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September 17, 2007

Washington Health Policy Week in Review Archive 451a6e4e-a424-4ded-8fe3-b984b3304d8a

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Bill Introduced to Block New SCHIP Limits

By John Reichard, CQ HealthBeat Editor

September 13, 2007 – Two Democratic and two Republican senators have introduced legislation to nullify new restrictions imposed by federal officials August 17 on the ability of states to enroll children in the State Children's Health Insurance Program (SCHIP). The rules would essentially prevent state SCHIP programs from enrolling uninsured children from families with household incomes above 250 percent of the federal poverty level, the senators said in a joint statement late Wednesday.

"Health coverage has grown so expensive that even above 250 percent of the federal poverty line, many families simply cannot afford it," said Republican Senator Olympia Snowe of Maine, who introduced the legislation (S 2049) along with Democrats Edward M. Kennedy of Massachusetts and John D. Rockefeller of West Virginia, and Republican Gordon H. Smith of Oregon. "In my state of Maine, a family faced with purchasing a policy on the individual market could face a cost well in excess of $24,000 a year," Snowe said. The federal poverty level for a family of four is $20,650; 250 percent of that level is $51,625.

The restrictions also appear to reverse previous administration policy, which allowed states to use waivers to expand their SCHIP programs to cover children from families making as much as 3 1/2 times the federal poverty level, or $72,275 for a family of four.

Dennis G. Smith, director of the Center for Medicare and Medicaid Services' Center for Medicaid and State Operations, said in his letter that among other requirements, states seeking to expand SCHIP will first have to assure the government that they have covered 95 percent of children in families earning less than 200 percent of the poverty level before covering those from families making 250 percent or more. The requirements "do not interfere with the effective and efficient provision of child health assistance coordinated with other sources of health benefits coverage to the core SCHIP population of uninsured targeted low income children."

The restrictions infuriated advocates of wider coverage of uninsured children, who say the rules set conditions that can't be met for covering children above 250 percent of the poverty level. Advocates say reaching such high enrollment percentages in government programs assisting lower-income Americans is extremely difficult, if not impossible, because of the difficulty of identifying and enrolling them all. Denying coverage as a result to children whose families have higher incomes but still can't afford health insurance is unconscionable, they say, especially without the population of uninsured children on the rise, they add.

"These new policies put forth by the Bush administration without Congressional approval are unjust, increasing barriers to child health coverage at a time when we need to be breaking down those barriers to cover more uninsured children—not fewer," said Marian Wright Edelman, president of the Children's Defense Fund, in a statement.

"The policy would stop states from moving forward with expansion plans, as well as force a roll back in states that have covered uninsured children in this income range through SCHIP for years," according to an August 30 analysis by the Center for Children and Families at the Georgetown University Health Policy Institute. "The federal SCHIP law has always granted states the authority to set their income eligibility levels for SCHIP. The new policy was not prompted by any change in statute or regulation."

The analysis said that 23 states "would clearly and directly be affected by the new rules," including 11 states that already have income eligibility thresholds above 250 percent of the federal poverty level and eight states that have adopted but not yet implemented such eligibility thresholds. "Hundreds of thousands of children with family incomes above the new threshold, as well as children with lower incomes could lose coverage as a result of the directive," the analysis said.

Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel's senior Republican, Iowa Senator Charles E. Grassley, are leading efforts in the Senate to negotiate a final SCHIP conference agreement with the House. Asked whether Baucus supports the legislation nullifying the new rules, a Baucus aide said her boss "is looking at ways to stop" the restrictions, but hasn't explicitly endorsed the bipartisan measure that would block the administration's new SCHIP restrictions.

However, it's reasonable to expect that an SCHIP conference report or a shorter-term measure extending the program would include language nullifying the restrictions. But President Bush has threatened to veto SCHIP expansion and some legislative analysts don't rule out the possibility that the White House might choose to veto even a shorter-term measure that continued spending at current levels but contained language to overturn the restrictions. A group of 44 senators led by Oregon's Smith and Democratic Senator Robert Menendez of New Jersey sent a letter to Bush September 10 urging withdrawal of the restrictions.

The restrictions also could face legal challenges, with the governors of both New York and New Jersey saying they may go to court to overturn them.

