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February 17, 2009

Washington Health Policy Week in Review Archive 08fcd322-e4f8-4c3c-9979-833c0672ddd5

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Conference Agreement Includes Health Concessions to the House

By John Reichard, CQ HealthBeat Editor

February 12, 2009 -- Medicaid enrollees and their advocates, medical research lobbyists and jobless Americans at risk of losing their health benefits may be among those cheering the loudest for economic stimulus provisions hammered out by Hill negotiators in anticipation of House and Senate action to quickly send the measure to the White House for President Obama’s signature.

The agreement also meets the long-held goals of many health policy analysts who want to make the health system more efficient through big investments in health information technology and “comparative effectiveness” research assessing which treatments work best for a particular medical condition.

Senate negotiators prevailed in deleting House language allowing the newly unemployed to hold on to health coverage through buying into the Medicaid program, a provision derided by critics as permitting outgoing Bush cabinet members to sign up for the low-income health insurance program. But House negotiators won out on premium subsidies for Consolidated Omnibus Budget Reconciliation Act (COBRA) health insurance benefits for hundreds of thousands of low-and-middle-income workers losing their health benefits who do not qualify for Medicaid.

And the House managed to hold onto some increases in funding for preventive care and “wellness” programs, after it appeared that the Senate might succeed in zeroing out any such increases.

The biggest spending increase among the health provisions — $86.6 billion over 27 months — goes to help states maintain and expand Medicaid enrollment as the deepening recession produces big shortfalls in state budgets and the newly unemployed crowd onto the Medicaid rolls. The federal government during that period would increase its percentage of the Medicaid spending — known as the “Federal Medical Assistance Percentage” (FMAP) — by 6.2 percent for all states, with an added decrease in state outlays based on increases in a state’s unemployment rate, according to a summary prepared by the Senate Finance and House Ways and Means Committees. States would have to maintain current eligibility criteria.

The summary said $24.7 billion will be spent to pay 65 percent of the premium costs for 9 months for laid-off workers who want to continue their job-based coverage under COBRA. That’s another House victory; the Senate approved only a 50 percent subsidy. “With COBRA premiums averaging more than $1,000 a month, this assistance is vitally important,” the summary said. To qualify, workers must have been “involuntarily terminated” between September 1, 2008 and December 31, 2009. To qualify, workers must attest that their annual income doesn’t exceed $125,000 for individuals or $250,000 for families.

The agreement allots $19 billion to speed adoption of health information technology by doctors and hospitals. The $19 billion includes $17 billion for investments and incentives through Medicare and Medicaid and $2 billion for grants and loans available through discretionary funding. If the agreement is enacted, “approximately 90 percent of doctors and 70 percent of hospitals would adopt and use certified electronic health records within the next decade, which in turn would save more than $12 billion through reduce spending on Medicare, Medicaid, and other programs,” the summary said.

After years of flat funding, the National Institutes of Health (NIH) gets a dramatic $10 billion increase, according to a House Appropriations Committee summary. That’s a victory for the Senate; it pushed for that sum while the House was willing to settle for a $3.5 billion hike. According to a preliminary overview of the conference agreement released late Wednesday by House Speaker Nancy Pelosi, D-Calif., the $10 billion breaks down into $8.5 billion for research grants and programs and $1.5 billion to NIH grant recipients to upgrade laboratories.

NIH also gets a chunk of the $1.1 billion in funding allotted for comparative effectiveness research aiming to identify which medical treatments work best for given conditions. The Agency for Healthcare Research and Quality is expected to get most of the money. Some of it will also go to the HHS Office of the Secretary, according to the House Appropriations document.

The big fiscal shot in the arm for NIH will reduce a backlog of research projects that have been on hold because of lack of funding. Elias Zerhouni, director of NIH through much of the Bush administration, said a big increase in the NIH budget was critical to turning an enormous increase in information on the genetic basis of disease into medical breakthroughs. The advocacy organization Research!America said the investment could create 70,000 jobs and stimulate the economy of every state, adding that most NIH funding is distributed to colleges, universities, and research institutions across the country.

The agreement also provides $1 billion for a new “Prevention and Wellness Fund,” much less than the $3 billion the House approved but considerably more than in Senate-approved stimulus language, which did not provide for such a fund. Possible uses include flu vaccinations and added funding for programs to reduce obesity, smoking and other health risks.

