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NEW YORK: A lot was supposed to happen on health reform before Congress went on summer vacation. Turns out, a lot didn’t. End result: The heavy lifting on health reform legislation has been pushed to the fall.A bipartisan group of six senators from the Senate Finance Committee was supposed to unveil its health reform bill — or at least an outline. But the group couldn’t resolve some outstanding issues such as how to make sure the health insurance structures they’re proposing end up being affordable.It’s also unclear whether the group will release a draft before the start of the Senate summer recess next Friday. That means the full committee, to say nothing of the full Senate, won’t begin to debate the proposal until the leaves start turning a lovely autumn orange.Meanwhile, House leaders had been promising a full floor vote on health reform before the congressional recess, which begins on Saturday. But that idea was tabled once it became clear that the last of the three committees — the Energy and Commerce Committee — wouldn’t report the bill out of committee until the 11th hour.That means the full House won’t take up a health reform bill before fall.So, with the finish line still far away, it’s too soon to tell the final shape that health reform would take. CNN’s Ed Henry put it best during his radio show: “It’s like covering Jello.”Until then, here’s an update on where things stand on some important questions: Will there be a public option? Who will pay for reform? When would it take effect?What’s the chance for a public option?Those who want a public insurance plan want it fiercely, saying it’s the only thing that can force private insurers to reduce costs and be more competitive. Those who oppose it are equally fierce, saying it would result in a government takeover of the heath care system.Truth is, there’s still not enough information in any of the proposals for either side to say definitively what the realities of a public option would be.Two major bills that lawmakers will consider — the tricommittee bill from the House and the bill put out by the Senate Health committee — propose a public health insurance option. That public plan would compete with private insurers on a health insurance exchange — or insurance supermarket — that the bills also propose.Among Democrats in the House, there is support for a public plan in theory. But progressive Democrats and fiscally conservative Democrats have different ideas as to what such a plan should look like. Republicans in the House, meanwhile, are almost universally opposed.In the Senate, meanwhile, a public option doesn’t appear to have sufficient support. So the bipartisan group on Senate Finance is expected to propose state and regional nonprofit health cooperatives to serve as a competitor to private insurers.The cooperatives would be owned and governed by the consumers who join them. But they would receive seed money from the federal government. It’s not clear whether the co-ops would hire doctors full-time to serve members or whether they would establish a network of doctors from which members could choose.Nonprofit co-ops aren’t a new idea, and some already exist today. But in order to be truly competitive in a market dominated by United Healthcare and the group of Blue Cross/BlueShield insurers, they need to attract a substantial number of people.Sen. Kent Conrad, D-S.D., who proposed the co-op idea, has said actuaries estimate that co-ops could attract 12 million members — potentially enough to make them competitive. But without any details on the proposal, it’s impossible to independently verify that kind of estimate.Who’s going to pay for this?That’s the 1 trillion question tripping up everyone. Much of the cost would stem from subsidies to help make health coverage more affordable for low- and middle-income families, including the uninsured.The House bill proposes to pay for reform in part by implementing various cost-saving measures in Medicare and Medicaid. It would also impose a surtax on the highest income Americans, affecting up to 1.2% of households. A surtax is a tax on top of a person’s ordinary income tax.The surtax has support among many although not all House Democrats. House Republicans oppose it.The surtax is not expected to get much love in the Senate, where the Senate Finance bipartisan group is seen as the arbiter of what will fly as a pay-for and what won’t. The Senate group is expected to propose a slew of savings in Medicare and Medicaid. On the revenue side, it has been considering a tax on insurers for very expensive health plans — those whose cost well exceeds the average cost of a policy for individuals and for families.Opponents of the insurer tax — including unions — say the tax is likely to be passed on to consumers in the way of higher costs.Another way lawmakers want to alleviate the cost of reform is through “pay or play” mandates on employers to provide coverage or pay a penalty that would help subsidize those who buy insurance. The Senate Finance Committee is not expected to propose an employer mandate but is expected to provide what have been referred to as employer incentives to provide coverage.When would health reform take effect?Not right away. In fact, health reform is going to be a long-term process no matter whose ideas end up dominating the day. Why? Because in essence it’s a restructuring of one of the biggest and most complex parts of the economy.The proposed health insurance exchange in the House bill, for instance, wouldn’t be up and running before 2013, and many of the insurance reform measures wouldn’t be fully in effect until 2018.Plus a number of measures in all the reform proposals will take time – in some cases 5 to 10 years, in some cases longer – the achieve the promises of greater efficiencies, better care and cost savings.- CNN’s Dana Bash, Ted Barrett and Deirdre Walsh contributed to this report.

