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Healthcare Reform Update - September 24-29, 2009


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Compiled by Andrew Fichter*

September 30, 2009

Baucus Must Strike A Balance With Three Factions To Pass His Bill
September 29, 2009

The Finance Committee today thwarted efforts by liberal Democrats to include a government-run health insurance option in major health care legislation, as the Senate appears to be dividing into three important camps: those who are solidly behind Chairman Max Baucus, those reluctantly leaning in his direction and a handful of wild cards who will wield great influence.

After a lengthy morning debate over what is emerging as one of the most contentious issues in the health care debate, the committee voted to reject two separate proposals, by Sens. John D. (Jay) Rockefeller IV,
D-W.Va., and Charles Schumer, D-N.Y., to add a public option to the legislation.

On the first roll call vote, Baucus and four other Democrats--Thomas Carper of Delaware, Kent Conrad of North Dakota, Blanche Lincoln of Arkansas and Bill Nelson of Florida--sided with 10 Republicans to kill the Rockefeller measure. Schumer's proposal later went down by a 13 to 10 margin. President Obama and liberal Democratic House and Senate leaders support a public option as a means of sparking competition within the insurance industry and expanding coverage to many uninsured Americans, but Republicans and many moderate Democrats oppose that approach, and Baucus has concluded it would be impossible to pass a bill in the Senate that includes a public option.

The Finance chairman is hoping the panel will wrap up work on the health bill this week. But to get the votes he needs, he's sure to have to make more concessions, both in committee and on the floor, without alienating backers he already has.

For example, to appease committee Democrats with close ties to labor, the Montana Democrat might have to raise the dollar value of high-cost health care plans subject to an excise tax. To keep moderate Democrats, he will have to keep the size of the package to $900 billion over the next decade. That might make it trickier to assuage Democrats who want to include more generous subsidies to help lower-income people.

While the Finance committee has rejected the public insurance option, Schumer and Rockefeller have vowed to carry the fight to the floor. "We are going to keep at this and at this and at this until we succeed, because we believe in it so strongly," Schumer said today. At the same time, a dozen or so centrist Democrats will surely raise concerns about the plan's cost. While few, if any, Republicans are expected to support the bill, Baucus continues to press for bipartisan support.

"The central challenge is making the pieces of health reform fit together so that at the end of the day, we contain costs and all Americans get quality, affordable coverage," said Finance member Ron Wyden, D-Ore. "If you don't do that, what happens is you have this collection of various changes--nearly always ratified by powerful interest groups--that at the end of the day don't really significantly contain costs or reform health care. It's all about fitting the pieces together."

Solidly With Baucus

The Democrats hold a 13 to 10 advantage over the Republicans on the Finance committee. Among the Democrats, those considered solidly behind Baucus' plan are Jeff Bingaman of New Mexico, John Kerry of Massachusetts, Conrad of North Dakota, Maria Cantwell of Washington and Robert Menendez of New Jersey.

Two of these Democrats were part of the so-called "Gang of Six," a group of three Democrats and three Republicans on the Finance committee handpicked by Baucus that held 61 meetings to draft the bill, which would require most people to buy insurance and create exchanges where individuals could purchase coverage. The bill also would provide subsidies to help people purchase health insurance. And it would expand Medicaid, the federal-state health insurance program for the poor and disabled.

While these senators have offered amendments to the bill--Kerry, for example, wants to toughen the provisions that would allow insurers to charge different rates based on age--they have appeared loyal to Baucus' plan and are expected to be solid "yes" votes when the final tally is called.

This block could represent a significant number of votes when the Finance package hits the floor, with debate expected to begin later this month. Once the bill is melded with legislation passes by the Health, Education, Labor and Pensions Committee, which includes a government-run public plan option and a mandate that insurers provide coverage, Senate Democratic leaders such as Majority Leader Harry Reid of Nevada and Senate health committee chairman Tom Harkin of Iowa would likely embrace the bill and push for its passage.

