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November 30, 2009

Washington Health Policy Week in Review Archive 6915aee9-6d55-4aa2-92f9-d5bf71219910

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Consumers Feel Better About the Economy and Health Care, Survey Finds

By CQ Staff

November 24, 2009 – A somewhat improved outlook for the economy in October also meant increased confidence in health insurance coverage and access to care, a new Robert Wood Johnson Foundation survey has found.

The foundation's Health Care Consumer Confidence Index rose to 104.4 points in October on a scale of 1 to 200 in which 200 is the highest point. That was up from 96.6 points in September, and the survey's authors said it's the highest rating since the monthly snapshot was launched in April.

The Future Health Cost Concerns Index, which measures consumer confidence about access to health care in the future due to cost, rose from 91.2 in September to 105 in October. That month also saw action in Congress on the health care overhaul.

Separately from the indexes, the foundation in October found 23.3 percent of Americans surveyed were worried about losing their health insurance coverage, a significant decrease from 34.4 percent who said they were worried in September. The percentage worried they couldn't afford future health care coverage dropped from 53.2 percent in September to 43.4 percent in October.

In addition, almost 72 percent of Americans said they think their access to care will improve or stay the same if the overhaul is enacted, fewer think their employers will drop their group coverage and fewer say they are unable to pay their health bills.

The data for the study comes from the University of Michigan Surveys of Consumers, which are monthly telephone interviews conducted by the Survey Research Center at the university. The margin of error is 4.4 percentage points and about 500 adults were surveyed.

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Cost Arguments Loom as Senate Launches Health Care Debate

By Richard Rubin, CQ Staff

November 25, 2009 – As the Senate prepares for its first week of formal debate on health care overhaul legislation, the Obama administration is working to head off arguments that the package would lead to excessive government spending at a time of record federal deficits.

Republican critics contend that both the House and Senate health care bills (HR 3962, HR 3590) would expand health insurance coverage without doing enough to control costs—either during the next decade or over the long haul.

But the White House is fighting back, challenging its opponents to show how they would do more to contain costs. Peter R. Orszag, director of the Office of Management and Budget, says both versions of the legislation contain numerous provisions designed to slow the growth of health care spending compared with what would happen if Congress leaves current laws unchanged.

The Senate bill, he noted, includes a provision to create an independent Medicare commission to recommend cost savings, an emphasis on evidence-based medicine, pilot programs for changing how health care providers are paid and an excise tax on high-cost health insurance plans.

On a conference call with reporters the day before Thanksgiving, Orszag attacked what he called "loosey-goosey" critics of the bills, arguing that people who have read and studied the legislation have found that it contains many of the cost-containment measures that experts have been discussing for years.

"I guess I would say to folks in the looser range: What specifically else would you do? Not, 'Oh, I'm unhappy, I'm grumpy, whatever.' Specifically, what would you do?" he said.

The main additional cost control item that Republicans seek would impose tight limits on medical malpractice lawsuits and caps on non-economic damages. A version of that proposal was included in the House Republicans' alternative proposal and it has been scored by the Congressional Budget Office as raising $54 billion over 10 years.

Orszag sidestepped a question about the omission of the excise tax from the House bill (HR 3962), which instead would raise much of its funding through an income surtax on wealthy households. He noted that President Obama has endorsed the idea of taxing high-cost health plans and said the excise tax is one of the four main cost-containment measures endorsed by many leading economists.

"We are in favor of a fiscally responsible health reform bill that includes these four pillars," he said.

But he would not discuss any communication between the White House and House leaders on the issue. More than 180 House Democrats have signed a letter opposing the tax, which they say would hit middle-income families. Unions, which have given up bigger wage increases in labor contracts to win generous health insurance coverage for their members, are strongly opposed to the excise tax.

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Grassley Requests More Information on Medicare Payroll Tax

By Jane Norman, CQ HealthBeat Associate Editor

November 24, 2009 – The top Republican on the Senate Finance Committee said on Tuesday that he wants more information about an increase of the Medicare payroll tax included in the Senate version of the health care overhaul.

"If Democratic leaders want to increase Medicare taxes, the revenue should go to Medicare, with Medicare's Hospital Insurance Trust Fund scheduled to run dry in eight years and the payroll tax having been established to fund the Medicare program, not for other government spending," said Charles E. Grassley of Iowa.

Grassley said he has written to the Joint Committee on Taxation asking which taxpayers would be affected by the new tax, particularly those earning less than $200,000 a year.

