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Health Care and Education Reconciliation Act of 2010

From Wikipedia, the free encyclopedia

Health Care and Education Reconciliation Act of 2010
Great Seal of the United States
Long titleAn Act to provide for reconciliation pursuant to Title II of the concurrent resolution on the budget for fiscal year 2010 (S. Con. Res. 13).
Enacted bythe 111th United States Congress
Public law111-152
Statutes at Large124 Stat. 1029 thru 124 Stat. 1084 (55 pages)
Acts amendedPatient Protection and Affordable Care Act
Legislative history
House votes by congressional district.   Democratic yea on both votes   Democratic nay on both votes   Democratic nay on first vote, not voting on second   Republican nay on both votes   Republican nay on first vote, not voting on second   Republican nay on first vote, no representative seated on second   No representative seated
House votes by congressional district.
  Democratic yea on both votes
  Democratic nay on both votes
  Democratic nay on first vote, not voting on second
  Republican nay on both votes
  Republican nay on first vote, not voting on second
  Republican nay on first vote, no representative seated on second
  No representative seated
Senate vote by state.   Democratic yea   Democratic nay   Independent yea   Republican nay   Republican not voting
Senate vote by state.
  Democratic yea
  Democratic nay
  Independent yea
  Republican nay
  Republican not voting

The Health Care and Education Reconciliation Act of 2010 (Pub.L. 111–152, 124 Stat. 1029) is a law that was enacted by the 111th United States Congress, by means of the reconciliation process, in order to amend the Patient Protection and Affordable Care Act (Pub.L. 111–148). The law includes the Student Aid and Fiscal Responsibility Act, which was attached as a rider.

It was passed by the House of Representatives on March 21, 2010, by a vote of 220–211, and on March 25 passed the Senate by a vote of 56-43, after having two minor provisions relating to Pell Grants stricken under the Byrd Rule. A few hours later, the amended bill was passed by the House with the vote of 220-207.

The Health Care and Education Reconciliation Act of 2010 was signed into law by President Barack Obama on March 30, 2010 at Northern Virginia Community College.

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  • ✪ Transforming Health Care: Understanding the Affordable Care Act and What Might Come Next
  • ✪ Obama care - explained
  • ✪ Presidents Bill Clinton and Barack Obama Discuss Health Care Insurance Coverage (2013)