Leaning Strongly Toward Baucus But Demanding Changes

Three other Democratic senators--Rockefeller, Schumer and Debbie Stabenow of Michigan have made tough demands on Baucus.

For example, Rockefeller and Stabenow opposed provisions in Baucus' original plan that would have taxed the insurance plans of many unionized workers in their states. Stabenow also has expressed concerns that any overhaul plan must guarantee that health insurance is affordable for middle-income workers.

Rockefeller and Schumer believe that the current bill, which sets up non-profit insurance cooperatives, would be inadequate to force private insurers to bring down their premiums and change discriminatory practices. While they have failed to add a public plan to the bill in committee, Rockefeller and Schumer, as well as Stabenow, are expected to be with Baucus when the final roll call vote is called. Like other Democrats who would have drafted a different bill than the Baucus plan, they nevertheless think the legislation has the best chance of passing the Senate. They don't want to allow the opportunity to pass health care overhaul legislation to slip away as it did for former President Bill Clinton and Democrats in 1994.

Finance moderate Carper of Delaware is also expected to be with Baucus in the end but might push for changes in the bill. In a sign of loyalty to Baucus as well as pharmaceutical manufacturers in his home state, Carper voted with Baucus to defeat an amendment that would have weakened a deal struck by Baucus, the White House and the drug industry on the industry's financial contribution to the cost of a health care overhaul.

Wild Cards

Still another Finance group that Baucus must corral is the "wild card" Democrats who, due to an array of pressures, have not yet come to the Baucus camp.

They include Wyden of Oregon, who has warned that he might not vote for the Finance bill unless it is beefed up to promote more competition among insurers and to provide more affordable insurance to many Americans. Wyden's bill that would make major changes to the nation's system of employer-sponsored insurance has some Republican co-sponsors but has made little impact on the overall health care debate.

Bill Nelson is another lawmaker whose support for the Finance package is unclear. The Florida Democrat has failed in his attempts to amend the bill to protect some Medicare Advantage beneficiaries from the cuts slated for private health insurers in Medicare. He also pushed unsuccessfully for larger discounts on drugs to Medicare beneficiaries than those in the deal negotiated earlier this year by Baucus, the White House and the drug industry.

Political analysts put Blanche Lincoln, a conservative Democrat from Arkansas, in the wild-card category although she has been complimentary of the Baucus plan and is expected to support it. The reason: she is facing a tough reelection campaign. So far, she has carefully navigated the committee votes, generally siding with her party but a few times casting her lot with the Republicans.

She went along with conservative Republican Jim Bunning of Kentucky and other Republicans in seeking an amendment that would have required that the complete legislative language of the bill as well as its financial cost be posted on the Finance Committee Web site for 72 hours before a final vote. Baucus complained that the amendment as crafted would have delayed a final vote by as much as two weeks, and it failed.

Expect the wild-card crowd to grow on the Senate floor, with Democratic moderates such as Evan Bayh of Indiana, Nelson of Nebraska and Mary Landrieu of Louisiana.

While most Finance Republicans are not expected to vote for the final bill, Baucus and Obama continue to court Maine Republican Olympia Snowe, who has said she still has a number of concerns about the bill, ranging from the mandate that individuals purchase health insurance to the question of affordability and the measure's final cost. Snowe's proposal to trigger the public health insurance option only if coverage is not affordable to 95 percent of a state's residents is likely to get more attention when a bill goes to the floor.

The 'Underinsurance' Problem Explained
September 28, 2009

Who are the underinsured?

People who are described as underinsured have health benefits that don't adequately cover their medical expenses. Often, consumers discover they're underinsured the hard way--when they break a leg or have a serious illness, such as cancer, and their medical bills exceed their benefits enough that it is difficult for them to pay.

In some cases, people who are underinsured have coverage through employer-sponsored plans; they have high out-of-pocket expenses or skimpy benefits. In other cases, consumers have bought coverage on the individual market that covers only catastrophic costs. Some polices might feature high deductibles and co-payments, as well as exemptions for specific conditions or expensive treatments, or limit annual and lifetime benefits.

