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April 18, 2011

Washington Health Policy Week in Review Archive 12dc5688-37e6-47c2-a107-ea831e2ea1b8

Newsletter Article


Obama Rejects Medicare Voucher and Turns to a Beefed-up IPAB Instead

By Jane Norman, CQ HealthBeat Associate Editor

April 13, 2011 -- President Obama would give additional power to an independent advisory board—one already highly unpopular with Republicans—to wring additional savings out of Medicare, according to a fact sheet the White House released in connection with the president's speech outlining his deficit reduction proposal.

A senior administration official, speaking on background in a call with reporters, also said the president does not support an increase in the eligibility age for Medicare. Obama "does not believe that part of strengthening and reforming Medicare requires raising the retirement age or ending the basic fee-for-service agreement," the official said.

In his remarks at George Washington University, Obama touched on what's essentially the unfinished work of the health care law—the need to curb the deficit by driving government health care spending even lower than what was enacted in the overhaul. When fully implemented, the law over time will expand access to millions of uninsured Americans and save $1 trillion. But the insurance industry and other critics have hammered away at the measure for not doing more to control costs down the line.

The president drew a sharp line between his approach to Medicare and Medicaid and that of House Republicans. "Their plan lowers the government's health care bills by asking seniors and poor families to pay them instead," Obama said. "Our approach lowers the government's health care bills by reducing the cost of health care itself."

Overall, the deficit reduction proposal calls for creation of a "debt failsafe" trigger that would implement across-the-board spending cuts. And consistent with enforcement mechanisms that prior presidents have put in place, Obama's trigger would not apply to "Social Security, low-income programs or benefits to Medicare enrollees," the fact sheet says. Triggers used by past administrations have affected provider payments, however.

In addition, the administration advocates replacing the current federal matching formula for making Medicaid payments to states. The president instead is calling for "a single matching rate for all program spending that rewards states for efficiency" and automatically increases if state costs rise in a recession.

A senior administration official said that the rate would vary by state, but cautioned that the idea is part of a framework for discussion rather than a complete legislative proposal. The question of whether maintenance-of-effort requirements would continue is not addressed.

Nonetheless, this idea contrasts with Republican proposals that would block grant Medicaid payments to states, which GOP lawmakers say would free up the states to find solutions that work best for them. The administration says the result instead would be that states would receive a third less in Medicaid funds by 2021 and that 15 million people could be left without health care coverage, including seniors in nursing homes.

Obama says no to Medicare vouchers

In his approach, the president rejects a voucher system for Medicare proposed by House Budget Committee Chairman Paul D. Ryan, R-Wis. Administration aides said the Ryan plan would harm seniors and force baby boomers in their 40s and 50s to pay up to $6,000 a year more for Medicare, after weathering the current economic downturn.

Administration officials say they want to strengthen Medicare and Medicaid over the long term even as they set a goal of achieving $4 trillion in overall deficit reduction in 12 years or less.
A chunk of that money would come from two main entitlement programs, Medicare and Medicaid, whose health care costs are main drivers of long-term deficits.

In addition to the savings projected because of enactment of the health care law (PL 111-148, PL 111-152), Obama wants to save $340 billion more by 2021 and $480 billion by 2023, including proposals already included in his budget proposal. He said he aims for more than $1 trillion in savings in the subsequent decade from Medicare and Medicaid.

Obama would strengthen the 15-member Independent Payment Advisory Board (IPAB), which was created in the health overhaul to help rein in Medicare cost growth. The board is charged with analyzing the causes of Medicare spending increases. When Medicare growth per beneficiary exceeds the growth in the GDP per capita plus one percent, IPAB is supposed to recommend to Congress ways to reduce growth and meet that target.

The IPAB's recommendations become law unless the House and the Senate each adopt, by a three-fifths majority, a resolution to block them. If the president vetoes the resolution, two-thirds of each chamber would have to vote to override the veto in order to block the recommendations.

Obama would set a tougher new target for Medicare growth per beneficiary of GDP per capita plus 0.5 percent, and give IPAB "additional tools" to improve the quality of care while at the same time reducing costs.

Gail Wilensky, a former administrator of the predecessor agency to CMS, said the 0.5 percent goal was "quite aggressive - I'm a little surprised it's quite that aggressive."

The board would be allowed, for example, to promote value-based benefit designs, which are explicit plan incentives, so that more seniors would take advantage of prevention services.

