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September 21, 2009

Washington Health Policy Week in Review Archive 37f46a61-7a45-4dda-9ec1-1956d36db902

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Baucus Plan Sparks Objections from Health Industry, Liberals and Unions

By Jane Norman, CQ HealthBeat Associate Editor

September 16, 2009 -- An odd marriage of health industry groups, unions, liberal advocates for the public option, and libertarians all found something to dislike in the long-awaited, $774 billion health overhaul proposal announced Wednesday by Senate Finance Committee Chairman Max Baucus, D-Mont.

Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed), said that the medical device industry considers a new $40 billion, 10-year tax on medical devices to be "unfair and counterproductive." The tax will cut money available for research and development of life-saving medical treatments, he said.

"We continue to believe there are better ways to reform the system than taxing countless products necessary to treat every patient who walks through the doors of a physician's office, hospital, or nursing home," said Ubl.

Doctors were unhappy that Baucus proposed only a one-year fix of the Medicare physician payment formula. Jack Lewin, CEO of the American College of Cardiology, said in a statement that the system, known as the Sustainable Growth Rate (SGR), can't be changed until a permanent solution is found.

"I shudder to think of how that one-year band-aid will lead us to spend the next year trying to fix that formula to prevent a payment disaster instead of working on the quality projects patients deserve," said Lewin. "Failure to permanently eliminate the SGR means patient access is threatened while Congress plays chicken with Medicare benefits year after year.

Union leaders were livid over a tax on insurance companies tied to high-benefit plans often extended to union members in negotiated contracts, and the substitution of co-ops for the public option. "Despite months of painful negotiations, the Senate Finance Committee proposal released today absolutely fails to meet the most basic health care needs of working families and it fails to meet the expectations we have set for our nation," said John Sweeney, president of the AFL-CIO.

Sweeney said that "outrageously, the plan imposes a 35 percent tax on high-cost health care plans without prohibiting insurers from passing on the tax to consumers who happen to be in groups that are older or sicker than average or live in high cost areas."

Baucus would reduce Medicare Advantage managed care payments to insurers, a move opposed by the insurance industry, Karen Ignagni, president and CEO of America's Health Insurance Plans, said that "we are committed to working with policymakers and stakeholders to find savings in the Medicare program, including Medicare Advantage, but it is important to ensure seniors' health care choices are protected."

She also said that insurance market changes the industry has backed would produce progress "without the need for a new untested government-created co-op that could disrupt the quality coverage on which millions of Americans rely today."

Aides to Baucus emphasized that many of the plan's provisions would go into effect soon, providing fast relief to the 46.3 million Americans who don't have insurance. Health insurance exchanges would be launched in 2010, and Medicare beneficiaries would begin receiving more help with their drug costs in 2010. By 2010 states would be required to set up ombudsman's offices to help consumers navigate health insurance problems.

Yet a harsh reaction came from the liberal group, which issued a statement charging that Baucus has caved in to the insurance industry by producing a bill that doesn't include a government-sponsored plan to compete with private companies. "The insurance companies have found their champion in Sen. Baucus," said Justin Ruben, executive director of the group, which strongly backs the public option, adding that the only comfort is that Baucus "stands nearly alone" in supporting his chairman's mark.

"The Baucus bill is by far the weakest of all five bills that have come from both chambers of Congress, and the only one not to include the public health insurance option, which is key to lowering costs, expanding coverage, and injecting competition into the market," said Ruben. "The Baucus bill will not solve the health care crisis that plagues millions of Americans, and fails to meet the basic tenets on successful reform laid out by President Obama."

House Speaker Nancy Pelosi, D-Calif., praised the portions of the bill that resembled the House bill and said health care costs need to be controlled. "I believe the public option is the best way to achieve that goal," said Pelosi.

Ron Pollack, the head of the liberal-leaning group Families USA, issued a somewhat lukewarm statement in reaction, praising Baucus for his numerous hearings, congressional summit, white paper on health care and patience in seeking a bipartisan plan.

"Sen. Baucus has counseled everyone to make sure that the perfect does not become the enemy of the good," said Pollack. "It is no doubt in that spirit that he introduced his proposal today—a proposal that differs in key respects from the directions he would have preferred but one that he believes has a good chance to be enacted."

