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December 15, 2008

Washington Health Policy Week in Review Archive f5cee1fd-4895-4435-a98b-f0877d38e5ec

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Baucus Wants Next Congress to Tackle Health Care Overhaul from the Start

By Drew Armstrong, CQ Staff

DECEMBER 10, 2008 -- In the race to stake out territory on a health care overhaul next year, Senate Finance Chairman Max Baucus is making it a habit to try and be first.

The Montana Democrat said Wednesday that when the 111th Congress opens, he'll be ready with a health care bill. "I'm guessing the first of the year, near the first of the year, we'll have a bill," Baucus said.

Also on the agenda is a short-term reauthorization of the State Children's Health Insurance Program (SCHIP) and tens of billions in funding for health information technology.

At a news conference, Baucus said the Finance Committee is working with the Congressional Budget Office to finalize policy sections and score savings and costs. "We're quite close," Baucus said. "We're in the process now of what do you need to score this provision, what do you need to score that provision?" he said.

Saving Health IT for Stimulus Package

One thing they won't be scoring as part of that effort will be a large package of funds to help doctors and hospitals buy health information technology, such as electronic medical records. Baucus said he will put the money—likely grants and loans—in an economic stimulus package that Congress will likely take up first thing in January.

"If I can put some of those upfront costs into the stimulus bill, I want to put them there," Baucus said.

"If you want to do this as part of an economic stimulus package, that would help it along," agreed Charles E. Grassley of Iowa, the committee's ranking Republican.

Baucus would not say how big the health information technology package will be, but he did say that it would likely be less than $50 billion.

Baucus also planned to do a short-term reauthorization of SCHIP. The current authorization expires at the end of March, and Baucus and other Democrats have talked about making a long-term expansion part of a health care overhaul.

The short-term reauthorization would be "of sufficient duration to fold into health reform," Baucus said.

Grassley was in line with such a plan. "I think I would back him on that," Grassley said. Including SCHIP in a health overhaul would likely help boost support for the overhaul from grass-roots organizations that helped push for an SCHIP expansion in the 110th Congress.

House Democrats May Wait on Obama

Such a short-term reauthorization would signal that Baucus is ready for a lengthy legislative struggle on a broader health overhaul bill. And while Senate Democrats are ready to burst out of the gates with their overhaul plans, getting them into law will be a more time-consuming matter.

The House is already doing its best to restrain the Senate's eagerness. There, key Democrats, such as Henry A. Waxman and Pete Stark, both of California, have said they want to wait and take their cues from President-elect Barack Obama.

"I think if Max [Baucus] thinks we're going to have universal coverage within the first couple months of [the next] Congress, he's being quite optimistic," said Rep. Diana DeGette of Colorado. DeGette is a chief deputy whip for Democrats and played an important role in the 110th Congress' struggle to expand SCHIP.

In November, Baucus released an 89-page white paper outlining his plans. Sen. Edward M. Kennedy, D-Mass., is expected to be the Senate's other leader on the bill. The two have alternately been praising the other's involvement and jockeying for primacy. While Baucus' committee has jurisdiction over key programs such as Medicare and Medicaid, Kennedy is a longer-established voice on an overhaul and has a reputation as a dealmaker.

Alex Wayne contributed to this report.

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Dems Debate Adding SCHIP to Economic Stimulus Package

By Mary Agnes Carey, CQ HealthBeat Associate Editor

DECEMBER 10, 2008 -- Democrats are debating whether or not to include a reauthorization of the State Children's Health Insurance Program (SCHIP) as part of an economic stimulus package, according to House and Senate lawmakers and aides.

"Nothing has been decided, but our first focus will be with the stimulus package and part of that would be SCHIP," Sen. Tom Harkin, D-Iowa, said Wednesday. In a recent interview, Rep. Henry A. Waxman, D-Calif., said adding SCHIP to the stimulus measure was "under discussion."

With economic stimulus legislation a top legislative priority in the 111th Congress, folding SCHIP into that bill could help bring bipartisan support for the proposal, provide financial assistance to states and help ease the burden of finding ways to finance the measure. Few, if any, lawmakers and experts say the stimulus package should be offset.

