualified individuals.”  Some Members may also note that there is no provision prohibiting Gateways from banning all private plans from participating, in order to create a single-payer system where the government-run plan is the only available option.

Medical Advisory Council:  The bill establishes a Medical Advisory Council, with members appointed by the Secretary, to make recommendations on minimum required benefit packages, as well as affordability for purposes of the individual mandate.  The Council’s recommendations would be binding unless Congress passed—and the President signed—a joint resolution disapproving its report.  The bill requires the Council to consider nine categories of “essential health care benefits”—including ambulatory and emergency services, hospitalization, maternity care, mental health care, prescription drugs, rehabilitative and laboratory services, preventive services, and pediatric services—and directs the Council to ensure that the actuarial value of the benefit package “is equal to the actuarial gross value of the benefits provided under a typical employer plan.”  The bill also requires the Council to disregard single-disease policies, as well as those with annual out-of-pocket limits exceeding those for Health Savings Accounts ($5,800 for an individual and $11,600 for a family in 2009).  The bill permits “the application of different criteria with respect to young adults.”

Some Members may be concerned that the Council would result in federal bureaucrats having undue influence on the definition of insurance for purposes of the individual mandate.  Members may also be concerned that the Council could evolve into the type of Federal Health Board envisioned by former Senator Tom Daschle, who conceived that such an entity could dictate requirements that private health plans reject certain clinically effective treatments on cost grounds.  Finally, some Members may be concerned that the Council could be used as a venue to require all Americans to obtain health insurance coverage of abortion procedures—a finding by unelected bureaucrats that would significantly increase the number of abortions performed nationwide.

Plan Tiers; “Low-Income” Subsidies:  The bill creates three tiers of cost-sharing—the lowest tier would have an actuarial value of 76 percent and maximum annual out-of-pocket costs not to exceed those for Health Savings Account plans ($5,800 for an individual and $11,600 for a family in 2009); the middle tier would have an actuarial value of 84 percent and maximum out of pocket costs half of the low tier plan; and the highest tier would have an actuarial value of 93 percent and maximum out of pocket costs no more than 15 percent of the low tier plan. (Only Health Maintenance Organizations would likely qualify for the high tier option.)  Some Members may be concerned that these benefit tiers would raise costs by not allowing for sufficient plan variation, as seven in ten participants in Commonwealth Choice plans in Senator Kennedy’s home state of Massachusetts are enrolled in plans with actuarial values below 76 percent that would therefore not meet the coverage standards.

The bill requires the Secretary to subsidize individuals’ premiums based on income, provided said individuals enroll through the Gateway—subsidies are provided to the Gateway, which in turn subsidizes enrollees.  Individuals with incomes under 500 percent FPL ($110,250 for a family of four in 2009) would be eligible for subsidies to ensure premiums do not exceed 10 percent of income; the level of subsidies would increase down the income ladder, such that individuals with incomes under 150 percent FPL would not pay more than 1 percent of their income in premiums.  Subsidies would be capped at the weighted average annual premium of the three lowest-cost plans available.  Many Members may be concerned that the bill’s definition of “low-income”—more than twice the median household income of $50,233—would raise costs to the federal government.  Some Members may also be concerned that credits would only be provided through Gateways, and not to individuals purchasing coverage on the private market—a factor which would strongly tip the playing field in favor of the bureaucrat-regulated Gateways.

The Secretary would delegate authority for eligibility determinations to Gateways in most instances, and would require individuals to self-report a change in status to the Gateway.  Some Members may be concerned that self-reporting could result in a significant amount of fraud and abuse with respect to available subsidies.  Some Members may further be concerned that, despite the bill’s supposed prohibition on payments to individuals not lawfully present, devolution of eligibility determinations to Gateways could result in large numbers of undocumented aliens obtaining federal welfare benefits—as States would have little incentive to scrutinize eligibility for benefits being funded by the federal government.

Small Business Credits:  The bill provides a limited subsidy program for small businesses offering coverage.  The program would subsidize firms with fewer than 50 employees and an average wage of under $50,000 that pay at least 60 percent of workers’ insurance premiums.  Subsidies would total $1,000 for individuals and $2,000 for families—more if firms pay a higher share of workers’ premiums—and would be based upon firm size.  Firms could receive the credit for no more than three years.

