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April 6, 2009

Washington Health Policy Week in Review Archive 743b52ec-03a6-4d44-a644-54339c75a588

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Experts Spar Over Best Models for Health Care

By Rebecca Adams, CQ Staff

Health care experts at a forum Monday debated such questions as how payments to medical providers might be structured and how Medicare's administrative costs compare with those of private health insurers.

The hourlong forum, the first public briefing by the Congressional Health Care Caucus this year, featured the views of Karen Davis, president of the Commonwealth Fund, a nonpartisan, left-leaning research organization; Merrill Matthews, director of the Council for Affordable Health Insurance, an advocacy group representing insurers; and Grace-Marie Turner, president of the Galen Institute, a nonprofit organization that promotes free-market ideas.

Davis advocated that Medicare change its payment policies so that medical providers would get one bundled payment to treat people for the duration of an illness, with an emphasis on incentivizing high-quality care rather than a high volume of care, which rewards providers who do not improve patients' health but perform a lot of medical services. The idea is that providers would have incentives to treat people effectively and efficiently. Davis said that changes to the system should be phased-in over time.

However, Turner said she was concerned that this model could create perverse incentives of its own. For instance, she said, a doctor treating a patient for cancer could have an incentive to start by prescribing the least expensive options before trying a more expensive one, even if the costly option would be more effective in treating the patient.

"Everyone is going to be trying to game the system to maximize profit and I'm not sure that the patient is going to continue to be at the center" of decisions, Turner said.

Davis, Merrill, and Turner also debated whether public programs such as Medicare or private insurers are best at holding down administrative costs. Davis said there is "no reason" why insurance companies should spend the amount of money that they do on administrative costs. Merrill and Turner, representing more conservative and industry-friendly views, said that cost comparisons between Medicare and private insurers are unfair because some of Medicare's costs are not explicitly delineated as administrative program costs. They argued that Medicare's "true costs" for administrative expenses are higher than is widely assumed.

The caucus, chaired by Rep. Michael C. Burgess, R-Texas, is planning a series of hearings. The next one will be held Tuesday in the Cannon house office building, said a Burgess aide, and is cosponsored with the American Enterprise Institute.

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Sebelius Confirmation Delayed by GOP Objection, Baucus Says

By John Reichard, CQ Staff

April 2, 2009 -- Senate confirmation of Kansas Gov. Kathleen Sebelius to head the Department of Health and Human Services probably won't take place until after the coming two-week recess because at least one senator has objected to an expedited procedure to move the nomination.

"I'm afraid there's a senator who will not grant consent so that means it has to be delayed until after the recess," Finance Chairman Max Baucus, D-Mont., said Thursday.

Baucus would not name the senator other than to say he or she is a Republican.

Earlier, at Sebelius' confirmation hearing with his committee, Baucus had predicted the Senate would confirm the nominee Thursday.

Baucus indicated that the nomination would not be held up by Sebelius' disclosure that she and her husband paid almost $8,000 in back taxes and interest owed because of filing errors.

The tax issue, revealed March 31, prompted no questions during the hearing.

Sebelius will play a central role in President Obama's effort to overhaul the health care system.

The Department of Health and Human Services (HHS) oversees programs such as Medicare and Medicaid, the Food and Drug Administration, the National Institutes of Health, and other public health and welfare agencies responsible for nearly $80 billion in annual discretionary spending and hundreds of billions more through entitlement programs.

The Obama administration appears to have dodged a Senate battle over abortion that might have come with Sebelius' nomination. The governor has clashed several times with the Kansas Legislature over her support of abortion rights, but the state's two conservative Republican senators, Sam Brownback and Pat Roberts—both prominent opponents of abortion—have lent her their support.

Thursday's hearing featured a bipartisan goodwill for the nominee and a sense of urgency that a health overhaul is essential this year.

Deep partisan divisions appeared, however, when the hearing focused on whether Congress should create a government-run health insurance program alongside private plan options.