Praise for the elimination of the public option came from health expert Michael Tanner of the libertarian Cato Institute, as well as for the plan's encouragement of the establishment of interstate co-ops for selling insurance across state lines.

But the provision to increase Medicaid eligibility will strain state budgets, he said, and the employer mandate, while "watered down," is still present in the form of penalties for employers who don't provide insurance and hire low-income workers. The individual mandate is "highly punitive" and makes it unclear whether people could keep their current plans, Tanner said.

Among insurers, the reaction was mixed. Scott P. Serota, president and CEO of the Blue Cross and Blue Shield Association, said that the group approves of both the individual mandate and the age-rating provision in the plan, which would allow discounts to people under 25 who tend to be the least likely to buy insurance.

"However, we are greatly concerned that burdensome new taxes and fees aimed at insurers and other health care industry stakeholders would severely undermine the reforms that the chairman's mark aims to achieve," said Serota. "These unprecedented new taxes would make coverage much less affordable for individuals, their families, and employers."

Antonio M. Perez, the chairman of the Business Roundtable's Consumer Health and Retirement Initiative and chairman and CEO of Eastman Kodak Company, said in a statement that the large employers who are members of the group were encouraged by the legislation. He said the mark is a "bold framework" for change. "Baucus' bill reflects a step in the right direction on the long road toward health care reform. It is important, however, we remain vigilant about controlling the overall cost of reform," said Perez.

The National Community Pharmacists Association praised the bill, saying it includes several provisions to help them better serve patients, including setting federal upper limits for the reimbursement of Medicaid generic drugs at 175 percent of the weighted average of the average manufacturer's price (AMP). "While we're still analyzing the full impact of this change, no other health reform proposal goes so far to ensure community pharmacies can continue serving Medicaid beneficiaries," said the association.

John Rother, AARP executive vice president, said the Baucus plan is a move forward by eliminating the doughnut hole in the Medicare prescription drug program, and doing away with out-of-pocket expenses for screening and other preventive measures. "However, we continue to have concerns about provisions that would allow for large differences in premiums based on age that could leave millions of older Americans still unable to afford the coverage they need," said Rother.

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Baucus Unveils $774 Billion Proposal to Overhaul Health Care

By Jane Norman, CQ HealthBeat Associate Editor

September 16, 2009 --Senate Finance Committee Chairman Max Baucus, D-Mont., on Wednesday brought an end to months of negotiations aimed at striking a bipartisan deal on the health care overhaul and issued a $774 billion, 10-year plan similar in its basic structure to the three bills approved in House committees but lacking a feature considered central by his party's liberals—a public option to compete with private plans.

In another major difference with the House, Baucus would set up, instead of an employer mandate, a system in which small businesses would get tax credits if they offer health insurance to employees, and businesses with 50 workers or more that don't offer insurance would have to reimburse the government, with a payment of up to $400 per worker. He would finance his system changes in part with a 35 percent excise tax on insurance companies linked to high-benefit insurance plans.

At an afternoon press conference in a room overflowing with reporters and TV cameras, Baucus said the health care system is "simply unsustainable" and he is determined to seize "our moment in history" to change it. "We can't let this opportunity pass," said Baucus.

His 223-page chairman's mark meets the standards set out by President Obama in his speech to Congress, and is "a common sense bill that can pass the Senate," Baucus said, with its spending fully offset. According to a Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) analysis of the proposal, by 2019, the number of non-elderly, legal Americans who are uninsured would be reduced by 29 million under the bill.

That would leave about 25 million non-elderly people without health insurance—a third of whom are not legal residents, CBO and JCT said. Additionally, the share of legal, non-elderly people with health insurance would rise from the current 83 percent to about 94 percent, CBO and JCT said.

Said Baucus, "This package may not represent all of our first choices," but "the time for action is now."

No Republican support was voiced in the hours after the chairman's mark was issued at about 9:30 a.m., and even other Democrats seemed tepid. Senate Majority Leader Harry Reid called it a "good beginning." The new chairman of the Senate Health, Education, Labor and Pensions Committee, which already has produced a companion bill with a public option, Democratic Sen. Tom Harkin of Iowa, said the Baucus proposal was a "positive development" but also warned that many amendments are expected to be filed.

