By Emily Ethridge, CQ Staff

January 6, 2011 -- Republicans' effort to repeal the health care overhaul would increase the deficit by an estimated $230 billion over 10 years, according to a nonpartisan budget report, fueling Democrats' accusations that the GOP is violating its promise to cut the deficit.

The Congressional Budget Office (CBO) called the report a "preliminary analysis" of the effects of a GOP bill (HR 2) to repeal the law (PL 111-148, PL 111-152) which Republicans plan to vote on next week.

The repeal's impact on the deficit is larger than originally estimated because CBO's report covers 2012-2021. For the 2012-2019 period, CBO found that repealing the law would "probably increase" budget deficits by approximately $145 billion. The analysis also found that repealing the law would leave about 32 million people without health insurance.

In a letter to House Speaker John A. Boehner of Ohio, CBO Director Douglas Elmendorf wrote, "CBO has seen no evidence to date" that implementation of the health care law "will yield overall budgetary effects that differ significantly" from those projected earlier.

Boehner brushed off the CBO analysis when asked about it at a news conference Thursday. "Well, I do not believe that repealing the job-killing health care law will increase the deficit. CBO is entitled to their opinion, but they're locked within constraints of the 1974 Budget Act."

Boehner's office released a competing analysis by House Budget Committee Republicans that said, "The health care law will cost the nation $2.6 trillion when fully implemented, and add $701 billion to the deficit in its first ten years."

The CBO report came as Republicans on the House Rules Committee attempted to report out a rule allowing no amendments to their repeal bill. The committee's hearing was often raucous, as Democrats assailed the GOP effort on both policy and fiscal grounds.

Republicans gave themselves an exemption in their new budget rules that would permit them to repeal the overhaul without replacing its estimated savings—a move Democrats blast as hypocritical. The rules require nearly all bills that affect spending to be paid for except for the one repealing the overhaul.

"The Congressional Budget Office confirms that just one day after taking over the House, the Republican rhetoric on fiscal discipline doesn't meet the reality test, as their plans to take away valued health benefits from the American people will balloon our deficit by $230 billion over 10 years," said House Ways and Means Committee ranking Democrat Sander M. Levin of Michigan.

Democrats also pounced on CBO findings that repealing the law would increase the number of uninsured non-elderly Americans by 32 million.

"Today, CBO confirmed the devastating effect their plan would have on the health of American families. If Republicans are successful, millions of Americans become uninsured, millions pay more than they should for their health benefits, and our deficit balloons. Republicans support an Insurance Company Bill of Rights—not the Patients' Bill of Rights," said Rep. Pete Stark, D-Calif.

If the overhaul were repealed, health insurance premiums for those who buy coverage in the individual market would be "somewhat lower," mostly because the average policy would cover a smaller share of enrollees' costs for health care and a slightly narrower range of benefits. But consumers might actually end up paying more because they would not be receiving subsidies through the state exchanges which the law creates, CBO said.

CBO also found that premiums for those who get insurance coverage through large employers would be slightly higher under the GOP bill, but it is unclear how premiums for those receiving coverage through small-business employers would be affected.

"The GOP's budget-busting repeal bill will kill jobs, raise costs and deny critical care to Americans who need it," said George Miller, D-Calif., ranking member of the House Education and Labor Committee.

CBO noted that it is working with the Joint Committee on Taxation to complete a more detailed estimate of the effects of repealing the overhaul.

By Jane Norman, CQ HealthBeat Associate Editor

January 7, 2011 -- Democrats turned the contention that the health care law is a "job killer" right back at Republicans, arguing that the GOP's proposed repeal would increase the deficit and dim a slowly brightening economic picture shown in new unemployment numbers.

Meanwhile, Republicans and their allies contended that a preliminary Congressional Budget Office (CBO) analysis of repeal that has undercut their argument that it would save money is built on a shaky foundation. And, they say, employers are afraid to add jobs while health care cost increases loom.

The loud struggle for the high ground in public opinion revolves around a CBO analysis that its own authors describe as preliminary, as well as a drive for repeal likely destined to stall on the Senate steps. But it shows how sensitive members in both parties will be to any insinuation that the health care law—still three years away from full implementation—could harm a fragile economy pulling out of recession.