Even moderate Republican Olympia Snowe of Maine expressed skepticism about a public program, saying it should be a "last resort." Sebelius, however, offered a firm defense, citing as successful models programs in many states offering state employees a menu of health insurance plans.

Panel members also showed the divide over whether to use budget reconciliation procedures to move a health overhaul bill. The fast-track tactic would allow Democrats to forestall potential Republican filibusters in the Senate.

Michael B. Enzi, R-Wyo., gently counseled Sebelius to refrain from advocating for the procedure, saying that a successful health overhaul will require bipartisan work to resolve many knotty issues.

The House budget resolution (H Con Res 85), which is expected to be adopted Thursday by the House, includes language that would allow legislation overhauling health care to move via reconciliation later in the year. The Senate measure (S Con Res 13), which is working toward adoption Thursday night or Friday morning, does not include such direction.

Enzi said that he, Roberts and Orrin B. Hatch, R-Utah, "have a great responsibility to keep Republicans calm through the debate."

The hearing was almost devoid of surprises. When asked by Baucus, however, whether anything in her background might create a conflict of interest, Sebelius mentioned that an HHS ethics officer had noted two stocks in her husband's portfolio. Sebelius said her spouse is committed to divesting them.

Details weren't immediately available on the stocks involved or their value.

Sebelius did break some new ground in her comments by saying that she thinks a health overhaul should fill the coverage gap in Medicare prescription drug known as the "doughnut hole."

Congressional Democrats have shied away from talk of filling the gap because of the tens of billions of dollars in expense involved.

On another issue that may raise Republican hackles, Sebelius said she would welcome legislation giving the HHS secretary authority to negotiate the prices of prescription drugs covered by the Medicare program.

"I would look forward to managing that aggressively," Sebelius said in response to a question by Sen. Bill Nelson, D-Fla. Medicare "overpays" for prescription drugs covered by the program's Part D drug benefit, she said.

Drama Ending
Sebelius' confirmation would help bring to a close a painful transition period for the White House in which reporters stopped referring to the president as "No Drama Obama" to describe his administrative skills in favor of a story line emphasizing inept vetting. The nominations of a half-dozen appointees were clouded by reported tax problems, with that of former Senate Majority Leader Tom Daschle (1987–2005) by far causing the administration the greatest embarrassment.

The $7,040 in back taxes and $878 in interest Sebelius said she and her husband paid to correct filing errors pales in comparison to the $140,000 in back taxes paid by Daschle and are viewed by lawmakers as minor errors. Daschle's withdrawal also occurred after reports that he received tens of thousands of dollars in speaking fees from insurers in the period after he left the Senate.

Those fees raised some concern that Daschle might be too close to industry heading into the health overhaul debate.

Sebelius, on the other hand, won a reputation for taking a firm hand with insurers when, as Kansas insurance commissioner before becoming the state's governor in 2002, she blocked the purchase of Blue Cross and Blue Shield of Kansas by the big Indiana-based insurer Anthem.

"Governor Sebelius has a proven ability to make tough decisions in the face of fierce opposition," Finance Committee Democrat Sen. John Rockefeller, IV, D-W.Va., said in a statement released at the hearing.

Sebelius said she acted because of evidence that premiums in the state "would have increased too much."

But Sebelius lacks Daschle's close ties to members of Congress that could have aided negotiations on a health overhaul. And her late arrival on the job complicates the challenges the Obama administration faces of achieving a health overhaul this year, one of its top priorities.

Both Presidents Bill Clinton and George W. Bush got their HHS nominations through the Senate considerably faster when they first came to town. Clinton's appointee, Donna E. Shalala, was confirmed on January 22, 1993, while Bush's appointee, Tommy G. Thompson, was confirmed February 2, 2001.

But despite the late start, Obama is far ahead of the Clinton White House in getting congressional committees started on a health overhaul. Committees in the Clinton era cooled their heels until late in 1993 awaiting his elaborate overhaul proposal; Obama is letting Congress fill out the details, a process that is already well underway despite the many difficulties it faces resolving differences over financing and the design of a program to expand coverage.

