By Joseph J. Schatz, CQ Staff

The Senate Finance and Appropriations Committees approved their pieces of the package on Jan. 27. The Finance Committee portion includes $342 billion in tax breaks and about $180 billion in health care and other entitlement spending. The Appropriations Committee measure includes $365.6 billion.

While floor amendments are still taking shape, GOP proposals will focus on additional tax cuts, reducing "non-stimulative" spending, and dealing with the housing crisis, according to one Senate Republican aide.

Many lawmakers argue that the housing market collapse is at the root of the economic crisis and should be better addressed in the stimulus package. One possible Republican amendment, the aide said, is a proposal that would allow homeowners with good credit to refinance their homes at interest rates of 4.5 percent or below.

Some Democrats are also pushing modifications. Sen. Kent Conrad, D-N.D., wants to expand the first-time homebuyer tax credit enacted last summer beyond first-time buyers. Conrad offered and withdrew such an amendment in the Finance Committee.

Ben Nelson, D-Neb., and Jeff Sessions, R-Ala., are pushing Democratic leaders to include language in the bill that would require businesses receiving stimulus money to use E-Verify, an electronic government citizenship verification program, to ensure that employees are not illegal immigrants.

"If passed, [the stimulus bill] will be paid for by the American taxpayers and we believe that Congress should do all it can to ensure that American taxpayers are the intended beneficiaries of its efforts," Nelson and Sessions said in a letter to Senate leaders. "The inclusion of such a provision will be a key factor as we evaluate the merits of the stimulus package and gauge our support."

Both President Obama and Democratic leaders in Congress cited a Commerce Department announcement Friday morning that gross domestic product (GDP) shrank by 3.8 percent in the last quarter of 2008 to press for quick floor action. Majority Leader Harry Reid, D-Nev., said the news "underscores the urgency with which we need a plan that not only strengthens our economy now, but will invest in our nation over the long term."

The House passed its version of the stimulus legislation (HR 1) by 244–188 on Jan. 27. Not a single Republican voted for it.

Reid and House Speaker Nancy Pelosi, D-Calif., have vowed to get a final bill to Obama's desk by Presidents Day in mid-February.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

JANUARY 27, 2009 -- On Tuesday Senate and House Democrats introduced legislation that would allow Medicare to offer seniors a government-run prescription drug plan as an alternative to private plans currently offered in the Medicare drug program.

Senate Majority Whip Richard J. Durbin, D-Ill., along with House Democrats Marion Berry of Arkansas and Jan Schakowsky of Illinois, said that allowing the traditional Medicare program to create its own prescription drug plan for beneficiaries would bring more competition to the Medicare drug program (PL 108-173), which Congress created in 2003. The lawmakers said the bill (HR 684) is similar to legislation they introduced in the 110th Congress.

If beneficiaries like the drug coverage they have, "they can keep it," Berry told reporters during a telephone news conference. The bill would require the secretary of Health and Human Services to negotiate the purchase price of drugs covered under the Part D program with drug makers, a step that bill proponents said would help reduce drug prices and make it easier for drugs to be added to the plan's formulary, or list of covered of drugs.

The measure also would strengthen beneficiaries' appeal rights to get coverage for drugs that are medically necessary but may not be covered by the plan. Medicare could create "one or more Medicare-operated drug plans" to compete with the private sector, according to a news release describing the legislation.

"Under our bill, seniors and people with disabilities would finally be able to select a Medicare-operated drug plan that provides a guaranteed benefit without having to worry that their premiums will drastically increase or their access to needed drugs will drastically decrease each year," Schakowsky said.

Having the Medicare program negotiate directly with drug makers could produce deep discounts that private sector prescription drug plans can't match, Berry said.

"If this works as we think it will, most of the private plans would drop out," he said.

The Pharmaceutical Research and Manufacturers of America (PhRMA) is reviewing the bill and said it would work with its sponsors to help Medicare beneficiaries get the drugs they need. "It's important to note however, that the competitive market approach of the Medicare drug benefit is working well for patients and taxpayers," PhRMA Senior Vice President Ken Johnson said in a statement. Beneficiaries saved $1,200 on drugs on average in 2008 and the cost of the program is less than previously Congressional Budget Office estimates, he said.