The December jobs report showed that unemployment had dropped to 9.4 percent, the lowest level in 19 months. And 103,000 jobs were added to the U.S. economy, though that job growth didn't meet economists' expectations.

The letter from the CBO released Thursday estimated that repeal of the overhaul (PL 11-148, PL 111-152) would increase the deficit by $230 billion from 2012 to 2021. About 54 million people would be without health insurance in 2019 were the law to be repealed, CBO said.

The analysis was met with a dueling report from House Budget Committee Republicans led by Chairman Paul D. Ryan who contended that the law would cost $2.6 trillion when fully implemented and add $701 billion to the deficit in its first decade.

CBO Director Douglas Elmendorf issued cautions and a promise of more complete data to congressional leaders in his letter taking a first look at the impact of repeal on the nation's budget. "CBO has not yet developed a detailed estimate of the budgetary impact of repealing [the health care law], though it is working with the staff of the Joint Committee on Taxation to complete such an estimate in the near future," he said.

Meanwhile, Democrats in the White House and in the congressional ranks said repeal would hit the U.S. economy hard at a time when there is some improvement.

Stephanie Cutter, White House special projects director, said in a blog post that more than one million private sector jobs have been created since President Obama signed the law in March and the unemployment rate has dropped from 9.7 percent in March 2010.

"So, at a time when our economy is getting stronger, repealing the law would hamper that important economic progress by increasing costs on individuals and businesses, weakening the benefits and protections that Americans with private insurance are already enjoying and adding more than a trillion dollars to our deficits," Cutter wrote.

Cabinet secretaries chimed in. Agriculture Secretary Tom Vilsack said in a conference call with reporters Friday that talk of repeal will create a climate of uncertainty for business owners who might otherwise be thinking about expansion. Small businesses and farmers would lose the tax credit they gained in the law that offsets health insurance costs, he said.

In Congress, Sen. John D. Rockefeller IV, D-W.Va., slammed repeal as a "stunt" that would blow up the budget and increase taxes. Two House Democratic backers of the law, Henry A. Waxman of California and Frank Pallone Jr. of New Jersey, said they'll release statistics on Monday showing the impact of repeal on every congressional district and major metro area.

But Republican Fred Upton, chairman of the House Energy and Commerce Committee, countered that the jobs report showed that the unemployment rate has been above 9 percent for 20 months straight and thus much work clearly remains to be done. "Our new majority is committed to turning the economy around and putting folks back to work," he said, pointing to repeal of the health care law as the first step.

House Speaker John A. Boehner continued to cast doubt on the CBO numbers. "Only in Washington can you stop payment on a $1 trillion check and claim it will increase your debt," said Boehner, R-Ohio.

Grace-Marie Turner, a health analyst with the Galen Institute who's a supporter of Republican leaders, slammed the CBO letter as "based upon gimmicks, double-counting, and phony assumptions that were deliberately written into the law to hide its true cost." She said that employers spooked by the law are trying to either shed employees or figure out how to escape the mandates and it's "ridiculous" to claim the law has contributed to job growth.

The debate will likely only grow over the weekend as members of Congress descend on the Sunday talk shows in advance of a critical House vote on health care. In a 236-181 vote, the House on Friday approved the rule (H Res 26) for the repeal bill (HR 2) and a resolution (H Res 9) to instruct certain committees to report replacement health care legislation. Votes are scheduled for Jan. 12.

By John Reichard, CQ HealthBeat Editor

January 5, 2011 -- Citing efficiency gains, the Department of Health and Human Services (HHS) is moving a key office charged with implementing the health care overhaul to the Centers for Medicare and Medicaid Services (CMS), a department source said.

HHS Secretary Kathleen Sebelius also is putting her department's Administration on Aging in charge of implementing provisions of the law popularly known as the CLASS Act (Community Living Assistance Services and Support Act). The provisions are intended to help people self-fund long-term care services when they become incapacitated, but critics say they will lead to enormous government expense down the road.

The reorganization places the HHS Office of Consumer Information and Insurance Oversight (OCIIO) under the control of CMS Principal Deputy Administrator Marilyn Tavenner. OCIIO's current director, Jay Angoff, will serve as an adviser in the HHS Office of the Secretary, advising Sebelius on policy issues pertaining to provisions handled by OCIIO.