[SIDE CONVERSATION] There's a line. Let me wait so a few more people can [INAUDIBLE]. [SIDE CONVERSATION] Good afternoon [INAUDIBLE]. We're going to get started, even though we have people who are still coming in. [INAUDIBLE] do have to stop on. The last question will be at 11:50. [INAUDIBLE] scheduling needs. So I wanted to introduce myself for those who don't know me. I'm [INAUDIBLE]. I'm the associate dean for communications and external relations at Harvard Medical School. And I am delighted to welcome all of you to today's Talk at 12. Though in addition to those in the audience, we are also welcoming individuals watching from around the through live streaming. Our last Talk at 12 on antibiotic resistance was viewed by more than 20,000 people around the world in 34 countries, as varied as Colombia, Costa Rico, Morocco, Canada, and Germany. And our last Talk at 12 was also viewed by 93,000 people on Facebook. So welcome to all of you. We predict this talk, transforming health care, understanding the Affordable Care Act, and what might come next will generate similar interest, given the public discourse and the many contrary views of how it should evolve. The Affordable Care Act, the ACA, was signed into law by President Barack Obama, as you may know, in 2010. The intention of the ACA was to provide millions of uninsured, low, and middle income Americans with some level of affordable health care insurance. It was designed to extend care to the most vulnerable, the young, the elderly, and those with preexisting conditions. The ACA continues to be a highly debated issue. There are those who believe health care should be accessible to all, but many don't agree on this basic fact. There are those who agree, but disagree on the methods on how to best achieve this goal. Some feel the most recent bill defeated in March did not go far enough to lower insurance costs. Others favored a more open market for insurers. A new bill is slated to be presented soon, perhaps even this week. As consumers, we're trying to make sense of all of this. And that's why we're delighted to have two of Harvard Medical School's health care policy experts talk us through the complexities. They'll try to anticipate what is in store for us. After the discussion, I hope you'll ask questions. We really want this to be more of a conversation and an exchange. And for those of you who are watching through Twitter, please send us your questions through our Twitter feed. Now today's two distinguished guests, Michael Chernew is a Leonard D. Schaeffer professor of health care policy and the director of the health care markets and regulation lab in the Department of Health Care Policy at HMS. Dr. Chernew's research focuses, most notably, on the causes and consequences of growth and health expenditures, payment reform, and value based insurance design. Dr. Chernew is a member of the Congressional Budget Office panel of health care advisors and of the Institute of Medicine Committee of National Statistics. He is the former vice chair of the Medicare Payment Advisory Committee. And in April 2015, Massachusetts governor Charlie Baker appointed Dr. Chernew to the Massachusetts Health Connector Board of Directors. And he was elected to the Institute of Medicine of the National Academy of Sciences. Joseph P. Newhouse is the John D. MacArthur professor of Health Care Policy and Management at Harvard University and director of the Interfaculty Initiative in Health Care Policy. He is a faculty member of Harvard Medical School, the Harvard Kennedy School, the Harvard TH Chan School of Public Health, and the Harvard faculty of Arts and Sciences. He is also a faculty research associate of the National Bureau of Economic Research. In 1981, he became the founding editor of the Journal of Health Economics, which he edited for 30 years. He is a member of the National Academy of Medicine and has served on the Board of Health Care Advisors, the Committee on National Statistics, the Science Technology and Economic Policy Board of the National Research Council, and was regent of the National Library of Medicine. He has won the Victor R. Fuchs Lifetime Achievement Award from the American Society of Health Economists, as well as numerous other awards and prizes for his research. We're delighted to have such esteemed members of our faculty talk to us today. Thank you both. [APPLAUSE] I thought I would start by telling you how I think about the Affordable Care Act or the ACA. It's inevitable to talk in acronyms when you're dealing with health policy. So I'll say ACA. I think the first thing to say is the ACA has 10 titles and only two of them are really relevant to what you're reading about in the newspapers almost every day. So, for example, there is a title approving pathways for biosimilars or biologics. There's a title on health workforce provisions. Those haven't really attracted much attention. And I think if there were a modification of the ACA to come out of the Congress-- which I'm skeptical about-- I think those titles would remain in place. So the titles that are really at issue are those around the Medicaid expansion and around the health insurance exchanges. It was helpful to me in thinking about those two titles to divide the population into four different groups of people. And I'll talk about them in turn, because the ACA really affects, mainly, two of the four groups. So the first group is probably the bucket that most of you fall into. It's the bucket Mike and I fall into, which is those with middle and large size group insurance. And for talking purposes, let's define that as people that work for employers of more than 50 who provide health insurance. So probably most of you, like the two of us, get our insurance through Harvard. For the most part, the ACA left that group alone. The one thing it did of note was it imposed a tax on employer plans with high premiums called Cadillac tax. The tax was unpopular, even at the time. So it was put off to go into effect until 2018. That was later deferred to 2020. I have my doubts that it will ever go into effect. But you probably haven't noticed much of a change in your benefits here because of the ACA. And that's true, actually, at most large employers. A little bit of, perhaps, anticipatory behavior for the Cadillac tax, but not a lot. So the second group are Medicare beneficiaries. This group, also, was relatively unaffected, compared to the other two groups I'll describe in a minute. There was in the drug benefit part D of Medicare, or is, something called a donut hole gap of no coverage. The amount where that starts and stops varies from year to year. It goes up with inflation. And it applied to generic drugs and brand drugs. There was no coverage for this gap in coverage. And the ACA is closing that gap over a 10 year period. So it'll be fully closed by 2020. Other than that, the ACA, again, mostly left Medicare alone. But it did cut reimbursement to hospitals and physicians. So for the physicians in the room, that was-- I'm sorry, not physicians, just hospitals and other institutional providers. MACRA, which the physicians in the room are probably familiar with, came along subsequently and drastically cut the rate of increase in physician services from fees from Medicare. But that's separate from the ACA. The other thing the ACA did on the Medicare front that's of note, is it established the Center for Medicare and Medicaid Innovation at CMS, which has been busily conducting various demonstrations. And Medicare, actually, started-- such as accountable care organizations-- Medicare, as a result, started to look somewhat different than it did a decade ago. That's all been something that's evolved from the ACA, nothing that was specific in the ACA, except for establishing the Center. So now, to the two groups that were definitely affected. The first group is those who are eligible for Medicaid and those who are uninsured. And the ACA expanded coverage, Medicaid coverage, to all citizens. In its original intent, it was to be to people below 138% of the federal poverty line. And it had a rather coercive provision that if a state didn't expand, and we're talking mainly about childless adults who didn't have coverage prior to the ACA through Medicaid. They weren't eligible for the remnant of our law from the English poor laws of the 19th century that said only, quote, deserving adults should be eligible for state aid. And if you were childless and not disabled, you were not in that category. But the ACA expanded coverage to that category. And, moreover, it said that if the state didn't expand, it would lose all its Medicaid funds. And the Supreme Court, in a case that did find the ACA mandate to have insurance constitutional, also declared that that provision was unconstitutional, ran, quote Justice Roberts, counter to the nation's tradition of federalism. And, therefore, states had the option to expand or not to expand. There's a lot of money on the table, federal money on the table, for the states, the initial three years for the expansion population. And we're going to be funded at 100%, tapering down to 90% in steady state. As of today, 31 states have expanded, and the District of Columbia. 19 have not. So the number of people who are insured through the ACA was not what was originally forecast. That's largely because of the not-- all states not expanding, including Texas and Florida, two of the four largest states. But that was the Medicaid expansion. There have been various provisions by the Obama administration to try to get states to expand, including so-called private option insurance. I won't go into that, unless there questions. Well, that's Medicaid and the uninsured. And, finally, there was the exchanges, which was the individual market and the small group market, meaning people that worked for employers under 50. This program, as you know, has had its problems. But there was-- in any individual insurance market, there's an incentive for, if everybody pays the same premium, for sick people to buy and healthy people not to buy, which economists call adverse selection. This happened in the ACA. The instruments that the ACA had in place to get at this were a mandate, meaning if you didn't buy you paid a penalty, and, importantly, subsidies that were a function of your income. The ACA also divided the country into states, and then marketplaces within states. There are several hundred such local marketplaces. Some of them have not gone well. Some of them have gone reasonably well. The Connector in Massachusetts, that Mike sits on, operates the Massachusetts exchange. I'll refer questions on the Massachusetts exchange to Mike. It's great. [LAUGHTER] And the issue is insurers, a lot of insurers, lost money initially. Some of that was because of actions the Congress took. One of the major issues, at the moment, is whether so-called cost sharing subsidies, which are subsidies that lower the cost sharing at the time of use for people under 250% of poverty, whether those will continue. The president has threatened that they won't. The estimate out there is that if they were removed, premiums on average would go up 19%. But the cost sharing would go up considerably for low income population. And undoubtedly, some of them would pull out. And undoubtedly, they would be the better risks. So this would exacerbate this [INAUDIBLE] whether this would-- what this would do, however, is pretty speculative. So let me stop with that. So to summarize, there's four groups of people. The people that worked for employers with more than 50 employees, ACA has largely unaffect-- left them unaffected. The Medicare beneficiaries closed the donut hole in Part D. Medicaid and the uninsured expanded Medicaid to childless adults at the state's option. And the individual market and small group market, left to buy through either the exchange or a small group market, still exists. But it doesn't function very well. Either some insurance among small employers has been declining and, of course, those people have the option of going to the exchange