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Transcript: Health On The Hill – Sept. 27, 2010

The Obama Administration and supporters of the new health law have planned a series of events this week to commemorate the law’s six-month anniversary and a package of consumer protections that go into effect Thursday as Republicans plan to unveil their plans Thursday to overhaul the nation’s health care system.

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MARY AGNES CAREY: Hi. I’m Mary Agnes Carey, and this is Health on the Hill, a discussion of health care policy and politics. Joining me this morning is Drew Armstrong of Bloomberg News. It’s great to have you here. Now, here we are six weeks out from an election, right, and of course there is new polling about health care, which is very interesting to people who are running for office.

The Associated Press had a poll that came out and it said irregardless of whether you like the bill, dislike the bill, or have no opinion about the bill, four out of 10 adults said that the health care law doesn’t do enough to change the health care system.

Okay, there is one finding. Here is another from the new Kaiser Family Foundation tracking poll on the health care law; the approval for the law has risen a little bit to 49 percent and 40 percent of opposition. But here is what I thought was really interesting, 53-percent of Americans say they are confused about health reform, and that has increased.

So, if you were a politician running for office, what do you make of all this?

DREW ARMSTRONG: To be honest, I think you don’t know what to make. We recently had a story, we talked to a lot of political experts, Bob Blendon up at Harvard, James Morone over at Brown University, and asked them how do you deal with all of this conflicting poll information, because what you have is a really interesting situation where you see increasing, you know, this new poll showing the slight uptick in satisfaction with the bill is a slight turn, but I mean over the past, basically since March, you have seen people become increasingly dissatisfied about the bill. An increasing number of people oppose health care reform.

At the same time, you poll people about the individual provisions in health care reform, and they all get overwhelming support. So, they like the contents of the bill, but they don’t like the bill, and what does that tell you, because obviously there’s a pretty substantial amount of cognitive dissonance going on there.

It tells you that the bill at large has become in a lot of ways a proxy for something else and you look at the mood around the country with the tea party movement, this anti-incumbent mood, people’s dissatisfaction with government. I think you can look at the satisfaction of the bill itself as something of a proxy figure for what is going on in the country, because this bill is so big, it is so complicated, people like you and me, we hope we kind of understand it.

MARY AGNES CAREY: On some days.

DREW ARMSTRONG: The average voter out there, yeah on a good day if you’re lucky.

MARY AGNES CAREY: Right, if you’re lucky.

DREW ARMSTRONG: For the average voter out there, there is no way they can take in the totality of this thing, because they haven’t been studying it for two years now, so I think you have to look at some of these poll numbers and trying to make sense of them as a whole, it’s not going to make sense within the realm of health care. A lot of this is about the larger national political dialog at large, and I think maybe some of the best ways to look at this are these specific provisions of the bill and the support there.

Now, to the extent that people are confused about those, I think that is where you can really look at this as being a problem politically for Democrats, because the thinking is that as these individual provisions get implemented, support for the bill will grow, and that is probably a multiyear process, given how long it takes for some of these things to fully come into effect.

So, if you look at it just from the basis of the individual provisions and people knowing about those, I think that is where you need to look for is this law going to eventually have support? I think those are the poll numbers probably to focus on for how people actually feel about this bill.

MARY AGNES CAREY: Okay let’s move then to one of these consumer protections you’re talking about, it came into effect for new plans last week, for new plan years after September 23, the requirement rather that insurers have to cover preexisting medical conditions for children up to age 19.

We had some health insurers say they are going to withdraw from the marker for a variety of reasons including the fear that families will wait until their child gets sick, then sign up for these policies and possibly drop them a short time afterwards.

Secretary Sebelius, Kathleen Sebelius of Department of Health and Human Services put a letter out to insurers last week to try to calm some of those concerns. What was her guidance and what impact do you think it will have?

DREW ARMSTRONG: Well, I think one thing that is first of all important to know is that these letters accusing the insurers of doing some terrible thing and severing American values and all this come up about every two weeks from the administration right now. We have an election I guess around 40 days away at this point.

MARY AGNES CAREY: About six weeks, right.

DREW ARMSTRONG: So, I don’t want to say that has anything to do with this, but there is also the concern going on about how some of these consumer protections get implemented and I think that there is a very natural back and forth going on between the administration and between the insurance industry about how to do this.

Now, as you said the concern is this, you remove insurers’ ability to not accept who they want, say if a kid has a preexisting condition, you’ve got to take him. Their concern is that parents who have kids who have a preexisting condition won’t just sign up immediately when the kid is not sick, they will just wait until the kid is sick, sign up, get the health care they need, and then drop the plan.

So, the insurers on their side are worried that they are only going to end up paying for basically procedures, they are not going to have the benefit of collecting premiums when the kid is well, which is how insurance is supposed to work. That is how it all works.

Now, the administration said that it gave the insurers a little bit of flexibility in this guidance, it says well instead of letting people sign up just whenever they want, maybe we will do it so that you have a one month window every year where you can sign up, so you sign up, you get coverage for the kid for the year.

If they get sick during that year, the insurer is going to pay for it. You sign them up for the next, but it doesn’t allow people to just sign up on the day or the week or the month when something is really going on with their kid.

MARY AGNES CAREY: Right and also, they have a penalty, right, if you would dis-enroll and then re-enroll, they are going to give insurers some flexibility to do that.

