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November 16, 2009

Washington Health Policy Week in Review Archive 7c9e9028-51fb-4363-9bcf-3cec164e18cf

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Senate Machinations Begin Anew

By Joseph J. Schatz, CQ Staff

November 10, 2009 -- Senate maneuvering on health care has started in earnest, with members preparing amendments and plotting strategy on flash points such as abortion.

And one Republican moderate hopes to change key parts of the bill by teaming up with moderate Democrats who support the legislation's goals, but not all of its details.

"There is considerable unease on both sides of the aisle about the impact of this bill," said Susan Collins of Maine. Collins has been talking to several Democrats about potential amendments, some focused on helping small businesses navigate new requirements in the health care overhaul. Majority Leader Harry Reid, D-Nev., said Monday that he will do his "utmost" to bring the bill to the floor the week of Nov. 16.

While narrow passage of a House health care overhaul package (HR 3962) on Nov. 7 did little to diminish the contentious issues facing the Senate—what the bill costs, whether it will include a government-run "public option" and how it will deal with politically difficult topics such as abortion and immigration—it has spurred some moderates to search for common interests.

Still, it has not taken long for some senators to jump into the divisive issue of abortion funding under the new programs the bill would establish. A group of female senators who support abortion rights are joining forces to find an alternative to tough restrictions adopted by the House.

Sen. Barbara Boxer, D-Calif., a staunch abortion rights supporter, said the Pro-Choice Caucus would meet Nov. 12 in an effort to ensure that the House amendment sponsored by Bart Stupak, D-Mich., does not find its way into the Senate bill.

The provision would extend a ban on federal funding for abortion to the insurance programs created by the bill and bar insurers selling plans through a new government-run "exchange"—including a government-run plan—from offering policies covering elective abortion to women whose premiums are subsidized by federal funds.

Despite renewed deal-making, the Senate remains in a holding pattern, waiting for the Congressional Budget Office to finish estimating the cost of alternative health care proposals sent by Reid.

The alternatives were based on the bills approved by the Finance Committee (S 1796) and the Health, Education, Labor and Pensions panel (S 1679). Democratic leaders still anticipate the estimates will be available late this week or over the weekend, aides said.

Unlike in the House, the Senate's Democratic moderates and Republicans will wield far more influence during its debate. "Honestly, I'm not even focused on the House bill," said Jon Tester, a moderate Democrat from Montana. "My focus is on the combined bill Sen. Reid is putting together."

Collins said Monday she hoped to attract support from Democratic and GOP moderates for varied amendments, tapping into concerns about the bill's impact on small businesses and other constituencies that have made vote-counting difficult for Democratic leaders. Collins has been talking to the "usual suspects," moderates in both parties, she said.

"Small businesses should be able to purchase insurance across state lines," Collins said, adding that small businesses should also be allowed to pool their workforce to get more affordable coverage in employer-sponsored plans. She also wants to change the structure of tax credits, included in the Senate Finance bill, that are designed to help small companies provide health insurance.

Questions on Abortion
Abortion, meanwhile, appeared destined to roil the majority's drive to advance the bill.

The version the Finance Committee approved does not change existing law, which bars federal funds from being used for any abortion services. Under the bill, state insurance exchanges would have to include at least one plan that provides abortion coverage and one that does not. The Health and Human Services secretary is required to ensure that only private funds are used for abortion coverage services, a Finance aide said.

In its September markup, the committee rejected an amendment from Orrin G. Hatch, R-Utah, similar to the amendment the House adopted. "I think the Senate Finance Committee did a good job of putting up a firewall" that would prevent federal funds from being used for abortion services, said Collins, an abortion rights supporter.

Still, the Finance version does not include a government-run health insurance option, and if one is added, language ensuring existing restrictions will have to be extended to the new program as well, Collins said.

But Boxer declared that the House language singles out women for "unfair treatment," adding that she will fight to ensure that the Finance Committee language stands.

On the other side, Ben Nelson, D-Neb., an abortion rights opponent, said Monday that he wants the final Senate bill to include the Stupak language, a position that could draw other conservative Democrats, as well as Republicans.