"It's an example of how we can strengthen and reform Medicare without undermining it as we know it today," said the senior administration official.

The IPAB also would be given "additional enforcement mechanisms" such as "an automatic sequester as a backstop," the fact sheet says, thus apparently requiring payment reductions.

"The newest proposals are focused on reducing pharmaceutical spending through good old fashioned price pressure," said Dan Mendelson, CEO of Avalere Health and a former Clinton administration official. He added that it was "hard to see where the IPAB savings would actually come from," but the two largest possibilities would be hospital and physician payments. IPAB does have some short-term carveouts for providers, such as hospitals who are exempted from cuts or other impacts; the president's fiscal commission recommended those carveouts be eliminated.

A senior official said the idea is there would be "some expansion" of IPAB and the sequestration power would help if the IPAB was stalled or Congress didn't act. "It does give it greater enforcement powers 2018 and beyond," the official said.


Even in its current form, the IPAB has been a target for Republicans, however. "The IPAB is basically the price control mechanism that they put in Medicare which, basically, I think, ends up rationing care," Ryan, who wants to repeal the advisory body, recently told the American Enterprise Institute.

That desire may also cross party lines because many lawmakers are reluctant to give up their own control over Medicare. A House bill to repeal IPAB (HR 452) sponsored by Rep. Phil Roe, R-Tenn., has picked up 68 cosponsors, including three Democrats. A Senate version (S 668) sponsored by Sen. John Cornyn, R-Texas, has 14 cosponsors, all Republicans.

Cornyn and Sen. Orrin G. Hatch, R-Utah, blasted the IPAB idea in a joint statement and said it's essentially a panel of unelected bureaucrats making key health care decisions for seniors. "So much for the president's claim that the health law was entitlement reform," they said. "Today, the president has once again punted the tough decisions to tackling soaring health care costs."

Karen Davis, president of the Commonwealth Fund, however, called the IPAB an "important strategy" for saving money in Medicare depending on how it's structured.

Families USA, a group highly supportive of the health care law, praised the "balanced framework" put forth by Obama. "The president's proposal is designed to moderate health care costs, while the House Republican proposal does nothing to moderate costs – but rather it shifts costs onto the shoulders of those least able to bear them," said Ron Pollack, executive director.

Finance Committee Chairman Max Baucus, D-Mont., said that Obama's plan is in "stark contrast" to the Ryan plan. "Over the course of the coming weeks and months, we will carefully build upon our country's shared priorities and make the difficult decisions we need to get this done," said Baucus. "We should begin with the assumption there will be at least some steps we have to take together that would not be the preference of each of us alone."

What's missing from the president's plan on Medicare, said Wilensky, is some element of responsibility for the Medicare enrollee to participate more in reducing costs. And she said she's never cared much for the IPAB because the board, once appointed, "is not accountable to anybody."

Republican Sen. Michael B. Enzi, R-Wyo., said he wanted more on how to change Medicaid. "Rather than vague promises about more efficiency and accountability, the president should have committed to ending burdensome regulatory requirements and providing states with the flexibility they need to reduce Medicaid spending," said Enzi.

The president also backs changes in Medicaid to produce more efficient and higher quality care for the so-called dual eligibles, people who qualify for both Medicare and Medicaid and account for 40 percent of Medicaid spending.

On prescription drug spending, Obama wants to leverage Medicare purchasing power in line with recommendations from his fiscal commission, by speeding up the availability of generic biologics and banning brand-name drugmakers from entering into "pay for delay" agreements with generic drugmakers. A plan for Medicaid management of high prescribers and users of prescription drugs is mentioned.

Also, the administration called for clamping down on states' use of provider taxes to lower spending without extending additional Medicaid services, recovery of erroneous payments from Medicare Advantage and an establishment of upper limits on Medicaid payments for durable medical equipment.

But the president said he will not change the essential nature of either entitlement program. "I will preserve these health care programs as a promise we make to each other in this society," he said.

"I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves. We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations."

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Obama Draws Contrast with GOP in Deficit Reduction Plan

By Paul M. Krawzak, CQ Staff

April 13, 2011 -- President Obama proposed what he called a "balanced" fiscal overhaul that would shave $4 trillion from deficits over a dozen years through a combination of spending cuts and increased revenues generated by a tax code overhaul.

