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December 14, 2009

Washington Health Policy Week in Review Archive 6a67c3bf-6c63-4487-9e92-577bae869da5

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A Plan to Allow Young Adults to Stay On Parents' Plans Wins Broad Appeal

By Jane Norman, CQ HealthBeat Associate Editor

December 11, 2009 -- Here's a rarity: A provision in the health care overhaul bills that is cheap, fairly easy to understand and universally popular.

Both House and Senate bills would allow young adults to remain on their parents' health insurance policies until their mid-20s. It is being touted as a way to extend health insurance to the "young invincibles," who have the highest rate of uninsurance.

The Commonwealth Fund estimates that a third of Americans age 19 to 29 are uninsured, the largest and fastest-growing segment of the population lacking health insurance. For those who aren't full-time students, it climbs to 39 percent.

Sen. Richard J. Durbin said parents worry when their sons and daughters graduate from college already loaded with student debt and then must leave parents' health care policies, which generally end when their status as a full-time students ends.

"I can't tell you how many times I called my daughter and said: 'Jennifer, have you got health insurance yet?' 'Oh, yeah, Dad, I will get to that soon.' I didn't like to hear that," said Durbin, an Illinois Democrat. "Parents don't like to hear that. Well, we extend them from age 24, and we say they can stay on their parents' insurance policy until they are 27. That is an addition of several years of protection—peace of mind—while a young person goes about finding a job, starting a career and starting a family."

While the proposal has universal support, health policy experts are not so sure that it would have a big impact on the number of uninsured Americans.

For one thing, it's unclear how many young adults would actually be added to their parents' policies. In states that have moved on to mandate addition of young people to parents' policies, the effect has been minimal, according to one study

"There was no impact," said Joel Cantor, a co-author and director of the Center for State Health Policy at Rutgers University. The study did find a small increase in young adult dependent coverage in the 25 states that at the time of the study had implemented expansions, but it was offset by a decline in coverage in the young adults' own names as policyholders, he said.

"Our conclusion, at least at this early stage, is this is causing a bit of a shift in the source of coverage, but really is not meeting the policy makers' intent in making a dent in the number of uninsured young adults," he said. "These policies really don't address the big problem of affordability." Some 38 states now have enacted young adult policies, most since 2003, though they differ in detail.

The impact could be greater if young adult coverage is implemented on a national scale and accompanied by an individual insurance mandate, federal subsidies and other market improvements, Cantor said. "I think it's a totally different game in a post-reform world," he said.

Policy makers are less sure of the effect if the policy is put into place on its own. The House health care overhaul bill (HR 3962) would make the expanded coverage effective Jan. 1, prior to other changes, assuming legislation is signed into law by then. The provision is based on a bill by freshman Kathy Dahlkemper, D-Pa.

No Objections From Industry
Under the House bill, health plans would have to allow parents to keep their dependent children on their policies until age 27 as long as they are not enrolled in other health plans. The Senate bill (HR 3590) would allow parents to keep unmarried dependents on their policies until age 26 and specifically bars "a child of a child," or grandchildren, from coverage. A spokesman for America's Health Insurance Plans said that the industry insurer group has no objections to either of the expanded young adult coverage proposals.

While it's difficult to estimate how many uninsured young people could be added to their parents' policies, just 1.1 million of the 10.3 million uninsured young adults in 2007 appeared to live in families with parents who have group employer coverage, according to a study by the Urban Institute.

"Therefore, even a very high take-up rate of dependent coverage for these young adults would only make a small dent in the uninsured rate among this age group," researchers John Holahan and Genevieve Kenney said in their report.

Kenney said in an interview that the affordability of insurance will remain key for this group, and that Medicaid expansion and federal subsidies would probably be more important for extending coverage to young adults on a national scale. "I don't think we can get there without an individual mandate," she added.

A report by Richard S. Foster, actuary for the Center for Medicare and Medicaid Services, estimates that 485,000 people would gain coverage through their parents' group plans under the Senate bill.

Whatever happens, the young adult provision seems a winner among politicians looking to burnish the appeal of the overhaul among worried parents.

"Can you imagine all of the young people today, college or not, who come out, get the first job, like my children, no health insurance, who will benefit by saying you can stay on your parents' insurance until your 27th birthday?" asked Sen. Debbie Stabenow, D-Mich. "That is in this bill, and it is very important."

