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November 8, 2010

Washington Health Policy Week in Review Archive fb5e41fb-e974-4c2e-b907-daadd4df8384

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House GOP Will Face Obstacles in Repealing Health Overhaul

By Emily Ethridge, CQ Staff

November 3, 2010 -- For months, the man presumed to be the next speaker of the House, John A. Boehner of Ohio, has said that repealing the health care overhaul, President Obama's signature achievement, would be one of his top priorities.

But even with the GOP gaining control of the House and picking up seats in the Senate, any repeal effort is sure to fail as long as Obama wields veto power. So GOP lawmakers have begun looking for other ways they can undermine the law (PL 111-148, PL 111-152) and hamstring its complicated implementation process.

"They can't repeal the bill, but there are many roadblocks of things that could make it harder to implement what is in that law," said Robert Blendon, an expert on health policy and public opinion at Harvard University. But with the prospects for support from Senate Democrats unlikely, Republicans will either have to temper their ambitions or stack up a pile of bills that go nowhere.

Health policy observers agree the GOP's best chances for disrupting the overhaul lie not in repeal efforts, but in blocking funding for the departments responsible for its implementation.

"There's going to be a giant steamroller behind repeal in the House," said Thomas A. Scully, former administrator of the Centers for Medicare and Medicaid Services under George W. Bush. He predicted House Republicans would quickly introduce and pass a bill to make good on their pledge—a tactic confirmed Tuesday night by Republican Whip Eric Cantor, R-Va., who is poised to become House Majority Leader—but the measure would go nowhere in the Democratic-controlled Senate.

Both President Obama and Senate Majority Leader Harry Reid signaled Wednesday that they are open to tweaking the health care law—but not to substantially dismantling it.

"If the Republicans have ideas for how to improve our health care system—if they want to suggest modifications that would deliver faster and more effective reform to a health care system that . . . has been wildly expensive for too many families and businesses, and certainly for our federal government—I'm happy to consider some of those ideas," Obama said.

He cited the 1099 tax-reporting provision for small businesses, which he said "appears to be burdensome."

But he said that governing, as opposed to campaigning, requires finding common ground and talking about specific programs, not generalities.

"Repeal is just not going to see the light of day," said Julie Barnes, director of health policy at the Bipartisan Policy Center, a nonprofit group that works to build political support to address issues such as health care. "More threatening to health care law implementation in the short term is the defunding, or starving of funding through the appropriations process."

The tactic of "starving the beast" could interfere with parts of the law already in progress and allow lawmakers to strike out the provisions they most dislike. Republicans may try to restrict funding for the Department of Health and Human Services so it is handicapped in terms of staffing and abilities to carry out implementation.

They may also target the Internal Revenue Service as they try to attack the "individual mandate"—the requirement that most people buy health insurance beginning in 2014, or else pay a penalty.

Barnes predicted that Republicans could try to deny IRS funding to prevent it from enforcing the requirement and collecting the penalties. But the requirement does not go into effect for another three years, so any attempts to hinder the agency's efforts may be premature, she said.

But Senate Democrats and Obama are extremely unlikely to sign off on any spending bills that drastically defund those agencies. House appropriators will have to compromise on spending bills, or else be willing to risk a government shutdown as they parry with the administration.

Scully considers GOP pursuit of the shutdown option unlikely. "A lot of this implementation is done in [the Department of Health and Human Services], and I'm sure there will be a big effort to cut its staff and funding—but the government has to run at some point," he said.

A less risky GOP approach might be targeting funding for the most unpopular provisions, such as comparative effectiveness research, which is aimed at finding the best treatment approaches but which some Republicans say could lead to rationing.

Also marked for potential obliteration is the Independent Payment Advisory Board (IPAB), created in the law to limit Medicare spending growth. The American Hospital Association recently endorsed a bill introduced by Sen. John Cornyn, R-Texas, that would strike out the board.

"There's not too many folks in the industry who are too excited about the possibility of a commission reducing their payouts in the Medicare program. And that's what the IPAB is supposed to be looking at," Barnes said.