The plan, which he presented at George Washington University, recommends reductions in the cost of entitlement programs but offers nothing like the restructuring of Medicare and Medicaid proposed by House Republicans, based on advance information provided by the White House.

Obama's approach includes a call for a "debt failsafe trigger," an enforcement mechanism that would require across-the-board spending cuts if the projected national debt does not begin to decline as a percentage of gross domestic product beginning in 2014.

On taxes, Obama reiterated his call to allow George W. Bush-era tax cuts for couples who earn more than $250,000 a year to expire at the end of 2012, in an effort to bring in more revenue.

In advance of his speech, Obama met with congressional leaders to preview his blueprint. If early reaction from Republicans is any indication, it could be hard for the two parties to strike a deficit-reduction deal, particularly if Democrats insist on the tax changes envisioned by Obama and Republicans persist in trying to restructure Medicare and Medicaid.

"I think the president heard us loud and clear. If we're going to resolve our differences and do something meaningful, raising taxes will not be part of it," House Speaker John A. Boehner, R-Ohio, said after the morning meeting with Obama. "We don't believe that raising taxes is the answer here," House Majority Leader Eric Cantor, R-Va., said.

Republicans have consistently argued that Congress needs to cut spending to reduce the nation's reliance on borrowed money to cover the government's costs.

"A serious and credible path forward to reduce spending is the only thing in my judgment that will get the votes in the Senate to raise the debt limit," Senate Minority Leader Mitch McConnell, R-Ky., said.

Obama, in his speech, said the GOP "vision is less about reducing the deficit than it is about changing the basic social compact in America. ... There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There's nothing courageous about asking for sacrifice from those who can least afford it and don't have any clout on Capitol Hill. And this is not a vision of the America I know."

The president insisted, "We don't have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country. To meet our fiscal challenge, we will need to make reforms. We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I'm president, we won't."

Both parties are jockeying for position as Congress faces a very difficult vote to raise the nation's debt limit sometime this spring or early summer. Failure to raise the ceiling could cause widespread disruptions in financial markets.

McConnell declined to offer specific demands for raising the debt ceiling. "We are not that far along in the process," he said.

Details of Obama's Plan

Obama tracked closely with the December recommendations of his bipartisan fiscal commission in proposing a comprehensive overhaul of the tax code, including eliminating loopholes, lowering rates and using projected increases in revenue to reduce the deficit.

Republican lawmakers have made clear they will strenuously oppose Obama's tax proposal because it would increase revenue.

In his speech, Obama proposed something close to the White House summit over deficit reduction that Senate Budget Chairman Kent Conrad, D-N.D., has been pushing for since late last year.

The president asked Republican and Democratic leaders from both chambers to tap a total of 16 lawmakers to join deficit reduction negotiations that would be led by Vice President Joseph R. Biden Jr. starting in early May.

In a further nod to the fiscal commission he appointed last year, but whose recommendations he has never embraced, Obama said his plan would seek to reduce the deficit through a 2-1 ratio of spending cuts to tax increases that he said is consistent with the commission's proposal. When interest payments are factored in, the ratio would be 3-1 spending cuts to tax increases, a senior administration official said.

While the plan adopts some of the ideas of the fiscal commission, it would require two years longer to reduce the deficit by $4 trillion. The commission proposed doing so over a decade through a combination of spending cuts, tax simplification and changes to entitlement programs including raising the Social Security retirement age.


Obama rejected House GOP proposals authored by House Budget Chairman Paul D. Ryan, R-Wis., to turn Medicaid into a block grant program and convert Medicare into a voucher-like system, where seniors would get a set sum from the government to purchase private health insurance plans. He also rejected raising the retirement age for Medicare eligibility.

"The president's framework rejects plans that would end Medicare as we know it or transform Medicaid into a dramatically under-funded block grant, putting at serious risk not only seniors but also the most vulnerable children and people with disabilities," the White House said.

Instead, Obama proposed cutting the cost of government-provided health care by $340 billion over a decade through strengthening the role of a yet-to-be-created Independent Payment Advisory Board, setting a lower target for Medicare growth, simplifying the federal contribution to Medicaid and other measures.

The White House slammed the entitlement overhaul proposals in the House fiscal 2012 budget resolution (H Con Res 34) that will be voted on by the House this week.