Finance Chairman Max Baucus, D-Mont., said he had hoped his committee's approach would resolve the abortion issue. "We have to find a solution. We need 60 votes. We're going to be burning the creative midnight oil," he said.

The issue poses a dilemma for Reid: Should he include the more restrictive House abortion language in the bill he will send to the floor and force abortion rights advocates to try to strip it, or should he leave the House abortion language out of the Senate bill and dare abortion rights foes to try to win an amendment adding language mirroring Stupak's to the bill?

Baucus said he doubts supporters of the House language would have sufficient votes to add similar language as a floor amendment.

Reid, an opponent of abortion rights, will be "talking to colleagues about this and other issues in the days ahead as we work on bringing a bill to the Senate floor," spokesman Jim Manley said Monday.

Conservative Bob Corker, R-Tenn., meanwhile, is preparing varied amendments aimed at the bill's cost and cuts in Medicare. He plans to offer them with five or six other senators, he said. "We have a long number of amendments we're looking at," Corker said.

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Business Roundtable Report Says Overhaul Proposals Promising

By Jane Norman, CQ HealthBeat Associate Editor

November 12, 2009 -- The Business Roundtable issued a report on Thursday saying that certain changes contemplated by Congress in the health care system could result in savings, and that improvement has to come or businesses risk seeing costs continue to rise.

"A number of the proposed reforms offer real promise, not only to save federal dollars, but also to reduce the rate of increase in private-sector spending if adopted and implemented appropriately," says the report prepared by Hewitt Associates for the group, which is made up of the leaders of top U.S. companies.

"Promising ideas include proposed delivery system reforms such as value-based purchasing, innovation centers to experiment with alternative methods of provider reimbursement, accountable care organizations, payment bundling and financial penalties for avoidable hospital readmissions," the report says.

Those ideas could reduce the rate of future health care cost increases by 15 to 20 percent when fully phased in by 2019, the report says, or $3,000 per employee. "This assumes the government implements the initiatives quickly, accurately, and consistently, and that private payers follow by implementing similar measures in a disciplined and timely way," it adds.

However, no endorsement of House or Senate legislation is offered, and the report also cautions that some ingredients are missing that are needed for system-wide change.

"Most important, current reform provisions must be broadened if we hope to achieve a more "normal" market dynamic for health care costs across all stakeholders, both public and private," it says. Risks include a too-weak individual mandate for health insurance, continuation of the practice of "defensive medicine," congressional reversals of provisions that would save costs, and more.

Nonetheless, the report was met with excitement by both the White House and Senate Finance Committee Chairman Max Baucus. President Obama said in a statement that the report makes clear the most important investment the country can make when it comes to business competitiveness is a revamped health care system.

"The Business Roundtable's report comes as Congress is reaching new milestones in the effort to reform our health care system," said Obama. "The potential benefit for America's businesses is just another reason why we can't afford delay or political games as this process moves forward."

Baucus said that the report shows the need for Congress to act. U.S. businesses pay far higher health care costs per employee than their competitors around the world and the cost to the U.S. economy grows every year," he said. "Employers are standing behind health reform because they know it will mean more predictable and affordable health care costs that can boost U.S. competitiveness and create jobs at home."

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Clinton to Senate Democrats: Just Get It Done

By Kathleen Hunter, CQ Staff

November 10, 2009 -- Former President Bill Clinton on Tuesday urged Senate Democrats to set aside their arguments over details and pass an overhaul of the health care system now.

Clinton addressed the Democrats at their weekly party luncheon, speaking from the painful perspective of his own administration's failure to get a health care overhaul through Congress in 1993 and 1994. Democrats lost control of Congress to Republicans in the November 1994 elections.

"There is no perfect bill because there's always unintended consequences," Clinton told reporters afterward. "So there'll be amendments to this effort, whatever they pass, next year and the year after that—and there should be. But the worst thing we can do is nothing. That was my argument."

Ron Wyden, D-Ore., said, "He made a strong case for Congress getting this done this year. There's a general sense that the clock is ticking, certainly in terms of the president being able to focus on the economy next year at the State of the Union."

Kent Conrad, D-N.D., said Clinton's eloquence helped unify the caucus. "His ability to analyze complex issues is unmatched," Conrad said. "He is able to penetrate through the fog of politics and policy better than anyone I have heard."

