Senate Plan Offers Big Boost in Health Spending

Jan. 23, 2009 – 4:04 p.m.

By Alex Wayne, CQ Staff
Senate Democrats are proposing about $132 billion in new spending for Medicaid and Medicare, electronic health records and health insurance for the unemployed as part of the emerging economic stimulus package.

The health measures are included in a $455 billion portion of the stimulus package that the Senate Finance Committee is expected to approve Jan. 27. While the health provisions of the bill (S 1) are similar in a general sense to those House Democrats have included in their economic recovery measure, they differ in several important respects.

That could complicate negotiations between the two chambers on a final bill.

House Democrats have proposed allowing states to expand their Medicaid programs to cover low-income unemployed workers through 2010, at a cost of nearly $9 billion. Senate Democrats have no similar provision in their bill, instead proposing only to extend Medicaid coverage for families who become ineligible for the program because their income increases. That would cost $1.3 billion over 10 years.

Senate Democrats also propose a more modest expansion of so-called COBRA health insurance coverage for people who lose their jobs.

Under the 1986 Consolidated Omnibus Budget Reconciliation Act (PL 99-272) laid-off workers and their dependents can keep their group coverage for 18 months, but they must pay 100 percent of the monthly premium costs, plus a 2 percent administrative fee. While that can be less expensive than individual insurance and guarantees continued coverage for people with chronic conditions who might be refused insurance on the individual market, few unemployed workers can afford the premium cost.

Under the Senate bill, the government would subsidize 65 percent of the COBRA premium — the same as proposed by the House — but only for nine months, instead of a year as in the House bill.

House Democrats have also proposed allowing people 55 or older, or those with at least 10 years’ tenure in their jobs, to continue their COBRA coverage indefinitely, until they either get a new job offering health coverage or reach age 65 and qualify for Medicare. There is no such provision in the Senate bill.

The House and Senate proposals to increase use of electronic medical records by doctors and hospitals are very similar. Most health providers still use paper records, out of concerns over the expense of electronic records systems, their interoperability with other providers’ systems, and privacy. There is general agreement that electronic records would improve the efficiency and safety of medicine, but Congress has been unable to agree on a national policy regarding health information technology, or health IT.

Both bills would provide $17.9 billion to help physicians, hospitals and other health care providers cover the costs of the necessary computers and software. The incentive payments available to doctors and hospitals vary slightly — the Senate bill would provide doctors up to $44,000 under Medicare, or $75,000 for doctors and nurses with many Medicaid patients. The House bill would provide up to $41,000 under Medicare and $75,000 for providers with many Medicaid patients.

Under both bills, the hospital incentive payments are based on complex formulas that make the maximum payment difficult to calculate. House aides say the maximum payment under their bill would be about $11.6 million; Senate aides say there is theoretically no maximum under their bill, but most hospitals would be paid between $3 million and $6 million.

The House bill would begin penalizing doctors and hospitals who do not adopt electronic records with reduced Medicare payments in fiscal 2016. Under the Senate bill, the penalties would begin in fiscal 2015.

The House bill includes a variety of stringent new privacy protections for electronic medical records. The bill released by the Finance Committee does not include any privacy protections; aides said that the Senate Appropriations Committee, which has not yet released its version of the bill, would address that issue.