"The president's framework offers a stark contrast with the House Republican plan that would increase seniors' health costs by $6,400 annually starting in 2022, raise health insurance premiums for middle-class Americans and small businesses, cut Federal Medicaid spending by one-third by the end of the decade, and increase the number of uninsured by 50 million," the White House said.

The president continued to insist that Social Security is not a driver of the nation's deficits, but said he supports bipartisan efforts to strengthen the program for the long haul.

"These efforts should be guided by several principles, including strengthening the program and not privatizing it, improving retirement security for the vulnerable while protecting people with disabilities and current beneficiaries, and not slashing benefits for future generations," the White House said.

The White House said the plan targets other mandatory spending, including agricultural subsidies, with a goal of saving $360 billion by 2023.

The plan would seek to pare $400 billion off projected discretionary security spending through 2023, while saving $770 billion in non-security spending during the same period.

In a news conference before the speech, Boehner described Obama's emerging plan for long-term deficit reduction as a delayed response to Ryan's fiscal 2012 blueprint.

"Washington has a spending problem not a revenue problem," Boehner said.

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Patient Safety Program Could Save Lives, Billions, HHS Says

By John Reichard, CQ HealthBeat Editor

April 12, 2011 -- A long line of health industry heavyweights flanked top Health and Human Services officials at the National Press Club this past week to launch what Centers for Medicare and Medicaid Services chief Donald M. Berwick has called the most ambitious national effort ever to reduce medical errors.

Berwick will need all the clout he can muster; he and other HHS officials are predicting a big payoff in lives and money saved from the initiative. Because the program is voluntary, making good on the projections is initially going to require a disciplined effort by hospital and other health care CEOs to devote time and resources to the project—in addition to their efforts to comply with the many requirements of the health care law.

"We're going to need will," Berwick said at the launch announcement. "We're going to need to decide to do this." But he also noted that the changes needed in health care delivery to meet the goals of the project will help hospitals qualify in a few years for incentive payments under the health law to improve patient safety.

Called the Partnership for Patients, HHS Secretary Kathleen Sebelius told reporters that over the next three years the program will help save 60,000 lives and has the potential to save up to $35 billion in medical costs, including as much as $10 billion in Medicare. Over the next ten years, the program could reduce costs to Medicare by about $50 billion and produce billions more in Medicaid savings, agency officials added.

HHS plans to spend up to $1 billion from the health overhaul law (PL 111-148, PL 111-152) to get the initiative off the ground. It has two objectives: decreasing preventable hospital-acquired conditions by 40 percent by the end of 2013 compared to 2010, as part of an effort to keep hospital patients from getting injured or sicker; and decreasing hospital readmissions by 20 percent over the same time period.

The initiative, which is designed to stop preventable injuries and complications in patient care, already has the backing of more than 500 hospitals, physicians and nurses groups, consumer organizations and employers, HHS officials said in releasing the details of the program.

Joining Berwick and Sebelius on the dais to announce the program were Cecil Wilson, president of the American Medical Association; Honeywell CEO David Cote; Gerry Shea, assistant to the president of the AFL-CIO; Oklahoma Medicaid Director Mike Fogarty, and Sorrel King, a patient advocate who said she lost her 18-month old to medical errors at the Johns Hopkins health system in Baltimore. Audience members included America's Health Insurance Plans President Karen Ignagni, Federation of American Hospitals President Chip Kahn, National Business Group of Health President Helen Darling, and representatives of other provider and consumer groups and the Department of Defense and VA health systems.

The Partnership will begin by asking hospitals to target nine types of medical errors and complications, including preventing adverse drug reactions preventing bed sores, childbirth complications and surgical site infections. The nine areas are ones in which hospitals have already demonstrated that dramatic reductions can be made in the rate of harm to patients.

Systems, not workers, to blame

Berwick emphasized that the problem isn't that health care workers are sloppy. "The workforce is not the problem," he said. "They want to offer safe care."

"Good people get trapped into bad systems," he said. The CMS head of the Centers for Medicare and Medicaid Services said that there are a variety of local health care systems that have made great strides in reducing medical errors. Other health care providers can learn from and adopt the processes of care involved and also make dramatic gains in preventing medical errors.