How many people are underinsured?

Health experts say that the number of people who are underinsured is rising rapidly, and that the problem is increasingly affecting the middle class, as well as people with lower incomes. An estimated 25 million Americans between the ages of 19 and 64 were underinsured in 2007--a 60 percent increase since 2003, according to a study in the journal Health Affairs.

Individuals were considered underinsured if they spent more than 10 percent of their incomes on out-of-pocket medical expenses (5 percent if they were low-income) or more than 5 percent on deductibles. Low-income adults were at the highest risk of being underinsured.

The increase in the underinsured is partly due to the fact that as health care and insurance costs have gone up, employers have bought policies with higher deductibles and co-payments and asking their workers to pay a greater share of the premiums.

What kinds of problems do the underinsured face?

Some of the underinsured avoid going to the doctor or getting prescriptions filled because they can't afford it. Others end up with medical debt and other severe financial problems.

Often, sicker or older (those just short of qualifying for Medicare) people are underinsured because they can't afford comprehensive coverage. One reason? Only 18 states limit how much insurers can base premiums on factors such as age, health status and gender.

How will the health overhaul proposals affect the underinsured?

The major proposals being debated in Congress would require insurers to provide a minimum set of benefits that are designed to take care of most patients' needs. In addition, the proposals would limit consumers' out-of-pocket costs--as long as they stay within network--and would prohibit insurers from imposing annual or lifetime limits on coverage. In addition, the legislation would bar insurers from basing enrollees' premiums on health status and gender. Backers say that these regulations would make it easier for people to afford coverage that would reduce the number of underinsured. Moreover, pending proposals would provide subsidies for people who have low or modest incomes, in an effort to make comprehensive coverage more affordable. And Medicaid, the state-federal program for the poor and disabled, would be expanded to include more lower-income people.

At Finance Committee, Fireworks Surround Efforts To Add Drug Discount, Eliminate Individual Mandate
September 25, 2009

The Senate Finance Committee on Thursday defeated an amendment that sought to squeeze more money out of pharmaceutical companies to help pay for the costs of changing the health care system. The panel's vote was a victory for President Obama and Finance Chairman Max Baucus.

The New York Times: "The proposal, an amendment by Senator Bill Nelson, Democrat of Florida, would have required drug makers to provide Medicare with discounts in the form of rebates totaling more than $100 billion over 10 years. Some of the money would have been used to close a gap in Medicare coverage of prescription drugs. In 2007, more than
eight million Medicare beneficiaries fell into the gap, known as the doughnut hole."

"Under the June agreement with the White House, drug makers pledged $80 billion over 10 years to help 'reform our troubled health care system.' In the belief that their contribution was capped, drug companies have run advertisements in support of a health care overhaul. The rebates proposed by Mr. Nelson would have more than doubled the amount of money to be given up by the industry" (Pear and Calmes, 9/25).

The Wall Street Journal: "The measure would have allowed Medicare to purchase drugs for low-income seniors at the same price that Medicaid pays for the drugs" (9/24).

The Washington Times: "The amendment failed on a 13-10 vote, with three Democrats--Committee Chairman Max Baucus of Montana and Sens. Thomas R. Carper of Delaware and Robert Menendez of New Jersey--joining Republicans in opposing the amendment" (Haberkorn, 9/24).

The Washington Post : "In the high-stakes battle over health care, the White House and the drug lobby make an unusual--and unusually powerful--team." They used their muscle to fight back an effort by Democratic senators, who "tried unsuccessfully to override a deal" struck months ago between the industry, the White House and Chairman Baucus. "If the deal fell apart, industry allies warned, the drug lobby could pivot from health-reform cheerleader to committed opponent armed with a $125 million war chest. ... It also foreshadowed battles to come: Democrats in both the House and Senate vowed anew to seek larger concessions from an industry that spent $92 million in lobbying in the first half of this year."