Several Democrats were impressed by Clinton's focus on the economic impact of a failure to change the health care system.

Ben Nelson, D-Neb., a conservative deficit hawk, said Clinton's most persuasive argument was "that if we don't do something, the trend for increasing costs for health care and insurance premiums is unsustainable."

Bob Casey, D-Pa., said, "I've tried to make the point over time [that] if all you're worried about is long-term debt and the fiscal condition of the country, you should be for health care reform." He said Clinton "thought that by not passing a bill, or not being able to pass a bill in the 90s, that hurt both economically and politically."

Majority Leader Harry Reid, D-Nev., said he expects to launch the Senate's health care debate next week, but Majority Whip Richard J. Durbin, D-Ill., cautioned that Democratic leaders will not schedule a vote until they know they have the 60 votes necessary to invoke cloture and move on to the bill.

"I want to make sure we have 60 votes committed before we go to the floor, and that's what we're working on," Durbin said.

Reid indicated that a vote on final passage could occur before Christmas, but Durbin acknowledged that it is unlikely a House-Senate conference could finish work in time for Congress to send a final measure to President Obama this year, as the White House had hoped and Democrats had initially promised.

"Our goal is to get it out of the Senate this year," Durbin said.

Abortion Issue
The House narrowly passed its version of the bill (HR 3962), 220–215, on Nov. 7, after an all-out push by the Democratic leadership and the White House.

But in order to get to that point, the leadership had to allow a vote on an amendment concerning abortion funding by Bart Stupak, D-Mich. The amendment would extend a ban on federal funding for abortion to the insurance programs created by the bill and bar insurers selling plans through a new government-run "exchange" from offering policies covering elective abortion to women whose premiums are subsidized by federal funds. The amendment was adopted, 240–194, with 64 Democrats joining 176 Republicans in voting "yes."

The bill (S 1796) that the Senate Finance Committee approved does not change existing law, which bars federal funds from being used for any abortion services. Under the bill, state insurance exchanges would have to include at least one plan that provides abortion coverage and one that does not. The Health and Human Services secretary is required to ensure that only private funds are used for abortion coverage services, a Finance aide said.

Reid, who has voted with Republicans in the past to place limits on abortion, said the Finance bill addresses the issue "in a responsible way." But when pressed, he stopped short of ruling out the possibility of strengthening that language in the bill he is crafting to bring to the floor.

"We're going to continue to work with pro-choice folks and pro-life folks in the Senate and come up with something that's fair and reasonable," he said.

Senators who attended the lunch session with Clinton said the former president steered clear of the topic and other specifics in the bill.

"President Clinton was not at all addressing the abortion issue, but I think he was addressing that whether you are a progressive or a conservative within our caucus, there may be things that you're not going to like," said Benjamin L. Cardin, D-Md. "But it's more important to get the job done, and we all need to step back a little and say 'Look, let's do the best we can to make the bill the way we want it, but at the end of the day let's make sure we vote for the bill and get it done."

Time to Digest Over Thanksgiving
If Democrats can muster the 60 votes needed to proceed to a heath care bill next week, Durbin said senators would have a weeklong Thanksgiving break to digest the measure before the real nuts-and-bolts work on amendments begins, most likely the first week of December.

"We do have a Thanksgiving recess, and we're hoping that the bill will be ready for all members to carefully review it during that time, and then, when we return, that we can meet together and work out our differences," Durbin said.

But first, Reid needs a final "score" from the Congressional Budget Office (CBO), which it not expected until late this week at best.

As soon as they can give us the bill, with a score, we're ready to roll," Durbin said. "We have to reach a point where we have enough of a commitment from CBO that we can assure our colleagues that this bill is going to meet the president's requirement that it doesn't add to the deficit. So we're waiting for that."

Durbin said CBO contacted Reid on Monday night with a number of questions, but he declined to comment on the nature of those questions.

Democratic leaders will "start with the premise" that there "wouldn't be much" Republican support for the bill, Durbin said, meaning that the 60 votes to overcome filibusters will likely need to come from within the Democratic ranks.