Reaching the goals may seem like a stretch given the fairly broad nature of the pledges participants in the program will make. For example, hospitals promising to take part must agree to make the goals of reducing harm and improving the transition of patients to care outside the hospital a priority for their board of directors, senior leaders, clinicians and staff. Clinicians will vow to "work to redesign activities across clinical settings to reduce harm" and learn from and share the experiences of others. Consumers groups pledge to educate patients and their families about steps they can take to assure that care is safer.

"This partnership is not about enforcement; it's about involvement," Berwick said in a brief interview after the press briefing. He noted that a voluntary effort is beginning to take shape in which CMS, along with private sector players, will make a variety of resources available to any hospital that wants to participate.

"You'll find easy access to support, you'll find peer and partners they can talk to ... they'll find tools for metrics. We'll be also be helping the local patients' groups" to strengthen the voice of the consumer, Berwick added.

"This is a period now, a window of voluntary engagement in really active improvement," Berwick observed. But under the health law, in 2013, 2014 and 2015 "there are real serious financial contingencies attached such that you'll see less and less paying for how much you do and more and more paying for how well you do."

"If your business plan at a hospital now is to take advantage of the idea that we're not going to not pay for how much you do, we're going to pay for how well you do, then you'd be very smart to be joining in this program because you're getting ready for that period when payment is for quality."

Asked why he's confident that hospitals will buy into this program, Berwick said "we have more knowledge now. It's not just saying please try harder, it's saying here's some things you really can do."

"What gives me most optimism is the response to this," Berwick said. "I'll tell you, we haven't made a phone call or an outreach to any stakeholder that hasn't said 'where do you need me, when can I show up.' Something feels different now, something feels like the tide is turning."

"We can over time eliminate just about every kind of patient injury," Berwick predicted.

Berwick's enthusiasm about patient safety partnerships was a hallmark of his efforts as head of the Boston-based Institute for Healthcare Improvement. He enlisted many hospitals in a campaign to adopt specific practices to reduce medical errors. The goal of 60,000 lives saved over three years is in addition to those earlier efforts, he said.

While the players in health care respond strongly to Berwick's passion for quality improvement, its actual impact remains to be seen—and given the specific goals outlined by the partnership—it will be measurable three years from now.

King, the opening speaker at the launch, said there is no time to waste. Her story suggested that fatal errors can befall anyone, even in the nation's finest health care systems.

"I'm here today because my daughter is one of the 98,000," she said. "It's time to come together…we've got to do it, and we've got to do it now. I have to tell you, it's not happening fast enough."

King said after the event that her daughter died because of communication failures that led the 18-month old to become dehydrated and to be given methadone when she shouldn't have been. Had either thing not occurred she would have survived, King said.

Noting the wide variety of groups that say they plan to participate in the patient safety program, Berwick said "I think we're there at last – where Sorrel asked us to be."

Brailer also credits Mostashari with having a gift for compromise, saying that rulemaking over what constitutes meaningful use of health IT has pitted those who wanted few demands on doctors against those who saw a rare opportunity to really push the medical profession hard to exploit its potential. Mostashari "was one of the key people that talked dreamers back into reality," Brailer said.

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In the States, Heat—but No Light—on Exchanges

By John Reichard, CQ HealthBeat Editor

April 15, 2011 -- The extent to which states will ultimately decide to create health insurance exchanges under the overhaul law remains uncertain—but what is clear is that the controversy surrounding that issue is heating up in state capitals.

Also coming into focus is a major effort big corporations will mount to shape the exchange-related legislation that states do adopt.

During the week of April 11, Maryland adopted a measure to create an exchange under the overhaul law and Oklahoma underscored its opposition to creating one by returning a $54 million federal "innovator" grant. The money was to be used to set up an information technology system to help operate the exchange. The system Oklahoma would have developed was intended to be a model for other states.

Oklahoma also announced it would return a $1 million grant it received last August to conduct health insurance premium rate reviews.

The week also saw the launch of the "Choice & Competition Coalition" which will urge states against creating the type of exchanges that will function as "active purchasers." Under that form of exchange, operators would use their negotiating clout to bargain hard for consumers and exclude plans that don't offer good value. California has passed a law that permits its exchange to do just that.

But the high-powered coalition is fighting that on the grounds that wider choice better serves consumers. Members of the coalition include America's Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association, the Pharmaceutical Research and Manufacturers of America (PhRMA), the U.S. Chamber of Commerce, the National Retail Federation, and the National Association of Health Underwriters.