"The pharmaceutical fireworks came in an otherwise sluggish third day of committee deliberations on Baucus's bill. Republicans tried but failed to restore proposed cuts in the Medicare program and to remove a requirement that every American carry health insurance" (Connolly, 9/25).

Reuters : "The Democratic-controlled panel defeated on a largely party-line vote a Republican proposal to let individuals opt out of the bill's requirement that everyone have health insurance. The plan would offer subsidies on a sliding scale to help people buy it. Republicans said the issue was a matter of personal freedom and questioned the constitutionality of forcing people to purchase insurance. 'The individual mandate in this bill is un-American. It may even be unconstitutional,' said Republican Senator Jim Bunning, the amendment's sponsor.

"Democrats said the requirement was vital to the success of the overhaul, which aims for a dramatic reduction in the number of uninsured people living in the United States. 'The system won't work if this passes,' (Finance Chairman Sen. Max) Baucus said of the amendment" (Whitesides and Smith, 9/24).

NPR's Talk of The Nation Thursday centered around the national debate on requiring everyone take health insurance or face a penalty (9/24).

Frustrated Doctors Say Insurers Meddle In Patient Care
September 25, 2009

"Have you ever wondered why your doctor has you come back two or three times to complete a check-up instead of wrapping it up in one visit? Doctors candidly admit that it's about money," CNN reports. They say insurers are to blame. Dr. Ted Epperly, president of the American Academy of Family Physicians "explained that if multiple services are administered to a patient on the same day, insurers often won't reimburse doctors for each separate treatment. ... Doctors don't think this is fair. While some are eating the cost of additional services rendered to patients, others are having patients come back repeatedly so they can be adequately reimbursed."

"Although the tension between doctors and insurers is decades old, Epperly believes it is reaching a crisis point" and says that "[d]octors are fed up with the administrative hassles and other obstacles to getting reimbursed." Paul Keckley, executive director of Deloitte Center for Health Solutions, explains that the "tests, medications, procedures that doctors prescribe are largely responsible for driving up health care costs." He adds that little of the rising inflation is consumer-driven. Insurers often provide guidelines to doctors on what treatments may be most cost-effective based on evidence-based data. But the struggle between "a physician's clinical judgment and insurers' focus on evidence-based medicine" is a point of contention (Kavilanz, 9/25).

Baucus Bill Doesn't Bend Cost Curve Enough, Experts Say
September 23, 2009

President Barack Obama and his congressional allies such as Senate Finance Committee Chairman Max Baucus have repeatedly vowed to "bend the curve" on health care costs, and Baucus' new bill makes good on some of those promises.

It proposes new tools for attacking Medicare spending and imposes a hefty tax on high-cost health insurance plans--a levy designed not only to raise money to cover the uninsured, but also to discourage excessive spending on health care. But many health care experts and budget hawks say the legislation doesn't go far enough in taming long-term costs in the nation's $2.5 trillion health care system. And they worry that the cost-control measures included in the bill might get watered down or eliminated as the congressional debate continues.

"Baucus clearly cares about bending the cost curve, but his plan doesn't do enough and the risk is that it gets watered down even more," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a government watchdog group. "The plan gets two thumbs up in going further than any of the other plans, but it just shows you how big the challenge is that it doesn't go nearly far enough--especially with this aggressive effort to expand insurance coverage."

Princeton University economist Uwe Reinhardt agrees. "All of the bills that have emerged from Congress have had only very weak gestures toward cost control," he said, adding, "The Baucus bill is no exception."

Their view isn't unanimous. Mark McClellan, a former administrator of the Centers for Medicare and Medicaid Services and now director of the Engelberg Center for Health Care Reform at The Brookings Institution, said "I think they do have a substantial amount of delivery reform" in the Finance bill.