Drew Armstrong and David Clarke contributed to this story.

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Senate Adopts $3.53 Trillion Budget Resolution

By David Clarke, CQ Staff

April 3, 2009 -- The Senate adopted its fiscal 2010 budget resolution Thursday night after a day of considering dozens of amendments.

The vote was 55–43, with no Republicans supporting the plan and two Democrats—Evan Bayh of Indiana and Ben Nelson of Nebraska—voting against it.

The House adopted its budget (H Con Res 85) on a 233 to 196 vote earlier Thursday with no Republicans voting for the proposal and 20 Democrats rejecting their party's fiscal blueprint.

While neither budget mirrors President Obama's proposal, they pave the way for implementing his proposals on health care, energy, and education. Getting these policies into law, however, will prove more difficult than getting a budget blueprint adopted.

Conference negotiations will focus on whether to include provisions that would, like the House plan, allow health care overhaul legislation move through the filibuster proof reconciliation process and how much in discretionary spending should be provided to the Appropriations panels to write the 12 annual spending bills.

The Senate plan (S Con Res 13) would provide the Appropriations panel with $1.08 trillion, which is $15 billion less than the president requested and about $8 billion less than the House resolution.

The Senate budget (S Con Res 13) would total $3.53 trillion in fiscal 2010, which is slightly below the $3.6 trillion proposed by President Obama. Senate Budget Chairman Kent Conrad, D-N.D., had to scale back some of Obama's proposals to show lower debt and deficit levels than were contained in an assessment of Obama's proposal by the Congressional Budget Office.

For instance, the budget does not make room to extend Obama's "Making Work Pay" program, which provides a payroll tax credit of $400 per individual and $800 per couple to most workers, beyond its expiration at the end of 2010.

It also assumes that the Alternative Minimum Tax will be "patched" in the first three years of the budget, so middle class tax bills do not rise, but not the last two, or that the cost of patching it will be offset with other tax increases or spending cuts. Obama's budget assumes the AMT is patched each year over the next 10 years.

"I wish to make clear that this budget is responsible, it controls spending, it reduces the deficit by two-thirds, it extends the middle-class tax cuts, and it adopts the president's priorities of reducing our dependence on foreign energy, putting a focus on excellence in education, and providing the possibility of major health care reform," Conrad said. "Those are the priorities of the American people, and they are contained in our budget."

Debate Marked by Partisan Divide
As is usually the case, the debate over the budget was partisan with little agreement among the two parties on substantive issues.

Republicans panned the proposal, repeating the mantra that it "spends too much, taxes too much, and borrows too much."

Even though the Senate plan would pare back Obama's budget, the deficit picture it projects is bleak as Congress struggles with how to deal with the faltering economy's affects on revenues and spending.

The Senate budget shows a deficit of $1.7 trillion in fiscal 2009 and $1.2 trillion next year. It then steadily drops, hitting $507.6 billion in fiscal 2014. Those figures have moderate Democratic senators worried especially because there is little guarantee Congress will keep within the spending or tax levels outlined in the budget going forward.

Senate Republican leaders decided not to introduce their own alternative believing the best strategy was to fire amendment after amendment at the Democrats' plan.

But Sen. John McCain of Arizona, the GOP's 2008 presidential candidate, produced his own plan, which was voted down 38 to 60 Thursday.

It focused on reducing spending and providing more tax breaks—a policy Democrats argued would short-change key programs and keep the economy in the ditch. No Democrats voted for the proposal and three Republicans voted against it: Sens. Olympia J. Snowe of Maine, Susan Collins of Maine, and Bob Corker of Tennessee.

It called for $17.5 trillion in spending over the next five years, $1.15 trillion less than Obama's plan, $776 billion less than the House budget, and $435 billion less than the Senate blueprint, according to a chart provided by McCain's office.