"Many stakeholders agree that exchanges must be true marketplaces that maximize choice and competition so that consumers and small businesses can purchase the plan that best meets their needs," said Robert Zirkelbach, spokesman for AHIP.

Federal officials say they would like all states to create their own exchanges rather than have Uncle Sam step in and do the job. But states like Florida, Alaska, Georgia, Oklahoma and Mississippi that oppose the health law (PL 111-148, PL 111-152) as overly intrusive aren't moving ahead on exchanges—even though their inaction could bring greater federal control over their insurance markets, not less.

It's not entirely clear what will happen in those states, however. If the courts uphold the constitutionality of the health law it's possible they would then decide to do their own exchanges.

In Mississippi, the state's insurance commissioner has said he has authority to move ahead with an exchange even though Gov. Haley Barbour has expressed opposition. In Georgia, efforts to move an exchange bill stopped after tea party activists objected to cooperating with "Obamacare."

Blue Cross Blue Shield Association spokesman Brett Lieberman said legislation to create exchanges has been introduced in 36 states and seven of those bills have passed. At least two states—Massachusetts and Utah—passed exchange laws before the health overhaul law was enacted.

In states that don't demonstrate to the satisfaction of the Department of Health and Human Services by Jan. 1, 2013 that they'll have a viable exchange ready a year later, federal officials will run the exchange.

It's likely that many states won't complete action on exchanges until next year, however.

Waiting will give state officials time to get a better sense of what standards federal officials will set for benefit packages. They also may want to see how the U.S. Supreme Court resolves the constitutionality of the law. But that strategy will leave little time to have exchanges in shape to gain federal approval by Jan. 1, 2013.

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Health Takes a Hit in Spending Deal but Priorities Survive

By Jane Norman, CQ HealthBeat Associate Editor

April 12, 2011 -- The cuts included in the spending compromise for fiscal 2011 will spread pain across federally funded health care programs and harm important initiatives. But the hits could have been even more devastating, advocates and lawmakers said.

And the health battles will be fought again right away. As soon as the 2011 vote is behind them, lawmakers will move on to a 2012 fiscal year budget in which discretionary spending reductions will be a priority for Republicans and Democrats will be forced to respond.

One problem in figuring out the impact of the 2011 spending deal—which averted a government shutdown—was that confusion over the numbers continued throughout the day after the details of the agreement (HR 1473) were released.

For example, an early version of a chart released by appropriators included an incorrect line item for a $1.045 billion cut in funding for HIV/ADS, viral hepatitis, and other diseases. "That was really, really scary," said Carl Schmid, deputy executive director of the AIDS Institute.

In comparison, a funding hit overall for the Centers for Disease Control and Prevention (CDC) of $730 million seemed bearable though it would take away 10 percent or more of the agency's overall budget in areas yet to be determined. Advocates for cancer prevention warned that the CDC cut could have a major impact on programs in the states that provide screening for breast and colorectal cancer among low-income Americans.

Congressional aides, speaking on background, said that the impact on CDC would not be as large as the bottom-line number indicates because the agency has the authority to reduce programs that it considers a low priority. Aides also said that the overall cut in CDC funding likely would be closer to six percent, with the specifics to be determined by the agency.

The National Institutes of Health sustained a reduction of less than one percent, so biomedical research was largely spared. "We're relieved," said Dick Woodruff, senior director of federal relations at the American Cancer Society, though he said advocates will continue working very hard to increase research funding. He also said cancer advocates were continuing to analyze the plan to determine exact reduction amounts.

Richard Hamburg of the Trust for America's Health said that cutting NIH by any amount is a "tough pill to swallow," but praised lawmakers for saving a $750 million prevention fund targeted by Republicans for elimination or cuts.

Overall, the bill reduces federal spending for the rest of the fiscal year by $40 billion in discretionary funds compared to fiscal 2010, according to House appropriators. Senate appropriators said the reduction would amount to $38.5 billion. The House is expected to take up the measure and House Majority Whip Eric Cantor, R-Va., predicted it will be approved.

The single largest health-related cut seemed to be a $1.2 billion one for the Health Resources and Services Administration (HRSA), although some programs within HRSA are slated to receive new money from the health care law.

