The Kennedy/Dodd Bill: A Physician’s Analysis

The Senate Health, Education, Labor, and Pensions Committee, chaired by Sen. Chris Dodd (D-Conn), passed a health bill on July 15th that finally laid out the specifics of the biggest overhaul of health care in history. Here are the highlights.

The Senate Health, Education, Labor, and Pensions Committee, chaired by Sen. Chris Dodd (D-Conn), passed a health bill on July 15th that finally laid out the specifics of the biggest overhaul of health care in history. You can read a staff draft of the bill HERE (text file). Here are the highlights.  
First, everybody has to be in a “qualified plan” as defined by the Secretary of Health and Human Services. If you can’t prove that you have been insured for every month of the last year, you’ll be assessed a surtax to cover the government covering you. Of course, if you don’t pay taxes, as an increasing number of people don’t, it won’t effect you. If you are an employer, you have to pay a minimum percent or dollar amount of the premium for the plan, but only if you don’t already offer insurance to your employees. If you do, and the plan is ‘qualified’, then you don’t pay the surtax. And how much is the tax? Whatever the Sec of HHS deems is necessary to get everyone to participate.

But what defines a “qualified plan”? The Kennedy bill mandates guaranteed issue and renewal. Everybody can get insurance and nobody can be canceled, regardless of your past health or your lifestyle choices. The plans could not charge more for people who engage in increased risk lifestyles or habits, such as alcoholism, drug addiction, obesity, etc. Each qualified plan must have a modified community rating to pay more to areas of the country where medicine costs more. There can be no caps on annual or lifetime benefits. And family policies must cover ‘children’ up to age 26. Qualified plans must have at least three levels of cost sharing, cover a list of preventive services approved by the government and cover “essential health benefits,” as defined by the new Medical Advisory Council (MAC), who would be appointed by the Secretary of Health and Human Services. The MAC would have control over such services as out patient care, emergency services, all hospitalization, maternity care, mental health, pharmaceuticals, rehab, and any other services that it deemed essential to health. The MAC would also define what was “affordable and available coverage” for different income levels.


The Kennedy bill would expand Medicaid to cover everyone up to 150% of the poverty level, with the federal government paying for all the increased costs to the states. People making between 150% and 500% of the poverty level would be subsidized by the government on a sliding scale. To put that in perspective, a family of four making $110,000 would still get a small subsidy. People living in big cities would get larger subsidies. Of course, this Committee has no ability to write actual tax law to fund this legislation. That’s up to the finance committee.
The largest of all the hurdles in the bill is the “public plan option,” in which the government will offer to include people in Medicare. To sweeten the offer, the legislation calls for physicians to be paid at Medicare rates plus 10%. The legislation makes no mention of the future payments. Nor does it acknowledge that the Sustainable Growth Rate calculations for physician reimbursement from Medicare are currently calling for a 21% cut in compensation. Group health plans with 250 or fewer members would be prohibited from self-insuring, leaving ERISA to big businesses.
The legislation calls for health insurance to be sold through “gateways” set up by state governments that market only “qualified plans.” These “gateways” would have “navigators”, also paid by the state, the enroll people. The organizations receiving these funds could be community organizer groups or unions.
As previously stated, an interesting loophole exists in this bill that would exempt health insurance plans that met the standards of a “qualified plan” that were in existence before the legislation. The effect of this could make it very difficult to change jobs, if the new job was paying the higher cost of mandated insurance.
Another huge hurdle is the definition of who must get insurance. The bill defines an “eligible individual” as “a citizen or national of the United States or an alien lawfully admitted to the United States for permanent residence or an alien lawfully present in the United States.” This appears to open the door to medical coverage to every illegal alien who is granted some type of amnesty.
The only hope for controlling costs in this bill is the re-introduction of the gatekeeper concept that was tried 20+ years ago. Under this scheme, the gatekeeper, called a “medical home”, is a patient’s private practitioner would have the control of whether a specialty referral was made, tests were ordered, or hospitalization occurred. He would have 10% of his compensation held back each year until it was known whether he met the limits on spending on each patient. If he failed to meet the spending goals for each patient, he would have to pay for the care from his own pocket.
What are the potential effects of the Kennedy-Dodd bill, should it pass? First is the price tag. Those who pay most of the tax revenues of the country would see their taxes rise significantly. Businesses will have to incorporate these increased costs by lowering wages, hiring fewer people, or moving to other areas of the globe. Small business could be hardest hit, though there is talk of a small business exemption. But it is unlikely that tax increases on the upper income taxpayers would be enough. President Obama has already started to reverse his campaign pledge that those making less that $250,000 “would not see [your] income tax rise one penny.” He is now admitting that medical benefits would need to be taxed. So if someone making $80,000 per year was receiving a $10,000 per health plan, he would be taxed on $90,000, thereby increasing his taxes up to $2,000 without any increase in salary.
The biggest effect would be 50 million new patients. With the current saturation of many private physician practices, many of those patients would come to the ED.  Convincing gatekeepers to refer and specialists to accept these patients could get significantly more difficult, exacerbating wait times and holds.
Another huge effect would be the power of the Medical Advisory Committee. Unelected, virtually unsupervised individuals would control what health care looked like in this country, who was covered, who paid, and what services were covered at what compensation.
Cost shifting from the healthy to the unhealthy and those who engage in risky lifestyles would increase dramatically. The only control of this would be through lobbying the members of the MAC.
And finally, this bill would not effect members of Congress despite Mr. Obama’s campaign promise to offer Americans “the same kind of coverage that members of Congress give themselves.”
Mark Plaster, MD, is the Executive Editor of Emergency Physicians Monthly