Reauthorizing SCHIP through the stimulus also would assure Democrats a legislative health care victory if they are unable to pass any broader health care overhaul measures, said aides and health care lobbyists. SCHIP is currently authorized through March 31.

At a news conference Wednesday, Senate Finance Committee Chairman Max Baucus, D-Mont., said he favored including a short-term reauthorization of the program in the stimulus package and discussing a longer-term SCHIP expansion as part of health care overhaul legislation Baucus said he plans to introduce early next year.

Baucus also said that he expects to see a health information technology package of less than $50 billion in the economic stimulus bill. Additional Medicaid funding for states is also expected to be part of that package.

Rep. Diana DeGette, D-Colo., said Congress needs to reauthorize SCHIP quickly. "We've got 9 million kids without health insurance in this country. But we need to realize that's not a substitute for universal national health care." DeGette said her support for a short-term SCHIP extension would depend on the size of the package.

The addition of SCHIP to the stimulus could draw the ire of fiscal conservatives in both parties who do not want the legislation loaded up with items not critical to improving the nation's sagging economy, particularly if the provisions are being added to avoid offsetting their cost per the "pay-as-you-go" budget rule.

While some Democrats have expressed an interest in putting SCHIP in the stimulus a House Democratic aide said, "it would be a hard sell" because of its size and that it is not related directly to the current economic downturn. Obama administration officials have also cautioned that the stimulus measure, which is expected to cost between $500 billion and $700 billion, must be focused on the economy, the aide said.

House Democrats passed a bill in 2007 that would have expanded SCHIP by nearly $50 billion over five years, but the Senate did not consider the measure. Instead, the Senate passed a bipartisan bill (HR 976) that expanded SCHIP by $35 billion over five years, to about $60 billion. But Bush vetoed that measure, as well as a second, very similar bill (HR 3963) that Democrats had hoped would draw a veto-proof proof majority. It did not.

SCHIP could move again separately if legislative efforts to overhaul the health care system drag on, said a Senate Finance aide. "If it appears that health reform is going to take a very long time, it increases the chances that we do SCHIP separately," the aide said.

Adoja Adofo, Drew Armstrong, David Clarke, John Reichard and Alex Wayne contributed to this report.

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Obama Picking Early Fight with the Insurance Industry?

By John Reichard, CQ HealthBeat Editor

DECEMBER 11, 2008 -- Despite their unsuccessful encounter with the insurance industry the last time Washington debated a big health overhaul, Democrats aren't being shy about criticizing insurers even as they emphasize the need to bring all players to the table to reach a deal on changes to the health system.

President-elect Barack Obama took on insurance company revenues from the Medicare program prominently in remarks Thursday on early steps he said must be made to lower costs in the health care system. And House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., never shy about attacking industry profits, issued a statement slamming the private health plans in Medicare, known as Medicare Advantage plans, for making big money at the expense of taxpayers and health plan enrollees.

Obama said in announcing the appointment of Tom Daschle as HHS secretary that "rising costs are unsustainable. We can't simply insure everybody under the current program without bankrupting the government or bankrupting businesses or states. So we're going to spend a lot of time on how do you streamline and rationalize the system. And I think you can fairly expect that we're going to have some very aggressive initiatives around things like health IT, around things like prevention that reduce costs."

"We're also going to examine programs that I'm not sure are giving us a good bang for the buck," Obama said. "The Medicare Advantage program is one that I've already cited where we're spending billions of dollars subsidizing insurance companies for a program that doesn't appreciably improve the health of seniors under Medicare. So our starting point is savings. Now, we are probably going to have to, then, find additional dollars to pay for some investments in the short term, although, my charge to my team is figuring out how do we make sure that it pays for itself over, say, a ten-year period so that we're actually saving money over the long term."

Stark, meanwhile, released a report by the Government Accountability Office saying that Medicare Advantage plans spent less on health care services than they projected in 2006, and as a result "pocketed an extra $1.33 billion in profits—65 percent more than estimated in their 2006 bids."

