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July 23, 2007

Washington Health Policy Week in Review Archive 554a6f33-5d59-4092-abd5-e8dddcd6816f

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Health Experts Discuss Ways to Achieve Universal Health Coverage

By Lauren Phillips, CQ Staff

July 20, 2007 – Health care experts came together this week to unveil four different policy proposals aimed at the same goal: launching a universal health care coverage system in the United States.

The authors agreed that universal health care is the next step in the health care debate. Among the principles of their policies, they said, is a focus on involving the lowest-income population who are uninsured. It is estimated that 45 million Americans are uninsured, and those who are insured spend more than one-sixth of their income on health care.

Tuesday's event was hosted by the Brookings Institution's Hamilton Project, which aims to develop economic strategies and policy ideas to promote growth.

"Universal health care is the broadest step we can take to protect the economic security of the American family," said Robert E. Rubin, chairman of the Executive Committee at Citigroup Inc. and former Treasury Secretary. "The first step is covering the uninsured," said Rubin, a member of the Hamilton Project Advisory Council.

One proposal, co-authored by Ezekiel Emanuel of the National Institutes of Health, suggested initiating a government voucher system, instead of current insurance programs, that would provide a standard package of benefits comparable to employer-given health insurance.

Another plan, drafted by The Heritage Foundation's Stuart Butler, would create a "Health Exchange Plan," which would evolve the current system to allow for portable insurance through state-charted "insurance exchanges. It also would overhaul current tax subsidies to target lower-income families.

"There is a fear of change among Americans," Butler said. "It's far better to make minimal changes to those parts of the system that work tolerably well, such as the large employment-based systems, and then construct mechanisms that are familiar to people who do not have coverage and allow others to gradually opt in to them."

Members of a different panel tasked with discussing how the plans could be implemented in the real world praised components of each strategy, but agreed that none was "perfect" yet.

Former Centers for Medicare and Medicaid Services Administrator Mark B. McClellan, one panelist, said the solution would start with incremental changes that would offer choices to people in how they get coverage. The first step would likely be state overhauls, said McClellan, currently a Brookings visiting fellow.

Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health, suggested expanding Medicare to allow everyone to enroll if they choose. His plan, which he co-authored, would require people to have health insurance, and require employers to provide it. It would allow firms and individuals to retain their current private insurance.

That plan might be one that unions and their members would likely accept, or another plan where the government or public has the bottom line, said panelist Gerald W. McEntee, international president of the American Federation of State, County and Municipal Employees. He said the first step toward that goal would be opening Medicare coverage to people older than 55 and expanding the State Children's Health Insurance Plan (SCHIP).

Expanding SCHIP is critical to implementing a universal health care system, said Former Treasury Secretary Lawrence H. Summers, a Hamilton Project Advisory Council member. Summers also sat on the discussion panel.

A proposal co-authored by Jonathan Gruber of the Massachusetts Institute of Technology would make the Massachusetts health care system national. The state law requires all residents to obtain health insurance. It provides subsidies to those with lower incomes to help them pay for that coverage. And it creates a state-run marketplace called "the Connector" to help individuals and employees of small businesses find affordable health plans.

Another panel member, General Mills Chairman and CEO Stephen W. Sanger, said he liked Gruber's proposal, but said he favors proposals that focus on the role of the physician and the user, and that take market forces into consideration. The first step toward a health insurance solution, Sanger said, would be to move more conceptually and expand large employer programs that already treat employees.

Summers said it is "inconceivable" to build a health care plan that resembles the current system, and agreed that change had to come little by little.

"Everything in my training says to me that before you think about a system, you should spend at least a little bit of time saying, if the whole thing were on a piece of paper, how would we draw this, and at least try to understand the answer to that question before you set a course," Summers said. "I think it's inconceivable that you'd start any system with any resemblance to our system."

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House Panels Gear Up For SCHIP Action

By Mary Agnes Carey, CQ HealthBeat Associate Editor

July 20, 2007 – As two key House committees aim to mark up children's health legislation the week of July 23, the American Medical Association and AARP have teamed up to sponsor a national advertising campaign supporting the measure.

