ProPublica: Eye on Health Care Reform

‘Black Liquor,’ the Sequel

2010-03-29T15:13:47-05:00

*This article corrects and expands an earlier post.

From the murky depths of the health care reform reconciliation bill re-emerges an unholy mixture of industrial waste and shady Congressional bookkeeping.

In Part I of our reporting last week, we shared a mystery with our readers: What was biofuel language doing in the health care reform reconciliation bill?

And, with help from readers, we thought we had the mystery solved. Through unintended application of a tax credit designed to encourage use of alternative fuels in motor vehicles, paper companies have managed to get an estimated $7 billion from the U.S. Treasury for continuing to use a pulp byproduct – called black liquor – to fuel factories, a practice they had been employing anyway since the 1930’s.

All true – but not the whole story.

That tax credit, known as Black Liquor I, was for 50 cents per gallon, and it expired at the end of 2009.

But just like a hatchet-wielding horror movie villain, tax credits for black liquor were resurrected as soon as our backs were turned. Or so it seemed.

In October, in response to a question from a field agent, the IRS issued this ruling, saying paper companies would be able to claim an even more lucrative $1.01 per gallon tax credit designed to encourage production of biofuels out of materials people don’t eat, instead of corn – the price of which has been driven up by biofuel-related demand.

Tax experts dubbed it "Son of Black Liquor."

Then the House of Representatives charged in, seemingly to the rescue. The original House bill included language banning (in a roundabout way) the application of the tax credit to Black Liquor, appearing to save taxpayers about $25 billion. Putting the language in the health care bill offset some of the increased costs, making the health care package technically $25 billion cheaper.

Enter the Senate, stage center. The chamber’s cheaper proposal did not require a $25 billion spending offset to make it look affordable, and besides, some powerful Senators had other plans for the on-paper savings. The Senate left out the biofuel language, and when the Senate bill emerged as the vehicle for health care reform via reconciliation, it appeared Son of Black Liquor had died on the Senate floor.

But Son of Black Liquor was back and standing right behind American taxpayers!

It turns out, however, the House may be the actual villains, because paper companies have repeatedly said they don’t believe they can get EPA clearance for the somewhat different Black Liquor production process that would be required to qualify for the Black Liquor II tax credit. Plain English subtitle: Closing a tax loophole no one was planning to use doesn’t actually save the government any money.

So, who, if anyone, can we blame? In this piece for WNYC’s The Takeaway, Todd Zwillich finds that many members of Congress didn’t actually know Black Liquor was back. (Also: if you listen all the way through, you will be rewarded with Sen. Charles Grassley, R-Iowa, explaining why the accounting makes sense.)

‘Medicare Tax’ Now to be Called ‘Unearned Income Medicare Contribution’

2010-03-24T11:27:30-05:00

by Olga Pierce

The payroll tax increase that was formerly known as "Medicare tax" in both President Obama’s health care reform reconciliation proposal and the original House reconciliation bill is NOT A TAX. Repeat: NOT A TAX.

Sure, individuals with earnings over $200,000 and couples with earnings over $250,000 will have to fork over 3.8 percent of their capital gains (which were not formerly subject to Medicare taxes) to Medicare, in addition to .9 percent more of their earned income.

But among the 15 pages of changes to the Reconciliation Act included in the manager’s amendment released over the weekend was a wee name change: references to ‘Medicare tax’ were deleted, and replaced with the much gentler, and voluntary-sounding, ‘unearned income Medicare contribution.’

We called Speaker Nancy Pelosi’s office for more insight, and will pass along anything we hear back.

For a look at all the changes that the reconciliation bill would make in the health care reform law, check out our side-by-side comparison.

Biofuel/Health Care Mystery Demystified

2010-03-23T09:52:21-05:00

by Olga Pierce

Last week, we asked readers to help us figure out why, amongst the talk of health care in the House reconciliation bill, there was a paragraph eliminating the "unintended application of [a] cellulosic biofuel producer credit."

We were as curious as anyone as to what sediment in biofuel has to do with health care, but it was Friday afternoon, after all, and even journalists like to go home sometimes, even if said home is a dank cell in Brooklyn.

Luckily, our readers came through for us (we owe you one).

As Mark Smith put it, the language eliminates "the boon to the paper industry from adding diesel fuel to its wastes before burning and claiming biofuel credit."

For the purpose of, "$ income for CBO score," @michaelwhitney helpfully tweeted.

Bottom line: Making it harder to get the tax credit will save the government money. And everything in the bill that saves the government money makes health care reform look cheaper on paper, because of the way the nonpartisan Congressional Budget Office evaluates the cost of legislation. And we care what the Congressional Budget Office (a.k.a. the CBO) says a bill will cost, because that's the official price tag that will remain affixed to the bill in perpetuity.

Turns out, making paper produces a byproduct called "black liquor," which can, in turn, be used to fuel a paper plant. Most U.S. paper producers have done this since the 1930s -- without receiving a tax credit of any kind.

Then, in 2007, an earlier law intended to encourage the mixture of biofuels (like ethanol) into fuel for automobiles was changed so that it could be claimed for fuel used for non-transportation purposes. Cha-ching for paper companies! Now they could get cash back for something they had been doing all along!

And they did: In 2008, one paper company received nearly $30 million from the U.S. Treasury for just one month's worth of black liquor use in just one of its four plants, according to an SEC filing turned up by The Washington Post. In this press release, International Paper trumpets the fact that it received $71 million for just one month's worth of black liquor use in 2008.

By shutting down the black liquor spigot, this language offsets billions of the cost of health care reform -- about $25 billion worth over 10 years, it seems.

The House has been pursuing this line of revenue generation for some time, according this firedoglake article that several folks pointed us to: Earlier stand-alone legislation aiming to rule out the credit for black liquor was folded into the manager's amendment of the original House health care reform bill.

Biofuel Tax Credit Language in Final Health Care Bill: Help Us Understand Why

2010-03-19T16:59:02-05:00

by Olga Pierce

Update (3/23/2010): Readers helped us solve this mystery.

Silly ProPublicans. We expected the health care reform bill to include language pertaining to health care. And most of it does, except this paragraph that appears to tackle the scourge of … ashy biofuels?

ELIMINATION OF UNINTENDED APPLICATION OF CELLULOSIC BIOFUEL PRODUCER CREDIT.

(a) IN GENERAL.—Section 40(b)(6)(E) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:

(iii) EXCLUSION OF UNPROCESSED FUELS.—The term ‘cellulosic biofuel’ shall not include any fuel if—

"(I) more than 4 percent of such fuel (determined by weight) is any combination of water and sediment, or

"(II) the ash content of such fuel is more than 1 percent (determined by weight)."

(b) EFFECTIVE DATE.—The Amendment made by this section shall apply to fuels sold or used on or after January 1, 2010.

We found the biofuel section using our side-by-side comparison of the Senate health care reform bill and the House reconciliation version – and we think it’s just the beginning of what we might find by looking at the full text of the bills. (So far as we know, we’re the only ones who’ve published the proposed final bill in full. We did it by stitching together the Senate bill and the House’s changes.)