Most of his cuts focused on entitlement programs such as Medicare, Medicaid, and Social Security, spending $922 billion less than Obama over the next five years on those and other entitlement programs and $3.1 trillion less over 10 years, according to his office. It also sought to extend all of the 2001 and 2003 tax cuts (PL 107-16, PL 108-27) and keep discretionary spending at lower levels than in the Democrats' plans.

"Tough decisions have to be made," McCain said on the floor.

Democrats criticized McCain's approach as too harsh.

"Colleagues, if you want to be voting for cuts that could be $350 billion in Medicare and Social Security, vote for the McCain alternative," Conrad said on the floor. "If you do not think that is a real good idea, stick with the budget that is before us."

Republicans were able to score one victory on the estate tax with the help of 10 Democrats.

Under current law the estate tax—now with a top rate of 45 percent with an exemption of $3.5 million per person—will disappear Jan. 1, 2010, and will return with higher rates and lower exemptions in 2011.

Sen. Blanche Lincoln, D-Ark., offered an amendment, adopted 51–48, that she worked out with Sen. Jon Kyl, R-Ariz., that adjusts the budget to accommodate a 35 percent rate and an inflation-adjusted $5 million per-person exemption on the estate tax. It would create a deficit-neutral reserve fund that would require unspecified revenue-raising offsets to cover the cost, which is estimated at $28 billion over five years and $85 billion over 10 years, according to Lincoln's office.

Reid spoke out strongly against the amendment.

But right after adopting Lincoln's amendment, the Senate adopted, 56–43, an amendment offered by Sen. Richard J. Durbin, D-Ill., to create a point of order against any legislation providing additional estate tax relief beyond what is assumed in the resolution unless an equal amount of tax breaks are provided to those making less $100,000 a year.

Uneasy Democrats
The debate also made clear there is unease among many Senate Democrats about Obama's proposal to implement a cap-and-trade system for carbon emissions that would raise $646 billion in revenue over 10 years.

Senators from industrial states are worried it could cost jobs and cause their constituents energy bills to rise sharply.

The chamber adopted, 65–33, an amendment offered by Sen. Lindsey Graham, R-S.C., to create a 60-vote point of order against any legislation that includes any energy tax increases that would affect individuals with annual incomes of $200,000 or less, or married couples with incomes of $250,000 or less. Twenty-six Democrats supported Graham's proposal.

Other Amendments
The Senate rejected, 43 to 55, a motion to send the budget back to committee so that funding could be cut. Two Democrats supported the motion: Sens. Evan Bayh, D-Ind., and Ben Nelson, D-Neb.

Other amendments included: 

  • By John Ensign, R-Nev., to adjust the resolution to accommodate a requirement that participants in Medicare's prescription drug program with annual incomes exceeding $85,000 for individuals or $170,000 for couples pay a higher monthly premium than other seniors. Obama proposed similar means testing in his budget, but Senate Finance Committee Chairman Max Baucus, D-Mont., urged a "no" vote. Baucus said his committee needs flexibility as it prepares a health care overhaul. Rejected, by a 39–58 vote.
  • By Bernard Sanders, I-Vt., calling for Federal Reserve banks to identify institutions getting assistance under federal lending programs, the amount, and how the funds are being used. Adopted, 59–39.
  • By Christopher J. Dodd, D-Conn., to set up a deficit-neutral reserve fund for subsequent legislation to allow for audits of the Fed's emergency actions to stabilize the economy over the past year. It also calls for the Fed to publicly disclose, on its Web site, the details of the lending facilities created to address the current economic crisis. Adopted 96–2.
  • By Jack Reed, D-R.I., essentially reasserting that funds provided by last year's $700 billion financial rescue law (PL 110-343) should be spent to help save homes, shore up small businesses and the municipal bond market, and expand credit, among other purposes. Adopted 56–42.
  • By David Vitter, R-La., to adjust the spending levels in the budget for the purpose of recovering $272 billion in funding approved as part of last year's bailout law, although separate legislation would be needed to accomplish this task. Rejected, 28–70. 


By Charles E. Grassley, R-Iowa, to make room for later legislation to "patch" the alternative minimum tax for five years. Rejected, 40–58.

