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Healthcare Reform Update January 21-27, 2010


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January 27, 2010

Compiled by Jennifer Hansen*

White House Mulling Limits On Scope Of Proposed Health Reforms
January 25, 2010

The Wall Street Journal : "The White House, with its health-care initiative in doubt, on Sunday zeroed in on several elements it hoped would survive, including measures to extend the life of Medicare, lower prescription drug costs for seniors and cap consumers' out-of-pocket medical expenses." Obama advisor David Axelrod raised the examples of cuts to health providers to extend Medicare's solvency beyond 2017, tax breaks for small businesses offering insurance, the closing of the Medicare prescription "doughnut hole" and protections for people with pre-existing conditions. "White House officials notably didn't emphasize that any revised legislation should include a major expansion of health insurance" (Adamy, 1/24).

The Los Angeles Times notes that, speaking on the ABC's "This Week," Axelrod said "The president will not walk away from the American people, will not hand them over to the tender mercies of health insurance companies who take advantage." Axelrod's remarks "echoed strategy laid out by Obama's 2008 campaign manager, David Plouffe, in an opinion article Sunday as the administration took steps to save major healthcare legislation." Senate Minority Leader Mitch McConnell, meanwhile, said President Obama should "start over" on health reform. And with Republican Scott Brown's Massachusetts' Senate seat victory, "Democrats appear to have little flexibility to push through their legislation. Either the House passes the Senate bill intact, or at least one Senate Republican would have to cross party lines to support a compromise between the versions that passed each chamber" (Puzzanghera, 1/25).

One provision that may attract support from some Republicans is a change allowing insurance companies to sell policies across state lines, a practice that is now forbidden, NPR reports. But, that plan could find resistance at the state level and from Democrats. Rep. Jackie Speier,
D-Calif., said, "California laws have managed to reign in the insurance industry and protect consumers. And she's unswayed by explicit language in the congressional designed to uphold those standards" (Varney, 1/25).

Regrouping Democrats Consider Next Steps On Health Overhaul
January 25, 2010

Democrats are trying to regain health reform momentum during the week of the president's State of the Union address.

BusinessWeek : "While Democrats don't want to face voters in November with nothing to show after months of health-care debate, they must focus on job growth and make clear they heard the discontent registered in the Republican upset win in Massachusetts. . . . Senator Tom Harkin, an Iowa Democrat who heads the chamber's health committee, said Democrats would let the legislation 'sit for a while' and then take it up 'in a week or so.' Christopher Dodd, a Connecticut Democrat who helped shepherd the bill through the Senate, said the break might last as long as six weeks."

Options to take the health bills back up include using budget reconciliation that would require only 51 votes in the Senate or trying a piecemeal approach to the legislation. "All the options before Democrats have drawbacks" politically for Democrats (Jensen and Faler, 1/25).

Politico has five questions on health care reform including the likelihood of using reconciliation to pass a health reform bill, how the House and Senate bills will be similar and how many "yeses" on reform have turned to "nos."

"The House passed its bill with 220 'yes' votes. But Republican Louisiana Rep. Anh 'Joseph' Cao has vowed to oppose the final package, and Florida Democrat Robert Wexler's midterm resignation leaves Pelosi at 218--the minimum threshold for passage" (O'Connor and Budoff Brown, 1/24).

The Hill lists 10 reasons health reform stalled, including deadlines, the economy's slump, the split on the public option for health insurance, so-called "backroom" deals, the excise tax and Democratic communication problems. "Democrats never united behind a single message to the public. At various times, they sought to sell the bill to the public as a deficit reducer, a consumer-protection bill and a moral imperative. Most recently they cast it as a jobs bill" (Young, 1/24).

Related KHN story: Why Support For Reform Faltered (Rau, Carey, Appleby and Galewitz, 1/20)

The Hill reports in a separate story that Democrats are following a script similar to 1994's health reform efforts. "Following that devastating blow to the White House, some Democrats on Capitol Hill pronounced the House- and Senate-passed bills as dead. . . . Obama quickly floated an idea of focusing on the 'core elements' of healthcare reform. Some House Democrats quickly embraced the idea, saying they want to pass health reform on a piecemeal basis. No final decisions have been made, but a scaled-back bill is a leading option. Similarly, in 1994, after comprehensive reform was deemed off the table, President Clinton urged the Democratic-led Congress to pass a streamlined measure." That effort failed (Cusack, 1/24).

