By Jane Norman, Drew Armstrong and John Reichard

June 9, 2009 -- Just as the Senate Health, Education, Labor and Pensions Committee Democrats unveiled a 615-page bill Tuesday in preparation for a scheduled June 16 markup by the panel, Senate Republicans mobilized by elevating the issue of process in health overhaul debate.

Underscoring GOP complaints that Democrats are trying to move health overhaul legislation too hastily, Republicans on the two key Senate committees handling overhaul bills joined in sending a letter to their Democratic colleagues Tuesday urging a thorough airing of the proposals and their costs before markups begin later this month.

Republicans generally stuck to polite language in urging that the process follow three steps before any markup in order to produce sound legislation: committee members should be given 7 to 10 days to review legislation; they should know the price tag of proposals by receiving cost estimates from the Congressional Budget Office and the Joint Committee on Taxation; and Democrats should "identify the offsets used to pay for heath reform."

"We are committed to working together with you to develop a bipartisan health reform bill," they wrote in the letter to Senate Finance Committee Chairman Max Baucus, D-Mont., and to Chairman Edward M. Kennedy, D-Mass, and Sen. Christopher Dodd, D-Conn., of the Senate Health Education, Labor, and Pensions Committee.

But the letter advised that "while expedience can sometimes be a virtue, it cannot be placed above the need to implement sound, well considered policy." And in a press briefing Tuesday afternoon, a senior aide to Michael B. Enzi, Wyo., the top Republican on the Senate HELP Committee, was far more unvarnished in his criticism. He singled out the HELP committee's Democratic leadership in particular for mishandling the legislative process, contrasting it to the more bipartisan process followed by the Senate Finance Committee.

"We weren't involved in the drafting of this product," said the Enzi aide. "My boss was very disappointed by what we saw today." Republicans were called in only occasionally to be briefed on the bill's contents, but given no input whatsoever, the aide said. "It's been frustrating." Nor were there any substantial interactions between Kennedy himself and Republicans, said the aide. "We've only interacted with Sen. Kennedy's staff. Sen. Kennedy has not been around because of his health reasons...All of our discussions have been at the staff level."

The aide said the process was a stark contrast to what the Senate Finance Committee had done by holding a series of public hearings and private member briefings over several weeks where Republicans were given a chance to offer input on the bill and learn about the proposals in private. "There are still huge outstanding issues there, but Senator Baucus is at least going about it the right way," said the aide. "In contrast, the HELP Committee is going to try and shoehorn that entire process four days before a committee mark. It's unlike any process that I've ever seen that leads to a bipartisan bill."

Beyond the process used to draft the bill, the aide said Republicans were upset both with the proposals included in the bill, and also with what was missing. "We have no idea . . . how the Democrats are going to pay for any of this," said the aide. His comments weren't confined to process considerations; the aide also slammed the Kennedy proposal for a government-run insurance option, employer mandate, Medicaid expansion, and federal health board.

Some New Details and Lots of 'Options'

The bill text follows the outlines of a draft bill circulated earlier but adds some details on health prevention, mandated nutrition labeling at chain restaurants, increasing the health care workforce, attempts to combat health care fraud and abuse, and development of follow-on biologics.

However, an analysis of the bill prepared for senators also offers a smorgasbord of options that apparently could yet be considered to change the way in which delicate issues such as the public plan, employer mandates, subsidies for the uninsured and more are handled. A statement from the committee says that "key outstanding issues" will continue to be discussed by Democrats and Republicans.

The "Affordable Health Choice Act" is intended to restructure the U.S. insurance market in all 50 states. It would place mandates on individuals to obtain insurance and employers to provide it. It would establish so-called "Gateways" in the states that would serve as marketplaces for consumers to obtain insurance, set up a public plan alternative, extend subsidies to families to assist in the purchase of insurance and bar insurance companies from using pre-existing conditions, age, gender or other conditions to set insurance rates. Children could remain on parents' policies until they are 26. No policy could include lifetime or annual benefit limits.