to buy insurance if they choose. So let stop and turn it over to Mike. Great. Well, thanks Joe. And I'm thrilled to be here. Just coming to listen to Joe's summary of the ACA is mostly what gets me here. But in any case, if you came hoping to know what health care is going to look like in 2020, maybe Joe knows. But, honestly, I don't. And I don't know if anybody does. So I want to talk about broad issues that the country faces regarding health care and how that might play out. So let me start with a very basic point. There's a certain amount of money that the country spends on health care. That money gets financed by the population, writ large. There's no magic tooth fairy that puts $10 thousand under your pillow if you have a heart attack. There's no money tree somewhere or rich Uncle Sam. One way or another, all the money comes from the population, goes through a bunch of other hands, insurers, and others, but ends up-- not all of it, necessarily, but the vast bulk of that-- ends up with a delivery system. And so, hopefully, no one tweeted to the four-year-olds watching us online that there's no tooth fairy, but, nevertheless, one way or another, we have to figure out what we're going to do. And it turns out that if that amount of money that we spend on health care services grows at the rate which it has historically grown, there's no amount of financing discussion, back and forth taxes pooling, that's going to solve that basic problem. We're getting to a point where there's just a fundamental fiscal problem that stems from the overall amount of money, and the rate of growth in the amount of money, that we spend on health care. And so when we think about the Affordable Care Act or whatever set of letters, the American Health Care Act or whatever new letters they put in place, it's all about how to manage that total pool of money. And then how it's going to be paid for. And in thinking about two different strategies, you have to think about the distributional fairness, who's paying and what the provisions of that bill do to control that total amount of spending. It's often said that the Affordable Care Act didn't do much to control health care spending, overall. That's that total pot of money. And that's probably, actually, not really true. Joe mentioned a number of ways they had, in Medicare, a number of provisions, which I think will not only help slow the rate of growth of Medicare health care spending, but, frankly, have spillover effects that might slow the growth outside of Medicare in a whole variety of ways. There's a series of other rules. The Cadillac tax, which Joe mentioned no one likes and has got postponed, but it was, never the less, in the law. There were other provisions in the exchanges of trying to promote insurer competition. So there was a lot of provisions in the Affordable Care Act that were, at least, intended to control health care spending. I'm not sure we've really cracked that nut as to how to do that. But, nevertheless, the Affordable Care Act had a bunch of things. And any replacement will undoubtedly have a bunch of other strategies. And I'm going to talk about those right now. So start with the basic premise that there's a big bag of money that we have that's going to health care in this country. And we have to finance that amount of money, one way or another. I want to talk about three broad ways that we might do that, where the Affordable Care Act sort of fit in that spectrum and where the new administration and Congress might go. So the first way to finance that is through taxation. So death and taxes, necessary evils. Taxes have a dampening effect on the economy. I don't know if anyone loved taxes. But it is a mechanism to finance a whole variety of things that the government does. And, it turns out, that it is mandatory. And it tends to be progressive. Richer people pay more, by and large, than poor people. And you could use that money to finance health care, plus a whole bunch of other things. And, of course, tax policy is incredibly controversial and will also be-- there's probably across the river, somewhere, a seminar at noon on what they're going to do for tax policy. But in any case, it remains a fundamental controversy about how much we should rely on tax financing to support health care. The second way of thinking about supporting health care financing is through premiums. And this gets at why health care is a somewhat unique product. It's not like broccoli. Unlike most products when you purchase the products, the cost of health insurance depends on who buys the health insurance. That is different than most products that you buy, at least qualitatively. It's much more important. So essentially, the health insurance, by its nature, pools people together. And I want to draw a distinction between two types of pooling. There's pooling between my brother and I. And you don't know him. We're actually quite different. But, because you don't know him, I'll make up some things. He may be watching. In any case, imagine we're basically exactly the same. It's the beginning of the year. And we buy insurance. Maybe we have the exact same risk. One of us may be lucky. One of us may be unlucky. It turns out, it's always my brother. But that's a separate story. But at the end of the year, it turns out the lucky one, through their premiums, has effectively subsidized the unlucky one. But at the beginning of the year, it was totally fair, because you didn't know at the beginning of the year who was going to be lucky and who wasn't. So there a cross-subsidisation. But when you bought the insurance, it was really not a question of fairness. Everyone was, basically, pitching in to pool their risks. Then there's another type of coverage, which would say pooling, which might be, say, between me and my dad-- which isn't exactly right since he's on Medicare, but anyway-- where people have fundamentally different risks. You know some people are high risk with chronic disease. And some people are low risk without chronic conditions. And if you force them into the same insurance pool, the people who are healthy are effectively subsidizing the people that are sick. And it's not necessarily simply because some of them are lucky or unlucky. You know going in that some subset of people are paying more than, essentially, their fair share would be if they were just paying for their own risk. But they're paying part for their own risk. And they're also paying for the risk of people that are higher risk than them. And, of course, the people that are a higher risk are benefiting from that cross-subsidy. That sort of pooling is accomplishing both the risk per risk mitigation part of insurance, but it's also accomplishing this type of cross-subsidisation that goes on, in some ways functioning like a tax on the lower risk people. And, as Joe mentioned, there is a tendency for those markets to try and unravel, because you don't want to be an insurance pool with my dad. How they separate out is challenging. The Affordable Care Act, through a whole number of mechanisms, some of which Joe mentioned-- the mandate, the subsidies, a whole bunch of things-- tried to push those groups together. And do it in a way that's essentially trying to bring the healthy people in. But bring them in at a premium that's slightly higher than the actual fair premium for them, because that extra amount of money is being used to finance the people that are somewhat sicker. If they came in and just paid the premium that was the appropriate premium for them, it wouldn't help solve the problem that the sicker people have much higher premiums that they can't really afford. So that's one financing mechanism, which is inherently unstable because of the tendency of the healthy people to try and get away from the sick people, at least in terms of their insurance pool. We love them, but, anyway, you don't want to be in their insurance pool. The other way to do some type of cross subsidy, is to have people pay more for their care, at the point of service. So when you go to the hospital or the doctor, you pay something out of pocket. You're now charging not necessarily the high risk people, but the people who end up sick during the course of the year. Even the healthy people end up sick. There's always that person who was super healthy and got hit by a bus or had a bad disease. Those people may have bought an insurance policy that was very cheap. And they thought it was perfect, because they never need health care. Some of those people that never need health care turns out will need health care. And you can finance some of that health care spending by charging people when they get sick. So that is problematic, in the sense that it imposes risk. Remember insurance-- should be clear from the name-- is designed to mitigate that risk, so you don't face the very high expenses when you get sick. That's, in many ways, the economic purpose of insurance, which is diminished when you have to pay all out-of-pocket. But the advantage of charging people out-of-pocket is it helps them manage their health care spending. It's a little daunting to make that point, sitting next to Joe, because the seminal work on this was done by Joe in the RAND Health Insurance Experiment. But the point remains. If you tax people, or if you just make them buy an insurance policy and pay through their premiums, you're not doing very much to control health care spending growth. If you charge them more at the point of service, for better or worse, you actually will reduce the amount of health care spending. And the price you pay societally for that is your imposing risk on people. And you're typically charging the sick people more than the healthy people, because they're the ones that go to the doctors and the hospitals more. And there's a whole series of other issues related to income distribution consequences of forcing people to pay out-of-pocket when they get sick. The fundamental debate that we're having, now, is between the mechanisms that the Affordable Care Act put in place, some combination of taxing and forcing people into a common pool to handle that financing problem, with where I think the current administration and Congress want to go-- although, frankly, I'm not sure where they want to go. So this is my impression, not necessarily true. But in a way which is charge people more at the point of service by encouraging them to enroll in plans that are less generous than the plans that the Affordable Care Act set in place. So there's a bunch of things-- the essential benefits, the actual value rules-- which determine how generous plans have to be that are in the Affordable Care Act that the current drafts of things have tried to release, relax, combined with reduce taxation by reducing the amount of premium support going into the system. And they are and has been, as Gina pointed out, they were not quite successful in getting a version of this to the floor a month or so ago. And so, now, they're taking a crack at it, again. And the issues, basically, are how much money are they going to put in the system, taxpayer funded money, are they going to put in the system, and how are they going to direct that money to offset the cost, largely, of the people that are using a lot of health care, particularly the people that are high risk people. So there's issues of high risk pools and reinsurance schemes and a bunch of other things that are really too technical to talk about, at least in my intro. But, by and large, it all has the flavor of charging people who are sicker, ex-ante, more than they would have had to pay in the Affordable Care Act and charging the people who get sick during the course of the year more than they would have paid in most Affordable Care Act policies. And you may argue the social equity of that. I don't want to argue the social equity of that. But economists are much more equipped to talk about efficiency than equity. But that seems to be the sort of philosophical direction that the current Congress and administration seems to be going in. And the