Overall, Senate Democrats say that the Department of Health and Human Services (HHS) would receive $70.6 billion in fiscal 2011, compared with $74 billion in fiscal 2010 and the $65.4 billion allocated in the House-passed spending bill (HR 1) from earlier this year. Agencies "will have wide discretion over the funding levels for many individual programs unless the levels were specifically cited in bill language," says a summary by Senate Democratic appropriators.

The health co-ops included in the health care law had their funding sliced by $2.2 billion of the $6 billion authorized in the overhaul. The co-ops, which have not yet been launched, would be new nonprofit health plans governed by consumers that are slated to receive start-up grants and loans.

House GOP appropriators said in a statement that co-ops were terminated but Senate Finance Committee Chairman Max Baucus, D-Mont., said the co-op program survived. "It's not pulled out," said Baucus. "One third is pulled out. One third reduction."

The compromise also includes policy riders that Republicans said would give them leeway to continue to probe the details of the health care law (PL 111-148, PL 111-152) as its implementation proceeds. "The agreement generates new tools and accountability mechanisms for the fight to repeal Obamacare," said a statement from the office of Speaker John A. Boehner, R-Ohio.

Democrats Spin Cuts

Democrats who agreed to the proposal tried to put the best face on it and repeatedly compared the results with what would have occurred if HR 1 became law. "This bill makes painful cuts. But it could have been a lot worse, especially when you compare it to the alternative from the tea party extremists in the House, which would have caused real damage to the economy," said Sen. Tom Harkin, D-Ia., chairman of the Labor, Health and Human Services appropriations subcommittee.

"This bill protects services for those most in need, such as the Community Services Block Grant and community health centers, while providing a strong level of funding for biomedical research and other programs that are critical to our economic future," said Harkin.

Spending for a voucher program in the health care law championed by Sen. Ron Wyden, D-Ore., was removed in the budget deal and Wyden was furious. He said he would not vote for the bill in its current form.

"I'm flabbergasted," said Wyden. "I've never seen anything like this in my time in public service, that something that is hard-fought battle in public, everybody knows about, is killed behind closed doors so quickly after the public fight."

Wyden did not say how or why it had been axed but said it was "abuse by special interests."

Under the voucher program, certain employees could have used their employers' contributions toward health insurance to help pay for coverage in the health insurance exchange, according to an analysis by the Urban Institute. That analysis found that health coverage would be made more affordable for low-income families under an approach like Wyden's. But other analysts predicted high costs for employers with many-low income employees.

Cuts summarized

Democratic staffers distributed detailed summaries of program cuts while GOP aides did not. The key points of the compromise as it applies to health include:

  • A reduction of 0.8 percent or $260 million for the National Institutes of Health below the fiscal 2010 level, according to summaries released by Democrats. It includes $300 million for the global fund that fights disease worldwide, which was eliminated in the House-passed spending bill.
  • A chart originally released by appropriators showing reductions included a $1.045 billion spending cut for HIV/AIDS, viral hepatitis, STD and TB prevention compared with 2010. But AIDS activists said that figure is incorrect, which congressional aides later confirmed, and that amount was removed from the chart. A summary by Senate Democrats says it's a $730 million cut and $5.66 billion in total funding.
  • Funding for Title X Family Planning is set at $300 million, which is $17 million below 2010, Democrats say. The House Republican bill would have eliminated all funding for Title X services.
  • A prohibition on the use of federal funds for needle exchange that was included in the House-passed bill did not make its way into the final compromise, Democrats say.
  • Also fended off was the elimination of the $750 million Prevention and Public Health Fund in the House GOP bill, Democrats say.
  • The Food and Drug Administration would see its budget grow by 4 percent to $2.5 billion under the measure.
  • An allocation of $109 million is made for the Teen Pregnancy Prevention Program, which is 96 percent of the fiscal 2010 spending level, Democrats say. The House Republican bill would have eliminated all funding.
  • Funding of $885 million for the Aids Drug Assistance Program, which is a $25 million increase over fiscal 2010 after a $25 million transfer for added supplemental funding for waiting lists for those seeking treatment. Schmid of the Aids Institute said the increase was appreciated but it's still too little to meet the growing numbers of low-income people who need medications.
  • Discretionary funding of $6.27 billion for the Health Resources and Services Administration, which includes community health centers, health professions training, the Ryan White Care Act and family planning under Title X. That's $1.2 billion below the 2010 level, though some programs will receive new money through the health care law.
  •  $600 million reduction for community health centers compared to 2010 was included but the nation's 1,100 health centers will stay open and operating because of a separate $400 million pot of mandatory funding in the health care law that will be tapped, aides said.
  • An allocation of $662 million for the Maternal Child Health block grant, the same as in 2010.
  • An elimination of all funding for the State Health Access Grant program. Democrats say with the enactment of the health care law, the program is no longer necessary. The grant program gave $75 million to states in fiscal 2010.
  • A chart from appropriators also shows cuts compared to fiscal 2010 of $35 million for rural health programs, $164 million for the Bureau of Health Professions, $69 million for CDC buildings and facilities and $50 million for NIH buildings and facilities.