The agreement provides $1.2 billion for the Veterans Administration to build or improve medical facilities, long-term care facilities, and to improve VA cemeteries. About $6.5 billion goes for sustaining, modernizing or building a variety of Department of Defense facilities, including those involved in health care.

The agreement includes a variety of other Medicare and Medicaid provisions. A cut in Medicare payments to teaching hospitals for their capital costs would be dropped at a cost of $191 million. A Medicare cut in payments to hospice providers relating to changes in a wage index for hospice workers would be blocked, costing $134 million. Adjustments in payments to long-term care hospitals, which treat medically complex cases such as patients who depend on respirators, would cost $13 million.

The agreement provides $1.3 billion to extend the “Transitional Medical Assistance” program from June 30, 2009 to Dec. 31, 2010. The program provides Medicaid benefits to those making the transition from welfare to work. Language requiring prompt Medicaid payment to nursing facilities and hospitals would cost $680 million. Extension through Dec. 31, 2010 of the “Qualified Individual Program,” which helps low-income people pay their monthly Medicare Part B premiums for doctor care and other forms of care outside the hospital, would cost $550 million. Temporary increases in Medicaid payments to hospitals that treat an unusually large number of uninsured or underinsured patients entail outlays of $460 million.

Provisions including eliminating certain out-of-pocket costs for American Indians and Alaska Natives enrolled in Medicaid and maintaining access to Indian health facilities carry a price tag of $134 million.

And the stimulus agreement would extend or add moratoria on certain Medicaid regulations at a cost of $105 million. These include regulations for case management, provider taxes and school-based administration and transportation services; current moratoria for these rules would be extended through June 30, 2009. A moratorium on a regulation for hospital outpatient services would last until July 1, 2009.

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Funds For Health IT, Prevention And Cobra Included In Stimulus Deal

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 12, 2009 -- States would receive $87 billion in additional Medicaid money, doctors and hospitals would receive $19 billion to help the adopt health information technology systems and unemployed workers who met certain income levels would receive financial assistance to help them afford health insurance for up to nine months as part of economic stimulus legislation scheduled for a House vote Friday.

The measure (HR 1) would invest $1 billion in prevention and wellness programs as well as $1.1 billion for federally funded studies to determine the effectiveness of drugs, devices and medical procedures. The Agency for Healthcare Research and Quality, the National Institute of Health (NIH) and the secretary of the Department of Health and Human Services (HHS) would receive those funds, according to a summary released by House and Senate appropriations committees.

Other health-related elements of the deal include $8.5 billion for biomedical research at the National Institutes of Health (NIH) to study diseases such as Alzheimer’s, Parkinson’s, cancer and heart disease and another $1.5 billion for NIH to renovate university facilities.

According to a summary released by the Senate Finance and House Ways and Means committees, states would receive nearly $87 billion in additional federal Medicaid funding for a 27-month period than began last Oct. 1 and would continue through Dec. 31, 2010. States will not be allowed to change their eligibility requirements for the program during that time.

In a statement, Sen. Charles E. Grassley, R-Iowa, the Senate Finance Committee’s ranking member, said under the formula in the bill, Iowa, along with 33 other states and the District of Columbia, will receive less Medicaid money than larger states. The stimulus package “shortchanges” Iowa by $185 million, Grassley said.

“It disregards the tough economic situation facing our state and others and it fails to understand that the recession is hitting places like Iowa a little later than other states, but it is still hitting us,” Grassley said in a statement. He tried but failed to chance the package’s Medicaid language during Senate debate.

The stimulus package would help laid-off workers purchase health insurance from their employers under the COBRA program. COBRA premiums are often prohibitively expensive and consume much of government unemployment benefit payments.

Under the stimulus measure, federal subsidies for health insurance under COBRA would cover 65 percent of the cost of premiums for nine months for workers whose incomes do not exceed $125,000 for individuals and $250,000 for families. To qualify, workers must have been involuntarily terminated from their jobs from between last Sept. 1 and Dec. 31, 2009. The House-passed version called for a 65 percent subsidy but only for nine months while the Senate bill would have provided a 50 percent subsidy of their COBRA premiums for 12 months.