Durbin said he was not opposed to moving the bill as stand-alone legislation "but I want to be realistic about this," noting that the measure could be part of larger health overhaul legislation.

Groups supporting the bill include the American Public Health Association, the Center for Medicare Advocacy and the Medicare Rights Center.

By John Reichard, CQ HealthBeat Editor

JANUARY 29, 2009 --The conventional wisdom is that Congress must move quickly while President Obama still has political capital if lawmakers are to pass legislation extensively overhauling the nation's health care system. But could the reverse be true—that Congress must move through a very deliberate and necessarily very time-consuming process of sorting through ideas from both sides of the political aisle and from the various stakeholders in the system if legislation is to have any chance whatsoever?

With the notable exception of Rep. Henry A. Waxman, D-Calif., key figures in the debate are increasingly acting as though they believe the latter to be true while giving lip service to the former. Obama's talk-to-both-sides approach to economic stimulus legislation may be laying down a precedent of bipartisan consultation that will be relied upon fully when lawmakers turn to overhauling health care. His administration in effect has already thrown in its lot with that approach in deciding not to rely on "budget reconciliation" as a vehicle for health systems changes, an approach that would have allowed passage of legislation in the Senate with a simple majority rather than requiring 60 votes to break a filibuster.

On Thursday morning, House Majority Leader Steny Hoyer, D-Md., sounded a similar note, saying he is committed to bringing overhaul legislation to the House floor in the 111th Congress while all but saying that would be unlikely to happen before 2010. The buzz preceding his remarks to a Families USA conference was that Hoyer would announce action on health care as soon as Congress is finished with economic stimulus legislation, but he offered little detail on his timetable. Instead, he emphasized the need to take time to build consensus, both in his speech and in comments afterward.

The answer to what an overhaul will look like "is still taking shape, of course," Hoyer told the conference of liberal community activists. "But as House majority leader I promise that I will help members with a wide variety of proposals sort out their differences and settle on a common course," Hoyer said. "Whatever issues arise, the process must take in ideas from both sides of the aisle. All of the interest groups. Patients. Doctors. Hospitals. Insurance companies. All of the stakeholders. We want to take their ideas into consideration."

But Hoyer stressed that "we want to synthesize those and create a consensus so we can have action. As history has demonstrated there's no surer way to lose public support than going through this process in the dark," Hoyer said, referring to the 1993 task force run by then First Lady Hillary Rodham Clinton to develop a health overhaul plan. The task force operated in secret and Clinton was widely blamed for failing to adequately consult lawmakers on the plan. "We want this process to be transparent," Hoyer said. "We want people to know what's going on. Who's suggesting what. And what interests are involved."

Hoyer added that the process must cast a very wide net to include Medicare and Medicaid. "We can no longer afford to think of health reform and entitlement reform as two separate issues," he said.

Asked after his remarks whether in effect health overhaul legislation wouldn't come to the floor before 2010, Hoyer gave a long-winded answer that suggested that might be the case. "Well, we've been dealing with the economic program right now so we've been focused on that. We'll have to get through that, and then we're going to have obviously extensive meetings with the president, with all the members of the committees, the leaders of the committees, to determine how quickly we can move on this."

"But I've talked to the president. The president's conviction is, and mine as well, that it's more important to do this right than to do it quickly. This is a complicated effort that ... is critically important and we want to move in a timely fashion. A timely fashion means that we can create the consensus that gets it done. We saw in '93 and '94 we couldn't do that," Hoyer said, referring to the failed attempt by the Clinton administration to get universal coverage legislation through Congress.

Asked about the views of a number of analysts then that it was a mistake to let the overhaul debate spill over from 1993 into 1994, an election year, Hoyer said, "we want to move as quickly as we can to get it done right."

In his remarks to the conference Iowa Sen. Charles E. Grassley, the top Republican on the Senate Finance Committee, emphasized the need for a deliberate approach. Bipartisanship, he said, doesn't mean getting all Democrats on board and then picking up a couple of Republicans, it means sitting down at the start and building a plan from the ground up with both Republicans and Democrats involved. He said he's begun such a process with Finance Committee Chairman Max Baucus, D-Mont., with meetings that began last November. Grassley said that he and Baucus want an approach that tackles the health system as a whole, an approach that will help bring down the growth rate of Medicare spending, he suggested.

