By John Reichard, CQ HealthBeat Editor

Senate Finance Chairman Max Baucus, D-Mont., said Thursday that his work on developing a Democratic bill to increase jobs may include short-term fixes to prevent cuts in Medicare payments to doctors and for outpatient rehabilitation services.

Baucus said after a hearing on the Obama administration's fiscal 2011 budget proposal that a three-month doctor payment fix is "being discussed . . . quite significantly." The same is true of language that would exempt virtually all Medicare beneficiaries from a cap of $1,860 on outpatient rehabilitation services for physical and occupational therapy and for speech-language pathology services.

Majority Leader Harry Reid, D-Nev., said earlier in the day that he would like to see an initial vote on a jobs package on Feb. 8 — likely a procedural vote. Reid added that he would like to see Senate passage before members leave town Feb. 12 for the Presidents Day recess. It's unclear, however, whether any Republicans will support the measure.

"I'm working with many senators on both sides of the aisle to address jobs, and I hope to have a part of that wrapped up very soon," Baucus said.

A two-month delay of a 21 percent cut in Medicare payments to doctors expires March 1. The rehabilitation cap took effect Jan. 1.

Meanwhile, several senators are urging the Obama administration to impose an administrative delay on cutting off rehabilitation services.

"We are concerned that implementation of the Medicare outpatient therapy caps is causing undue hardship on Medicare beneficiaries, particularly for those who are recovering from a stroke or a debilitating injury such as a hip or joint fracture," Republican Charles E. Grassley of Iowa, Democrat Blanche Lincoln of Arkansas and Republican John Ensign of Nevada wrote in the letter to Health and Human Services Secretary Kathleen Sebelius.

"We have already received reports that beneficiaries with severe rehabilitation needs have already exceeded the financial caps," the senators wrote. "In fact, one national provider has reported that as of February 1, 2010, approximately 1,050 of its patients across the country will hit the caps. This number is expected to grow to more than 4,000 patients by February 28, 2010."

Congress has intervened repeatedly to keep the cap from taking effect. Lawmakers included provisions to block the cap in health care overhaul legislation, but its prospects are uncertain.

By Alex Wayne, CQ Staff

February 5, 2010 -- President Obama and congressional Democratic leaders are still vowing to finish a comprehensive health care overhaul and make good on their top domestic priority. But the legislation has stalled as Democrats sort through a thicket of procedural and policy problems.

The bill made no evident progress last week, in spite of assurances by some senior Democrats that they would move quickly to decide how to finish the measure. Perhaps the only viable plan—a two-step strategy that entails the use of budget reconciliation to avoid a Senate filibuster and amend a Senate-passed health bill (HR 3590)—is being viewed with increasing skepticism.
"When you start dealing with reconciliation in this context and you have another bill, a main bill, it is a good deal more complicated than people have been led to believe," said Senate Budget Chairman Kent Conrad, D-N.D.

Such sentiments have left the future of the health overhaul more uncertain than ever. Though Senate Majority Leader Harry Reid, D-Nev., has said there is no rush to finish the health legislation — House and Senate health care plans are alive until the end of the current session — there is no political advantage in waiting. Many Democrats are anxious to put the health debate behind them. And incumbents facing competitive races this fall will be increasingly wary about casting difficult votes as Election Day approaches.

There is unlikely to be much progress on health care this week, as the Senate focuses on passing a bill aimed at reducing unemployment and Democrats look forward to regrouping during the weeklong Presidents Day recess.

Yet many in the House and Senate remain optimistic that they will somehow complete the legislation. Among them is Rep. Chaka Fattah, D-Pa., who has been urging his colleagues and leaders to clear the Senate's health bill since Jan. 20 — the day after Republican Scott P. Brown won the Massachusetts Senate seat formerly held by Democrat Edward M. Kennedy, D-Mass., casting the health bill into political and procedural limbo.

"I am confident that that's how we're going to proceed," Fattah said. While he acknowledged that only a minority of House Democrats support clearing the Senate bill, "I think the minority's growing."

