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Issues & Legislation

Murkowski Floor Speech on Health Care Bill

President Obama has signed into law the Senate version of the health care reform bill. Proponents of the new law have said the public will come to like it now that it is the law of the land. But that's not the sentiment of most Alaskans who have contacted this office. The overwhelming majority have been strongly opposed to the partisan Senate and House bills throughout the health care debate. Sen. Murkowski voted against the Senate version when it came before the chamber late last year and opposed the companion reconciliation measure as well.

When the health care debate began more than a year ago, all sides agreed that the primary goal of reform was to bring down the out-of-control cost of medical expenses. But instead of containing costs, we've instead created a massive government expansion of the health care system with a price tag of $2.6 trillion. Who will pay for this expansion?

America's seniors: The health care law cuts $529 billion from Medicare, at a time when the program is slated to go broke in seven years. These cuts also will occur as the baby boomer generation is reaching retirement age.
Small businesses and American families: The new law calls for more than a half trillion dollars in tax increases. Individuals earning more than $200,000 and couples earning over $250,000 will be hit with a new 3.8 percent tax on certain investment income. This same group will also see its Medicare payroll taxes jump nearly a full percentage point. The wage thresholds for these tax hikes are not indexed for inflation, so over time more and more Alaskans will see their taxes go up. Sen. Murkowski offered an amendment that would index for inflation the wage thresholds for those subject to the tax increase, but it failed to pass. These tax increases will hit small businesses - particularly women-owned businesses which are expanding twice as fast as the number owned by men -- especially hard, serving as a disincentive to expand and create new jobs. This is the last thing we should be doing in the middle of the worst economic downturn since the Great Depression.
Wounded Warriors: The new law imposes a 2.3 percent tax on medical devices, such as wheelchairs and crutches, with no exceptions provided for America's veterans.
States: By expanding Medicaid eligibility, states will have to spend billions of dollars more on their already over-burdened Medicaid programs. The Democratic governor of Tennessee, Phil Bredesen, has called this the 'mother of all unfunded mandates.'
Our children and grandchildren: The health care law is an impediment to future generations who will be forced to foot the bill. The U.S. simply cannot afford another huge entitlement program on top of the growing costs of Medicare, Medicaid and Social Security and the more than $12 trillion dollars of national debt we currently owe.

Had we been truly interested in reigning in the escalating cost of health care, we would have focused on such things as creating incentives for health care providers to be reimbursed for the value of their services rather than reimbursements based on the volume of their services. The new law did nothing to alter the reimbursement system. As we move forward, Sen. Murkowski will be joining her colleagues in looking for ways to repeal the most egregious parts of the law - the tax hikes, Medicare cuts and increased premiums - and replace them with proposals that will reign in the escalating costs of health care, such as junk lawsuit reforms and allowing insurers to sell across state lines. There are, however, reforms in this law that Sen. Murkowski strongly supports, including removal of lifetime caps on insurance policies, a prohibition against denial of coverage based on pre-existing conditions and access to wellness and preventive care services. These are important provisions that should be a part of our health care system.

Health Care Documents

Chronology of Major Effective Dates for Health Care Law
Read the text of the Senate Health Care Bill passed by the US House of Representatives.
Read the text of the Reconciliation Bill passed by the US House of Representatives.
Health Care Law: When Taxes Start
For more information and documents by the Congressional Research Service click here.

A Second Opinion On Health Care

The Senate Republican Conference has launched a webpage to collect news stories and other useful information on the new health care law since its passage. If you'd like to read more, and get a second opinion on the law, click here.