Chuck Conlon and Richard Rubin contributed to this report.

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Senate Budget Debate Turns to Issue of Health Care Cost-Effectiveness

By Martha Angle, CQ Staff

April 1, 2009 -- Research into the comparative effectiveness—and cost—of different medical treatments, a key issue in the health care overhaul debate this year, jumped to the fore Wednesday during Senate debate of the fiscal 2010 budget resolution.

Senate Minority Whip Jon Kyl, R-Ariz., charged that the Obama administration plans to include cost analyses in comparative effectiveness research to assess the relative usefulness of various options such as drugs versus surgery for the treatment of specific diseases or conditions.

Kyl offered an amendment to the Senate's budget resolution (S Con Res 13) that would expressly forbid Medicare and other federal health programs from using results of comparative effectiveness research to deny coverage of any treatments.

When the Senate votes on that proposal, it may offer an important test of sentiment that could influence the health care overhaul legislation being assembled in two Senate committees.

In a related development, eight Democrats from Senate and House committees with jurisdiction over health introduced legislation designed to provide doctors with unbiased information on all prescription drugs, based on independent, scientific research instead of studies underwritten by the drug companies themselves.

Kyl and his GOP allies said considerations of the relative costs of various treatment options would inevitably lead to rationing of health care.

"Comparative effectiveness research can provide doctors and patients with important information," Kyl said, "but without appropriate safeguards, the government can use it as a tool to ration or deny health care."

Senate Finance Chairman Max Baucus, D-Mont., whose panel is helping to draft this year's massive health care overhaul, dodged the particular question of assessing costs in comparative effective research. But he said, "Controlling costs is part of health care reform. We cannot continue to spend as much as we do on health care. ... We must find a way to contain costs, and part of the solution is reducing unnecessary costs and waste in our system."

Raynard S. Kington, the acting director of the National Institutes of Health, in testimony March 26 before the House Appropriations Labor-HHS-Education Subcommittee, said his agency might use some of the $10.4 billion it received from the economic stimulus package (PL 111-5) to fund comparative effectiveness research that includes cost comparisons.

According to an administration official, the $400 million could be used to fund comparative effectiveness studies that include cost comparisons but the stimulus law would preclude use of these findings by Medicare as the basis of coverage decisions. "In terms of the research that is ongoing at NIH and across the government, the information found in this research is just dispersed to the public for the for their knowledge—there is no requirement to use it," the official added.

Baucus said he understood the intent of Kyl's amendment but considered it unnecessary. He said he was working with ranking Finance Committee Republican Charles E. Grassley of Iowa, Michael B. Enzi of Wyoming, the ranking Republican on the Health, Education, Labor and Pensions Committee, and Orrin G. Hatch, R-Utah, on legislation addressing comparative effectiveness research.

Both Baucus and Senate Budget Chairman Kent Conrad, D-N.D., said Kyl's amendment could potentially require the government to pay for treatments that were ineffective or worse.

Kyl struck back, insisting the aim of the Obama administration was to use comparative effectiveness research to help allocate scarce health care resources "If you don't think anybody's going to try to do it, what's the harm of adopting this amendment?" he challenged.

Prescription Drug Information
Meanwhile, Democrats from key committees in both chambers outlined new legislation to create a source of unbiased information for doctors about the relative effectiveness and costs of prescription drugs - both brand name and generic.

"This bill will provide for objective, scientific reviews of the available evidence on the safety and effectiveness of drugs, and will get this information to the physicians who need it, so they and their patients can make more informed decisions about what is best for their care," said Sen. Edward M. Kennedy, D-Mass., chairman of the Health, Education, Labor and Pensions Committee.

Rep. Henry A. Waxman, chairman of the Energy and Commerce Committee said, "For far too long, most of the information physicians receive to make prescribing decisions has come from the drug companies marketing reps, not independent experts. This important legislation will help provide doctors with the best objective information to help them make better clinical decisions in partnership with their patients."