Congressional Democrats often take their cues on the health bill from the president. The day after Brown's win, Obama said in an interview with ABC News that Democrats should focus on passing only the "core elements" of the health overhaul. That sentiment has been echoed by many rank-and-file Democrats, particularly in the House, who proposed abandoning the larger health bill and passing a series of narrower, less contentious measures instead.

Democratic Reps. Tom Perriello of Virginia and Betsy Markey of Colorado on Feb. 5 introduced one such bill that would repeal health insurers' exemption from antitrust laws — which Democrats contend limits competition in the health marketplace.

But beginning with his State of the Union speech Jan. 26, Obama has pivoted back to advocating passage of complete, comprehensive legislation. "We've got to finish the job on health care," he told Senate Democrats Feb. 3, during a policy retreat.

"I think the president accomplished yesterday what he needed to do," Sen. Ron Wyden, D-Ore., said Feb. 4. "The president was very resolute. That was a question that I think was on senators' minds: is the president willing to go the distance?"

Fattah suggested that there has been little obvious progress in recent weeks because Democrats were waiting for Brown to take his seat.

Before his election, some had suggested that his swearing-in could be delayed so that Democrats could finish the health bill while they still had a 60-vote majority in the Senate — enough to stop a filibuster.

But that idea was widely panned, and immediately after Brown won, Sen. Jim Webb, D-Va., said the Senate should take no more health care votes until after he was seated. Reid agreed. And even though Brown's election had no impact on the political makeup of the House, Democratic leaders there may have avoided criticism by also waiting to act on health care.

"To move in haste absent him being seated would give the opposition — even though it would be ridiculous — the chance to say 'oh, we are ignoring the views of the voters in one state,' " Fattah said.

Reconciliation Rules
Now that Brown has been sworn in, Democratic leaders can move forward, once they resolve a procedural question: can the Senate pass a reconciliation bill that amends legislation that is not yet law? The answer is important, because House Democrats would prefer that the Senate pass the reconciliation bill reflecting their preferences before the House takes up the Senate-passed health bill. House members view the Senate's health bill as inferior to a plan (HR 3962) they passed in November and want assurances the Senate bill would be changed before they vote.

Energy and Commerce Chairman Henry A. Waxman, D-Calif., said procedural questions are less important than the policies Democrats ultimately decide to embrace. "A lot of the policy issues are related to what can or cannot be done under reconciliation in the Senate," he said.
Meanwhile, Democrats are adjusting their messaging by arguing that their health overhaul would itself be a jobs bill — a point they have made in the past, though without as much emphasis.

Speaker Nancy Pelosi, D-Calif., claimed on Feb. 4 that the overhaul would create 4 million jobs. At a Feb. 3 hearing on Obama's health budget, Democrats and Republicans on the Senate Finance Committee sparred over whether the health bill would create or destroy jobs. The committee's chairman, Democrat Max Baucus of Montana, used his first question to Health and Human Services Secretary Kathleen Sebelius to tout the job-creation properties of the health bill.

Sebelius said that with expanded health insurance coverage, workers would take fewer sick days. "You'd not only have more productive companies, but we'd be more globally competitive," she said.

But Finance member Michael B. Enzi, R-Wyo., said that by reducing the growth of Medicare spending over the next 10 years, the overhaul would hurt health providers. "How many jobs will be lost if one in five health care providers go out of business?" he asked Sebelius.

She did not directly respond to his question. Unless Democrats figure out soon how to pass the legislation, it may be of little concern.

By Alex Wayne, CQ Staff

February 5, 2010 -- Even as they try to resuscitate their comprehensive health care overhaul, House Democrats are planning to take another swipe at the insurance industry next week with legislation that would strip its exemption from federal antitrust law.

The House will take up a bill by freshmen Democrats Tom Perriello of Virginia and Betsy Markey of Colorado that would amend a 1945 law, known as the McCarran-Ferguson Act, that grants insurers an antitrust exemption and subjects them to state regulation. Under the bill, health insurers and medical liability insurers would be subject to federal antitrust law, as well as state regulation.

