US Videos

Prognosis for Health-Care Reform

Jeremy Glaser

Jeremy Glaser: I'm Jeremy Glaser with Morningstar.com. President Obama unveiled, this morning, his plan for moving health-care reform further. Here to discuss the prognosis of this plan is health care analyst Matt Coffina. Matt, thanks for joining me.

Matt Coffina: Thanks for having me, Jeremy.

Glaser: So, bottom line, do you think that President Obama's new plan helps the future of health care reform? Will it pass?

Coffina: Well, it's interesting. Health reform has really kind of bounced back and forth. It looked all but assured a few months ago then Scott Brown won the seat in Massachusetts and it looked like health reform was completely dead. Then the President sort of put it to the back of his agenda, in his State of the Union Address, but now it seems to be back front and center.

The President is staking his whole 2010 on it, basically, at this point. So it certainly has increased the chances of health reform passing to the extent that it's an area of emphasis still for the administration.

Read Full Transcript

Glaser: Was there anything in this plan that surprised you, something that might have been different from the versions we've already seen come out of the Senate and the House?

Coffina: Largely, there weren't too many surprises in the President's version of the bill. The biggest change was, from the Senate bill in particular, that the President wants to establish a new rating authority. This would be basically a Government Agency that would have the authority to say that a particular insurance company's rate increase for the year was unreasonable, unjustified, and prevent that rate increase from going through.

Glaser: What impact do you think that provision would have on the health insurers?

Coffina: Well, it's hard to say. Insurance regulation, as of now, is pretty much handled at the State level. Most of these rate increases are going to be driven by health-care cost increases, so it would be very hard for a federal regulator to come in and basically say: "You have to be making a loss on these insured people. You're not allowed to make a profit." Because, really then, the insurance company is just going to say: "OK, if that's the case, we're going to pull out of the market altogether."

So, I think it's largely a symbolic gesture, but I think the President's real goal with the Bipartisan Summit on Thursday, and with his bill that he just put out today, is really to put Republicans on the spot, to give them some very tough decisions to make. To make it very hard for the Republicans to say: "We're not in favor of preventing unreasonable rate increases by insurance companies."

Glaser: What are some of the biggest political hurdles between where we are now and the bill passing?

Coffina: Well, it's interesting. I don't think anyone would have believed that it looks like the House of Representatives is actually going to be the most important chamber in this discussion. Everybody thought it would come down to the Senate, but with the loss of that 60th seat in the Senate, it looks like that they are going to go a reconciliation route in the Senate, meaning that they'll just have to have 50 votes in the Senate to pass an amendment to the bill that was already passed in the Senate.

The problem is now that they have to get the House to pass both the original Senate bill and the President's adjustments to that bill, and that's going to require a simple majority in the House. The last time they considered health reform, the vote was just 220 to 215.

So, basically, the Democrats have only two votes to lose, and one of the 220 was actually a Republican. So if they lose two votes, they can still pass it in the House, but if they lose three, they're done.

Glaser: So it seems that health-care reform is still far from assured, but it seems to be closer to passing than it did before?

Coffina: Basically. It's still an area of emphasis, obviously. I think we'll know a lot more on Thursday after the Bipartisan Summit. We'll get sort of a sense of where the politicians are going with respect to this, but they have to nail down those House votes, and, as of now, it's really very much up in the air.

There's issues like abortion, in particular, that the President's bill really skirted dealing with that issue altogether, but it's a major sticking point for a lot of House Democrats, so it will be interesting to see if they can rally behind this bill or not.

Glaser: For investors who are concerned or interested in the health-care reform, it looks like the House will be the place for them to keep an eye out.

Coffina: Certainly, and we'll be keeping an eye on this Bipartisan Summit. I think the Republicans would just as soon no go at all, but, at this point, once again they're on the spot. The President says: "Here's our proposal. Where's your proposal?" It'll be interesting to see how they react to that and how they come off looking after that.

Glaser: Matt, as always, thank you for your analysis.

Coffina: Thank you, Jeremy.

Glaser: For Morningstar.com, I'm Jeremy Glaser.