Under the bill (HR 3590), individuals earning more than $200,000 and married couples making more than $250,000 would see a slightly higher payroll tax rate to help fund the overhaul—1.95 percent compared with 1.45 percent now. The tax increase would raise about $59 billion over the next 10 years, according to the Joint Committee on Taxation.

Because he wanted to pare back the impact of an excise tax tied to high-cost insurance plans included in the bill, Senate Majority Leader Harry Reid, D-Nev., added the 0.5 percent increase in the payroll tax that funds Medicare. It would mean that the tax would take into account marital status, so working couples whose combined income tops the threshold may have to adjust their tax withholding or face additional payments when they file their returns.

The tax would not start until 2013, and the income levels that trigger it would not be indexed for inflation. As a result, many people whose income in current dollars is below the threshold would have to pay the tax, even if their real purchasing power does not increase.

Grassley said he wants to know if the Medicare payroll tax increase could become like the alternative minimum tax. He said the alternative minimum tax did not affect many taxpayers in the beginning but later became a major tax burden because it, too, was not indexed for inflation.

Grassley said he also fears the bill could result in an inadvertent marriage penalty, and so he has asked the committee for information on the impact on married couples.

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It's a Good Week for Geeks to Give Thanks

By John Reichard, CQ HealthBeat Editor

November 24, 2009 – The federal Department of Health and Human Services announced Tuesday that it's awarding $80 million in grants to develop community college programs to train technical people to help doctors and nurses use new information technology systems.

David Blumenthal, the federal official in charge of government efforts to spur health IT adoption, also announced Tuesday a new blog to engage the health IT world in how best to advance the field.

The two announcements are the latest developments in what has been a banner year for health IT.

Under economic stimulus legislation passed earlier this year, Congress provided for net additional federal spending totaling $19 billion for health IT—$2 billion in discretionary spending by HHS, and $17 billion in Medicare and Medicaid payment incentives.

HHS announced this summer that it would use $1.2 billion of the discretionary funds to create state and regional networks for the exchange of health data and to establish technical assistance centers. About half of the total would go for networks and the other half for creating the centers, which HHS likens to the agricultural extension centers Congress set up in the early 1900s to improve the efficiency of agriculture.

Of the $80 million announced Tuesday, $70 million will go directly for the community college programs and $10 million to develop educational materials to support them.

HHS said in a news release that the programs will run six months and be open to "individuals with some background in either health care or IT."

"The expansion of a highly skilled workforce developed through these programs will help health care providers and hospitals implement and maintain electronic health records and use them to strengthen delivery of care," said Blumenthal. He serves as the HHS national coordinator for health information technology.

"We estimate 70 community colleges will be involved," said Mary Jo Deering of the Office of the National Coordinator." The efforts of the community colleges will be coordinated through five regional consortia. "While many of the graduates will work in extension centers, it's certainly the intention that they would be hired by providers directly, especially over time," added Deering.

Blumenthal said in an announcing his new blog, called Health IT Buzz that he sees it in part as a listening post. "Listening is critical because there is no predicting when the most intriguing thoughts and advice will pop to the surface. It could be in a hallway conversation, in testimony before an advisory committee, or in an e-mail. It could also be on a blog."

But he said he also plans to use the blog "to discuss our ongoing work to protect patient privacy, secure information, and implement standards."

By the end of Tuesday, more than three dozen comments had been posted on the blog.

Early comments emphasized confusion about how to use health IT and the need to educate providers. Commenters also warned against hyping the technology's potential and flaws with the process for certifying new systems.

"We need to minimize the hype that has been associated with electronic health records in regard to substantial improvements in patient safety and quality," said an instructor of medical informatics. "For every positive article on the subject, there is a rebuttal or flaw in the literature."

"Many of my clients are lost, frustrated and stuck in an aggressive roll-out plan without a project plan when we arrive for the first time," blogged a consultant in the adoption of electronic health records. "I hope. . .this blog supports education to help hospital systems, physician practices and other healthcare organizations understand the complexity of what needs to be done," the consultant added. "We are in the trenches. We see what is behind the press releases and it isn't pretty."

And another comment warned about an imperfect technology certification process. Certification "does not ensure the purchaser of the software that the product does not pose any patient safety risks or that it does not have significant gaps in functionality that will cost the customer lots of money/time to figure out work-arounds," the comment said.

