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July 20, 2009

Washington Health Policy Week in Review Archive ebc40f03-0ecf-454b-9da5-0f2b0a65690f

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Ways and Means Panel Approves Its Health Overhaul Provisions

By Richard Rubin, CQ Staff

July 17, 2009 -- Democrats on the House Ways and Means Committee defended their health care plan against Republican attacks, maneuvering it out of committee on a 23–18 vote.

The final vote came at 1:16 a.m. Friday, more than 16 hours after the markup started Thursday morning. All of the committee's Republicans voted against the bill (HR 3200). They were joined by three Democrats Earl Pomeroy of North Dakota, Ron Kind of Wisconsin, and John Tanner of Tennessee.

"I'm proud of what we have done. I have no clue as to what the other committees have done [or] where we go from here," said Chairman Charles B. Rangel, D-N.Y., afterward. The House Education and Labor Committee approved its portions of the bill, 26–22, Friday morning after a markup that ran through the night. Energy and Commerce resumed its markup Friday morning and is expected to take until Wednesday to complete it.

The defeated amendments from Ways and Means Republicans included attempts to eliminate a government-run insurance plan, eliminate a requirement for employers to provide coverage to workers, and prevent the government from using research on the comparative effectiveness of treatments to make coverage decisions on the basis of cost.

Republicans also tried to remove all of the tax increases, require states to limit medical malpractice lawsuits, order members of Congress to enroll in the public plan, and prevent abortions from being covered under the essential benefit package.

But all of those efforts and dozens of others failed as Democrats hung together behind the bill they spent months crafting.

"The other side is trying to make people afraid," said Jim McDermott, D-Wash., criticizing the tenor of the GOP amendments. "What we ought to be afraid of is a system of private health care in this country that has left almost 50 million people without health insurance."

Major Provisions of the Bill

The bill would expand health insurance by requiring individuals to get coverage and mandating that employers provide coverage or pay a penalty. It includes subsidies for low-income workers and creates a government-run "public option" to compete with private insurance companies as part of a health insurance exchange through which consumers could compare plans.

The bill, estimated to cost more than $1 trillion, would be paid for partly by reducing costs within existing programs such as Medicare. It also includes a $544 billion surtax on the adjusted gross income of upper-income Americans, with a top rate of 5.4 percent for individuals making $800,000 and married couples making $1 million. The surtax would affect the top 1.2 percent of taxpayers.

A chairman's amendment introduced Thursday would raise $8.2 billion over 10 years by preventing taxpayers from using tax-advantaged flexible spending arrangements, health reimbursement arrangements, and health savings accounts for purchases of over-the-counter medications.

It also includes a $4 billion provision that would allow more people to avoid paying taxes on the value of employer-provided health insurance. The provision would allow the tax exclusion for all eligible beneficiaries under a health plan, expanding it to include same-sex couples. Currently, people who receive health insurance benefits through the employers of their same-sex partners must pay taxes on the value of those benefits.

GOP Objections

Republicans pursued a range of arguments against the bill. They contended that it would reduce choices for consumers, lead to too much government involvement in health care and hurt the economy.

"It would raise taxes and force employers to cut jobs at a time when we are in the middle of the most severe recession in decades," said Wally Herger, R-Calif.

Republicans also argued that the bill would cost too much while complaining it would lead to rationing of care as a way to control costs.

Republicans also pressed Congressional Budget Office Director Douglas Elmendorf, who attended the markup, to repeat comments he had made earlier in the day to the Senate Budget Committee, where he warned that the health care legislation before Congress would not control costs enough to compensate for the increased federal expenditures from the coverage expansion.

Democrats tried to rebut the argument, citing numerous other pressures on federal spending. "It's disingenuous to just pick Medicare and not talk about the agriculture budget or the defense budget," Pete Stark, D-Calif., said.

But Elmendorf noted that Medicare and Medicaid are growing exceptionally fast, in a way that threatens the long-term fiscal outlook. He praised the House bill's demonstration cost-containment projects for those programs, but added that there is not yet enough understanding of how to change payment policies in a way that might make the system more efficient.

Under questioning from Chris Van Hollen, D-Md., Elmendorf said one way would be to give the secretary of Health and Human Services more flexibility to change payment methods.