NEW YORK (Fortune) — The Obama administration sent Congress its latest plan to spruce up the much maligned credit rating business. But the proposal sidesteps a key issue, and legislators don’t seem to be in any rush to act on it. The Treasury Department says its plan, which it formally introduced Tuesday, would “increase transparency, tighten oversight and reduce reliance on credit rating agencies.” Assistant Treasury Secretary for Financial Institutions Michael Barr told reporters on a conference call that the proposal — which would also create a new watchdog office within the Securities and Exchange Commission — would “make an important difference” for investors. The ratings reform effort is part of the administration’s plan to shore up the financial system in the wake of last year’s financial market collapse. Poor performance and conflicts of interest at big ratings agencies such as Moody’s (MCO) and the Standard & Poor’s unit of McGraw-Hill (MHP, Fortune 500) have drawn intense scrutiny on Capitol Hill. Former Securities and Exchange Commission chief accountant Lynn Turner charged in congressional testimony this year that raters “became blinded by the dollars they were billing rather than providing insight to the public into the perfect storm that was forming.” 0:00
/6:25Rating agencies need reformThe Treasury plan would bar ratings agencies from doing consulting work with companies whose bonds they rate, and would force rating companies to disclose fees paid by bond issuers in each report. It would also oblige raters to use different ratings scales for plain vanilla corporate bonds and so-called structured securities — bonds made up of slices of other bonds, for instance. Downgrades and defaults on highly rated structured products have been commonplace during the crisis.One thing the administration plan wouldn’t do is restrict the practice of bond issuers paying for ratings — a conflict of interest that some observers put at the center of the credit crisis. The two leading U.S. ratings agencies, S&P and Moody’s, are paid by issuers. Sean Egan, who runs the Egan-Jones subscriber-paid rating agency in Pennsylvania, says the administration’s proposal “changes nothing” because it fails to address the issuer-pays conflict. Barr said the administration took the conflict issue “head on” and would put in place “tough rules” to manage conflicts of interest. He added that subscriber-paid agencies such as Egan’s are hardly beyond reproach, given that “investors would still have a conflict because they own these securities being rated.” But Egan scoffed at the administration’s attempts to diminish the importance of the issuer-pays conflict. “That conflict isn’t manageable,” he said. “What I’m admiring is the amazing lobbying power of S&P and Moody’s, getting Treasury behind this sort of nonanswer.” A spokesman for S&P said the company was “studying” Treasury’s proposal. Moody’s didn’t immediately respond to a request for comment.Whether Congress will get behind the plan remains to be seen. Barr said the ratings overhaul should be viewed as part of a series of changes to the nation’s financial regulatory system, including a consumer financial product safety panel and new rules on executive pay. “The prospects for our package of reforms is strong,” he said. “We have an enormous amount of support.” Barr said Treasury was working with the appropriate committee chairs — House Financial Services Chairman Barney Frank, D-Mass., and Senate Banking Committee chief Chris Dodd, D-Conn. — to introduce the ratings legislation. But ratings reform is hardly a new issue — the SEC has been studying it for 15 years — and just when Congress might take up the reform mantle isn’t clear. Frank said Tuesday he was told by House leadership that no piece of regulatory reform will hit the House floor before September. Barr said the administration is “mindful of the chairman’s desire to run the process the way he thinks effective.” CNNMoney.com senior writer Jennifer Liberto contributed to this report.