"This is the second year in a row that MA organization profits exceeded their own projections," the Stark statement continued. "A June GAO report showed than in 2005, MA plans earned an extra $1.14 billion in profit." Stark said the report "reinforces why we can't trust the health insurance industry with taxpayer dollars," and called for enacting minimum percentages of premium dollars that plans must pay in benefits to enrollees.

GAO said that "on average MA organizations reported earning profits of 6.6 percent of total revenue in 2006—which was higher than their projected profits of 4.1 percent. MA organizations reported spending an average of 83.3 percent of total revenue on medical expenses, but had projected spending an average of 86.9 percent of total revenue on those expenses."

Cracking down on Medicare Advantage payments and bringing them down to the level of payments to providers in traditional Medicare could save as much as $160 billion over 10 years, according to a 2007 Congressional Budget Office estimate.

But America's Health Insurance Plans has staunchly defended current Medicare Advantage payment levels, warning that cuts would mean higher out-of-pocket costs and reduced benefits for seniors, notably those with modest incomes who can little afford to buy the supplementary Medicare coverage purchased by more affluent Americans, including those with retiree health benefits.

AHIP hasn't hesitated in the past to let lawmakers know that they'll bring in busloads of irritated seniors if the budget knife slices too deeply into Medicare Advantage payments. That may not be the kind of image the Obama administration wants outside the Capitol later this year as lawmakers debate health care changes inside.

But the insurance industry has public relations problems of its own, with health plans that originally boasted they could take lower payments than traditional Medicare and crank out extra benefits to boot because of their efficiency now receiving far higher payments than the fee-for-service part of the program.

Both AHIP and the Blue Cross Blue Shield Association of America kept a low profile in the wake of Obama's statements. The Blues declined to comment either on the Medicare Advantage remarks by Obama or on Stark's statements concerning the GAO report.

Responding to Obama's comments doubting health improvements from Medicare Advantage, Robert Zirkelbach, AHIP's spokesman, said the plans "offer care coordination and disease management programs that are helping seniors get the care they need. There is a lot of anecdotal evidence showing that these programs are working to improve the quality of care for seniors," he said, referring a reporter to an AHIP publication touting plan features such as the use of caseworkers to oversee care, phone monitoring of those with bipolar disease, and reduced out-of-pocket charges for preventive care. "I would also like to point out that seniors in MA report incredibly high satisfaction with their benefits."

Concerning Stark's blast and the GAO findings, Zirkelbach said, "plans based their projections on the best available knowledge at the time. Both Medicare expenditures and national health expenditures grew less than were originally projected. Moreover, MA plans have implemented a variety of innovative programs that improve the quality of care for seniors and help control rising health care costs."

"I would also point out that 2006 was the first year of the Medicare drug benefit, which created significant uncertainty about what future costs would be. For example, Part D expenditures are significantly lower than originally anticipated thanks in large part to plans' efforts to incentivize greater use of generic prescription drugs."

Other observers saw little likelihood Obama was stoking a strong backlash from the insurance industry with his remarks.

"This is a classic political no-brainer in the sense that every Democratic member of Congress has said they ought to stop overpaying those Medicare Advantage plans," said Joseph Antos, a health policy scholar at the American Enterprise Institute. Insurers know they've had it good payment-wise of late, he added. "They know they've been getting a very good deal."

Antos added that cuts proposed by the Obama administration might be "close to the scalp but they won't get all the way to the bone." The Obama team knows that Medicare Advantage benefits lower-income seniors who get added benefits and lower out-of-pocket costs through Medicare Advantage at little expense, he said.

So-called private fee-for-service plans in the MA program could see big cuts, Antos added. But even there the Obama administration "will be very careful about how far they go in that direction because they don't want to undercut retiree coverage for big corporations because big corporations are who we're bailing out on a daily basis." Private fee-for-service plans are an attractive retiree health option for big corporations because they offer nationwide coverage.

A managed care industry executive likewise opined that Obama wasn't really playing with fire, noting that the president-elect's comments were part of an ongoing series of comments by Democrats. "It's just sort of piling on to a fire that's already burning," the executive said.