Individual Mandate:  The bill would impose a new tax on individuals who do not obtain “qualified health coverage,” and would grant to the Treasury Secretary the authority to establish the level of taxation, provided the Secretary “shall seek to establish the minimum practicable amount that can accomplish the goal of enhancing participation.”  The bill defines “qualified health coverage” as those policies sold within the Gateway, as well as those policies that comply with the Gateway’s certification criteria, “such other requirements as an applicable Gateway may establish,” and comply with the premium taxes used to fund the Gateway.  Thus, although an individual could purchase “qualifying health insurance” outside the Gateway, it would have to meet all the bureaucratic mandates established by the Gateway itself—in which case few individuals or plans would be likely to expend the effort to purchase coverage outside the Gateway.  Some Members may view these provisions as a de facto attempt to abolish a private market for health insurance, by taxing those who dare to purchase coverage that does not meet the diktats established by the bureaucrats governing the Gateway and the Medical Advisory Council.

The mandate would not apply to certain individuals, including members of “a federally recognized Indian tribe,” those exempted under the Medical Advisory Council’s affordability guidelines, and other individuals “for whom [the tax] would otherwise represent an exceptional financial hardship, as determined by the Secretary.”  Some Members may agree with then-Senator Barack Obama, who in a February 2008 debate pointed out that in Massachusetts, the one state with an individual mandate, “there are people who are paying fines and still can’t afford [health insurance], so now they’re worse off than they were.  They don’t have health insurance and they’re paying a fine.”  Some Members may also be concerned that unlike the Massachusetts reform plan, the bill contains no religious exemption for the mandate.

Employer Mandate:  The legislative draft has under this section a comment noting “policy under discussion.”  However, press accounts had earlier reported that the HELP Committee was looking to raise as much as $300 billion in revenue by taxing employers who do not offer coverage.  Given a National Federation of Independent Business study suggesting an employer mandate could result in the loss of 1.6 million jobs, some Members may oppose any effort to impose new taxes on businesses, particularly during a recession.

Government-Run Plan:  The legislative draft has under this section a comment noting “policy under discussion.”  However, earlier press accounts reported that the Committee intended to include a “public option” that would reimburse providers at Medicare payment rates plus 10 percent, and would further require providers participating in Medicare to accept enrollees in the government-run plan.  Given estimates from the Lewin Group that as many as 120 million individuals could lose access to their current coverage under a government-run plan—and that a government-run plan reimbursing at the rates contemplated by the HELP Committee would actually result in a net decrease in provider reimbursements, even after accounting for the newly insured—many Members may oppose any effort to include a government-run plan in any health reform legislation.

Access to Services:  The bill includes several provisions related to community health centers, reauthorizing $18.2 billion in appropriations over four years—a significant increase from the $13.3 billion, five-year reauthorization that passed just last year (P.L. 110-355).  The bill would also more than triple funding for the National Health Service Corps, authorizing more than $4 billion over six years.  Some Members may be concerned by the significant increase in authorization levels given the federal government’s expected deficit of nearly $2 trillion this year.

Reinsurance for Pre-Medicare Retirees:  The bill would establish a $10 billion Retiree Reserve Trust Fund to finance reinsurance payments to employers (including multiemployer and other union plans) who offer coverage to retired workers aged 55 to 64 who are not eligible for Medicare.  The Trust Fund would pay 80 percent of claim costs for all retiree claims exceeding $15,000, subject to a maximum of $90,000; payments must be used to reduce overall insurance premiums and “shall not be used for administrative costs or profit increases.”  Some Members may be concerned that such reinsurance programs, by providing federal reimbursement of high-cost claims, would serve as a disincentive for employers to monitor the health status of their enrollees.

New Long-Term Care Entitlement:  The bill would create a new entitlement to long-term care services, financed by a new Trust Fund generated from beneficiary premiums.  The Trust Fund would be excluded from the federal budget for purposes of both the President and Congress, and subject to a “lock-box” that would prohibit any legislation from diverting monies from the Trust Fund without the consent of 3/5 of the Senate.  Some Members may be concerned by the concept of creating a new, expansive federal entitlement program when Medicare itself is not actuarially sound and the Medicare Hospital Insurance Trust Fund is scheduled to be insolvent by 2017.

The bill would require the Secretary to develop actuarially sound plan benefit designs.  The plan could have a premium of no more than $65 per month, and could vary by age (but not among individuals of the same age).  Individuals with incomes below the poverty level and employed students under age 22 would pay a maximum premium of $5 per month, subject to a self-attestation form verifying their status.  Premiums would not increase so long as the individual remained enrolled in the program (or the program had insufficient reserves for a 20-year period of solvency).  Individuals’ eligibility for benefits would vest after five years.