Roll Call reports that Democrats "insist they will pass a health care reform bill. They just have no idea how or when they will do it. . . . 'A lot of people made clear that in light of the election results on Tuesday, they didn't want to rush into anything,' one Senate Democratic leadership aide said. 'We're going to continue to discuss the next steps and strategy with the House and the White House.'" Sen. Dick Durbin, D-Ill., said Friday that leaders will try to figure out a solution this week (Dennis and Pierce, 1/25).

The White House is defending the legislation, the Los Angeles Times reports. David Axelrod, senior adviser to the administration, said "that Massachusetts had enacted its own major healthcare overhaul law in 2006, and 68% of voters in last week's special election said they supported it, according to a poll by the Washington Post, the Henry J. Kaiser Family Foundation and Harvard University's School of Public Health. Brown voted for that overhaul in the state Legislature." Also David "Plouffe, who is returning as an adviser to the White House political team on strategy for November's congressional midterm election, wrote in the Washington Post that Democrats must 'pass a meaningful health insurance reform package without delay'" (Puzzanghera, 1/25).

The New York Daily News: Although the White House "isn't about to pull the plug on heath care reform," aides say the new task is figuring out "the art of the possible." White House officials now say the lesson of last week's Massachusetts election centered on "cooperation instead of obstructionism." Meanwhile, Republicans took to the Sunday airwaves to maintain that the GOP was open to negotiating (Saltonstall, 1/25).

Many Still Hope For Insurance Reform
By Julie Appleby and Jenny Gold
KHN Staff Writers
January 22, 2010

With a major health overhaul in deep trouble, some lawmakers want a scaled-back approach that targets the indisputably unpopular insurance industry.

Include the popular ideas, they say, such as requiring insurers to accept people with medical problems and barring them from canceling policies or charging more for customers with health problems.

But that raises a question about a central plank of the overhaul legislation: a controversial requirement that nearly all Americans carry insurance. While many policy analysts insist such changes wouldn't be effective without that mandate, other experts and advocates across the political spectrum are contesting that premise.

A major concern is that without legally requiring most Americans to carry coverage, people would wait until they're ill to obtain it, raising costs for everyone. The health insurance industry's major trade group agreed to accept all applicants as long as there was an individual insurance mandate drawing in younger and healthier people to spread risks and costs.

Some liberal and conservative thinkers and even some insurance company officials say insurance reforms are still possible in the individual and small-group markets, where consumers are most vulnerable, even without a mandate.

Stuart Butler, vice president of domestic policy studies at the Heritage Foundation, a conservative think tank, says there are other ways to encourage Americans to buy coverage. "I'm always a little cynical when I hear an industry saying everyone should be required to buy my product," he says.

Jerry Flanagan, health care policy director of the Consumer Watchdog advocacy group in Los Angeles, never bought the idea of a mandate. "The industry was crying a lot of crocodile tears. The idea that people won't buy coverage unless it's required is largely overblown," he says. A more modest bill that includes new limits on insurers, but doesn't force people to buy coverage will prove that "Congress can stand up to the industry."

But some longtime supporters of comprehensive overhaul legislation say it can't be so easily pulled apart--that the insurance reforms were part of a closely-woven package that included the mandate and government subsidies for those who couldn't afford to buy insurance.

One of the most outspoken defenders of the Democratic approach, Ron Pollack of Families USA, warned Congress in a letter Thursday not to pursue an incremental approach, terming it "a recipe for disaster, both substantively and politically."

States that have tried such approaches, Pollack wrote, found that new insurance rules alone--without requiring expanded coverage--leads to "skyrocketing premiums as sicker, older people secure coverage and younger, healthier people don't."