In addition, Republicans have a chance to win bipartisan support for eliminating certain pieces of the legislation. Members of both parties have introduced bills to eliminate the tax-reporting requirement for small businesses, for example. And the individual mandate could be tweaked to allow more people to claim exemptions based on income.

"Everybody has made this discussion that you repeal it or you put it in as it is, but that's not true," Blendon said. "You can keep the structure as it is and perfect the pieces that you think don't work as well."

Andrew Croshow, managing director of the health care practice at Leavitt Partners, said such a piece-by-piece approach would allow GOP lawmakers to tell voters they are eliminating the worst parts of the law, while buying time until political conditions are more favorable for a full repeal.

"They would help stall the implementation until Republicans feel they have a better opportunity to construct a comprehensive plan," said Croshow, whose group has identified six areas of the law ripe for disruption, including the individual mandate, Medicaid expansion and Medicare funding cuts.

"Implementing the bill will be an election issue in 2012 again. It won't be over," especially if government spending and the deficit remain major concerns, said Blendon.

GOP lawmakers could also disrupt the implementation process by following through on their pledge to call numerous hearings to grill top administration officials such as Health and Human Services Secretary Kathleen Sebelius and CMS Administrator Donald M. Berwick.

"I assure you, Secretary Sebelius will be one of the most recognized faces in Rayburn next year," said Rep. Fred Upton of Michigan, who is vying to become chairman of the Energy and Commerce Committee.

"That kind of distraction is damaging to the administration [by preventing it from] focusing on implementation," said Croshow, adding that industry experts have told his group that Sebelius should plan on spending the first six months of 2011 on Capitol Hill.

But political observers added that Upton and Rep. Dave Camp, R-Mich., the presumed House Ways and Means Committee chairman, could be key to drafting legislation both parties can support. Both members have served in the House for more than two decades and are seen as level-headed legislators who can work across the aisle, as well as with the Senate to get things accomplished.

Boehner himself was circumspect Wednesday about the shape or timing of GOP efforts.

"Listen, the American people are concerned about the government takeover of health care," he said. "I think it's important for us to lay the groundwork before we begin to repeal this monstrosity and replace it with common-sense reforms that will bring down the cost of health insurance in America."

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Lessons from the California Exchange

By John Reichard, CQ HealthBeat Editor

November 1, 2010 -- As state officials wake up to the fact that they'll really have to hustle to create the insurance exchanges required by the health care overhaul law, the views of colleagues in states such as California that have gotten off to a fast start may help focus their thinking.

So what does California's experience thus far suggest? Among the lessons from a recent forum on the subject: If possible, get outside advice to help with the highly technical process of creating an exchange; be careful how you pick its board; make it easy for the public to understand what the exchange is doing, and spur the kind of competition that is going to make premiums affordable.
On Sept. 30, California became the first state in the nation to pass a law creating an exchange under the health care overhaul law.

Jennifer Kent, an aide to Republican Gov. Arnold Schwarzenegger, told the Oct. 21 forum sponsored by the California Healthcare Foundation that it would have been really scary if people in her office had "sat down and drafted something on our own. We needed expertise."

So California's exchange planners decided to draw on experiences from throughout state government and got help from outside foundations that "stepped up and helped provide a lot of talent and skill," Kent said.

"The main decision point right off the bat was, do we go with a governmental entity or a nonprofit" to run the exchange, she said. The overhaul law allows either approach—but California chose the former. Government "is transparent in a lot of ways," she said. And it "has to conduct its business in the public."

But the board overseeing the exchange couldn't be cumbersome, she said. "Large boards, while they may make a lot of people feel really good to be able to sit on them ... are not necessarily nimble." California also decided that board members had to have experience with purchasing health care, running public programs, and designing benefits. Board members "need to actually know what they are doing, and they needed to have operated in this area before," Kent said.

The board also must "operate within the funds that they have, which are going to be limited at this point to the federal grant awards that are available, to the assessments that will be on the premiums, and to any generous, nonprofit foundational money."