The minimum cash benefit would be $50 per day, with amounts scaled for levels of functional ability—and benefits not subject to lifetime or aggregate limits.  In the case of beneficiaries enrolled in Medicaid, the beneficiary would receive either 5 percent (for institutionalized patients) or 50 percent (for patients in home and community-based services) of the cash benefit, with the balance applied to the cost of coverage, and Medicaid providing secondary payments.  Benefits would also include advocacy services and advice and assistance counseling in addition to the cash benefit.

All individuals over 18 receiving wage or self-employment income would be automatically enrolled in the program; premiums would be automatically deducted from workers’ wages, and firms would be eligible for a tax credit equal to 25 percent of the administrative cost of withholding.  Individuals “shall only be permitted to disenroll from the program during an annual disenrollment period.”  Some Members may be concerned that the opt-out provisions, coupled with the coercive nature of the disenrollment requirements, would effectively undermine a working market for long-term care insurance by diverting individuals into the government-run program.

Benefit eligibility would be determined by State Disability Determination Services (DDS) within 30 days; “an application that is pending after 45 days shall be deemed approved.”  Particularly given the backlog in processing Social Security disability claims using the same DDS system—where the time necessary to process an average claim has grown to 106 days—some Members may be concerned that making all claims pending 45 days eligible for benefits would constitute a recipe for the approval of virtually all long-term care claims, including many dubious or fraudulent ones.

Title II—Quality and Efficiency

This title includes a variety of programs, studies, and grants intended to improve the quality of U.S. health care.  While agreeing with the general goal of improving health delivery and outcomes, some Members may be concerned by the bill’s approach of relying on lists of measures, grant programs, and additional federal spending and regulatory requirements as a way to “cure” health care.  Specific programs and measures include:

National Strategy; Quality Measures:  The bill requires the Secretary to establish a national strategy to improve health delivery, taking into account factors like care of patients with chronic diseases, health disparities, gaps in quality outcomes, and the way federal payment policy can influence quality.  The bill requires an annual report on progress made in achieving the strategy, and directs the Agency for Healthcare Research and Quality (AHRQ) to award grants to develop quality measures associated with same.  Quality measures would be endorsed by multi-stakeholder groups, and publicly reported on a risk-adjusted basis.

Quality Improvement Grants:  The bill establishes a Patient Safety Research Center within AHRQ to develop and disseminate best practices and authorizes grants to provider groups and other entities to provide technical expertise.  The bill also authorizes grants to develop multidisciplinary “health teams…to support primary care practices” and improve care coordination, including chronic care management; primary care providers would “provide a care plan to the care team for each patient participant”  and work with the team “to ensure integration of care.”  The bill further authorizes grants to implement medication therapy management programs, develop innovative emergency care and trauma systems, and support trauma centers with large uncompensated care costs.

The bill requires the Secretary publicly to disclose hospitals’ rates of preventable readmissions for all entities receiving funds under the Public Health Service Act, and further requires the Secretary to work with outside entities to develop patient decision aids to educate patients about their treatment options.  The bill directs the Food and Drug Administration (FDA) to study “whether the addition of standardized, quantitative summaries of the benefits and risks of drugs” in a uniform labeling format would improve health decision making, and authorizes FDA to implement such changes if the Department determines they would be effective.  The bill establishes a Center for Health Outcomes Research and Evaluation to conduct research and provide public access to outcomes information and authorizes grants for quality improvement and patient safety training demonstration projects.  The bill creates separate Offices of Women’s Health within the Department of Health and Human Services, the Centers for Disease Control,  AHRQ, the Health Resources and Services Administration, and FDA to provide advice on issues relating to female health and wellness and authorizes grants to organizations to promote women’s health.

Administrative Simplification:  The bill requires the Secretary to adopt within two years standards “for the electronic exchange and use of health information for purposes of financial and administrative transactions,” and requires the Secretary to promulgate a final rule establishing a National Health Plan Identifier within one year of enactment.

Title III—Health and Wellness

The bill contains various provisions, grants, and programs designed to promote health and wellness.  While agreeing with the general goal of promoting wellness and prevention, many Members may disagree with the bill’s approach, which focuses heavily on creating costly new grants and programs—including a new $100 billion trust fund and a $5 billion per year federal entitlement program—as well as federal regulation of restaurant menus as part of a top-down,  government-run approach to healthy behaviors.  Specific provisions include:

Disease Prevention:  The bill would create a National Health Council to coordinate prevention and wellness activities, establish several other task forces to evaluate the effectiveness of various preventive treatments and approaches, require the development of a health prevention strategy, engage in outreach and education promoting preventive care, and create a $100 billion Prevention and Public Health Investment Fund “to provide for expanded and sustained national investment in prevention and public health programs.”