Rejected Amendments

Republicans teed up a series of hot-button amendments for the beginning of the markup. The committee voted 15-25 along party lines to reject an amendment from Paul D. Ryan, R-Wis., that would have eliminated the public plan. Ryan argued that the plan would have unfair advantages against private competitors and employers would stop providing health coverage, pushing people into the exchange where the public plan is an option.

The committee voted 18–21 to reject an amendment from Dean Heller, R-Nev., designed to require members of Congress and their dependents to enroll in the public plan.

"If the public plan is good enough for millions of our constituents, it should be good enough for members of Congress," said Heller, whose proposal was backed by three Democrats: Shelley Berkley of Nevada, John Yarmuth of Kentucky and Artur Davis of Alabama. The Senate Health, Education, Labor and Pensions Committee had adopted a similar amendment by Tom Coburn, R-Okla., to its health care overhaul this week.

The committee defeated, 15–26 along party lines, a Herger amendment that would have prevented comparative effectiveness research from being used to make coverage decisions based on cost.

An amendment aimed at limiting non-economic damages in medical malpractice cases generated a tense debate between McDermott and Geoff Davis, R–Ky., who contended that the defensive approach to medicine forced by the fear of lawsuits contributed to unnecessary procedures being performed on his dying mother. McDermott said it was issues with end-of-life directives, not malpractice lawsuits, that prompted any unwanted procedures. The amendment was rejected, 15–26, along party lines.

The committee rejected an amendment that would have prevented abortions from being included in the essential benefit package created under the bill, except in cases of rape and incest or to save the mother's life. Under the bill, federal officials make that determination.

"If this amendment is not included, this bill would represent the most massive expansion of abortions in our country since Roe vs. Wade," said Sam Johnson, R-Texas.

The amendment was rejected, 18–23, with all Republicans joined by Pomeroy, Tanner and Bill Pascrell Jr. of New Jersey. A similar amendment from Eric Cantor, R-Va., also attracted the vote of Artur Davis, but went down 19-22.

Democratic Concerns

Some Ways and Means Democrats raised concerns about the bill. Artur Davis said he still sees geographic disparities in the bill but said he would vote for it in markup and seek changes before floor consideration. He said he wanted a "hardship exemption" for small businesses that would otherwise be subject to the employer mandate.

Pomeroy said the public plan has a "fatal flaw," because it bases its reimbursement rates on Medicare, a formula that he says would adversely affect providers in his home state. That opinion led him to vote for an amendment from Charles Boustany Jr., R-La., that would have prevented providers from being forced to participate in the public plan. He was joined by fellow Democrats Berkley, Tanner and Kind, but the proposal was defeated, 19–22.

An amendment from Peter Roskam, R-Ill., would have based payment rates on the private market, rather than on Medicare. But that proposal was defeated, 19–21, with Tanner, Pomeroy, Kind and Bob Etheridge of North Carolina voting yes.

Republicans had one small victory late Thursday. By voice vote, the committee removed a provision in the chairman's amendment that would have expanded who can file certain lawsuits on behalf of Medicare. Rangel said Democrats agreed that the issue needed further study.

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Blue Dogs Bare Teeth at Health Bill Markup

By Alex Wayne and Jonathan Allen, CQ Staff

July 17, 2009 -- Moderate "Blue Dog" Democrats showed their potential influence on a health care overhaul before the House Energy and Commerce Committee, joining Republicans Friday to adopt an amendment aimed at preventing the creation of duplicative government health programs.

The Blue Dogs, a 52-member coalition, are a closely watched group, as they have threatened to block approval of the House bill (HR 3200) unless it is modified to meet their concerns about its policies and cost. House Democratic leaders have been struggling to woo enough of them to assure passage once the bill goes to the floor.

The Energy and Commerce amendment, offered by John Sullivan, R-Okla., would require the Health and Human Services secretary to study whether any duplicative programs are created by the overhaul, and after reporting to Congress, unilaterally eliminate them. Most panel Democrats said they didn't object to a study of duplicative programs, but they wanted to be able to control whether the programs are eliminated.

Nonetheless, Sullivan's amendment was adopted 29–27, with support from seven Democrats, all but one of them Blue Dogs. Republicans applauded after the committee's clerk announced the tally.

Committee Chairman Henry A. Waxman, D-Calif., said he asked the Blue Dogs after the vote if they were trying to make a statement, and they told him no, they thought it was genuinely a meritorious amendment.

"There's no doubt in my mind that if the Blue Dogs join with the Republicans they can bring this bill down," Waxman said. But he doubts that will happen.