He pointed to the bill's proposal to create an independent Medicare commission to make recommendations to Congress on saving money, as well as a new CMS "innovations center" to test ways to make health care more efficient. He also noted there are several pilot projects to experiment with ways to save money. The tax on high-cost health insurance plans would also reduce costs, he said. "You can see the savings grow a lot over time." The provision would raise revenue and encourage people to pick less generous health insurance plans, McClellan said.

Linking payments to quality

The measure also includes other provisions to reduce health care costs. For example, the bill would create a program that would link a percentage of Medicare payments to hospitals to the quality of care provided on a set of specific conditions, such as cardiac, surgical and pneumonia care. The measure would require physicians to report on a series of quality measures or face a cut in payments. The Finance bill also creates a voluntary pilot program to encourage hospitals, doctors and other health care providers to collaborate and improve patient health care in the Medicare program and share in the savings of coordinating care.

While the Congressional Budget Office is reluctant to score substantial savings on some of the provisions, McClellan said, "I think there's a lot of potential for a big impact on health care costs."

As the Finance Committee got down to work on the $774 billion 10-year Baucus bill Tuesday, the chairman offered some changes in his proposal. To appease concerns of his Democratic colleagues, Baucus raised the thresholds for plans for workers with high-risk jobs and for non-Medicare retirees age 55 and higher--a concession to unionized workers who feared their health plans would be taxed.

Baucus' original proposal would have compelled insurers to pay taxes on policies with annual premiums of $8,000 for individuals and $21,000 for families. His revised version raised the thresholds for individuals by $750 and for families by $2,000 for those with high risk jobs or retirees 55 and higher who are not eligible for Medicare.

He also raised the tax, which would be levied on insurers and plan administrators, from 35 to 40 percent. In addition, under his new plan, Baucus would index the level that plans would be taxed in the future to the consumer price index plus one percent; that was designed to ease fears that more and more middle-income workers would get hit by the tax over time. But some lawmakers may want those thresholds raised even higher and broadened to apply to more workers.

'A lot of musical chairs?'

Baucus move to change the tax on high-cost insurance plans was a response to colleagues such as John D. Rockefeller IV, D-W.Va., who was worried that the tax would unfairly hit coal miners and others in high-risk jobs. While the proposed tax on high-cost health insurance plans would not affect most insurance policies, it already has encountered strong opposition from labor groups and their allies on Capitol Hill.

It's not clear any tax on high-cost policies will survive, considering opposition in the House. And other provisions to slow the long-term rise in costs face skepticism-if not downright opposition.

For example, there has been concern among some lawmakers and patient groups that comparative effectiveness research, which tries to determine which medicines, medical devices or procedures work best at treating specific ailments, might be used to limit access to certain treatments. In addition, some members of Congress fear that the Medicare panel that Baucus envisions would have too much power to impose spending reductions. These lawmakers want to maintain their authority over reimbursements to hospitals, physicians and other health care providers.

If the bill's Medicare commission is weakened, it's projected $23 billion in savings from 2015-2019 could be reduced. Even in its current form, the commission would be barred from changing Medicare benefits or eligibility rules and Congress could vote to reject its proposals.

Other, more traditional ways to reduce the legislation's costs also face some opposition. For example, the insurance industry is beginning to step up its protests of Baucus' plans to reduce payments to Medicare Advantage plans--the private-plan part of Medicare--by about
$123 billion over the next 10 years. And powerful trade groups, such as the Advanced Medical Technology Association or AdvaMed, are lobbying hard to stop proposed new fees on their industry. The Baucus plan would impose $ 4 billion in annual fees on medical-device manufacturers over the next decade but on Tuesday he proposed exempting retail products from the fee.

"Nobody has ideas that are going to fly off the page and go into effect very quickly that are really going to reduce total health spending as opposed to shifting it around so the federal cost is lower," said Joe Antos of the conservative American Enterprise Institute. "In the end we're going to see a lot of musical chairs on spending for whatever final bill comes out."

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.

*We would like to thank Andrew Fichter, PhD, JD (Widener University School of Law, Wilmington, DE), for selecting the articles for this week's update.

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