Source:CNN

NEW YORK: It is one of the touchiest issues in the health care debate: Would a government-run health plan upend the employer-based health insurance system used by 160 million Americans?Senate Democrats behind a key proposal say the answer is no.Sens. Edward Kennedy, D-Mass., and Chris Dodd, D-Conn., say their plan would preserve employer-sponsored insurance coverage and create an affordable public option for those who need it.”The … bill virtually eliminates the dropping of currently covered employees from employer-sponsored health plans,” Kennedy and Dodd said in a letter Thursday to members of the Health Committee, one of two Senate groups working on health reform.The proposal is a central part of Washington efforts to rewrite the rules of health care. Congress returns Monday for a month-long session before breaking for the summer. The Health Committee bill includes a “pay or play” provision that would require employers to provide adequate coverage for their workers or subsidize a system that will.”Pay or play” would require companies to pay the government 750 per full-time worker per year (375 for part-timers) if they don’t offer health coverage, or if they offer “qualified” coverage but pay less than 60% of workers’ premiums. Small businesses that employ fewer than 25 workers would be exempt.The Congressional Budget Office, which analyzed the legislation, estimated that by 2019 the same number of workers would be covered by employer-based plans as would otherwise be the case under the current system. “It tracks what we’re seeing in Massachusetts,” a senior Democratic aide on the Senate Health Committee said on a conference call with reporters.Massachusetts requires companies to pay up to 295 per worker per year if they don’t provide employees with insurance or don’t pay enough for the insurance they do provide.So far, employers haven’t been dropping coverage in Massachusetts.Paul Fronstin, director of the health research program at the Employee Benefit Research Institute, is skeptical that 750 is enough to keep employers from dropping their plans or bumping up what their workers pay for coverage.As Fronstin sees it, the fee would penalize employers already providing insurance but paying less than 60% of premiums.Those employers, Fronstin said, would do one of four things under the Senate Health Committee proposal:pay the 750 per-worker penalty and keep everything as is;pay more than 60% of the premium to avoid the 750 fee.pay the 750, keep the company plan but reduce how much they subsidize an employee’s coverage by 750;or pay the 750 and drop their plan.One goal of the 750 fee is to keep employers in the health-insurance game, to keep their coverage instead of dropping their plans and sending workers to the public plan.”But they’re already in the game,” Fronstin said. “They’re already paying 85% of premiums. Does this 750 stop them from dropping coverage? It doesn’t.”A survey by the Kaiser Family Foundation found that in 2008 employers paid an average of 3,983 per employee for single workers’ coverage and 9,325 per employee with family coverage.Fronstin also doesn’t think the Massachusetts example would apply nationally. For one thing, the state’s fee is not the most onerous provision for companies. Employers must also assume part of the cost of the uncompensated care for workers who can’t afford their health bill. Given how quickly a hospital stay can add up, that may be the strongest incentive for businesses to keep their coverage intact, Fronstin notes.Another reason, he said, is that companies that operate in many states often try to provide uniform coverage for their workforce. So they’re unlikely to drop coverage in just one state. If the fee applies nationally the story may be different.Lastly, Fronstin noted, the Massachusetts system is relatively new and companies typically don’t change benefit policies on a dime.In the case of a 750 employer fee assessed nationally, “The most cost-effective thing may be to drop coverage,” Fronstin said.Keith Ashmus, chair of the National Small Business Association, concurred. “My firm pays a whole lot more than 750 for its employees … in tough times it might be tempting to just say, ‘I’ll pay the 750 dollars.’ “For large employers, the story may be different.Most companies with more than 200 employees voluntarily offer coverage and the majority of them pay more than 60% of workers’ premiums, said Mike Langan, principal of the employer benefit consulting group Towers Perrin. If cost were the only factor, those companies would already have dropped coverage.”It’s part of a compensation, wage and benefit package. Employers see a connection between workplace productivity and health benefits,” Langan said.Still, over time, the cost-benefit analysis is likely to hold sway if Congress passes an employer mandate.”A lot of the decision making will ultimately come down to cost considerations as a voluntary benefit program becomes a mandatory one,” according to a June statement on Towers Perrin’s Web site.Of course, it ain’t over till it’s over. What’s not clear yet is whether the 750 fee — which would be adjusted for medical inflation annually — would be the only cost employers would have to pay if they don’t provide adequate coverage.”I would be surprised if it was just that,” said Helen Darling, president of the National Business Group on Health, which represents large employers’ perspective on national health policy issues And every cost lever adjusted will factor into companies’ decisions about whether to keep or drop the coverage they currently provide.– CNN’s Ted Barrett and CNN Radio’s Lisa Desjardins contributed to this report.

