Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



May 8, 2006

Washington Health Policy Week in Review Archive 9f5926f5-cdb0-4ff3-ad68-f90e06cfadab

Newsletter Article


Cantor Introduces Bill that Would Provide Tax Incentives on HSA Premiums, Contributions

MAY 3, 2006 -- Rep. Eric Cantor, R-Va., introduced legislation (HR 5262) on Wednesday that would provide tax incentives on premium payments and contributions for high-deductible health savings accounts (HSAs), including a tax credit of up to $3,000 for purchases by low-income families.

The Tax-Free Health Savings Act, which Cantor introduced at a news conference with Treasury Secretary John W. Snow, aims to make HSAs more attractive to consumers by providing income-tax credits on premiums and contributions, as well as by making premiums for HSA-compatible insurance tax deductible.

"For years, people in Washington have been looking for a solution to achieve universal health coverage," Cantor said in a statement. "Rather than forcing a one-size-fits-all government program on workers and families, the Tax-Free Health Savings Act empowers individuals with making their own health care decisions."

The announcement comes shortly after Monday's American Hospital Association meeting where President Bush urged Congress to approve various proposals that he said would make health care affordable, including Cantor's bill.

In his speech, Bush lauded HSAs, saying, "When patients and consumers see how their health care dollars are spent, they demand more value for their money. The result is better treatment at lower costs."

In response to Bush's call to promote HSAs, House Minority Whip Steny H. Hoyer, D-Md., said in a statement that HSAs "will undermine traditional group insurance and discourage American families from seeking important preventative care."

According to Snow, more than 3 million U.S. residents—"a large portion of whom were previously uninsured"—are covered under HSA-qualified plans.

Publication Details

Newsletter Article


Conflict Developing Within AHIP over Enzi Bill

MAY 5, 2006 -- A battle is brewing on the board of America's Health Insurance Plans (AHIP) over legislation the Senate is scheduled to consider May 9 that would permit small businesses to bypass state insurance mandates.

While AHIP officially has taken no position on the bill (S 1955), its president Karen Ignagni has been pushing members who oppose the measure to find a way to support it in order to curry favor with Senate Health, Education, Labor and Pensions Chairman Michael B. Enzi, R-Wyo., the bill's sponsor. So say AHIP members who also are members of the Coalition to Protect Access to Affordable Health Insurance, a group of regional community-based plans that opposes Enzi's measure.

"Their logic is that Enzi is chairman of the committee and AHIP and its membership will have more issues before his committee, so we must accommodate Enzi," said an executive of a company on the AHIP board.

That strategy, the sources say, is designed to benefit larger AHIP members that operate nationally—and stand to make a lot of money if the Enzi bill becomes law—over community-based health plans that operate in just one state and would be hurt by the Enzi bill.

"There are a few plans that could make out extremely well under this bill," because it would allow insurers to avoid state laws governing areas such as rating rules, underwriting, and consumer protection, said another of the unhappy AHIP members. Community-based insurers have followed such state regulations for years and fear the Enzi bill would create an uneven playing field that will harm their health plans if new players do not have to abide by the same rules.

Some of AHIP's smaller to medium-sized members "feel in many cases we're being ignored and not getting a full hearing," one of the sources said. They also fear that any changes made in the Senate bill will lose out in a House-Senate conference to a far different version of small business health insurance legislation (HR 535) the House passed last year.

Mohit Ghose, a spokesman for Ignagni, said that AHIP and its staff have not taken an official position on the bill and have followed the directives of AHIP directors with regard to the Enzi bill.

"We have provided technical support and have been in on meetings with other stakeholders so we can continue to work with Chairman Enzi on this bill," Ghose said Friday. He also pointed to a March 7 letter to Enzi where Ignagni noted several concerns about the measure, including that the bill "is not entirely consistent with the principle of creating a level playing field and may have unintended consequences for consumers."