Timeline of Major Provisions of Health Reform and Reconciliation Laws

Within One Year:
• Provides a $250 rebate to Medicare prescription drug beneficiaries whose initial benefits run out
June 2010-Jan, 21, 2014:
• Establishes Temporary High Risk Pools for individuals with no insurance because of pre-existing conditions who have been uninsured for more than six month. Provides $5 billion to establish the program.
September 2010:
• Bars insurers from denying people coverage when they get sick
• Bars insurers from denying coverage to children with pre-existing conditions
• Bars insurers from imposing lifetime caps and recissions of coverage
• Requires insurers to allow people to stay on their parents' policies until they turn 26
2011:
• Medical Loss Ratios: Requires individual and small group market plans to spend 80 percent of premium dollars on medical services. Large group plans have to spend at least 85 percent.
2014:
• Provides subsidies for families earning up to 400 percent of the poverty level, currently about $54,120/ind, $111,000/family of four (AK)
• Requires employers with 51 employees (including part-time, 30 hours per week employees) to provide coverage or face penalties
• Requires individuals to obtain coverage or face penalties
• Medicaid expansion begins
• Small business tax credits available to small employers with fewer than 25 employees and average annual wages less than $40,000. Employers must contribute 50% of premium. It is phased in from 2010-2013, up to 35% credit. In 2014, up to 50% credit for two years.
2015:
• Independent Medicare Payment Advisory Board will establish a commission that would submit proposals to Congress to "extend" Medicare solvency, which will likely result in further cuts.
2018:
• Imposes a 40 percent excise tax on Cadillac insurance policies - there is no phase in for high cost states.

Health Care Law Highlights

Background:

President Obama has signed health care legislation into law and will soon be signing a companion reconciliation bill that made changes to the health care law. Following are highlights of the new law:

Top Line Statistics:

Overall tax increase: $573.2 billion
Medicare cuts: $528.9 billion;
23 million Americans will remain uninsured;
Nine million Americans will lose their current health care plan;
16 of the 32 million newly insured individuals will be enrolled in Medicaid;
$60 billion will be raised in taxes before the majority of the benefits start four years later;
$53 billion in Social Security is expected to be raised from addition revenues generated by higher wages. These additional wages are based on employers' shifting their compensation packages away from health benefits, which are no longer tax preferred, into taxable wages.

Affordability:

Reduces cost-sharing for individuals and families with incomes between 100% and 250% Federal Poverty Level (FPL)
- 100% - 150% FPL à Plan covers 94% of costs (was 90% in Senate)
- 150% - 200% FPL à Plan covers 87% of costs (was 80% in Senate)
- 200% - 250% FPL à Plan covers 73% of costs (was 70% in Senate)
- 250% - 400% FPL à Plan covers 70% of costs (unchanged)

Makes the tax credits less for health insurance premiums for individuals and families with incomes between 133% and 150% of the federal poverty level (FPL) and more for individuals and families earning between 250-400% FPL.

o Up to 133% FPL 2% of income (unchanged from Senate)

133%= $17,994/ind, $$36,668 family of four

o 133 - 150% 3% - 4% (4% - 4.6% in Senate)

150%= $20,295/ind, $41,355/family of four

o 150% - 200% 4% - 6.3% (unchanged from Senate)

200%= $27,060/ind, $55,140/family of four

o 200% - 250% 6.3% - 8.05% (unchanged from Senate)

250%= $33,825/ind, $68,925/family of four

o 250% - 300% 8.05% - 9.5% (8.1% - 9.8% in Senate)

300%=40,590/ind, $83,250/family of four

o 300% - 400% 9.5% (9.8% in Senate)

400%=$54,120/ind, $111,000/family of four

Individual responsibility:

Reduces the penalty for individuals and families that do not purchase health insurance, and phases in the penalty over a 3-year period
- 2014 greater of a flat fee of $95 or 1.0% of taxable income
- 2015 greater of a flat fee of $325 or 2.0% of taxable income
- 2016 greater of a flat fee of $695 or 2.5% of taxable income

Employer responsibility:

Increases penalties for large employers that do not offer health insurance coverage to $2,000 per full time employee (FTE) vs. $750 per FTE in the Senate bill.
Improves the transition to the employer responsibility policy for employers with 50 or more fulltime equivalent workers (FTE) by subtracting the first 30 full time employees from the payment calculation (e.g., a firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount).
Increases penalty from $750 per FTE to $2,000 per FTE for employers with 51 or more employees that do not offer coverage and have at least one FTE that receives a premium tax credit or cost-sharing subsidy
Allows employers to count part-time workers' time as "full-time equivalents," based upon a 30-hour work week per FTE, for the purpose of calculating the penalties.