Source:CNN

NEW YORK: It is one of the touchiest issues in the health care debate: Would a government-run health plan upend the employer-based health insurance system used by 160 million Americans?Senate Democrats behind a key proposal released Thursday say the answer is no.Sens. Edward Kennedy, D-Mass., and Chris Dodd, D-Conn., say their plan would preserve employer-sponsored insurance coverage and create an affordable public option for those who need it.”The … bill virtually eliminates the dropping of currently covered employees from employer-sponsored health plans,” Kennedy and Dodd said in a letter to members of the Health Committee, one of two Senate groups working on health reform.The bill includes a “pay or play” provision that would require employers to provide adequate coverage for their workers or subsidize a system that will.”Pay or play” would require companies to pay the government 750 per full-time worker per year (375 for part-timers) if they don’t offer health coverage, or if they offer “qualified” coverage but pay less than 60% of workers’ premiums. Small businesses that employ fewer than 25 workers would be exempt.The Congressional Budget Office, which analyzed the legislation, estimated that by 2019 the same number of workers would be covered by employer-based plans as would otherwise be the case under the current system. “It tracks what we’re seeing in Massachusetts,” a senior Democratic aide on the Senate Health Committee said on a conference call with reporters.Massachusetts requires companies to pay up to 295 per worker per year if they don’t provide employees with insurance or don’t pay enough for the insurance they do provide.So far, employers haven’t been dropping coverage in Massachusetts.Paul Fronstin, director of the health research program at the Employee Benefit Research Institute, is skeptical that 750 is enough to keep employers from dropping their plans or bumping up what their workers pay for coverage.As Fronstin sees it, the fee would penalize employers already providing insurance but paying less than 60% of premiums.Those employers, Fronstin said, would do one of four things under the Senate Health Committee proposal:pay the 750 per-worker penalty and keep everything as is;pay more than 60% of the premium to avoid the 750 fee.pay the 750, keep the company plan but reduce how much they subsidize an employee’s coverage by 750;or pay the 750 and drop their plan.One goal of the 750 fee is to keep employers in the health-insurance game, to keep their coverage instead of dropping their plans and sending workers to the public plan.”But they’re already in the game,” Fronstin said. “They’re already paying 85% of premiums. Does this 750 stop them from dropping coverage? It doesn’t.”A survey by the Kaiser Family Foundation found that in 2008 employers paid an average of 3,983 per employee for single workers’ coverage and 9,325 per employee with family coverage.Fronstin also doesn’t think the Massachusetts example would apply nationally. For one thing, the state’s fee is not the most onerous provision for companies. Employers must also assume part of the cost of the uncompensated care for workers who can’t afford their health bill. Given how quickly a hospital stay can add up, that may be the strongest incentive for businesses to keep their coverage intact, Fronstin notes.Another reason, he said, is that companies that operate in many states often try to provide uniform coverage for their workforce. So they’re unlikely to drop coverage in just one state. If the fee applies nationally the story may be different.Lastly, Fronstin noted, the Massachusetts system is relatively new and companies typically don’t change benefit policies on a dime.In the case of a 750 employer fee assessed nationally, “The most cost-effective thing may be to drop coverage,” Fronstin said.Keith Ashmus, chair of the National Small Business Association, concurred. “My firm pays a whole lot more than 750 for its employees … in tough times it might be tempting to just say, ‘I’ll pay the 750 dollars.’ “For large employers, the story may be different.Most companies with more than 200 employees voluntarily offer coverage and the majority of them pay more than 60% of workers’ premiums, said Mike Langan, principal of the employer benefit consulting group Towers Perrin. If cost were the only factor, those companies would already have dropped coverage.”It’s part of a compensation, wage and benefit package. Employers see a connection between workplace productivity and health benefits,” Langan said.Still, over time, the cost-benefit analysis is likely to hold sway if Congress passes an employer mandate.”A lot of the decision making will ultimately come down to cost considerations as a voluntary benefit program becomes a mandatory one,” according to a June statement on Towers Perrin’s Web site.Of course, it ain’t over till it’s over. What’s not clear yet is whether the 750 fee — which would be adjusted for medical inflation annually — would be the only cost employers would have to pay if they don’t provide adequate coverage.”I would be surprised if it was just that,” said Helen Darling, president of the National Business Group on Health, which represents large employers’ perspective on national health policy issues And every cost lever adjusted will factor into companies’ decisions about whether to keep or drop the coverage they currently provide.– CNN’s Ted Barrett and CNN Radio’s Lisa Desjardins contributed to this report.