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CMS Actuary Says Senate Bill Would Increase Health Spending Through 2019

By Jane Norman, CQ HealthBeat Associate Editor

December 11, 2009 -- A new report by Medicare's chief actuary says that the Senate health care overhaul bill would increase health spending through the next decade by 0.7 percent rather than curbing growth and might make it tough for some Medicare-dependent hospitals to stay in business.

An increased demand for Medicaid services would be difficult to meet especially during the first few years of the overhaul, and both Medicare and Medicaid patients might have trouble obtaining care, it says.

But the report also projects the legislation (HR 3590) would extend health insurance coverage to some 33 million Americans who now go without, a key objective for Senate Democrats struggling to achieve a 60-vote consensus on a main domestic initiative.

Richard S. Foster, the actuary for the Centers for Medicare & Medicaid Services and a non-political civil service employee, wrote an analysis of the House-passed health care bill (HR 3962) in November that Republicans seized upon repeatedly to make the case that planned cuts to Medicare needed to finance the overhaul might not stick.

They also requested this newest bombshell, delivered late Thursday and circulated on Friday, and it gave the GOP fresh ammunition at a tenuous time for Senate Democrats. They are awaiting a Congressional Budget Office (CBO) score on a compromise plan to drop the government-run insurance program in the bill and extend Medicare to people ages 55 through 64, a move that's brought condemnation from liberal groups such as who say Democrats have bargained away real change.

Republicans focused on cost. Sen. John McCain of Arizona described the Foster report as "one of the most serious indictments" of Democrats' approach to health care, adding it should "put the dagger in the heart of the Reid bill." Mike Johanns of Nebraska called it "a roundhouse blow to the Reid plan."

Foster projects that total national health expenditures would increase by $234 billion between 2010 and 2019 under the Senate bill. That reflects the net impact of greater use of health care by newly insured Americans and other coverage expansions, despite provisions aimed at curbing costs, Foster says. He cautions that the actual future impact of the Senate bill is "very uncertain" because so few precedents exist for a wholesale change in the structure of the system. Both the CBO and Joint Committee on Taxation have estimated an overall reduction in the deficit through 2019 under the bill.

Blasting away, Republican Sen. Charles E. Grassley said the Foster report showed that the Senate bill "doesn't do anything to reduce the unsustainable growth in health care spending and in fact would make health care costs grow more rapidly." Sen. Michael B. Enzi, R-Wyo., said "the experts tell us the Reid bill would drive up costs and hurt seniors on Medicare."

But Finance Committee Chairman Max Baucus, D-Mont., said in a one-paragraph statement that there is "a lot of great news" in the report because it showed the Senate bill would extend the life of the Medicare system by nearly a decade, from 2017 to 2026, and would reduce Medicare premiums and cost-sharing for beneficiaries. Linda Douglass of the White House Office of Health Reform wrote on the White House blog that opponents of the overhaul were distorting the Foster report's conclusions and that CMS takes a more conservative approach to measuring savings than other independent experts.

Other Democrats said the report looked at an outdated version of their bill. Foster analyzed the legislation introduced by Majority Leader Harry Reid, D-Nev., on Nov. 18 so his work does not reflect any amendments adopted on the Senate floor since then or the effect of possibly dropping the public option.

"That assessment was of previous versions of the legislation so it's completely wrong," said Sen. Christopher J. Dodd, D-Conn., a top health negotiator. "I saw that study as well and went back and realized they were looking at previous versions of the bill."

Douglass pointed out that Foster also says that proposed reductions in payment updates to Medicare providers, the cost-cutting actions of a new Independent Medicare Advisory Board and an excise tax on high-cost insurance plans "would have a significant downward impact on future health care cost growth rates." During 2010 through 2019, those effects are offset by the costs of expanded coverage, he says.

However, Foster did express great doubt about estimated savings in connection with proposed Medicare price updates for hospitals, skilled nursing facilities and home health agencies that are tied to productivity gains in the overall economy. Those reductions may be "unrealistic" because it's doubtful those providers could match gains in the private sector, Foster says. Over time, these sustained reductions in payment updates would grow more slowly than the providers' costs and simulations by the actuary's office suggest 20 percent of Part A providers like hospitals would become unprofitable, says the report.

