Healthcare Reform Signed – Watch Out Below

The deed is done.  Obama’s version of healthcare reform is law and the details continue to trickle out.  My favorite so far is that consumers will be fined $695 to not get insurance — the IRS will keep tabs, but the IRS hasn’t been given any money to enforce the bill (estimated at >$10b annually) — and the IRS has been given no enforcement ability.  People who don’t get insurance will be billed $695, but if they don’t pay, then the IRS can’t take the offender to court, doesn’t charge interest or penalties — in essence,  the IRS has no power to collect.  While stupidity like this kept the cost of the bill down for the CBO, ultimately money will need to be added and the deficit will grow larger.  With the deficit in mind, last week’s US government bond offering went poorly and interest rates ticked up 10-20 basis points.  Increases in interest rates has begun and the market, not the Fed, will push rates higher and ultimately the Fed will be pulled along. If someone needs to pay $150/month for insurance, it seems to me that paying $695 in a fine (assuming the fine actually needs to be …

A Major Week in the History of the U.S.

This coming week may be a major milestone in the history of the United States. The Administration will pull out ALL stops and will do ANYTHING to get their version of the healthcare bill passed. First let’s review the procedures for passage. A couple of months ago the House and Senate passed different versions of the reform bill. Given that the Senate could not pass (by 60 votes) the same bill today, the House needs to pick up the Senate bill and pass it without amendments. The House does not have the votes to pass the original Senate bill, unless they cut a side deal with the Senate. With a side deal in place, the House intends to get the votes to pass the original Senate bill and that will be signed by the President. The deal with the House is that the Senate will introduce another bill to make some budget changes to the original bill, and will move to pass this new bill with the 50 vote reconciliation process of the Senate. The purpose of this new bill is to adjust the final version of the original act, which is necessary to get the House votes necessary for …

We Are So Screwed

I saw an article the other day with this headline:  We Are So Screwed. When I saw the national health expenditure numbers which were released this morning by CMS, I remembered the headline. There are a lot of numbers in the release, so to simply the message, I’ve created this table which I think shows the problem far better than words. Rate of Annual Growth Notes 2008 2009 2010E 2009-2019 National Health Expenditures 4.4% 5.7% 3.9% 6.1% +4.7% with doc pay fix GDP -1.1% 4.0% 4.4% Unrealistically high — 4.4% next 10 years?? Healthcare Spending as % of GDP 16.2% 17.3% 19.3% 1.1% change in 2009 is largest in history Medicaid spending 4.7% 9.9% 7.5% Recession caused uptick in 2009 Medicare spending 8.6% 8.1% 1.5% 6.9% 2010 assumes physicians get 21.3% pay cut If docs pay frozen, NHE rises 4.7%; Medicare 5.1% Private health insurance 3.1% 3.3% 2.8% Out of pocket expenses 2.8% 2.1% 4.8% Hospital spending 4.5% 5.9% 6.1% Physician & clinical spending 5.0% 6.3% 5.9% Prescription drug 3.2% 5.2% 6.3% Source: CMS & Villwock Advisory Services LLC In 2009, Medicaid spending grew by nearly 10% and Medicare over 8%. In 2009, healthcare spending as a percent of GDP …

Ping Pong

Want to play Ping Pong? Apparently the House and Senate do. The Dems have figured out that they do NOT want a conference committee to reconcile the different version of the House & Senate healthcare reform bill.  To have a conference committee means that they might have to have Reps on the committee.  No way. So instead the House apparently intends to bring the Senate bill to the floor and then offer amendments to the Senate bill.  We should assume that any amendment offered by Dems has been pre-blessed by the Senate.  Once the House has amended the Senate bill the bill is sent back to the Senate for passage. It pings from the Senate to the House and pongs back to the Senate. If the Dems plan everything right, the Senate will then pass the House bill without amendment and it can then be sent on to the President for his signature. The President is meeting with Dem House & Senate leaders today to broker a final deal.  The possibility that this breaks down is small.  The deal will be done shortly.

Senate Passes Healthcare Bill

The Senate passed its version of the healthcare reform bill by a purely partisan vote — 60 to 39. The next step is critical in the bill’s progress.  Now that the House and Senate have passed different bills either the bills will go to a Committee made up of representatives of both the House & Senate, or the House will take up the Senate bill. Ultimately the House & Senate must have the same bill in order for it to go to the President.  There is little doubt that compromises will be found — i.e. representatives and senators paid off — to get this bill passed in some form.  We have already seen the pay off in Nebraska and Louisiana and surely more is coming. Healthcare in the U.S. will be changed forever — not a good thing.  Once the bill is passed, then it will be up to CMS and other government officials to implement.  If the implementation of the Balanced Budget Act of 1997 is any indication, the implementation of the bill will be far more important than the bill itself.  Providers of healthcare services will need to be extra cautious.