The Enzi plan would permit insurers to bypass state coverage mandates if they also sell at least one policy that matches a benefit plan offered to state employees of one of the five most populous states—California, Texas, New York, Florida, or Illinois. Provisions of the measure, however, are expected to change before Senate floor action begins as Enzi tries to build support for his bill.

Opponents say the legislation would leave people underinsured and would allow insurers to raise prices for older, sicker workers. But proponents of the measure, which include many business groups, say it is needed to help small businesses purchase affordable health care insurance for their employees.

The opposition of some AHIP members to the Enzi bill has created "a major stomachache" for Ignagni and the dissent "points out the inherent conflict in this organization" that represents insurers that vary in size and interests, one of the executives said.

One of the executives said that other AHIP members share their concerns but have been reluctant to join the fray. Nonetheless, the conflict "could cause deep divisions and permanent scars" within AHIP, the executive said.

But another dissenter said, "This is a battle; it's not Armageddon."

Publication Details

Newsletter Article


Eighty-Four Percent of Americans Want Health Care Costs Published, Study Finds

MAY 2, 2006 -- Eighty-four percent of Americans believe hospitals, doctors, and pharmacies should publish prices on all goods and services, according to a poll released Monday by the Council for Affordable Health Insurance, a group that favors market-oriented solutions to health care.

In addition, the poll, conducted by Zogby International, finds that 79 percent of respondents said they would likely use that data to shop around for the best price, with 51 percent responding they would be "very likely" to shop around and 28 percent saying they would be "somewhat likely" to shop around.

According to the poll's findings, "Among those most likely to say they would shop around for the best price are Hispanics (89 percent), 20- to 34-year-olds (88 percent), and those earning between $25,000 and $35,000 a year (84 percent)." For the poll, Zogby conducted 1,209 interviews nationwide between April 17–24. The poll's margin of error is plus or minus 2.9 percentage points, with the margin higher in the poll's subgroups.

Publication Details

Newsletter Article


Insurers Urge Creation of Portable Databases to Improve Care

MAY 1, 2006 -- BlueCross BlueShield local health plan leaders made the case on Monday for health insurers to establish uniform portable health databases to ease the burden on doctors and patients.

The meeting held in Washington was the first in a series the association will hold on the topic as lawmakers consider legislation to integrate health information technology nationwide.

"It's really just an extension of what we already do," said Mary Nell Lehnhard, the association's senior vice president of policy and representation. "It's really the best chance for wide-scale and quick adoption because consumers don't have to do very much."

Efforts to shift from paper records to electronic ones are already under way in Louisiana, New Jersey, and Alabama, and have allowed insurers to pair clinical information with family history and administrative data, panelists said.

BlueCross BlueShield leaders from those states said they are using technology to do things such as trigger patient reminders for check-ups and make personalized suggestions for low-cost medications targeting specific ailments.

Technology also can ensure that records are ready for a patient to examine and update when visiting a new doctor rather than documenting medical history from scratch. The insurance officials also said electronic health efforts can notify doctors which patients are not filling their prescriptions.

In June, Alabama's BlueCross BlueShield will begin an initiative whereby doctors can transmit prescriptions directly to a pharmacy of their patients' choice via handheld electronic devices. A pilot "e-prescribing" program also will be introduced this year in BlueCross BlueShield's Louisiana system.

Hurricane Katrina accelerated efforts to make data more accessible, said W. Ob Soonthornsima, senior vice president and chief information officer of BlueCross and BlueShield of Louisiana. On Oct. 1, 2005, the group started a claims-based health record system for providers to access patient data.

For example, the system could document that a patient has had four different doctors treating the same problem, outline all procedures performed, and detail the prescriptions the patient has subsequently filled.

According to Lehnhard, 72 percent of those surveyed said they would use a personal health record and research showed they would prefer their insurance carrier to provide that record instead of a doctor.

But Ed Harris, vice president of senior products and information services for BlueCross and BlueShield of Alabama, emphasized that getting doctors to use the systems is the real challenge.

