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JIM LEHRER: We go first tonight to a new fight over health insurance. It’s over the bipartisan Kassebaum-Kennedy bill President Clinton promised in his State of the Union Address to sign when it comes to his desk. But it is nowhere near his desk at this moment because of a stall put on it in the U.S. Senate. The bill would require insurers to offer coverage to people who have changed or lost their job, limit the ability of insurers to deny coverage for a pre-existing condition, require health plans to renew coverage for individuals and groups as long as premiums are paid, and help small employers form purchasing pools to buy insurance at lower rates. Here to discuss the bill is one of its sponsors, Sen. Nancy Kassebaum of Kansas, who chairs the Senate Labor & Human Resources Committee, and one of its leading critics, Bill Gradison, former congressman, now president of the Health Insurance Association of America, a trade group representing 220 insurance companies. Senator, your bill was supposedly headed for quick and easy passage, then boom. What happened?
SEN. NANCY KASSEBAUM, (R) Kansas: I’m not sure it was quick and easy. It did pass in August unanimously, the Labor Human Resources Committee, and we’ve had a strong bipartisan group of co-sponsors, and I’m very appreciative of conversing with Bill Gradison as we were putting this bill together. It is narrowly focused. It doesn’t go nearly as far as some would like and in other instances, it goes further than they would like. And as it moved to the floor and was on the Senate calendar, the opposition to it grew. The main objection has been the ability to have moved from group to individual portability, if that is necessary. I believe it’s a key component of the bill that really makes it truly an important piece of health care legislation.
JIM LEHRER: Explain that provision and why it’s so important.
SEN. KASSEBAUM: I think today when you have so many people losing jobs if they have been part of a group health plan, they should be able to enroll if they’ve been at least for a year and a half in a health care plan, or their COBRA benefits have run out, which would be a year and a half, eighteen months to or more in some cases be able to get into another health plan, either in a group or as an individual. And they could not be denied coverage because of a pre-existing condition.
JIM LEHRER: Under the current laws and rules and practice, they could be, is that correct?
SEN. KASSEBAUM: Yes. But we had a gentleman testify who for thirty some years has been under a plan when the business dissolved and he formed a partnership of other businessmen to run the company. Because of a heart condition he was denied coverage, even though for thirty some years he’d been part of this plan. Someone like that, I would argue, should be able to continue coverage in a plan. We don’t cap premiums, which many would think would be a good idea to do, and we just feel it’s a reasonable approach that fills a niche today with so many people being downsized in companies and laid off, and after their benefits run out worry whether they will be able to cover themselves as they have been in the past.
JIM LEHRER: Mr. Gradison, you and your group have been credited with holding this up on this issue. First of all, do you rate the credit and if so, what is your objection to it?
BILL GRADISON, Health Insurance Association of America: We haven’t asked any Senators to put holds on this bill. We think that Sen. Kassebaum deserves a great deal of credit, along with the members of her committee, in putting together a bill which will deal with one of the major problems in health insurance today, which is so-called job lock, where people are afraid to make a change in jobs because of their concern about having a lapse in their health insurance coverage. We’re absolutely convinced that the provisions of the Senator’s bill make sense and will work fairly when they permit people to move from a group that they’re under today into a new group under circumstances where if they qualified in the first group, they don’t have to start all over, no pre-existing condition requirements, no new waiting periods. We measure the, the reform proposals that are being considered against two major tests. Will they maintain and increase coverage, and what effect will they have on the cost of health insurance? Probably the strongest message we get from our customers, the 10 million, for example, that buy individual health insurance policies, they think we’re charging them too much. Our concern is that if it’s possible to move from a group into individual coverage, that that additional group of people who will apply will be taking out more in the way of benefits than they’ll be putting in in the way of premiums. We think there’s a better way. The better way would be–
JIM LEHRER: What you just outlined is what–the provision that Sen.–you think that will, will raise the cost to everybody?
MR. GRADISON: We think it will raise the cost of individually purchased health insurance. This is a very price-sensitive market. These are farmers and ranchers and sole proprietors that kids are just getting out of school and coming off their parents’ policies that are paying from their own pockets for their health insurance. The employers almost never contribute towards those policies. And we’re concerned that many of them will drop their policies if the price goes up. And we think–
JIM LEHRER: Why? Why would they do that?
MR. GRADISON: Well, because–
JIM LEHRER: Why would the price go up, in other words?
MR. GRADISON: The price would go up because of the experience that many employers have had with people who’ve left their companies and then take advantage of the rights which the Senator quite properly has called attention to, to continue under their old policy for a year and a half. The actual experience of employers with those folks who continue after they left employment to buy into their former employer’s insurance policies is that those, that those expenditures, the benefits are about 50 percent more than the people are paying in in the way of premiums. Now we think there’s a better way, Jim.
JIM LEHRER: Hold on just a minute. Let me go back to the Senator on that. Do you buy his, his scenario?
SEN. KASSEBAUM: We have done an analysis of this, and I think it is misleading to say premiums would drastically increase. The American Academy of Actuaries has just sent a letter to you which was copied to me that said their estimate is less than 2 percent increase in the premium. So I don’t think the argument that it will really escalate price premiums, the cost of premiums, for individual coverage is a valid one. I know that there is an argument that if states have risk pools for high risk insurers, that that’s a better way to go. And this does not in any way preempt that. If a state has the ability–is putting together funds for a high-risk pool or other innovative coverage for that population, then this would not, this individual portability would not take place. State law would, would with the Secretary of Health & Human Services’ approval be in effect, and I think that many of the states that have this already also cap their premiums, is that not correct?