It’s Friday afternoon and all the experts have gone home. But we still want to know: What tax credit is this snippet referencing? What does it do? Is it health care related in a way our inferior brains can’t understand? Give us your thoughts or post in the comments below.

And do you see something else in the bill the public should know about? Take a look. We’ll happily post insights on our site, with copious credit.

Why You Should Check Out the Health Care Bills Side by Side

2010-03-19T12:31:12-05:00

by Olga Pierce and Jeff Larson

Thanks to many hard-working souls at ProPublica, we’ve created a side-by-side comparison of the full versions of the Senate health care bill versus the bill that will likely go before the House for a vote on Sunday.

What you’ve seen elsewhere — the text put out by the House Rules Committee — is a 150-page list of amendments to the Senate bill ("strike paragraph 4", "insert this new sentence in paragraph B…").

What we’ve created — the final proposed bill in full, and highlights of the changes -- allows you to easily compare the House’s reconciliation proposal to the earlier Senate bill. We’re also showing you exactly what the House has proposed to change, add and delete. So far as we know, this is the only place on the Web where the full proposed final bill is available. (Disclaimer: Creating the full version of the reconciliation bill involved some old-fashioned and frenzied cutting and pasting — we're only human, so please let us know of any errors.)

What we’ve noticed so far:

· Provisions of new revisions to the laws governing student loans;

· A new law governing the tax credit for biofuels;

· An assortment of changed legislative formulas;

· And more.

If you find something, e-mail us or tweet using #hcr and #pphcr.

ProPublica reporter Olga Pierce — that’s me! — will also be marking up the versions with her analysis, pointing out any sweetheart deals left in the bill or, for example, the kind of small formula changes that will make a big monetary difference. She'll also explain how the bill impacts you — whether you're uninsured, underinsured, on Medicaid or Medicare, a small business owner or ... young and invincible. She’s going to start — as soon as she gets some sleep.

Meanwhile, check out the bills.

What Health Care Reform Means for: ‘Young Invincibles’

2009-12-22T06:00:33-05:00

by Sabrina Shankman and Olga Pierce

Using results from a questionnaire we did with American Public Media’s Public Insight Network, we’re looking at how the proposed health care reforms will actually affect people facing common health care coverage situations. See our previous posts on what health care reform means for Medicaid Recipients, the uninsured, the underinsured, small businesses, those enrolled in Medicare programs, and the insured.

Neil Thurgood, 26

Location: Washington, D.C. Health Care Status: Insured through his wife Household Income: $65,000

His Story:

When Neil Thurgood graduated college in the fall of 2006, his health insurance lapsed while he looked for a job. At the time, he says, “I just kind of figured, I’m young and healthy and everything is cool,” so he didn’t worry when it took longer than planned to find a job. His wife eventually got one that offered insurance, but the premium was still too expensive for Thurgood to be covered.

That wasn’t a problem until January 2007, when Thurgood came down with what he now refers to as “some crazy renegade virus,” which landed him in the hospital with a fever of 105. A spinal tap and a day later, Thurgood was sent home with fuzzy understanding of why he was sick and a bill for about $6,000.

Nearly three years later things are looking up for Thurgood. He’s landed a job and is now insured through his wife’s coverage, which costs them $260 a month. But he’s still paying down his hospital debt.

“I feel bad having those kinds of obligations outstanding,” he said. “It’ll be paid when it’s paid.”

Thurgood is part of the group called “the Young Invincibles.” Young adults between 19 and 29 have the highest uninsured rate of any age group – they aren’t as worried about getting sick, they’re less likely to have jobs that will offer insurance, and they typically make less money than other age brackets so they can’t buy private insurance. In the last year, 47 percent of people between age 19 and 34 went without health insurance at some point, and one in three is uninsured now.

What Health Reform Means to Him:

A series of changes offered by both the House and Senate’s reform bills mean the “invincibles” will have more options for insurance – whether as a dependent on a parent’s insurance, Medicaid or as a purchase through an exchange — but one option that will no longer be available is skipping health coverage.

For relatively well-off young people, like Thurgood and his wife, health care reform will mean a new health insurance requirement, but not much help affording it.

Both health reform bills mandate that everyone has insurance, which means young adults wouldn’t have the option of staying uninsured unless they want to pay a fine. The House bill would fine them either 2.5 percent of their adjusted income ($1,624 for the Thurgoods) or the price of the lowest premium on the exchange, whichever is lower. The Senate bill would phase in a penalty over the next six years, eventually fining them $750 a person, or $1,500.

As of now, coverage from a parent’s private plan or through a public program that covers children usually ends at age 19. But the both the bills extend the age that children can remain as dependents. The House extends it to the child’s 27^th birthday, and the Senate extends it to the 26^th.

For the poorest group of young people, Medicaid may be an option. The program does not currently cover young adults without a child or a disability, except for in 15 states that have waivers, but that’s about to change. Both the House and Senate bills would extend the population that they cover to include childless adults. (See our coverage of Medicaid and young adults.) The Senate bill also expands Medicaid to cover up to 133 percent of the federal poverty line (about $14,000 for a single person) starting in 2014, and the House bill expands it to 150 percent, or about $16,000, in 2013.

But at his current household income, Thurgood wouldn’t qualify for Medicaid.

If he decided he didn’t want to use his wife’s insurance, both bills would allow him to purchase health insurance through an exchange. However, it’s not clear how much exchanges will benefit healthy young people who earn too much to also qualify for government subsidies.

The House plan would create a national exchange, and the Senate plan would create state-based exchanges. The exchanges function like large pooling mechanisms, allowing people who would normally buy insurance through the individual market to buy into one of a menu of private group plans. The House bill also includes a public option – but that did not make it into the Senate version, and House leaders have indicated a willingness to drop it.

If he’s buying through the exchange, Thurgood could choose the Senate’s “young invincible” option, which offers people under 30 bare-bones coverage for a discount price — a possibility that would no longer be open to others who buy through the exchange, since levels of benefits will be set by Congress.

Lower-income young people who qualify for subsidies would probably skip the “invincible” option, because they could buy better insurance with government help, as the Congressional Budget Office has pointed out.

But the Thurgoods earn too much to qualify for subsidies, so buying coverage through the exchange may not help them much. The Thurgoods are above the income threshold to qualify for subsidies for premiums that are offered under each plan, which is 400 percent of the federal poverty line, or $58,280 for a family of two by 2009 standards. (Read our coverage of premium subsidies.)

What Health Care Reform Means for: Medicaid Recipients

2009-12-07T10:36:06-05:00

by Sabrina Shankman and Olga Pierce, ProPublica

Using results from a questionnaire we did with American Public Media’s Public Insight Network, we’re looking at how the proposed health care reforms will actually affect people facing common health care coverage situations. See our previous posts on what health care reform means for the uninsured, the underinsured, small businesses, those enrolled in Medicare programs, and the insured.

Sarah Goodwin, 25

Location: Harveys Lake, Pa. Health Care Status: Medicaid recipient Household Income: $0, but she has a Social Security application pending

Her story:

Sarah Goodwin, who has chronic fatigue syndrome and a slew of immune deficiencies, relies on Medicaid for health coverage.