According to Boehner's office, the deal gives the green light to studies of the impact of health insurance premium increases on individuals and families due to mandates in the health care law, a "full audit" of waivers granted by the administration to organizations that need more time to meet requirements for benefit packages under the law, another "full audit" of comparative effectiveness research funding, and a report on contractors hired to carry out the law.

The White House Office of Health Reform gets no funding, though the office has ceased functions already.

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Deductibles in Individual Market in 2014 Could Be 'Substantial,' Study Says

By Jane Norman, CQ HealthBeat Associate Editor

April 14, 2011 -- The deductibles for the minimum health insurance coverage that some people will be required to buy under the health care law could be "substantial," says an analysis released by the Kaiser Family Foundation.

While the study notes that deductibles are also high now in the individual market, the forecast of a fairly steep cost for coverage for the newly insured may create questions about how easy it will be to get some Americans to abide by the law's individual mandate. People earning below 400 percent of the federal poverty level will be eligible for subsidies, though the highest earners in that group could still face some pretty substantial cost-sharing, the study predicts.

The report warns that there also could be big differences in the financial details of the plans that meet the law's requirements. That could make it more difficult for consumers to compare plans. And the study says one question could be whether people will perceive themselves as "better off under reform than the status quo."

Deductibles are estimated in the study—which is pegged to 2014, the first year of the individual mandate—to be at least $2,750 for the least comprehensive single plan in the individual and small group market. That's along with a 30 percent coinsurance requirement once the deductible is met. Family deductibles would be higher—at least $5,500.

But the projections also ranged up to $6,350 for a deductible with no coinsurance. Researchers who did the study sought estimates from three actuarial and benefits consulting firms.

The estimates are for the so-called "bronze plan," which the study notes is particularly central to the structure of the law because it's the minimum coverage that people who get insurance through the individual and small group markets could buy in order to meet the law's requirements.

All three estimates "suggest that the bronze plan would require that patients meet a substantial up front deductible," the Kaiser study says. They would also be high enough that the plans could be paired with a Health Savings Account, which is permitted under the law (PL 111-148, PL 111-152).

For people with modest incomes that are not small enough to meet qualifications for the biggest subsidies, "cost sharing could be substantial," the study says. For example, for families with incomes between 200 and 250 percent of poverty, which is $44,700 to $55,875 for a family of four, the estimated per-person deductible ranges from $1,750 to $3,200, the study said.

Kaiser asked three firms to provide estimates using common assumptions: Actuarial Research Corporation, Aon Hewitt and Towers Watson. They examined the costs for consumers on the four tiers of coverage created in the law: bronze, which is 60 percent actuarial value; silver, 70 percent; gold, 80 percent; and platinum, 90 percent. Actuarial values measure the generosity of a plan for a standard population. Not included in the analysis was a catastrophic plan limited to people under 30 and certain other individuals for whom coverage would be a hardship.

Premiums were estimated to rise 7 percent a year between now and 2014 by the firms. And the estimates assumed coverage of a broad range of services typical of employer group plans as well as no cost sharing for preventive care. The Department of Health and Human Services has not yet determined what benefits must be included in the plans.

Most people will be required to buy insurance that's at least at the bronze level or pay a penalty. Cost-sharing in plans with the same actuarial value can vary, with one plan having a higher deductible than another combined with a lower coinsurance requirement, the study noted. Or a plan may cover some physician visits before an enrollee meets the deductible, offsetting that with a higher deductible or coinsurance percentage, the study said.

The study also pointed out that while the deductibles seem high, deductibles today in the individual market are steep as well. A 2010 Kaiser study found that the average deductible in the individual market for single coverage in 2009 was $2,498, and those deductibles are expected to increase.


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