Obama Health Proposal To Congress Critiqued, Analyzed

He also proposed an initiative aimed at imposing curbs on medical malpractice lawsuits.

The president projected the cost of his plan as $900 billion over 10 years.

In reaction, a Washington financial analysis group, Washington Analysis, said the president's speech was not a "game changer."

Reform, if it occurs, said Washington Analysis, will most likely have to be through legislation now being drafted by the Senate Finance Committee that is scheduled to be marked up by the committee Sept. 21.

The organization deemed it unlikely that changes would be adopted as proposed in the bills passed so far by one committee in the Senate and the so-called "tri-committees" in the House.

The National Association of Health Underwriters was highly critical of the president's comments.

"Health insurance reform by itself will not be the true test of reform, but President Obama officially pivoted in outlining his goals for health reform from systemic reform to health insurance reform," said John Greene, NAHU vice president of congressional affairs.

"While there is broad support on both sides of the isle for insurance reform and insurance carriers have agreed to such changes, he also promised lower premiums," he said.

However, the "fees" insurance plans will be asked to pay "are in reality taxes that workers will be forced to pay in the form of higher premiums," Mr. Greene said.

Mr. Greene commented that the most "notable omission" was how President Obama intends to bend the cost curve.

"He talked about waste, fraud and abuse as a target for reform, but he provided no specifics," Mr. Greene said.

"Unless the underlying payment and delivery systems are fundamentally changed so that the incentives are changed, whatever changes are made will not meet the long term goals of affordability and deficit reduction," he added.

In his speech, the President said that while he prefers a non-profit public option run by the government, other ideas might be acceptable, for example a provision proposed by members of the Senate Finance Committee for a trigger mandating a "public option as a fallback," or non-profit cooperatives.

He also endorsed an individual mandate with some teeth and hardship exemptions, employer responsibility, and tax credits for uninsured individuals and small businesses to purchase insurance.

In his speech, the president also backed a proposal outlined earlier in the week by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, that would impose a fee on insurance companies that offer expensive, or so-called "Cadillac policies."

Sen. Baucus' proposal would impose an excise tax of 35 percent on insurance companies for policies costing more than $8,000 for an individual and $21,000 for a family. The tax would apply to the amount of premiums above the threshold.

In an effort to win support of Republicans, President Obama also endorsed a proposal first suggested by Sen. John McCain, R-Ariz., during his presidential campaign to rein in defensive medicine costs by limiting medical malpractice lawsuits.

The president proposed that, as a start, the Department of Health and Human Services start demonstration projects in states to test new models to address medical malpractice.

He also endorsed a budget mechanism to automatically reduce the growth of Medicare if health care reform mandates do not produce the savings that the administration and many health care experts expect.

Earlier in the day, Sen. Baucus issued a statement calling for action and saying he will introduce a bill early next week that will form the basis for a markup of legislation the following week by his committee.

In a note to investors, Washington Analysis said to win passage a health care bill "has to be more middle-of-the-road (and therefore more likely to be based on the proposal being developed by the Senate Finance Committee expected to be released next week and marked up the week of Sept. 21) than the House's and Senate Health Committee's bills, both of which have a government-run public option on day one (implemented in 2013)."

In a statement, Karen Ignagni, president of America's Health Insurance Plans, again reiterated industry opposition to a public plan saying, "New health insurance reforms and consumer protections will solve the problem without creating a new government-run plan that will disrupt the quality coverage that millions of Americans rely on today."

Ms. Ignagni added, "Health plans will continue to work with policymakers and stakeholders to advance comprehensive, bipartisan health care reform. The nation cannot afford to let this historic opportunity pass us by."

Joel Kopperud, a director of legislative affairs at the Council of Insurance Agents and Brokers, said the president's "openness to health insurance cooperatives as an alternative to a government insurance program is promising."

Charles Symington, senior vice president, government affairs for the Independent Insurance Agents and Brokers of America, voiced support for the president's remarks that he would support initiatives dealing with medical malpractice issues, and said proposals by Sen. Baucus hold promise.

But he criticized the president's decision not to rule out the so-called public option or government provided health insurance.

Mr. Symington said the "The public plan is a non-starter for us. We were disappointed the president did not relent on that last night."

He said he applauded the president's offer to work on medical malpractice reform and said the president's order to award medical malpractice demonstration grants to certain states "is a good first step."

At the same time, he said the outline of Sen. Baucus' bill "appears to be a much more workable approach to health care reform, but we reserve judgment until the legislative text is released. As with most bills, the devil is in the details."