American Heart Association President Timothy Gardner said the COBRA provisions in the measure would help “close gaps in care for many who need ongoing treatment for chronic disease” such as heart disease and stroke which have high mortality rates.

The $19 billion in health information technology funding includes $2 billion in discretionary funds and $17 billion for investments and incentives offered through the Medicare and Medicaid programs to help increase the use of “health IT” in hospitals, doctors’ office and other medical facilities. The bill would require the government “to take a leadership role” to develop standards by 2010 that would allow health information to be exchanged nationwide.

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Lobbies Eye a Segue from SCHIP to Broader Health Overhaul

By John Reichard, CQ HealthBeat Editor

February 13, 2009 -- Can House and Senate support for the SCHIP bill that recently became law be parlayed into support for a broader health overhaul bill? Maybe with a little friendly persuasion.

Families USA, the Pharmaceutical Research and Manufacturers of America (PhRMA), the Service Employees International Union and the American Cancer Society Action Network are launching a multi-million dollar, multi-week cable TV ad buy this weekend thanking selected lawmakers for their “yes” votes on legislation expanding the State Children’s Health Insurance Program.

The $10 million-plus ad buy will thank 34 senators and 49 members of the House for their support for the law, which is expected to push SCHIP enrollment from 7 million to 11 million. The ads thank the individual lawmaker involved by name for his or her effort to bring health coverage to 11 million children. They flash the phone number of the lawmaker, urging viewers to call to express thanks, and to deliver another message on a broader overhaul. The ad for Sen. Christopher J. Dodd, D-Conn., for example, urges viewers to “Call Senator Dodd today. Tell him thanks for standing up for our kids, and that now’s the time to guarantee quality affordable health care for all Americans.”

The ads, which will run for three weeks in the case of the senators and two weeks in the case of House lawmakers, is a way to let lawmakers know that voters expect bigger things from them than expanding SCHIP. A Families USA spokesman declined to name the lawmakers but said they include both Democrats and Republicans. “It breaks down pretty evenly” between the parties, he said.

The spokesman said the three groups are also planning a direct mail campaign targeting voters in the states or districts of the lawmakers. The campaign calls for 150,000 pieces in the case of each senator and 60,000 pieces in the case of each lawmaker.

The joint efforts of business groups like PhRMA and left-leaning organizations like Families USA and SEIU have earned them the moniker “strange bedfellows”. While they share the goal of universal coverage, at some point their respective visions of needed changes in the system might be at sharp odds on issues like controlling drug costs. But Families USA Executive Director Ron Pollack said “I don’t think the health reform plan is going to address every single issue. There are going to be some issues that are going to be dealt with at a different time” and in a different legislative vehicle, he predicted. “You don’t have to do everything at once.”

Pollack added that the groups share more common ground than people realize and hinted that they will soon offer a concrete proposal reflecting that common ground.

PhRMA CEO Billy Tauzin said in a statement Friday on the ad campaign, “this collaboration is especially important because it emphasizes the broad support for comprehensive health care reform. We may always have differences of opinion, but we strongly agree that health care reform is a shared priority.”

Meanwhile, AARP, the nation’s largest senior lobby with 40 million members, is launching its own strategy to step up pressure on lawmakers to deliver for health system and other legislative changes. Its new Web site Government Watch puts “members of Congress on notice that when they cast a vote on an issue important to Americans 50-plus, 80 million eyes will be watching.”

The first bill they focus on will be the vote on the conference agreement on economic stimulus legislation (HR 1). “This legislation is a ‘key vote’ for AARP because it will provide older Americans will real relief and jump start our economy,” the site says. “As soon as Congress takes action on this bill, AARP will post how each member of Congress voted.”

Along with posting votes on key bills, the site will give AARP members “a simple way to give their elected officials feedback on his or her voting record.

AARP also said it will recognize members who champion legislation benefiting Americans fifty and older through its “Congressional Award” program.

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GOP Pals Hard to Find, But Not for Wyden

By John Reichard, CQ HealthBeat Editor                     

February 13, 2009 -- While the new Congress is shaping up as one in which Democrats run into a GOP wall when they try to pass their pet proposals, the ability of Oregon Democratic Sen. Ron Wyden to attract the support of staunch Republicans for his health overhaul plan offers a striking contrast — and assures that the plan will get plenty of publicity. That certainly was the case this week when the proposal (S 391) Wyden is co-sponsoring with Utah Republican Sen. Bob Bennett was showcased at a prestigious Washington, D.C. forum sponsored by The Atlantic magazine.