Grassley indicated an openness to overhaul elements such as creating a structure in which consumers are given a menu of plans to pick from and in which those of modest means are given assistance in purchasing coverage. "Anything that helps people understand what they are getting into I think is very, very important," he said. He spoke favorably of some kind of cap on the exclusion of health insurance premiums from taxable income, saying that setting that cap even at as much as $15,000 per year would generate considerable tax revenues while helping to break down health costs fueled by "gold-plated coverage." Grassley indicated that a cap might help knock a few percentage points off annual health spending growth rates of seven percent or so. Hoyer in his remarks also indicated he was receptive to considering tax code changes.

In his remarks to the conference later in the day, Waxman said a bill overhauling the health care system can become law this year. Informed of Hoyer's stated commitment to floor action in this session of Congress rather than this year specifically, Waxman said, "I think he doesn't realize that we can move quickly."

By Derek Wallbank, CQ Staff

January 26, 2009 -- President Obama should act quickly if he hopes to pass wide-scale changes to the health care system, said two health care experts, whose suggestion is one of eight pieces of advice on enacting health overhaul published in a new edition of Health Affairs.

"Every day we wait we lose another opportunity," said Jim Cooper, D-Tenn., who co-authored along with Michael N. Castle, R-Del., one in a series of eight articles published in a new edition of Health Affairs.

Support for President Clinton's attempt at a large scale health overhaul started strong, at 59 percent in September 1993, before nose-diving to 43 percent in April 1994, according to Gallup polls taken at the time. Opposition rose over the same period from 33 percent to 47 percent.

Part of the problem, Castle said in an interview, is that the Clinton plan was hard to understand, publicly spearheaded by a relatively unpopular first lady and one that could never marshal the broad support necessary to pass, thanks in part to withering attacks from the health care industry.

In contrast, he said, any effort now must be led personally by Obama, whose initial approval rating was pegged by Gallup at 68 percent, the highest initial approval rating since President Kennedy's 72 percent in 1961. A health care overhaul plan also should be simple to explain and appeal to lawmakers on both sides of the aisle. The sour economy could help stem any potential backlash from industry, Castle added, as businesses may be more focused on shedding their own health care costs to save money.

Intel Corp. Chairman Craig Barrett and Peter Lee, executive director for national health policy at Pacific Business Group on Health, agreed the high cost of health care is "putting American business at a competitive disadvantage."

"President-elect Obama will find a willing partner in corporate America if he reaches out in ways that recognize that solutions must put the patient at the center of our health care system and also drive efficiencies to allow U.S. companies to compete globally," wrote Barrett and Lee in another article in the series.

A jumping-off point, wrote Cooper and Castle, could come in the form of legislation similar to a measure introduced in 2007 by Oregon Democratic Sen. Ron Wyden.

Under Wyden's legislation consumers would choose their health insurance coverage from a pool of plans. Employers could either continue to offer health coverage or transfer money they now spend on employee health insurance to workers' wages. While people would be required to hold some form of insurance coverage, the government would pay to cover the poorest Americans.

"This may not be a perfect bill, but it's a good start," Castle said.

Wyden spokeswoman Mary Conley said the legislation will be reintroduced in the 111th Congress.

In a third article, Stanford University Professor Victor Fuchs said other options with a chance of success include government-backed health care vouchers, the Massachusetts system of combining coverage mandates with subsidies or simply expanding Medicare eligibility to all—an option favored by liberal stalwart and filmmaker Michael Moore in his documentary "SiCKO."

Fuchs said Obama and his allies could succeed if they settle on and fully support one proposal, rather than try and construct the perfect policy through endless attempts at compromise—a tactic that helped kill Clinton's health care initiative.

"Anything that substantially changes 16 percent of U.S. gross domestic product will necessarily be complex," Fuchs wrote. "It is easy to disagree about the details of any plan. Failure because of such disagreements is always the easiest course, as the 90-year history of health reform has demonstrated."

Henry Aaron, senior fellow at the Brookings Institution, said trying to change everything all at once is a mistake.