"It has to be in a way that doesn't interrupt their daily routine," Harris said.

Health plan providers also disagree with some aspects of Congress' efforts to fuel health information technology. For example, one bill (HR 4167) intended to help disseminate secure patient records would require all payers and health care providers to switch to a new billing code system by Oct. 1, 2009.

An April 5 letter that America's Health Insurance Plans (AHIP) sent to Rep. Nancy L. Johnson, R-Conn., explains that the transition would replace the existing 23,000 codes for describing medical diagnoses and procedures with more than 200,000.

BlueCross BlueShield is among many organizations that called the timeframe for that transition unworkable and recommends extending it by three years, to 2012.

Privacy remains the other significant hurdle.

Dr. Deborah Peel, founder and chairman of Patient Privacy Rights, said that while her organization sees the merits of portable electronic records, "They'll only be realized if patients really, really trust that only the people they want to know about them do."

Peel said legislation should include elements such as audit trails for disclosures and meaningful criminal penalties.

"Because we have a new technology, [why] would we eliminate the ethics that have been the foundation of medicine?" Peel asked.

Dr. Richard Popiel, vice president and chief medical officer of Horizon Blue Cross Blue Shield of New Jersey, likewise emphasized the importance of "technology embedded with clinical rules and clinical guidelines."

Soonthornsima maintained that in its early local and collaborative stages, those principles are adhered to. "We share a lot of knowledge," he said. "We don't share data. We share practices."

Publication Details

Newsletter Article


McClellan Urges Congress to Enact Proposed Medicare Cuts to Ease Solvency Woes

MAY 2, 2006 -- Congress could improve the dire financial outlook for Medicare portrayed by the program's trustees Monday by enacting cuts proposed earlier this year by the Bush administration, the head of the Medicare program said Tuesday. Those cuts along with higher Part B premiums for affluent beneficiaries and payment incentives to improve quality and efficiency would lessen the need for harsher measures later, Centers for Medicare and Medicaid Services Administrator Mark B. McClellan told a forum sponsored by the American Enterprise Institute (AEI).

Neither the House nor the Senate so far has shown any interest in adopting Medicare cuts proposed by the administration totaling $36 billion over five years. The fiscal 2007 budget resolution passed by the Senate does not call for Medicare cuts, nor does the budget resolution pending in the House.

When asked if the trustees' warning that the hospital trust fund will become insolvent in 2018 would give the proposed cuts new life on Capitol Hill, McClellan said the administration is making a new effort to build interest in the proposal.

But when asked if the administration has received any signals from key lawmakers that they now might be open to the cuts, McClellan said, "It's only been one day."

Meanwhile, other speakers at the AEI event on the Medicare trustees' report warned that the dire financial predictions for the future of the program in fact might be too optimistic.

And while many analysts have emphasized that older Americans are benefiting at the expense of younger Americans from current Medicare obligations, speakers noted that beneficiaries themselves will face big financial burdens under Medicare in coming years.

Fast-rising spending on Part B of the program, which covers various forms of care outside the hospital, might mean many years of significant annual increases in Part B premium deductions from Social Security checks, indicated Richard Foster, Medicare's chief actuary.

Foster noted that because of problems with the Medicare physician payment formula, doctors are in line for payment cuts of five percent per year through 2015 and perhaps for a few years after that as well. Foster said the cost of erasing those cuts, along with other factors, in turn contributes to double-digit increases in the premiums beneficiaries must pay for Part B. The trustees' report projected an 11 percent increase in Part B premiums in 2007.

By 2040, 45 percent of Social Security benefit checks will go to pay premiums for Part B and for Part D, the Medicare drug benefit, said another speaker, Texas A&M University economist Thomas Saving, who serves as one of the Medicare trustees.