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Obama Says Economic Downturn Has Further Strained Health Care System

By Adriel Bettelheim, CQ Staff

DECEMBER 11, 2008 -- President-elect Obama on Thursday linked overhauling the health care system to a broader economic revival but hedged on whether he would roll back some of President Bush's tax cuts to pay for the changes.

Obama introduced the two top members of his health care team at a Chicago news conference that was dominated by questions about the federal corruption case against Illinois Gov. Rod R. Blagojevich.

Obama's point man on health care, former Senate Majority Leader Tom Daschle, will serve in dual roles as secretary of the Department of Health and Human Services and director of a new White House Office of Health Reform. The day-to-day operations of the White House office will be handled by Jeanne Lambrew, a senior fellow at the Center for American Progress.

Obama said rising health costs were contributing to the economic downturn, by hastening personal and business bankruptcies and enlarging the population of uninsured Americans. He blamed "Washington politics and influence-peddling" for thwarting past attempts to fix the system.

"This simply cannot continue," Obama said. "The runaway cost of health care is punishing families and businesses across our country. We are on an unsustainable course, and it has to change. The time has come—this year, in this new administration—to modernize our health care system for the 21st century, to reduce costs for families and businesses and to finally provide affordable, accessible health care for every American."

Obama did not specify how he intends to pay for the changes—a question that has taken on added significance with the cost of the government's response to the financial crisis now exceeding $1 trillion.

Obama's presidential campaign put the cost of his health care plan at between $50 billion and $65 billion a year, though some conservative health policy experts said the figures were overly optimistic.

Obama said his economic team still was evaluating whether to roll back some of Bush's tax cuts on the wealthy. During the presidential campaign, Obama said he would pay for his plan by repealing tax cuts for Americans earning more than $250,000 and maintaining the estate tax at its 2009 level. However, Obama advisers more recently said he is reconsidering that pledge, worried about imposing additional tax burdens during an economic crisis.

On Thursday, Obama said he would try to achieve savings by promoting new health-care technologies and more preventive testing, and by eliminating some wasteful programs. He singled out Medicare Advantage—a privately run, government-funded alternative to Medicare created in the Republican-led overhaul of the entitlement program, in 2003.

"We're spending billions of dollars subsidizing insurance companies for a program that doesn't appreciably improve the health of seniors under Medicare," Obama said.

Beyond those steps, Obama acknowledged, "We are probably going to have to, then, find additional dollars to pay for some investments in the short term."

Obama pledged to convene meetings of health care providers and other interested parties soon after taking office to chart an overhaul plan, and to "have a bunch of this stuff on C-Span" to ensure a transparent process.

Obama would be far from the first president to attempt to remake the U.S. health care system. Former President Bill Clinton and then-First Lady Hillary Rodham Clinton failed in 1993 and 1994 to win support for an ambitious plan to make employers pay for most of their workers' health costs and give the government a hands-on role in the health care system.

President Bush and the GOP-controlled Congress in 2003 pushed through a successful overhaul of Medicare that gave private insurers a greater role administering benefits to seniors and created new outpatient prescription drug coverage—but not without a bitter, year-long fight that fractured Congress.

Obama during the presidential campaign proposed a "play or pay" system that requires employers to either offer health coverage to workers or pay a sum equal to a percentage of their payrolls to fund a new national insurance plan.

The insurance industry opposes the requirement, though its supports other aspects of Obama's plan.

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Obama Taps Daschle to Lead His Health Team

By Alex Wayne and Drew Armstrong, CQ Staff

DECEMBER 11, 2008 -- President-elect Barack Obama announced his health advisers Thursday, led by former Senate Majority Leader Tom Daschle as Health and Human Services secretary.

Daschle will be responsible both for directing the sprawling HHS department and for leading Obama's effort to overhaul the health care system to ensure near-universal insurance coverage for every American as director of a new White House Office of Health Reform.

HHS manages the two huge health entitlement programs, Medicare and Medicaid, as well as the Food and Drug Administration and sundry other health programs.