"It's not typical of democracies to transform something the size of all of France through a single piece of legislation, or even through multiple laws during a single presidency," Aaron wrote in his article. "This is true particularly in the United States, because our political system is well calibrated to frustrate action on large matters that are not supported by overwhelming majorities."

Instead of what he called an "overreaching" attempt at policy change, Aaron said Obama should start by creating a national clearinghouse for health insurance, funding state efforts to expand coverage, improving health information technology and expanding cost-effectiveness analysis.

"It isn't completing the reform process that's the triumph, it's getting it underway," Aaron said in an interview.

By Will Matthews, CQ Staff

JANUARY 27, 2009 -- At least 36 million young and working-age Americans in 2007 went without a prescribed medicine because of its cost and more will have trouble as the economy declines, according to a recent report by the Center for Studying Health System Change (HSC).

The group's 2007 Health Tracking Household Survey found that 14 percent of Americans under 65 could not afford to fill at least one prescription in 2007, compared with 10 percent in 2003 and 2001, the first year the question was asked.

Uninsured, working-age adults with at least one chronic disease were the hardest hit, with almost two-thirds saying they had to forgo prescribed drugs in 2007.

"The fact that they have a chronic condition makes it more troubling that they have an access problem," said HSC spokeswoman Alwyn Cassil. "Their use is less likely to be discretionary."

The overall increase was driven by significant changes in the unmet needs of two groups. Unmet needs changed from 26 percent to 35 percent among uninsured adults and from 9 percent to 11 percent among adults with employer-sponsored insurance. Cassil said the 2 percentage point increase among employed, insured adults—which HSC attributed to deteriorating drug coverage in employee plans—had a particularly strong effect on the overall increase, since a large proportion of the adult population is in that group.

According to the report, the difference between 2007 and the earlier surveys "probably stemmed from higher prescribing rates, drug prices that are rising faster than workers' earnings, higher patient cost sharing in private insurance and the introduction of expensive new medicines."

Cassil said the higher prescribing rates likely stemmed from both an increase in the number of available medications and changes in prescription guidelines, such as the 2004 American College of Physicians recommendation that expanded the use of cholesterol-fighting statins.

"If there are more opportunities for people to be prescribed drugs, it creates more opportunity for there to be problems accessing them," Cassil said. "Certainly there are going to be varying degrees of need."

Cassil acknowledged that the survey did not probe respondents about the types of medications they went without.

Children's unmet drug needs are lower than adults', partially because they are prescribed fewer drugs in the first place, but their rate of affordability problems rose from 3 percent to 5 percent.

Working-age adults with Medicare, Medicaid or other state insurance have more trouble affording their medicines than the general population, the report found, but their unmet drug needs did not change significantly between 2003 and 2007. The Medicare prescription drug program (PL 108-173) took effect in 2006, and about 30 percent of working-age Medicare beneficiaries reported drug affordability problems in surveys both before and after. The report noted that "[m]ost working-age adults eligible for Medicare are disabled and often have very high prescription drug needs and low incomes."

The survey was conducted in late 2007 and early 2008, just as the current economic recession was beginning. "The ability of many people to afford prescription drugs is likely to deteriorate as the economy continues to decline," the report said.

Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA), said the growing difficulties were unsurprising given the economic climate, but that drug companies are working to help patients get the drugs they need.

Johnson said PhRMA's Partnership for Prescription Assistance—which helps patients find drug company assistance programs and features talk show host Montel Williams as its national spokesman&#8212has connected more than 5 million people with such programs since April 2005.

The HSC report noted that pharmaceutical manufacturers do offer assistance programs for uninsured and low-income people, but "the programs are limited and enrollment can be complicated."

"Since the economy has been in turmoil, our companies have really stepped up their efforts," Johnson said, citing relaxed eligibility standards and expanded outreach for the assistance campaign. He said PhRMA companies have distributed $13 billion in free medicine.

A report released this month by the Centers for Medicare and Medicaid Services (CMS) found that while rising health costs continue to outpace overall economic growth, prescription drug costs grew more slowly. CMS attributed the trend to the expanded use of generic drugs and discount programs at large retail chains.