"Obviously, the bill that Sen. Baucus proposes is just that – a proposal," said Harkin.

Republican Sen. Charles E. Grassley of Iowa had been one of the members of the so-called "Gang of Six" that spent months working with Baucus to devise a bill that could attract Republican and moderate votes. Grassley said he's willing to continue talks but Democratic leaders set a Sept. 15 deadline that forced Baucus to put forth a plan.

Grassley issued a statement late Tuesday night saying he was disappointed to be "pushed aside" by Senate leaders, and told Iowa reporters in a conference call on Wednesday that he thought the Gang of Six could have arrived at an agreement. He said his continued concerns surround costs to taxpayers, affordability for individuals, taxpayer funds used for abortion services and enforcement against subsides for those in the country illegally. He also wanted an alternative to the individual mandate for insurance and additional provisions on medical malpractice.

In the Baucus plan, individuals who don't buy health insurance would be subject to a penalty ranging from $750 a person per year to $3,800 a year for families earning more than 300 percent of the federal poverty level.

"I think it was possible for us to move ahead," said Grassley. "We were making considerable progress on very difficult issues."

But he still didn't close the door. "All I know is, he's putting in his framework," said Grassley. "But who knows what's going to take place in committee next week?"

The Baucus plan would rely on the concept of Web-based health insurance exchanges, and would require that all individuals purchase insurance coverage, with "health affordability tax credits" provided for low and middle-income families to help pay for plans. The tax credits would kick off in 2013.

Instead of mandating that businesses cover employees, the Baucus plan would use a so-called "free rider" approach that as of Jan. 1, 2013, would require that employers with more than 50 workers reimburse the government for the cost of employees receiving tax credits. About 25 million people would buy insurance through the exchanges, CBO said.

Medicaid eligibility would be extended to all parents, children, pregnant women and childless adults earning less than 133 percent of the federal poverty level, or about $14,400 a year for an individual, beginning in 2014. Those earning between 100 percent and 133 percent of poverty could choose between Medicaid and a private plan in the exchange. CBO said that would add about 11 million more Americans to the Medicaid rolls.

As an alternative to the public option and in a bid to win Republican and moderate Democratic support, the Finance proposal would rely on a system of voluntary, consumer-run co-operatives called the "Consumer Owned and Oriented Plan." Run at the state, regional or federal level, the co-ops would provide health insurance coverage for individuals and employees of small businesses, receiving $6 billion in federal money for start-up costs. Aides said local organizations with matching funds would be sought to help establish the co-ops.

CBO, however, said the co-ops "seem unlikely to establish a significant market presence in many areas of the country." The co-op provision, the brainchild of Democratic Sen. Kent Conrad of North Dakota, also brought forth harsh criticism from Democratic Sen. John D. Rockefeller IV of West Virginia, who backs the public option.

"The proposed co-op model is untested and unsubstantiated—and should not be considered as a national model for health insurance," Rockefeller said in a statement. He said both the U.S. Department of Agriculture and the Government Accountability Office "agree there is not sufficient analysis and data for health care co-ops, and the National Cooperative Business Association—the leading association for co-ops nationwide—believes that more research must be done before such a plan can be considered."

In an initial estimate prepared by the committee, the Baucus mark was said to cost $856 billion over 10 years. However, that was the preliminary gross cost of expenditures in the bill, while the updated CBO figure of $774 billion is net. Both figures are accurate, aides said.

Aides said about $300 billion is spent on expanding Medicaid, while $400 billion goes toward tax credits for low-income people enrolled in the exchange. Another $24 billion is spent on the small-business tax credit and $100 billion goes toward other program changes in Medicare and Medicaid, including the elimination for one year of a proposed cut in Medicare physician payments and the end of the "doughnut hole" in Medicare prescription drug coverage.

The bill at the same time reduces spending on both Medicare and Medicaid, including slicing $123 billion from Medicare Advantage managed care payments to insurance companies, $15 billion in nursing home payments and $500 billion from Medicare payments to providers, most of them recommended in the past by the Medicare Payment Advisory Commission, committee aides said. The excise tax on insurers tied to high-benefit plans was expected to bring in $215 billion in revenue over 10 years, aides said. The tax would apply to self-insured plans and plans sold in the group market.