point they make-- which is, in fact, true-- is we can't manage the rate of health care spending growth that we've experienced in the past going forward. And we need this type of fiscal discipline, if you will, in order to ultimately slow the rate of health spending growth. Whereas, admittedly, that will cause adverse consequences for a range of people, particularly people that are ex-ante sick, people that are depending on the subsidy scheme relatively lower income in the grand scheme of things, or who get sick over the course of the year. And again, the details of that matter. And we haven't yet seen the bill that threads that needle between what is politically acceptable and what they think is-- meets their other fiscal goals. So that's what I think the tension is. That's where I think the debate is. It's, in part, a debate about efficiency and how to control that overall amount of spending that's going into the health care system. And it's part a debate about the distributional consequences. Too often, I think, it's poised as a debate about premiums. But, understand, I can make premiums really low, if I just gave everybody a $20,000 deductible. Premiums are just one way by which people pay for their care. And so you take the total cost into account. You think who's going to pay for it. And how is that going to affect the aggregate amount of spending? So that's where, I think, the tension is. And I look forward to questions. Gina might ask some. Thank you, both. Again, if you're watching through Facebook or through our live streaming, send us your questions at @talksat12. T-A-L-K-S-A-T-12. Thank you. Are there questions? We have microphones. [INAUDIBLE] So we are going into the social [INAUDIBLE], why does no incentive, like for the prevention, for example. At the end of the year, if I am having good health, a portion of it should be returned to me, for the insurance costs, just like in taxes. At the end of the year, we do the taxes. And you get some of the more big based on the insurability They would also use the cost of the health insurance, also, would be in it. Could you repeat the question? Yes, I'll repeat the question. So the question is why isn't there more reward for preventive behavior or possibly amounts refunded at the end of the year. I'd make a couple of points. First, the ACA did make all preventive services free. So while there's a lot of cost sharing, high deductible plans, and so forth, in all plans, preventive services are to be free. There's a whole debate about what constitutes preventive services. But it's defined by the US Preventive Services Task Force. That's one point. Second point-- as Mike referred to high cost sharing, large deductibles, co-insurance and so forth, if one is successfully preventing illness, which, of course, could be by lifestyle, such as exercise or diet or tobacco non-use and so forth, one will be spending less on cost sharing, presumptively. It will be going less to the hospital and so forth. So I would say there are rewards and incentives in the ACA for preventive behavior. We can argue about, maybe, they should have been greater. But they are there. And I've said two things first is I'm a huge supporter of prevention. I have, actually, two wristbands on to make sure I get all of my steps, because I'm also a little OCD. But that said, the evidence of prevention, at least all these programs to increase prevention, save money is quite dubious, as a general rule. Picking up on what Joe said, the prevention that is free in the Affordable Care Act is primary prevention, getting largely cancer screenings things like that, as opposed to secondary prevention managing your diabetes, managing your heart disease. And there's a big controversy around that. And I've been quite involved in trying to support that type of prevention. But I think one of the fundamental issues that you raise has to do with the equity between people that are healthy, versus not, at a point in time, and how much the people that have maintained their health should subsidize the people that are less healthy, which again, may be because of their behavior, may be because of a bunch of whole other reasons. And so there's a bunch of discrimination issues that arise in thinking about how much you should charge a healthy person versus a sick person, because only a portion of the health difference is related to prevention or behavior. There's a lot of the health difference that's related to a whole bunch of other things. And that becomes a broader philosophical equity issue, which, gratefully, you asked us not to address. Susan. Thank you. My question is in respect to how healthy are preventative medicine [INAUDIBLE] preventive [INAUDIBLE]. Most of all, there is a lot of genetics material that can make things appear out of space. I am an advocate for health equality. I'm wondering why these [INAUDIBLE] administration is what's the [INAUDIBLE] in place to help the weak, the poor, and the sick try to get a life that they deserve, in which ACA has tried to give to them by making health care affordable and all. I think the quick answer is there are, certainly, some protections and subsidies in the current law. They are not as great as in the Affordable Care Act and, now, reflects a series of priorities that might not match the priorities that you eloquently vocalized. So I don't have a great answer for why they want to do what they want to do. I think it largely has to do with meeting the fiscal challenges that they see in the future. But the debate now is essentially how much of those types of protections and what form they should be in the new rule and what form those protections should take. But I think it's probably safe to say that, for the most part, the protections in what is being discussed moving forward would be weaker than the protections that were under the Affordable Care Act. We're not advocating anything, one way or another, incidentally. I'm just saying that's my take of the situation. Dr. Chernew, Dr. Newhouse, I'm curious. In the new plan that we ant-- what do you anticipate we're going to see, any of the provisions of the Trump, Ryan plan that will be reprised? Well, first of all, I don't think it's 100% we're going to see a new plan. I gave a talk about the future of health care. And my first slide, the title of the slide, said let's start with the honest answer to this question. So I had a picture of a crystal ball. So I-- I just don't know. As Mike said, if they move to the right, they lose votes on the left. I, personally, thought the political history would be they would get a vote out of the House. I was a little surprised it would go to the Senate. The Senate would probably pass some kind of very different bill through reconciliation, so-called. And then the whole thing would probably come apart in conference, because the Senate and the House wouldn't be able to agree on a bill that could pass both houses. But we haven't even gotten to that stage, yet. So I don't want to try to predict what this modified bill will look like. Yeah, I think one of the challenges is there's a number of things that may happen that will affect the way the Affordable Care Act functions. So you should not assume that simply because the Affordable Care Act remains the law of the land that the Affordable Care Act will function the way the Affordable Care Act has functioned-- the biggest of which, Joe mentioned, is the cost sharing subsidies, which are currently being debated and you'll see debated a lot. If they decide-- if they, the administration and Congress, decide not to fund the cost sharing subsidies-- in fact, even if they decide to fund them, but they just wait quite long enough and do a bunch of other things they may cause the exchange, which is one of Joe's four segments, to collapse in a whole variety of ways without having to get anything through the House or the Senate. And the fundamental question, there, will be who is to blame. And if that does happen, and they come to the floor now with a bill having the Affordable Care Act effectively not functioning, what will people on the political left do? So there's one view that they will say, you broke it. You own it. Let's take it to 2018 and let it play out. I'm not saying they should or would do that. There's another view, which is there's so many people that are suffering in a variety of ways. We will accept a much weaker bill going forward, just to get something as opposed to naught. And, again, I don't have a good answer as to how that will play out. But don't believe that simply because they can't get a bill through Congress the Affordable Care Act will function the way that it has. And just to give you a little more detail, the House Republicans, when they were-- when President Obama was in office, brought a lawsuit, saying that the administration-- it was unconstitutional for the administration to pay these subsidies, because the Congress had not appropriated the money. And a federal district court judge in Washington actually found for the House in that lawsuit. And the Obama administration, this was near the end of the Obama administration, appealed. And then we had the election. President Trump was inaugurated. And all of a sudden there was this lawsuit from the House Republicans on appeal to stop the cost sharing subsidies. The Trump administration could, of course, decided to drop the appeal, in which case, the cost sharing subsidies would-- the federal district court judge decision that they were unconstitutional would have held. And they would have disappeared. So the House, which now, since the Republicans were now the governing party, was having second thoughts about whether they really wanted to do this. Ask the court, the appeals court, for a stay, which the appeals court granted. So the original decision is stayed. The stay expires May 22nd. But, as Mike said, the insurers have to decide what they're going to do before then about submitting bids for 2018. At least, in most states they're going to have to decide. Some states have given an extension to June 1, but that's still a very narrow window. So if the exchanges are going to function reasonably well in 2018, it's going to be important for there to be some clarity about what's going to happen with these cost sharing subsidies in the next few weeks. We have a question from Twitter. This question is from Michael Chernew. Medicare faces long term fiscal challenges. How do you see reform of Medicare taking place? Will benefits be cut or will premiums or cost be sharing-- I'm sorry. Will premiums or cost sharing be increased? Medicare does face fiscal challenges going forward, largely, because of the demographics, quite frankly. It turns out when you have more people on Medicare, you have to have the people paying taxes pay more. That's-- you don't need a lot of math to figure that out. And that becomes problematic in a variety of ways, at least politically, quite problematic. As Joe mentioned in his excellent summary, there was a lot that was put in place in the Medicare program to try and control the rate of spending growth per capita through reducing fees to facilities, through innovation and payment, through the Center for Medicare Innovation, the Innovation Center. I believe that the hope is that those things will pay off in a way that will alleviate the pressure on Medicare and any shortfalls be made up through taxes. I do not see further fee cuts in the future. Physicians are going to get a fee in inflation adjusted terms anyway, given the MACRA law that Joe mentioned. And the facilities are getting fee increases that are below the cost of their inputs. So I don't see fees going up more slowly. And I don't see dramatic changes to make benefits less generous, just given the way that the population is on Medicare votes. So my sense is that if they can't-- if those things don't work sufficiently, there will be some attention to either taxes, maybe eligibility rules in a variety of ways, maybe means testing premiums in Medicare, things of that nature. But I think the hope in the