Congressional Democrats and the Obama administration blame much of the increase in health care costs over the last decade on insurers and say that subjecting them to federal antitrust law would increase competition in the industry and bring down insurance premiums.

"This is a chance for us to put patients ahead of profiteering," Perriello said at a Friday news conference announcing the legislation.

But bill supporters have little evidence to support claims that the antitrust exemption leads to higher costs. In fact, their statements in support of the bill sometimes suggest the opposite.

Travis Plunkett, legislative director for the Consumer Federation of America, said at the news conference that passage of the Perriello-Markey bill "will lead to higher payments [to health providers] for covered services because the insurers will no longer be able to collude."

He rejected the idea that might respond by charging consumers higher premiums.

"I think insurance companies are going to have to get more efficient," Plunkett said. "In short, the answer is competition."

Yet there are indications that requiring insurers to comply with federal antitrust law in addition to state regulations could actually decrease competition in the industry.

The Congressional Research Service (CRS) noted in a Jan. 14 report that smaller insurance companies rely on data collected from their larger competitors and shared industrywide — something that would be forbidden under the Democratic bill — in order to accurately set their rates.

"Should additional data be unavailable to small insurers in some way, further consolidation in the insurance industry as small insurers merge in order to gain the competitive advantage of additional information is a likely, albeit, ironic, possibility," CRS said.

State insurance commissioners say that they already sufficiently regulate health insurers and are opposed to the Perriello-Markey legislation and to similar proposals. The insurance industry opposes the bill as well, although health insurers have expressed little concern about losing their antitrust exemption. They say they do not cooperate with one another as much as do property and liability insurers, who make greater use of collective data on claims and losses.

Representatives of the Property Casualty Insurers Association of America (PCI), which opposes the bill, attended Friday's news conference. Many property and casualty insurers also offer medical liability insurance to health providers.

"Including medical malpractice insurance in this bill will not help one single person find health insurance coverage," said Tom Litjen, PCI's vice president for federal government relations.

For Democrats, though, the Perriello-Markey legislation is more important symbolically than it is to advance their policies. Debate on the measure will likely provide Democrats with a platform to attack the insurance industry and try to turn public opinion back in their favor.

"Never underestimate the importance of a good message bill," one House Democratic aide said. "Especially when everybody agrees that insurance companies are the bad guys."

The legislation is strongly supported by many House Democratic leaders and is likely to pass their chamber easily. Its prospects in the Senate are less rosy, however. Republicans are likely to filibuster the bill and could pick up support from some centrist Democrats.

While House Democrats included a partial repeal of McCarran-Ferguson in their health overhaul legislation (HR 3962), Senate Democrats opted to exclude a similar provision from their bill (HR 3590).

"If it's about bid rigging and price fixing, I am absolutely in favor of seeing that go," said Sen. Ben Nelson of Nebraska, whose state is home to some large insurers. "If it's about data collecting . . . we don't want it to extend off to property, casual and liability lines, where if you don't have the ability to aggregate data then small companies are not going to enter into the market."

By Jane Norman, CQ HealthBeat Associate Editor

February 4, 2010 -- The national health expenditures are projected to have risen to $2.5 trillion in 2009, or 17.3 percent of the Gross Domestic Product, boosted by spending on public health programs amidst a deepening recession, according to a new government study published Thursday.

The 1.1 percentage-point increase to 17.3 percent of GDP compared with 16.2 percent in 2008 was the largest single-year increase since the government began tracking health spending in 1960, said the study by actuaries at the Centers for Medicare and Medicaid Services published in the journal Health Affairs.

Health spending was projected to have risen by 5.7 percent between 2008 and 2009, while the GDP in a struggling U.S. economy fell by 1.1 percent. Projections are made by the study, rather than final figures, because not all the data for calendar year 2009 was available to the actuaries.

"This is certainly a very steep rate of growth for the health share of the GDP," said Christopher J. Truffer, an actuary and report co-author. However, analysts project that health spending as a share of GDP would be relatively flat for the next few years assuming an economic rebound and a healthier GDP.