The changes come amid growing doubts about how the Obama administration can fund implementation of the law in a new session of Congress given the many new Republican members who are hostile to the law. But the HHS source said the staff changes do not stem from the more difficult funding environment and said Sebelius, who served as insurance commissioner and later as governor in Kansas, has always sought ways to manage more efficiently.

OCIIO is in charge of everything from giving consumers detailed information to help them compare health plans to overseeing the creation of state insurance exchanges, to monitoring rate hikes by insurers, and has been run by the Office of the Secretary of Health and Human Services. Under CMS it will become the Center of Consumer Information and Insurance Oversight.

The HHS source said the move will economize by saving on health information technology costs, for example. "There are some important natural synergies between the functions of OCIIO and CMS, such as IT infrastructure, regulatory support, federal and state legislation, contracting, human resources and communications with partners and consumers, to name a few," the source said.

On its face, the change on its face would appear to ease coordination with Medicaid officials on the creation of insurance exchanges, which will have to steer customers efficiently into Medicaid or into a program of private plan subsidies, depending on their income levels. But oversight of the private insurance industry is a new function for CMS.

Republicans are likely to frame the change as a further weakening of the Medicare program coming on top of the $500 billion in Medicare cuts planned over a decade's time under the overhaul.

"First they took more than one-half trillion dollars out of the Medicare program to fund ObamaCare," a GOP congressional aide said. "Now they're raiding the staff tasked with running Medicare. This is just another example of resources being diverted from seniors' health care to be used to advance the Democrats' new government-run health care entitlement."

Angoff has been a high-profile executive in going after insurers for big rate hikes. Presumably his changed role won't preclude him from continuing that effort.

Dan Mendelson, a top health budget official in the Clinton administration, said in an e-mail that the Obama administration is hunkering down for budgetary warfare over implementation of the law.

"It's easier to target and de-fund a small agency like OCIIO," said Mendelson, now the president of the consulting firm Avalere Health. "By contrast, CMS has many core functions that are vital to the functioning of Medicare, so is guaranteed it will be getting some funding. So moving OCIIO into CMS should protect it somewhat from the zeal of the budget axe. Also it is easier for HHS to transfer funds within an operating division than across," he said.

Tavenner, CMS Administrator Donald M. Berwick and Angoff notified OCIIO staff of the changes at a noon meeting. CMS staffers were briefed on the changes later in the day. OCIIO has won much praise from the press and consumer organizations for its website, which provides comparative health information on health plans, and its official in charge of insurance exchanges has been praised by the insurance industry as a fair-minded regulator.

But the exchange creation effort faces major challenges, with major policy decisions essential to the creation of successful exchanges yet to be resolved. At least some states say they need much more guidance from HHS on how to get exchanges operating.

There may be logistical issues as well. OCIIO is now housed in Bethesda, while CMS is located in Washington, D.C. and Baltimore. Morale has been on the rise at OCIIO as it has become more fully staffed and it has made strides in implementation. How the move to CMS control and the move of Angoff to the Office of the Secretary will affect that morale is unclear. Tavenner is regarded as a strong administrator.

Sebelius notified House Appropriations Chairman Harold Rogers, R-Ky., of the changes in letters sent. His office declined to comment.

"We believe an operating division such as CMS has the best resources, in terms of expertise and administrative processes, to achieve successful implementation," Sebelius wrote.

Administration of the CLASS Act is just getting under way and is expected to involve "tens" of staffers while OCIIO's workforce is more in the "hundreds," the HHS source said.

"The CLASS office will establish the national voluntary insurance program, set premiums, set rules for enrollment and eligibility systems, and specify and design the benefit," Sebelius said in the letter to Rogers. "It will also establish systems for advice and assistance, and support a protection and advocacy network to serve beneficiaries of the program."

Kathy Greenlee, Assistant Secretary for Aging, is providing interim leadership to the staff working on CLASS.

By John Reichard, CQ HealthBeat Editor

January 6, 2011 -- To critics, it's a waste of taxpayer money, a "slush fund" politicians can tap into to throw precious taxpayer dollars at ill-defined local projects. To public health officials, however, the $15 billion the overhaul law allots over 10 years to ward off disease is an essential investment in maintaining basic public health functions and in improving the physical and mental well-being of an increasingly sickly population.