The bill unveiled by the lawmakers Wednesday would fund grants to academic experts, such as medical or pharmacy school researchers, to develop educational materials for doctors showing the relative safety, effectiveness and cost of prescription drugs, including brand-name products, generic and over the counter alternatives. These materials would include brochures, handouts, and electronic information accessible to both patients and doctors.

Grant applicants could not be recipients of financial support from any manufacturer of the drugs being reviewed.

The bill would also create grants for hiring, training and deploying medical professionals to disseminate and discuss the materials with doctors.

The legislation follows a related bill (S 301) introduced in January by Sen. Herb Kohl, D-Wis., and Senate Finance Committee ranking Republican Charles E. Grassley of Iowa to require manufacturers of drugs, medical devices, and biologics to disclose how much money they give to doctors in direct payments, gifts, honoraria, travel and other emoluments.

Kohl, chairman of the Senate Special Aging Committee, said the latest bill addresses a system "fraught with conflicts of interest."

"By providing physicians with thorough, independent research on all the drugs available to them, we believe we can improve the quality of health care and reduce the cost of prescription drugs in America," Kohl said.

John Reichard contributed to this story.

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Study: Hospital Readmissions Occur Among Nearly One-Fifth of Medicare Patients

By Melissa Attias, CQ Staff

April 3, 2009 -- Almost one-fifth of Medicare beneficiaries who are discharged from a hospital are readmitted within 30 days, according to a new study in the New England Journal of Medicine.

The study also found that 34 percent of patients are readmitted within 90 days while 56 percent of patients are readmitted within one year.

These rehospitalizations cost Medicare an estimated $17.4 billion in 2004, according to the study. Medicare pays for all rehospitalizations except when patients are readmitted for the same condition within 24 hours after their discharge.

The study comes just one month after President Obama released his budget for fiscal year 2010, which includes measures to reduce hospital readmissions. By providing better care after a hospital stay, the budget indicated that Medicare would save roughly $26 billion over 10 years.

The results of the study are also consistent with MedPAC's 2008 report, which said 18 percent of Medicare hospitalizations result in readmissions within 30 days of discharge. The MedPAC report said these readmissions account for $15 billion in spending, $12 billion of which are potentially preventable.

The new study analyzed data from the Medicare Provider Analysis and Review (MEDPAR) file for the 15-month period from Oct. 1, 2003 to Dec. 31, 2004. It compiled data on follow-up visits from the 2003 national sample in the Centers for Medicare and Medicaid Services' Chronic Condition Data Warehouse.

The data shows that 67 percent of patients who were discharged with medical conditions and 51.5 percent of those discharged after surgical procedures were rehospitalized or died within one year of discharge. For half of patients readmitted within 30 days, the study found that there was no bill for a physician between the time of discharge and the time of readmission. Researchers estimated that 10 percent of readmissions were likely to have been planned.

In addition, the data shows that 70.5 percent of patients rehospitalized within 30 days of a surgical discharge were readmitted for a medical condition. The five most common surgical procedures that result in hospital readmission are cardiac stent placement, major hip or knee surgery, vascular surgery, major bowel surgery, and other hip or femur surgery, according to the study. The five most common medical conditions are heart failure, pneumonia, chronic obstructive pulmonary disease, psychoses, and gastrointestinal problems, researchers said.

The study also shows that the average stay of rehospitalized patients was 0.6 days longer than patients with similar diagnoses whose most recent hospitalization had been at least six months previously. Researchers found that the reason for readmission and the length of stay are more powerful predictors of the risk of rehospitalization than demographic factors.

Finally, the study showed a wide variation in the rates of rehospitalization from state to state. The five states with the highest readmission rates (Maryland, New Jersey, Louisiana, Illinois, and Mississippi) had rates 45 percent higher than the five states with the lowest rates (Idaho, Utah, Oregon, Colorado, and New Mexico).

Yet hospital readmission rates can and should be reduced, researchers said. Their report cites previous studies that show that certain interventions at the time of discharge, such as assistance with medication management, will decrease the risk of rehospitalization.