DREW ARMSTRONG: Yeah, a little bit of carrot and stick power to make sure that insurers can actually have a functioning insurance product in the traditional sense.

MARY AGNES CAREY: And do you think that will be enough to keep insurers in that game?

DREW ARMSTRONG: I don’t know. I think it’s hard to know. When we look ahead to what happens in 2014 where you have really a nationwide insurance expansion, it comes with a mandate that everybody has to sign up for coverage and that has been the big argument of the insurance industry.

If you have to have a mandate that says everybody gets coverage, everybody goes into the pool, everybody puts their money on the table in order to get everybody covered and avoid the only people signing up for coverage being the most sick expensive people because then the whole system probably has a lot more difficulty.

MARY AGNES CAREY: Since we are on the topic of insurers, let’s move to another part of the health care law, the medical loss ratio, loosely defined as a requirement that insurers spend at least 80-percent of the premium dollar on health care, kicks in early next year.

The National Association of Insurance Commissioners has been helping draft guidance and they put an interim regulation I believe out last week, could you tell us a little bit about what that calculation to hit that 80-percent or 85-percent is going to be?

DREW ARMSTRONG: So, how this is going to work essentially is that if you are an insurer, you collect all your premium dollars from your customers and then a certain amount of that, the majority of it is usually going to go out into paying for medical care, and then a certain percentage of that is going to go into paying for things like running your office, having profits, paying people’s salaries, all those administrative expenses, so this was designed to be essentially create the, you know, how much do you have to spend on medical care versus how much do you have to spend on profits?

And it works out to be for large group plans like that would be run through a big employer, you’re going to have to spend 85-percent of all the premium dollars that come in on medical care, the rest of the 15-percent can go for profits. For small plans and individual plans it’s an 80/20 split.

And so the National Association of Insurance Commissioners, they are serving as kind of the technical expertise to the government and they have written this first set of regulations on what should be included as medical care and what should be included as administrative and medical costs?

What has been going on here is that the insurance industry has been pushing for as many things to be counted as medical costs as possible because that way they can say look at all this money we are spending on medical care.

And then as few things as possible to be counted as administrative expenses, because that allows them more room on that side for profits and salaries and all those things that shareholders like, which is who they are ultimately beholden to here.

So, the insurance commissioners finally have come out with a draft that has solidified a number of these things. One of the big, big, big issues that everybody has been watching is essentially how a number of federal taxes get included, whether or not they get tallied up within all this.

The ultimate decision on that is going to be probably kicked down to the NAIC executive committee and they still have not met on this. And there has been some back and forth on that and it gets pretty technical, but there has been some back and forth on which taxes you get to include, which taxes you get to exclude and things like that. It comes down to, again this is all about money and who is going to be able to put what money in which pile?

MARY AGNES CAREY: Right and they are looking to, I think, wrap up, they are going to get comments back and give a final regulation out about the end of October, is that right?

DREW ARMSTRONG: I think that’s the idea and they need to get it soon because one of the things around here is insurance plans are rolling out their products for next year, and this is going to apply to them for next year.

And they don’t necessarily know how all of this is going to be counted and where it is going to be counted and what they are going to be doing. So it is going to affect some of their business decisions, so you are hearing, at least we are hearing a lot of noise from the insurance industry on we need this now, and I think that has been a big concern of theirs.

MARY AGNES CAREY: Okay, I would like to end with a look back if I could to last week. Of course, it was the six month anniversary of the health law, a package of consumer protection, some of which we have discussed this morning, were released and discussed about.

President Obama and Democrats were really looking at these new consumer protections as a bonus, a sale point if you will for the health care law. Republicans came out with their pledge to America, talked a little bit more about their plans to repeal and replace the health law, who do you think won the message game there?

DREW ARMSTRONG: You know, I think that is something we are going to find out maybe in November. I don’t know.

MARY AGNES CAREY: A six week period, that’s right.

DREW ARMSTRONG: It is one of those things there is so much confusion over this subject. I think you are seeing Democrats really try to get their mojo back on this. President Obama came out and gave a big speech on this the day before the six month anniversary.

Vice President Biden did this call with seniors on the drug benefits; they are really beginning to try to pound home, like here is what is in it for you, which is fundamentally what this has always been about. If you look at the larger picture, I think Republicans have probably been winning this up until now, and they continue to do so.

I mean, this may be one of these message wars that it is not decided until sometime after 2014 or maybe even the 2012 presidential election. There is so many other conflicting things at play right here with the economy, what’s going on in foreign policy, I think in a lot of ways some of those things have kind of swamped over what is going on in health care right now.
The Democrats at some point are going to have to decide I think, and this is something that was shared with us between talking to a lot of political experts who have been talking about this between are they the party that gets behind this in the way that some of their leaders are, or are they the party that runs away from this in the way some of their moderates and the folks who didn’t vote for the Bill.

I think you see a real split in the Democratic Party right now about whether or not all their members support this bill that really is a monumental effort by their party. And you don’t see any real division among the Republicans about how they feel or at least how they are talking about this piece of legislation.

MARY AGNES CAREY: Right, well we will see how these messages play out in this critical six week period of the midterm elections. Thanks again to Drew Armstrong, Bloomberg News. Thank you for joining us at Health on the Hill.

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