The President’s speech yesterday brought to mind Senate Finance Committee Chairman Max Baucus’s proposal which bears strong similarities to the House majority bill, HR 3200. Of course, there are significant differences between the two. For example, the House bill funds the expansion of coverage with surtaxes on wealthy taxpayers while the Baucus proposal uses fees on “Cadillac” plans, health insurers, pharmaceutical companies, and medical device manufacturers for funding. The House bill grandfathers employer sponsored plans from new health plan standards until 2019 while the Baucus proposal appears to allow those plans a somewhat greater degree of flexibility beyond that date. We can’t be sure though until the Baucus proposal is put into legislative language, which should happen next week. The Senator has stated that he plans a committee markup for the week of September 21.

Here is AHIP’s statement on the President’s speech. Marketwatch reports that health insurer, hospital company, and drug manufacturer shares advanced today.

Speaking of benefit design flexibility, Business Insurance reports that “Employers are expecting a nearly 9% increase in the cost of their group health care plans in 2010, but plan to trim that increase to 5.9% through a variety of cost-cutting actions, early responses to a Mercer L.L.C. annual survey indicate.” The cost cutting actions include “eliminating higher-cost or more generous health plan options as a way to move employees into lower-cost options, such as high-deductible consumer-directed health plans; auditing plans to ensure that all covered dependents are actually eligible for coverage; and adding or renegotiating performance guarantees with plan vendors.”

The Wall Street Journal reports that the original business design of retail clinics such as Minute Clinic and Take Care has not worked out as well as expected. That design focused on providing basic services, such as immunizations, at a low cost to walk up customers. Now those clinics are looking at creating a more steady income stream by treating certain chronic illnesses like diabetes and asthsma. The medical community is not pleased by this move onto their main turf.

Finally, the U.S. Court of Appeals for the First Circuit has affirmed the First Databank average wholesale price (“AWP”) settlement. First Databank publishes a listing of AWPs which prescription benefit managers (PBMs) and others use to price prescription drugs for their business partners — both pharmacies and health plans. Under the settlement, First Databank will rollback the AWP on a hundreds of prescription drugs as explained in this press release. In return, First Databank, which also paid about $2 million, received a general release from the class. Not a bad deal for First Databank. PBMs are now busily rewriting contracts to adjust for this change which remedies a wrong that allegedly was committed by co-defendants McKesson and First Databank eight years ago. The settlement doesn’t make sense to me. (McKesson’s agreement to kick $350 million into a settlement pot is OK with me.) The big news is that the AWP benchmark will be going by the wayside in a couple of years, and it will be interesting to see what takes its place.