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Democrats May Be Close to a Deal on SCHIP

By Alex Wayne, CQ Staff

September 14, 2007 -- Congressional Democrats were nearing a tentative deal on children's health insurance Friday that might allow them to send legislation to President Bush before the end of the month.

Lawmakers left town Sept. 12 in a stalemate over a renewal and expansion of the State Children's Health Insurance Program. But in an apparent breakthrough, House Democratic leaders made major concessions that could lead to a deal on the bill, according to an executive for a leading children's advocacy group.

House Democrats, the executive said, had agreed to limit spending on SCHIP to $60 billion over the next five years, a $35 billion increase that meets a demand by Senate Republicans and matches the increase in a bill passed by the Senate (HR 976). The spending increase would be paid for by raising tobacco taxes, including a 61 cent cigarette tax increase, to $1 per pack—also an element of the Senate bill. In addition, House Democrats had agreed not to insist on including Medicare provisions in the final bill—another condition demanded by Senate Republicans.

The executive received the information from a House Democratic leadership office, and asked not to be identified in order not to harm relationships with lawmakers. A Senate aide and a health care lobbyist confirmed the outline of the deal.

"We are working on an agreement between the House and Senate on proposals to take to our respective caucuses in order to see where we go from here," House Speaker Nancy Pelosi, D-Calif., said during a conference call Friday. "I'm optimistic that we will have a bill and that we will have a bill on time, which is Sept. 30."

A spokesman for Pelosi would not confirm any elements of the agreement, however, saying it was still under discussion.

Indeed, the deal remained tenuous and could yet fall apart, as many details remained to be negotiated—particularly among House Democrats, some of whom were said to be displeased with the agreement.

The House passed a broad health insurance bill (HR 3162) on Aug. 1 that would nearly triple spending on SCHIP to $72 billion over the next five years. The House bill would also make many changes to Medicare, including cutting spending for Medicare Advantage, a program in which insurers cover seniors in place of the government, and dedicate the savings to averting a scheduled cut in Medicare reimbursements for physicians.

The Senate bill is much more limited in both scope and spending.

"It's not at all a done deal," the executive said.

In particular, two powerful lawmakers, Energy and Commerce Chairman John D. Dingell, D-Mich., and Ways and Means Chairman Charles B. Rangel, D-N.Y., "are not thrilled," the executive said. Dingell and Rangel largely wrote the House bill.

But statements from House and Senate Democratic aides, as well as discussions among lobbyists and activists, suggested that a deal was imminent.

"Folks are still working, but it's constructive," said an aide to Senate Finance Chairman Max Baucus, D-Mont., who wrote the Senate bill with Charles E. Grassley of Iowa, the senior Republican on Finance, and Orrin G. Hatch, R-Utah, and John D. Rockefeller IV, D-W.Va.

Without congressional action by Sept. 30, SCHIP will have no new funding in fiscal 2008. The program covers about 6 million children who are low income but not poor enough to qualify for Medicaid. Democrats have said one of their top priorities is to expand the program to cover many of the 9 million children who are estimated to be uninsured, especially about 6 million who are thought to be eligible for SCHIP or Medicaid but unenrolled.

Senate Numbers, House Policy
While the compromise bill might adopt the Senate's spending limit and exclude the House's Medicare provisions, House Democrats are expected to insist that much of the policy from their bill remain in the final version.

"If there is a deal, and they're near a deal, it is House policy and Senate numbers," a House Democratic aide said Thursday night. That could mean the final bill uses language in the House bill to allocate SCHIP spending among states, and that eligibility limits included in the Senate bill are left out.

"I think there's some grousing about, 'what's the point of taking back the Congress, and then Chuck Grassley writes the bill?'" the executive said.

However, Democrats could be even more concerned about potential political damage should they miss the Sept. 30 deadline. "If they don't get something done by Sept. 30, then [President] Bush says, well, they didn't even bother to reauthorize, it's their fault," the executive said.

Bush has said he would veto either the House or Senate bill.

The Senate passed its measure Aug. 2 by a vote of 68–31, enough to override a veto. It is unclear how well that bill would fare in the House. Democratic aides say they are confident it would pass, but they are unsure how many House Republicans would support it. All but five Republicans voted against the House bill.

"We'd lose some guys, but we'd easily be able to sustain a veto" against the Senate bill, a House Republican aide said.