near term is that the things put in place as part of the Affordable Care Act and other laws like MACRA will be sufficient to control the rate of spending growth. Although admittedly, the current forecast suggests that's not the case when you get out to 10 years from now. But we will have to see how that plays out. There is a related feature of the Affordable Care Act, which is a surcharge of 9/10 of a percent on income for high income individuals to the payroll tax to finance Medicare. If that is repealed, which is part of the Republican bill that didn't pass, that would advance the time at which the Part A, that's the hospital part of Medicare, goes to a zero balance, which the press says means go broke. But that's not quite right. That goes back from 2028 to 2025. So there is an impact on Medicare, but of a larger financing problem. Another question. It Seems to me that part of the problem is the evolution of the term insurance, which really is for something that's unlikely, like a tornado. If you look at people who are under Medicare age, the majority of patients who will have the majority of costs, we know them already. It's not a surprise, because they have chronic conditions. The majority of costs, now, go to people who already have a diagnosis. It seems that we need to work much harder at identifying those groups, figuring out how to care for those, and then the truly low risk people leftover, as you discuss, become a simpler issue. And plus, that improves the incentives to get really good care for these chronic conditions that we already know are very expensive. So that, hopefully, was the theme of my intro, in some ways, that that is the crux of the problem, that there are people that have high expected expenditures to some extent, although not perfectly I might add, to some extent they can be predicted. And the question, then, is who pays for them. The answer is either they pay for themselves, which seems problematic in a bunch of ways, that we pay for them through taxes or by charging the healthier people higher premiums. That's the basic issue. We have not, yet, figured out a great way to control the amount of spending that those people make. And in fact, it has typically not been the case that giving them more care or better care lowers their overall spending, And that's just, unfortunately, the way that the innovations look. To the extent that delivery systems can do a better job of that, then the world would be a better place. But that has been hard to do. No, but I mean, for instance, for renal failure, which is clearly, now, a carve out. At least then we're dealing with the problem that we have, rather than diluting it with a totally separate problem, which is how much to get from the healthy. If we at least are focusing on the individual chronic conditions and what constitutes a high enough risk if they pull out. There are not a lot of things that there's bipartisan agreement on. But there is a fair amount of bipartisan agreement on a move to shift risk downward toward providers, or provider groups, really, which goes under the banner of value based purchasing, which is a little bit of a misnomer in my view. But in any event, it would shift risks somewhat away from insurers or purchasers, including Medicare, toward provider groups, as I said. And one of the reasons, or rationales, for that is that, then, the provider groups would have an incentive to coordinate care for the chronically ill and try to reduce their use of services in the future. We have a question, here, another one, here, and one at the top of the room. Yeah. So this might be a somewhat trivial question. So ACA tries to harmonize, or bring together, very different interests in society. And the American societies are heterogeneous in this, in their risk assessment or social responsibility and so forth. Now, to some extent different states have different overall, average view of these issues, like Massachusetts tends to vote in a different way than, for example, Texas. So why aren't these problems tested for the next 10 years at the state level, trying to find different models, whichever works. For Massachusetts, there's a 99% coverage in health insurance. So other states would try something else that would be more in concert with their own view. So the issue is simple. The first part is just money. Massachusetts gets money. And so how much money should the feds give to the states to do that? And the second one is concern in different parts of the political spectrum about the people that end up in states that have a solution, if you will, or approach to that problem that not everybody likes. So there's some sense in which the federal government is trying to impose certain types of standards across all of the states to manage that issue. Medicaid expansion would be an example of where that would be the case. Though one of the fault lines that runs throughout American history, starting with the Constitution, is the role of the states versus the role of federal government. And you can see that play out, certainly, as Mike said, in the Medicaid decision of the Supreme Court. But at bottom, there's an issue about, for example, should Massachusetts voters have the prerogative to say to residents of Texas that you should provide better health care for poor people in Texas. Or should that be left to people in Texas. Another way to say that is when we say the United States. Is the emphasis on the United? Or is it on the states? And this is just a tension in the American, political, governmental system. It has been there since the founding of the country. And it's still there. So go see Hamilton. [LAUGHTER] We have two more questions. One, and then we'll have to stop. One of my good friends, a former president of one of the partner's hospitals, said something that happened to be the same thing that one of the major fidelity economists mentioned to me, too, on the tennis court one day-- that there's not enough money to afford the Affordable Care Act and so that it was not going to succeed. It was inevitably bound not to work. And then a Republican friend of mine in the Midwest said something I didn't expect to hear from him, which is basically, that he thought that single payer was inevitable, which is kind of consistent with those other two comments. And I wondered what both of you think about the inevitability of single payer? Inevitable, I think, is too strong of a word. But I certainly could see a path should the Affordable Care Act collapse through law or neglect that we move to provide care for people at some basic level. Single payer means different things to different people in a whole variety of complicated ways. But through expansions of Medicaid, through people buying into Medicare, through a whole series of things, we could certainly move in that direction. The notion that there's not enough money for the Affordable Care Act, but there would be for a single payer, doesn't make a lot of sense to me. Again, a lot of that's a lot of complicated hand-waving when the basic point is there's a certain amount of health care spending. There's a certain number of people. The people have to pay for the health care spending. And so one way or another, the question is how much health care are they going to go. And a lot of that not enough money means, is code for, we're not willing to tax ourselves enough. We're not willing to put enough pressure on the suppliers of health care to be able to afford it. But there, also, is the escalation part, that the health care expenses, and you've alluded to this, continue to escalate very steadily. And if we can't solve that, there is-- it's true. If health care spending grows to 2% faster than GDP, it turns out there will, mathematically, be not enough money for health care. We'll be running around healthy and naked, whatever it happens to be. There will be no food. Right? I mean, yes, that's the way the math works out. And so if we don't solve the rate of growth in health care spending part-- it's great to be here to talk about the Affordable Care Act or the American's Health Care Act or whatever other act they want to put in place. But if you can't solve the health care spending growth problem, it's just a matter of time before you have this other problem. And the Affordable Care Act tried to do that. I would just add that single payer is not the only necessary tool for that question. I mean, you can have some kind of all payer rate regulation, which we've had in various states, at times. It hasn't worked very well, but that's a different issue. I'd like to-- Can we take one last question? One last question. Yeah, one last question. And I-- we could be here for another hour. We'll have 12 at noon another time. So I like the example you gave of the bag of money that we all have to split for everybody to have health care. And, from the discussion, it seems that everything that's been going on is people fighting over the same amount of money, and who gets a chunk of it, who gets insurance, who doesn't. I like the direction of the Affordable Care Act in that it's moving towards giving everybody health insurance. My question is what are the provisions. What are examples of provisions that were put in health care laws that would try and focus on spending some of that money on actually reducing the cost of health care, in terms of health care design, for example, new innovations that costs less. Are there any laws that make sure that some of that money goes in that direction to better make use of that money? Well, the thing that comes first to mind was the thing we've already discussed, the Center for Medicare and Medicaid innovation. That was part of the ACA. A lot of Republican voices didn't like that Center when they were out of power, I think, there's been some rethinking about that since they're in power. But one of the things to keep your eye on is what happens to the monies and the authorities of that Center. I think one of the challenges is your basic philosophy to do that there's a view in which the government is more prescriptive. And they take money and they pick things, like information technology or prevention or pick whatever you want, and try and funnel money toward-- telemedicine-- they try to funnel money towards those things. That's one strategy. I'm actually a little skeptical on a lot of that strategy. But that is one strategy. The Affordable Care Act-- and frankly, I think going forward, we'll see more of this-- is less about picking those winners and losers and more about putting the responsibility to develop those innovations on the delivery system by giving the delivery system a set of incentives to be sufficiently innovative underneath. It's turned out that has been a hard thing to have happen. Many people thought, they still think, there's 30% waste in the system. And if we change the incentives, 30% of health care spending will just melt away. And it turns out that the innovations have saved a little bit of money, that it's a lot harder to change provider behavior and come up those innovations. And when you try and find those innovations directly through IT, you don't nearly get the savings. It's proponents of those things said you would get. So I think the Innovation Center that Joe mentioned and, I think, the broad philosophy both of the ACA and of where the system is going outside of the ACA, and where the new administration and Congress would take it, are all about having the incentives go down to the delivery system to let them do what they want to do, as opposed to having the government, certainly the federal government, pick selected winners. And some of the things that might help is relaxing a certain types of regulations-- I won't go through all of them because of time-- to try and give those organizations a little more flexibility to do that. But we're at the beginning of that process. Dr. Newhouse, Dr. Chernew, thank you so much. [APPLAUSE] There's much to talk about. There's much to talk about in the months to come. We'd love to invite you back. [SIDE CONVERSATION]