Political Support

House Speaker Nancy Pelosi acknowledged the problem after announcing that there weren't enough votes in the House to pass the Senate version of health overhaul legislation, fueling the burgeoning debate over other options. "Well, I don't think anybody disagrees with, 'Let's pass the popular part of the bill,' but some of that popular part of the bill is the engine that drives some of the rest of it."

Yet, Pelosi said, "however we achieve it we must arrive at accountability of the insurance companies," listing "any discrimination (based on) pre-existing conditions" and "stopping them from canceling policies" when people get sick. Her list also included provisions that Republicans might try to block, such as repealing the insurance industry's antitrust exemption.

Republican lawmakers haven't taken a formal position on a downsized bill, but Michigan Rep. Dave Camp, the ranking member of the House Ways and Means Committee, told reporters Thursday he could back a proposal that barred insurers from rejecting the sick, or charging them more. Still, any proposal would also have to include medical malpractice reforms, said Camp, who is opposed to an individual mandate.

Getting bipartisan support would be difficult if not impossible. Timothy Jost, a law professor at Washington and Lee University in Virginia, said, "Anyone who thinks the Republicans will embrace market reforms and help the Democrats out of this hole is crazy. They have a clear strategy to say no to everything."

All Republican proposals introduced last year lacked an individual mandate and stopped short of an outright ban on insurers rejecting people with health problems. One bill, for example, would prohibit insurers that participate in newly created, state-based insurance marketplaces, called exchanges, from rejecting applicants. But the bill gives the insurers an out by allowing them to sell policies outside the exchanges that would not be subject to the ban.

Although America's Health Insurance Plans and the Blue Cross Blue Shield Association, the leading industry groups, oppose separating insurance reforms from an individual mandate, a top CIGNA official says it could work. G. William Hoagland, vice president of public policy for the big health insurer, says there are some risks, including "premium spikes" in some cases, "but it's not going to put [insurers] out of business."

Hoagland says while CIGNA would prefer to have an individual mandate to help cushion the reforms, "we could live without it" if it "means getting something done and moving along here. It's better than nothing." CIGNA's main business is selling insurance to employers, rather than on the individual market where the reforms would have the most impact.

States' Experience

Some experts cite the experience of five states--Massachusetts, New York, Maine, Vermont and New Jersey--that currently require insurers to accept all people who buy their own coverage, such as the self-employed or those who work for companies that don't offer insurance. Those states do set some rules. For example, they allow insurers not to pay for pre-existing conditions for a period of time--such as one year--if the person has gone for more than a couple of months without coverage before applying.

Only Massachusetts has a requirement that most residents carry coverage. In the four other states, premium costs tend to be higher than in states that do not force insurers to offer insurance to all who apply. A survey by AHIP reported the average policy for an individual in New York cost $6,630 in 2009, compared with $3,503 in Connecticut or $2,943 in California.

"You can't point to a state that's done it without premium increases as a result," says Mark Hall, a professor of law and public health at Wake Forest University, who predicts a backlash among consumers if Congress approves such a measure and then premiums do, indeed rise.

Still, other policy experts like Karen Pollitz, research professor at the Health Policy Institute at Georgetown University, say additional factors contribute to higher premiums in those states, including higher labor costs, whether individuals and small businesses are lumped together into one risk pool and how much authority state regulators have over premium increases.

She says all the states do have rules allowing insurers to bar payment for pre-existing conditions for a period of time--commonly one year--if the applicant had been without coverage for more than a couple of months. "That's so people don't wait to buy the policy on the way to the hospital," she says.

Butler at the Heritage Foundation and others say there are ways to encourage most Americans to buy coverage, short of a mandate. One way would be to automatically enroll people in coverage through their jobs. Employers would either sign up workers for employer-based coverage if they offer it, or enroll them in the lowest-cost plan offered on an exchange.

Workers could opt out, but Butler suspects many won't. "If you don't have to do anything to be in something, you'll be in it," he says, pointing to automatic enrollment in 401(k) programs as an example of how it could work.

He also suggests another way to prompt laggards: a "soft penalty." After an initial period of open enrollment, premiums would be higher for those who have been uninsured for an extended period. In addition, there could be high-risk pools for individuals who have serious illnesses.