Source:CNN

NEW YORK: The promise of health reform is to make care more accessible for everybody — and to reduce the federal deficit by slowing the growth rate in costs. But the promise of deficit reduction through health reform might be overstated.Here’s why: Even if reform works well, the cost savings will not be nearly enough to tackle the debt ogre breathing down Uncle Sam’s neck.”Ultimately, the long-term budget outlook will necessitate serious tax and spending changes,” says the Committee for a Responsible Federal Budget, which is led by tax and budget experts from the left and the right.And “ultimately” really means ASAP, say some tax experts. That’s because the financial and economic crises have exacerbated an already tough budget outlook.”The key message is the future is now. The future has arrived,” said William Gale, co-director of the Urban-Brookings Tax Policy Center, in a Brookings video discussing a sobering report on the fiscal predicament that he coauthored with Alan Auerbach, director of the Burch Center for Tax Policy and Finance at the University of California, Berkeley.The risk is not decades from now, but within the next 10 years. Should investors in U.S. Treasurys consider the country’s growing debt load to be unacceptably high, they will start demanding to be paid higher interest rates on the debt they buy to compensate them for the risk they’re assuming.That, in turn, jacks up what the country owes and increases the level of borrowing required to meet debt payments. Money available for domestic investment falls as does income growth. Meanwhile, the prospect for inflation grows should the Fed decide to print money to pay off what the country owes rather than default on its debt.So how much can health reform help dig us out of this fiscal hole?0:00
/3:32America’s growing debt dilemmaBudget hawks commend President Obama for insisting that health reform be deficit neutral. And they commend him for trying to tackle health costs. But the president and Congress need to do much more to put the budget on a stable footing, they say.What health reform can and can’t doBest-case scenarios for health reform would reduce the growth rate in health care costs by 1.5 percentage points a year. Even Obama economic adviser Christina Romer has said that won’t be easy to achieve.Gale and Auerbach estimate that for health cost savings alone to stabilize the debt-to-GDP ratio over time, the growth rate in health costs would need to be slowed by 3 percentage points a year — for 75 years.”The issue is certainly health care, but the issue is a lot more than health care,” Gale said. “Our fiscal books are fundamentally out of balance.”A big reason, Gale and Auerbach say, are the tax cuts and spending increases put into place since 2001.One way to measure the imbalance is to consider the “fiscal gap” — which is a measure of the difference between revenue and outlays over the long term.Under Obama’s budget, Gale and Auerbach estimate the fiscal gap would be 9% of GDP. Conceptually, that means to restore fiscal balance over the long-term the federal government would need to increase taxes by 9% of GDP or cut spending by that amount starting now and lasting “until the end of time,” Gale said.For some context, consider that in a normal year, the country gets tax revenue equal to about 9% of GDP.Obama has promised to make permanent the tax cuts for everyone except high-income households. It’s an expensive promise. The federal coffers will see roughly 2.1 trillion less in revenue over the next 10 years than it would if the tax cuts expired for everyone, according to estimates from the Joint Committee on Taxation.”The [Obama administration] gave away a huge pot of money. [It was] a gargantuan missed opportunity,” said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.The fight aheadCurrently lawmakers are contorting themselves trying to figure out ways to pay for health reform so it doesn’t increase the deficit and doesn’t alienate their constituents … too much.But the pay-for debate over health care will be a mere warm-up to the resistance Congress will face if it tries to put the budget on more stable footing.Politicians understand the issue behind closed doors, Gale said. But when they’re in front of the cameras, he noted, “Republicans say ‘no new taxes.’ And Democrats say ‘no new taxes for 95% of all households.’ Neither one of those is a starting position for sensible fiscal reform.”None of this means the country shouldn’t embark on health reform. But it does mean lawmakers will have to level with the public. And the public — which itself is no big fan of tax hikes and spending cuts — will have to listen.Without making significant changes to lessen the country’s debt burden, the Committee for a Responsible Federal Budget said, “we face the real threat of a fiscal and economic crisis more severe than what we’ve already endured.”