"I think that it would be such a mistake for any group of Democrats to bring down this legislation and give the president a defeat—especially those in marginal districts," he said.

"They are the ones who will pay a political price when voters get angry that Congress hasn't responded to their health care concerns."

Military Medics

In a rare moment of bipartisanship, the committee unanimously adopted an amendment designed to help former military medics obtain jobs as civilian paramedics.

The measure, by Jane Harman, D-Calif., would authorize grants to states to set up programs to help military medics become emergency medical technicians. Harman said that unemployment among discharged veterans of the Iraq and Afghanistan wars is about 30 percent.

Democrats ruled out of order an amendment by Michael C. Burgess, R-Texas, that would have capped non-economic damages—such as pain and suffering awards—in medical malpractice cases at $250,000. Democrats have not addressed the issue of medical malpractice in any of their overhaul proposals, to the chagrin of doctors and the GOP, who contend that the costs doctors incur defending themselves from frivolous suits are a major driver of increased medical spending.

Waxman said that Burgess' amendment fell under the jurisdiction of the Judiciary Committee.

After Republicans complained they'd had little time to read a 75-page Democratic omnibus amendment, which gathered together numerous proposals from Democrats on the committee, Waxman agreed to postpone further consideration of the measure until Monday.

Two other House committees, Education and Labor and Ways and Means, completed markups Friday of their portions of the huge health care bill.

Not Just Blue Dogs

So far, four of the five Blue Dogs who have had a chance to pass judgment on the bill in Ways and Means and Education and Labor have voted against it.

Rep. Mike Thompson of California, a close ally of Speaker Nancy Pelosi and a member of Ways and Means, is the only Blue Dog to support the measure in committee so far. The real committee-level showdown between Blue Dogs and liberals will be in the Energy and Commerce Committee, which has more Blue Dogs than the other panels.

But it's not just the Blue Dogs who are having trouble embracing the House bill.

Freshman Democratic Reps. Dina Titus of Nevada and Jared Polis of Colorado, neither of whom is a Blue Dog, voted against the measure in the marathon, 24-hour Education and Labor Committee markup.

And Polis led 21 House Democratic freshmen and one second-term lawmaker, the overwhelming majority of whom are not Blue Dogs, in writing Speaker Nancy Pelosi, D-Calif., on Thursday expressing concern about provisions that would pay for the health care expansion by raising taxes on the wealthiest Americans.

Titus, who signed the letter, cited those concerns in explaining her vote against the bill at the committee level.

"This was a difficult vote. There are positive aspects of this legislation, like ending the practice of denial based on pre-existing condition and making insurance portable. I know that families across Nevada are struggling due to the high cost of health care, but I have concerns regarding the tax portion of this legislation," Titus said.

"We are working hard to lift our economy out of this recession and to promote growth and job creation. Increasing taxes that can affect small businesses in my district will make it harder for them to be the engines of growth that pull us out of this recession and put people back to work," she added.

Blue Dog Reps. John Tanner of Tennessee, Earl Pomeroy of North Dakota and Ron Kind of Wisconsin voted against the health care bill at a Ways and Means markup, and fellow Blue Dog Jason Altmire of Pennsylvania did so in the Education and Labor Committee.

Leah Nylen contributed to this story.

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Senate Panel Approves Health Care Overhaul

By Drew Armstrong, CQ Staff

July 15, 2009 -- The Senate Health, Education, Labor, and Pensions (HELP) Committee has sent a health care overhaul to the Senate floor, after a nearly month-long markup featuring hundreds of amendments.

The committee approved the bill Wednesday on a party-line 13–10 vote. The legislation eventually will be combined with a closely related, but more politically moderate measure being prepared by the Finance Committee

Christopher J. Dodd, D-Conn., the HELP Committee's acting chairman, said that he was disappointed by the party-line vote, but noted that Republicans had still influenced the bill with a number of amendments. "This is where we're starting from, but I still believe we can achieve that bipartisanship," Dodd said. "I will not sacrifice a good bill for that; that is not the goal here," he said.

The HELP Committee markup began on June 17, and carried on for 13 days and 60 hours. Committee members and staff said they believed it was the panel's longest markup ever. Members considered almost 500 amendments, according to Dodd, adopting nearly 160 offered by Republicans.

The draft legislation amounts to a sweeping overhaul of the nation's health care system. It would require individuals to obtain health insurance and require employers to help cover the costs for their workers. It would create a new, government-run insurance option to compete with private insurance plans in marketplace exchanges where individuals could compare and choose among plans.