The groups will spend at least $1.3 million on national television advertising from July 23 through August 3, a period when the House and Senate are expected to be considering legislation to reauthorize the State Children's Health Insurance Program (SCHIP). Both the House Energy and Commerce and Ways and Means committees may mark up their version of the measure next week. Meanwhile, Senate floor action is expected on the SCHIP bill the Finance panel approved yesterday.

At a Friday news conference, AARP and AMA officials also said they are planning to conduct direct mail and e-mail campaigns, as well as coordinate visits to lawmakers' offices and other grass roots activities, in support of the House measure, which is expected to include provisions that benefit both groups' members.

In addition to reauthorizing SCHIP, the House package is expected to include language to provide more generous subsidies to low-income beneficiaries in the Medicare drug benefit and lessen or eliminate a scheduled 10 percent cut in 2008 Medicare physician payments.

A voice-over in the television ad warns that "powerful special interests are making misleading claims about critical health care reform facing America." Those special interests are tobacco companies that are trying to prevent an increase in the tobacco tax to finance an SCHIP expansion, as well as health insurers who oppose cutting Medicare reimbursements to Medicare Advantage (MA) plans, said AARP CEO Bill Novelli and AMA President-elect Nancy H. Nielsen. The ad then touches on key points of the House SCHIP plan and urges viewers to call their representatives to tell them to back the bill.

While the Senate bill includes provisions for higher tobacco taxes to finance the $35 billion SCHIP expansion—a 61-cent per pack hike—some conservative members of the House Democratic caucus are opposing a similar tobacco tax increase in their measure. In addition, some House Democrats from rural states and urban areas have expressed concern that cuts to Medicare Advantage plans could hurt members in their districts. The Senate SCHIP package would not cut Medicare Advantage plans.

Karen M. Ignagni, president and CEO of America's Health Insurance Plans (AHIP), said on Friday her group has heard that the cuts to Medicare Advantage plans could be as high as $50 billion over the next five years. "That would mean the end of the program," Ignagni said. "Members of Congress are going to have a strategic choice beginning next week. Are they going to go home and tell beneficiaries they have ended the program they have depended on? ... That would be one of the largest Medicare cuts ever."

Ignagni said AHIP, "was one of the first groups out there talking about the need to have SCHIP reauthorization. It's a major part of our universal access proposal." The group also is planning to launch its own advertising campaign next week about the value of Medicare Advantage and the need for SCHIP reauthorization.

Any payment cuts to providers in the traditional Medicare fee-for-service program, such as hospitals and nursing homes, would also generate revenue to pay for an SCHIP expansion larger than in the Senate bill, but the cuts are also likely to face opposition from House members in both parties, who fear they would reduce beneficiary services in their districts.

The Senate bill would expand SCHIP by $35 billion over the next five years. Many House Democrats favor an SCHIP expansion of $50 billion, saying the Senate bill does not go far enough. President Bush has said he will veto the Senate SCHIP package. The program expires Sept. 30.

In addition to providing health coverage to an additional 3.2 million children, the Senate package also includes $200 million in new grants for states to provide dental coverage for children, and would require states that provide mental health services to do so on an equal basis with medical and surgical benefits offered under SCHIP. The bill also would authorize $100 million in new grants to fund outreach and enrollment efforts aimed at increasing participation of eligible children in both Medicaid and SCHIP.

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Private Fee-for-Service Looms Large in Medicare Advantage Growth

By John Reichard, CQ HealthBeat Editor

July 16, 2007 – Congressional Budget Office Director Peter R. Orszag reminded congressional aides Monday that much of the growth in the Medicare Advantage program is projected to be in private fee-for-service plans—a reminder aides might find particularly noteworthy as Congress considers Medicare Advantage payment cuts because those plans don't coordinate care the way other Medicare's other private plans do. Lawmakers also might find those plans a particularly inviting target for cuts because they are paid more than Medicare Advantage plans—119 percent on average of the rates paid in traditional Medicare, compared to 112 percent for other Medicare Advantage plans.

At a forum on Medicare Advantage payments sponsored by the nonpartisan Alliance for Health Reform, Orszag detailed CBO projections showing that Medicare Advantage will account for about 25 percent of Medicare's total enrollment by 2016, up from 20 percent now. But the percentage of Medicare beneficiaries in HMOs and PPOs won't really change over that period, holding steady at about 15 percent, while the slice going into private fee-for-service plans will get much larger. Those plans will account for about 40 percent of the enrollment in Medicare Advantage, up from about 12 percent now. Orszag said that if anything, those figures might understate the growth in private fee-for-service plans under current payment law.