The rate of health care spending growth in 2009 was due in large part to swelling Medicaid enrollment as jobless Americans lost their private health insurance through employers and fell into poverty. Health spending by public entities totaled $1.2 trillion, growing by 8.7 percent between 2008 and 2009. Spending by private payers was slightly higher at $1.3 trillion but the growth rate was just 3 percent.

Private insurance enrollment is expected to have declined by 1.2 percent in 2009 compared with the previous year. The study noted that the decline occurred despite substantial assistance from federal subsidies provided by the economic stimulus law and intended to help jobless people extend their private employer-provided policies through COBRA.

A somewhat pessimistic picture is presented for 2010 as well. Although the economy is expected to grow in 2010, private health spending growth is projected to slow to 2.8 percent compared with 2009 due to reduced private health insurance enrollment and a continued high rate of unemployment, the study says. The COBRA subsidies also will expire.

There is also a slowdown in public spending expected for 2010 compared to 2009, but that's calculated under the assumption that Congress will fail to avert a scheduled 21.3 percent cut in physician reimbursements under the Medicare program. If the cut does take effect — which it likely won't since Congress has acted repeatedly to turn aside other cuts — overall health spending would rise by 3.9 percent in 2010 compared with 2009. If instead physicians receive the same Medicare pay they receive now, the growth in overall health spending would be 4.7 percent, the study said, still less than this year.

But after 2010, the CMS actuaries expect the overall growth in health care spending to take off, hitting 7 percent by 2016. "This acceleration is primarily a result of expected faster growth in disposable personal income associated with the economic recovery," the study says. By 2019, an increasing number of baby boomers moving from private coverage into Medicare would contribute to slowing private spending growth and accelerating public spending growth, the actuaries say.

No assumptions are made in the projections about health care overhaul measures pending in Congress or their effect on cost containment.

In the Medicare program, spending is projected to have increased 8.1 percent in 2009 compared with the previous year, rising to $507.1 billion. That's lower growth than in the previous year, attributed to less spending growth in the program on hospital care and prescription drugs. In the years to come, with or without the physician payment fix, Medicare spending is expected to climb more than 7 percent annually as baby boomers grow old enough to sign up.

Federal and state Medicaid spending combined is projected to have grown 9.9 percent between 2008 and 2009, reaching $378.3 billion. "Enrollment increases are projected to be most notable among nondisabled children and adults during the recession as working parents become unemployed and lose access to employer coverage," the study notes.

By Jane Norman, CQ HealthBeat Associate Editor

February 1, 2010 -- President Obama's quest to overhaul the nation's health care system may remain stuck in Congress, but he proposed a 2011 budget of $81.3 billion for the Department of Health and Human Services on Monday that takes other routes to expand access to care, such as new community health centers. In addition, the president would increase federal commitments to biomedical research and launch payment system pilot programs for Medicare.

The overall budget assumes enactment of a health care overhaul and thus anticipates that it would reduce the deficit by $150 billion over 10 years, administration officials said — an average of the House bill and the Senate bill. HHS Secretary Kathleen Sebelius said, however, at an afternoon press conference that "there really are no specific features in this (budget proposal) that have that assumption built in, but I think the president made it very clear at the State of the Union that he does not intend to walk away from health reform."

Sebelius said the budget is aimed at strengthening working families, investing in a foundation for future growth and "bringing a new level of accountability and transparency to government." Relief is targeted at Americans who need it most at a time of economic stress, she said.

In a move sure to be applauded by states with strapped budgets, Obama included $25.5 billion for a six-month extension of Medicaid money under the economic stimulus program for continuation of an increase in the federal match, through June 30, 2011. Without it, spending was scheduled to decrease by $30 billion after Dec. 31, 2010. The budget says that the federal share of current Medicaid outlays is expected to be $271 billion in the 2011 budget year.

Obama proposes a $2.5 billion emergency fund for the Temporary Assistance for Needy Families block grant, providing assistance to needy families. He also proposes $500 million for a new Fatherhood, Marriage and Families Innovation Fund that would extend competitive grants to states to "conduct and rigorously evaluate comprehensive responsible fatherhood programs."

