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Wednesday, March 31, 2010

Private Health Insurance: Changes Made by H.R. 4872, the Health Care and Education Reconciliation Act of 2010

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

Mark Newsom
Analyst in Health Care Financing

Chris L. Peterson
Specialist in Health Care Financing

On March 23, 2010, the President signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA) as passed by the Senate on December 24, 2009, and the House on March 21, 2010. The new law will, among other changes, make statutory changes affecting the regulation of and payment for certain types of private health insurance. 

On March 21, 2010, the House passed an amendment in the nature of a substitute to H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (hereafter referred to as the reconciliation bill). The reconciliation bill was written as making amendments to PPACA and is now before the Senate for consideration. On March 25, 2010, the bill passed the Senate with amendments and has been sent back to the House. 

This report summarizes only the private health insurance provisions in the reconciliation bill and their impact on PPACA. For a description of all the private health insurance provisions in H.R. 3590, see CRS Report R40942, Private Health Insurance Provisions in Senate-Passed H.R. 3590, the Patient Protection and Affordable Care Act
Among the changes that would be made by the reconciliation bill to PPACA are the following which, except for the first two, would apply beginning in 2014: 

• extend to grandfathered plans, starting for plan years six months after enactment, the prohibition of lifetime limits, prohibition on rescissions, limitations on excessive waiting periods, and a requirement to provide coverage for nondependent children up to age 26; 

• for coverage of adult dependent children prior to 2014, the requirement on grandfathered group health plans would be limited to adult children without an employer offer of coverage; 

• make certain changes to the calculation of the penalties imposed on persons who are not in compliance with the individual mandate; 

• modify a rule regarding the exemption from the individual mandate; 

• make changes to how the employer penalties would be calculated; 

• include full-time equivalents in the counting of full-time employees; 

• strike the employer fee based on extended waiting periods; 

• for grandfathered group health plans, prohibit pre-existing condition exclusions and restrict annual limits; 

• increase premium credits and cost-sharing subsidies to certain low- and middleincome individuals enrolled in private coverage through an exchange; and 

• alter how income is counted for purposes of determining eligibility for premium credits and cost-sharing subsidies.


Date of Report: March 25, 2010
Number of Pages: 13
Order Number: R41126
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Medicaid: The Federal Medical Assistance Percentage (FMAP)

Chris L. Peterson
Specialist in Health Care Financing

Medicaid is a health insurance program jointly funded by the federal government and the states. Generally, eligibility for Medicaid is limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The remainder is referred to as the nonfederal share, or state share. 

Generally determined annually, the FMAP is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita income relative to the national average (and vice versa for states with higher per capita incomes). For FY2010, the regular FMAPs—that is, excluding the impact of the temporary FMAP increase included in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5)—range from 50.00% to 75.67%. 

In the State Children's Health Insurance Program (CHIP), expenditures are generally reimbursed at the enhanced FMAP (E-FMAP). This is calculated by reducing the state share under the regular FMAP by 30%. 

In recent years, the fiscal situation of the states has focused attention on Medicaid expenditures, as well as on changes in the federal share, or FMAP. In the 108th Congress, the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27) provided temporary fiscal relief for states and local governments through a combination of FMAP increases and direct grants. In the 109th Congress, provisions to exclude certain Hurricane Katrina evacuees and their incomes from FMAP calculations and to prevent Alaska's FY2006-FY2007 FMAPs from decreasing were included in the Deficit Reduction Act of 2005 (P.L. 109-171). In the 110th Congress, a temporary FMAP increase was included in economic stimulus legislation that was debated but not adopted at the end of 2008. 

In the 111th Congress, ARRA included a temporary FMAP increase for nine quarters, subject to certain requirements. The Administration estimated that the provision will increase federal payments to states by more than $90 billion. For the first quarter of FY2010, the FMAPs reflecting the ARRA increase ranged from 61.12% (Alaska) to 84.86% (Mississippi). (The ARRA FMAP increase does not affect the CHIP E-FMAP.) The ARRA FMAPs end December 31, 2010. 

On March 10, 2010, the Senate passed H.R. 4213 (American Workers, State, and Business Relief Act of 2010), which includes a provision to extend the ARRA FMAPs by two quarters, through June 30, 2011. The House may consider the Senate-passed version or participate in a conference to resolve their bills' differences. 

The new health reform law enacted March 23, 2010 (P.L. 111-148, H.R. 3590, the Patient Protection and Affordable Care Act, or PPACA), did not extend the ARRA FMAPs. PPACA requires that for states to get any Medicaid matching funds, they cannot make Medicaid or CHIP "eligibility standards, methodologies, or procedures" more restrictive than those in effect on March 23, 2010, PPACA's enactment date. In 2014, the law requires states with Medicaid programs to expand coverage to some currently ineligible low-income parents and childless adults. For these newly eligible individuals, states will have a 100% FMAP for three years and then, for most states, slightly reduced rates well above regular FMAPs. 

The reconciliation legislation (H.R. 4872) would alter some PPACA FMAP provisions. 
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Date of Report: March 25, 2010
Number of Pages: 23
Order Number: RL32950
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Medicaid and CHIP: Changes Made by the Reconciliation Act of 2010 to the Patient Protection and Affordable Care Act (PPACA,H.R. 3590, P.L. 111-148)

Evelyne P. Baumrucker, Coordinator
Analyst in Health Care Financing

Cliff Binder, Coordinator
Analyst in Health Care Financing

Julie Stone
Specialist in Health Care Financing

Elicia J. Herz
Specialist in Health Care Financing

On March 23, 2010, the President signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as passed by the Senate on December 24, 2009, and the House on March 21, 2010. This new law will, among other changes, make several significant statutory changes affecting Medicaid and the Children's Health Insurance Program (CHIP). 

On March 21, 2010, the House passed an amendment in the nature of a substitute to H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (hereafter referred to as the reconciliation bill). The reconciliation bill would make amendments to PPACA and is now before the Senate for consideration. 

The reconciliation bill includes two titles: (1) Coverage, Medicare, Medicaid, and Revenues, and (2) Education and Health. Title I contains provisions related to health care and revenues, including modifications made by reconciliation bill to P.L. 111-148. Title II includes amendments to the Higher Education Act of 1965, which authorizes most of the federal programs involving postsecondary education, and other health amendments. 

This report provides a brief summary of P.L. 111-148 followed by a discussion of the modifications that would be made to the Medicaid and CHIP provisions contained in the reconciliation bill. This report reflects legislative changes contained in the reconciliation bill published by the House Committee on Rules on March 18, 2010. Selected highlights of the Medicaid and CHIP changes that would be made by the reconciliation bill include provisions that 

• increase primary care physician payment rates for selected patient treatments; 

• revise the definition of the average manufacturer price (AMP) to help make AMP more closely reflect the manufacturers' average prices; 

• delay the effective date of the Community First Choice Option; 

• change state FMAP rates for newly eligible populations, and changes income counting rules for certain populations; 

• provide an increase in the territories' spending rate caps beginning with the second quarter of FY2011; 

• provide additional program integrity funding through indexing of the Medicaid Integrity Program for fiscal years beginning with FY2010; and 

• modify Medicaid Disproportionate Share Hospital (DSH) payment reductions. 



Date of Report: March 25, 2010
Number of Pages: 16
Order Number: R41125
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Medicare: Changes Made by the Reconciliation Act of 2010 to the Patient Protection and Affordable Care Act (P.L. 111-148)

Patricia A. Davis, Coordinator
Specialist in Health Care Financing

Paulette C. Morgan
Specialist in Health Care Financing

Holly Stockdale
Analyst in Health Care Financing

Sibyl Tilson
Specialist in Health Care Financing

Jim Hahn
Analyst in Health Care Financing

On March 23, 2010, President Obama signed into law a comprehensive health care reform bill, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), which would, among other changes, make statutory changes to the Medicare program. The U.S. House of Representatives also passed an amendment in the nature of a substitute to H.R. 4872, the Health Care and Education Affordability Reconciliation Act of 2010, on March 21, 2010 (referred to hereafter as the Reconciliation bill), which would amend the PPACA. 

The Reconciliation bill includes two titles. The first title contains provisions related to health care and revenues, including modifications to PPACA's Medicare provisions. The second title includes amendments to the Higher Education Act of 1965, which authorizes most of the federal programs involving postsecondary education. 

Medicare changes that would be made by the Reconciliation bill, as passed by the House on March 21, 2010, to the PPACA are summarized in this report. Among other changes, the Reconciliation bill would: 

• phase out the coverage gap under the Medicare prescription drug benefit and close it by 2020; 

• change the methodology used to determine Medicare Advantage payments, and create an incentive system to reward high quality plans with higher payments; 

• move up reductions in payments to disproportionate share hospitals to 2014, and reduce the cuts; 

• revise the adjustments to annual updates for certain providers; 

• change the qualifying date whereby an existing physician-owned hospital would be exempt from the self-referral prohibition; 

• change the assumptions used to calculate Medicare reimbursement for advanced imaging services; and 

• increase funding for the Health Care Fraud Abuse Control program and provide for enhanced oversight of DME suppliers.