However, final language on a public plan option and the employer mandate apparently could still be open to change, and other sections as well. The committee said in a statement that Democrats and Republicans will meet Wednesday and Thursday to "discuss outstanding legislative options such as the public option and employer mandate." A public hearing is scheduled for Thursday and a markup will be launched June 16 and is expected to take as long as three weeks. The bill will eventually be folded in with a measure under development by the Senate Finance Committee that is expected to be announced as soon as next week.

Three options for the public plan—likely the most controversial piece of the bill—are under discussion, according to a section-by-section Senate analysis obtained by CQ HealthBeat. The first would be a public plan operated by the government, using a payment schedule based on Medicare rates and set in law. The second option would be a plan contracted out by the Department of Health and Human Services but operating under the same rules as private market insurance carriers. The third option would be to drop the public plan entirely, the approach which would be favored by most Republicans.

A separate section of the analysis defines a public health insurance option as a plan approved by HHS that offers payments for items and services at Medicare rates plus 10 percent; another option is to strike that definition.

On the question of subsidies for individuals who need help buying insurance, the committee lists three options for the "premium credits" that would be extended through the Gateways. The first option would be to allow them for families earning up to 500 percent of the federal poverty level, or about $110,000 for a family of four. The second would be sliding scale subsidies up to 200 percent of poverty level, and the third would be a tax credit tied to average premiums in a service area.

Options for discussions also are presented for the individual mandate. One suggestion is to instead provide subsidies or tax credits for individuals who enroll in health insurance; another is to automatically enroll low-income people and/or those who have been offered employer insurance, with an option to opt out or change plans, with late enrollment penalties.

Five possibilities are listed for the employer mandate, including just dropping it entirely. One would be "pay or play," meaning that all but small employers would have to offer health insurance meeting certain standards to employees or pay a fee. Another approach would be to avoid mandates but make employers pay back any portion of Medicaid coverage provided to workers. Under another, if the employer doesn't offer affordable coverage and the worker has to enroll in a publicly subsidized plan, the employer would have to make a payment to the government equal to the employee's coverage. A fifth option would allow employers to offer incentives for employee behavior, perhaps through changes in the gift tax.

The committee statement says that the bill will include five principles—that consumers will be able to keep the coverage they have now if they like it; reduction in health care costs; better disease prevention; health system modernization; and long-term care and services.

By John Reichard, CQ HealthBeat Editor

June 9, 2009 -- White House Office of Management and Budget Director Peter R. Orszag moved Tuesday to nip budding GOP assertions that a Democratic health overhaul plan will explode the federal budget, insisting that any plan endorsed by President Obama will have to pass muster with "an appropriately skeptical" Congressional Budget Office.

Orszag said in remarks to a Brookings Institution seminar that "there is a moral imperative to expand coverage and reduce the ranks of the uninsured. If we're to finance that expansion of coverage, we will have hard CBO-scored offsets," Orszag declared, referring to estimates by the Congressional Budget Office of the costs of legislation. Many analysts view CBO as being unwilling to project savings from legislation without hard evidence.

Separately, leaders of the Senate Budget Committee are moving to enlist CBO more directly in efforts to write a health overhaul plan that would bend down the long term growth curve in U.S. health spending. "Congress must have the best information available to evaluate whether health care reform proposals will truly bend the cost curve," Chairman Kent Conrad, D-N.D., and ranking Republican Judd Gregg, N.H., said in a June 8 letter to CBO. The letter asked CBO to submit by June 16 a summary of policies that could best put health spending on a more sustainable trajectory.

In its budget proposal earlier this year, the Obama administration proposed various Medicare and Medicaid revisions as well as reduced tax deductions for wealthy Americans as a way to pay about $630 billion throughout 10 years of the cost of financing a health overhaul plan. The administration suggested that the $630 billion would pay about half the costs of an overhaul. Orszag said Tuesday that the White House plans to propose another $200 billion-to-$300 billion in Medicare and Medicaid reductions to help finance expanded coverage and other system improvements.

That would mean total Medicare and Medicaid cuts and other revisions saving some $500 billion-to-$600 billion. The congressional Joint Committee on Taxation on Monday identified another big source of funding for a health overhaul. It estimated that $419 billion over 10 years could be saved by limiting the amount of employer paid health insurance premiums that would be excluded from a worker's taxable income. The estimate assumes taxation above the cost of a "standard option" health plan for federal employees that is indexed annually for per-capita medical cost inflation.