Medicaid serves low-income and disabled individuals, with the federal government paying for about 60 percent of the program (with a temporary boost of that percentage included in the stimulus bill) and states paying for the rest. Goodwin has experienced firsthand the wide leeway that states are given in determining who is eligible and what services are covered.

In Maine, Goodwin was able to get only temporary Medicaid, which meant she was constantly reapplying, and having to fight to get the medications she needed. Two years later, she has moved from Maine to Pennsylvania, where she says she’s had a better experience. “The Medicaid people here are really helpful,” she says.

Most of the Medicaid-covered services that Goodwin uses are free, with some doctors charging a $3 co-pay.

“I’m really happy with the Medicaid that I have right now, and I would hope that it would stay the same,” she says.

For those, like Goodwin, who have chronic conditions, Medicaid can be a lifeline.

“If I ever miraculously get better, I’m still going to be uninsurable,” she says.

What changes would mean for her:

Goodwin has seen the two sides of Medicaid: first in Maine, where the program didn’t meet her needs, then in Pennsylvania, where it did. Some states offer coverage for children from families with incomes as high as three times the federal poverty line. Other states cut off eligibility at 100 percent of the poverty line. Some states cover childless adults, some don’t. Physical therapy may be covered with a $1 co-payment – or not at all. This variability among states is one of the major complaints about Medicaid, and is one that the Senate and House health care bills attempt to remedy. (You can check out the highs and lows of coverage here.)

Both the Senate and House bills would require all states to have the same income cutoff for Medicaid.

The Senate bill would expand Medicaid to cover those with incomes up to 133 percent of the federal poverty line (about $14,000 for a single person) starting in 2014, while the House bill would expand it to 150 percent, or about $16,000, a year earlier. The Congressional Budget Office estimates that both bills would result in as many as 15 million new Medicaid enrollees by 2019.

Both bills would make low-income adults, like Goodwin, eligible for Medicaid coverage, even if they don’t have children. Currently, only 15 states offer such coverage — which the states pay for on their own. And many of those states have closed their programs to new enrollees because of funding concerns.

To address disparities among states in benefits for childless adults, both bills would define a minimum benefits package, which would include mental health services. The House bill goes one step further, requiring that beneficiaries be offered preventive services and vaccines with no co-payment.

The biggest difference between the House and Senate bills regards another disparity among states that can have a big effect on how easy it is to get care. Medicaid as a whole tends to pay less than other insurers for health services – and in some states a lot less. This means it may be difficult to find doctors willing to accept Medicaid patients.

To avoid this, the House bill would incrementally increase Medicaid payments for primary care to the higher rates paid by the Medicare program. The Senate bill has no such increase.

Medicaid is already notoriously expensive, accounting for about one-fifth of all state spending. Critics of the expansion have argued that expanding the program is an unfunded mandate that would break states’ already strained budgets.

Under both bills, the federal government would pay a higher share of the cost of new Medicaid enrollees than it pays for people in the program now.

In the House bill, the federal government would pay the full cost of coverage for new enrollees until 2015, when the percentage that Washington covers would be set at about 90 percent.

The Senate bill would pay the full cost of new enrollees for the years 2014 to 2016, then gradually adjust the share that Washington pays. From 2019 onward, the federal government would pay 32.3 percentage points more of the cost of each new enrollee. (This would be about 90 percent on average, but with considerable variation from state to state.)

There’s a catch though: States that already offer coverage to adults beyond federal requirements would get less federal help in the years before 2019. Not surprisingly, these states aren’t happy about this, arguing that they are being penalized for their efforts to cover more uninsured residents.

Though the changes would not be cheap for states or the federal government, for Goodwin, they would likely mean easier access to a bolstered Medicaid program.

What Health Care Reform Means for: Those Already Insured

2009-12-01T09:00:56-05:00

by Olga Pierce and Sabrina Shankman

Using results from a questionnaire we did with American Public Media’s Public Insight Network, we’re looking at how the proposed health care reforms will actually affect people facing common health care coverage situations. See our previous posts on what health care reform means for the uninsured, the underinsured, small businesses, and those enrolled in Medicare programs.

Tracy Bullion, 46

Location: Fort Wayne, Ind. Health Care Status: Happy with her insurance — and worried about the cost of reform. Household Income: $110,000

Her story:

Tracy Bullion and her husband -- along with their three kids, ages 11, 14 and 18 -- are happy with their health insurance, which they get through her husband’s employer. “We’ve got good eye, good dental,” she says. “And we’ve worked a long time for it.”

The Bullions pay about $350 a month for a premium. The family has enjoyed good health, except for a lump in Bullion’s breast last year, which turned out to be benign. Their payments for tests on the lump amounted to “$50 here, $100 there,” she said.

Bullion worries that an expanded government role in health care, including a public option, would negatively impact the coverage she has – and the federal budget.

“I just hope that we see a bill out there that makes sense, that isn’t going to put us in such deep, deep debt to where our children and grandchildren are going to be paying for it for the rest of their lives,” she said.

What changes would mean for her:

Neither the House nor Senate bill would require the Bullions to change plans, and the cost of their health insurance probably wouldn’t change much -- but lenient penalties might lead some companies to drop their coverage.

Both the House and Senate bills allow people who are happy with their coverage to keep it, unless it is below a minimum standard, in which case they would have to pay a tax penalty. Since Bullion’s coverage meets the minimum coverage standards set out in both bills, she and her family would not be affected.

There are concerns about employers pushing workers off to public programs, and indeed it has happened before. (See this excellent report on large employers whose workers get coverage through Missouri Medicaid.)

The House and Senate bills include tax penalties for employers over a certain size that choose not to offer coverage – but the Senate’s penalty would be much smaller.

Under the House plan, most employers – including Mr. Bullion’s – would be required to provide health insurance, or else they would be fined 8 percent of their total payroll. But that might actually cost less than paying for insurance itself, because more than half of employers currently pay 10 percent or more of their payroll for health insurance.

The Senate plan would take an even gentler approach. Large employers wouldn’t have to offer health coverage. But for each employee who qualified for a government subsidy to buy insurance – those making less than four times the federal poverty level -- the business would be fined $750 annually. That’s far less than the roughly $4,000 that companies pay on average now for single employee coverage.

Again, employers would have to decide if the benefits of continuing to offer coverage, such as employee morale and avoiding the fine, made it worthwhile. But more businesses might decide that it made sense to end coverage and instead just pay the relatively small fine.

Of course, currently employers can drop insurance benefits with no penalty, and many are doing so as the economy tanks and costs continue to rise.

The reforms being proposed could put some upward pressure on premiums, because both the House and Senate plans would require a comprehensive benefits package. That means all insurance plans would have to offer things like pediatric exams, hospitalization and prescription drugs. In general, the more comprehensive a plan’s coverage, the more it costs. Rules against turning down people with pre-existing conditions are in both bills, and a cap on deductibles in the House bill could also drive up premiums.