Another trustee, Syracuse University professor John L. Palmer, said that a typical elderly couple now has a yearly income of $35,000 and must spend 20 percent of that on out-of-pocket health care costs. In 25 years that percentage easily could climb over 50 percent, he said. "So it's a big problem for beneficiaries too," Palmer said of Medicare's rising costs. And the figure illustrates why shifting costs to Medicare beneficiaries as a solution to the program's fiscal crunch will be difficult, he said.

But the analysts also had plenty of warnings for the impact of Medicare's rising costs on taxpayers and the federal budget. In 25 years, half of all federal income tax revenues will have to be applied to Medicare and Medicaid, Saving said.

Foster noted that by 2030, there will be 2.4 workers paying payroll taxes into the Medicare hospital trust fund for every Medicare beneficiary—down from the current figure of four workers for each beneficiary . After 2030, the ratio goes down to two workers per beneficiary.

Meanwhile, 2011, the year baby boomers begin entering the program and swelling its costs, "is getting closer and closer and frankly we're not doing much about it," Foster said.

Foster said that one piece of good news in the report released Monday is that the net cost it projects to the federal government of the Medicare drug benefit over the next decade is 20 percent lower than trustees predicted a year ago. Instead of $1.1 trillion, trustees now project a cost of about $880 billion. About four percentage points of the 20 percentage point drop stem from higher-than-expected price breaks negotiated by Medicare drug plans, he said. Smaller-than-expected enrollment accounts for a comparable portion of the 20 percentage point drop.

Last year, trustees projected an enrollment of 37 million of Medicare's 43 million beneficiaries in the drug coverage and this year they are projecting enrollment of 31 million. McClellan noted, however, that of the remaining 12 million beneficiaries, about half have existing coverage because they are still working or have drug coverage through the Department of Veterans Affairs, among other sources of coverage. Slower-than-expected increases in drug spending, in part owing to greater-than-expected generic drug use, also were a major reason for the 20 percent drop in projected spending.

Palmer noted that the overall Medicare spending projections in the report assume that health cost growth will exceed the increase in the Gross Domestic Product by 1.4 percent per year 25 years from now and by zero percent in 75 years, down from 2.3 percent now. But trustees do not specify how this drop in "excess cost growth" will happen, Palmer noted.

He added that the tools and knowledge do not exist right now to put into effect this assumed reduction. So there is a great deal of optimism in the projections, Palmer said. Former Congressional Budget Office Director Douglas Holtz-Eakin said analysts do not now understand what part of "excess cost growth" may be beneficial forms of increased health care spending and should try to answer that question to better understand what to do about Medicare. By comparison, Social Security is relatively easy to fix, he said. "We should probably fix the easy one" while trying to understand Medicare better, he said.

But Holtz-Eakin said presidential candidates aren't going to be able to keep ducking the Medicare cost problem, what he referred to as "kicking the can down the road." Even a president "with a very strong leg can't get us to 2016" without dealing with Medicare, he said.

Publication Details

Newsletter Article


Medicare to Post Price Data on June 1 Under Transparency Plan

MAY 1, 2006 -- In a speech Monday that otherwise broke little ground in his campaign to make consumers more responsive to the price of health care, President Bush told hospitals Medicare will start posting price data on the Internet June 1.

Although he repeated the administration's pitch to hospitals to make price data available to the public as a way to avoid federal legislation requiring "transparency," Bush used the speech, delivered to the American Hospital Association, more as an opportunity to urge Congress to adopt a familiar mix of proposals he said would make health care affordable. The speech also appeared to be prepared with the upcoming congressional election season in mind, laying out a broad defense of his record on health care.

AHA responded by issuing a new policy on transparency that drew Bush's thanks. AHA had to be dragged by the administration to that policy statement "kicking and screaming," a health care lobbyist said. Whether it will be enough to satisfy the administration remains to be seen.

Medicare Data
Bush offered no details on what price data Medicare would post, but a Health and Human Services (HHS) spokeswoman said the information would be in line with plans outlined by HHS Secretary Michael O. Leavitt in a March 14 speech to the Commonwealth Club in San Francisco.