Orszag said there is confusion over how the administration's goal of reducing geographical variation in health spending figures into efforts to keep down the costs of a health overhaul. Reducing those variations intrigues President Obama, Orszag said, noting the president's strong interest in a recent New Yorker magazine article by former Clinton administration official Atul Gawande comparing sharp Medicare spending differences in two otherwise comparable cities in Texas.

"I think many people have confused our efforts to lead to a more efficient health care system and address regional variation with the hard offsets—that is reductions in payments for Medicare Advantage plans, reductions in payments for other types of providers, some changes in Medicare beneficiary cost sharing that we had proposed and additional revenue—with the changes that are necessary to lead to a more efficient health care system," Orszag said. "We need to do both.

"We need to offset the full cost of any changes over the next five or ten years in a deficit neutral way through hard scoreable savings—this is not make-believe, this is not untested proposals—these are proposals that have been scored by an appropriately congressional skeptical budget office. And on that basis the package must be deficit neutral."

Congressional committees are gearing up in coming days to move various health overhaul proposals. On Tuesday the Senate Health, Education, Labor and Pensions Committee announced a markup of many days to begin June 16.

Senate Finance Committee Chairman Max Baucus, D-Mont., who also addressed the Brookings event, told reporters afterward, "I think we'll have a markup roughly the 17th."

Baucus said when asked how long the markup would run, "We can do it in a week."

A Baucus aide later clarified that the Baucus "mark"—the chairman's version of the overhaul—would likely be released around the 17th with the markup several days after that. "The plan is to release the bill the week of the 17th and mark up the following week," the aide said.

The Brookings event dealt with the issue of expanding federal funding of research comparing the effectiveness of medical treatments and procedures. Both Baucus and Orszag urged expansion of the studies, with Orszag calling it a way to help patients and doctors figure out which treatments work best and to reduce unjustified geographical variations in spending. Baucus said he would add to his health overhaul proposal a bill he introduced last year with Conrad to provide stable funding for an expanded federal research program.

By Emily Stephenson, CQ Staff

June 11, 2009 -- A national health insurance exchange and policies to help individuals find coverage would create a more patient-centered health care system, sponsors of a new report said Thursday.

The Commonwealth Fund and Consumers Union held a lunch briefing Thursday to highlight policy changes they said would lead to consistent, high-quality care for the nearly 46 million Americans without health insurance.

The report recommends establishing a mixed public-private insurance system, creating a national insurance exchange to help individuals find coverage, requiring employers to offer or contribute to coverage and mandating universal coverage for all Americans.
Karen Davis, president of the Commonwealth Fund, which issued the report, said individuals struggling with affording insurance and care are too often forgotten in the political fight over how to change the health care system.

"The one voice that we haven't heard from enough...is the voice of the American consumer," Davis said.

Sara Collins, the Commonwealth Fund's assistant vice president for the Program on the Future of Health Insurance, said an additional 25 million Americans don't have sufficient insurance to cover all medical needs, and women and older adults, in particular, often experience problems with access and paying bills.

Catherine Howard of San Francisco, Calif., spoke at the briefing about her struggle with insurance coverage and high health care costs. Howard, 46, said she worked as a documentary filmmaker in 2004 when she was diagnosed with breast cancer. She had insurance, but it didn't pay for all of her treatments. When she had her first surgery, she had to write a check for $3,000, she said.
Howard has a more traditional job now and employer-provided insurance, but she said she owes $40,000 in medical bills.

"Unfortunately, their stories aren't that unusual," said DeAnn Friedholm, health reform director for Consumers Union.

About 30 minutes into the event a protestor objecting to cutting health care spending disrupted the briefing, interrupting a presentation from Neera Tanden, senior adviser in the Department of Health and Human Services' Office of Health Reform. She later quipped: "We appreciate that the health crisis is an issue about which people feel passionately—super passionately."

Tanden said Thursday's event is an effective way to communicate to the public the Obama administration's commitment to lowering costs and improving the quality of health care.