On the other hand, proponents of health care reform, including President Barack Obama, have argued that health care providers charge insured people more for health care to recoup the cost of care for the uninsured. Reducing the number of uninsured people could reduce the cost of some kinds of care, potentially reducing premiums. But the evidence of this is somewhat limited.

An analysis of the Senate proposal, by the nonpartisan Congressional Budget Office, did indeed find that the cost of coverage in the individual market would go up about 10 to 13 percent, although that effect would be cancelled out for about half of the people buying insurance on their own because they would receive subsidies.

For people who, like Bullion, purchase insurance through the large group market - an estimated 70 percent of people under the Senate proposal - the CBO found the Senate bill would have a “negligible” effect on the cost of insurance.

The answer to how much the reform proposals would cost taxpayers is nearly as complicated. According to CBO estimates, the Senate plan would include $848 billion in new federal spending over 10 years, and the House plan calls for an eye-popping $1.05 trillion in new spending. Either way, it sounds like a huge drain on the federal budget.

But not so fast.

Both plans would offset the new spending with reductions in other federal health care costs and new sources of revenue.

Under the Senate plan, changes to Medicare, the penalties individuals and businesses would pay for not having insurance, and revenue from taxes on so-called “Cadillac” insurance plans and the health care industry, would generate $859 billion. Taking that into account, the Congressional Budget Office estimates that the Senate plan would actually reduce the deficit by $130 billion over the next 10 years.

The House plan would make many of the same changes, except it would impose a 5.4 percent surcharge on adjusted gross incomes of more than $500,000 for singles and $1 million for joint filers instead of the tax on high-cost insurance plans.

Taking that into account the House plan would reduce the federal deficit by an estimated $138 billion over 10 years, according to the CBO.

The decades after 2010-2019 would be more expensive because many of the reform provisions would not kick in until halfway through this decade, but the cost savings and taxes would start much sooner. For 2020-2029, the CBO estimate is that the plans would basically break even, or result in a small decrease of the federal budget deficit.

This all presumes, of course, that the revenue-raising measures, some of which have already drawn ire, actually make it into the final legislation intact. As some longtime observers of health care reform, like Washington Post columnist David Broder, have pointed out, Congress has struggled before to make some of the proposed changes – especially those pertaining to Medicare.

What Health Care Reform Means for: The Underinsured

2009-11-24T09:12:55-05:00

by Olga Pierce and Sabrina Shankman, ProPublica

Using results from a questionnaire we did with American Public Media’s Public Insight Network, we’re looking at how the proposed health care reforms will actually affect people facing common health care coverage situations. See our previous posts on what health care reform means for the uninsured, small businesses, and those enrolled in Medicare programs.

Mary and Mack Kroner

Age: 53, 57 Location: Austin, Texas Work Status: Employed Health Care Status: Underinsured with a high deductible Income: Combined $50,000 per year

Their story:

Mack is a self-employed cab driver and Mary is a self-employed writer; they both pay for their own health insurance. Though together they pay about $600 a month in premiums, they have what Mary Kroner calls "junk insurance."

Rapidly rising premiums have forced them to increase their deductible every year, and now they have a policy with a $5,000 deductible per illness per year. That means that they've been paying essentially all their health care costs out of pocket. Mary pays $100 for her annual mammogram -- a must because her sister had breast cancer -- but she skips recommended pelvic exams. A recent colonoscopy recommended for Mack after he showed signs of bowel cancer cost them $1,376, roughly half their monthly income.

"We just bite the bullet and don't attend to things because we can't afford it," Mary said.

What Health Care Reform Means for Them:

The Kroners would qualify to purchase insurance through a health care exchange because they are not part of a government program and do not have insurance through their employers. They could choose one from of an array of private plans, and one public plan, that conform to set levels of coverage.

The House plan would create a national exchange, the Senate plan state-based exchanges -- and states would be able to opt out of the public option.

The plans in the exchange are likely to cost less for individuals like the Kroners because they pool risk, much the way that employer policies do. Setting levels of coverage also encourages plans to compete based on price.

Both the Senate and House plans would help the underinsured by requiring generous coverage for preventive care, like Mack's colonoscopy and Mary's mammograms. They would also cap out-of-pocket costs.

The Kroners would also qualify for government help in paying their premiums, but would fare slightly better with the Senate plan. Both plans offer subsidies on a sliding scale, which would ensure that people making less than 400 percent of the Federal Poverty Line would spend only a certain percentage of their salary on premiums. Mary and Mack make about 300 to 350 percent of the poverty line, which in 2009 is $14,570 for a family of two. Under the Senate plan, the Kroners' premium would be capped at 9.8 percent ($4,900). That's $2,300 less than they pay now. Under the House plan, their premium would be capped at 10 to 11 percent of their income ($5,000 to $5,500), which would save the Kroners between $2,200 and $1,700 from their current premium.

Under the Senate and House plans, the Kroners would also qualify for cost-sharing credits.

If the Kroners decided to keep buying private insurance outside the exchange, they would have to buy a policy that covered preventive services, pre-existing conditions, hospitalization and a series of other services ("essential benefits" in official jargon) or they would face a steep tax penalty under both proposals.

Under the House bill, that tax would equal 2.5 percent of their annual income, or $1,250. Under the Senate bill, which phases the penalty in over the next six years, by 2016 they would owe $750 a person, or $1,500.

What Health Care Reform Means for: Medicare Programs

2009-11-17T10:21:48-05:00

by Sabrina Shankman and Olga Pierce

Nov. 17: This post has been updated.

Graydon DeCamp

Age: 75 Location: Elk Rapids, Mich. Work status: Retired Income: About $75,000, including SSI

Medicare Advantage has been a major flash point in the health care reform debate, giving fodder to opponents of reform who say that Medicare would be cut to pay for the proposals. Our analysis of the impact of reforms on one very satisfied Medicare Advantage member finds the changes would be a loss for many seniors, but a win for taxpayers.

About Medicare Advantage: The elderly can participate either in traditional Medicare, which is administered by the government, or in Medicare Advantage, which subsidizes managed care plans administered by private insurance companies.

The private plans offer many perks – low or zero cost-sharing, comprehensive prescription drug coverage, even gym memberships. But they also have a downside: As in other managed care plans, prior authorization is needed for many services, and members are limited to certain doctors and hospitals.

The relatively new Medicare Advantage is more expensive for taxpayers, however. In 2003, the Republican-controlled Congress wanted to make sure that seniors, especially those in rural areas, had access to a range of managed care plans. (This was a problem that plagued an earlier version of the Medicare managed care program.) So it agreed to pay health insurers more per person than it would cost if they were in traditional Medicare. Today that gap is about 12 percent.

Neither the House health care reform bill nor the Senate Finance Committee bill eliminates Medicare Advantage, but both would reduce what the government is willing to pay. The boon for private insurers from higher premium subsidies has long been a prime target for budget savings, especially among Democrats in Congress. So – not surprisingly -- cuts have turned up in the reform bills. Those provisions have proven to be some of the most contentious in the debate. President Barack Obama insists there are not cuts to Medicare in the health care reform packages, though many don’t see it that way.