Date of Report: March 25, 2010
Number of Pages: 13
Order Number: R41124
Price: $29.95

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Tuesday, March 30, 2010

Medicare Coverage of Clinical Preventive Services

Sarah A. Lister
Specialist in Public Health and Epidemiology

Kirsten J. Colello
Specialist in Health and Aging Policy

Congress established the Medicare program in 1965 in response to concerns that many seniors did not have health insurance, or had insurance that only covered hospital inpatient services. Historically, Medicare covered only diagnostic and treatment services, not preventive services provided in the absence of illness. Generally, adding coverage of a preventive service required statutory authority. Since 1980, Congress has established Medicare coverage for several preventive services in law. Recently, Congress gave the Secretary of HHS limited authority to cover new Medicare preventive services administratively. 

While many view preventive services as a means to improve the quality of health care by preventing illness, disability, and death, some have also touted prevention as a means to contain health care costs. However, whether expanding coverage or utilization of preventive services would actually save money for Medicare is a matter of debate. While these screenings may be effective in preventing premature death or other unwanted outcomes in some beneficiaries, their broad use may incur a net cost for the Medicare program, rather than savings. 

Efforts have also been made to determine whether specific preventive services are effective, and whether their use would be likely to benefit the patient without posing potential risks from the procedure itself. Congress has in the past sought the advice of expert panels to make these assessments. However, none of these panels is explicitly charged with evaluating preventive services for the purposes of Medicare coverage. For example, current Medicare coverage of preventive services does not always comport with evidence-based recommendations of a prominent expert panel, the U.S. Preventive Services Task Force (USPSTF). A recent USPSTF recommendation regarding screening mammography has refocused congressional attention on the appropriate role of advisory panels with respect to Medicare coverage decisions. 

In November 2009, the House passed the Affordable Health Care for America Act (H.R. 3962). In December 2009, the Senate passed the Patient Protection and Affordable Care Act (an amendment to H.R. 3590). Each bill would, in general, expand Medicare coverage of preventive services, and reduce or eliminate most cost-sharing for these services. The Congressional Budget Office (CBO) has scored most of these proposals as incurring a net cost for Medicare. The House is preparing to vote on Senate-passed H.R. 3590 and on an accompanying reconciliation bill (H.R. 4872) that would change several controversial elements in the Senate-passed bill and otherwise amend it so that its budgetary impact meets the reconciliation instructions in last year's budget resolution. If the House approves H.R. 3590, it will be sent to the President to be signed into law. The reconciliation measure, if approved by the House, would then be taken up by the Senate. 

This report first discusses the legislative and administrative history of Medicare coverage of preventive services. Then it discusses several advisory panels that have evaluated the effectiveness of preventive services, Medicare coverage of these services, or utilization of these services. Next, it discusses whether or not the use of preventive services would be cost-saving or cost-effective for Medicare, and whether utilization of preventive services can be improved. The report then presents relevant proposals in pending health reform legislation. Finally, the Appendix compares current Medicare coverage of preventive services with current USPSTF recommendations.


Date of Report: March 18, 2010
Number of Pages: 34
Order Number: R40978
Price: $29.95

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Monday, March 29, 2010

Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System

Jim Hahn
Analyst in Health Care Financing

Each year since 2002, the statutory method for determining the annual updates to the Medicare physician fee schedule, known as the sustainable growth rate (SGR) system, has resulted in a reduction in the reimbursement rates (or a "negative update"). With the exception of 2002, when a 4.8% decrease was applied, Congress has passed a series of bills to override the reductions. The SGR system was established because of the concern that the Medicare fee schedule itself would not adequately constrain overall increases in spending for physicians' services. While the fee schedule limits the amount that Medicare will pay for each service, there are no limits on the volume or mix of services. The SGR system was intended to serve as a restraint on aggregate spending. If expenditures over a period are less than the cumulative spending target for the period, the update is increased. However, if spending exceeds the cumulative spending target over a certain period, future updates are reduced to bring spending back in line with the target. 

In the first few years of the SGR system, the actual expenditures did not exceed the targets and the updates to the physician were close to the Medicare economic index (MEI, a price index of inputs required to produce physician services) in the first two years (2.3% in 1998 and 1999, compared with a MEI of 2.2% in 1998 and 2.3% in 1999). For the next two years, in 2000 and 2001, the actual physician fee schedule update was more than twice the MEI for those years (5.5% update vs. MEI of 2.4% in 2000, 5.0% update vs. MEI of 2.1% in 2001). However, beginning in 2002, the actual expenditure exceeded allowed targets and the discrepancy has grown with each year, resulting in a series of ever-larger cuts under the formula. 

Some criticisms of the SGR system point to purported flaws in the technical details behind the formula, while others have just expressed displeasure with the resultant outcome. Although modifications have been proposed to replace the SGR system, no proposal has garnered sufficient support and almost all proposals would be expensive to implement compared against the current baseline, which necessarily assumes that significant cuts to the fee schedule will occur. 

Legislative activity in the current session of Congress includes several bills. S. 1776 would have (1) set the update to the conversion factor at 0% for 2010 and in subsequent years, and (2) sunset the SGR system immediately. On October 21, 2009, the cloture motion to proceed to the bill was not invoked by the Senate by a vote of 47-53. H.R. 3961 would create two categories of physician services (evaluation, management, and preventive services in one category with all other physician services in the other), each with its own separate target growth rate and conversion factor update. CBO has estimated that implementing the bill would increase direct spending by about $210 billion over the 2010-2019 period. On November 19, 2009, the House passed H.R. 3961 by a vote of 243-183, but the Senate has yet to take up the bill. The health care reform bill under consideration in the Senate, an amendment in the form of a substitute to H.R. 3590, does not address this issue. The FY2010 Defense Appropriations Act delayed the implementation of the reductions for two months, until February 28, 2010. The Statutory Pay-As-You-Go Act of 2010 (P.L. 111-139) exempts the amount it would cost to freeze payments for five years from PAYGO rules. H.R. 4691, which became law on March 2, 2010, delayed the payment cuts through March 31, 2010. Most recently, a Senate-amended version of H.R. 4213 would extend the delay through September 30, 2010, while a House-amended version of H.R. 4851 would extend the delay through April 30, 2010. However, as of this writing, neither house has yet to take up the version passed by the opposing house.



Date of Report: March 18, 2010
Number of Pages: 20
Order Number: R40907
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Medicare Program Changes in Senate-Passed H.R. 3590

Patricia A. Davis, Coordinator
Specialist in Health Care Financing

Jim Hahn
Analyst in Health Care Financing

Paulette C. Morgan
Specialist in Health Care Financing

Holly Stockdale
Analyst in Health Care Financing

Julie Stone
Specialist in Health Care Financing

Sibyl Tilson
Specialist in Health Care Financing

Medicare is a federal program that pays for covered health services for most persons 65 years and older and for most permanently disabled individuals under the age of 65 years. The rising cost of health care, the impact of the aging baby boomer generation, and declining revenues in a weakened economy continue to challenge the program's ability to provide quality and effective health services to its 45 million beneficiaries in a financially sustainable manner. 

On December 24, 2009, the Senate passed its version of health insurance reform, the Patient Protection and Affordable Care Act, in H.R. 3590, as amended by the Senate. This report, one of a series of CRS products on Senate H.R. 3590, examines the Medicare related provisions in this bill. Estimates from CBO on the Senate bill indicate that net reductions in Medicare direct spending would be approximately $400 billion from FY2010 to 2019. Major savings are expected from constraining Medicare's annual payment increases for certain providers, basing payment rates in the Medicare Advantage program on average bids, reducing payments to hospitals that serve a large number of low-income patients, creating an independent Medicare Advisory Board to make changes in Medicare payment rates, and modifying the high-income threshold adjustment for Part B premiums. A new Hospital Insurance tax for high wage earners would also raise approximately $87 billion over 10 years. 

Other provisions in the bill address more systemic issues such as increasing the efficiency and quality of Medicare services, and strengthening program integrity. For example, the bill would establish a national, voluntary pilot program that would bundle payments for physician, hospital and post-acute care services with the goal of improving patient care and reducing spending. Another provision would adjust payments to hospitals for readmissions related to certain potentially preventable conditions. Additionally, the bill would increase funding for anti-fraud activities, and subject providers and suppliers to enhanced screening before allowing them to participate in the Medicare program. 

The Senate bill would also improve some benefits provided to Medicare beneficiaries. For instance, Medicare prescription drug program enrollees would receive a 50% discount off the price of brand name drugs during the coverage gap (the "doughnut hole") and the coverage gap would be reduced by $500 in 2010. Other provisions would expand assistance for some low-income beneficiaries enrolled in the Medicare drug program, and eliminate beneficiary copayments for certain preventive care services.