Public health lobbyists are determined to protect the fund—and it looks like they'll have their work cut out for them. Senate Republicans already have attempted to zero the fund out and use the savings to offset the legislative costs of repealing the controversial "1099" provisions of the overhaul law (PL 111-148, PL 111-152) that small businesses say will crush them with paperwork.

That effort failed, but there are likely to be more attempts in the new Congress. Lawmakers are under heavy pressure not only to reduce deficit spending, but also to offset the costs of meeting other chronic funding needs, such as averting Medicare payment cuts next year to physicians.

The prevention initiative has a big plus in its favor—the health law requires that it be funded, freeing it from annual appropriations battles. But advocates acknowledge they also have a big education job on their hands to counter criticism that the fund is a waste of taxpayer money.

Critics like Oklahoma's Republican Sen. Tom Coburn helped stop Senate passage in December of legislation to fully fund the federal government in fiscal 2011 by, among other things, calling the prevention program a "slush fund" that wastes taxpayer money for paying for such things as building jungle gyms.

Inaction on the spending bill won't derail the fund, however. If Congress doesn't pass legislation specifying how money in the fund should be spent, the executive branch can make those funding decisions on its own. Public health activists hope that the Obama administration will take steps soon to get the fund's 2011 allotment of $750 million flowing.

If there is no new legislation addressing the uses of the fund, chances are the way the administration decides to spend that money will be based on the provisions in the failed spending bill that Coburn helped block.

The administration drew criticism from Capitol Hill for not consulting lawmakers sufficiently in deciding how to spend the fund's 2010 allotment of $500 million. Half of that money went to help train more primary care clinicians to address an expected shortage of such caregivers as more uninsured Americans gain coverage under the health law.

Jeffrey Levi, executive director of Trust for America's Health, said that in his view it would be prudent both on political and policy grounds for the administration to move forward in line with the provisions of the spending bill. He says Sen. Tom Harkin, D-Iowa, and David Obey, the House Democrat from Wisconsin who retired at the end of the last session, led the effort to draft that measure.

What the Fund Does

Established under section 4002 of the overhaul law, the "Prevention and Public Health Fund" is funded in perpetuity, according to a Congressional Research Service analysis. The amounts ramp up over time. Next year, the funding level rises to $1 billion, in fiscal 2012 to $1.25 billion, in fiscal 2013 to $1.5 billion, and in fiscal 2012 to $2 billion. It stays at that annual amount thereafter.

The spending bill would have allocated $530 million of the $750 million for fiscal 2011 to community-based programs to prevent chronic disease.

Of the $530 million, $145 million would go for "community transformation grants," in which business, medical groups, community organizations, and local government officials join together to develop programs targeting particular problems in their local areas. A total of $140 million would go for state grants to prevent chronic disease. Fifty million would go the Office of Smoking and Health at the Centers for Disease Control and Prevention. The Substance Abuse and Mental Health Services Administration (SAMSHA) would receive $35 million to combine primary care and mental health care services to more fully meet the needs of the mentally ill. And $25 million would pay for approaches to improving the health of communities that focus on specific racial and ethnic groups.

Also included in the $530 million would be $100 million for immunizing the children of low-income parents and $35 million for SAMSHA screening and suicide prevention programs.

In addition to the $530 million for community-based prevention programs, $85 million would be used to address an under supply of public health workers and public health labs to track diseases. A total of $83 million would go for other disease surveillance programs. The remaining $52 million would fund activities such as research into better preventive care and a National Prevention, Health Promotion, and Public Health Council.

Public health lobbyists say that local and state health departments are chronically underfunded, understaffed, and under equipped. The fund is a necessity to build up a dangerously weakened system, they say. And it seems to be a little bit of a sore point that the Obama administration directed half of last year's allotment—$253 million—to build up the cadre of primary care professionals.

"There's certainly a substantial need for the public health workforce—different from the primary care workforce—the public workforce itself," said Georges C. Benjamin, executive director of the American Public Health Association. "We need to begin doing that now, because obviously it's going to take a while to build."