His story:

Graydon DeCamp says he couldn’t be happier with his Medicare Advantage plan. He switched to it after his premium for traditional Medicare and private supplemental insurance skyrocketed to more than $1,000 a month even though, DeCamp says, he’s a healthy guy.

Now, in Medicare Advantage, he pays $148 per month for a plan that also features low co-payments. A few years ago he had two detached retinas, which resulted in five surgeries. His out-of-pocket expenses, he says, didn’t go over $500 or $600. Prescriptions that he takes for ongoing eye problems cost him $55 every three months.

“I’ve got no complaints,” he says.

What health reform may mean for him:

DeCamp’s premiums will probably increase, and he may have fewer plans to choose from. If the government decreases its subsidies to Medicare Advantage plans, the plans will likely pass their increased costs on to people like DeCamp, resulting in higher premiums. The House bill calls for $172 billion in savings over the next 10 years from reducing Medicare Advantage payments to insurers to the same amount paid for traditional Medicare – a significant chunk of the roughly $570 billion in savings from changes to Medicare overall. Likewise, the Senate Finance Committee’s bill calls for $470.2 billion in Medicare savings, of which 25 percent ($117.6 billion) would come from Medicare Advantage cuts. The bill would generate those savings by establishing a bidding process for plans.

Because DeCamp lives in northern Michigan, he may also see fewer Medicare Advantage plans to choose from as subsidies under both proposals decrease.

Overall, DeCamp would likely fare better under the Senate Finance Committee proposal, which includes more protections to soften the impact of reduced subsidies. If the bids include significant cuts to benefits, the government would temporarily step in.

The proposed reforms also call for some improvements to Medicare Advantage coverage. The Senate Finance bill prohibits managed care plans from charging people more than traditional Medicare for certain services, such as chemotherapy, renal dialysis and skilled nursing care. It also offers bonuses to plans that offer superior quality of care and care coordination. And the House bill provides bonus payments to high-quality plans, and requires that a list of high-quality and improved-quality plans be provided on the Medicare Web site.

If his plan becomes too expensive, DeCamp could switch back over to traditional Medicare. Under both bills, preventive services would be free (see the Senate provision and the House’s). And both have provisions for reducing fraud and waste, which drive up Medicare costs.

Update:This post has been updated to reflect that Medicare Advantage plans include managed care plans, and a similar category of managed care plans called Preferred Provider Organizations, or PPOs. While HMOs generally require approval from gatekeeper doctors for many services, PPOs encourage members to use providers in the network by imposing higher cost sharing for outside services.

What Health Care Reform Means For: Small Businesses

2009-11-09T12:02:51-05:00

by Sabrina Shankman and Olga Pierce

Fairfield Lighting and Design, Office Manager Barbara D’Agostino

Location: Fairfield, Conn. Employees: 12 (10 receiving health insurance) Sales: $2 million annually Payroll: $384,000 annually

Their story:

Fairfield Lighting and Design has been in business since 1972, but it is struggling to cope with tough economic times. It has 12 employees, whose average wage is about $20 an hour. Because of the recession, opportunities to work overtime have dwindled, and the regular hours of some employees have been cut.

The recession has also made it difficult to keep paying their health care costs: Fairfield offers health insurance to 10 of its employees, at a company cost of $550 per employee each month.

The costs to each employee are relatively low. They pay only 20 percent of the premium, or $110 per month. Their co-payments are $15 to see a doctor or $500 for a hospital, and medications cost them $15, $25 or $50, depending on the type of drug.

But that could change. Fairfield Lighting and Design was recently notified that its coverage will be taken over by a new company, probably around the beginning of the year.

“Hopefully when this whole thing goes through maybe we can find something less expensive,” D’Agostino said. “Otherwise the employees may have to contribute a bit more.”

What health care reform would mean for them:

Two of the reform bills require that employers provide some minimum health insurance to employees or pay a penalty. The exception is the Senate Finance Committee bill, which has no employer requirement.

But small businesses are exempt. Because Fairfield Lighting and Design has only 12 employees and a payroll of less than $500,000, it would not be required to provide health insurance under any of the health reform bills.

Each of the three bills gives small businesses tax credits for several years to provide relief from high insurance premiums until more comprehensive reforms are in effect – until 2015 for the House bill, and 2017 in the Senate Finance bill. The Senate health committee bill would offer a credit until state exchanges are up and running -- up to three years. But some plans offer a lot more help than others. The health committee bill would offer Fairfield a tax credit of about $10,000 per year. The others use sliding scales based on employee income, and because Fairfield pays near the top of those scales, it would get a credit of only about $5,000 under the House bill and $2,500 under the Senate Finance Committee bill.

Small businesses would also have the option under all three bills to buy insurance through a health insurance exchange, a pooling mechanism that would allow them to choose from a menu of private plans, which the Congressional Budget Office projects would be cheaper than private plans currently out there for small businesses.

Help won’t arrive right away under any of the proposals. The House bill, which phases small businesses into the exchange based on their size, would make Fairfield wait until 2013. The Finance Committee plan would make Fairfield wait even longer – it won’t set up exchanges for small businesses until 2017. The Senate health committee plan would authorize the Health and Human Services secretary to start giving grants to states to start up health care exchanges right away, but it is unclear how quickly states would move.

What Health Care Reform Means For: The Uninsured

2009-11-02T09:30:46-05:00

by Olga Pierce

Anne Johnson, 41

Location: Corona, Calif. Work Status: Unemployed Income: $0

Her story:

Anne Johnson lost coverage for herself and her 18-year-old son in February when she lost her job as a secretary at a solar energy company, where she was earning about $25,000 per year.

Shortly before she was laid off, a cardiologist told her she needs her aortic valve replaced, but without insurance she can’t afford the surgery. She is supposed to get checkups every six months, but that is also too expensive – so she has put them off. Her last visit to the cardiologist was in January, so she is already three months overdue.

"Right now I have no idea what type of condition I'm in," Johnson said.

What health care reform would mean for her:

Johnson’s son may already qualify for Medi-Cal, the state’s Medicaid program, which covers low-income children if they do not have private insurance, because her son is under age 21. (We let Johnson know that her son may be eligible.)

But if she gets a job that pays roughly the same as she earned before but does not provide health insurance, he would most likely lose his Medi-Cal coverage. The House reform plan, and the Senate Finance Committee plan would standardize Medicaid eligibility across states to 133 percent of the federal poverty line, which amounts to $19,378 for a family of two. The plan from the Senate Health, Education, Labor and Pensions Committee (known as the HELP committee) would expand it to 150 percent of the poverty line, still only $21,855.

Johnson would be able to purchase private health insurance from a gateway or exchange, a state-based pool offering a menu of private insurance plans. The House and the Senate HELP bills would also offer her a public plan.

Her low income would qualify her for a subsidy to help buy insurance through the exchange, according to all three reform proposals.

The House plan and the Senate Finance Committee plan would allow Johnson to choose from four levels of coverage ranging from basic to premium, while the Senate Health, Education, Labor and Pensions Committee does not specify levels of coverage.