It also would make major changes to how health care is delivered, including a strong emphasis on preventive care and wellness. And it also would cover many of the nation's uninsured, according to estimates by the Congressional Budget Office.

Just before the vote, a Democratic staff member passed out bright blue rubber bracelets to committee members, with the word "Tedstrong" imprinted on them, a reference to Chairman Edward M. Kennedy, D-Mass.

Dodd said that earlier in the morning he spoke with Kennedy, who is being treated for brain cancer and is currently in Massachusetts. "We missed Ted Kennedy," Dodd said. "He was very excited that his committee would be the first committee to mark up a bill and send it to the floor," Dodd continued, describing their phone conversation.

Combining the Bills

The HELP and Finance committees now must figure out how they can blend their two products, once the Finance Committee unveils its bill and marks it up, perhaps as soon as next week.

Dodd dismissed suggestions of bringing the HELP measure to the floor without the Finance Committee product.

"I'm confident that Max Baucus will get a bill," Dodd said, referring to Finance Chairman Baucus, D-Mont. "He's got a tough job, obviously, in the Finance Committee.

"We'll bring our two bills together," Dodd said.

Baucus has made a priority of getting at least a handful of Republican votes, working in particular with Olympia J. Snowe of Maine and ranking GOP member Charles E. Grassley of Iowa.

Dodd, asked whether the Senate would need Republican votes on the floor, deferred.

"It may, I don't know. Again, we have 60 votes," Dodd said of Democrats' newly expanded majority. "The ideal thing is to have all of us working together on this . . . I just don't want to lose sight of what our most important objective is on all of this, and that's to get a good bill."

Republicans were quick to slam the HELP Committee product as a partisan one.

"I did have high hopes that this would be the year that Republicans and Democrats could work together," said HELP Committee ranking Republican Michael B. Enzi of Wyoming. "If America's going to believe in what we do, it has to be a bill put together by both sides," he said.

Enzi criticized the lack of offsets for the HELP proposal, which the panel is counting on the Finance Committee to provide.

"This bill will bend the cost curve the wrong way," Enzi argued, before voting against the bill.

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CBO Chief: Health Bills to Increase Federal Costs

By David Clarke and Edward Epstein, CQ Staff

July 16, 2009 -- The health care overhauls released to date would increase, not reduce, the burgeoning long-term health costs facing the government, Congressional Budget Office (CBO) Director Douglas Elmendorf said Thursday.

That is not a message likely to sit well with congressional Democrats or the Obama administration, and House Speaker Nancy Pelosi, D-Calif., said Thursday she thinks lawmakers can find ways to wring more costs out of the health system as they continue work on their bills.

The chairman of the Senate Finance Committee, Democrat Max Baucus of Montana, who has not yet released a bill, said his panel is acutely aware of the long-term cost concern. "Clearly our committee will do what it can," he said. "We are very seriously concerned about that issue. We very much want to come up with a bill that bends the cost curve."

But Baucus suggested the White House is making the task difficult with opposition to one cost-cutting approach Elmendorf cited—limiting or even ending the tax exclusion for employer-provided health benefits.

The Democrats and President Obama have cited two goals in their overhaul proposals—expanding coverage to the estimated 47 million Americans who currently lack it and bringing down long-term costs because the growth in Medicare and Medicaid spending threatens to swamp the federal budget in coming years.

Under questioning from Chairman Kent Conrad, D-N.D., Elmendorf told the Senate Budget Committee that the congressional proposals released so far do not meet that second test.

"In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount and, on the contrary, the legislation significantly expands the federal responsibility for health care costs," he said.

Elmendorf was not addressing the narrow question of whether the Democrats' legislation would be budget-neutral over 10 years. Congressional Democrats and the White House have promised to offset the cost of health care legislation over that period.

But budget analysts and some members fear the legislation will not slow the growth of health care spending enough to prevent it from overwhelming the federal budget after that 10-year window.

Earlier this week, House leaders introduced their overhaul plan, which is being considered by three committees this week.

Elmendorf said that CBO has not completed its evaluation of the House plan, but what it has seen so far does not represent "the sort of fundamental change, the order of magnitude necessary to offset the direct increase in federal health costs from the insurance coverage proposals."