Date of Report: March 18, 2010
Number of Pages: 86
Order Number: R40970
Price: $29.95

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Health Insurance Premium Credits Under H.R. 4872, the Reconciliation Bill

Chris L. Peterson
Specialist in Health Care Financing

Thomas Gabe
Specialist in Social Policy

On March 23, 2010, the President signed into law health reform legislation (H.R. 3590, the Patient Protection and Affordable Care Act, PPACA, P.L. 111-148) that will, among other things, provide "premium assistance credits" beginning in 2014 to help certain individuals pay for health insurance. 

On March 21, 2010, the House passed H.R. 4872, the Health Care and Education Reconciliation Act of 2010, hereafter referred to as the reconciliation bill. The reconciliation bill was written as making amendments to PPACA. 

This report describes the premium credits as reflected in the reconciliation bill (specifically, as amending PPACA). 

Under PPACA, state-established "American Health Benefit Exchanges" will have to be established in every state by January 1, 2014. Exchanges will not be insurers, but will provide qualified individuals and small businesses with access to insurers' qualified health plans in a comparable way. 

Only for purchase of coverage within an exchange, advanceable, refundable premium assistance credits will be available to limit the amount of money some individuals would pay for premiums. Under the reconciliation bill, for example, a family of three just above 133% of the federal poverty line (FPL)—that is, currently with annual income of $24,352—would be required to pay 3% of its income toward premiums ($824 annually, if the proposed premium subsidies were currently in effect). A family of three just under 400% FPL ($73,240), where the premium subsidies end, would be required to pay no more than 9.5% of its income in premiums ($6,958 annually, if the proposed premium subsidies were currently in effect). 

Although the premium credits will not be available until 2014 under PPACA, the illustrations provided in this report are based on current FPLs, to reflect how the premiums families would pay compare to their current income levels. 

Relative affordability of health insurance premiums individuals and families might face within health insurance exchanges would likely vary from exchange to exchange based on a host of factors, including enrollees' age, the health of the people actually enrolled in the plan, the varying prices paid by plans for medical goods and services, the breadth of the provider network, the provisions regarding how out-of-network care is paid for (or not), and the use of tools by the plan to reduce health care utilization (e.g., prior authorization for certain tests). Examples shown in this report depict a range by which premiums might reasonably be expected to vary based on enrollees' age, and variation in medical costs across geographic areas, for purposes of illustration only. Actual premiums would likely vary among health insurance exchanges based on a wide range of factors other than those depicted in this report.



Date of Report: March 24, 2010
Number of Pages: 27
Order Number: R41137
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Friday, March 26, 2010

Health Insurance Premium Assistance for the Unemployed: The American Recovery and Reinvestment Act of 2009

Janemarie Mulvey, Coordinator
Specialist in Aging Policy

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

As the nation enters its third year of the current economic recession, the unemployment rate is currently near 10%. One consequence of unemployment is that people can lose their employer sponsored health insurance coverage. The 111th Congress has passed legislation that begins to address this problem. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) includes provisions to subsidize health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and expand tax credits to unemployed workers through the Health Coverage Tax Credit (HCTC). 

ARRA includes COBRA premium subsidies of 65% to help the unemployed afford health insurance coverage from their former employer. Initially, the subsidy was available for up to 9 months to those individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before January 1, 2010. On December 19, 2009, the Department of Defense Appropriations Act 2010 (P.L. 111-118) extended the eligibility period for the COBRA subsidy by an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was also extended an additional six months (from 9 to 15 months). On March 2, H.R. 4691, the Temporary Extension Act of 2010, was enacted into law and extends eligibility for COBRA premiums subsidies to individuals who are involuntarily terminated through March 31, 2010. 

On March 10, the Senate passed H.R. 4213, the American Workers, State, and Business Relief Act, which extends eligibility for COBRA premium subsidy to individuals who lose their jobs on or before December 31, 2010. Because the original bill, H.R. 4213, was amended by the Senate in the nature of a substitute, the Senate-passed version must now go back to the House for consideration. On March 17, Representative Levin introduced H.R. 4851 to extend eligibility for the COBRA premium subsidy to individuals who are involuntarily terminated through April 30, 2010. 

In addition, a number of provisions in ARRA make modifications to the HCTC and the Trade Adjustment Assistance (TAA) programs. These include increasing the HCTC from 65% to 80% of the cost of qualified health insurance, and expanding the eligibility criteria for TAA assistance (which, in turn, expands HCTC eligibility) to include service sector and public agency workers. 

Whether the unemployed will benefit from the premium assistance programs in ARRA depends on their individual circumstances. Those that are involuntarily terminated and lose their employer-sponsored health insurance may be eligible for the subsidy. Other individuals, although considered to be unemployed, will not meet the criteria of involuntary termination and therefore will not have access to the COBRA subsidy. This group includes unemployed individuals (1) who were terminated but did not have employer-sponsored coverage to begin with, (2) who voluntarily left their jobs, and (3) who are just entering or re-entering the workforce. For those unemployed without health insurance coverage, they either rely on spouses and family members, purchase insurance in the individual market, or remain uninsured. It is estimated that 55% of those who were involuntarily terminated most likely had employer-sponsored coverage prior to being laid off and may benefit from the COBRA subsidies. In addition to those who are unemployed, there are other at-risk groups who are not eligible for the premium assistance provisions in ARRA but may have lost health insurance coverage due to changes in their work status. These groups include involuntary part-time workers and discouraged workers who are no longer seeking employment.


Date of Report: March 18, 2010
Number of Pages: 15
Order Number: R40420
Price: $29.95

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Medicare Program Integrity: Activities to Protect Medicare from Payment Errors, Fraud, and Abuse

Janemarie Mulvey, Coordinator
Specialist in Aging Policy

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

As the nation enters its third year of the current economic recession, the unemployment rate is currently near 10%. One consequence of unemployment is that people can lose their employersponsored health insurance coverage. The 111th Congress has passed legislation that begins to address this problem. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) includes provisions to subsidize health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and expand tax credits to unemployed workers through the Health Coverage Tax Credit (HCTC). 

ARRA includes COBRA premium subsidies of 65% to help the unemployed afford health insurance coverage from their former employer. Initially, the subsidy was available for up to 9 months to those individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before January 1, 2010. On December 19, 2009, the Department of Defense Appropriations Act 2010 (P.L. 111-118) extended the eligibility period for the COBRA subsidy by an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was also extended an additional six months (from 9 to 15 months). On March 2, H.R. 4691, the Temporary Extension Act of 2010, was enacted into law and extends eligibility for COBRA premiums subsidies to individuals who are involuntarily terminated through March 31, 2010. 

On March 10, the Senate passed H.R. 4213, the American Workers, State, and Business Relief Act, which extends eligibility for COBRA premium subsidy to individuals who lose their jobs on or before December 31, 2010. Because the original bill, H.R. 4213, was amended by the Senate in the nature of a substitute, the Senate-passed version must now go back to the House for consideration. On March 17, Representative Levin introduced H.R. 4851 to extend eligibility for the COBRA premium subsidy to individuals who are involuntarily terminated through April 30, 2010. 

In addition, a number of provisions in ARRA make modifications to the HCTC and the Trade Adjustment Assistance (TAA) programs. These include increasing the HCTC from 65% to 80% of the cost of qualified health insurance, and expanding the eligibility criteria for TAA assistance (which, in turn, expands HCTC eligibility) to include service sector and public agency workers. 

Whether the unemployed will benefit from the premium assistance programs in ARRA depends on their individual circumstances. Those that are involuntarily terminated and lose their employer-sponsored health insurance may be eligible for the subsidy. Other individuals, although considered to be unemployed, will not meet the criteria of involuntary termination and therefore will not have access to the COBRA subsidy. This group includes unemployed individuals (1) who were terminated but did not have employer-sponsored coverage to begin with, (2) who voluntarily left their jobs, and (3) who are just entering or re-entering the workforce. For those unemployed without health insurance coverage, they either rely on spouses and family members, purchase insurance in the individual market, or remain uninsured. It is estimated that 55% of those who were involuntarily terminated most likely had employer-sponsored coverage prior to being laid off and may benefit from the COBRA subsidies. In addition to those who are unemployed, there are other at-risk groups who are not eligible for the premium assistance provisions in ARRA but may have lost health insurance coverage due to changes in their work status. These groups include involuntary part-time workers and discouraged workers who are no longer seeking employment.


Date of Report: March 15, 2010
Number of Pages: 15
Order Number: R40420
Price: $29.95

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Unemployment and Health Insurance: Current Legislation and Issues

Janemarie Mulvey
Specialist in Aging Policy

When workers lose their job, they can also lose their health insurance. For people with good health and luck, loss of insurance might not matter very much because they would not use many health care services anyway. However, for people who have health problems or are injured, loss of coverage can be serious. Without insurance, people often have difficulty obtaining needed care and problems paying for the care they receive. Unemployed people who cannot postpone care may incur large bills that add to their financial distress. 