But if Johnson remains uninsured, she will have to pay a hefty tax penalty: All three plans impose a highly controversial tax penalty on uninsured individuals. The HELP bill would impose a penalty of $750 per year per person, so Johnson would have to pay $1,500. The Senate Finance plan phases in a penalty of $750 per year per uninsured adult, so Johnson would pay the same amount since her son is 18. The House bill would fine families the cost of a basic health insurance plan from the health exchange, up to 2.5 percent of their taxable income.

Critics of the requirement that all individuals have health insurance say it would in effect increase taxes for poor and middle-class people for not being able to afford health insurance.

Anne Johnson shared her story in response to our "How (if at all) has the health care system failed you?" survey. The survey was created in collaboration with American Public Media's Public Insight Journalism.

If you'd like to share your stories and experiences with ProPublica, join our Reporting Network.

Grading the Public Options That Already Exist

2009-10-28T12:27:02-05:00

by Sabrina Shankman

Nov. 9: This post has been corrected.

Pundits and politicians from both sides of the fence have been hollering themselves blue about a potential public health care option. Instead of relying on private insurers, the government would insure people itself. The idea is that if a government-run option were offered to compete with private insurers, it could help keep pricing in check and ensure quality.

Two of the three health care reform bills in Congress have a public option. What might a public option look like in practice? One way to find out is to look at what's already out there. About a third of Americans already get health care from a publicly administered program. From celebrated programs like the VA's or the military's, to the troubled ones like the Indian Health Services, here's a snapshot of how they actually work:

TRICARE

The good: TRICARE isn't an insurance program -- it's considered a government benefit for active members of the military, retirees and their families. This means that if you qualify, you're automatically covered, regardless of pre-existing conditions. And if you use TRICARE Prime, which operates like an HMO and is the most popular option, there are no out-of-pocket fees so long as you go to a Military Treatment Facility.

The bad: If you enroll in TRICARE Prime, which charges non-active-duty members $230 a year, there are just nominal out-of-pocket expenses to visit non-military providers. But if you only have the default coverage, TRICARE Standard, the fees can be steep. Inpatient costs for civilian facilities under the Standard plan, for instance, are $535 a day.

The ugly: Walter Reed.

Veterans Health Administration

The good: Like TRICARE, it's a government benefit, so if you qualify, you're in. In many cases, that means you're exempt from co-pays and deductibles. If not, costs are comparable to Medicare's. And unlike veterans of previous wars, if you served in Iraq or Afghanistan, the VA will cover you even if you were not injured, because it now recognizes that it can take a few years for symptoms of post-traumatic stress disorder to show. What's more, you can't knock the product -- the VA is known for its high standard of care.

The bad: If you don't sign up within five years of discharge -- and don't qualify based on the VA's enrollment specifications -- you're out of luck.

The ugly: Enrollment has boomed in recent years, because of an influx of vets from Iraq and Afghanistan. But the budget hasn't kept pace. In the last 10 years, the VA's medical spending per veteran increased 23 percent, from $4,374 to $5,390. But health care costs have inflated by 50 percent. Taking that into account, the VA is actually spending $1,184 less on each veteran now.

Indian Health Service

The good: If you're a member of one of the country's 564 American Indian and Alaska Native tribes -- or a descendant -- you are automatically enrolled (although no dice for tribes that aren't federally recognized). To receive services, you have to live on or next to a reservation, and you can visit, for free, any of the IHS or tribal-run hospitals or clinics.

The bad: The coverage is better than nothing ... but just barely. Each year IHS receives about $600 million for Contract Health Services, which covers any services outside the IHS system. In places where IHS already has a hospital, this might pay for visits to a specialist. In locations that just have clinics, the funds have to cover more. But the problem is, the money runs out every year. So if you need to see your cardiologist, get a mammogram or get a colonoscopy, you'd better ask for it in January. Because by March, funds for these will start running low. By June, they will have run dry. (This was explained to us by Elmer Brewster of IHS, who also explained it to Slate.)

The ugly: Let's look at the numbers -- American Indians' life expectancy is 2.4 years less than the overall average, and their infant mortality rate is 8.5 per 1,000 live births, as opposed to 6.8 for the entire country. They are six times as likely to die from tuberculosis, and nearly twice as likely to die from diabetes. Of course, there are multiple factors explaining why Native Americans have more health problems, but health care coverage is likely one of them: While the average health care expenditure in the U.S. is about $6,000 per person, IHS shells out just $2,100.

Healthcare Group of Arizona

The good: The state of Arizona started this program in the 1980s to offer more affordable health insurance to businesses with between two and 50 employees, allowing them to choose from three managed-care options.

The bad: The program operated in the red from 2004 to 2007. While it's back in the black, that is in part because the plans with the lowest deductibles were eliminated. So, where there used to be zero and $500 deductibles, now most are close to $2,000.

The ugly: Even the administrator of the program admits that it might not be the most affordable option. For a small business with a young, healthy staff, you'll do much better on the private market, the administrator, Monica Coury, told us.

Medicare

The good: Taking Part D (the confusing prescription drug program that's administered by private programs) out of the picture, people are basically happy with Medicare. The fees are pretty low, and you can go to any health provider that accepts Medicare -- which means most providers. And studies show that Medicare's administrative costs are low compared with those of privately run programs.

The bad: There's a lot of evidence of wasteful care. The program spends about $10 billion annually in payments to suppliers of medical equipment, but an inspector general for the program estimated last year that as much as $2.8 billion of that was waste. Meanwhile, take a look at the discrepancies in how much patients cost the system. In 2006 in Des Moines, Iowa, Medicare doled out an average of $6,335 in reimbursements per enrollee. The same year in Miami, that average was $16,351.

The ugly: It’s really, really expensive. In 2008, Medicare funding accounted for more than 13 percent of the federal budget, coming in at a whopping $391 billion. (For the sake of comparison, 2 percent of the budget was spent on education). Because it's an entitlement program, there's no way to limit the number of people who qualify, so as baby boomers age into the system, expect to see that budget balloon even more.

Medicaid

The good: More than 50 million low-income people who might otherwise go without insurance have it because of this program. It's state-administered, meaning eligibility can differ, but typically, if you're low-income or are disabled, you qualify.

The bad: Because states decide eligibility, you may qualify in one state, but not in others. For instance, in New York, someone making less than $706 a month qualifies. In Georgia, the bar is set at $235. Of course, cost of living varies geographically too, but eligibility differences go beyond just income. In some states, if you don't have children, or aren't pregnant, you may not qualify at all. One reason for this is a Medicaid waiver program that started during the Bush administration, which allowed states to skirt federal guidelines in order to cut costs and, in theory, better serve the states' Medicaid population. (You can check out waivers in your state here.)

The ugly: As the economy has tanked, more people have joined Medicaid, which has squeezed already tight budgets. Many states have used stimulus funds to supplement their budgets. But when the funds run out, it's unclear what will happen to the program, which accounts for more than one-fifth of total state spending.