New Prevention Entitlement:  The bill creates a new state-based “Right Choices” entitlement program, administered through Medicaid or similar programs, to provide care to uninsured Americans lawfully present with incomes under 350 percent FPL ($77,175 for a family of four in 2009); individuals with incomes over 200 percent FPL ($44,100 for a family of four in 2009) would be required to contribute cost-sharing amounts on a sliding scale determined by the Secretary.  Doctors and hospitals would be paid at Medicaid reimbursement rates for providing care.  Funding would be based on a capped allotment formula similar to that used in SCHIP; federal funding could not exceed $5 billion per year.  The program would sunset when Gateways become available, “or on a date determined by the Secretary.”  At a time when Medicare is scheduled to become insolvent by 2017, some Members may be concerned by the prospect of creating yet another federal entitlement—this one to provide care to “low-income” families making more than $75,000 per year—and one that need not be ended by the Department of Health and Human Services, even once other government entitlement programs come into effect.

Other Prevention Provisions:  The bill would authorize grants for school-based health clinics and require a national public educational campaign by the Centers for Disease Control focused on oral health and prevention.  The bill would further authorize grants for research-based dental disease management and additional activities related to oral health, including “components that shall include tooth-level surveillance.”  The bill would authorize grants to promote the development of community-based preventive health activities and requires applicants to measure “decreases in weight, increases in proper nutrition, increases in physical activity,” and other metrics.  The bill requires new standards for accessibility of medical diagnostic equipment for individuals with disabilities and authorizes states to purchase vaccines using new federal grant funds to improve immunization coverage.  Finally, the bill requires funding for public health services research, collection of information regarding health disparities, and health impact assessments “as a means to assess the effect of the built environment on health outcomes.”

Nutrition Labeling for Restaurants:  The bill imposes new federal requirements on chain restaurants and vending machines to display nutrition labeling.  Federal requirements would apply to chain restaurants “with 20 or more locations doing business under the same name,” and include all menu items except condiments and “temporary menu items appearing on the menu for less than 60 days per calendar year.”  The bill would require restaurants to list the caloric content of menu items “adjacent to the name of the standard menu item, so as to be clearly associated” with same, and would further require “a succinct statement concerning suggested daily caloric intake, as specified by the Secretary by regulation and posted prominently on the menu and designed to enable the public to understand, in the context of a total daily diet, the significance of the caloric information that is provided on the menu.”  The Secretary would be further empowered to promulgate regulations requiring additional disclosures beyond caloric content.

Vending machine operators “owning or operating 20 or more vending machines” that do not permit purchasers to review nutrition information prior to purchase “shall provide a sign in close proximity to each article of food or the selection button that includes a clear and conspicuous statement disclosing the number of calories contained in the article.”  Some Members may be concerned that these requirements will increase administrative burdens for business in order to provide additional information that may or not be helpful to consumers—and may or may not in fact reflect the nutritional content of the food as actually prepared for the customer (as opposed to the food as prepared when quantifying the disclosure requirements of the “food police”).

Title IV—Workforce Provisions

The bill contains provisions designed to increase the number of health care workers.  While supporting the goal of ensuring a vibrant health care workforce, some Members may be concerned first by the bill’s apparent approach of establishing new programs and grants to alleviate every workforce problem, and second by the higher levels of federal spending associated with these new bureaucratic programs.

New Commission and Bureaucracy:  The bill creates a national commission to evaluate “current and projected health care workforce supply and demand” and make recommendations to Congress about workforce priorities.  The Commission would make further recommendations regarding a new grant program designed to enable state planning for workforce strategies.  The bill also establishes a National Center for Health Care Workforce Analysis to evaluate the effectiveness of federal workforce strategies.

Student Loan Provisions:  The bill reduces student loan interest rates for participants in existing health care workforce loan programs, requires medical students receiving loan forgiveness to practice for a minimum of 10 years, and increases maximum loan amounts for eligible nursing students and participants in health care training for diversity programs.  The bill creates a new program of up to $35,000 in student loan forgiveness per year for individuals committing to at least two years of service in a pediatric medical or surgical specialty, establishes an additional loan forgiveness program of up to $35,000 per year—including an additional payment covering tax liabilities on said loan forgiveness—for individuals studying in public health programs who commit to practice “for the federal government” for at least three years, and expands eligibility for existing student loan forgiveness programs to allied health professionals.  The bill would also extend loan forgiveness of up to $60,000—including an additional payment covering tax liabilities on said forgiveness—for individuals who agree to serve as a full-time faculty member at a nursing school for at least four years.