The 111th Congress had passed legislation that temporarily addressed this problem. On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) was signed into law. It included two provisions that help some unemployed maintain or get coverage: a premium subsidy for COBRA continuation coverage, and an increase in the Health Coverage Tax Credit (HCTC). On December 19, 2009, Congress extended the COBRA subsidy for unemployed workers under the ARRA. As part of the FY2010 Defense Appropriations (P.L. 111-118), the eligibility period for the COBRA premium reduction was extended for an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was extended for an additional six months (from nine to 15 months). On March 2, 2010, H.R. 4691 was enacted; it extends eligibility for COBRA premium subsidies for individuals who are involuntarily terminated on or before March 31, 2010. On March 10, the Senate passed H.R. 4213, the American Workers, State and Business Relief Act, which would extend eligibility for COBRA premium subsidy to individuals who lose their jobs on or before December 31, 2010. On March 17, Representative Levin introduced H.R. 4851 to extend eligibility for the COBRA premium subsidy to individuals who are involuntarily terminated through April 30, 2010. In addition, the House is considering the Senate-passed health care reform proposal, H.R. 3590, with some potential changes. If ultimately enacted, it could provide future assistance to the unemployed. 

Future legislative solutions face three broad challenges. First, the unemployed are a diverse population in terms of age, gender, marital status, income, and other characteristics. These attributes suggest they likely have different health care needs and different capacities to pay for care and insurance. Over one-quarter of the unemployed are under the age of 25, a group that as a whole is relatively healthy, whereas about one-third are aged 45 or older. About 40% of households that receive unemployment compensation have incomes under $25,000, whereas about 30% have incomes greater than $50,000. Some people are unemployed for a short period of time, others for years. The diversity makes it difficult to craft targeted remedies that are both equitable and effective. 

A second challenge is that many people do not lose health insurance when they lose their jobs because their employers did not provide it. Among the groups less likely to have employmentbased insurance are workers in the leisure and hospitality industry, part-time workers, and people who were previously family caregivers. Whether legislation should provide assistance to the unemployed in general or just to those who lost coverage involves difficult cost and equity issues, as well as debate over whether they should be helped to obtain public or private insurance. A third challenge is whether legislation should build upon existing federal programs and provisions or should create new solutions. Building upon what is established might be appropriate given the immediate needs of the unemployed and their families, but new approaches might allow solutions that are preferable in terms of long-term needs, equity, and other matters. A major consideration for new approaches is how long the recession will last and how high the unemployment rate will rise. 

Date of Report: March 18, 2010
Number of Pages: 33
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Wednesday, March 24, 2010

Health Benefits for Members of Congress

Barbara English
Information Research Specialist

Members of Congress and retired Members are entitled to participate in the Federal Employees Health Benefits Program (FEHBP) under the same rules as other federal employees. Members meeting minimum enrollment period requirements who are also eligible for an immediate annuity may continue to participate in the health benefit program when they retire. For an additional fee, incumbent Members can receive health care services from the Office of the Attending Physician in the U.S. Capitol; in addition, Members may purchase care from military hospitals using their FEHBP benefit. Members must also pay the same payroll taxes as all other workers for Medicare Part A coverage.


Date of Report: March 16, 2010
Number of Pages: 8
Order Number: RS21982
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Indian Health Care Provisions in H.R. 3962

Roger Walke
Specialist in American Indian Policy

Elayne J. Heisler
Analyst in Health Services

The 111th Congress has devoted considerable effort to health reform that seeks to increase health insurance coverage for more Americans and help control increasing costs while improving quality and patient outcomes. H.R. 3962, the Affordable Health Care for America Act, was passed by the House of Representatives on November 7, 2009. H.R. 3962 is based on H.R. 3200, America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. One major difference between H.R. 3200 and H.R. 3962 is the addition of Division D, "Indian Health Care Improvement," which would reenact, authorize, and amend the Indian Health Care Improvement Act (IHCIA). Division D differs from much of the other divisions of H.R. 3962 in that it targets a specific population group—American Indians and Alaska Natives, a group that, in general, has lower health status, lower life expectancy, and higher rates of a number of diseases, including diabetes, than the U.S. population as a whole. The goal of the division—to improve the health of American Indians and Alaska Natives—is consistent with the changes proposed in other divisions that also propose to improve health care access and quality, augment the health care workforce, and increase access to mental health services. 

This report summarizes the provisions of Division D of H.R. 3962. The division contains two titles. Title I contains three sections (3101-3103), of which Section 3101(a) would replace current IHCIA language with new language that would reenact, amend, and reauthorize all eight titles of IHCIA. Section 3101(a) contains IHCIA's general provisions and its eight titles: (1) Indian health workforce, (2) health services, (3) health care and sanitation facilities, (4) access to federal reimbursements, (5) health services for urban Indians, (6) Indian Health Service (IHS) organizational improvements, (7) behavioral health programs, and (8) miscellaneous. Sections 3101(b) and (c) would make technical corrections to other federal law as necessitated by IHCIA Section 601's creation of a new Assistant Secretary for Indian Health. Sections 3102 and 3103 would make changes to Indian programs not in IHCIA. Title II of Division D contains five sections (Sections 3201-3205), three of which amend the Social Security Act (SSA) as related to American Indians and Alaska Natives. None of these sections amend IHCIA.


Date of Report: March 19, 2010
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A Comparative Analysis of the Indian Health Care Provisions of House-Passed H.R. 3962and Senate-Passed H.R. 3590

Elayne J. Heisler
Analyst in Health Services

Roger Walke
Specialist in American Indian Policy

On November 7, 2009, the U.S. House of Representatives approved health reform legislation, H.R. 3962, the Affordable Health Care for America Act. On December 24, 2009, the Senate approved health reform legislation, H.R. 3590, the Patient Protection and Affordable Care Act. Both of these bills include provisions that would amend and reauthorize the Indian Health Care Improvement Act (IHCIA). IHCIA authorizes many programs and services provided by the Indian Health Service (IHS), sets out the national policy for health services administered to Indians, and states the federal goal to ensure the highest possible health status for Indians, including urban Indians. In addition, it authorizes direct collections from Medicare, Medicaid, and other third-party insurers. This report, one of a series of CRS products on health reform, compares many of the IHCIA provisions included in H.R. 3962 (the House-passed bill) and H.R. 3590 (the Senate-passed bill). 

The two bills would amend IHCIA in different ways. H.R. 3962 would replace the current IHCIA with new language. In contrast, H.R. 3590 would retain the current IHCIA but would amend a number of provisions included in the act. Both bills would include provisions that would amend the Social Security Act (SSA) and other laws as they relate to American Indians and Alaska Natives. 

There are a number of similarities between the two bills. For example, both bills would extend authorizations of appropriations for IHCIA programs indefinitely. Both bills would also permit tribal organizations (TOs) and urban Indian organizations (UIOs) to apply for contract and grant programs for which they are not eligible under the current IHCIA. Each bill would also expand mental health services authorized under IHCIA to create comprehensive behavioral health and treatment programs. 

There are also some salient differences between the two bills. The House-passed bill, but not the Senate-passed bill, would elevate the position of the IHS Director to that of Assistant Secretary of Indian Health. Both bills contain provisions related to American Indians and Alaska Natives in SSA health benefit programs—Medicare, Medicaid and the Children's Health Insurance Program (CHIP)—however, these provisions differ. The House-passed bill contains provisions related to billing SSA health programs, and provisions requiring studies related to American Indians and Alaska Natives enrolled in, and receiving services from, SSA health benefits programs. The Senate-passed bill contains provisions that would permit specified Indian entities to determine Medicaid and CHIP eligibility and provisions that would prohibit cost sharing for Indians whose incomes are at or below 300% of the federal poverty level, who are enrolled in a qualified health benefit plan in the individual private insurance market through the exchange (that would be established in H.R. 3590). The Senate-passed bill, but not the House-passed bill, contains a provision that would require that IHS establish an Office of Direct Service Tribes to serve tribes that receive their health care and other services directly from IHS as opposed to receiving services through IHS-funded facilities or programs operated by Indian tribes or tribal organizations. The Senate-passed bill also includes provisions requiring demonstration projects to construct modular and mobile health facilities and provisions requiring programs related to youth suicide prevention. 
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Date of Report: March 19, 2010
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Health Insurance Continuation Coverage Under COBRA

Janet Kinzer
Information Research Specialist

Meredith Peterson
Information Research Specialist

Most Americans with private group health insurance are covered through an employer, coverage that is generally provided to active employees and their families, and may be extended to retirees. A change in an individual's work or family status can result in loss of coverage. In 1985, Congress enacted legislation to provide temporary access to health insurance for qualified individuals who lose coverage due to such changes. Under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA; P.L. 99-272), an employer with 20 or more employees must provide those employees and their families the option of continuing their coverage under the employer's group health insurance plan in the case of certain events. The coverage, usually for 18 months, can last up to 36 months, depending on the nature of the triggering event. Employers who fail to provide the continued health insurance option are subject to penalties. 

Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8%. Many of these individuals were eligible to continue their employer-sponsored health insurance, but did not elect coverage under COBRA because of the cost. On average, employees pay 27% of the premium for family coverage under an employer-sponsored health insurance plan. Those extending coverage through COBRA can be required to pay up to 102% of the premium, which averaged $13,643 for a family in 2009. Congress addressed this issue under Title III of the American Recovery and Reinvestment Act (P.L. 111-5), which included a temporary 65% subsidy for COBRA premiums. The subsidy is available to individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before March 31, 2010. 

The 111th Congress is currently considering whether to extend COBRA benefits beyond the current coverage. Some argue that even with the subsidy, high premiums make COBRA coverage unaffordable to many. Others maintain that in requiring employers to provide former employees with the option of continuing their health insurance coverage, COBRA has resulted in extra costs for employers (in the form of increased premiums for employers' group health insurance policies), as well as added administrative burdens. 

This report provides background information on continuation health insurance under COBRA and on the COBRA population.


Date of Report: March 19, 2010
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Wellness Programs: Selected Legal Issues

Nancy Lee Jones, Coordinator
Legislative Attorney

Jody Feder
Legislative Attorney

Edward C. Liu
Legislative Attorney

Jennifer Staman
Legislative Attorney

Kathleen S. Swendiman
Legislative Attorney

Jon O. Shimabukuro
Legislative Attorney

Health care costs have risen dramatically in recent years and employers providing health insurance, as well as other insurance providers, have struggled to find ways to contain costs. This has led to the introduction of incentives to promote healthy behaviors, often referred to as wellness programs. These programs take a myriad of forms from providing a gym at the workplace to subsidizing the co-pays of certain medications and linking health care benefits or discounts to certain healthy lifestyles. In Arkansas, for example, state employees who exercise more frequently or eat healthier foods can earn up to three extra days off from work each year. These healthy lifestyle programs can include requirements for no tobacco use as well as requirements for certain cholesterol, blood pressure, or body mass index (BMI) measurements. For example, Scotts Miracle-Gro, a lawn care company, announced a policy that any smoking by employees, whether on or off the job, would result in termination of employment. 

There is a wide variety of wellness programs and the application of existing law to a particular program is highly fact specific. One of the key distinctions is whether the health insurance program is provided by an individual's employer or whether it is provided by another source such as Medicaid. An employer-provided wellness program raises potential discrimination issues since, if the employer obtains information about a health condition, there could be impacts not only on the provision of insurance but also on employment. 

Congress is currently considering major reform of the U.S. health care system, and preventive care has widespread political support. However, several interest groups are concerned about certain forms of wellness programs. This report will examine the legal issues raised by wellness programs, including discussions of the Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination rules, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), other employment discrimination laws such as the Age Discrimination in Employment Act and Title VII of the Civil Rights Act of 1964, as well as Medicaid and applicable tax code provisions.


Date of Report: March 19, 2010
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Genetic Exceptionalism: Genetic Information and Public Policy

Amanda K. Sarata
Specialist in Health Policy and Genetics

The Human Genome Project, from inception through completion, has generated a great deal of debate over the appropriate uses, as well as potential misuses, of genetic information. Legislation that is specific to genetics is predicated on the concept of genetic exceptionalism, or the premise that genetic information is unique and, therefore, merits both special and different, or exceptional, treatment. As applied to public policy, this translates into genetics-specific legislative approaches to various health policy issues, such as the oversight of genetic tests, privacy, and discrimination in health insurance. Amidst great concern over the potential for the misuse of genetic information, most states passed genetics legislation during the past decade and a half in areas such as genetic privacy, genetic discrimination in health insurance, and genetic discrimination in employment. A genetic exceptionalist approach was taken by lawmakers in the Genetic Information Nondiscrimination Act of 2008 (P.L. 110-233). 

This report provides an overview of the nature of genetic information and its implications for individuals, family, and society. Individuals utilize genetic information to guide health care and other decisions, when possible, and may experience anxiety as a result of genetic test results. Genetic test results for an individual may often be informative for other close family members and thus influence their care decisions. Society must grapple with the effect genetic information may have on our conception of disease, as well as its impact on issues like privacy and equity. The report ends by summarizing the main issues involved with a genetic exceptionalist approach to public policy, including defining genetic information; physically separating genetic information from other medical information; unintended disparities between "genetic" and "nongenetic" disease; and the effect of legislation on participation in genetic research, on uptake of genetic technology and on the delivery of high quality health care.



Date of Report: March 19, 2010
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Tuesday, March 23, 2010

Public Health, Workforce, Quality, and Related Provisions in H.R. 3590, as Passed by the Senate

C. Stephen Redhead, Coordinator
Acting Section Research Manager

Erin D. Williams, Coordinator
Specialist in Public Health and Bioethics


Health care reform is at the top of the domestic policy agenda for the 111th Congress, driven by concerns about the growing ranks of the uninsured and the unsustainable growth in health care spending. Improving access to care and controlling rising costs will require changes to both the financing and delivery of health care. Experts point to a growing body of evidence showing that the health care system fails to provide high-quality care to all Americans. 

On December 24, 2009, by a vote of 60-39, the Senate passed a comprehensive health reform bill, the Patient Protection and Affordable Care Act (H.R. 3590, as amended). The legislation is an amalgam of separate measures reported by the Committee on Finance and the Committee on Health, Education, Labor, and Pensions (HELP). The House is preparing to vote on H.R. 3590, as passed by the Senate, and on an accompanying reconciliation bill (H.R. 4872), which would change several controversial elements in H.R. 3590 and otherwise amend it to meet the reconciliation instructions in the budget resolution. This report, one of a series of CRS products on H.R. 3590, discusses the bill's workforce, prevention, quality, and related provisions. 

H.R. 3590, as passed by the Senate, includes numerous provisions intended to increase the primary care and public health workforce, promote preventive services, and strengthen quality measurement, among other things. It would amend and expand on many of the existing health workforce programs authorized under Title VII (health professions) and Title VIII (nursing) of the Public Health Service Act (PHSA); create a Public Health Services Track to train health care professionals emphasizing team-based service, public health, epidemiology, and emergency preparedness and response; and make a number of changes to the Medicare graduate medical education (GME) payments to teaching hospitals, in part to encourage the training of more primary care physicians. The bill also would establish a national commission to study projected health workforce needs. 

In addition, Senate-passed H.R. 3590 would create an interagency council to promote healthy policies and prepare a national prevention and health promotion strategy. It would establish a Prevention and Public Health Fund to boost funding for prevention and public health; increase access to clinical preventive services under Medicare and Medicaid; promote healthier communities; and fund research on optimizing the delivery of public health services. Funding would be provided for maternal and child health services, including abstinence education and a new home visitation program. The bill also would establish a national strategy for quality improvement; create an interagency working group to advance quality efforts at the national level; develop a comprehensive repertoire of quality measures; and formalize processes for quality measure selection, endorsement, data collection and public reporting of quality information. It would establish and fund a new private, nonprofit comparative effectiveness research institute. 

Other key provisions in H.R. 3590, as passed by the Senate, include programs to prevent elder abuse, neglect, and exploitation; a new regulatory pathway for licensing biological drugs shown to be biosimilar or interchangeable with a licensed biologic; new requirements for the collection and reporting of health data by race, ethnicity, and primary language to detect and monitor trends in health disparities; and electronic format and data standards to improve the efficiency of administrative and financial transactions between health care providers and health plans.



Date of Report: March 20, 2010
Number of Pages: 109
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Public Health, Workforce, Quality, and Related Provisions in H.R. 3962

C. Stephen Redhead, Coordinator
Acting Section Research Manager

Health care reform is at the top of the domestic policy agenda for the 111th Congress, driven by concerns about the growing ranks of the uninsured and the unsustainable growth in spending on health care and health insurance. Improving access to care and controlling rising costs are seen to require changes to both the financing and delivery of health care. Experts point to a growing body of evidence of the health care system's failure to consistently provide high-quality care to all Americans. 

The health reform debate has encompassed a number of proposals to address these challenges and improve the delivery of health care services. They include initiatives to encourage individuals to adopt healthier lifestyles, and to change the way that physicians and other providers treat and manage disease. Delivery reform proposals focus on expanding the primary care workforce, encouraging the use of clinical preventive services, and strengthening the role of chronic care management. Health care delivery reform relies on putting mechanisms in place to drive change in the systems of care. Key drivers include performance measurement and the public dissemination of performance information, comparative effectiveness research, adoption of health information technology, and, most important, the alignment of payment incentives with highquality care. In February 2009, Congress enacted the Health Information Technology for Economic and Clinical Health (HITECH) Act to promote the widespread adoption of electronic health records for sharing of clinical data among hospitals, physicians, and other health care stakeholders. 

