On Thursday, March 18, the text of a reconciliation bill, known as the Health Care and Education Affordability Reconciliation Act of 2010, was released. It includes a variety of changes desired by House Democrats to the Patient Protection and Affordable Care Act, the version of the healthcare reform bill passed by the Senate on December 24, 2009. It also includes completed unrelated provisions regarding student loans by the government, hence the reference to education in the title.

The healthcare provisions in the reconciliation bill basically follow the outline proposed by President Obama last month, making insurance premiums more affordable to low-income individuals purchasing healthcare insurance coverage in the insurance exchanges, increasing penalties on large employers who do not provide insurance coverage to employees, and increasing penalties on higher-income individuals who choose not to have healthcare insurance coverage while reducing penalties on low-income individuals who choose not have healthcare insurance coverage.

For pharmaceutical companies, the main change from the Senate bill is an increase in new fees that will be imposed on the industry. With the changes in the reconciliation bill, imposition of the new fees will be delayed until 2011, when they will start at $2.5 billion, increasing to $3.0 billion per year in 2012 through 2016, increasing again to $3.5 billion in 2017 and $4.2 billion in 2018, before dropping to $2.8 billion from 2019 on.

The reconciliation bill gradually eliminates the so-called “doughnut hole” in Part D prescription drug coverage. It preserves the 50% discounts in the Senate bill that pharmaceutical companies would have to offer in the doughnut hole, although it delays implementation until January 2011.

President Obama’s proposal included a ban on settlement agreements between branded and generic pharmaceutical companies in which the generic company receives anything of value in return for an agreement to limit or delay sales of the generic drug, but this provision was not included in the reconciliation bill. The reason could be simply for procedural reasons. Reconciliation bills are supposed to be limited to issues relating to the budget, and any provision not relating to the budget can be challenged. Rather than face potential delays later in the Senate, it appears that a decision was made to drop the settlement ban from the reconciliation bill.

Greater Reduction in Budget Deficit

Also on March 18, the Congressional Budget Office released its estimate of the budget impact of the reconciliation bill combined with the Patient Protection and Affordable Care Act. According to the CBO, the combination would produce a net reduction in federal deficits of $138 billion over the 2010-2019 period. The incremental reduction from the reconciliation bill alone is estimated at $20 billion over the period. The CBO also estimates that the combined legislation would continue to reduce the budget deficit after 2019.

Picking Up Liberals and Blue Dogs

The House is expected to vote on the legislation Sunday, March 21. House Speaker Nancy Pelosi had promised members that they would have 72 hours to review the reconciliation bill before a vote, and since the text of the bill was released on Thursday, Sunday is the earliest a vote could be scheduled. The House will actually vote only on the reconciliation bill, and House Democratic leadership has arranged it so that the Patient Protection and Affordable Care Act will be deemed passed if the reconciliation bill passes.

The House needs 216 votes to pass the legislation. There had been some concerns about whether Speaker Pelosi would be able to round up enough votes, but momentum appears to be building, and it now appears that Speaker Pelosi will be able to pick up the remaining votes she needs by Sunday. President Obama postponed a planned trip to Indonesia and Australia to help in the push to convince wavering Democrats in the House. Earlier in the week, he succeeded in winning the support of Dennis Kucinich, a liberal Democrat from Ohio who had voted against the healthcare reform bill last November. Members of the “Blue Dog” coalition of conservative Democrats, too, had generally been opposed to the reform bill, but later in the week some members announced they were willing to support the legislation. The deficit reduction estimates announced by the CBO on March 18 helped in the effort to convince fiscal conservatives to support the bill.

If the legislation passes the House on Sunday, it will then be up to the Senate to pass the reconciliation bill, for which they will only need 51 votes, and then President Obama will sign the legislation into law. After many ups and downs, it now appears that the healthcare reform bill is heading toward passage.