Senate Bills

The Senate Health, Education, Labor, and Pensions Committee approved its draft bill Wednesday, and Christopher J. Dodd, D-Conn., the acting chairman of that panel, said his panel had reduced the initial price tag of its bill as estimated by the CBO. "I'm very confident we can meet the president's goal of having a fully paid-for 10 year program on health care right around $1 trillion," he said.

Senate Finance, not the HELP Committee, has jurisdiction over the tax code and Medicare—the areas Elmendorf targeted for savings.

Dodd complained that CBO refuses to assume that government savings will occur from an increased focus on wellness and preventive health care.

"The only thing CBO does is tell you how much taxpayer money has to be invested to achieve those results," Dodd said.

"We believe we have crafted legislation that does bend that curve, bring health care costs down and make it affordable for all Americans," he said. "I appreciate their work, but frankly we're on the right track, we have a solid bill and one that's affordable."

The Senate Finance Committee has yet to release its overhaul proposal, and Elmendorf said he did not want to publicly discuss the conversations he has had with members of that committee, including Conrad.

When asked what could be done to help "bend the curve" of health care costs over time, Elmendorf pointed out that most health experts believe the tax exclusion for employer-provided health insurance is an area that could help reduce costs. Many experts say the exclusion encourages high health care spending since it shields workers from the cost of their coverage.

Baucus took aim at Obama on that point. "Basically, the president is not helping us. He does not want the exclusion" to be capped or eliminated, he said.

None of the congressional plans released so far address the tax exclusion, and it is not clear whether Finance will tackle the issue.

Many experts also have told CBO that altering the Medicare payment system so that it emphasizes cost effectiveness, rather than fees for services as the current system does, would also help, Elmendorf said.

"Delivery system reforms," Baucus said, would be "a game changer in this bill."

However, he told reporters two days ago that the payment reforms in his bill and in the House bill are more similar than they are different. And those would not significantly alter the current system.

Surtax vs. Cost Savings

Meanwhile, House Speaker Nancy Pelosi said Thursday that if more cost savings can be produced in the legislation now being assembled in the House, a proposed $544 billion tax surcharge on the wealthiest Americans could be scaled back.

As three House committees began marking up the health care overhaul bill (HR 3200), Pelosi told reporters that she thinks the legislation can eventually wring more costs from the health system.

"I believe all the costs of the health care reform bill can come out of squeezing costs out of the health care system," she said.

But then she added that even if that were true, the revenue from the proposed surtax would be needed to help with startup costs associated with making changes to the health system and for reducing the big federal budget deficit.

"We have to have a revenue stream to pay for it," she said of the bill. "If we don't need it, we can use it to reduce the deficit," Pelosi said.

Under questioning, she said that some of those high-income taxpayers who would face the proposed surcharge might get a break. "If we can get more savings, perhaps we can cut it at the high end," Pelosi said.

Under the surtax plan spelled out by the Ways and Means Committee, the bottom two surtax rates would disappear if health care savings to the government exceed $175 billion by 2013. But those rates would double if the government fails to save at least $150 billion.

Pelosi said she wants to encourage House members to propose more structural changes that could wring costs out of the system. "More structural changes? Absolutely. They are already significant, "she said, referring to the proposed legislation unveiled Tuesday. "Can there be more? Absolutely," she added.

Pelosi said she remains confident that the legislation can be changed enough to bring on board many of the Blue Dog Democrats who have threatened to walk away from a bill that they see as too expensive.

Energy and Commerce Committee Chairman Henry A. Waxman, D-Calif., plans to meet with Blue Dogs to see how their concerns can be addressed.

"What we're saying is, let the process unfold in the public process," Pelosi said. She said members are getting a chance to speak up in the committee markups, then in the Rules Committee and finally on the floor.

She said the bill will be on the House floor in the last week of July, which would fulfill her pledge to have the House vote on the bill before it leaves for its long August recess.

Alex Wayne, Jane Norman and John Reichard contributed to this story.

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Orszag Urges New Council to Restrain Medicare Spending

By John Reichard, CQ HealthBeat Editor

July 17, 2009 -- With growing cost concerns threatening to derail the Obama administration's health overhaul efforts, White House Office of Management Budget (OMB) Director Peter R. Orszag urged House Speaker Nancy Pelosi, D-Calif., Friday to consider rewriting a House Democratic overhaul plan to include language creating a new council to hold Medicare spending to levels projected under current law or to lower them.