Avoid Conflicts of Interest

In addition, "there can't be a conflict of interest." It would be to everyone's detriment if a board member sat through the first contracting phase and then promptly went to work for a health plan that was just awarded a contract, she said, adding that the state forbade exchange managers from being employed by the insurance industry for a full year after leaving the exchange.

The state also sought to avoid an overly cumbersome regulatory process because the board was going to have to work quickly to get the exchange operating by 2014. It decided to rely on emergency regulations to get things moving quickly.

But Patrick Holland, a consultant who previously served as the chief financial officer of the exchange created in Massachusetts under that state's overhaul law, said the process should ensure lots of dialogue with health plans in order to create an attractive marketplace. "The overarching goal that we have in Massachusetts was to try to work with carriers, do it in a very transparent way," he said.

"You're running a business. You're trying to have people come to the exchange, to buy health care."

Scott Bain, a consultant who advised the California Senate Committee on Health, noted that the overhaul law also gives states the decision of whether to merge the individual and small-group markets into the same exchange. California chose not to blend the two "in part because we didn't know the impact of premiums on small employers and individuals if we did merge those markets."

Concern for Bad Risks

California has had considerable experience with exchanges already. In the early 1990s it created the Health Insurance Plan of California, an exchange for small businesses operated by the state government. It ultimately failed because it became a dumping ground for bad risks.

But Richard Curtis, president of the Washington, D.C.-based Institute for Health Policy Solutions, predicted that wouldn't happen under the new exchange.

Curtis noted fears that exchanges won't bring in enough good risks because penalties are weak under the law for violating the mandate that requires individuals to carry health insurance. But a government-sponsored reinsurance plan and "risk corridors" will help pick up health costs of plans socked with bad risks, he noted.

And people who want to get federal subsidies will have to do so through the new exchange created under the overhaul law, Curtis noted. That feature will draw a "large population with a broad degree of risk," helping to make the new exchange very different from the one operated by the state in the 1990s.

Jon Kingsdale, former executive director of the exchange in Massachusetts, emphasized the advantages of an exchange despite the complexities involved in their creation. Now, an insurance shopper might spend half an hour or more on the phone with a single insurer getting answers to a dozen questions about its coverage. Then he or she would have to do the same thing all over again with other insurers "with a different set of products that aren't comparable."

"And by the end of the day, if you were a really diligent consumer, you'd have pages and pages of notes on noncomparable products with noncomparable answers and indecipherable notes." But with the Massachusetts exchange a shopper enters a few pieces of data on a website and gets apples-to-apples comparisons of three to five insurance options. Kingsdale said "you can look at the premium differences and who's in which networks and make an intelligent choice about a $10,000-$15,000 purchase decision in a matter of a half hour."

John Reichard can be reached at [email protected]

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HHS Says Lower Premiums Will Boost Enrollment in Program to Cover Hard-to-Insure Americans

By John Reichard, CQ HealthBeat Editor

November 5, 2010 -- A program created by the health care law to cover Americans unable to find health insurance because of preexisting medical conditions will have new lower-cost plans in 2011, federal officials announced on Friday.

Enrollment in the program has been surprisingly low. But officials said during a midday telephone briefing that the new choices should help increase it. Known as the "Pre-Existing Condition Insurance Plan" (PCIP), the program is administered at the state level, either by the states themselves or by the federal government. Twenty-three states and the District of Columbia have opted to let the feds do the job.

Richard Popper, Director for the Office of Insurance Programs in HHS's Office of Consumer Information and Insurance Oversight, said in a mid-day press briefing that premiums will drop 20 percent for options offered in the states where the federal government is operating the program. HHS has asked states that are running their own programs whether they intend to make premium and plan design changes but it is unclear how many will do so.

The program now offers a single standard plan that has a single combined medical and pharmacy deductible of $2,500. In 2011, additional options will be available in the federal part of the program.

The standard plan in 2011 will have two separate deductibles: $500 for drugs and $2,000 for medical care. The premium charges for the plan will fall 20 percent, a change HHS said is being made based on actual claims experience. The $500 deductible is an attractive feature for people who take one or more maintenance medications.