Joseph Antos of the American Enterprise Institute, a conservative think tank, proposes an initial one-time open enrollment period during which all Americans could sign up for health insurance without facing higher premiums for their health status, and limited premium increases for their age. But if someone chooses to remain uninsured after open enrollment ended or has a lapse in coverage, Antos says, that person would face potentially higher premiums based on age, gender and health status.

Butler, among others, believes a bipartisan agreement that includes insurance reform is possible. But others say even scaled-back legislation would be difficult to pull off.

Chris Jennings, a former Clinton administration official who runs a consulting firm in Washington, says groups like hospitals and drug-makers that supported the cost-saving and revenue-raising provisions of the comprehensive bills wouldn't necessarily sign on.

"From both a policy and political perspective," he says, "small-ball incremental reform can be as hard to viably construct as any comprehensive approach."

Mary Agnes Carey and Phil Galewitz contributed to this article.

Updated: Poll Finds Health Care Was Most Important Issue For Mass. Voters
January 22, 2010

A post-election poll released Friday afternoon shows Republican Scott Brown's campaign for the Senate successfully tapped into Massachusetts voters' "dissatisfaction with the direction of the country, antipathy toward federal government activism and opposition to the Democrats' health-care proposals," according to The Washington Post . The poll "underscores how significantly voter anger has turned against Democrats in Washington." The poll was conducted by The Washington Post, the Henry J. Kaiser Family Foundation and Harvard University's School of Public Health.

The Post reports, "Health care topped jobs and the economy as the most important issue driving Massachusetts voters. . . . Overall, just
43 percent of Massachusetts voters say they support the health-care proposals advanced by Obama and congressional Democrats; 48 percent oppose them. Among Brown's supporters, however, eight in 10 said they were opposed to the measures, 66 percent of them strongly so." However, the poll found that 68 percent of voters in Tuesday's election support Massachusetts' universal health-care plan, which was enacted several years ago (Balz and Cohen, 1/23).

Meanwhile, in a poll released by USA Today and Gallup, a "majority of Americans say President Obama and congressional Democrats should suspend work on the health care bill that has been on the verge of passage and consider alternatives that would draw more Republican support," USA Today reports. "The results underscore the unsettled prospects for health care legislation--which has consumed much of the capital's energies for nearly a year--in the wake of Republican Scott Brown's upset victory in the Massachusetts Senate race Tuesday. . . . An overwhelming 72% of those surveyed Wednesday say the Bay State result 'reflects frustrations shared by many Americans, and the president and members of Congress should pay attention to it.'" 

The poll found less unanimity "about the larger meaning of Brown's victory, however: 55% call for Democrats to go back to the drawing board for a more bipartisan proposal while 39% say they should continue to work on the current bill. One in four Democrats say lawmakers should draft a new bill, as do 56% of independents and 87% of Republicans" (Page, 1/22). 

A separate poll released Friday by the Kaiser Family Foundation finds that "Americans remain divided over health care reform proposals," but that a "significant number of people, including skeptics, become more supportive when told of specific provisions in the bill," Politics Daily's Poll Watch reports.

"In the Kaiser survey, 42 percent support the proposals in Congress,
41 percent oppose them, and 16 percent withheld judgment. Thirty-one percent describe themselves as 'strongly' opposed while those who strongly support the proposals number 19 percent. Independents are split, with 42 percent opposing and 41 percent supporting the proposals. Kaiser read a list of specific provisions of the legislation to those surveyed and asked whether each would make the person more or less likely to support the health care measures. The results could help identify elements for an alternative bill that's more acceptable to opponents." The poll was conducted Jan. 7-12 (Drake, 1/22).

The Washington Independent : Republicans have been trumpeting polls indicating that most Americans oppose the Democrats' proposals to reform the country's dysfunctional health care system. Yet there's increasing evidence that a good chunk of the opposition is rooted, not in any real criticism of the bills, but in the public's misunderstanding of what the bills would do. An example: The Kaiser Family Foundation today released the results of a poll finding that 42 percent of Americans support reform, while 41 percent oppose it. Yet the approval numbers leap when certain elements of the bill are described to the respondents" (Lillis, 1/22).

