The Latest Health Care Reform Update, April 15, 2011

Obama Signs Repeal of Health Reform 1099 Reporting Rule 

On April 14, President Barack Obama signed legislation that repeals a much-criticized health care reform law provision requiring employers doing more than $600 in business with a corporate vendor to furnish Form 1099 statements. Small employers, in particular, complained that the burden imposed by the reporting provision, which had been scheduled to go into effect in 2012, was too great.

Obama’s Medicare Proposal: How Would It Work?

President Obama’s debt-relief plan differs profoundly with Republicans’ on the fate of Medicare.  As outlined on Wednesday, a central aspect of the president’s plan would be to double down on one of the most controversial aspects of his health care reform law: an independent board with the power to slow costs in the Medicare system if the program’s spending rises faster than set limits.

Under the health care law, this Independent Payment Advisory Board (IPAB) would start to work if Medicare spending rises faster than the annual growth of the U.S. gross domestic product, plus 1 percent.  Under the plan outlined by President Obama on Wednesday, the board would act if Medicare spending rises faster than GDP plus 0.5 percent.

As it is now structured, the IPAB is supposed to be an organization of 15 members appointed by the president and confirmed by the Senate.  The health care reform law calls for the board to have varied geographic and professional representation, with experts in health care finance, hospital management and health insurance, as well as physicians.

If Medicare spending surpasses its targets, these people are supposed to put their heads together and come up with ways to cut the program so the costs remain under the set threshold.  Their recommendations are then submitted to Congress.

• If lawmakers vote to approve them, and they are signed by the president, they become law. 
• If Congress does not vote on the recommendations, they become law.
• If Congress votes the recommendations down, but the president vetoes what Congress did, and Congress cannot override the veto, they become law.

One thing that makes it controversial is that it takes away some of Congress’s power to deal with Medicare issues.  Former Obama budget director Peter Orszag has said the board might be “the largest yielding of sovereignty from the Congress since the creation of the Federal Reserve.”

According to an analysis of the current law by the Kaiser Family Foundation, the board is prohibited from making recommendations that would:

• Ration health care procedures,
• Increase taxes,
• Change Medicare benefits, or
• Make the program more expensive for beneficiaries.

What would the board be able to change?  

• Things Medicare pays for,
• What it pays to providers, and
• The program’s structure, among other things.

Since a big target of spending reductions probably would be things that supply income to doctors, hospitals, and other providers, the IPAB is intensely unpopular in the medical establishment.  Changing or repealing it is one of the American Medical Association and the American Hospital Association’s highest priorities.