In addition, researchers said supportive palliative care that focuses on reducing the severity of symptoms can reduce hospital readmission rates and increase patient satisfaction. Patients would also benefit if hospital physicians coordinate prompt follow-up care after they are discharged, researchers said.

"You have to worry about a system in which patients are rehospitalized soon after discharge with no bill for a physician visit in between," said Stephen F. Jencks, one of the authors of the study, in a news release. "If we want to prevent unplanned rehospitalizations, we have to help hospitals and community healthcare providers implement transition procedures that are more patient-centered."

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The Risks of Using Reconciliation for Health Care Legislation

By Rebecca Adams, CQ Staff

April 3, 2009 -- The biggest question facing both the budget resolution and this year's health care debate is whether lawmakers will use a fast-track parliamentary maneuver known as reconciliation to pass the health care bill.

Reconciliation gives Democrats the advantage of passing health care legislation with only a majority of votes in the Senate rather than the 60 required to shut off a filibuster.

Most critics who oppose using reconciliation have complained that using the technique would stir up partisan tensions and doom any chances of getting a broadly accepted compromise through Congress. But often overlooked is a much more fundamental problem: if Democrats use reconciliation, they are taking the risk that major pillars of the health care bill could be struck down under Senate budget rules.

Some of the most significant parts of potential health care legislation could be killed under a Senate rule that requires provisions in reconciliation bills to be related to tax or spending decisions, not major unrelated policy changes with little budgetary impact. The vulnerable provisions include some of Democrats' highest priorities, such as requiring insurers to offer health care to everyone, regardless of preexisting conditions and without charging patients different rates based on their health. Another provision that could face a challenge would require all individuals to buy insurance. Facing slightly less risk is a proposal to require all employers to offer or pay for coverage for their workers.

The resulting bill would end up looking like "Swiss cheese," said Senate Finance Committee Chairman Max Baucus, D-Mont.

"I don't know what the point of doing health reform would be if you took out all of the insurance provisions," said Baucus' counterpart, Finance Committee top Republican Charles E. Grassley of Iowa.

Democrats are aware of the risks. That is one reason why the Democratic chairmen of the main committees who will write the bills—including those at Senate Finance Committee; the Senate Health, Education, Labor and Pensions Committee; the House Ways and Means Committee; and the House Energy and Commerce Committee—say that using reconciliation is not their most preferred route for passing health care legislation.

"My preference is to develop a bipartisan majority so you don't need reconciliation," said Henry A. Waxman, D-Calif., chairman of the Energy and Commerce Committee.

Plan of Attack
The House budget resolution includes language that would allow Congress to use reconciliation to pass health care legislation. The Senate version does not. Negotiators will soon decide whether to include the fast-track option in a conference report version of the budget resolution.

If lawmakers decide to keep reconciliation as an option, the committees that oversee health care legislation have until late September to report out a bill and bring it to the floor for debate.

The Senate rule that critics of health care legislation could use to gut the measure is known as the Byrd rule, named for its sponsor Sen. Robert C. Byrd, D-W.Va. If a senator challenges a provision under the Byrd rule and the parliamentarian rules in favor of the challenge, the provision is taken out of the measure. Supporters of the provision who want to restore it then must muster 60 votes in order for the contested provision to survive.

The rule applies both to bills and conference reports that are considered by the Senate. The last time that senators used the Byrd rule against a language in a conference report came in 2005, when three Medicare-related provisions in the Deficit Reduction Act were struck down.

Extraneous provisions have been included before in bills that were passed using reconciliation, but those were often noncontroversial provisions that weren't challenged because they were in bipartisan bills such as the 1996 welfare reform law.

For his part, Byrd wrote in an April 2 letter that he opposes the use of reconciliation for health care legislation.

The health care bill is "replete" with provisions that Republican critics could challenge, said Senate Budget Committee top Republican Judd Gregg of New Hampshire, characterizing the list as "almost everything except the act of raising money . . . It'd be very hard to get [much of health care legislation] past the Byrd rule."