Jonathan Allen, Drew Armstrong, Mary Agnes Carey and Bart Jansen contributed to this story.

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Payoff from 'What Works' Provision May Be Ten Years After

By John Reichard, CQ HealthBeat Editor

September 10, 2007 – Research on "what works" in medicine is one of the few bright spots in the otherwise bleak array of choices for controlling health costs, according to Congressional Budget Office Director Peter R. Orszag. But legislative provisions in the children's health insurance bill that would promote that research would actually cost the federal government more money than it saved in the decade after its enactment, according to a CBO scoring document released last week.

Contained in a measure (HR 3162) reauthorizing the State Children's Health Insurance Program and blocking cuts in Medicare payments to doctors, the CBO estimated that the House-passed provisions funding a center to compare the effectiveness of various medical treatments and procedures would cost the federal government $600 million over five years and $2.4 billion over 10 years. At the same time, the research produced by the center would reduce federal health spending—primarily in the Medicare, Medicaid, and the Federal Employees Health Benefit Programs—by about $100 million over five years and $1.3 billion over ten years.

Consequently, those provisions would increase direct federal spending by half a billion dollars over five years and by $1.1 billion over ten years, the CBO estimated.

However, research findings generated by the provisions would produce overall savings if spending by the private sector on health care is included, Orszag said in a Sept. 5 letter to House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif. Total spending by public and private purchasers on health care would be reduced about $6 billion over 10 years, yielding a savings of several billion dollars, after netting out the $2.4 billion in federal costs.

That's a puny amount of savings compared to the health outlays that must be reduced to make a significant dent on the long-term costs of running public and private health programs. "Getting to the point where additional research on comparative effectiveness could have a significant impact on health spending would probably take many years," Orszag wrote. "In addition to the time required to get such research under way, a lag would exist before results were generated—particularly if they depended upon new clinical trials."

Orszag added that "initially, the available results would probably address a relatively small number of medical treatments and procedures; more time would have to elapse before a substantial body of results was amassed," he said. "And in areas of medicine that involved significant amounts of spending, several studies might be needed before a consensus emerged about the appropriate conclusions to be drawn—even if those studies did not generate conflicting results."

However, despite the time it would take to generate a payoff, the CBO director has repeatedly suggested that such research is one of the keys to assuring the long-term financial viability of the Medicare and Medicaid programs without undermining patient care. The premise of the research is that a variety of treatments exist for high-cost conditions and that considerable savings may be generated by identifying the most effective approach. If what works best in fact does cost less, health costs can be cut while boosting quality at the same time, proponents of the research say.

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Study: Blacks More Likely than Whites to Live in Poor-Quality Nursing Homes

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 11, 2007 – Blacks are more likely than whites to live in poor-quality nursing homes across the United States, according to a new report in the journal Health Affairs.

Researchers found that 10 of the 20 nursing homes with the greatest disparities in quality of care were located in Wisconsin, Indiana, Ohio, and Michigan. Milwaukee is noted as the metropolitan area with the greatest disparity in care, with blacks who reside there more than twice as likely as whites to live in a nursing home with significant inspection deficiencies, substantial staffing shortages, and financial problems.

The study also showed that care inequalities are closely correlated to racial segregation. Researchers found that nursing homes in the Cleveland metropolitan area were the most segregated, followed closely by Gary, Ind., Milwaukee, Detroit, Indianapolis, Chicago, St. Louis, Harrisburg, Pa., Toledo, Ohio, and Cincinnati.

The report, billed as the first to document the relationship between racial segregation and quality disparities in U.S. nursing homes, was paid for by The Commonwealth Fund and written by researchers at Brown University.and Temple University. The study, which used 2000 data, examined racial segregation in 147 metropolitan statistical areas, with 7,196 nursing homes caring for more than 800,000 residents.

Policy changes that could improve the quality of nursing homes and potentially eliminate disparities identified in the study include improving payments to nursing homes with a high proportion of Medicaid residents, closing the gap between the amount paid to nursing homes by Medicaid and private payers, as well as broader regional planning in response to concerns about racial disparities, researchers found.

Researchers also found that nursing homes in the South were the least likely to have unequal racial distribution of residents relative to residential racial composition. Only four Southern urban centers—Houston, West Palm Beach, Fla., Richmond, Va., and Winston-Salem, N.C. —landed in the top 20 metropolitan area with the highest level of racial disparities in nursing home quality.