"We agree that it is critical that health care reform is not only deficit neutral over the next decade, but that it does not add to our deficits thereafter," Orszag said in a letter Friday to Pelosi. The council "would have the authority to make recommendations to the President on annual Medicare payment rates as well as other reforms," Orszag said. "Both the annual payment updates and the broader reforms would be prohibited from increasing the aggregate level of net Medicare expenditures."

Senior OMB officials said the aim would be to maintain or lower the current Medicare spending "baseline," the level of spending actuaries project under current law that takes into account medical inflation, changes in enrollment, intensity of services, and other factors. Spending could go up in some parts of Medicare and fall in others, but the net effect would have to be no increase in the spending baseline, they said. One of the officials said the approach would hopefully lower the baseline but that even if it were maintained the council would help Medicare get better health care for the dollar.

The Medicare program is under constant pressure from companies and their lobbyists to boost payment levels.

Pelosi said in a mid-day press conference that she is receptive to the idea.

Under a draft bill forwarded along with the letter, the new "Independent Medicare Advisory Council" or "IMAC," would deliver its recommendations as a package that the president would have to either accept or reject. If the president accepted the recommendations, Congress would have 30 days to intervene by passing a joint resolution opposing them. But the president could veto that resolution, forcing Congress to come up with a two-thirds majority of each chamber to override him. Otherwise, the secretary of the Department of Health and Human Services would be authorized to carry them out.

That basic approach has been in place for two decades in the defense arena, where five rounds of military base closings and realignments have taken place since Congress in 1988 set up an independent commission to make recommendations to the president, who submits them to Congress. Lawmakers can pass a resolution of disapproval, but no such effort has ever succeeded.

The plan is similar to a proposal by Sen. John D. Rockefeller IV, D-W.Va., which Orszag also praised in his letter. Rockefeller would elevate the existing Medicare Payment Advisory Commission (MedPAC) to an executive branch agency with the authority to implement its recommendations. Rockefeller has said that change is needed because commission recommendations regularly get attacked by special interests and fail to gain passage in Congress. He says Congress has proven itself inefficient and inconsistent when it comes to making decisions about provider reimbursements.

Orszag said that either the Rockefeller MedPAC proposal or the IMAC approach "would represent a critical step forward in creating a health care system that rewards quality, restrains unnecessary costs, and provides better care to more Americans." The letter asks that Pelosi and the three House committees with jurisdiction over the Democratic proposal (HR 3200) consider the proposals.

The House Energy and Commerce Committee is the only one of the three panels still marking up the legislation. The Ways and Means and Education and Labor Committees approved the measure Friday.

Republicans and the conservative Blue Dog faction of the Democratic party in the House are protesting the cost of the Democratic plan, with criticism spreading across Capitol Hill Thursday following testimony by Congressional Budget Office Director Douglas Elmendorf that cost control elements in HR 3200 would not fully offset the increases it would make in the nation's overall health care spending.

Pelosi said at her press conference that even before receiving the Orszag letter she had instructed her staff to look at "how we can come together so that we can get the savings that MedPAC would put forth, but the responsibility of Congress would be reflected in the criteria that we would put forth and that the administration can have what they want." Pelosi didn't commit to the approach, however. "I'm not here to announce that is final. I am just saying that is something that under certain circumstances we would be receptive to."

Wisconsin Democrat Ron Kind, a House Blue Dog who voted against the version of HR 3200 marked up by the Ways and Means Committee, said the idea of empowering MedPAC is "worth exploring."

The proposals are controversial because they limit the ability of lawmakers to intervene on behalf of powerful constituents such as local hospital officials. Hospitals and other providers and manufacturers are sure to oppose the proposals because of their success in lobbying for higher reimbursement rates. "We oppose it," Richard Coorsh, spokesman for the Federation of American Hospitals, said of the IMAC approach.

Rockefeller issued a statement thanking the White House for endorsing his proposal. "The President is deeply committed to cutting costs, taking lobbyists and special interests out of the equation, and keeping Medicare solvent – and this is exactly what the MedPAC proposal will do," he said. A Rockefeller spokeswoman declined comment on how the IMAC proposal would compare with the MedPAC proposal.

In remarks delivered at the White House late Friday afternoon, President Obama sought to counter the upward spiral of concern about overhaul costs by pointing out progress made in the overhaul debate and pledging new cost control tactics.