By John Reichard, CQ HealthBeat Editor

JANUARY 29, 2009 -- While other key Democrats are hinting that a health overhaul may not be accomplished this year, House Energy and Commerce Committee Chairman Henry A. Waxman isn't among them, declaring Thursday that overhaul legislation can be introduced and signed into law in 2009.

Addressing a conference sponsored by the left-leaning advocacy group Families USA, Waxman, a California Democrat, offered few details about how such complex legislation could become law so quickly. He offered no timetable for when his own committee will take up the issue, saying an announcement would come later. And he gave no ground on an overhaul element likely to stir strong opposition from many Republicans. "I believe that it's critically important that we have a public program alternative" to private insurance in a system of universal coverage he said, rejecting as a "false dichotomy" arguments that the system should be all private or all public.

Waxman described the chance to enact a health overhaul as an historic opportunity and the reason he waged his successful bid to take over the chairmanship of the committee. He called his panel the lead committee on the issue in the House and said that because of its size—59 members—and its mix of urban and rural, liberal and conservative, and veteran and new members, achieving consensus on the panel would mean "we'd be pretty close to what would be a consensus in the House and the Senate."

Waxman underscored the need to build a system of universal coverage on the existing system of employer-sponsored health insurance, as well as Medicare, Medicaid, and the State Children's Health Insurance Programs. He called the principles espoused by President Obama for a health overhaul exactly the right approach. Obama would build on the existing system, allowing those with employer coverage to keep what they have while also having the alternative of a public program of coverage.

"If we're going to succeed we've got to find common ground. We have to recognize that any successful approach has to reject the false dichotomy of everyone in a government plan, or everyone left to the mercies of a market-based approach. I believe that we must have a significant role for private insurance. But I believe that it's critically important that we have a public program alternative."

Referring to the insurance exchange proposed by Obama, Waxman said "it gives people a place to go to get good, accessible, affordable and regulated coverage through private plans or if they prefer, they can go into a public alternative. We leave the choice to them."

Some Republican aides have suggested a bipartisan deal won't be possible if Democrats insist on a public plan alternative, but Waxman said "in practical political terms, I think we have to offer those who support a single-payer plan a reasonable public plan option, even if it's not ... all that they want, just as we assure those that pay for a more private, market-based approach that there's a very large political role for them to play." Waxman added that "the better they perform it, the better they have a private system that works best, the less they need to be threatened by a public plan alternative."

"I believe that it's critically important that we have a public program alternative," Waxman said. "I think market forces will work better if there's some creative tension between the two different choices. Rather than have us pick one or the other alternative in legislation and likely continue with a gridlock of our efforts, we should put both in place letting individual families make the decisions about what coverage is best for them in their community."

Waxman said that while coverage expansion is a key element of an overhaul, so too is strengthening public health programs and building a "robust" workforce of public health professionals. "I know that if we stop kids from ever developing an addiction to cigarettes or any other tobacco products, we can improve our health and stop the needless cost of treating so many tobacco-related disabilities, diseases and early death," Waxman said. "We're going to move our FDA regulation of tobacco legislation very, very soon," Waxman said to whoops and applause from the audience.

Waxman spoke of the need for bipartisanship and of the necessity for people with different views to not scuttle the overhaul effort if they don't get their top priority in negotiations. "What we're determined to do is work to find the approach that will be broadly acceptable to the American people." Waxman said he is "sympathetic" to the idea of a mandate that individuals buy coverage, an approach that helped forge a compromise on a system of near universal coverage in Massachusetts.

"It may well be the critical component of making insurance work," he said, apparently referring to the mix of both good and bad risks that would come into the insurance pool as a result, allowing more affordable coverage for those with costly illnesses. But an effective regulatory structure is critical. "You don't want to mandate people to buy something they can't afford" and that won't serve their needs, he said.

Waxman rejected arguments that the current economic woes mean an overhaul must be postponed. "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. He ended his remarks with a rousing call to action. "We don't intend to let delay sap the opportunity to finally enact the legislation we've waited decades for" he declared. "I must tell you, this is our time. We need to get this job accomplished this year. And get the bill to the president."

Informed after his speech of Steny H. Hoyer's, D-Md., commitment to floor action in this session of Congress rather than this year specifically, Waxman said, "I think he doesn't realize that we can move quickly."