Correction: This post originally indicated that if veterans did not sign up within five years of discharge, they would not qualify for Veterans health care. In fact, if a veteran qualifies under the VA's enrollment specifications, they can qualify for care, regardless of how much time has passed since discharge. This articles also originally indicated that if you are low-income, have children or are disabled, you typically qualify for Medicaid. In fact, having children is not, on its own, a way to qualify for Medicaid.

Medicare Drug Planners Now Lobbyists, With Billions at Stake

2009-10-20T17:12:28-05:00

by Olga Pierce

Oct. 21: This post has been corrected.

A version of this story was co-produced with the CBS News investigative unit for CBS Evening News With Katie Couric and aired on that program on Tuesday, Oct. 20, 2009.

Six years ago, a group of lawmakers and aides crafted Medicare Part D, the prescription drug program for seniors that has produced billions of dollars of profits for pharmaceutical companies.

Today, at least 25 of those key players are back, but this time they’re lobbyists, trying to persuade their former colleagues to protect the lucrative system during the health care reform negotiations.

The role of big players like Billy Tauzin — the former Republican representative from Louisiana who is now president of PhRMA, the drug industry’s lobbying group — has been long understood. But a ProPublica analysis shows that the drug industry’s position is also being promoted by other foot soldiers from the Part D legislative process, from committee aides to top Bush administration officials.

The most prominent members of this group include:

Tauzin, former chairman of the House Energy and Commerce Committee, who was instrumental in ensuring Part D’s passage. As PhRMA’s president he reportedly earns more than 10 times what he was paid as a member of Congress
Former Sen. John Breaux, D-La., who fought against allowing drug prices to be negotiated in Medicare Part D. A year after the bill passed, he left the Senate to begin his lobbying career. He now has his own lobbying firm, Breaux Lott Leadership Group, which this year has received $300,000 to lobby for the pharmaceutical industry.
Former Sen. Don Nickles, R-Okla., who helped negotiate the final version of Part D, then left to form his own lobbying firm. Bristol Myers-Squibb paid the Nickles Group $120,000 this year to lobby for, among other things, “health care reform issues related to Medicaid and Medicare.”
Thomas Scully, the former Medicare chief who helped design Part D. Scully obtained a waiver allowing him to discuss job offers before he left his government post. Less than two weeks after the bill passed, he went to work for the lobbying firm Alston & Bird, where he works on behalf of drug companies.

Less familiar names also made the leap to lobbying for the pharmaceutical industry.

Raissa Downs was once a top legislative aide in the Department of Health and Human Services, where she helped spearhead the agency’s efforts to shape Part D. Now she’s a partner at Tarplin, Downs & Young consulting firm, where she is lobbying against changes to Part D.
Michelle Easton has gone through the revolving door several times, working for Breaux, then the industry, then for Senate Finance Chairman Max Baucus, the Montana Democrat who is a key player in the current reform debate. Now Easton works in Downs’ firm.
John McManus, who was staff director of the House Ways and Means health subcommittee when Part D was created, now has his own lobbying firm. Between 2004 and June 2009 the McManus Group earned about $6 million lobbying for PhRMA and various drug companies.

None of this is illegal as long as the former officials abide by a cooling off period —two years for senators and their staff, one year for representatives and their staff, as well as for senior agency staffers — before they personally lobby the Hill. In the interim they are free to accept jobs with lobbying firms and offer advice about strategy, tactics and the intricacies of the law.

“This is a phenomenon that is prevalent throughout Congress,” said Dave Levinthal, spokesman for the Center for Responsive Politics, a nonpartisan group in Washington that tracks lobbying activity. “They’re in Congress, out of Congress – then back lobbying their former colleagues.”

One former Congressional staffer who now works for the pharmaceutical industry refused to be quoted by name but said he sees nothing wrong with a revolving door between the public and private sectors.

“Every time a major bill passes, there is an exodus of Hill staffers,” the former staffer said in an e-mail to CBS News, which worked with ProPublica on this story. “In many cases, they have worked for 2-3 years on the legislation and then they go to work for firms with a stake in the implementation. These staffers, obviously, have a unique understanding of the issue and people are willing to pay a premium for that knowledge – even more so than for their so-called ‘connections.’”

Creating Part D

To understand how the pharmaceutical industry is helping to shape the nation’s health care policies, it helps to understand how the industry’s interests prevailed when Part D was created in 2003.

As ideas for the prescription drug benefit were being debated, several proposals were introduced that would have allowed the government to negotiate for lower drug prices, as it does for the drugs it buys for Medicaid and for the Department of Veterans Affairs.

But after intense lobbying by pharmaceutical companies, and strong-arm tactics by House leaders, the final bill instead specifically barred the government from negotiating lower drug prices. It also banned importation of cheaper drugs from Canada and gave drug companies stronger protections against their generic competitors.

Congressional leaders pulled no punches in making sure the bill passed. In violation of House rules, members were given less than 24 hours to read the 850-page document, and the final vote was called about 3 a.m.

Instead of closing the vote 15 minutes after voting began, as required by House rules, leaders kept the vote open for almost three hours, the longest roll call vote in the history of the House of Representatives, while they worked the floor.

In 2006, Rep. Louise Slaughter, D-N.Y., called that night “the worst abuse of the legislative process I have seen during my 20 years in Congress.”

Indiana Republican Rep. Dan Burton also recalls the night as being ugly. “The votes were there to defeat the bill for two hours and 45 minutes and we had leaders going around and gathering around individuals, trying to twist their arms to get them to change their votes,” Burton told CBS’s 60 Minutes in 2007.

Today, the prices the government pays for drugs through Part D are about 30 percent higher on average than the prices it pays for drugs for Medicaid recipients, according to a 2008 report by the House Committee on Oversight. Another study by an economist at the University of Maryland also found a significant price difference.

Preserving Part D

Now the pharmaceutical industry is fighting for its bottom line again.

Its lobbyists are working against the House version of the health care reform bill, which would require drug companies to give up some of the windfall they gained as low-income seniors were transferred from Medicaid to Medicare during the Part D launch. Unlike Part D, Medicaid has strict rules to make sure it gets the lowest possible drug prices.

The Congressional Budget Office estimates such a requirement would save taxpayers $63 billion over the next 10 years. In the House bill, that money would be used to close the Part D “doughnut hole,” a nearly $3,500 gap in coverage plans that leaves seniors responsible for the full cost of their drugs.

The industry is also fighting a similar but more stringent proposal in the Senate – advocated by two Democratic Senators, Bill Nelson of Florida and Jay Rockefeller of West Virginia – that would save taxpayers more than $100 billion over the next 10 years, according to projections by the Congressional Budget Office.

Instead, the pharmaceutical industry supports the bill passed by the Senate Finance Committee, which apparently reflects an agreement negotiated between committee chairman Baucus, the White House and Tauzin, the former representative turned lobbyist.

Under that agreement, PhRMA would give seniors a discount on drugs they purchase while in the doughnut hole, a concession worth about $30 billion over the next 10 years. But in exchange two of the industry’s biggest legislative worries – any attempt to recover its windfall profits when seniors were moved from Medicaid to Medicare, and the legalization of re-importing cheaper drugs from Canada – would be off the table.