Grant Programs; Authorizations:  The bill creates new grants for mid-career public health professionals, and establishes new grants for nurse-managed health clinics.  The bill increases authorizations for the National Health Service Corps to $4 billion over six years—a near-tripling of authorization levels by 2015—and eliminates an existing cap on the Public Health Service Corps, so as to establish a “Ready Reserve” to serve “in time of national emergency.”

Workforce Education:  The bill authorizes new grants to hospitals and medical schools to support primary care training and education, to institutions of higher education to provide training opportunities to direct care workers in long-term care settings, to schools of dentistry or other entities to support training in dentistry, to geriatric education centers to support career education on geriatric and chronic care management issues, to institutions of higher education to support recruitment and training of students in social work and mental and behavioral health programs, and to schools of nursing to support nurse retention programs.  The bill also establishes a primary care extension program to educate providers about preventive medicine, and authorizes grants to states for state primary care extension programs.

Title V—Fraud and Abuse

The bill contains provisions designed to reduce fraud and abuse within government health programs, establishing senior advisors on health care fraud within both HHS and the Department of Justice and creating a health care program integrity coordinating council to develop a strategic anti-fraud plan that includes fraudulent activities targeting private health insurance plans.  The bill adds new federal criminal offenses to ERISA for employers who make knowingly false statements about their plan’s financial condition or benefits.

The allows the Secretary of Labor to apply certain State anti-fraud laws to multiple employer welfare arrangements (MEWAs), notwithstanding ERISA’s general pre-emption of State laws and regulations.  The bill also grants the Department of Labor the authority to issue cease and desist and summary seizure orders against MEWAs in financially hazardous conditions and requires all MEWAs to register with the Department prior to enrolling beneficiaries in a plan.  Finally, the bill further amends ERISA by establishing evidentiary privilege and confidential communications among State and federal authorities with respect to “any investigation, audit, examination, or inquiry conducted or coordinated by any of the agencies.”  Some Members may be concerned that this overly broad communication exemption could result in activities by overzealous bureaucrats becoming obscured from all public or judicial scrutiny.

While agreeing with the general goal of fighting waste, fraud, and abuse in health care programs, many Members may be concerned with the bill’s apparent focus on fighting fraud in private health plans rather than eliminating fraud in government programs.  For instance, the bill does not increase penalties for those who commit Medicare or Medicaid fraud—the only increased penalties apply to employers.  Similarly, the bill does not require the online posting of (de-identified) claims data, to allow for better scrutiny of claims patterns and broader clinical research.  Some Members therefore may believe that this title falls far short of the measures necessary to fight the tens of billions of dollars fraudulently stolen from government health programs each year.

Title VI—Access to Medical Therapies

The bill includes a section related to the introduction of follow-on biologics; however, the text notes only that the “policy [is] under discussion.”  If language regarding FDA approval of follow-on biologics is included in the bill, some Members may support provisions providing brand-name manufacturers with a sufficient period of data exclusivity needed to generate return on their investment, in order to maintain the incentives for companies to develop the innovative treatments that have made a significant impact on the quantity and quality of Americans’ lives.

The bill expands participation in the 340B program, which reduces the price paid for outpatient pharmaceuticals purchased by certain entities.  Specifically, the bill expands the program to children’s hospitals, critical access hospitals, rural referral centers, and sole community hospitals, while also extending the price control mechanism to inpatient drugs used by such hospitals and facilities.  The bill also includes provisions for the Secretary to verify the accuracy of prices charged by manufacturers to ensure that eligible 340B entities are receiving the maximum price discount possible, including fines of up to $5,000 “for each instance of overcharging a covered entity that may have occurred.”  Some Members may be concerned that this language, by extending the scope of price controls on pharmaceutical products, represents a further intrusion of government into the marketplace—and one that could result in loss of access to potentially life-saving treatments, by reducing companies’ incentive to develop new products.

Cost: A formal CBO score is not yet available.  However, press reports indicate that the bill’s price tag could approach $2 trillion in mandatory spending—and the text of the bill itself authorizes tens of billions more in discretionary spending.  Many Members may be concerned first by the levels of spending contemplated by the bill’s provisions, and second by the fact that—other than imposing a tax on individuals who do not purchase health insurance meeting bureaucratic diktats—no provision in the bill exists that would begin to finance its costs.

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