A big part of the rationale for spurring the growth of Medicare Advantage is that—in theory, at least—it does a better job of coordinating care—of ensuring that services are delivered in the most cost-effective setting. Coordinated care, backers say, offers the prospect of not only higher quality, but also lower costs. But private fee-for-service plans don't coordinate care, which may make them particularly vulnerable to cuts because of their relatively high payment rates.

Orszag said paying private fee-for-service plans the same rates paid in traditional Medicare would save $15 billion over five years.

But Orszag gave aides something more to think about—whether or not coordinated care actually saves money, despite the claims of many in the health policy field. A test of that concept raises doubts on that point, the CBO director said. "The evidence that we're getting from the coordinated care demonstration within Medicare is not very promising, especially with regard to costs," he said.

Does that suggest lawmakers might react by going after Medicare Advantage plans more broadly? After all, if coordinated care isn't what it's cracked up to be, why not cut Medicare Advantage more deeply? That's what some observers are expecting to happen in the House, at least. One managed care industry executive predicted that cuts coming out of the House may seek to pay all Medicare Advantage plans at the same rate as traditional Medicare, which CBO projects would save $54 billion over five years. Steep Medicare Advantage cuts, along with tobacco taxes, will be the key ways Democrats seek to raise money to cover uninsured kids and to block a Medicare physician payment cut, the executive said.

The House Ways and Means Committee majority "dislikes the managed care industry even more than it dislikes the tobacco industry," the executive said.

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Senate Panel Approves Renewal of Health Insurance for Children

By Timothy R. Homan, CQ Staff

July 19, 2007 – The Senate Finance Committee approved a $60 billion children's health insurance bill Thursday, endorsing a bipartisan deal among the panel's members and defying a presidential veto threat.

Bill supporters said the measure, approved 17–4, would expand the State Children's Health Insurance Program to cover nearly 10 million uninsured children. The reauthorization would cover children in households with incomes up to 300 percent of the federal poverty line.

The five-year, $60 billion bill would be funded by a 61-cent-a-pack increase in the federal tax on cigarettes and increased taxes on other tobacco products. The increase would bring the federal cigarette tax to $1 per pack.

Renewal of the program, set to expire at the end of September, would continue coverage for the 6.6 million children now enrolled in the program while adding 3.2 million.

According to the Congressional Budget Office, 800,000 people would lose coverage without the increase in funding.

"It's obscene that millions of kids go to bed at night without decent health care," said Democrat Ron Wyden of Oregon.

The White House wants a $5 billion expansion of the program, to $30 billion over five years, and has threatened to veto the $35 billion Senate increase.

The veto threat has drawn criticism from senior Finance Republicans, including ranking GOP member Charles E. Grassley of Iowa.

At a news conference after the markup, Grassley said the White House should recognize that the committee's bill "is good policy."

The program, which received $5 billion in fiscal 2007, provides health coverage to low-income, uninsured children whose parents do not qualify for Medicaid but can't afford private coverage on their own. If states cover children in households with incomes above the 300 percent threshold, they would qualify for lower Medicaid matching payments under the bill.

It also covers certain adults, which has drawn opposition from some Republicans and from the White House, although the Bush administration has approved waivers that allow states to cover adults. The Finance Committee bill would phase out that practice by the end of 2009.

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Study: Medical Center Ups the Quality of Care, but May Have Lowered Revenues

By Susannah Crepet, CQ Staff

July 16, 2007 – Virginia Mason Medical Center, based in Seattle, recently improved the quality and cost-effectiveness of treatment for four conditions—uncomplicated lower back pain, migraines, gastroesophageal reflux disease and cardiac arrhythmias—but it may have reduced its revenues as a result, according to a recent study.

At risk of having its specialties excluded from Aetna's high-performance network because their relatively high costs per episode of care, the medical center worked with Aetna and four of its largest Seattle clients, Costco, Nordstrom, Starbucks and the King County government, to reduce costs and improve quality of treatment for the four conditions.