The 'Public Option'
Reid, who has said the bill will include a government-run "public option" with an escape hatch for the states, reiterated his support for some type of public insurance plan in the bill that the Senate ultimately passes.

"We're going to move forward," Reid said. "I believe strongly in a public option."

Reid is already working to win over members of his caucus who oppose a public option. The majority leader said he had "a good conversation" early Tuesday with Joseph I. Lieberman, I-Conn., who caucuses with the Democrats but has said he will not vote for cloture before a vote to pass the bill unless the public option is stripped. "I'm confident we'll work something out," Reid said.

First, the leadership needs 60 votes to choke off debate on the motion to call up the bill—a step Lieberman has said he will support.

Lieberman spokesman Marshall Wittmann said Lieberman has not changed his position regarding cloture on a bill that includes a public option, but he declined to comment on whether Reid offered Lieberman any assurances during their Tuesday talk.

Durbin said he was cautiously optimistic that Democrats will reach the 60-vote threshold necessary to call up the bill and begin the debate.

"But until it actually happens, as the whip, I don't take anything for granted," he said. "We had to step aside for the House to finish their work. That's understandable. But now we want to get on this and get moving." 

Alex Wayne contributed to this story

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Higher Premiums for Older Adults at Issue in Health Care Debate

By Jane Norman, CQ HealthBeat Associate Editor

November 12, 2009 -- Health insurers are wading anew into the thorny issue of age rating, which means allowing health insurance companies to charge higher premiums to older people who buy insurance in the individual market.

Where to set the limit in the health care bill is the delicate question, as well as how to accomplish that without alienating seniors already skeptical of the overhaul.

It's an approach that pits two of the largest health industry lobbies against each other as the congressional debate over the overhaul gets down to the nitty-gritty. They are American's Health Insurance Plans (AHIP) and AARP, the advocacy group for seniors, which issued a powerful endorsement of the House health care bill approved on Nov. 7, in part because of its treatment of age rating.

The health insurance industry is arguing to lawmakers that cost containment is a vital issue that has so far not been considered enough in the overhaul, and drawing plenty of young, healthy people into the system by extending them reasonable premiums is part of the equation.

About 30 percent of Americans ages 19 to 24 lack insurance, as do 26 percent of those ages 25 to 34, according to AHIP information derived from a Kaiser Foundation data table.

But at AARP, it's a question of how far age rating can go before it becomes age discrimination, and before premiums rise so high they are unaffordable for adults age 55 to 64 not yet eligible for Medicare.

The House bill would impose a 2-to-1 age rating, which means someone 55 or older could be charged at the most two times as much as a young enrollee. The Senate Finance Committee adopted a 4-to-1 age rating, thus allowing older people to be charged four times as much as younger people. In some states currently, age ratings can range as high as 7-to-1.

At a briefing with reporters on Thursday, Karen Ignagni, the head of AHIP, said the group is talking with lawmakers about an age rating limit of 5-to-1 in a structure similar to what was proposed during a debate over health care in California. An "external subsidy" was proposed there for people over 55, essentially giving additional money to help older people pay their premiums, Ignagni said. She said AHIP is "very dedicated" to trying to curb the impact of higher premiums on older people.

In the health overhaul on the Hill, initial studies by AHIP show that with a 5-to-1 band, the cost of federal subsidies for younger people would be reduced because their premiums would cost less. That would more than offset the cost of extra premium money for older Americans, she said.

"We've begun to talk to people on Capitol Hill," she said.

Depending on the benefit package, something in the range of $500 per older person could be added to premiums, she said.

Young, healthy people would be more inclined to purchase health insurance under the 5-to-1 age rating band, the insurers argue, thus increasing the size of the risk pool and lowering costs across the board.

Ignagni distributed charts that the association has developed showing that in the 2-to-1 age rating band, annual premiums for the "silver plan" in the Senate Finance Committee version of the health bill would be an estimated $3,179 annually in 2013 for those age 29 and younger in the individual market. Premiums under a 5-to-1 band would be $1,620.

"We were very concerned, looking at these numbers, there might be a strong incentive for younger people to not stay in the pool," said Ignagni. Young adults might instead accept the penalty if they perceive the system is unfairly weighted against them, she said.