By Alex Wayne, CQ Staff

June 11, 2009 -- The Senate Finance Committee's version of health care legislation, to be revealed next week, will include some form of a public plan and is likely to call for a system of government-organized insurance "co-operatives" across the country, Chairman Max Baucus said Thursday.

"I am inclined, and I think the committee is inclined, toward it," Baucus said. "It's got to be written in a way that accomplishes the objective of the public option, even though it itself is not public."

In the panel's hour and a half discussion on the concept, which would be modeled after a proposal by Senate Finance Chairman Kent Conrad, D-N.D., most committee Republicans held fast in their opposition to any public plan in health care overhaul legislation. Conrad proposes setting up a system of publicly owned "co-ops" to offer health insurance, rather than a centrally controlled federal plan.

"I think it all smacks of a government-run plan that really won't work," said Orrin G. Hatch, R-Utah.

The Democrats' proposed "public plan option" is the most controversial issue in the health care debate. Democrats say a public plan will force private insurers to reduce their costs and treat their customers better. But most Republicans, insurers and business groups oppose the idea, including Conrad's plan.

Maine's Olympia J. Snowe is one committee Republican, however, who supports Conrad's idea of co-operatives, noting that some states already have insurance co-ops. She said she also would like to see a stronger, government-run plan as a "fallback" option if many Americans continue to lack access to affordable coverage.

Baucus faces difficulties on his left, as well. Charles E. Schumer, D-N.Y., said that the co-op alternative must meet certain conditions, including that "it has to be national." Hatch said that Schumer told committee members he wanted the national co-op to be founded and backed by the government.

"It has to have a significant infusion of federal dollars right from the start, so it has the clout to compete against the insurance companies," Schumer said.

Baucus said the committee still awaits cost estimates on its legislation from the Congressional Budget Office; some of CBO's "scores" are due on Monday. A draft version of his bill will be released Wednesday, Baucus said, and the committee will begin debating it on June 23. Baucus said he expects the markup to extend all week.

Republicans expressed unease about that schedule. Snowe said she had urged Baucus to be "flexible" about the timing of a markup, and Hatch said "they're pushing it unmercifully fast." But Hatch said that he understood Baucus felt pressure from Democratic leaders to complete the bill.

"I think we've finally realized as a group, a committee, that the time table I've laid out is about the only option we have," Baucus said.

His chief of staff, Russell Sullivan, told reporters that the draft legislation probably will not be complete because committee members continue to wrestle with issues such as the public plan and, crucially, how to pay for the cost of the bill.

The legislation is expected to include some modification of the tax treatment of employer-sponsored benefits. Currently, employee health plans are excluded from income taxes. Capping or otherwise limiting the exclusion could raise hundreds of billions of dollars to pay for an overhaul.

Richard Rubin contributed to this story.

By Edward Epstein, CQ Staff

June 11, 2009 -- Speaker Nancy Pelosi said Thursday that House Democrats strongly want a government-run insurance plan to be part of any health care overhaul, while top House Republicans said they are unalterably opposed to such a public component.

"In our caucus, members have been very clear about what their concerns are about a public option, and I agree," Pelosi told reporters. "It should be actuarily sound. It should be administratively self-sufficient. It should be a competitor with the private sector and not have an unfair advantage."

The California Democrat called for a "level playing field" for public and private health care providers.

"In our House, there is strong support for a public option and great respect for concerns that have been raised within our caucus," she added.

And Pelosi wouldn't close the door on a suggestion from the Senate that public health insurance co-operatives be created, instead of a government-run plan. But she said such an option should not be "instead of a public plan."

House GOP leaders warned that if Democrats persist in including a public plan in health care legislation, they will campaign vigorously against it.

"If a government-run plan is a competitor, pretty soon you'll have no other competition," said Rep. Roy Blunt, R-Mo., who heads the party's House health care working group.

He said the federal government will always have an unfair advantage over the private sector. Such a plan "will drive people away from the coverage they have now," he said, and lead to rationing of health care and medical decisions made by government bureaucrats.

"We need more competition, not less," he added.

Minority Leader John A. Boehner, R-Ohio, was more direct. "I'm opposed to a government option, period."