Seven Democrats including Wyden, five Republicans including Bennett and one Independent are co-sponsoring the bill. Five Republicans is more than enough to allow the measure to cross the magic 60-vote threshold needed to get legislation to the floor in the Senate and get it passed, assuming all Democrats and Independents back the Wyden measure. And four of the five names aren’t those of the three Republican senators that joined Democrats in backing economic stimulus legislation.

In addition to Bennett, the four include Sens. Lindsey Graham of South Carolina, Michael D. Crapo of Idaho, and Lamar Alexander of Tennessee. The fifth Republican on the Wyden bill is Sen. Arlen Specter of Pennsylvania, who joined with Maine Republicans Susan Collins and Olympia J. Snowe to back the economic stimulus package.

The other aspect of the Wyden bill that excites its supporters is that it is a way to get to universal coverage without driving up the federal deficit. A Congressional Budget Office estimate in 2008 said the measure would be budget-neutral.

The big knock on the plan is that it will unravel employer-sponsored health insurance. However, Wyden in his remarks to the Feb. 11 forum cheerfully brushed aside those concerns, expressed the day before by Senate Budget Committee Chairman Kent Conrad, D-N.D after a hearing in  which he also praised the Oregon Democrat for his “contribution” to the overhaul debate. The new version of the bill, introduced Feb. 6, loudly proclaims — in legislative language at least — that workers can keep the coverage they have. Wyden said that was implicit in the old bill, but he made the change so no one has any doubts. Wyden said “We decided to be really subtle” and give a new section the title, “‘Guaranteeing You Can Keep What You’ve Got,’” he said.

The bill shifts the locus of health insurance away from employers to state-based pools where people choose from a menu of private health insurance plans. The current exclusion of health insurance premiums from taxable income would be eliminated, raising federal revenues, as would new tax payments from employers. However, households would receive a $17,000 deduction for family coverage, Wyden said. Individuals and families would be required to carry coverage and would receive subsidies to help pay the costs if they had lower incomes.

The premiums employers now pay for their employees coverage would instead be paid to workers in the form of higher wages. Individuals would have to pay the federal government for their premium costs at the time they file their income tax returns. According to a May 1, 2008 Congressional Budget Office estimate of the cost of the proposal Wyden offered in the 110th Congress, “most health insurance premiums that are now paid privately would flow through the federal budget. As a result, total federal outlays for health insurance premiums in 2014 would be on the order of $1.3 trillion to $1.4 trillion,” the estimate said.

Wyden said at the forum that employees could simply designate their employer’s plan as the coverage option they wanted rather than switch to another plan. So a worker could stick with current coverage or switch to a lower cost plan and pocket the difference between the deduction and the cost of coverage if it was less than the deduction. And to the extent higher cost workers were left in the employer plan and its costs went up, a “risk adjustment” mechanism to pay the plan more for its sicker enrollees would keep the plan from going under, Wyden suggested.

But a number of analysts see enormous obstacles to the plan despite its favorable scoring and ability to attract Democrats and Republicans. “It’s a bit strange that people still point to it,” said American Enterprise Institute Resident Scholar Joseph Antos in an interview this week. “It is not really bipartisan . . . and I don’t think it represents a consensus view,” Antos added, predicting it won’t serve as the basis of compromise talks.

“It can’t be the base plan from which you begin to deviate because it is way far out there in too many ways,” Antos said.

Antos said for example that Congress would not be able to keep its hands off the approximately $1.3 trillion that would flow to the government to pay insurance plans selected in state based pools. “If you have that kind of money running through Congress it will stick,” and get diverted to other purposes, he predicted. And it would be very difficult to figure out how to convert premium payments to higher wages, he said. Phasing out the exclusion could not be done quickly, he added, and many employers would stop offering coverage, he said.

Other analysts note with concern that the plan entails converting Medicaid and the State Children’s Health Insurance Program into supplemental coverage plans that would wrap around private coverage obtained through the state run pools. Doing so “is possible in theory,” but “it is quite difficult to do in practice,” said Edwin Park of the Center on Budget and Policy Priorities in a Sept. 24, 2008 analysis. Park cautioned that “a substantial number of low-income people covered through Medicaid or SCHIP could be placed at risk and lose access to needed care.”