Benjamin said there aren't enough "sanitarians," who perform functions such as assuring safe drinking water supplies for houses, closing beaches when bodies of water aren't safe for swimming and inspecting milk on dairy farms. And there's a need for statisticians, lab workers, and epidemiologists who track disease, as well as for computer systems that link to the offices of doctors that health departments rely on to report emerging illnesses. Many workers in the public health field are nearing retirement age, he added.

"What's happened over the years is we really haven't had sustained, reliable funding," he said. "Just when you think you've got your hands around the problem, the funding gets pulled."

Rather than taking a comprehensive approach to prepare for a variety of diseases, budgeting has taken a "silo" approach in which dollars are allotted for individual diseases that emerge as threats and cause public alarm. "We did smallpox, and then we did pandemic flu, and when West Nile Virus came out, we did West Nile Virus," Benjamin said. And then a disease comes along like tuberculosis "where funding for that is totally inadequate at a national level."

What the fund is supposed to do is ramp up to "build a stable funding stream for the national public health infrastructure to begin addressing some of these really critical" issues.

But lack of specificity in the language of the overhaul law about the uses of the fund is a challenge for the public health community and leaves it fending off criticisms that the money won't be spent in a disciplined way.

"I don't think jungle gyms are a bad thing," Benjamin said. "Let me tell you, in communities where kids do well, and are physically active, and there are lots of jungle gyms, they don't get in trouble, they stay off the streets."

Benjamin added that the "transformation" grants that would fund things like jungle gyms are meant to be awarded after a multidisciplinary process in which businesses, medical providers, local officials, churches and others join together to develop evidence-based strategies to meet the particular needs of their communities. The grants also can be part of a strategy to renew business growth in a community, he said.

"It's a big pot of money, and legislators often don't like a big pot of undesignated money," Benjamin observed. But during the development of the health law there was much more detail in the House bill about how the money would be spent. "We all thought that had they gone to reconciliation [of the House and Senate bill], you would have had much more detail" about uses of the fund.

But "it's not like people don't know what the needs are. We know what the needs are." Just ask state and local health departments, he urged.

But lawmakers will be buffeted by other concerns. They recently passed legislation that would forestall Medicare payment cuts to doctors through the end of 2011. But the hunt will be on for pay-fors to prevent those cuts in 2012.
Levi said though that doctors themselves do not want to kill off the fund to cover the costs of another payment patch. At a Dec. 13 meeting of administration officials and various health groups about ways to pay for preventing cuts to doctors, an American Medical Association lobbyist made it very clear that the physicians' lobby wanted no part of erasing the fund, Levi said.

That kind of coalition building is part of the strategy for keeping the fund going in the face of attempts by critics to cancel it. "Our hope is that they recognize that there is enough support for the fund that they won't try to use it as a pay for," Levi said.

"My concern is that they will go after it," Benjamin said. "I am pretty confident that we will be able to maintain it. But it will take some effort and we will have to continue to explain to members of Congress as well as to the public how those dollars benefit everyone."

By Jane Norman, CQ HealthBeat Associate Editor

January 6, 2011 -- Senate Democrats are joining in an all-hands-on-deck effort to defend their embattled health care law with a series of hearings on the measure's benefits for the Health, Education, Labor and Pensions committee.

The House Republicans' drive for repeal won't stop with the floor vote. They're expected to follow that up with a series of attacks on specific sections of the law in multiple oversight hearings in committees.

It's not clear yet what bills the GOP-controlled House might send to the Senate where they would likely die anyway. But Democrats fear public opinion about the law could suffer unless supporters inside and outside of Congress play offense as well.

Families USA, for example, an advocacy group that's been so supportive of the law it's filed briefs in court challenges, will feature a lineup of heavy hitters at its annual Washington conference later this month headlined by President Obama.

Senate Democrats also launched their own hearings to counter the heat on the House side. HELP Committee Chairman Tom Harkin, D-Iowa, said he'll convene the sessions during the next several months to highlight how the law benefits Americans. They'll probably include testimony from people who live outside the Beltway. In addition, administration officials will be asked to discuss implementation and experts will testify.

"Chairman Harkin wants to fight fiction with facts," said an aide, speaking on background.