On March 30, 2010 Obama signed the Health Care and Education Reconciliation Act of 2010,[1] 7 days after he had signed the Patient Protection and Affordable Care Act into law.[2][3] At the end of 2009, each house of Congress passed its own health care reform bill, but neither house passed the other bill. The Senate bill, the Patient Protection and Affordable Care Act, became the most viable avenue to reform following the death of Democratic Senator Ted Kennedy and his replacement by Republican Scott Brown. Lacking a filibuster-proof super-majority in the Senate, the Obama administration and House Speaker Nancy Pelosi began encouraging the House to pass the Senate bill, then pass a new bill to amend it using the reconciliation process.[4]

Under the Fiscal Year 2010 budget resolution,[5] the text of the reconciliation bill submitted to the Budget Committee had to have been reported by the relevant Committees by October 15, 2009.[6] Therefore, the Democrats combined the text of America's Affordable Health Choices Act of 2009 as reported out of the Ways and Means Committee, and as it was reported out of the Education and Labor Committee, and the text of the Student Aid and Fiscal Responsibility Act as reported out of the Education and Labor Committee.[7][8] This version was never meant to be passed; it was only created so that the reconciliation bill would comply with the Budget resolution.[6] The bill was automatically amended to the version that was meant to be passed per the special rule that was reported out of the Rules Committee.[9] The Student Aid and Fiscal Responsibility Act was added to the Reconciliation Act as only one reconciliation bill can be passed each budget year, and it also faced a tough road through the Senate due to Republican filibuster and opposition from several centrist Democratic Senators.[10] The move was also thought to give President Obama two key victories in overhauling the health care and student loan system. It also eventually became clear that the budget savings caused by the student loan bill would become essential to the overall reconciliation bill by reducing the deficit enough for the overall bill to qualify for the reconciliation process.[10]