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Major Provisions of the Health Care Bill to be Offered on Senate Floor

By CQ Staff

November 23, 2009 – Senate Majority Leader Harry Reid, D-Nev., unveiled a version of the health care overhaul bill (HR 3590) Nov. 18 that will be debated after the Thanksgiving recess. The measure would expand Medicaid coverage, create state-run insurance exchanges, establish a public health care option to compete with private insurers and cost an estimated $848 billion over 10 years. The bill would:

Coverage Requirements
Individual Mandate
• Require most individuals to obtain minimum essential coverage, beginning in 2014.
• Exempt those who cannot afford coverage, including taxpayers with incomes less than 100 percent of the federal poverty level.
• Allow individuals and groups to keep their current health plans.
• Require those who do not obtain coverage to pay a penalty of $95 in 2014, rising to $750 in 2016 and indexed for inflation thereafter.

Employer Mandate
• Require businesses with 200 or more employees to automatically enroll employees into health insurance plans offered by the employer. Employees could opt out if they had other coverage.
• Require employers that have more than 50 employees and do not offer coverage to pay a $750 fee for each employee who gets a tax credit for health insurance through a state exchange.

Insurance Options
State Exchanges
• Require states to establish government-run insurance marketplaces, or exchanges, by 2014. All legal state residents could enroll in a plan through the exchange. If a state exchange is not operational by 2014, the Health and Human Services (HHS) secretary would establish and operate one.
• Allow insurers to offer one of four types of health plans. The plans would provide increasing levels of service and out-of-pocket costs.

Consumer Cooperatives
• Establish and appropriate $6 billion for a federal program to assist nonprofit, member-run health insurance issuers, known as the Consumer Operated and Oriented Plan (CO-OP) program.

Public Option
• Require the establishment of a public health insurance option within the exchanges by 2014. States could opt out if they provide health care coverage as comprehensive as required under the bill.
• Require the public option to cover essential health benefits, as defined by HHS. States could require additional benefits if they defray the costs.
• Require HHS to negotiate provider reimbursement rates for the public option. The rates could be no higher than average rates paid by private qualified health plans.

Tax Credits and Subsidies
• Provide tax credits to help low-income individuals and families to buy coverage on the exchange.
• Make most employees offered insurance by their employers ineligible for federal subsidies.
• Provide tax credits for certain small businesses that purchase health insurance for employees.

Insurance Requirements
• Bar insurance companies from denying coverage for pre-existing conditions or dropping coverage of those who become ill.
• Bar plans from imposing lifetime limits or creating plans that effectively discriminate in favor of higher-wage employees.
• Require all plans to cover preventive services and immunizations.
• Prohibit out-of-pocket expenses greater than those for health savings accounts.
• Cap deductibles at $2,000 for individuals and $4,000 for families for the small-group market.
• Provide that no individual, company or issuer would be required to participate in a federal health insurance program.

Abortion Restrictions
• Specify that abortion coverage could not be a mandated benefit as part of a minimum benefits package.
• Allow qualified health plans to decide whether to cover abortions, and if so, whether to limit coverage to pregnancies that result from rape or incest or that would endanger the woman's life, or to provide broader coverage.
• Allow the public option to cover elective abortion only if it uses money collected as premiums—not subsidies or federal funds—to pay for the procedure.
• Permit states to require coverage of abortions beyond those in cases of rape or incest or danger to the woman's life only if no federal funds are used for the coverage.
• Require each state exchange to offer at least one plan that covers abortion beyond the limits of rape, incest or danger to the woman's life and one that does not. Exchange plans that cover abortion would have to segregate revenue collected as private premiums from federal subsidy revenue and use only money from private premiums to pay for the procedure.
• State that the bill would not pre-empt state laws regarding the prohibition or requirement of funding or coverage for abortions.

Medicaid and Medicare
Medicaid Expansion
• Expand eligibility for Medicaid in 2014 to cover all children, parents and childless adults who are not eligible for Medicare and who have incomes up to 133 percent of the federal poverty level. States could expand eligibility as early as Jan. 1, 2011.
• Provide federal payments that would cover 100 percent of the cost of insuring newly eligible people under Medicaid through 2016, with additional aid available in subsequent years.
• Allow states to amend their state Medicaid plans to cover all non-elderly individuals with incomes above 133 percent of the federal poverty level.
• Require states to maintain the same income eligibility levels for adults through 2013, and the same levels for children currently in Medicaid through Sept. 30, 2019.
• Reduce Medicaid disproportionate-share hospital allotments, which are made to hospitals that treat a higher-than-average share of low-income patients.