Daschle published a book this year on health care reform, titled Critical: What We Can Do About the Health-Care Crisis. His co-author, Jeanne M. Lambrew, a professor at the University of Texas at Austin and health policy expert at the Democratic-aligned Center for American Progress, will also join the administration as deputy director of the new White House office.

Obama described Daschle and Lambrew's book as "groundbreaking" and "filled with fresh ideas." Daschle, Obama said, "will be responsible not just for implementing our health care plan; he will also be lead architect of that plan."

Lambrew was a top health policy adviser to President Clinton during his second term. According to her biography at the Center for American Progress, she led Clinton's effort to draft and implement what is now called the State Children's Health Insurance Program, which covers more than 6 million children whose families are low-income, but not poor enough to qualify for Medicaid. A large expansion of the program, to cover 10 million children or more, has been a top priority for congressional Democrats and is expected to be one of the first pieces of legislation passed by the 111th Congress.

In 2007, Lambrew helped House Democrats write legislation that would have expanded SCHIP by $50 billion. The bill was opposed by the insurance industry because it would have drastically cut payments to insurers who participate in the Medicare Advantage program, in which private insurers provide benefits to seniors in place of the government.

Lambrew and Daschle will be advocating their positions on health care reform in a White House that will be filled with people considered experts on health care in their own right, such as Obama's top economic adviser, Lawrence Summers, and his director of the Office of Management and Budget, Peter R. Orszag.

"It's going to be a challenging environment in which to build consensus," said Dan Mendelson, president of Avalere Health, a health policy consulting firm. Mendelson preceded Lambrew as associate director for health at the Office of Management and Budget under Clinton and knows her well.

"She understands the White House environment, she understands details technically and analytically," he said. "She has the ability to monitor what's going on and shape it within the White House. Daschle's going to need that. Inevitably in the White House structure there's going to be people who have differing ideas on the best way forward on reform."

Goal: Affordable, Available Care

Daschle said he aims "to make health care in this country as affordable and available as it is innovative." He said that Obama's overhaul campaign would begin with an effort to encourage Americans to host health care policy discussions in their homes and report their opinions and ideas to the Obama administration through its Web site,

"This is going to be an open and transparent process," Obama said.

In his book, Daschle critically examined President Clinton's attempt to overhaul the health care system in 1993 and concluded that it failed in part because the process was unduly secretive.

Daschle is critical of much of the health-care industry in his book, including doctors, hospitals, insurance companies and drug companies, blaming them in large part for the spiraling costs of care. As a solution, he proposes expanding both Medicaid—to cover more poor people—and Medicare—to cover more older Americans, especially those needing long-term care, while also opening the Federal Employee Health Benefits Program, which manages health insurance for government employees and members of Congress, to all Americans.

Daschle has endorsed the idea of requiring all Americans to purchase health insurance, a proposal strongly supported by many Republicans and the insurance industry. Obama has said that he doesn't think an individual mandate to purchase insurance is necessary for health reform, but has also said he is willing to reconsider.

To control costs in the health care system, Daschle proposes in his book to create a new Federal Health Board, modeled on the Federal Reserve Board, that would have sweeping powers to study best practices in medicine and recommend which treatments and drugs should be covered by government health insurance programs. The idea is to insulate those highly controversial decisions from politics and health-care lobbyists.

Daschle's Connections

Daschle, a South Dakota Democrat, served eight years in the House (1979–87) and 18 years in the Senate (1987–2005), including stints as both minority and majority leader. He was defeated in 2004 by Republican John Thune, and has been a public policy adviser at the law and lobbying firm Alston & Bird and senior fellow at the Center for American Progress, whose founder, former Clinton White House chief of staff John D. Podesta, is heading up Obama's transition operation.

Daschle's work at Alston & Bird caused some controversy as his name began to be floated for the HHS position. He is a policy adviser for the firm, not a registered lobbyist. But the firm's clients include many health care companies, and it has lobbied Congress, HHS and the Centers for Medicare and Medicaid Services on their behalf.