  1. David Hoyer, MD FAAEM on

    The “Kennedy/Dodd Bill” would be a disaster for American healthcare(from which Congress has conveniently exempted itself). This Bill is a federal government takeover that could bankrupt the country and destroy our academic medical centers. Our taxes will be raised big-time, we will be told how to practice medicine with a huge increase in patient volume and no malpractice reform. Then, once the government bureaucrats realize how much “Kennedy/ Dodd” costs, they will start cutting physician reimbursement “to save money”. So with “Kennedy/ Dodd” physicians will be working harder, paying higher taxes while getting paid less, all to insure patients who should be going to the county/ teaching hospitals or clinics for their care. Of course since “everyone” will have health insurance, no one will want to go to teaching hospitals, which could devastate our academic medical centers.
    We physicians (and everyone in healthcare) need to stand up, fight and defeat this disastrous legislation.

  2. A recent study revealed the average doctor pays $85,000 per year to handle insurance paperwork. Eliminating that by have mandated tiers of coverage (i.e. low, medium, deluxe and catastrophic only) would eliminate most of that cost. 100,000 doctors saving $85,000 each would be billions of dollars in cost savings every year and make any minor cuts in reimbursement financially viable for docs. The 30 to 50% of our healthcare costs that are going to profits of insurance companies is where we need to start. Oh, that’s right, they have effective lobbyists, hmmm… The very first place we need to start is with insurance companies.

  3. Terry Clark, M.D. on

    It is a given that healthcare reform will take place. It is also a given that, ultimately, this reform will prove to be a catastrophic failure for healthcare in America. Sadly, any reversal of this failed reform policy will take so long as to not occur in our lifetime. Our generation (I am 53 years old) will die having been denied quality healthcare in the twilight years of our lives.

  4. Dr. Sourbutt on

    Hasty and reckless passage of the Kennedy-Dodd bill would be tantamount to jumping out of an airplane while holding a parachute hoping that you will be able to put it on during the fall into the abyss. Here we must pause and reason our way very carefully through this mess to prevent another debacle like the continuing meltdown of out financial markets/system. We need concrete concessions (not theoretical) from Big Pharma and the third party payors. Providers driving up the costs? Balderdash! Not one word about the runaway 600 lb gorilla who is advertising on TV 24/7…tort reform.

  5. Lloyd G. Alch, M.D. on

    Wonder what would happen if doctors formed a union for
    collective bargaining. We must create a different form of clout to replace our continual funding of our PACs and lobbyists. Each year we lobby to prevent Congress from decreasing our Medicare (etc) compensation. This is a costly, expensive and tiresome process. It’s difficult to have any 10 doctors agree on anything, let alone thousands, with disparate economic and personal interests. Until we all understand how “socialized” medicine negotiates (as in Scandinavia, which I know firsthand)with their governments each year, we will suffer. More work, less compensation, treated as a unit of production, and the target of government, because as President Clinton had said: ‘ you all do a great job, but you cost too much’.