As for expanding coverage, the new insurance mandates as well as the expansion of Medicaid would result in 33 million additional Americans with insurance by 2019, Foster says. He projects that 18 million would gain Medicaid coverage as a result of expansion to all legal adults earning less than 133 percent of the federal poverty level, and 20 million would obtain insurance through the new insurance exchanges, many of those individuals qualifying for subsidies. That would be offset by a decrease of 5 million individuals who receive insurance through employer-sponsored group plans.

Foster examines the host of new fees in the bill on drugmakers, medical device manufacturers and health insurance plans and concludes that they would be passed on to consumers in the form of higher prices and produce an additional $11 billion in national health spending beginning in 2011.

He's also very critical of the Class Act, a new long-term insurance program that he says would produce estimated net savings of $38 billion through 2019 mostly because of an initial five-year period in which no benefits are paid. Over the longer term, expenses would exceed revenue and "there is a very serious risk the program would become unsustainable," says Foster. Cuts in Medicare growth rates that are supposed to be achieved by the Independent Medicare Advisory Board "may be difficult to achieve in practice" through 2019, he adds.

Kathleen Hunter contributed to this story.

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Democrats Scrutinize Latest Senate Health Care Proposal

By Alex Wayne, CQ Staff

December 9, 2009 -- Democratic leaders in both chambers were briefing their rank and file on Wednesday on a Senate proposal to replace a so-called public option in the health care overhaul with an alternative that includes expanding Medicare eligibility.

Details were still scarce about the proposal, put together by a group of 10 Democrats and outlined Tuesday evening by party leaders. The full Senate Democratic Caucus was awaiting a 5 p.m. briefing on the plan, which leaders have sent to the Congressional Budget Office for a cost estimate.

"There's really just confusion about what's in the proposal," said a senior aide to a House Democrat who attended a briefing led by Rep. Rosa DeLauro, D-Conn.

The new proposal would effectively scrap a government-run insurance plan like the one that the House-passed health care bill (HR 3962) would create to compete with private insurance offerings in a new exchange, or marketplace.

Instead, individuals ages 55 through 64 would be able to buy into Medicare, the health coverage entitlement now open only to those age 65 and older. Second, the proposal would create a new system of private, national health insurance plans administered by the Office of Personnel Management, which already manages health benefits for federal employees.

Senate aides did not contest those details after Senate Majority Leader Harry Reid, D-Nev., announced an agreement on the new policy Tuesday evening. But while Reid said that it was "not true" that the public option would be dropped as part of the agreement, it appears he may have been employing a broad definition of the term.

One Senate aide said Wednesday that the proposal does not include a new government-run insurance plan of any kind. Instead, insurers who offer plans to federal employees under the Federal Employee Health Benefits Plan would be required to make the same plans available nationwide to the broader public if the government can't find at least two entities willing to offer national plans independently.

The proposal would not require private insurers offering plans in the new exchanges to spend at least 90 percent of their revenue on medical benefits, the aide said. The 10 Democrats who developed the proposal considered that idea, but apparently rejected it, along with a proposal to provide expand Medicaid eligibility to people at 150 percent of the federal poverty level, up from the 133 percent level already included in the Senate bill (HR 3590).

Some Democrats consider the Medicare buy-in option better than creating a new government-run insurance plan within the exchanges the bill would create.

Rep. Anthony Weiner, D-N.Y., a deputy whip in his chamber, called the Medicare buy-in "way better than the public option," and he put his face in his hands when asked about other liberals who expressed skepticism about the proposal.

"Expanding Medicare is an unvarnished, complete victory for people like me who support a single-payer system," Weiner said. "Never mind the camel's nose—we got his head and neck in the tent."

The public option, he noted, was itself a compromise proposed by people who would prefer simply to expand Medicare to cover every American, or enact some other kind of single-payer system.

"We shouldn't fall in love with our compromise position when they're giving us our ask," he said.

Skipping Conference?
Meanwhile, there was increasing talk among rank-and-file Democrats on Wednesday that their leaders might bypass a House-Senate conference committee on the health care bill and try to clear the Senate's version—once one is finally ready—through the House without further changes. That would be the fastest way to put a bill on President Obama's desk, possibly even by the end of the year.

Democratic leaders aren't saying much about their end-game strategy, since Senate passage appears at least a week away. But Speaker Nancy Pelosi, D-Calif., was cool to the idea of bypassing a conference.