"Blacks and whites aren't getting different care in the same nursing homes. They're getting different care because they live in different nursing homes," said Vincent Mor, chairman of the Department of Community Health at Brown University and the study's lead investigator. "In the same urban areas, blacks are more likely to be concentrated in substandard nursing homes—homes with smaller budgets, smaller staffs, and poorer regulatory performance."

Other findings in the report include:

  • Blacks were nearly three times as likely as whites to be located in a nursing home housing predominantly Medicaid residents.
  • Blacks were nearly twice as likely as whites to be located in a nursing home that was subsequently terminated from Medicare and Medicaid participation because of poor quality.
  • Blacks were 1.41 times as likely as whites to be in a nursing home that has been cited with a deficiency causing actual harm or immediate jeopardy to residents. Blacks were also 1.12 times as likely as whites to live in a nursing home that was greatly understaffed.

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Survey Finds Health Insurance Premiums Rise 6.1 Percent in 2007

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 11, 2007 – Health insurance premiums for employer-sponsored coverage rose an average of 6.1 percent this year, the smallest rate of increase since 1999 but still higher than increases in inflation or workers' wages, according to a survey released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust.

The average premium for family coverage in 2007 is $12,106, with workers paying on average $3,281 for a family policy and employers paying the rest. For single workers, the average total premium cost is $4,479, with workers contributing $694. Since 2001, researchers found, health insurance premiums have increased 78 percent while wages have gone up 19 percent and inflation has increased 17 percent.

"Health insurance is becoming increasingly unaffordable for many Americans and businesses," said Drew E. Altman, president and CEO of the Kaiser Family Foundation. While the 6.1 increase for 2007 is a "notable moderation … it just doesn't feel like moderation at all when premiums continue to increase faster than inflation year after year," he said.

Anxiety over rising health care costs is helping to make health care a top issue in the 2008 presidential campaigns. In a Kaiser health tracking poll conducted in June, 75 percent of voters said they were either very worried or somewhat worried about having to pay more for their health care, outranking fears of being the victim of a terrorist attack (54 percent) or being the victim of a violent crime (49 percent).

While the Bush Administration and proponents of consumer-driven health plans, one option an employer can offer for coverage, say such plans will help to control health care spending, the Kaiser survey found that 3.8 million workers were enrolled in such plans in 2007, up from 2.7 million in 2006. Few employers who do not already offer such plans said they planned to do so next year, and only 15 percent of small firms and 17 percent of large firms said the plans were "very effective" at keeping down costs.

The low rate of acceptance may be due to the fact that consumer-driven health plans are relatively new and are a complicated product to explain to employees, said survey co-author Gary Claxton, a Kaiser vice president and director of the foundation's Health Care Marketplace Project. In addition, moderation in premium growth has not pushed employers to make major changes to their health insurance plans, he said. The plans feature a high deductible and a tax-preferred savings accounts, from which employees can withdraw money to pay for out of pocket medical expenses.

The ninth annual survey, conducted between January and May, included 3,078 randomly selected, non-federal public and private firms with three or more employees. Nearly all large businesses with at least 200 workers offer health benefits to their workers this year, but fewer than half of the smallest firms with three to nine workers provide health care insurance to their workers.

While the number of firms offering health care benefits to their workers remained statistically unchanged from last year's rate of 61 percent, the number is lower than the 69 percent of employers who offered coverage in 2000. "We aren't falling off a cliff," said Jon Gabel, a co-author of the study and senior fellow at the National Opinion Research Center at the University of Chicago. "We are witnessing a slow but certain long-term erosion of our employer-based system."

Workers are certainly expected to pay more for their benefits in 2008. The Kaiser survey found that 21 percent of firms were very likely to increase the amount that employees pay for their health insurance, while 11 percent said they would increase the amount workers paid for prescription drugs and 12 percent planned to increase plan deductibles.

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Will Business Really Lead the Charge for Health System Overhaul?

By John Reichard, CQ HealthBeat Editor

September 14, 2007 --- If the next decade brings intensive congressional debate on an overhaul of the U.S. health system, what role will business play? The buzz now is that, unlike in the early 1990s, U.S. businesses at a competitive disadvantage in the global economy because of rising health costs will lead the charge for change—not drag their heels the way they did during President Clinton's failed attempt to institute universal coverage. But in the end, will business yank its support despite the current buzz?