    I believe that forming a union by doctors would be considered illegal. Why is that?? Something needs to be done, or soon all specialties/hospitals will be fighting over a single universal payment given for each illness. Think about that. How many will still work more for less? Most of us do what we do because we enjoy the intellectual rewards and perhaps the lifestyle, and not for the money per se. Still, let’s get together on this, or else suffer the consequences.

  6. Terry Geurkink on

    It is rather hilarious, and sordid, that 1,000 page bills are written by congressional/senate staffers, who I suspect are 20-somethings—and never read by congressmen and senators or the prez—yet it is pushed to the public as the saving grace for a national crisis.

    As physicians, we know how hard we work to practice proper and phenomenal medicine, and the politicians know absolutely nothing about the medical care system, but they know everything about collecting taxes, power, and control.

    If the American voters believe that politicians know more about proper medical care than physicians and clinic and hospital staffs, then our future in medicine, as providers and utilizers, looks fairly bleak. If American voters are skeptical that politicians should dictate our medical care, then we have opportunities to continue to advance the best medical care on the planet.

  7. Alan Kenwood on

    While this bill has good intentions, the road to hell can be paved the same way – with good intentions.

    You cannot pass such a monster spending bill without a very clear idea and very clear future policy on how to pay for it. The Democrats are trying to pass the bill first, without a meaningful cost analysis. The USA already has, by far, the biggest health care costs in the western world. Now it will be dramatically more expensive!

    President Obama has failed miserably in thinking through the problem from its root causes. You cannot craft major health reform by listening to politicians and lobbyists, yet that is what he is doing. Instead he should be taking a stance on what should REALLY happen in health care reform and stick with it, come what may. Political courage has been sore lacking.

    The basic problem, as I see it, is that the insurance model has failed. We cannot control costs when the companies that issue the insurance are beholden to shareholders first and patients second.

    On the other hand, the federal government should not be the dictator of all health issues. Its function should be to make a bill that is cost neutral from the beginning, and to collect the taxes to do it. This should include calculations on TOTAL health costs for all of us, including out-of-pocket expenses.

    We should set up regional authorities to make the rules for each region. Each authority would be controlled like a public utility, with a board made up of various segments of our society – doctors, business executives, public advocacy groups. That way, the rules would be made in a democratic fashion with feedback from all, not just dictated by Washington. Washington would only sent the check; each local “utility” would negotiate with hospitals, doctor goups, etc. for the total amount each would receive.

    So how would you control costs? GIVE THE DECISION MAKINIG BACK TO THE DOCTORS! Right now, insurance and medical decision making are essentially separate things. If the doctor’s compensation is DIRECTLY linked to the cost consequences of medical decisions, the costs would drop dramatically. Then give the docs rebates for saving the system money. That way, the system is self-correcting – without the onerous layers of rules that our government loves to create.

    The system should be voluntary, like public education. We pay out taxes for the nation’s kids to go to school, even if you have no kids or they are finished with their education. We do it for the public good. If you want, you can send your children to private school, as many do. But you still pay your share.

  8. The cost of the healthcare of the nation should be paid for by the companies that received the government bail out fund. Let AIG, GM, CitiBank, B of A, etc to pay for it.

  9. SGCassiere,MD on

    Enroll those without insurance into the VA hospital system. This is already a government program which could be ramped up to include this subset of the population. There would be little if any disturbance on the private sector. VA already has EHR so by definition, the uninsured would already be ahead of the curve in receiving quality care.

  10. Douglas Lewis on

    Several people seem to be under the notiion that the people who are foisting this garbage off on the citizens really want to improve health care access. This is solely a way to bring health care under government control. President Obama and the Democrat leaders don’t care what level of care is provided as long as they control it. Why else would they be in such a hurry to pass a bill that hasn’t even been read in it’s entirety by the committees who are authoring the bill(s)?
    If thses people were serious they would first fix the problems with Medicare and Medicaid, Indian Health Service and VA where they already have control, prove their program, then try to expand system. Also, if they wanted to decrease costs they would not tax health care benefits from employers and would give a tax deduction to self-insured.
    Finally, you can get a fair assessment of the level of care that is planned, since the Senate committee voted down an ammendment that would require Congress to have their care provided through the same insurance ‘offered’ to the public.