The first hearing is set for Jan. 27 and will focus on the law's consumer protections, which include an end to insurance denials based on preexisting conditions and an end to lifetime and annual limits for insurance benefits.

Future topics are expected to include the new rules on medical payouts, premium rate review, benefits for small business owners, deficit reduction, quality of care, prevention and expanded access to coverage.

While the law's requirement that all Americans have insurance isn't popular, the consumer protections and the extension of family health insurance coverage to young adults under the age of 26 have found more favor with the public.

Meanwhile, Finance Committee Chairman Max Baucus, D-Mont., issued a statement saying "we simply can't return to the days when insurance companies could hike rates without justification and had free passes to deny people the care covered under their policies."

By Jane Norman, CQ HealthBeat Associate Editor

January 5, 2011 -- A Medicare Payment Advisory Commission (MedPAC) study found that regional variation in Medicare use is particularly high for services associated with post-acute care—including care at home, in skilled nursing facilities, and in long-term-care hospitals.

And, once again, Miami and McAllen, Texas, top the list of high Medicare users.

Big variations in overall Medicare spending across regions of the country intrigued lawmakers as they shaped the health care law (PL 111-148, PL 111-152) because there didn't seem to be much evidence of a relationship with quality of care or outcomes for patients.

The issue made its way into a speech by President Obama to the American Medical Association (AMA) and provoked widespread discussion when surgeon Atul Gawande wrote an article for New Yorker magazine examining why health care costs in McAllen are so much higher than in the rest of the country.

But the question is how to measure the differences in a meaningful way, and policymakers are continuing on that front. The new MedPAC study, which covers data from 2006 through 2008, drilled down even further than the agency has in the past into not just regional variation in overall spending but in the levels of use of specific services covered by Medicare.

To pin down the variations in use, the study adjusted Medicare spending to account for geographic differences in: wages; special payments to certain hospitals and physicians; beneficiaries' health status; and demographics.

That's because Medicare spends more in some geographic areas. Medicare accounts, for example, for the differences in nurse's wages between New York and North Dakota. Without removing those factors, a study could "wrongly conclude that an area had high use when in fact it had high prices, a very ill population or both," the study said.

MedPAC didn't recommend what policies Congress should pursue to try to even out these variations in use. "However, we do note that at the extremes, there is nearly a twofold difference between the metropolitan statistical area (MSA) with the greatest service use (the Miami, Fla., MSA) and the MSA with the least service use (the LaCrosse, Wis., MSA)," the report said.

"Extremely high levels of service use in certain areas may be driven by overuse and, possibly, fraud and abuse," it continued. "Additional policy measures may have to be taken in those areas beyond those used to address variation in general."

Miami has been cited in the past by federal officials as a particularly ripe area for Medicare fraud and abuse. In October, for example, a Department of Justice strike force alleged some $200 million in fraud in a case filed there.

The study also found that geographic areas that are high-use in one sector such as ambulatory care, inpatient care or post-acute care tend to be high-use overall. And areas with high service use among Medicare patients who died tend to have high service use for patients who survived as well. "In short, the pattern of high use often extends across different services and different groups of beneficiaries," the study said.

The lowest-use areas exhibit very low use of post-acute care services, about half the national average, the study said. Service use in LaCrosse is moderately low for inpatient and ambulatory services and very low for post-acute care, for example. Hawaii is similar.

On the other hand, the McAllen MSA has very high service use in the post-acute care sector, 3.2 times the national average, the study said. Home health use in McAllen is almost seven times the national average. Gawande's article pointed to an explosion in the use of home health services in McAllen, the study noted. Very high use of durable medical equipment and home health care is also apparent in four counties in south Florida.

"Variation at the level found in Miami-Dade cannot be explained by simple differences in practice patterns, price or health status," the study said. "Rather, it is likely evidence of fraud, as is suggested by the many Office of Inspector General reports on the topic."

The study also looked at regional variations in Medicare enrollees' use of prescription drugs covered under Part D, based on 2007 and 2008 data. It found that regional differences in drug use is less than the variation in drug spending, though some differences remain.

MedPAC released a somewhat similar study in December 2009. The new study was different because it looked at use of specific services and also prescription drug use. Data used in the study was also updated and refined, the authors said.