Leavitt announced then that government analysts will examine claims data from Medicare, Medicaid, the Defense Department, and the Federal Employee Health Benefits Program so that "price and quality data will be available for each hospital and doctor." The initiative calls for listing the total costs of particular procedures, even though insured patients pay only a small fraction of those costs themselves.

"Take hip replacement surgery, for example," Leavitt said. "It would change the health care world if people could know, before their operation, what the overall package price is going to be, including lab tests, anesthesia, rehab costs, as well as specific information on quality, such as complication rates and patient satisfaction." He added that "we will start with a few of the most common procedures and expand as quickly as possible."

Key congressional committees have yet to take up legislation promoting hospital pricing disclosure. In a statement Monday, Senate Finance Chairman Charles E. Grassley, R-Iowa, said he intends to draft legislation this year that may benefit Health Savings Accounts, or HSAs.

"I strongly support efforts to expand and improve HSAs," Grassley said. "I hope to draft and advance a health care tax incentives package this year that may include an expansion of HSAs, especially for small businesses."

Grassley has said, however, that he doesn't think new HSA tax breaks proposed by the administration would attract enough votes for Senate passage.

U.S. Leadership at Stake
Bush said that keeping health care affordable is critical to preserving the nation's position as global leader. "One of my concerns is that the United States of America loses our nerve, fears competition and we become an isolated and protectionist nation. And health care plays a vital role in making sure this nation remains competitive," he said. "You're part of an industry that must be reformed to in order for the United States to be an economic leader."

Unleashing market forces to restrain health care costs is the key to keeping the United States number one in the world in health care, a position it holds because of the innovations of the private sector, he said. And the key to unleashing market forces is widespread adoption of health savings accounts and posting of health care prices to foster comparison shopping by consumers, he said.

HSAs "will mean that Americans who do not have coverage will be able to get coverage and afford coverage," Bush said. As a result, "fewer people will show up at our nation's hospitals needing uncompensated care." Bush urged hospitals themselves to offer HSAs, noting few of them do so now.

As an important step to further sales of the accounts, Bush said Rep. Eric Cantor, R-Va., will introduce legislation this week increasing tax breaks for buying HSAs, including a tax credit of up to $3,000 for purchases by low-income families.

Step two in making health care more affordable is allowing consumers to spend their HSA dollars wisely by informing them what medical procedures cost. "We're asking doctors and hospitals and other providers to post their walk-in prices to all consumers," Bush said. "Every hospital represented here should take action to make information on prices and quality available to all your patients. If everyone here cooperates . . . we can increase transparency without the need for legislation from the United States Congress."

Bush also urged Congress to pass legislation controlling medical malpractice costs, and allowing small businesses to pool their health care purchasing power. And he said the administration is working to make care affordable by promoting health information technology.

AHA Policy Statement
AHA "supports federal requirements for states, working with state hospital associations, to expand the many existing state efforts that make hospital charge information available to consumers," the association's President Dick Davidson said in a statement Monday. "The AHA also supports federal requirements for states, working with insurers, to make available in advance of medical visits information about a patient's expected out-of-pocket costs."

The administration is urging that hospitals disclose the entire costs associated with various procedures, while AHA asserts that what matters more to consumers is information on what their out-of-pocket costs will be. The policy statement urges a federal-led research effort on what price information will be most useful to consumers, and the use of consumer-friendly terminology to explain pricing data. Pricing explanations also should make clear why prices vary, AHA says.

AHA officials emphasized that a public–private approach has worked well to publicize data on the quality of hospital care and that a similar approach would succeed with pricing data. The Federation of American Hospitals also urged support Monday for that approach.

The lobby's president, Chip Kahn, praised Bush for highlighting "the groundbreaking public–private sector quality partnership where hospitals are publicly reporting on clinical performance. And we look forward to working with the administration to expand this quality initiative to include additional measures as well as . . . health care pricing information."

Publication Details