Obama has said he will impose strict requirements on his political appointees to reduce the influence of special interests on the government. According to his Web site, "no political appointees ... will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years."

One government watchdog group, Public Citizen, has said that it seems impossible that Daschle could avoid violating that prohibition, given Alston & Bird's clients and lobbying activities. But Obama's aides have said Daschle will recuse himself from any work that presents a conflict of interest.

Daschle's appointment was roundly applauded by Democratic lawmakers.

"Exceptional challenges call for exceptional leaders, and Tom is an ideal choice to meet the urgent challenge of health reform," said Sen. Edward M. Kennedy, D-Mass., who chairs the Health, Education, Labor and Pensions Committee and is writing his own health care overhaul legislation.

Senate Finance Committee Chairman Max Baucus, D-Mont., whose committee will hold confirmation hearings on the appointments, praised Obama's picks.

"President-Elect Obama's creation of a White House Office of Health Reform is a strong affirmation that health reform is on the agenda for the Obama administration," Baucus said. "I've said that reforming America's broken health care system is my top priority for 2009 and this office only contributes to the momentum toward success."

In his book, Daschle suggested that the Senate might want to move health legislation through the budget reconciliation process, a fast-track route that bars filibusters in the Senate.

Republican health policy experts are skeptical of that idea, because it would impose fiscal constraints on the legislation that Obama and other Democrats may find too limiting. But Democratic aides at a news conference hosted by the Alliance for Health Reform, a nonprofit founded by Sen. John D. Rockefeller IV, W-Va., said Thursday that the idea is under consideration.

"My understanding at this point is that there's no decision to use it, and no decision not to use it," said John McDonough, an aide to Kennedy. "It is something to stay tuned for."

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Report Identifies Obstacles to Establishing 'Medical Homes'

By John Reichard, CQ HealthBeat Editor

DECEMBER 12, 2008 -- A new report by a Washington research firm shows that policy makers face many challenges revamping health care by ensuring individuals have "medical homes"—a single physician practice that gives individuals ready access to doctors who oversee their overall treatment to boost its efficiency, including by keeping them healthier through better preventive care.

Released this week by the Center on Studying Health System Change, the report aims to fill a gap in research on how to put the medical home concept into practice. It lists four big challenges in that regard: how to certify the status of a physician practice as a medical home; how to find patients the right medical home; getting patients and doctors to work together to ensure the right care is delivered in the right place at the right time; and how best to pay practices to function as true medical homes.

The report notes that many of the components of the health care system operate independently, a feature of the U.S. system promoted by fee-for-service payments that pay individual doctors per procedure, giving them a financial incentive to prescribe many appointments, tests, and procedures in order to increase their incomes. While there may be benefits to having so many independent operators in the system, including greater choice of provider, "the flip side of independence is fragmentation—across care sites, providers, and in clinical decision making for patients," the report says.

The medical home concept aims to limit care to its essential components by encouraging teamwork both among doctors and other caregivers and between patients and providers. But "qualification tools" that can be used to qualify a practice as a medical home in the eyes of insurers can pose problems, by overemphasizing information technology, underemphasizing primary care, or through an overwhelming application process to qualify as a home, the report suggests.

The right tool helps a practice focus on the most important things to do to improve care. But the early version of a tool developed by the National Committee for Quality Assurance required 80 to 100 hours to complete, according to several physician practices cited by the report.

"Given that practices with five or fewer physicians constitute 95 percent of office-based medical practices, such time and resource considerations could pose significant barriers to participation among the very practices medical home initiatives are targeting," the report says.

A newer version of the tool takes 40 to 80 hours to complete, the report notes, but suggests further improvements are in order. The documentation burden could be lightened by decreasing the number of information technology items, particularly those not proven to be effective, the report advises.

Effective payment for medical home services requires some form of "capitation," or fixed per-patient payment, the report counsels. And it might be better to initially avoid "budget-neutrality" approaches that fund payment for medical home services by reducing payments to specialists, it adds. "Paying for medical home services without immediate expectation of budget neutrality might begin to correct the imperfections of the fee-for-service system in a way that would minimize opposition" from specialists, it says.

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