  11. Douglas Lewis on

    Also, instead of enrolling uninsured in VA system, close the VA and Tricare give these vets the best available private insurance.

  12. This all stinks of a major Orwellian social debacle. Nothing will change because there are too many high level (read: wealthy) individuals profiting from the dysfunction of the system as it stands. As a result, NO ONE is speaking about the true problems of the health care system.

    Patient irresponsibility and the prevalence of tort action drive the high cost of health care in this country. We make the individuals who are the most self destructive to be the determinants of what is the “standard of care” and expect there to exist some resemblance of a sustainable “health care” system. What we have instead is an “unhealth management” system. We all know what goes on every day:

    1) Patients using ambulances like free taxicabs
    2) Noncompliance with treatment and follow up leading to more expensive complications
    3) Risky behaviors/lifestyles
    4) Doctor and hospital shopping
    5) Fraudulently presenting themselves as others
    6) Lawsuits against health care providers when the root of the problem is patient action or inaction.

    This crap is over-crowding our ER’s and burning resources unnecessarily to the point of closing hospitals. Any health care “reform” action which fails to address these core issues will be unsuccessful. The death of an internationally famous individual sparks debate about how they were cared for by doctors, and who was in their “inner circle”. No mention is made of whether there should have been some initiative towards personal responsibility to deal with their own illness at any given point. Next there will likely be more Tort actions and finger pointing at everyone but the individual themselves.

    As long as this puerile perception remains society’s focus, any kind of health care “reform” will only be at best a farce and won’t move us from where we are today, but rather just plunge us headlong into something worse.

  13. After 21 years of working in EDs I have finally accepted that we need universal healthcare coverage. The solution entails:
    1. Eliminate waste. We all know that at LEAST 75% of what we do (labs, xrays, CT, MRIs and treatments galore) is a waste of time and money. We do it because of:
    a. The stinking Press Ganey
    b. Defensive medicine
    c. Patient demand/expectation.
    2. Ration healthcare. Yes, you read it right–Ration. Just say No. We know that huge number of folks should be on hospice/ comfort care/minimal care. Yet we continue to spend a great percentage of healthcare dollars toward the end of life.
    3. Tort reform-For one thing, if you are getting free healthcare you shouldn’t have the right to sue. Lawsuits should be handled by a panel of judges and doctors, not uninformed and emotionally led jurties.
    4. Eliminate private health insurance altogether. Like KS notes above, the savings in paperwork alone would pay for the new system.
    5. Centralize healthcare to the primary care physician. Doctor shopping generates an enormous waste of redundant testing and treatment. Every patient should carry their records around on those little plug-in storage devices. That way when they come to your ED and its the third ED in town they’ve hit in one day you can plug in their record, see what was done and just say bye bye.
    6. Every able bodied person should work and pay taxes. As long as everything is free to a huge segment of the population, there will be enormous waste, fraud and abuse. If the private sector doesn’t have the jobs then the government should put the freeloaders to work at productive jobs and have them pay taxes no matter what their level of income.
    7. Financially penalize those with self destructive behaviors. For example-If they smoke and then have to take 5 asthma meds then they should have to pay for those meds out of pocket, not make the poor taxpayer pay for their abuse.
    We could easily save enough hundreds of billions through practicing medicine rationally to make universal healthcare affordable. Unfortunately we know the government will go about it all the wrong way.

  14. Is there a problem with the medical care or the insurance system?
    This issue should be titled health insurance reform since the insurance is what needs to change. I suggest that all insurance should be regulated as a necessary utility just like electricity. Massive and hidden profits for insurers while patients are refused care and physicians are denied payments makes no sense.
    The resent proposals are typical of bleeding heart liberals who never have to clean up the shit (literally and figuratively). Anyone who has any say in health care policy needs 3 months as an ED tech. If they saw what absurd behavior occurs in patients and in the systems they might come up with realistic change.
    The changes coming will just speed the eventual collapse of this system. They will make medicine less attractive to the best and the brightest while increasing the costs dramatically. Hang on for the ride.

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