Closing the Medicare prescription drug "donut hole":

Provides a $250 rebate for all Medicare Part D enrollees who enter the donut hole in 2010
These individuals will eventually receive coverage for 75 percent of both generic and brand name drug costs once the donut hole is fully phased out in 2020, conveniently after the ten year budget window.

Federal funding for Medicaid:

Strikes the provision for a permanent 100% federal matching rate for Nebraska for the Medicaid costs of newly eligible individuals.
Provides federal Medicaid matching payments for the costs of services to newly eligible individuals at the following rates:
- 100% in 2014, 2015, and 2016;
- 95% in 2017; $5 million will be AK's portion
- 94% in 2018; $6 million
- 93% in 2019; $7 million
- 90% thereafter; $12 million

Medicare tax:

This new Medicare tax of 3.8 percent on net investment income applies to modified adjusted gross income that is $200,000 individual and $250,000 if jointly filed. For the first time ever, investment income will be included in asset determination. Furthermore, this same group will also see their Medicare payroll taxes jump nearly a full percentage point. The wage thresholds for these tax hikes are not indexed for inflation, so over time more and more Alaskans will see their taxes go up.

Medicare Advantage payments:

Freezes Medicare Advantage payments in 2011
Beginning in 2012, the provision reduces Medicare Advantage benchmarks relative to current levels. Benchmarks will vary from 95% of Medicare spending in high?cost areas to 115% of Medicare spending in low?cost areas. The changes will be phased?in over 3, 5 or 7 years, depending on the level of payment reductions.

Market basket updates:

Reduces the market basket update for inpatient hospitals, long?term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospitals.
All told, these changes would cut an additional $9.9 billion from these facilities' updates from 2010-2019.

Disproportionate share hospital payments:

Lowers the reduction in federal Medicaid DSH payments from $18.1 billion to $14.1 billion and advances the reductions to begin in fiscal year 2014.
Directs the Secretary to develop a methodology for reducing federal DSH allotments to all states in order to achieve the mandated reductions.
Below are the DSH payments Alaska will receive in 2010. As has been the historic practice, the majority of dollars are being used to fund the state psychiatric hospital. The remainder is being used for behavioral health purposes.

o DSH paid to Providence: $3,343,719 FFY10

o DSH paid to Fairbanks Memorial Hospital: $1,787,856 FFY10

o DSH paid to Bartlett Regional Hospital: $1,953,050 FFY10

o DSH to API: $3,584,010 FFY09

o DSH to API: $9,639,615 FFY10

o Total 2010: $20,308,250

Temporary increase in Medicaid payments for primary care physicians:

But, the Medicare rates in Alaska are lower than Medicaid rates, therefore, this may adversely impact our state's Medicaid program, if Medicaid were to drop reimbursement rates to match our Medicare rates. This, at a time when Medicaid is expected to enroll an additional 16 million individuals, a portion of which will be enrolled in Alaska Medicaid, could limit access to care.

High cost plan excise tax:

o Delays application of the tax until 2018 (2014 in Senate bill),

o Increases taxed amount to

o $10,200 for single coverage ($8,500 in the Senate bill)

o $27,500 for family coverage ($23,000 in Senate bill)

o $11,850 and $30,950 for retirees and employees in high risk professions;

o Excludes stand?alone dental and vision plans from the tax;

o The dollar thresholds are indexed to inflation plus one and the dollar thresholds are automatically increased in 2018 if CBO is wrong in its forecast of the premium inflation rate between now and 2018.

Health insurance providers:

Delays the industry fee until 2014 - this provision will raise $60 billion over 10 years)
- ($8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018, and indexed to medical cost growth thereafter)
- In the case of tax exempt insurance providers, provides that only 50 percent of their net premiums that relate to their tax?exempt status are taken into account in calculating the fee.

Delay of the annual limitation of $2,500 on contributions to a Health Flexible Spending Account (FSA):

o Delays the provision until 2013. There currently is no statutory limit. The Senate limits it at $6,000/year.

Excise tax on medical device manufacturers:

o Delays the tax by two years to 2013 and converts the industry fee to an excise tax on the first sale for use of medical devices at a rate of 2.9 percent. Exempts from the tax Class I medical devices, eyeglasses, contact lenses, hearing aids, and any device of a type that is generally purchased by the public at retail for individual use.