"Why would we not have a conference?" Pelosi asked. "No, we're going to have a conference . . . We'll see when we see paper."

Still, some other Democrats indicated the idea was under consideration.

"I think we should keep it in our arsenal of tools," said Rep. Diana DeGette, D-Colo., the chief deputy whip.

Majority Leader Steny H. Hoyer, D-Md., said he was open to the idea of reaching agreement through informal negotiations, with the chambers possibly volleying versions back and forth. "We could do that," Hoyer said.

But he added that lengthy negotiations would probably be required to resolve major differences between the two bills. "The Senate has made some pretty dramatic changes . . . and the members will have to look at that," Hoyer said.

He added, "My point is we're not going to see a conference by the end of the year unless the Senate passes something by Friday, which I don't expect to happen. If they don't pass it by Friday, we're scheduled to get out on the 18th. I am very focused on the week of the 21st, which is Christmas week, being an off week, and I'm not trying to deviate from that, unless I thought we could get a conference report done on the 21st or 22nd. If they don't pass a bill until the end of week, I don't think that's possible simply from a staff standpoint and a technical standpoint."

Rep. Raul M. Grijalva, D-Ariz., who is co-chairman of the Progressive Caucus, said he wanted a conference held so that liberals could make a last stand for the public option.

"To jettison it without a fight would be demoralizing to our base," he said. "It would put progressives in a yes or no position where no is the only option."

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Medicare Buy-In Emerges as Sweetener to Woo Disappointed Liberals

By John Reichard, CQ HealthBeat Editor

December 7, 2009 -- Democratic senators and staff members reassembled late Monday to take another crack at reaching an agreement on language pertaining the "public option," the controversial provision in the Senate health care overhaul bill (HR 3590) complicating efforts by Democrats to attract the 60 votes they need to pass the proposal.

A meeting Sunday evening between moderate and liberal Democrats divided on the issue failed to produce a compromise, but New York Sen. Charles E. Schumer reported "a great deal" of progress on the issue. However, Nebraska's Ben Nelson, a strong critic of the public option, gently hinted that Schumer was engaged in spin, describing "my good friend" as "optimistic."

Schumer said, however, that staffs of the senators would meet later Sunday evening and on Monday. One new element apparently on the table is discussion of a "Medicare buy-in," which presumably would allow the uninsured to pay premiums to enter the popular government insurance program for the elderly and disabled.

Details of the proposal weren't immediately available. Another proposal that has surfaced would involve creating an additional option in insurance exchanges giving small businesses access to national nonprofit plans. The nonprofit options apparently would be negotiated by the Office of Personnel Management (OPM), which runs the Federal Employees Health Benefits Program. That program is often cited by centrists and conservatives as an example of how to use marketplace forces to restrain premium increases.

The OPM model likely wouldn't satisfy liberals hungry for a new government-run insurance plan as distinct from an added selection of private plans negotiated by government officials. But a Medicare buy-in might ease the sting.

Sen. John D. Rockefeller IV, D-W.Va., said Thursday afternoon that a Medicare buy-in "is popular with me, but it wasn't with Kent Conrad or Max Baucus," referring to the chairmen of the Senate Budget and Senate Finance committees, respectively. It wasn't clear, however, the context in which Rockefeller was referring to a Medicare buy-in.

Another alternative to a robust public option would entail tough regulations to ensure more affordable private coverage. Rockefeller briefly showed reporters a document that included such regulations, including one that would require insurers to pay out 90 cents of every premium dollar for health care. Urging reporters to look at the list, Rockefeller said, "See all those round circles? Those are things that have sort of been agreed to by Ben Nelson—sort of, maybe." Rockefeller then seemed to backtrack a bit to say that Nelson was at least willing to look at them—"considering, considering, considering," Rockefeller amended.

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White House Announces Half a Billion Dollars for Health Centers

By CQ Staff

December 9, 2009 -- The White House on Wednesday announced grants of $509 million for construction and renovation projects at 85 community health centers around the country. Allocated under the economic stimulus law, the awards will create jobs and help provide care "for more than half a million additional patients in underserved communities," a White House news release said.

Community health centers funded by the federal government take all comers, including the uninsured. In many instances, they treat low-income patients without coverage or with skimpy insurance.

According to the White House, there are some 1,100 health centers across the country that served some 17 million patients in 2008 and will serve come 20 million patients in 2010.

