Monday Update

The FEHBlog was offline yesterday for the Weekend Update so I will try to catch up today.

Both the Hill newspaper and I misread Speaker Pelosi's comment last Thursday about the month of August. We each thought that she, like Sen. Harry Reid, was throwing in the towel on passing the health reform legislation before the recess, but that was not the case. She continues to advocate for floor action but the House Energy & Commerce Committee mark up remains in limbo. Over the weekend, the CBO released a letter estimating that an approach to controlling Medicare costs favored by the White House and the Blue Dogs would only save $2 billion over ten years. Modern Healthcare reports that the Committee's markup may resume on Wednesday.

The Wall Street Journal reports tonight that

In an effort to gain momentum, Democratic leaders Monday focused their
statements on insurance companies, saying insurers have made huge profits over
the last several years while Americans have been asked to pay more for their
health care. "The status quo is indefensible," said House Majority Leader Steny
Hoyer (D., Md.).

According to Reuters, the House leadership also relied on on a CBO letter suggesting that the House bill would not have the harmful impact on employer sponsored coverage predicted by the Lewin Group study, which was updated today. Nevertheless, "[t]he latest CBO analysis also said the healthcare reform proposal would increase budget deficits in the long run."

The Federal Times reports on the potential impact of the 1000+ page House bill on the FEHB Program. Most significantly, "Dan Adcock, legislative director for the National Active and Retired Federal Employees Association, * * * said that after a reform bill is passed, the government may have to extend FEHBP coverage to seasonal or temporary employees — who are currently ineligible for the plan — or contribute funds to cover the cost of those employees’ insurance."

Meanwhile, the AP reports that the Senate Finance Committee continues to be engaged in a bipartisan effort.

[Anonymous officials] said any legislation that emerges from the talks is
expected to provide for a nonprofit cooperative to sell insurance in competition
with private industry, rather than giving the federal government a role in the
marketplace. The White House and numerous Democrats in Congress have called for
a government option to provide competition to private companies and hold down
costs.

One of the senators involved in the talks, Olympia Snowe, R-Maine,
confirmed that co-ops are the preferred approach. "The co-op is certainly one of
the prominent options that is on the table," Snowe told reporters after the
group met Monday. "It's safe to say that'll probably remain in the final
document."

Officials also said a bipartisan compromise would not subject companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtaininsurance on their own.

Snowe said the idea is to discourage employers from dropping coverage because under the plan their workers could get government assistance to pay premiums. "We don't want to undermine (employer coverage) or create a perverse incentive where employers potentially drop coverage because their employees can get subsidies," she said.

In other Hill news, on Wednesday the Senate Homeland Security and Governmental Affairs Committee will mark up bill (S. 1507) to provide the U.S. Postal Service with financial relief from its obligation to pay employer contributions toward retiree coverage for FEHBP coverage. Govexec.com reports that Sen. Tom "Carper [(D Del.)] expects to pass the bill before Congress leaves for recess in August. The House Oversight and Government Reform Committee approved H.R. 22 on July 10, which also would afford the Postal Office some debt relief, though not as much as Carper's bill."

In legal news, last week Judge Patty Saris of the U.S. District Court for the District of Massachusetts approved the McKesson piece of the average wholesale price ("AWP") fixing case, which creates a $380 million pot to be shared by third party payers, consumers, and of course lawyers. The appeal of Judge Saris's earlier order approving the First Databank AWP rollback settlement in this case will be argued before the First Circuit tomorrow. I read the objector’s reply brief and I think that they have a strong case. Basically, the objecting pharmacies argue that the financial consequences of the rollback fall on them. Therefore, the plaintiffs were obligated by Rule 19, Fed. R. Civ. P. to join them as defendants in the lawsuit. The settlement fails because they weren’t so joined.