Medicare Changes
• Repeal a scheduled 21 percent reduction in the Medicare physician pay rates scheduled for January and instead provide a 0.5 percent increase.
• Require Medicare to cover 100 percent of the cost of preventive services and waive beneficiary co-insurance requirements.
• Freeze the income thresholds from 2011 through 2019 for higher- income individuals who pay higher Part B premiums.

Prescription Drug Coverage
• Provide a $500 increase in 2010 for the onset of the coverage gap, or "doughnut hole," under the Medicare prescription drug program. Drug manufacturers would have to give a 50 percent discount on drugs that beneficiaries buy while in the coverage gap.

Medicare Advantage
• Make rates for Medicare Advantage the same as those for traditional Medicare fee-for-service plans.
• Base Medicare Advantage payments on the average of bids from Medicare Advantage plans participating in a market.

Children's Health Insurance Program
• Require states to maintain their current income eligibility levels for the Children's Health Insurance Program (CHIP) through fiscal 2019.
• Provide a 23 percentage point increase in the CHIP match rate from fiscal 2014 to 2019, but cap the rate at 100 percent.

Medical Malpractice
• Express the sense of the Senate that states should be encouraged to develop and test alternatives to the existing civil litigation system and that Congress should consider establishing a state demonstration program to evaluate alternatives to the existing civil litigation system for medical malpractice claims.

Revenue Provisions
Excise Taxes
• Impose a 40 percent excise tax on insurance companies that offer plans costing more than $8,500 a year for individuals and $23,000 a year for families, starting in 2013.
• Increase the hospital insurance tax rate for high-income taxpayers, including individuals who earn more than $200,000 and couples who file a joint return and earn more than $250,000.
• Impose a 5 percent tax on the amount paid for voluntary cosmetic surgery.

Flexible Spending Accounts
• Limit contributions to health care flexible spending accounts to $2,500 per year, beginning in 2011, and allow reimbursement only for prescribed drugs or insulin, not over-the-counter drugs.

• Raise $2.3 billion per year from fees on manufacturers and importers of prescription drugs that are sold in the United States.
• Raise $2 billion per year from fees on manufacturers and importers of medical devices that are sold in the United States.
• Raise $6.7 billion per year from fees on U.S. health insurance providers.

Itemized Deductions
• Increase to 10 percent, from 7.5 percent, the adjusted gross income threshold used for claiming the itemized deduction for medical expenses, except for those 65 and older, effective for taxable years beginning after Dec. 31, 2012.

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Reid's Recruitment Must Start Over

By Alex Wayne, CQ Staff

November 24, 2009 – The Senate will begin its long-awaited health care debate effectively at an impasse.

The Democratic leadership barely mustered the 60 votes needed to keep Majority Leader Harry Reid's bill alive long enough to bring it to the floor. It was an important victory, but one that could quickly prove hollow.

The Democratic moderates who gave Reid the support he needed on a Nov. 21 cloture vote also served notice publicly that he cannot count on them unless the bill is made more to their liking—as did at least one liberal.

When the Senate begins debate on the bill the week of Nov. 30, the Nevada Democrat's task will be to find a way to unify his disparate majority behind the legislation (HR 3590). At the moment, it does not appear there are 60 votes to either pass the bill or amend it in ways that might draw the votes needed for passage.

It will be up to Reid—and, to a large extent, President Obama—to find a way to break the gridlock. The health care debate, coming on the eve of a congressional election year, has become a test of Reid's and Obama's leadership and of the Democratic majority's ability to address significant policy concerns.

"I would think they're going to have to make some accommodation for some people on their side to get it out of here," said John Thune, R-S.D. "It's going to be a real challenge for [Reid], probably, to satisfy his left and the people he's going to need to get to 60, the moderates."

Reid has no reason to expect any help from the Republican minority. Of the 40 GOP senators, 39 voted against the procedural motion to proceed to the bill, and the one who did not vote—Ohio's George V. Voinovich—had earlier announced his opposition. Amendments are also expected to require 60 votes, since they will be subject to filibuster as well.

Some Democrats hold out hope that one or both of Maine's moderate Republicans, Olympia J. Snowe and Susan Collins, might vote for the final health care overhaul. But Snowe said she voted to keep Reid's bill from coming to the floor because she doubts she will be able to win the adoption of amendments she wants.