MR. GRADISON: Many of them do, yes, indeed, Senator.
SEN. KASSEBAUM: So actually there is some advantage to the insurance companies that we don’t cap premiums.
MR. GRADISON: Well, let me just say that every estimate–while the estimates vary enormously, every estimate indicates there would be some increase in premiums that would be paid by people who buy these individual policies. We want these folks covered. The question is who should pay for them. And we think the risk pools are a better way to go because they would spread the costs more generally, not just on that limited number of people who currently buy individual health insurance policies.
JIM LEHRER: If you’re–when you outlined your, your organization’s position, you support the rest of the Kassebaum-Kennedy bill.
MR. GRADISON: Yes.
JIM LEHRER: Is that correct?
MR. GRADISON: That’s correct.
JIM LEHRER: But this is important, this particular part is so objectionable to you that you don’t think the bill should be passed?
MR. GRADISON: We prefer the bipartisan bill in the House which includes the group to group portability but does not include the group to individual portability. So there really is a bipartisan bill in the Senate and a separate but different bipartisan bill in the House. We want action. We think it’s vital that a bill on this subject reach the President’s desk this year and be signed.
SEN. KASSEBAUM: And there is a companion bill to our bill in the House as well. Congressman Rockema from New Jersey has a companion bill.
JIM LEHRER: That has similar things to yours in it?
SEN. KASSEBAUM: It is exactly the same, but–
JIM LEHRER: Senator, why–let me ask the reverse question that I just asked Mr. Gradison–why is this so important, this particular part of your bill?
SEN. KASSEBAUM: Well, it seems to me it’s kind of the heart of the bill, and I think a case can be made that you can’t even have necessarily group to group portability without the ability to have individual, because if you leave one group plan, you may go to another company that says they won’t offer you health benefits. They may have a group plan, but they would say we’re not going to cover you, or they don’t even have a group plan.
JIM LEHRER: And so the person–the individual wouldn’t have–wouldn’t be protected unless this–
SEN. KASSEBAUM: But if there is individual portability, they could be part of a group plan because they would be able to transfer through their portability. You see, I think in a way it enhances the ability to have group to group coverage as well. Otherwise, you could potentially be cut out.
MR. GRADISON: I would just point out that the problem of job lock is a very serious problem. It requires attention. Most people who lose their job that had health insurance, not all, but most of them, before their rights to remain under their old policy expire, end up in another job with health insurance, not enough do. Some fall through the cracks, and we think that the state risk pools or, for example, a mandate that your former group policy would have to have a continuation provision so you could stay in that would, would be a workable way to build on the system that’s already there without running the risk of overpricing individual policies for the people who reach into their own pocket to pay for them.
JIM LEHRER: I don’t think we’re going to resolve this argument here, but give us a feel for each of your perspectives. How many people–how big a problem is this? How many people are we talking about?
SEN. KASSEBAUM: The General Accounting Office has said about 25 million people would have an advantage with the full group to group or group to individual portability.
JIM LEHRER: That’s a lot of people.
MR. GRADISON: We think that that’s about right, and that of that 25 million, roughly 1,800,000 or less than 10 percent would be involved in the question which is being discussed, which are people that might move from a group to an individual policy. To say it another way, the, the parts that we’re not trying to minimize the disagreement, but the parts we’re–
SEN. KASSEBAUM: I was going to say, that’s not very much, Bill, we can surely accommodate that.
MR. GRADISON: But the parts we’re in agreement on, they’re probably 90 percent of this, but I appreciate your focus, and very properly so, on the areas of disagreement.
JIM LEHRER: Because that’s what’s held the bill up, is it not? I mean, isn’t–
SEN. KASSEBAUM: Yes.
JIM LEHRER: I mean, that’s what the whole–that we should–some Senators have put a hold on it in the Senate. It was about to go to the floor for debate last week, was it not, and a vote–
SEN. KASSEBAUM: Well, Sen. Dole has propounded a unanimous consent agreement. There was one objection to that, and other holds were taken off. It’s my hope that, and I think Sen. Dole’s, that by tomorrow, the one objection can be worked out.
JIM LEHRER: And then what happens?
SEN. KASSEBAUM: Well, then the unanimous consent agreement was that it would come up to a vote before May 3rd, which gives those in opposition plenty of time to continue to make their case.
JIM LEHRER: And your opposition is strong and you’re going to work hard to defeat this, is that right?
MR. GRADISON: Well, we presented our views very clearly to the committee, and they unanimously disagreed with us, but we still wrote those views. I hope you don’t have to wait till May to bring it up, Senator.
SEN. KASSEBAUM: Well, I do too. I would really like to have the debate, and I appreciate that, and I think that hopefully we can resolve that, and at some point in the near future we can talk.
JIM LEHRER: You think you’re going to win it?
SEN. KASSEBAUM: Well, I tend to believe so. There’s strong support on both sides of the aisle.
JIM LEHRER: Do you think you’re going to win?
MR. GRADISON: We’re continuing to seek middle grounds on this, and we’re not giving up the hope that something can be found that would gain unanimous support in both Houses, and I really mean that.
JIM LEHRER: I was listening very carefully. I didn’t see a lot on this particular issue.
SEN. KASSEBAUM: But I think we’ve tried to leave flexibility to the states, and that’s one of the reasons the National Governors Association and the National Association of Insurance Commissioners both endorsed the bill.
JIM LEHRER: All right. Thank you both very much. We’ll see what happens.