Another $88 million in grant money will help networks of community health centers adopt electronic health records and other forms of health information technology.

In addition, President Obama signed an order creating a "demonstration program" to test the "medical home" concept in selected health centers.

The idea of the medical home is to give patients a doctor who is accessible, coordinates treatment with other doctors and nurses, and provides good preventive care.

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With Democrats on the Defensive, Gawande Weighs in on The Senate Bill

By John Reichard, CQ HealthBeat Editor

December 11, 2009 -- On a day when they were derided for producing a 2,074-page bill in the Senate that in the words of Minority Leader Mitch McConnell, R-Ky., fails to do anything about rising costs, Democrats were clearly on the defensive.

Medicare's respected actuary Richard S. Foster weighed in Friday with an analysis of the bill (HR 3590) that cast doubt on whether the measure could squeeze savings out of the nation's health system because 33 million newly covered Americans would receive care they wouldn't have received when uninsured.

Poll results earlier in the week were no source of moral support, with a CNN survey showing only 36 percent of Americans surveyed supporting the Senate Democratic overhaul proposal. Earlier in the week, a Quinnipiac University poll found that only 38 percent of Americans "mostly approve" of the proposed changes to the health care system under consideration by Congress.

On the other hand, 52 percent said they "mostly disapprove." Older Americans, who Republicans said would suffer under Medicare cuts in the Senate bill, expressed an even lower opinion of changes under consideration in Congress. Only 30 percent of those over age 55 said they "mostly approve" and 57 percent of them said they "mostly disapprove."

Republicans fired Friday out of both barrels, armed with lengthy talking points based on the Foster findings. Democrats responded quickly but weakly, failing to provide any comprehensive rebuttal. But at least they could take comfort in a defense of the Senate bill written by Atul Gawande, the surgeon and former Clinton administration official who made a big splash in the health care debate earlier this year with a New Yorker magazine article that detailed waste in Medicare spending associated with medical entrepreneurship.

Gawande was back at it in the Dec. 14 issue of the New Yorker with a piece on the Senate bill.

"Health care costs are strangling our country," Gawande wrote. "The costs of our dysfunctional health-care system have already helped sink our auto industry, are draining state and federal coffers, and could ultimately imperil our ability to sustain universal coverage."

What does the Senate bill do about those costs? Does it end piecemeal payment, replace payment for quantity with payment for quality, adopt structural changes that improve quality? "It does not," Gawande said. "Instead, what it offers is. . .pilot programs.

"Where we crave sweeping transformation. . .all the current bill offers is those pilot programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate to solve a problem of this magnitude. And yet—here's the interesting thing—history suggests otherwise."

His argument relies on an extensive analogy to the agricultural sector. In 1900, almost 40 percent of family income went to food and almost half the nation's work force was tied up in farming. "We were, partly as a result, still a poor nation."

But amid criticism that it was taking over the agricultural sector, "government was enlisted to help millions of farmers change the way they worked. The approach succeeded almost shockingly well. The resulting abundance of goods in our grocery stores and the leaps in our standard of living became the greatest argument for America around the world."

Gawande asserted that "it all started with a pilot program."

The piece cites the example of a U.S. Department of Agriculture employee who convinced a Texas farmer to try out "scientific" methods to see how they worked. Amid the spread of the boll weevil, the cotton farmer turned a large increase in profits, catching the eye of other local farmers. USDA followed with a program of employing "extension agents" who set up other demonstration farms across Texas and Louisiana.

Other USDA programs compared the effectiveness of farming techniques and the department continually evaluated new technologies to provide technical assistance to farmers.

"The government never took over agriculture, but the government didn't leave it alone either. It shaped a feedback loop of experiment and learning and encouragement for farmers across the country."

The history of agriculture suggests that transformation is possible "without a master plan, without knowing all the answers up front." Figuring out how to transform medical communities with their hodgepodge of local entities is going to require trial and error according to Gawande — and that's where the Senate bill comes in.

"Pick up the Senate health-care bill—yes, all 2,074 pages—and leaf through it. Almost half of it is devoted to programs that would test various ways to curb costs and increase quality. The bill is a hodge-podge. And it should be."

Gawande concludes that if "we're willing to accept an arduous, messy, and continuous process [of improving care and controlling costs] we can come to grips with a problem even of this immensity. We've done it before."

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