A new option called the Extended Plan has a medical deductible of $1,000 for medical care and $250 for drugs. The premium charges for the plan will be slightly higher than those for the 2010 standard plan.

Also on the menu is the health savings account option. It has a single $2,500 deductible and will charge premiums 16 percent lower than the 2010 premium for the standard plan. Payments that count toward the deductible can be made from a health savings account, which provides certain tax breaks.

Another new option is the child-only rate, offered to make coverage more affordable for enrollees up to age 18.

The Obama Administration predicted that hundreds of thousands of people would enroll in the program. But as of Friday, the tally stood at only 8,011. Popper said that enrollment grew 60 percent in the past month, however. And he said the new options would increase enrollment, but didn't project by how much.

The impact may not be dramatic.

One problem is that the cost of the premiums, although lower than for conventional insurance, are a barrier for many, program directors say. And a requirement that applicants be uninsured for the prior six months in order to qualify is a major hurdle for the chronically ill, many of whom who enrolled in high-cost state risk pools or expensive private plans just to get life-saving coverage. The new rules don't let them move directly from the state to federal pools.

Officials sidestepped questions Friday about the six-month requirement, which is viewed as a major impediment to enrollment gains.

Another challenge is getting the word out about the program to people having trouble finding coverage. Popper said those efforts are intensifying. HHS is asking state insurance departments to tell insurers when they deny coverage applications to inform the applicants about the availability of the PCIP program. Humana has agreed to do so, he noted.

The Social Security Administration is notifying people about PCIP who are receiving disability payments and are in the two-year waiting period prior to qualifying for Medicare. AARP has sent notices to its 24 million members about PCIP. And HHS is also working with consumer groups, hospitals, doctors' offices, and groups representing people with chronic diseases to get the word out about the program, Popper said.

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Health Insurance Mandate Ban Measures Pass in Oklahoma, Arizona; Fail in Colorado

By Dena Bunis, CQ HealthBeat Managing Editor

November 3, 2010 -- The health care overhaul law's individual mandate was soundly rejected at the polls in Oklahoma and Arizona on Tuesday. But voters in Colorado rejected a ballot proposition.

In Oklahoma, state question 756 was approved by 65 percent to 35 percent. In Arizona, Prop 106 passed 55 percent to 45 percent. And in Colorado, Amendment 63 was defeated by a fairly narrow margin of 52.8 percent to 47.1 percent.

The proposed constitutional amendments in the three states would ban enforcement of the provisions of the health law (PL 111-148, PL 111-152) that says virtually everyone must get health insurance by 2014 or face an income tax penalty.

The propositions also said that patients can pay individually for their medical care, which advocates for their passage viewed as a protection against any future move toward a government-run, single-payer system.

The results of the referenda mirrored the pre-election polling. And a Kaiser Family Foundation poll in August showed that the mandate was one of the least-supported provisions of the health law, with 70 percent of 1,203 adults surveyed saying they viewed it unfavorably.

Supporters and opponents of the individual mandate agreed Tuesday that if the health law is found constitutional by the courts, the states cannot nullify such a federal statute so that whatever the outcome, the ballot measures were unlikely to have much of a practical effect.

"To a certain point it is voters venting their spleen, expressing their disgust at the mandate provisions in Obamacare,'' said Robert Alt, deputy director of the Center for Legal and Judicial Studies at the Heritage Foundation.

But Alt says it would be a mistake to dismiss the symbolism.

"I think it signals something broader,'' he said in an interview before the polls closed. "It will send a strong message to members going to Congress as to what voters of Arizona, Oklahoma and maybe Colorado" think of the law and perhaps provide some more momentum for those lawmakers who will arrive for the 112th Congress intent on repealing provisions of the law.

Two of the three states—Arizona and Colorado—are among the 20 that have joined in a suit against the law. The mandate is at the center of that lawsuit. Arguments on the suit at scheduled for Dec. 16 in federal district court in Florida. (See related story). A separate lawsuit is working its way through federal court in Virginia. A decision on that lawsuit is expected by year's end.

