Nelson: It's important to read health care bill's fine print

In TV ads, Sen. Ben Nelson predicts health care legislation would lower families' costs, protect Medicare and reduce the deficit.

Do experts back him up?

Yes, but . . .

Yes: More than 175 million Americans would pay about the same or less for health insurance premiums than if the bill didn't pass, partly due to new federal subsidies.

But: The Senate bill includes taxes on high-priced plans and would likely increase premiums for 14 million Americans not in group plans who earn too much for subsidies.

Yes: Solvency of the Medicare program would be extended by nine years, to 2026.

But: Much of the plan would be paid for by reducing Medicare payments to hospitals and other providers, which could cause some to go out of business or stop taking Medicare.

Yes: The federal budget deficit would be lowered by more than $130 billion over the 2010-19 time period.

But: Some revenue provisions start immediately while most major spending starts in 2014. The reduction also hinges on Congress breaking past patterns and following through on the Medicare cuts.

***

Sen. Ben Nelson can point to supporting evidence for each of his assertions about the health care bill, but they also come with asterisks.

The health care debate has emerged as a defining moment of the Nebraska Democrat's political career after he delivered the crucial 60th vote to prevent a filibuster by Senate Republicans and advance the bill.

In 30-second ads paid for by the Nebraska Democratic Party, Nelson predicts three main benefits from the bill, but, as with any significant piece of legislation, it's important to read the small print.

Nelson said that while individual portions of the bill may prove flawed, people need to look at the big picture. He believes the legislation represents an improvement over what the country can expect if nothing is done.

“The whole is more than the sum of the parts here,” Nelson said.

Here is what is in some of the small print related to the senator's pitch about the health care overhaul:

It lowers costs to families and small businesses

The nonpartisan bean counters at the Congressional Budget Office found that the bill would have only a limited impact on the 2016 health care premiums in the largest category of Americans, those covered under employers' large group plans. They compared what average premiums would be in that year under current law with those that would result from the Senate health care bill.

Although the Senate and House bills still must be reconciled into a final product, the Senate is expected to prevail on most significant areas of contention.

For the 134 million Americans covered through large group plans, premiums would be the same or up to 3 percent lower than they would be if the bill were not passed, the budget office said.

Premiums for the 25 million who receive coverage through small group plans would be between 1 percent more and 2 percent less, without taking into account small business tax credits. Those credits would mean 8 percent to 11 percent lower premiums for about 3 million people in this category.

The remaining 32 million people purchasing insurance in the individual market would see premiums of 10 percent to 13 percent higher as a result of the bill — before accounting for federal subsidies.

Those subsidies would be available on a sliding scale to people with incomes up to four times the federal poverty level, meaning that a family of four earning less than $96,000 in 2016 would qualify.

More than half of the 32 million people in the individual market would receive subsidies and, considered as a whole, see much lower premiums. Because the subsidies are on a sliding scale, however, they would tend to provide less relief to those in the upper income brackets, and some are concerned that middle-class families still would struggle to afford the premiums.

Studies commissioned by the health insurance industry have indicated significantly higher premiums are likely to result for those buying insurance in the individual market without subsidies.

Those studies have relied on different assumptions from the budget office, including a key difference over the extent of “adverse selection,” or the practice of young, healthy people waiting until they get sick to purchase insurance.

The budget office has predicted that limited adverse selection would occur under the legislation because of its legal requirement that every American have health insurance coverage, while the insurance industry studies assume that those mandates are not strong enough.

One factor working to push up premiums is that many insurance plans would provide broader coverage as a result of the bill, which is expected to translate into decreased out-of-pocket costs for families. Also, the practice of not covering pre-existing conditions would be eliminated.

One of the big hopes at the heart of the legislation is that the growth of individual premiums can be tamed further as the new exchanges, or central marketplaces for coverage, foster additional competition among insurance companies.

But chief actuary for the Medicaid and Medicare systems Rick Foster said overall national health spending is likely to increase slightly faster as a result of the bill because of the increased number of insured people, who are more likely to seek out health care than the uninsured.

It protects Medicare

The House and Senate bills both include hundreds of billions of dollars in cuts to future Medicare spending. That includes substantial cuts in reimbursements to hospitals and other health care providers, as well as to the Medicare Advantage program through which private insurance companies provide benefits. The Democrats' plan would address the so-called doughnut hole in the Medicare prescription drug benefit — Medicare Part D — gradually shrinking and ultimately eliminating the gap.

Those reductions in spending, coupled with increases in Medicare payroll taxes, would extend Medicare's solvency by nine years to 2026 compared with 2017 under existing law, according to Foster.

In theory, the cuts to reimbursements would not affect benefits, just the amount of money flowing to hospitals for the care they provide Medicare patients. The lost revenue is supposed to be offset by hospitals having to provide less uncompensated care for the uninsured.

But Foster has estimated the reimbursement cuts would threaten the profitability of one in five providers over 10 years. That could mean hospitals shutting their doors or refusing to accept Medicare patients, he said.

Nelson said he will continue working to ensure that critical access hospitals in Nebraska are reimbursed enough to keep the doors open.

“This is not a single piece of legislation that will be put into perpetuity without a requirement for some adjustment, such as making sure that what (Foster) has projected will not occur,” Nelson said.

Indeed, Congress has gotten pretty good at making such adjustments.

Reductions in Medicare payments to doctors have been set to take effect for years. And Congress has moved again and again to forgo them. Before considering the main health care bill, Senate Majority Leader Harry Reid of Nevada brought up a separate measure to eliminate those scheduled cuts in the future at a cost of about $250 billion over 10 years.

That bill, known as the “doc fix,” failed to garner enough votes but is expected to come up again in some form once the health care bill is finished.

When Congress opts to prevent already-planned cuts in Medicare doctor payments, it casts doubt on whether lawmakers will stand by the cuts included in the health care bill.

However, one reason to think Congress could stick by the cuts — without forcing some hospitals out of business — is that this time, 30 million uninsured are gaining coverage, meaning less uncompensated care and more insurance payments for hospitals.

Nelson also said that it's typical for long-range programs such as health care to end up with different funding mechanisms along the way.

It reduces the deficit

The Senate bill as it's written now would reduce the overall federal budget deficit by $132 billion over the next 10 years, according to the budget office.

That calculation, however, is the result of a few only-in-government accounting methods.

For example, some of the tax increases in the bill would begin generating revenue right away, while large spending items in the bill such as the subsidies for premiums don't kick in until 2014.

Spending continues to increase beyond the initial 10-year period, but the budget office said revenue from the Medicare savings and the tax portions of the bill would outpace it, resulting in some additional deficit reduction over the second decade of the bill.

The budget office cautioned, however, that predicting budget deficits so far in advance is fraught with uncertainty. In particular, Congress would be under pressure to scale back taxes in the bill as inflation makes them apply to more people.

The bill's Medicaid expansion also would hit most states with additional costs starting in 2017. Nelson is working to extend to all states the same exemption that was included for Nebraska, but doing so would cut significantly into the bill's deficit reduction.

Nelson contrasted the bill's financing plan with Medicare Part D, which relied on deficit financing. That bill was passed in a Republican-controlled Congress.

“At least there's an effort here to try to (pay for) this legislation.”

Contact the writer: 202-662-7270, joe.morton@owh.com

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