Passage of the legislation in the United States House of Representatives using the self-executing rule method was considered, but rejected by House Democrats. Instead, on March 21, 2010, the House held a series of votes: the first vote on ordering the previous question on the special rule resolution that set the terms of debate, the second on the rule itself, the third on the Senate bill, the fourth on a minority attempt to amend the reconciliation bill itself, and finally a vote on the reconciliation bill itself.[11] The reconciliation bill passed on a vote of 220–211, with all 178 Republicans and 33 Democrats voting against it.[12]

In the Senate, the bill faced numerous amendments made by the Republicans, which failed. Republicans struck two provisions dealing with Pell Grants from the bill due to violations of budget reconciliation rules, forcing the bill to return to the House.[13] The two provisions were the fourth paragraph of Sec. 2101(a)(2)(C) and Sec. 2101(a)(2)(D).[14][15] On March 25, the bill passed the Senate by a 56–43 vote, with all Republicans and three Democrats (Blanche Lincoln (D-AR), Ben Nelson (D-NE) and Mark Pryor (D-AR)) voting against it.[16] Later that same day, the House passed the amended bill by a 220–207 vote, sending it to President Obama for a signature.[17]


The Health Care and Education Reconciliation Act is divided into two titles, one addressing health care reform and the other addressing student loan reform.

Amending the Senate's Healthcare Bill

Speaker of the House Nancy Pelosi signing the bill after it passed in the House of Representatives on March 26, 2010
Speaker of the House Nancy Pelosi signing the bill after it passed in the House of Representatives on March 26, 2010

The Reconciliation bill made several changes to the Patient Protection and Affordable Care Act that was signed into law seven days earlier on March 23, 2010. These changes include the following:[18]