Doug Kendall, president of the Constitutional Accountability Center, said both these referenda and the multiple lawsuits challenging the individual mandate undermine the federal-state cooperation built into the law.

"The law itself builds in a great deal of flexibility for the states to design their own programs,'' Kendall said. "The reality is that the health care bill is a good example of cooperative federalism about how a federal program can incorporate and utilize the skills and existing resources of state officials."

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MedPAC: Medicare Pays Private Health Plans 10 Percent More Than Traditional Providers

By John Reichard, CQ HealthBeat Editor

November 5, 2010 -- A Medicare payments to private health plans will be an average of 10 percent higher next year than those to providers in the traditional Medicare fee-for-service program, the Medicare Payment Advisory Commission (MedPAC) said this week.

The private health plan side of Medicare is known as the Medicare Advantage program.

Medicare began contracting with private health plans in the 1980s in an effort to bring its spending down. But over time the payments to the plans, which originally were below those made to providers in traditional Medicare, edged higher.

The increases followed complaints by some lawmakers in the 1990s that their constituents lacked access to Medicare's private plans. Complaints also came from the plans themselves who said that they couldn't make any money.

Dozens of plans dropped out of Medicare a decade ago as a result. During the Bush administration Republican lawmakers reacted by boosting payments and fueling steady enrollment gains.
MedPAC issued a series of yearly recommendations that payment levels to private health plans be made the same as for providers in traditional Medicare. But by 2009, rates paid to plans were 113 percent of those in traditional Medicare.

The commission said Medicare could ill afford to pay more given its troubling fiscal outlook.

Congress finally moved earlier this year in the health care overhaul law (PL 111-148, PL 111-152) to shrink the differential and move toward equal payment levels in 2017. The savings, however, don't go to Medicare, but rather to finance subsidies to help the uninsured buy coverage.

Data presented by MedPAC staff Thursday at the commission's Nov. 4-5 meeting show that the highest overpayments will go to two types of Medicare Advantage plans: "private fee-for-service plans" and local PPOs. Their payments next year will average 114 percent of traditional fee-for-service.

The corresponding percentages for HMOs are 109 percent and for regional PPOs 110 percent.

MedPAC data also show a dramatic decline in access to the private fee-for-service plans in the Medicare Advantage program. This year, every enrollee in the Medicare program had access to the plans, but next year only 63 percent will.

Fewer insurers are offering those plans because of requirements in a 2008 law that they establish networks of providers to better coordinate treatment services.

The new data also show a decline in the average number of Medicare Advantage plans from which seniors can choose: 12 plans next year compared to 21 this year. Republicans will cite the data as evidence that options are shrinking while Democrats will say the drop helps seniors who now face a confusing number of choices and plans that too often are not distinct from each other.

The MedPAC figures show that Medicare Advantage enrollment climbed 5 percent this year to 11.4 million, up from 10.9 million in 2009. Twenty-four percent of Medicare beneficiaries are now in Medicare Advantage plans.

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Reducing Prescription Drug Costs Encourages Consistent Use, Studies Find

By CQ Staff

November 2, 2010 -- Two studies on "value-based insurance design" published in the November issue of Health Affairs magazine say that when consumers pay less for certain prescription drugs needed to combat a chronic illness, they are more likely to adhere to a regimen. But it remains unclear whether this will ultimately reduce drug spending or lead to better outcomes.

In value-based insurance design, cost-sharing is lowered for drugs that have strong evidence of clinical benefit relative to cost, in the hopes of changing patient behavior.

When the corporation Pitney Bowes did away with copayments for statins that lower cholesterol, employees' adherence to the drug regimen increased by 2.8 percent, one study supported by the Commonwealth Fund says. The employees had diabetes or vascular disease.

A second study says Blue Cross Blue Shield of North Carolina found similar results more broadly for patients with diabetes, hypertension, hyperlipidemia, and congestive heart failure.

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