The two bills must still pass their respective houses of Congress. Then they will collide in conference committee negotiations before a final vote is taken.

Calling on former government workers

The skills of government workers turned lobbyists are invaluable to the pharmaceutical industry during these negotiations.

John McManus, for instance, is described on his firm’s Web site as the “chief staff architect” of Part D, who “led the policy development, drafting and negotiations with interest groups” associated with the bill. That claim is based on his years as staff director for the House Ways and Means health subcommittee, including during the original Part D debate.

Before McManus went to work for the committee, he was a senior associate at pharmaceutical manufacturer Eli Lilly & Co. from 1993 to 1997. After he left the government, he founded the McManus Group, a lobbying firm that specializes in health matters. His latest lobbying disclosure indicates he is lobbying in “opposition to Medicare rebates” in the “House Tri-Committee health reform draft.”

Michelle Easton’s career took even more twists and turns.

She started her Hill career in Breaux’s office as legislative director and staff director for the Senate Special Committee on Aging. According to her biography, she “worked extensively on the Medicare and Medicaid programs while working in the Congress, including instrumental work on the Medicare Modernization Act,” the bill that established Part D.

In February 2005, Easton left to become a vice president at PhRMA, where her job was maximizing enrollment as Part D was rolled out. Less than a year later, she returned to the public sector as chief health counsel to Baucus, who opposed price negotiations during the original Part D debate and is now the lead sponsor of the bill that PhRMA supports.

Last year Easton joined Tarplin, Downs & Young, which specializes in health lobbying. So far in 2009, she has lobbied on behalf of Amgen, the Biotechnology Industry Organization, Boston Scientific, Genzyme, Vertex Pharma, Wyeth, AstraZeneca and PhRMA, according to disclosures filed with the House of Representatives.

One disclosure says her work for PhRMA involves “Medicare and Medicaid drug reimbursement, Medicaid rebate.” On behalf of drug maker AstraZeneca she is advocating “Medicare Part D non-interference.”

To advance the pharmaceutical industry’s agenda, lobbyists meet with their former colleagues, attend hearings —and also funnel campaign donations.

Just over a week after moderate Republican Senator Lisa Murkowski voted against a version of health care reform being considered by the Senate health committee, Easton’s colleague, lobbyist Downs, co-hosted a $1,000-a-person fundraising breakfast for Murkowski at Charlie Palmer Steak.

The Capitol Hill restaurant, where Washington’s elite can choose from a breakfast menu that includes quail eggs and fig risotto, is a world away from the Department of Health and Human Services, the dowdy concrete fortress where Downs once spearheaded the agency’s efforts to shape Part D.

Downs’ former boss Thomas Scully — the former Medicare chief who is now senior counsel at Alston & Bird — was the only person mentioned in this article who agreed to be quoted by name. He said he sees nothing wrong with such lobbying efforts.

He also said he has no regrets about his role in getting Part D passed or about his career change. He’s listed in the firm’s disclosures as a lobbyist for drug maker CSL Behring on the topic of the “Medicaid rebate,” but said he isn’t lobbying much for industry these days.

“So much of this is politics,” Scully said. “People took lots of shots at me while I was in government, but it was people trying to get a political gain for five minutes.”

As for the other staffers who are now lobbying, he said, “Generally the people who understand these programs the best are the ones who have been working on them.

“They’re all good people,” he added. If they are lobbying, “they have every right to do it.”

Correction: This post originally stated lawmakers and aides crafted the Medicare Part D plan four years ago. It should have said six years ago. This article also said that Billy Tauzin was a former senator in the 29th graph. He was actually a former representative.

Health Care Reform: Search the Competing Bills—and See What Hoops They Have to Jump Through

2009-09-14T08:45:15-05:00

by Olga Pierce

The hubbub has subsided after President Obama's health care speech, but reform's treacherous route through Congress remains the same.

Obama called for reining in the insurance industry, creating a public option to help make insurance available to everyone, and requiring everyone to have coverage. But he must still reconcile his views with proposals in the House and the Senate, which differ from one another and from what the president outlined.

For people out there who don't like to read 1,000-page bills, we have posted to our document viewer the health care reform bills being considered by Congress. So far, there is one bill in the Senate, with one more to come, and one in the House. With the documents in the viewer you can search for specific terms, or link directly to pages in the bill -- and we'll be keeping the bills up-to-date as they change. (Search the Senate bill and the House bill.)

Here is more about the bills -- and the steps (and senators) they'll have to make it past before they can become laws.

Until last week, President Obama took a hands-off approach to health care reform. Instead, in February he included eight general principles in the presidential budget. The principles laid out requirements of a plan -- it must make insurance available to everyone and address rising costs, for example -- but did not specify policies.

That left Congress to debate many of the contentious issues, including whether to have a public option, and whether everyone should be required to have health insurance.

The three House committees that have jurisdiction over health care matters, Energy and Commerce, Education and Labor, and Ways and Means, all passed a bill in June. Now that it has made it out of committee it must be passed by a majority of House members.

But the House will probably not act until the two Senate committees with jurisdiction over health care settle on a bill. The Senate Health, Education, Labor and Pensions Committee passed its version of a health care reform bill in July, but the Senate Finance Committee, which has jurisdiction over Medicare and Medicaid, has yet to pass a bill.

Though Democrats have a majority on the committee, its chairman, Max Baucus, a Democrat from Montana, initially decided not to move a bill forward without the support of three key moderate Republicans on the committee: Olympia Snowe of Maine, Mike Enzi of Wyoming and Charles Grassley of Iowa. But those three senators and three Democratic negotiators from the committee, a group known as the Gang of Six, failed to reach consensus in time for Obama's speech, as Baucus asked, and he said they will produce a bill by the end of this week or, if necessary, he will move ahead on his own.

Having the support of the Gang of Six -- including the three Republicans -- will both move health care proponents in Congress closer to a filibuster-proof majority of 58 senators and please moderate Democrats who have threatened to vote against the bill. It will also allow proponents of the bill to portray it as bipartisan, and make it an easier sell for Democrats from moderate or conservative districts.

In part because of Baucus' approach, intended to produce a bill that the whole Senate is more likely to pass, there are likely to be significant differences between the two Senate bills. In particular, Baucus has said any bill must cost less than $900 billion, and should not include a public option because that would keep the Senate from passing it.

The Senate could separately consider two different bills from two different committees, but most likely members of the two committees will negotiate a compromise version which will then move to the full Senate for a vote. (Here's a side-by-side comparison of the House and Senate bills (PDF), done by the Kaiser Family Foundation.)

If bills pass in both the House and Senate, representatives of the two houses will meet to negotiate a compromise version. Key sticking points here are likely to be the amount and what kind of help -- including a public option -- that individuals will be given to buy insurance, the size an employer should be before it is required to provide insurance to workers or pay a fee, and cost.

Once the two houses of Congress agree on a compromise bill, both must pass it. If they manage to do that -- regardless of how close it comes to the president's goals -- Obama is almost guaranteed to sign it. It is unlikely he will veto legislation passed by his own party, even if it does not do everything he asked.