Speakers at a forum Friday asserted that not only is the mood in the business community open to overhaul, it offers a golden opportunity for an astute politician to build political support. That's particularly the case, they said, in the sector of business most identified with killing off the Clinton plan: small business. A changing economy that leaves tens of millions of Americans hunting for coverage on their own—those who work as independent contractors, small entrepreneurs, and employees of small businesses—is ripe for a politician who could champion effective ways to obtain affordable coverage, speakers said.

Unlike during the Clinton era, "the business case for health care reform is being made very forcefully," Carl Camden, CEO of Kelly Services, said at the event sponsored by the Century Foundation, The Commonwealth Fund, and the AARP. A growing number of businesses are banding together in support of universal coverage and less-bloated health care spending, he said. "As a businessman, I find the price-value relationship to be appalling," Camden said. Per-capita health care spending in the United States far outstrips that of other industrialized nations, yet much of it goes for treatments that are ineffective or of unproven value. "The American people are paying about 50 percent more to get 50 percent less," he asserted.

Camden, whose business provides temporary staffing through some 750,000 employees, estimated that there are some 30 million Americans working as free agents, freelancers, or entrepreneurs, many of whom are highly skilled. These workers stand at America's "creative edge," he said, adding that a politician advocating solid proposals on behalf of this group would reap "great political advantage."

John Arensmeyer, who founded Small Business Majority in 2004 because he found other small business lobbying groups to be too "dogmatic and ideologically based," described small business as a potent political force that needs an overhaul of the U.S. health care system in order to be prosperous. And in order for that overhaul to succeed, politicians, in turn, need the support of small business, he said.

Workers in small businesses account for 52 percent of the private sector work force, he said. "This is where most of the people in this country work."

Although small business owners were pivotal in the demise of the Clinton plan, Arensmeyer said his polling shows that they aren't heavily Republican, and that they regard the cost of health care as their biggest problem. His survey results found that 30 percent of small business owners and managers are Republicans, 23 percent are Democrats, and that by far the largest group—41 percent—consisted of independents.

Critics of overhaul plans have, in many cases, depicted them as a threat to the free market, but Arensmeyer said that "we cannot allow the opponents of reform to seize the high ground of the free market." The high costs of health care block many people from starting their own businesses and so undermine the free market, he said.

But while a number of business executives speak generally about the need for a health care overhaul, their ideas vary about how the system should be changed. Michael Critelli, CEO of Pitney Bowes, said Friday that the focus of changes ought to be on health, not health care. The highest priority of overhaul efforts should be pinpointing ways to keep people healthy by considering policy changes within a "holistic framework" that goes beyond insurance, he suggested.

Thus, policies should be revised to end subsidies that promote the availability of unhealthy foods in inner city food stores, reduce traffic congestion that causes asthma, create spaces in which people could exercise, and increase access to urgent care clinics—as well as to make it cheaper for people to take drugs and to get screening to prevent serious diseases, Critelli said.

But not only must different policy visions be reconciled, business would have to come to terms with likely mandates that might be similar to those that doomed its support for previous overhaul efforts. Cheryl Matheis, Director of Health Strategies at AARP, voiced some skepticism about how united the business community would actually be once policy details are developed.

She said it's too simple to say that business is ready to sign on to an overhaul of the health care system, and pressed other speakers on what they regarded as the key obstacles to business support for such changes. Arensmeyer insisted that "small business owners will look at a solution if it is practical." And Bruce Bodaken, CEO of Blue Shield of California, said "mandates are not antithetical to the American way. We do it where the public good is served by such a thing."

But Dallas Salisbury, CEO of the Employee Benefits Research Institute, noted that employers in Massachusetts are hedging their bets about whether they ultimately will go along with the health care overhaul plan in that state hailed nationally as an example of what can be accomplished when all the players in the health care system are willing to compromise. That state's overhaul mandates employers to help fund coverage of the uninsured if they don't cover their workers, and employers are wary that funding demands could grow. Salisbury noted that employers in the state may yet go to court to overturn the Massachusetts plan on the grounds that its requirements are preempted by the Employee Retirement Income Security Act (ERISA).

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