States Worry About Medicaid Stimulus Money Drying Up Under Scaled-Back Health Bill
January 22, 2010

News outlets report on health care funding gaps in state budgets, including Massachusetts, Maryland, Georgia and Wisconsin, and the possible impact of a scaled-back federal health bill.

The Atlanta Journal-Constitution : "Georgia is projecting a $608 million deficit in Medicaid, and Gov. Sonny Perdue is proposing a tax on hospitals and managed care insurers to help bridge the gap, officials said Thursday. The Medicaid gap is largely due to the reduction of $506 million in money from sources that include the federal stimulus program and the national settlement with tobacco companies. In addition, the recession has spurred a projected 7.7 percent increase in enrollment in the state's Medicaid health program for the needy from July 2009 to June of this year" (Schneider, 1/22).

(Milwaukee) Journal Sentinel : "Gov. Jim Doyle on Thursday proposed basic, stopgap health coverage for people waiting to get in the state's BadgerCare Plus Core program. More than 20,000 people have been placed on a waiting list for the BadgerCare plan since Oct. 9, when unexpectedly strong demand and budget limitations forced the program for low-income adults without children younger than 19 to halt enrollments. Now, Doyle is proposing a temporary option for uninsured adults without dependent children: a plan that provides limited access to doctors, hospitals and generic drugs for monthly premiums of $130" (Romell, 1/21).

The Associated Press/ABC News : "The uncertainty surrounding national health care legislation after a Republican Senate victory in Massachusetts could have direct implications on Maryland's budget, which was formally released to the Maryland General Assembly on Wednesday. The $12.7 billion operating budget fills in a $2 billion shortfall by using a mix of cuts, fund transfers, debt and anticipated federal stimulus money. Gov. Martin O'Malley, a Democrat, built into the budget an assumed $389 million in additional federal stimulus money through Medicaid that is in the U.S. House of Representatives health care reform legislation," which now seems unlikely to happen (Witte, 1/21).

WBUR : "Despite having reached its goal of near-universal health coverage, Massachusetts could be years away from controlling the rapidly rising cost of health care, according to a key legislator involved in state health reform. 'I don't think we're going to get cost containment done this year,' said state Rep. Harriett Stanley, speaking at a national conference on Massachusetts health reform in Boston on Thursday. . . . Nationwide, the cost of health care has been increasing at 2 percent above the rate of inflation for the past four decades, and private health insurance premiums in Massachusetts have risen 10 to 15 percent annually in recent years" (Pfeiffer, 1/22).

Insurance Companies Increased Lobbying By 24 Percent In 2009
January 25, 2010

The Hill reports on insurer lobbying spending in 2009: "America's largest insurance companies spent millions more on lobbying last year as lawmakers debated healthcare reform, lobbying disclosure records show. Overall, the companies increased lobbying spending by an average of
24 percent from 2008 to 2009, according to an analysis by The Hill of disclosure reports released this week. The list includes insurance giants such as Aetna and Wellpoint along with the industry's major trade association, America's Health Insurance Plans (AHIP)." Wellpoint was the largest spender among the insurers, and Humana showed the biggest increase in lobbing spending (Bogardus, 1/24).

Health News Florida : "Thursday's Supreme Court ruling, which allows companies to pour unlimited money into advertising campaigns for political issues, is 'nirvana,' according to a spokesman for big business in Florida. But consumer groups say corporate interests will drown out all other voices in the fight for health reform." Brad Ashwell of Florida Public Interest Research Group says the decision "tips the scales of power against people struggling in a broken health care system." Barney Bishop III, president and CEO of Associated Industries of Florida, "thinks the decision will have less impact on health care companies than other industries because they have already spent so heavily on health care reform" (Gulliver and Melone, 1/22).

*We would like to thank Jennifer Hansen, Esquire (Hooper Lundy & Bookman, San Diego, CA), for selecting the articles for this week's update.

This information was reprinted from with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery . © Henry J. Kaiser Family Foundation. All rights reserved.


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