But Jim Dau, a spokesman for AARP, said health insurance age rating is nothing more than discrimination that makes health coverage unaffordable for older people.

"Last week, we endorsed the House's health care bill in part because it takes a major step toward ending this practice," Dau said in a statement. "The industry's continued embrace of age rating is further proof that private insurance companies only pose as champions of older Americans when it is convenient to their bottom line. We need to abolish age rating for the same reasons we're ending private insurance discrimination based on a person's gender or health history — because fairness is a fundamental American value and arbitrary discrimination in any form runs counter to who we are."

AARP's John Rother testified before a Senate panel in June that in Massachusetts, even with an age rating of 2-to-1 as well as state subsidies, insurance remains a difficult issue for AARP members there. Massachusetts has already instituted its own health care overhaul, including a requirement that everyone must be insured.

The lowest-priced benefit package in Massachusetts for someone age 60 is $420 to $575 a month, he said. If the age rating were 5-to-1, the package would total $1,050 to $1,335 a month, or half the median income of uninsured Americans age 50 to 64, said Rother. "If age rating is not seriously constrained within national health reform, insurers likely will charge higher rates to older people to substitute for rating based on medical condition," he said.

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Increase in Medicare Payroll Tax a Possibility for Senate Health Bill

By Richard Rubin, CQ Staff

November 12, 2009 -- Senate Democrats are considering raising the Medicare portion of the payroll tax to pay for expanding health insurance, a top Obama administration official said Thursday. Two congressional aides also confirmed the talks, and one said the idea comes from Majority Leader Harry Reid, D-Nev.

There are several variations of the idea "floating around," said Peter R. Orszag, director of the Office of Management and Budget.

The specifics of any plan are unclear, but liberal interest groups have been pushing the idea of expanding the Medicare tax instead of taxing high-cost health insurance plans. The House passed legislation last week (HR 3962) that would levy a surtax on individuals earning more than $500,000 per year. Reid's proposal is similar.

"To some extent it is a variation—depending on how they do it—it is a variation on the surtax," a House Democratic leadership aide said. "It is sort of going after a similar revenue source. To that extent, it has some potential."

Currently, workers and employers each pay a 1.45 percent payroll tax for Medicare. A set of proposals circulated earlier this year by the advocacy group Citizens for Tax Justice suggested applying the tax to capital gains and other investment income or setting up a 2.5 percent payroll tax bracket that would start at $250,000 of income.

The House aide said that applying the payroll tax to "unearned" income, like capital gains, would be more controversial than raising the rate of the tax for high earners. Applying the payroll tax to unearned income would change its nature, making it more of an income tax and raising questions about what kinds of income should be excluded, such as government benefits.

"There's a whole range of issues that exist on the income tax side that would come into play if you change the basis for the payroll tax," the aide said.

Orszag did not express an opinion on the idea.

If included, the new approach would allow the Senate to reduce or eliminate a proposed excise tax on high-cost insurance plans provided by employers.

Under legislation (S 1796) approved by the Senate Finance Committee, starting in 2013, individual insurance plans costing more than $8,000 and family plans costing more than $21,000 would face a 40 percent tax on the amount above that level.

Workers in high-risk professions and retirees who are not yet eligible for Medicare would get higher thresholds. Those thresholds would rise every year but not as fast as medical costs. The idea is to provide a strong incentive to contain costs; proponents argue that it's one of the provisions in the health care bills likeliest to make a difference in limiting health care inflation.

Economists expect that companies will reduce the generosity of plans to avoid the tax and share the savings with workers in the form of higher taxable compensation.

But Democrats, particularly those connected with organized labor, have been resisting the excise tax. They doubt that those wage increases will materialize and warn that the burden may fall on many middle-class families.

More than half of House Democrats have signed a letter urging that chamber's leadership to continue resisting the excise tax. The House bill (HR 3962) includes a 5.4 percent surtax on adjusted gross income above $500,000 for individuals and $1,000,000 for married couples.

Joseph J. Schatz, Alex Wayne and David Clarke contributed to this story.

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Senate Dems Say Overhaul Urgent for Middle Class

By John Reichard, CQ HealthBeat Editor

November 10, 2009 -- Seeking to quell doubts that an overhaul would benefit middle-income Americans, four Senate Democrats held a press briefing Tuesday to say that sweeping legislation is an urgent matter for the middle class and for small businesses.