An expansion of Head Start and Early Head Start for needy pre-schoolers, also in the economic stimulus program, would be continued and Head Start is projected to serve 971,000 children from birth to age five. There is additionally an increase of $1.6 billion for child care for 235,000 more low-income children than would otherwise have been served.

The $81.3 billion in total discretionary budget authority for HHS in 2011 would be less than the $81.9 billion estimated for fiscal 2010, including balances transferred from the Department of Homeland Security related to the BioShield program that protects against terrorism. Excluding those balances, it would be an increase from $79.5 billion in fiscal 2010.

Obama has proposed a $3.8 trillion budget overall for 2011 focused on adding jobs and reducing deficits, and he would freeze domestic discretionary spending, though not across the board. That freeze does not affect big mandatory human services programs like Medicare and Medicaid.

Obama has proposed terminations, reductions and savings for the federal 2011 budget overall of $23 billion, and some programs in HHS are targeted. However, often savings such as these are difficult to achieve because they are politically popular or favorites of members of Congress. Some of the programs have been recommended for cuts in the past but have survived.

In HHS, Obama would terminate anthrax vaccine research, a Children and Families Services job demonstration program, three congressionally earmarked projects in the Health Resources and Services Administration in Alaska and Mississippi and the Rural Communities Facilities Program.

The Centers for Disease Control and Prevention, which was a main agency in fighting the H1N1 flu outbreak that's now abated, is slated for a $133 million decrease; budget documents say there's still money available from the fiscal 2009 pandemic influenza supplemental bill, so less money was requested for CDC.

But Obama would provide an increase of $1 billion for the National Institutes of Health for an expansion of support for biomedical research, which in his remarks on Monday morning on the budget he put in the context of job stimulation. Obama said he would "increase investment in scientific research, so that we are fostering the industries and jobs of the future right here in America."

At NIH, the focus is expected to be on genomics, translational research, science to support the health care overhaul, global health and "reinvigorating the biomedical research community." There would be more than $6 million to support efforts to battle cancer including 30 new drug trials in 2011 and doubling the number of novel compounds in Phase 1 through Phase 3 clinical trials by 2016. The budget would support the completion of a catalog of cancer mutations for the 20 most common malignancies.

There's $2.5 billion in budget authority and $4 billion in total program resources for the Food and Drug Administration, a net program increase of $748 million or 23 percent compared to 2010. Food safety funds would rise by $318 million. FDA would develop an integrated national food safety program and set new standards for safety, strengthen surveillance and enforcement and improve response to outbreaks. The budget again proposes four new user fees and proposes increases in existing user fees.

Obama would add $290 million for health centers in medically underserved areas, for a total of $2.5 billion in 2011. With the money, 25 new community-based sites could be added and the 2 million new patients that existing sites saw in 2009 could be served; there were 17 million in all last year. There would be money in the budget to expand behavioral health services such as care for addicts.

Obama also would spend more than $3 billion on HIV/AIDS prevention and treatment activities, budget documents said.

In the category of supporting the health care overhaul, the president would devote $110 million for continuing efforts to strengthen health IT policy, coordination and research activities; and spend $286 million for comparative effectiveness research that was begun under the recovery act through the Agency for Healthcare Research and Quality. That takes in $273 million for research and $13 million for program support.

At the Centers for Medicare and Medicaid Services, new demonstration projects would be launched aimed at higher quality care at lower cost and better alignment of provider payments with costs and outcomes. Programs are expected to put special emphasis on chronic care for beneficiaries. In Medicare and Medicaid, the request is to spend $561 million, an increase of $250 million, on fighting fraud and abuse and increasing oversight.

There's $169 million for the National Health Service Corps to add providers to areas of the country that don't have enough doctors and other health professionals. And there's $222 million across the agency to expand research, detection and treatment for autism spectrum disorders.