The employers chose the conditions based on costs associated with health benefit spending, absenteeism or workers' compensation, said researchers at the Center for Studying Health System Change (HSC), which conducted the study.

"The good news is that Virginia Mason identified ways to streamline and improve care; the bad news is that the medical center's bottom line may take a significant financial hit as a result," said Hoangmai H. Pham, HSC senior health researcher and lead author of the study, in a press release.

Physicians at the medical center, a 300-bed hospital with ambulatory surgical care centers and outpatient facilities throughout the region, were ordering diagnostic tests, such as magnetic resonance imaging (MRI), more frequently than recommended by guidelines for back pain care, and sometimes ordered redundant testing such as echocardiograms and stress test for cardiac patients, researchers said.

Pay-for-performance favors those diagnostic tests, making them relatively profitable for physicians, while they are expensive and sometimes unnecessary for patients, according to researchers. As a result, reducing the quantity of unnecessary diagnostic tests reduces the costs and increases the efficiency of treatment for some conditions, but it simultaneously diminishes a source of revenue for physicians.

"Most efforts to improve efficiency for a specific medical condition usually reduce the number of services per patient that can be billed, posing financial challenges for providers. These challenges are often magnified by the current fee-for-service payment structure, where some services are highly profitable and others are unprofitable," said HSC President Paul Ginsburg in the release.

Doctors also prescribed excessive numbers of pills for drugs that migraine patients were using only on a trial basis, as well as the most expensive brand-name drug for gastroesophageal reflux disease when less expensive alternatives were available. Virginia Mason was able to address these inefficiencies, but did not share in the resulting pharmacy savings, researchers said.

The medical center was able to identify and largely eradicate costly inefficiencies in part because it had adapted and implemented a version of the Toyota Production System, a business philosophy that facilitates increased communication within an organization, in addition to consumer input, according to researchers.

Aetna and the participating self-insured employers also agreed to pay higher rates for certain unprofitable services to help subsidize Virginia Mason's improved treatments, but Virginia Mason still faces a financial challenge from applying more efficient care practices to patients covered by other insurers, which account for more than 90 percent of the medical center's revenues, according to the release.

The medical center has a large group of salaried physicians who might not be as sensitive to the loss of revenues from profitable services as would be physicians in most practice settings, Pham said.

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Study: Uninsured Experience Higher Health Costs Once Enrolled in Medicare

By CQ Staff

July 16, 2007 – Uninsured adults ages 59 through 64 who suffer from hypertension, diabetes, heart disease or stroke had health costs that were 51 percent higher than their insured counterparts once they entered Medicare, according to a recent Commonwealth Fund report.

The study, conducted by researchers at Harvard Medical School and published in the July 12 issue of the New England Journal of Medicine, found that those who were uninsured reported 13 percent more doctor visits and 20 percent more hospitalizations than those who had health insurance before becoming eligible for Medicare. Moreover, those higher costs continued through age 72 for the individuals who did not have health insurance before entering the federal health care program for the elderly and disabled.

"This study highlights the importance of health insurance coverage for all Americans to improve the efficiency of our health care system, as well as the quality of our health care and health outcomes," Commonwealth Fund President Karen Davis said in a statement.

In a Commonwealth Fund news release, the study authors noted that poor control of high blood pressure and glucose and cholesterol levels can cause life-threatening complications such as heart attacks, strokes and kidney failure, increasing the need for costly medical care, hospitalizations and medications. The authors also noted that the costs of expanding health insurance for uninsured adults before age 65 may be partially offset by subsequent reductions in health care services after they reach age 65.

The study is based on a nationally representative sample of adults from the Heart and Retirement study, which is federally financed. Researchers followed 5,158 adults from 1992 through 2004, before and after they became eligible for Medicare, comparing the use of health care services for those who were insured to those who did not have health care insurance before entering Medicare.

Separately, new data from the Agency for Healthcare Research and Quality (AHRQ) found that a lack of health insurance also prevents many American women from not having a routine screening test for cervical cancer. According to the agency, one-fourth of uninsured U.S. women between the ages of 18–64 reported not having a Pap smear within the last three years when surveyed in 2005. That rate was double the 11 percent rate for women with private insurance and more than the 15 percent rate for women covered by Medicaid or any other public insurance.

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