"I want everybody to just step back for a moment and look at the unprecedented progress that we've already made on reform," he said. Referring to the Orszag letter, Obama said "I've proposed to Congress, and I am actually confident that they may adopt these proposals, that . . . an independent group of doctors and medical experts will oversee long-term cost-savings measures."

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AMA Endorses House Health Overhaul Bill

By Jane Norman, CQ HealthBeat Associate Editor

July 16, 2009 -- The American Medical Association (AMA) on Thursday endorsed House Democrats' health overhaul bill, casting aside earlier qualms over a public plan option and giving an important boost to the legislation (HR 3200) as three House committees worked on marking it up.

Michael D. Maves, executive vice president of the AMA, said in a letter to House Energy and Commerce Committee Chairman Henry A. Waxman that the board of the influential doctors' organization supports the legislation because it "includes a broad range of provisions that are key to effective, comprehensive health system reform."

The outcome was exactly what had been sought by President Obama when he spoke to the AMA at its annual convention in Chicago in mid-June, when he told physicians that his plan—which the House bill broadly resembles—will reduce costs for individuals, expand coverage choices and curb rising health care costs. The House bill includes a government-sponsored plan that would be offered through a new health insurance exchange.

In a statement sent out by the AMA, J. James Rohack, AMA president, said AMA physicians urged passage by the full House.

"The status quo is unacceptable," Rohack said. "This is an important step, but one of many steps in the process. The AMA is actively engaged with Congress and the administration to achieve health reform that best meets the needs of patients and physicians. We are committed to passing health reform this year consistent with principles of pluralism, freedom of choice, freedom of practice, and universal access for patients."

Republicans in the House quickly criticized the AMA for endorsing the House bill. The AMA's support "trades short-sighted promises for meaningful long-term changes," wrote Rep. Charles W. Boustany Jr., R-La., a former physician, in a letter he intends to send to doctors. "Under the new health care system proposed as part of HR 3200, federal bureaucrats will have greater control over treatment options and reimbursement rates." Republican Rep. Michael Burgess of Texas, a physician and member of the AMA, said in a statement: "Today the American Medical Association lost a historic opportunity to take the high ground and lead the charge in changing our nation's health care system. By endorsing the tri-committee bill, they affirm all of its parameters, as we are only beginning the dialogue. Important principles, such as liability reform, Medicare payment reform and antitrust issues could have been discussed. However, by their preemptive surrender, they lose incredible momentum, and just as we begin the mark-up process in my committee, House Energy and Commerce."

Boustany said that state medical associations are "standing up to the AMA" and 17 of them have written to the association expressing opposition to a public plan. He urged that doctors who oppose a public plan contact their state medical associations to let them know that "you oppose a government takeover of health care and comparative effectiveness research denials based solely on cost."

The Medical Association of Georgia issued an alert Thursday to its members asking them to contact lawmakers and oppose the bill, saying leaders there believe it could bring an end to private practice in the United States.

Prior to now the AMA had said it remained open to the idea of a government-run health insurance plan, as long as doctors are not required to participate and the plan pays doctors more than Medicare does. After The New York Times reported that the AMA had told lawmakers of its opposition to any public plan, former association president Nancy H. Nielsen in June issued a statement saying doctors would accept a public plan that competes on a "level playing field" with private insurers.

At a minimum, she said, the government should not require doctors to participate as a condition of retaining their Medicare billing privileges, and the plan must pay higher rates than Medicare does.

"The AMA is willing to consider other variations of a public plan that are currently under discussion in Congress," she said at the time.

Under the public plan option in the House Democrats' bill, the secretary of HHS establishes geographically-adjusted provider payment rates for the public option. For the first three years, those rates are based on Medicare rates with a 5 percent add-on for doctors who also participate in the Medicare program.

After the first three years, the secretary is granted greater flexibility in setting rates, but the general rule is that overall spending would remain consistent with the initial levels, a committee bill analysis says. Medicare providers are presumed to be taking part in the public option unless they opt out, and there are no penalties for opting out.

The AMA's Maves praised the bill for promising to extend coverage to all Americans through health insurance market reforms, providing consumers with a choice of plans through a health insurance exchange, eliminating denials of insurance coverage for pre-existing conditions, revamping of the Sustainable Growth Rate (SGR) formula for physicians in the Medicare program, additional funding for primary care without slashing specialty care, making the Medicaid program stronger, including an individual mandate for coverage as well as subsidies for low-income people, and "significant" payment and delivery system reforms such as the accountable care organization and medical home concepts.

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