On November 7, 2009, by a vote of 220-215, the House passed a comprehensive health reform bill, the Affordable Health Care for America Act (H.R. 3962). The legislation, introduced by Representative Dingell on October 29, 2009, is based on an earlier measure, the America's Affordable Health Choices Act of 2009 (H.R. 3200), which was jointly developed and reported by the House Committees on Ways and Means, Energy and Commerce, and Education and Labor. This report, one of a series of CRS products on H.R. 3962, summarizes the bill's workforce, prevention, quality, and related provisions. 

H.R. 3962 includes numerous provisions intended to increase the primary care and public health workforce, promote preventive services, and strengthen quality measurement, among other things. The legislation would amend and expand on many of the existing health workforce programs authorized under Title VII (health professions) and Title VIII (nursing) of the Public Health Service Act (PHSA). It would create a Public Health Workforce Corps and establish a new loan repayment program, modeled on the National Health Service Corps (NHSC), for individuals who agree to practice in medically underserved areas with unmet health care needs. The bill also would make a number of changes to the Medicare graduate medical education (GME) payments to teaching hospitals, in part to encourage the training of more primary care physicians. 

In addition, H.R. 3962 would bolster quality improvement activities, including performance measurement, and broaden Medicare and Medicaid coverage of clinical preventive services. The legislation would establish a multi-billion dollar Public Health Investment Fund to provide additional funding for these and other new programs and activities. 
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Date of Report: March 19, 2010
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Health-Related Revenue Provisions: Changes Made by the Reconciliation Act of 2010 to Senate-Passed H.R. 3590

Janemarie Mulvey
Specialist in Aging Policy


This report summarizes the health-related revenue provisions in the Reconciliation Act of 2010, introduced in the nature of a substitute to H.R. 4872. The bill amends provisions in H.R. 3590, the Patient Protection and Affordable Care Act, passed by the Senate on December 24, 2009. 

Title 1, Subtitle E of H.R. 4872 includes amendments to the revenue provisions in H.R. 3590. This report identifies the changes made by H.R. 4872 to the health-related revenue provisions in H.R. 3590. Specifically, the report discusses the amendments to the revenue provisions related to changes in the thresholds, health plans included, and implementation date for the 40% excise tax on high-cost health insurance plans. The Reconciliation Act also includes provisions to add a 3.8% Medicare tax on net investment income, and converts the fee on medical device manufacturers to an excise tax based on sales revenue. H.R. 4872 would also delay implementation dates for a number of revenue provisions in H.R. 3590 including implementation of the flexible spending account limitations, and provisions to eliminate the deduction for expenses allocable to the Medicare Part D subsidy.



Date of Report: March 19, 2010
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Private Health Insurance: Changes Made by the Reconciliation Act of 2010to Senate-Passed H.R. 3590

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

Chris L. Peterson
Specialist in Health Care Financing

Mark Newsom
Analyst in Health Care Financing

On December 24, 2009, the Senate passed health reform legislation (H.R. 3590, the Patient Protection and Affordable Care Act) that would, among other changes, make statutory changes affecting the regulation of and payment for certain types of private health insurance. 

On March 18, 2010, the House Rules Committee issued an amendment in the nature of a substitute to H.R. 4872, the Health Care and Education Affordability Reconciliation Act of 2010 (hereafter referred to as the reconciliation bill). The reconciliation bill was written as making amendments to H.R. 3590. 

This report summarizes only the private health insurance provisions in the reconciliation bill and their impact on Senate-passed H.R. 3590. For a description of all the private health insurance provisions in H.R. 3590, see CRS Report R40942,
Private Health Insurance Provisions in Senate-Passed H.R. 3590, the Patient Protection and Affordable Care Act


 

Among the changes that would be made by the reconciliation bill to H.R. 3590 are the following which, except for the first two, would apply beginning in 2014: 

• extend to grandfathered plans, starting six months after enactment, the prohibition of lifetime limits, prohibition on rescissions, limitations on excessive waiting periods, and a requirement to provide coverage for non-dependent children up to age 26; 

• for coverage of adult dependent children prior to 2014, the requirement on grandfathered group health plans would be limited to adult children without an employer offer of coverage; 

• make certain changes to the calculation of the penalties imposed on persons who are not in compliance with the individual mandate; 

• modify a rule regarding the exemption from the individual mandate; 

• make changes to how the employer penalties would be calculated; 

• include full-time equivalents in the counting of full-time employees; 

• strike the employer fee based on extended waiting periods; 

• for grandfathered group health plans, prohibit pre-existing condition exclusions and restrict annual limits; 

• increase premium credits and cost-sharing subsidies to certain low- and middleincome individuals enrolled in private coverage through an exchange; and 

• alter how income is counted for purposes of determining eligibility for premium credits and cost-sharing subsidies. 
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Date of Report: March 19, 2010
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Medicare: Changes Made by the Reconciliation Act of 2010 to Senate-Passed H.R. 3590

Patricia A. Davis, Coordinator
Specialist in Health Care Financing

Paulette C. Morgan
Specialist in Health Care Financing

Holly Stockdale
Analyst in Health Care Financing

Sibyl Tilson
Specialist in Health Care Financing

Jim Hahn
Analyst in Health Care Financing

On December 24, 2009, the Senate passed health reform legislation that would, among other changes, make statutory changes to the Medicare program. H.R. 3590, the Patient Protection and Affordable Care Act, is under consideration by the U.S. House of Representatives. 

On March 18, 2010, the House Rules Committee issued an amendment in the nature of a substitute to H.R. 4872, the Health Care Education Affordability Reconciliation Act of 2010 (referred to hereafter as the Reconciliation bill). If passed, the Reconciliation bill would amend H.R. 3590. 

The Reconciliation bill includes two titles. The first title contains provisions related to health care and revenues, including modifications to H.R. 3590's Medicare provisions. The second title includes amendments to the Higher Education Act of 1965, which authorizes most of the federal programs involving postsecondary education. 

Medicare changes that would be made by the Reconciliation bill, as issued March 18, 2010, to Senate-passed H.R. 3590 are summarized in this report. Among other changes, the Reconciliation bill would: 

• phase out the coverage gap under the Medicare prescription drug benefit and close it by 2020; 

• change the methodology used to determine Medicare Advantage payment, and create an incentive system to reward high quality plans with higher payments; 

• move up reductions in payments to disproportionate share hospitals to 2014, and reduce the cuts; 

• revise hospital market basket adjustments; 

• change the qualifying date whereby an existing physician-owned hospital would be exempt from the self-referral prohibition; 

• change the assumptions used to calculate Medicare reimbursement for advanced imaging services; and 

• increase funding for the Health Care Fraud Abuse Control program and provide for enhanced oversight of DME suppliers.


Date of Report: March 19, 2010
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Medicaid: Changes Made by the Reconciliation Act of 2010 to Senate-Passed Patient Protection and Affordable Care Act (H.R. 3590)

Evelyne P. Baumrucker, Coordinator
Analyst in Health Care Financing

Cliff Binder, Coordinator
Analyst in Health Care Financing

Julie Stone
Specialist in Health Care Financing

Elicia J. Herz
Specialist in Health Care Financing

On December 24, 2009, the Senate passed health reform legislation that would, among other changes, make statutory changes to Medicaid and the Children's Health Insurance Program (CHIP). The Patient Protection and Affordable Care Act (H.R. 3590) is under consideration by the House. 

On March 18, 2010, the House Rules Committee issued an amendment in the nature of a substitute to H.R. 4872, the Health Care and Education Affordability Reconciliation Act of 2010, (hereafter referred to as the reconciliation bill). If passed, this reconciliation bill would amend H.R. 3590. 

The reconciliation bill includes two titles: (1) Coverage, Medicare, Medicaid, and Revenues, and (2) Education and Health. Title I contains provisions related to health care and revenues, including modifications to H.R. 3590's Medicaid and CHIP provisions. Title II includes amendments to the Higher Education Act of 1965, which authorizes most of the federal programs involving postsecondary education, and other health amendments. 

This report provides a brief summary of H.R. 3590 followed by a discussion of the modifications that would be made to the Senate-passed bill by the Medicaid and CHIP provisions contained in the reconciliation bill. This report reflects legislative changes contained reconciliation bill published by the House Committee on Rules on March 18, 2010. Selected highlights of the Medicaid and CHIP changes that would be made by the reconciliation bill to H.R. 3590 include provisions that: 

• increase primary care physician payment rates for selected patient treatments; 

• revise the definition of the average manufacturer price (AMP) to help make AMP more closely reflect the manufacturers' average prices; 

• delay the effective date of the Community First Choice Option; 

• change state FMAP rates for newly eligible populations; 

• provide an increase in the territories' spending rate caps beginning with the second quarter of FY2011; 

• provide additional program integrity funding through indexing of the Medicaid Integrity Program for fiscal years beginning with FY2010; and 

• modify Medicaid Disproportionate Share Hospital (DSH) payment reductions in H.R. 3590.