  • Increasing tax credits to buy insurance
  • Eliminating several of the special deals given to senators, such as Ben Nelson's "Cornhusker Kickback"
  • Lowering the penalty for not buying insurance from $750 to $695
  • Closing the Medicare Part D "donut hole" by 2020, giving seniors a rebate of $250.
  • Delaying the implementation on taxing "Cadillac health-care plans" until 2018
  • Requiring doctors treating Medicare patients to be reimbursed at the full rate
  • Setting up a Medicare tax on the unearned incomes of families that earn more than $250,000 annually.
  • Offering more generous subsidies to lower income groups. Households below 150% of the federal poverty level would pay 2-4% of their income on premiums. Health plans would cover 94% of the cost of benefits.[19] Households with incomes from 150-400% of the federal poverty level ($88,200 for a family of four) would pay on a sliding scale from 4-9.8% of their income on premiums, rest will be covered by government advanceable, refundable tax credit. Health plans would cover 70% of the cost of the benefits.[19][20]
  • Setting a penalty for a company with more than 50 workers not offering health care coverage after 2014, of $2,000 for each full-time worker above 30 employees. For example, an employer with 53 workers will pay the penalty for 23 workers, or $46,000.[19]
  • Increasing Medicaid payment rates to primary care doctors to match Medicare payment rates, which are higher, in 2013 and 2014.[19]
  • Having the federal government pay all costs of expanding Medicaid under the reform until 2016, 95% in 2017, 94% in 2018, 93% in 2019, and 90% thereafter. Some states that already insure childless adults under Medicaid would receive more federal money for covering that group through 2018.
  • Providing a 50% discount on brand-name drugs for Medicare patients starting in 2011. By 2020, the government would pay to provide up to 75% discount on brand-name and generic drugs, eventually closing the coverage gap.[19]
  • Extending the ban on lifetime limits and rescission of coverage to all existing health plans within six months after signing into Law.[19]

Student loan reform

Education in the United States
Diploma icon.png
Education portal
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United States portal

Title II of the reconciliation bill deals with student loan reform. The language is very similar to the Student Aid and Fiscal Responsibility Act that passed the House in 2009; but with some slight variation.[21] The reform package included,[22]

  • Ending the process of the federal government giving subsidies to private banks to give out federally insured loans. Instead loans will be administered directly by the Department of Education.[23]
  • Increasing the Pell Grant scholarship award.
  • For new borrowers of loans starting in 2014, those who qualify would be able to cap the amount they must spend on loan repayment each month to 10% of their discretionary income, down from 15%.[22]
  • For new borrowers after 2014, loans would be eligible to be forgiven to those who make timely payments after 20 years, down from 25 years previously.[22]
  • making it easier for parents to take out federal loans for students.[24]
  • using several billion dollars to fund schools that predominantly serve poor and minority students, as well as increasing community college funding.[23]

Tax avoidance

The law codified the "economic substance" rule of Gregory v. Helvering from 1935, which allows the IRS to invalidate tax avoidance transactions in certain situations.[25]

Deficit effect

The Congressional Budget Office's last estimate predicted that if both bills were passed into law in 2010, the net reduction in federal deficits would be $143 billion over the 2010–2019 period as a result of the proposed changes in direct spending and revenues. That figure comprises $124 billion in net reductions deriving from the health care and revenue provisions and $19 billion in net reductions deriving from the education provisions.[26] The health care and revenue provisions consist in part of several new taxes, fees on health-related industries, and cuts in government spending on healthcare programs like Medicare Advantage.[27]

See also


  1. ^ Pub.L. 111–152, 124 Stat. 1029, codified as amended at scattered sections of the Internal Revenue Code and in 42 U.S.C., 19 U.S.C., and 20 U.S.C.
  2. ^ Obama signs higher-education measure into law William Branigin The Washington Post March 30, 2010.
  3. ^ "Obama To Sign Health Care Reconciliation Bill". March 2010. Archived from the original on March 29, 2010.
  4. ^ Gay, Sheryl (March 17, 2010). "Health Vote Caps a Journey Back From the Brink". The New York Times. Retrieved March 21, 2010.
  5. ^ " | Library of Congress".
  6. ^ a b Klein, Philip (March 15, 2010). "The Health Care "Shell" Game Begins". The American Spectator. Archived from the original on March 22, 2010. Retrieved April 7, 2010.
  7. ^ HR443P1.PS
  8. ^ HR443P2.PS
  9. ^ "Archived copy" (PDF). Archived from the original (PDF) on April 7, 2010. Retrieved April 7, 2010.CS1 maint: archived copy as title (link)
  10. ^ a b Brown, Carrie Budoff. "Loan bill could give Obama twin win". Archived from the original on January 23, 2013. Retrieved January 21, 2011.
  11. ^ "COMMITTEE ON RULES - Senate Amendments to H.R. 3590  Patient Protection and Affordable Care Act H.R. 4872  Reconciliation Act of 2010". Archived from the original on March 24, 2010. Retrieved March 21, 2010.
  12. ^ Roll call vote 167, via
  13. ^ Health Care Fix-It Bill Headed for Revote 25 March 2010
  14. ^ "Archived copy" (PDF). Archived from the original (PDF) on November 3, 2010. Retrieved April 6, 2010.CS1 maint: archived copy as title (link)
  15. ^ "Archived copy" (PDF). Archived from the original (PDF) on November 3, 2010. Retrieved April 6, 2010.CS1 maint: archived copy as title (link)
  16. ^ Roll call vote 105, via
  17. ^ Roll call vote 194, via
  18. ^ "BREAKING -- Reconciliation bill posted - Live Pulse -".
  19. ^ a b c d e f Hossain, Farhana (March 19, 2010). "Proposed Changes in the Final Health Care Bill". The New York Times.
  20. ^ "Policies to Improve Affordability and Accountability". The White House. February 22, 2010. Archived from the original on December 30, 2012.
  21. ^ "Registrant WHOIS contact information verification |".
  22. ^ a b c "Archived copy". Archived from the original on December 5, 2010. Retrieved March 26, 2010.CS1 maint: archived copy as title (link)
  23. ^ a b "What would change if student lending legislation passes". The Washington Post. March 26, 2010.
  24. ^ Big Changes Coming to Student Loans - US News and World Report 24 March 2010
  25. ^ Rose CA. Tax Lawyer’s Dilemma: Recent Developments Heighten Tax Lawyer Responsibilities and Liabilities Archived December 20, 2012, at the Wayback Machine. Columbia Business Law Review. Volume 2011, Issue 1.
  26. ^ "Cost Estimate for Pending Health Care Legislation". CBO Director's Blog. n.d. Archived from the original on March 25, 2010. Retrieved March 21, 2010.
  27. ^ "Health care reform bill 101: Who will pay for reform?". Christian Science Monitor. March 22, 2010. Retrieved March 22, 2010.

External links

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