The main test that the Senate parliamentarian would have to decide, said Gregg, is whether a public policy proposal is extraneous to the main goal of cutting the deficit. Public policies can be included in budget reconciliation bills, but the main purpose should be to affect tax or spending decisions, not meet a policy goal such as getting people insured.

Over the 24 years that the Byrd rule has been used, challengers are successful in striking contested provisions about 80 percent of the time, according to the Congressional Research Service.

The Byrd rule allows an extraneous provision to be struck if the parliamentarian decides that the language meets any one of six scenarios:

  • it does not change outlays or revenues;
  • it produces a change in spending or revenues that is only a fig leaf and incidental to the policy changes it would make;
  • it produces a spending increase or revenue decrease that does not meet the instructions given to the committee in the budget resolution;
  • it was produced by a committee that does not have jurisdiction over that provision;
  • it would increase the deficit for a fiscal year beyond the time period covered by the reconciliation measure;
  • or it recommends changes in the Social Security program. (This does not include Medicare, which was created through the Social Security act.)

Many Democrats say that even if the conference report of the budget resolution includes the option of using reconciliation techniques, they want the tool to be used only if they first fail to get a bipartisan consensus.

"Ideally, you don't want to use reconciliation," said Sen. Sherrod Brown, D-Ohio, a member of the Senate Health, Education, Labor and Pensions Committee and a fierce proponent of health care overhaul legislation. "I hope we don't use it. But it helps to get Republicans to the table and be reasonable about this."

Rep. Jim McDermott, D-Wash., a House Ways and Means Committee member who supports universal health coverage, said that Democrats only want to "preserve the option as a last resort."

The problem is that merely keeping the option on the table raises suspicions among Republicans that Democrats are not truly interested in incorporating the views of Republicans.

"Republicans feel that Democrats could be stringing them along until they don't need them anymore," said a Senate GOP aide.

Avoiding the Byrd Bath
Democratic staff say their primary focus is on getting a bipartisan agreement. But if Republicans refuse to agree on health care legislation, aides are considering ways to use reconciliation and get around the threat of the Byrd rule.

Democrats were able to protect themselves from one use of the Byrd rule by tucking language in the Senate budget resolution that says that any health care legislation would have to be paid for over an 11-year timeframe. Democrats had adopted "pay as you go" budget rules in the last congressional session that would otherwise require the health legislation to be offset over both a six year- and an 11-year window.

One potential trick could be to tuck a vulnerable provision into a larger section of the bill that would not be extraneous, said G. William Hoagland, a Republican who spent nearly three decades on Capitol Hill as the top budget aide to Senate GOP leaders, and who now heads the public policy office of Cigna Corp. Then the Congressional Budget Office might estimate the costs of the entire section rather than the individual provision that would be at risk.

"That might work in some cases," he said. But for parts of the bill governing the complex laws governing the insurance industry, "that would be a nightmare."

Writing the bill in unnatural ways designed to protect vulnerable provisions from the Byrd rule could give headaches to regulators who would later have to figure out the bill's intent, and lawsuits could be filed to challenge the provisions.

Hoagland and congressional aides say that one of the most at-risk parts of the health care bill could be language requiring insurers to offer health care to everyone, regardless of preexisting conditions and without charging patients different rates based on their health. That language seems inherently extraneous, several Republican aides said, as does language requiring individuals to buy insurance.

A requirement for employers to pay for their workers' coverage could be in jeopardy for another reason, Hoagland said. That provision probably would have tax consequences and might not be considered extraneous. However, it could affect Social Security, which would give critics a different argument for dropping that provision.

Provisions that are struck down could potentially be added to other must-pass legislation later, but that is not easy to achieve.

All of the parliamentary challenges underscore the reasons why lawmakers prefer to get a broad consensus on health care legislation. A bipartisan compromise is easier to sell politically to the public and it's far easier to actually move through the Senate.

"If you're going to make major policy changes in this country you want a strong bipartisan majority," Hoagland said.

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