Date of Report: March 19, 2010
Number of Pages: 15
Order Number: R41125
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Medicaid: The Federal Medical Assistance Percentage (FMAP)

Chris L. Peterson
Specialist in Health Care Financing

Medicaid is a health insurance program jointly funded by the federal government and the states. Generally, eligibility for Medicaid is limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). 

Generally determined annually, the FMAP is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita income relative to the national average (and vice versa for states with higher per capita incomes). For FY2010, the original FMAPs—that is, excluding the impact of the temporary FMAP increase included in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5)—range from 50.00% to 75.67%. 

In recent years, the fiscal situation of the states has focused attention on Medicaid expenditures, as well as on changes in the federal share, or FMAP. In the 108th Congress, the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27) provided temporary fiscal relief for states and local governments through a combination of FMAP increases and direct grants. In the 109th Congress, provisions to exclude certain Hurricane Katrina evacuees and their incomes from FMAP calculations and to prevent Alaska's FY2006-FY2007 FMAPs from decreasing were included in the Deficit Reduction Act of 2005 (P.L. 109-171). In the 110th Congress, a temporary FMAP increase was included in economic stimulus legislation that was debated but not adopted at the end of 2008. 

In the 111th Congress, ARRA included a temporary FMAP increase for nine quarters, subject to certain requirements. The Administration estimated that the provision will increase federal payments to states by more than $90 billion. For the first quarter of FY2010, the FMAPs reflecting the ARRA increase ranged from 61.12% (Alaska) to 84.86% (Mississippi). 

On March 10, 2010, the Senate passed H.R. 4213 (American Workers, State, and Business Relief Act of 2010), which includes a provision to extend the ARRA FMAPs by two quarters, through June 30, 2011. The House is expected to consider the Senate-passed version soon. 

Health reform legislation passed in the House (H.R. 3962) and Senate (H.R. 3590) would require states with Medicaid programs to expand coverage to some currently ineligible low-income parents and childless adults. For these newly eligible individuals, states would have a 100% FMAP for at least a couple years, and then slightly reduced rates well above regular FMAPs. The President's proposal, as well as the reconciliation legislation released on March 18, 2010, followed the same general approach.


Date of Report: March 19, 2010
Number of Pages: 23
Order Number: RL32950
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The Medical Device Approval Process and Related Legislative Issues

Erin D. Williams
Specialist in Public Health and Bioethics


The central medical device issue for Congress is how best to help speed medical devices to consumers if they are safe and effective, and correct them or keep them from consumers if they are not. A medical device may be anything from a tongue depressor to a pacemaker. In order to be legally marketed in the United States, medical devices must be approved by the Food and Drug Administration (FDA), the agency responsible for protecting the public health by assuring the safety, efficacy, and security of human medical devices and other products. FDA's Center for Devices and Radiological Health (CDRH) is primarily responsible for medical device review. The regulation of medical devices can affect their cost, quality, and availability in the health care system. 

During reviews, FDA classifies devices according to the risk they pose to consumers. If a premarket review is warranted by the potential risk, a manufacturer must demonstrate that its device is safe and effective, or substantially equivalent to a device already on the market. FDA requires product manufacturers to register their facilities, list their devices with FDA, and follow general controls requirements. Manufacturers of FDA-approved devices are required to report serious adverse events associated with the use of their devices to FDA. In addition, tracking is required for some medical devices. 

The medical device approval process is currently funded through direct FDA appropriations from Congress, and increasingly through user fees collected from applicants. FDA's authority to collect user fees, originally authorized in 2002 (P.L. 107-250), has been reauthorized in five-year increments. It will next expire on October 1, 2012, under the terms of the FDA Amendments Act of 2007 (P.L. 110-85). 

A number of medical device-related topics are of interest to Members of the 111thCongress, and have prompted the introduction of legislation with pertinent provisions. Three such topics are included in major health reform bills: medical device-related taxes as a source of revenue for health reform (House-passed H.R. 3962; Senate-passed H.R. 3590; and the accompanying reconciliation bill, Amendment in the Nature of a Substitute to H.R. 4872, as amended by a manager's amendment); a national medical device registry (House-passed H.R. 3962); and reporting requirements for gifts to physicians (House-passed H.R. 3962 and Senate-passed H.R. 3590). 

Device-related topics addressed in other legislation include liability and preemption, as highlighted by Riegel v. Medtronic and Wyeth v. Levine (S. 540/H.R. 1346, H.R. 1086, S. 45, and S. 1324); the 501(k) clearance and device approval processes (H.R. 1321/S. 391); importation and inspection (H.R. 759 and S. 882); advertising (S. 301/H.R. 3138 and H.R. 3261); use of unapproved devices (H.R. 3261); laboratory test (in vitro diagnostic, or IVD) regulation; (H.R. 1699 and H.R. 1452); issues specific to certain devices, situations, diseases, or conditions (S. 717, S. 819, H.R. 1878, S. 586/H.R. 1483, H.R. 1380, H.R. 1236, H.R. 1142, S. 422/H.R. 1032, H.R. 1021, H.R. 554, S. 332, S. 254/H.R. 574, S. 236, H.R. 463, S. 21, H.R. 2088, H.Res. 577, and S. 1746); and certain other issues (H.R. 1531/S. 1089, H.R. 1737, S. 1733, S. 1591/H.R. 3560, H.R. 2454/S. 2998, H.R. 3012, H.R. 3090, H.R. 3242, and H.R. 3932). 

This report contains the legislative history of medical device regulation, describes FDA's approval process for medical devices, and provides an overview of the medical device-related legislative issues facing Congress.



Date of Report: March 20, 2010
Number of Pages: 35
Order Number: RL32826
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Sunday, March 21, 2010

A Comparative Analysis of Private Health Insurance Provisions of H.R. 3962and Senate-Passed H.R. 3590

Chris L. Peterson, Coordinator
Specialist in Health Care Financing

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

Paulette C. Morgan
Specialist in Health Care Financing

Janemarie Mulvey
Specialist in Aging Policy

Mark Newsom
Analyst in Health Care Financing

Jon O. Shimabukuro
Legislative Attorney

On November 7, 2009, the U.S. House of Representatives approved health insurance reform legislation, H.R. 3962, the Affordable Health Care for America Act. On December 24, 2009, the U.S. Senate passed its version of health insurance reform, the Patient Protection and Affordable Care Act, in H.R. 3590, as amended by the Senate (hereafter referred to simply as H.R. 3590). 

Individuals currently receiving health insurance through a large employer would likely see the least direct impact from the bills. The largest changes would occur in the private health insurance market for small businesses and for nongroup coverage (currently, insurance obtained directly from an insurance company, broker or agent). The most substantial of these reforms would not take effect until 2013 under H.R. 3962, and in 2014 under the Senate bill. At full implementation, the required private health insurance market reforms should be fully in place, along with subsidies to certain low- and moderate-income individuals ineligible for Medicaid. At full implementation, the bills would require most individuals to obtain and, in the House bill, for larger employers to offer and contribute toward health insurance. Although the Senate bill does not have an explicit "employer mandate," employers who do not offer coverage could face substantial penalties. 

Shortly after enactment of either of the bills, all private health insurance would be subject to some new requirements. For example, health insurers could not offer coverage with unreasonable annual or lifetime limits on benefit payouts, and they could not cancel ("rescind") policies unless the policyholder had committed fraud. Many other provisions are detailed in the report. 

After full implementation, although prior coverage could generally continue without meeting new requirements (at least for a period of time), new coverage would have to meet federal standards stipulated in the bills—and different requirements may apply depending, for example, on whether the coverage is nongroup or employment-based. The bills also call for an exchange available in each state, through which individuals not enrolled in (or, primarily in the Senate bill, not eligible for) other coverage, as well as small businesses, could choose from private health insurance plans. In addition, under the House bill, individuals obtaining coverage through an exchange could also choose a "public option" established by the Secretary of Health and Human Services (HHS). The public option would be appropriated start-up funding, but would ultimately have to be self-sustaining through the premiums charged. Payments to providers (doctors, hospitals) would be established through negotiations with the Secretary. The Senate bill would not include a public option. However, the Director of the Office of Personnel Management would enter into contracts with health insurance issuers to offer at least two multi-state qualified health plans (MSQHPs) through each exchange in each state to provide individual, or in the case of small employers, group coverage. Both bills also provide start-up funding for cooperatives, which would be new, member-run, nonprofit entities that could offer health insurance through exchanges. 

Under the Senate bill, any participation in the exchange requires verifying citizenship or legal residence status. Under H.R. 3962, such verification is only required for premium and costsharing subsidies. Under both bills, such subsidies would only be available through an exchange, for qualifying low- to moderate-income individuals. Both bills would prohibit the subsidies from paying any part of elective abortions. The House bill would also prohibit subsidies from going to a plan that covers elective abortions. Besides the subsidies to individuals, small businesses would be eligible for tax credits to help them pay toward their employees' coverage. The Congressional Budget Office (CBO) estimated the bills' costs would be fully offset in both the 5- and 10-year budget windows by increased excise taxes and other revenues and decreased spending.