“The changes are massive,” Antos concluded, and in that regard are reminiscent of President Clinton’s universal coverage that many analysts say frightened the public because of its complex changes to the health care system. They also would be made much too quickly, he said. “The real truth about health reform is we need more time.”

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Pallone Says Health Care Overhaul Bill Could Come this Year

By Daniela Feldman, CQ Staff

February 11, 2009 -- House Energy and Commerce Health Subcommittee Chairman Frank Pallone, Jr., D-N.J., said Wednesday he wants to draft a comprehensive health care plan within the first year of President Obama’s administration.

During an address at The Atlantic’s “State of the Union for Health Care,” Pallone said he wants an overhaul to make care more robust, beef up employer coverage and make improvements to the health care market.

“What’s most important is that we recognize in Congress, the leaders in health care and the president, that we need to move forward as quickly as possible and despite crisis, because that is going to help the economy,” Pallone said, adding that the House will want to take cues from the Obama administration as it moves forward on a bill.

Earlier this month, Senate Finance Committee Chairman Max Baucus of Montana and Senate Health, Education, Labor and Pensions Committee (HELP) Chairman Edward M. Kennedy of Massachusetts sent a letter to Obama reiterating their commitment to passing health care overhaul legislation this year. Both the Finance and HELP panels have been working on health care legislation.

Last November, Baucus unveiled a wide-ranging plan to overhaul the nation’s health care system which, among its provisions, would create a “health insurance exchange” where insurers could sell health coverage to the uninsured.

And Pallone’s boss, Energy and Commerce Committee Chairman Henry A. Waxman, D-Calif., said on Jan. 29 that overhaul legislation can be introduced and signed into law in 2009, and rejected the notion that current economic woes mean an overhaul must be postponed.

At the January conference sponsored by the left-leaning advocacy group Families USA, Waxman said, “This isn’t something to put off, this is something to do right now to help fix our economy” by easing the burdens of rising health costs on business and increasing the productivity of workers.

Pallone said he wants to create and expand health care programs to provide wider and more comprehensive coverage, specifically for Medicare and Medicaid. He also said he wants to see public health care options that create competition, bring down costs and provide choices at the national level for universal coverage.

“Health care is in crisis,” he said. “The number of uninsured is going up, which is linked to costs.” Pallone said he plans to hold a series of subcommittee hearings on the problems with the health care system in the coming weeks.

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Conrad Sends a Message on Universal Coverage . . . Sort Of

By John Reichard, CQ HealthBeat Editor

February 10, 2009 -- Senate Budget Committee Chairman Kent Conrad warned fellow lawmakers Tuesday against health overhaul plans that would add “hundreds of billions of dollars” to the nation’s health care tab, saying they face “a heavy burden” making the argument for such changes.

The North Dakota Democrat issued that stern warning to those “outside this room” at the start and end of a hearing that dealt largely with what to do about runaway health spending. Because respected economists put the annual cost of such overhaul plans at between $100 billion and $200 billion, Conrad appeared to be saying that universal coverage proposals won’t be enacted.

But Conrad stopped short of that conclusion when asked after the hearing if universal coverage is possible given the nation’s huge fiscal challenges. “There’s a growing consensus that you’ve got to have universality of care in order to get at the cost issue effectively, because to the extent you have people outside the system, they tend to get treated, but they tend to get treated in the most expensive way,” he said.

Conrad also noted in the hearing that there would be worthwhile upfront costs associated with retooling the health system.

 Pressing CBO for Answers

Conrad was a man on a mission Tuesday, pressing the hearing’s sole witness Congressional Budget Office (CBO) Director Douglas W. Elmendorf to rank cost control strategies that would deliver the biggest bang for the buck while maintaining or improving health care quality. After a cautious reply in which the CBO director warned of the perils of picking out one or two approaches, Conrad insisted on a list of priorities, saying delay is no longer possible in dealing with the economic impact of fast-increasing health outlays.

“The sweet by and by is upon us,” Conrad said, adding that he has had “some of the most learned people in this country” including prominent economists tell him recently that the nation faces a collapse of its currency and will look like “a banana republic if we don’t deal with this long-term funding issue.”

