WASHINGTON BUREAU – President Barack Obama now has listed what he says are 3 elements that must be included in any health reform legislation that he is willing to sign.

Obama says an acceptable health reform package must provide consumer protections for those with insurance; create an exchange that individuals and small businesses can use to buy affordable coverage; and establish a requirement that people who can afford insurance have insurance.

Obama described the requirements Wednesday during an address to a joint session of Congress.

Any individual health coverage mandate should include hardship exemptions, Obama said.

Obama also called for health insurance tax credits for small businesses and for uninsured individuals; a requirement that most employers provide health coverage; and medical malpractice reforms.

Obama recommended that Congress adopt a proposal suggested by Sen. John McCain, R-Ariz., during the presidential campaign to rein in defensive medicine costs by limiting medical malpractice lawsuits. Obama said the U.S. Department of Health and Human Services should start demonstration projects in states to test new models to address medical malpractice.

Obama endorsed consideration of a mechanism that would automatically reduce the growth of Medicare if health care reform mandates failed to produce the expected amount of savings.

Obama emphasized his support for a nonprofit, government-run, “public option” health plan, but he said other approaches might be acceptable.
He cited, as an example of an alternative that might be acceptable, a proposal circulating in the Senate Finance Committee that would create a public option “trigger.” Under that approach, health reform legislation might use nonprofit health cooperatives as an alternative to the public option plan, or require creation of a public option plan program if private insurers fail to provide high-quality health coverage at affordable rates.

Obama praised a proposal developed by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, that would impose a fee on insurance companies that offer expensive, “Cadillac” health insurance policies.” Baucus has suggested imposing a 35% excise tax on insurers that sell policies costing more than $8,000 for an individual or $21,000 for a family. The tax would apply to the amount of premiums above the threshold.

Baucus says that, early next week, he will introduce a bill that will form the basis for a Finance Committee markup that will take place the following week. “The time has come for action and we will act,” Baucus says. “We must move forward if we are going to get this bill done by the end of the year…. This is our moment. We have spent many weeks and months on this crucial issue. Now is the time to move forward.”

The president has estimated the cost of implementing the kinds of health system changes that he and many congressional Democrats want to see adopted to be about $900 billion over 10 years.

Obama said he wants to “hold insurance companies accountable,” but he also said, “I have no interest in putting insurance companies out of business.”

Insurance companies “provide a legitimate service, and employ a lot of our friends and neighbors,” Obama said.

Washington Analysis, Washington, says the president’s speech was “not a game changer.”

Whether Congress passes a bill by regular order or through the budget reconciliation process, “the bill has to be more middle-of-the-road (and therefore more likely to be based on the proposal being developed by the Senate Finance Committee,” analysts at the firm write in a comment on the address.

The House health system bill and the other major Senate health system bill both would include a public option plan, the analysts write.

Although some House members say they will vote for a bill only if it includes a public option, some of those are open to voting for a bill that would create a government-run health plan only if private carriers fail to provide acceptable coverage at affordable prices, the analysts write.

THE INDUSTRY REACTS

The National Association of Health Underwriters, Arlington, Va. — “NAHU agrees with many of the reform ideas that President Obama presented last night to the joint session of Congress,” NAHU Chief Executive Janet Trautwein says. “Reigning in health care costs so that more Americans can afford health insurance needs to be the key driver of any comprehensive health care reform package.

“NAHU strongly supports President Obama’s proposal to eliminate pre-existing condition exclusions and provide tax subsidies for low-income individuals and small business owners who cannot afford to offer health insurance to their employees. These market-driven sensible reforms will go a long way in controlling costs and improving access to the health care system.

“NAHU is also encouraged by President Obama’s remarks on the need for meaningful medical malpractice reform. The Department of Human Services estimated that medical liability and defensive medicine reforms alone could save the health care system up to $500 billion dollars.

“While we continue to disagree about the need for a government-run public plan, NAHU was very heartened by the president’s clear willingness to compromise on this issue. A public option may seem like a clever way to expand insurance coverage and lower costs, but our existing public options prove that another government-run health plan will only raise the cost of private insurance and crowd out private alternatives. The pattern of systematically underpaying doctors and hospitals through the Medicare and Medicaid programs have raised the average family’s premiums by $1,800 a year and a public option will only exacerbate this problem — and make health insurance more expensive.

“Americans want our elected officials to work in a bipartisan fashion to forge real solutions to reduce costs, improve quality and expand access and choice. Most Americans like their private health insurance coverage and want health reform to strengthen and build upon what is working, and address those areas where there are shortcomings.

“We look forward to our continued work with the administration, members of Congress and stakeholders to bring the real-world consumer perspective to this debate and share our experience to help enact sensible, bipartition health care reform because insuring America is in everyone’s best interest.”

America’s Health Insurance Plans, Washington
— AHIP President Karen Ignagni, president of America’s Health Insurance Plans, says the health insurance industry continues to oppose any public option proposal

“New health insurance reforms and consumer protections will solve the problem without creating a new government-run plan that will disrupt the quality coverage that millions of Americans rely on today,” Ignagni says.

“Health plans will continue to work with policymakers and stakeholders to advance comprehensive, bipartisan health care reform,” Ignagni says. “The nation cannot afford to let this historic opportunity pass us by.”

Council of Insurance Agents and Brokers, Washington — The president’s “openness to health insurance cooperatives as an alternative to a government insurance program is promising,” Joel Kopperud, CIAB legislative affairs director, says.

“Chairman Baucus’ framework includes state-based cooperatives that we hope would be designed in a way that excludes government involvement and subjects the entities to the same regulatory requirements faced by all private insurers,” Kopperud says.

The CIAB also “appreciates that the President recognizes that medical malpractice needs to be addressed to lower costs,” Kopperud says. “The state-based experiments that the President mentioned is encouraging and we hope leads to broader reforms that will result in increased focus on cost-effective patient care rather than continued practices that only continue to drive up costs – yielding little benefit.”

The National Association of Insurance and Financial Advisors, Falls Church, Va., and AHIA – NAIFA Health and Employee Benefits, Falls Church – “AHIA and NAIFA support the president’s 3 basic principles,” the groups say.

“As a matter of fact, we support the 8 principles he outlined in his budget earlier this year,” the groups add. “Achieving these principles can be accomplished with bipartisan solutions including insurance market reforms to guarantee coverage, medical malpractice reforms, health and wellness incentives, requirement for people who can afford insurance to get insurance and tax credits to help people who can’t. A new government option remains a major concern. NAIFA looks forward to working with the president and Congress to ensure that access to choice, affordability, quality, competition, and professional service through agents and brokers are included in any health care reform legislation.”