Blunt said that Democrats have used a sense of urgency for passing a bill this summer as a distraction from their goal of creating a government-run health system. "It's a bum's rush," he said, "hoping to sneak a government takeover of health care through."

By Jane Norman, CQ HealthBeat Associate Editor

June 12, 2009 -- As Congress debates how to rein in cost and at the same time improve quality in the nation's health care system, top executives from nine health provider organizations Friday endorsed a set of ideas tied to coordinated care for patients that they predicted could save the Medicare system some $500 to $600 billion in 10 years.

"We will not control health care costs until we create clear incentives for providers — the people who deliver care — to focus on quality and efficiency," the CEOs, many of them from the West Coast, said in a report produced by the non-profit New America Foundation.

At a forum organized by the foundation, the CEOs said that the traditional fee-for-service Medicare system is unsustainable and that providers should be held accountable by Medicare for reasonable cost and quality standards by a specified date. Because Medicare drives so much of what goes on in the rest of the health system, change should start there and in Medicaid to the degree possible in that program, they said.

They also declared that Medicare should begin the transition toward bundled payment models, encourage accountable organizations that accept full responsibility for high-quality patient care and efficient performance, make payments contingent on compliance with strict quality standards and eliminate the Sustainable Growth Rate (SGR) for determining physician payments. The SGR is a mechanism devised by Congress in 1997 to keep a lid on the growth of such payments in comparison with the growth of the economy overall.

The CEOs did not specify how much each of their recommendations would save Medicare, but they said they "firmly believe" that up to 30 percent of the $2.4 trillion now spent on health care is the result of too few efforts to coordinate care and not enough attention to quality.

They also said that in the broader context of the health overhaul, they support health exchanges or new marketplaces for purchase of health insurance, reforms that end discrimination based on age, sex or health status; subsidies financed through "broadly shared responsibility" to ensure affordable coverage; and a mandate that individuals be covered by insurance.

"We really are here to try to create space for a bipartisan conversation about health reform," said Len Nichols, director of the centrist foundation's health policy efforts and a health official with the Office of Management and Budget during the Clinton administration.
Nancy-Ann DeParle, the White House director of health reform, spoke briefly at the event and praised the health CEOs for coming together to make the recommendations, calling them a "very serious group of people who actually serve patients," manage budgets and work with insurance companies and the government. "We embrace a lot of the ideas you have here," she said, including elimination of the SGR. "You're the leaders in your sector," she said.

The CEOs are Patricia A. Gabow, CEO and medical director of Denver Health; Scott Armstrong, president and CEO of Group Health Cooperative in Seattle; Nicholas Wolter, CEO of the Billings Clinic in Billings, Mont.; Anthony R. Tersigni, president and CEO of Ascension Health in St. Louis; Gary Kaplan, chairman and CEO of Virginia Mason Medical Center in Seattle; Lloyd Dean, president and CEO of Catholic Healthcare West; Kenneth C. Frazier, president for Global Human Health at Merck & Co. Inc.; Bruce Bodaken, chairman and CEO of Blue Shield of California; and Donna Katen-Bahensky, president and chief executive officer of the University of Wisconsin Hospital and Clinics.

Armstrong said Group Health Cooperative is a nonprofit health care system that coordinates care and coverage, with 610,000 people enrolled in a broad portfolio of health plans. It is the largest integrated group practice in the Pacific Northwest, with 950 physicians caring for patients through medical centers spanning Washington and Idaho.

Cooperative health arrangements are under study as a possible component of the health care overhaul proposal to be written by the Senate Finance Committee, at the suggestion of Sen. Kent Conrad, D-N.D., and as a way of deflecting criticism over a government-sponsored plan.

As an example of the way Group Health provides coordinated care, Armstrong said the cooperative decided eight years ago to invest in medical technology that tracks patient care. Every provider, including pharmacists and nurses, has "up to the minute" access on patient records on clinical care, any time day or night, he said. "Every one of our patients can get access to that clinical information from literally any computer in the world," he added. "They can look at their lab results. They can schedule an appointment with their doctor. They can e-mail their physician and expect a reply the next morning."