Elmendorf replied that “the cleanest and strongest lever that you have about private health care is the tax exclusion,” the provision of tax law that excludes employer-paid health insurance premiums from an individual employee’s taxable income. “Many analysts would agree that adjusting that exclusion can be very beneficial for health insurance coverage and for ensuring a more efficient health care system.”

Ending the exclusion would raise some $250 billion in revenues, Elmendorf said. Capping the exclusion rather than eliminating it would still raise significant revenues while making employees more likely to put pressure on employers to avoid offering health plans with lavish coverage that exceed the cap and force individuals to pay income taxes on premium amounts above the cap, he suggested. Some health overhaul proposals call for using revenues raised by changing the exclusion to subsidize premium payments by those of modest means in a system in which individuals would be required to carry coverage. Sen. Ron Wyden, D-Ore., has offered such a proposal (S 391), attracting six other Democrats, five Republicans and one Independent as cosponsors.

“In the public sector . . . the comparably clean and strong lever would be increasing cost-sharing by Medicare beneficiaries,” Elmendorf added. Those savings are partly from reduced use of health care services, “but more importantly, [from] shifting of the costs to the beneficiaries.”

Another approach is reimbursing doctors and hospitals more for providing higher value care rather than simply reimbursing based on the volume of care, Elmendorf continued. Conrad interrupted, saying he is particularly interested in that approach. “If you reimbursed based on the number of procedures, you’re going to get a lot of procedures,” Conrad said. Elmendorf said that one tactic is to put doctors on the payroll and to pay them salaries. That results in “30 percent less health care,” he said.

If doctors practice independently, “bonus-eligible organizations” could be formed in which doctors figure out how to work together to provide more efficient care, sharing resulting savings with the government in the case of treating Medicare patients for example.

Conrad said he is “intrigued” by the idea of paying such incentives to doctors. “I think we’ve got to have a carrot approach here, to make it attractive for them so they are in on the solution and they feel that they’re being treated fairly,” he said.

In his testimony, Elmendorf expressed skepticism about big savings from a variety of approaches to reining in costs, including better preventive care and wider use of health information technology. That drew a tough line of questioning from Sen. Sheldon Whitehouse, D-R.I., who said CBO analyses do not take into account the effects of varying approaches “interacting dynamically.” Whitehouse drew a parallel to a toaster, a plug and a piece of bread. The three by themselves have no impact but if the bread is put in the toaster and the toaster is plugged in, the result is toast. Similarly, if doctors and hospitals have financial incentives to use health information technology, the result is major savings on health costs, Whitehouse suggested.

“I agree completely with your concerns,” Elmendorf responded, adding that CBO in many cases must make cost impact estimates based on “weak evidence. “I don’t think our numbers should be the ultimate determinants” of what lawmakers vote for or against, he said. He agreed with Whitehouse that lawmakers must take “leaps of faith” in assembling a cost control strategy but said “our expertise could be very valuable in judging what leaps to take.” Elmendorf endorsed trying “a set of things” instead of relying on a single “silver bullet,” saying some elements could be “duds” while others work out better than expected.

Widening Coverage

Elmendorf said the nation could obtain “near universal coverage” by pooling together people with high and low risks of incurring health costs, offering subsidies to make insurance affordable to families with lower incomes and mandating that individuals carry coverage or by creating a process to simplify enrollment in health plans. Achieving universal coverage based on subsidies alone would be expensive because they would have to cover a big chunk of premium costs, he said. Without changes in policy, the number of uninsured will rise from at least 45 million in 2009 to 54 million in 2019, he said.

Wyden took heart form Elmendorf’s testimony. Without commenting specifically on Wyden’s plan, it suggested that his approach to funding universal coverage might generate growing savings. The CBO has scored the cost of the Wyden plan, which adjusts the exclusion of employer-paid premiums, as budget-neutral. Elmendorf observed in his testimony that savings from eliminating or adjusting the current tax exclusion “would grow steadily because the revenue losses that stem from that exclusion are rising at the same rate as health care costs.”

Conrad said the Wyden proposal is a “real contribution” because of its CBO scoring. But he added after the hearing that there are “real issues” with the Wyden plan, expressing concern about its impact on employer-based health insurance.

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