By Jane Norman, CQ HealthBeat Associate Editor

February 3, 2010 -- President Obama delivered a lengthy defense of the need for a wide-ranging, comprehensive health care overhaul in his remarks at a New Hampshire town hall meeting on Tuesday, and took responsibility for not living up to his campaign pledge that negotiations would be televised on C-SPAN.

He said he made that commitment to transparency, though it's hard to know if lawmakers will negotiate in good faith or posture for the cameras if negotiations are televised. "But I think it is a legitimate criticism to say, if you say that all of it is going to be on C-SPAN, all of it is going to be on C-SPAN," he added.

Obama also said because of the many pieces of health care that need to fit together in comprehensive legislation, it became a "big, complicated bill and it's very easy to scare the daylights out of people."

Obama has devoted most of his focus to jobs and the economy since the Jan. 19 Massachusetts special election in which Republicans gained a 41st seat in the Senate and the ability to mount filibusters, throwing congressional Democrats into disarray as to how to move ahead. Republican Scott P. Brown won the seat held by the late Sen. Edward M. Kennedy, a Democrat.

But in the Nashua, N.H., event Obama — prodded by questions — reverted to the detailed explanations of the overhaul that marked his campaign for it last August and argued why change in the health care system should matter to Americans.

He was emphatic that an overhaul will be signed into law. "I do not quit. We are going to get that done," Obama told the crowd at Nashua High School North.

Obama made the case for comprehensive legislation, which Democrats say they are still trying to achieve through the budget reconciliation process while also attempting to move approval of smaller initiatives such as an end to anti-trust exemptions for the health insurance industry.

The president said that one of the most basic principles of the overhaul is that people should not be denied health insurance because of a pre-existing medical condition, but that requirement affects the rest of the health insurance structure and demands other shifts in policy, such as an individual mandate.

"Now, (a ban on denials) is something that's very popular if you just say it in isolation, but when you start explaining what is required to make that happen, then sometimes some people get a little nervous," he said. "You can't have insurance companies have to take somebody who's sick, who's got a pre-existing condition, if you don't have everybody covered, or at least almost everybody covered.

"And the reason, if you think about it, is simple. If you had a situation where not everybody was covered but an insurance company had to take you because you were sick, what everybody would do is they'd just wait till they got sick and then they'd go buy insurance. Right? And so the potential would be there to game the system."

That's important to understand because "a lot of the reforms that we've proposed fit together," he said. "Here's the problem, though, is when you've got all those things fitting together it ends up being a big, complicated bill and it's very easy to scare the daylights out of people. And that's basically what happened during the course of this year's debate."

Members of the House and Senate who approved separate measures (HR 3962, HR 3590) disagreed on about 10 percent of what was in each bill, he said. "So we were just about to clean those up, and then Massachusetts' election happened," said Obama. "Suddenly everybody says, 'Oh, oh, it's over.' Well, no, it's not over. We just have to make sure that we move methodically and that the American people understand exactly what's in the bill."

In answer to a question from a high school student as to "how you would grade yourself on your transparent government?" Obama said his administration has been praised as "the most transparent ever" by outside watchdogs. Hours of congressional hearings and his own town hall meetings last summer were televised, he noted.

"So when people say, well, the negotiations weren't on C-SPAN, what they're frustrated about — and I take responsibility for this — is that after Congress had finally gone through its processes, the House had voted on a bill, the Senate had voted on a bill, it is true that I then met with the leaders and chairmen of the House and the Senate to see what differences needed to be resolved in order to get a final package done," he said. "And that wasn't on C-SPAN."

Brian Lamb, chairman and CEO of C-SPAN, has written Obama asking that important meetings on health care be open to media coverage.

Obama said that when Republicans present him with proposals for a health care overhaul, "and we put forward what we want to do on health care, I very much want that on C-SPAN, and I want everybody here to watch . . . because I think it will be a good educational process for people to weigh the arguments about the relative merits of the bill instead of listening to millions of dollars' worth of insurance industry ads that have been put out there or whatever pundit on the left or the right is saying about these different issues."

He insisted that his administration may not have "gotten it perfect" on transparency but is doing better than any in recent history. "And we'll keep on trying to improve on it," he said.