The briefing comes at a pivotal time. Whether the middle class sees overhaul legislation as a financial godsend or a looming fiscal nightmare will do much to determine the long term success of overhaul efforts.

Sorting out the cost picture will be no easy matter for either side in the overhaul debate. Republicans are pointing to huge tax hikes and enormous job losses as the likely outcome of the Democratic approach to an overhaul.

Minimum requirements for levels of health care that must be delivered under an overhaul will inevitably raise premiums, Republicans say. Insurers meanwhile insist that premiums will rise in general, fueled in part by new taxes on their products.

Democrats meanwhile point to various features of overhaul legislation they insist will make a big difference for middle-class families, ensuring access to coverage and protecting them from financial ruin. Perhaps their most potent argument is that the status quo cannot be permitted to continue and that the nation must try new approaches and improve them as needed if they prove to be flawed.

An overhaul will brake rising premiums that now jeopardize coverage for middle income Americans, Sen. Benjamin L. Cardin of Maryland asserted at the briefing.

"We think it's critically important that health care reform be aimed at helping middle income families in America," Cardin said.

"Ten years ago the cost for a family health insurance plan in my home state of Maryland was $6,000," he said. "Today that coverage costs $12,000. And it's projected by 2017 to be close to $24,000. Well, that's out of reach of many middle income families in America today."

An overhaul would help lower those costs by getting rid of a "hidden tax" of $1,100 per year that families pay in higher premiums to take care of the uninsured, Cardin said.

He added that small business pay premiums 20 percent higher than big companies for the same coverage. "That's not fair," he said. "It's not a predictable market," he added. It's not unusual that small businesses face sharp hikes of to 20 to 40 percent per year, he said.

Senate overhaul legislation will help assure the availability of lower, more stable premiums by establishing local insurance exchanges, he added. The exchanges will do so by creating larger pools of workers and by creating competition through choice, he said.

Sen. Kay Hagan of North Carolina said that under the Senate bill that people whose lose their jobs would be able to get help with premium payments to get back on their feet. In North Carolina insurance premiums are rising five times faster than wages, she noted.

"This bill is obviously targeted to help small businesses," she said, noting the availability of tax credits under the Senate Finance Committee proposal. In North Carolina, the self-employed and small businesses spent $3.8 billion on premiums last year and that number will rise to $9 billion by 2018 unless Congress acts, she said. Insurance companies also won't be able to charge "exorbitant" premiums for pre-existing conditions, she added.

Sen. Paul G. Kirk Jr. of Massachusetts asked, "What kind of a health insurance system is it that says we're not going to pay you any more because you got sicker than we thought you would?" Kirk said that an overhaul would end caps on benefit payouts by insurance companies, protecting the middle class in that way.

Marky Derbyshire, owner of Park Moving and Storage Co. in Baltimore, said he only offers individual coverage to his workers because family coverage is unaffordable. He said that small businesses consistently face double-digit premium hike and that is "absolutely not sustainable. It's not a debatable issue. "

"It's just collapsing for small businesses," he said.

While Cardin spoke of an overhaul ending the "hidden tax" represented by cost shifting to pay provider costs of providing some level of treatment for the uninsured, it's unclear how quickly those savings would materialize. The uninsured would gain coverage gradually, not immediately under overhaul plans.

Meanwhile, Senate Democrats on Tuesday were peppered with questions about how they would vote if tough language restricting abortion coverage were a part of Senate overhaul legislation. A number of Democrats said the language must be modified.

Sen. Ted Kaufman of Delaware issued a terse and forceful response to those who would subject the entire health care overhaul legislative effort to what he viewed as narrow litmus tests, or "standards," in his words.

Kaufman said "if we don't pass this legislation as everyone said, our present system will self destruct."

"I can tell you, I've been around this place for a long time, not just as a senator but as a staff person," he said. "Those that say, they're going to put up standards" [should know] that "if we do not pass this bill we will not revisit this area again for a very long time." Those would block it must think "hard, hard" about what they are doing if they act in a way that keeps the present system intact, he warned.

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