That leaves Reid and Obama where they were on the motion to limit debate—with no room for dissenting votes from senators in the 60-member Democratic Caucus.

"There are a number of very, very tough issues," said Nancy LeaMond, a senior vice president of AARP who directs the interest group's lobbying. "I can't imagine it's not going to take the full force of the president and the leadership of the Senate to find a path through it."

The 'Public Option' Obstacle
Reid's foremost problem is what to do about the "public option"—a government-run insurance plan most Democrats would like to create to compete with private insurers in the insurance exchanges the legislation would set up.

Four senators—independent Joseph I. Lieberman of Connecticut and Democrats Ben Nelson of Nebraska, Blanche Lincoln of Arkansas, and Mary L. Landrieu of Louisiana—who voted to begin debate on the bill have said they will likely later oppose any move to end a filibuster and pass the measure unless the public option proposed by Reid is significantly altered or removed.

On the other side of the issue, Bernard Sanders, an independent from Vermont, released a statement Sunday saying that there are a "number of senators, including myself, who would not support final passage without a strong public option."

A compromise could emerge from talks on a proposal by Thomas R. Carper, D-Del. He has suggested a public option available only in states where private insurers fail to offer insurance plans that meet yet-to-be-defined cost standards, or in states that choose to offer a public plan in competition with private insurers.

Carper says he has discussed his idea with "the usual suspects"—moderates he declined to identify.

Kent Conrad, D-N.D., who said he has spoken with Carper, said of the proposal: "I give him very high marks for the effort he has under way. It's very thoughtful."

Another potential broker of bipartisan agreementi—if such a thing is possible in the Senate—could be Ron Wyden, D-Ore., who has put together an alternative health care overhaul (S 391) with five conservative Republican cosponsors. "I continue to hope that before this is through, we're going to have some real bipartisan breakthroughs," he said.

But Thune was skeptical. "I suspect there will be efforts by the Democrats to poach some issues that can attract" Snowe and Collins, he said. "But I don't know. Talking with them, there's some pretty strong reaction in opposition right now to this bill."

Abortion and Other Issues
Reid will also have to address the abortion issue. Anti-abortion groups, notably the Democratic-inclined U.S. Conference of Catholic Bishops, are alarmed that his bill would allow insurance plans receiving federal subsidies, including the public option, to cover elective abortion. Doing so, abortion opponents say, would violate longstanding legal prohibitions—collectively known as the Hyde amendment—against using federal money to terminate pregnancies that are not the result of rape or incest or do not threaten a woman's life.

Reid, who personally opposes abortion, and abortion-rights supporters say his bill honors the principle of the Hyde restrictions by requiring insurance plans covering abortion to separate federal subsidies from the money they use to pay for abortions. Abortion opponents say that restriction is insufficient.

Nelson is the only anti-abortion Democrat who has said he may oppose the bill if the abortion language is not changed.

But Reid may be able to assuage Nelson and other anti-abortion Democrats by clearing the way for a vote on an amendment that would tighten the bill's abortion restrictions. Such a vote would allow anti-abortion Democrats to publicly demonstrate their position on the issue, but the amendment would probably not be adopted. Abortion opponents acknowledge that they do not have 60 Senate votes on their side.

There are also likely to be fights during the floor debate over the tax increases and Medicare spending reductions that would finance the bill's expansion of health insurance coverage.

Patrick J. Leahy, D-Vt., has said he will offer an amendment to partially repeal health insurers' exemption from federal antitrust law.

Republicans will likely try to win amendments that would reduce medical malpractice lawsuits, which they say needlessly drive up health care costs.

And then there is the unknown: "My sense is there is a tough issue out there that hasn't been invented yet," LeaMond said.

Passage of the bill may ultimately depend on Reid winning 60 votes, after much debate, for one or more amendments representing a grand compromise between Democratic liberals and moderates on issues as diverse as the public option, abortion, and the bill's financing and cost.

Majority Whip Richard J. Durbin, D-Ill., said he expects changes in the bill in the forthcoming debate. But he added that the leadership will not permit an endless series of amendments and cloture motions to bog down the Senate into the new year.

"If you think we're just going to sit in here, 30 hours after 30 hours after 30 hours, until it's Jan. 1, it's not going to happen," Durbin said.

Drew Armstrong contributed to this story.

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