Date of Report: March 9, 2010
Number of Pages: 109
Order Number: R40981
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FDA Advisory Committee Conflict of Interest

Erin D. Williams
Specialist in Public Health and Bioethics

The Food and Drug Administration (FDA) regulates a wide variety of products, including foods, cosmetics, drugs, medical devices, biologics (e.g., vaccines), tobacco, and radiation-emitting devices. Advisory committees play a role in this regulation, enabling the agency to obtain specific recommendations from external experts on the various products. An understanding of the mechanisms FDA uses to manage conflicts of interest on its advisory boards is informative not only for FDA-specific policy discussions, but also as a reference when considering how to 

As described herein, the way that FDA recruits and vets advisory committee members, and the circumstances under which conflict-of-interest exceptions may be granted, are governed by a combination of laws, one presidential statement, and several FDA guidance documents. Relevant laws include Title VII of the Food and Drug Administration Amendments Act of 2007 (FDAAA; P.L. 110-85); the Federal Advisory Committee Act (FACA; 5 U.S.C. Appendix); the Ethics in Government Act of 1978 (EGA; 5 U.S.C. Appendix); and Acts Affecting Personal Financial Interest (AAPFI; 18 U.S.C. 208). 

This report analyzes the laws and other documents that articulate FDA's policies and activities for addressing conflicts of interest in its advisory committees.


Date of Report: March 8, 2010
Number of Pages: 9
Order Number: RS22691
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Thursday, March 18, 2010

Health Insurance Premium Assistance for the Unemployed: The American Recovery and Reinvestment Act of 2009

Janemarie Mulvey, Coordinator
Specialist in Aging Policy

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

As the nation enters its third year of the current economic recession, the unemployment rate is currently near 10%. One consequence of unemployment is that people can lose their employersponsored health insurance coverage. The 111th Congress has passed legislation that begins to address this problem. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) includes provisions to subsidize health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and expand tax credits to unemployed workers through the Health Coverage Tax Credit (HCTC). 

ARRA includes COBRA premium subsidies of 65% to help the unemployed afford health insurance coverage from their former employer. Initially, the subsidy was available for up to 9 months to those individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before January 1, 2010. On December 19, 2009, the Department of Defense Appropriations Act 2010 (P.L. 111-118) extended the eligibility period for the COBRA subsidy by an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was also extended an additional six months (from 9 to 15 months). On March 2, H.R. 4691, the Temporary Extension Act of 2010, was enacted into law and extends eligibility for COBRA premiums subsidies to individuals who are involuntarily terminated through March 31, 2010. 

On March 10, the Senate passed H.R. 4213, the American Workers, State and Business Relief Act, which extends eligibility for COBRA premium subsidy to individuals who lose their jobs on or before December 31, 2010. Because the original bill H.R. 4213 was amended by the Senate in the nature of a substitute, the Senate-passed version must now go back to the House for consideration. 

In addition, a number of provisions in ARRA make modifications to the HCTC and the Trade Adjustment Assistance (TAA) programs. These include increasing the HCTC from 65% to 80% of the cost of qualified health insurance, and expanding the eligibility criteria for TAA assistance (which, in turn, expands HCTC eligibility) to include service sector and public agency workers. 

Whether the unemployed will benefit from the premium assistance programs in ARRA depends on their individual circumstances. Those that are involuntarily terminated and lose their employer-sponsored health insurance may be eligible for the subsidy. Other individuals, although considered to be unemployed, will not meet the criteria of involuntary termination and therefore will not have access to the COBRA subsidy. This group includes unemployed individuals: (1) who were terminated but did not have employer-sponsored coverage to begin with, (2) who voluntarily left their jobs, and (3) who are just entering or re-entering the workforce. For those unemployed without health insurance coverage, they either rely on spouses and family members, purchase insurance in the individual market, or remain uninsured. It is estimated that 55% of those who were involuntarily terminated most likely had employer-sponsored coverage prior to being laid off and may benefit from the COBRA subsidies. In addition to those who are unemployed, there are other at-risk groups who are not eligible for the premium assistance provisions in ARRA but may have lost health insurance coverage due to changes in their work status. These groups include involuntary part-time workers and discouraged workers who are no longer seeking employment. 
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Date of Report: March 11, 2010
Number of Pages: 15
Order Number: R40420
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Selected Health Funding in the American Recovery and Reinvestment Act of 2009

C. Stephen Redhead, Coordinator
Acting Section Research Manager

Elayne J. Heisler
Analyst in Health Services

Sarah A. Lister
Specialist in Public Health and Epidemiology

Bernice Reyes-Akinbileje
Analyst in Health Resources and Services

Amanda K. Sarata
Specialist in Health Policy and Genetics

Pamela W. Smith
Analyst in Biomedical Policy

Roger Walke
Specialist in American Indian Policy

The American Recovery and Reinvestment Act of 2009 (ARRA), the economic stimulus legislation signed into law on February 17, 2009 (P.L. 111-5), included supplemental FY2009 discretionary appropriations for biomedical research, public health, and other health-related programs within the Department of Health and Human Services (HHS). Generally, the appropriations are to remain available through September 30, 2010. P.L. 111-5 also incorporated new authorizing language to promote health information technology (HIT) and established a federal interagency advisory panel to coordinate comparative effectiveness research. 

As enacted, ARRA included $17.15 billion for community health centers, health care workforce training, biomedical research, comparative effectiveness research, HIT, disease prevention, and Indian health facilities. This report discusses the health-related programs and activities funded by ARRA and provides details on how the administering HHS agencies and offices are allocating, awarding, and spending the funds.


Date of Report: March 17, 2010
Number of Pages: 25
Order Number: R40181
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Community Living Assistance Services and Supports (CLASS) Provisions in H.R. 3962 and Senate-Passed H.R. 3590

Janemarie Mulvey
Specialist in Aging Policy

Kirsten J. Colello
Specialist in Health and Aging Policy

Under current law, the majority of paid long-term care (LTC) services are funded by public programs, such as Medicaid and Medicare. However, these programs are limited in scope and continue to face increased financial pressures. Although private LTC insurance is available to provide some financial protection against an individual's risk of the potentially high cost of LTC, less than 10% of individuals aged 50 and older own such a policy. Thus, for the majority of older Americans, the out-of-pocket cost of obtaining paid help for these services may far exceed their financial resources. To address gaps in LTC coverage and assist individuals and families in paying for such services, the House and Senate have each passed their versions of comprehensive health care reform legislation that include the establishment of a national voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program. On the House side, these provisions appear in the Affordable Health Care for America Act (Sections 2561 of H.R. 3962) passed on November 7, 2009. On the Senate side, similar provisions are included in the Patient Protection and Affordable Care Act (Sections 8001 and 8002 of H.R. 3590), passed on December 24, 2009. 

Both the House and Senate bills are similar with respect to benefit determination, eligibility, enrollment, oversight and administration of the CLASS program. Specifically, both would allow employed individuals aged 18 and older to voluntarily enroll in the CLASS program. CLASS enrollment would not be subject to underwriting so coverage would be available to all persons who enroll regardless of pre-existing conditions. The CLASS program would provide employers the option to automatically enroll their employees in the new voluntary publicly administered LTC insurance program through payroll deductions. Employees would then have the opportunity to "opt-out" if they do not want to participate. One key difference between the proposals is that the House bill would allow non-working non-institutionalized spouses of employed workers to enroll in the CLASS program; the Senate bill does not have this provision. The bills also differ with respect to the authorities given to the Secretary of Health and Human Services and the Secretary of Treasury. 

Premiums for the CLASS program would be determined by the Secretary of Health and Human Services (HHS) based on 75-year actuarial estimates of expected future use and expenditures. After a five-year vesting period, eligibility for benefits from the CLASS program would be based on the existence of a functional or cognitive impairment that lasts for at least 90 days and that would be certified by a licensed health care practitioner. Benefits to eligible recipients would include a cash benefit of at least $50 a day and would vary based on the degree of the beneficiary's functional or cognitive impairment. Other benefits of the CLASS program would include advocacy services and advice and assistance counseling on accessing and coordinating LTC services. The key difference in premiums between the two proposals would be that the Senate proposal includes explicit premium subsidies for workers with incomes below the federal poverty line and full-time students at the ages of 18 to 21 who currently are working. 

This report discusses the cost and financing for LTC services as well as the current market for private LTC insurance; compares the CLASS provisions in both the House and Senate health care reform legislation and identifies key differences between the two bills; and discusses the federal budget implications of the proposed CLASS program, as estimated by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS). 
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Date of Report: March 12, 2010
Number of Pages: 18
Order Number: R40842
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