Annual market basket updates would be reduced for hospitals, home health providers, nursing homes, hospice providers, long-term care hospitals and inpatient rehabilitation facilities.

A flat fee of $2.3 billion a year would be placed on the pharmaceutical manufacturing sector, $4 billion on the medical device manufacturing industry, $6 billion on the health insurance industry and $750 million on clinical laboratories, all beginning in 2010.

Under the Baucus plan, health insurers would have to issue plans to individuals regardless of their health status, and couldn't exclude people based on pre-existing conditions, though limited variations would be allowed for age, tobacco consumption and family size.

Rates could vary by geographic area but not within a geographic area. Yearly and lifetime limits on coverage would be eliminated.

The plan would also shift Medicare incentives to reward quality rather than quantity, increase the number of primary care doctors, encourage coordination of care, provide wellness visits for Medicare beneficiaries and provide free tobacco cessation classes for pregnant women enrolled in Medicaid.

Transparency is encouraged. Each covered individual would receive an outline of coverage in a uniform format that does not exceed four pages in length and has a 12-point typeface.

A 15-member independent Medicare commission is created that would make recommendations on curbing program growth, and in years when costs are projected to be "unsustainable," the commission proposals would take effect unless Congress passes an alternative proposal.

The plan is called "America's Health Future Act," and Baucus said it is designed to broaden access, lower costs and allow Americans to keep the coverage they like, a message that's also been emphasized by President Obama and House Democrats. He said it will not add to the deficit, drawing revenue in part from an excise tax levied on insurers and tied to high-value insurance plans.

"The cost of America's broken health care system has stretched families, businesses and the economy too far for too long. For too many, quality, affordable health care is simply out of reach," said Baucus. "This is a unique moment in history where we can finally reach an objective so many of us have sought for so long."

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House Democrats Renew Push for Public Option in Overhaul

By Jane Norman, CQ HealthBeat Associate Editor

September 15, 2009 -- Democratic supporters of the public option in the health overhaul bill mounted a vigorous defense in the House on Tuesday, summoning a panel of health experts who said it's essential for cutting costs. The friendly witnesses sharply criticized a Senate proposal to instead establish a system of consumer-run co-operatives, as well as any "trigger" mechanism that would delay the public option.

Additional firepower came later in the day from Sen. John D. Rockefeller IV, D-W.V., who told reporters he can't back in its current form a bill under development by the Senate Finance Committee that likely will leave out a public option in order to draw more votes from moderate Democrats and Republicans. Rockefeller, a member of the committee who's not been involved in bipartisan negotiations, vowed "many, many, many amendments" to the bill when it is taken up by the full committee.

He said he has sat alongside Chairman Max Baucus for 22 years on the Finance panel but "I can't agree with him on this bill." Rockefeller also cited the bill's possible shift of low-income children into private health insurance plans, and a possible tax on insurance companies that he said would rebound on West Virginia coal miners who receive generous health benefits due to the dangerous nature of their work.

The three-hour meeting of the House Democratic Steering and Policy Committee, which drew House Speaker Nancy Pelosi as well as leaders of the three committees that have approved versions of the House bill (HR 3200), came as the Finance Committee neared the end of months of talks. The release of a draft plan by Baucus, D-Mont., could come as soon as Wednesday, with markup sometime next week.

Jacob Hacker, a Yale University professor who developed the concept of the public option, said a government-sponsored plan will have a "superior ability" to control costs within the health exchange system, while maintaining broad access for people who need health insurance. He told members of the Democratic panel that it would be a "great mistake" to opt instead for some kind of "trigger" mechanism that would institute a public plan if private insurers don't live up to specified benchmarks.

"For most who support it, a trigger is just a way of saying "no" to a public plan choice," said Hacker, and a way to "gain political cover." Co-ops, he said, "are not a serious means of achieving any of the public plan goals."

House members erupted in applause when Hacker finished speaking.

But there were also expressions of dismay and amazement from lawmakers about the heated opposition that the overhaul debate has generated in town hall meetings and elsewhere, including from seniors, veterans and others who take part in government-financed programs.

Rep. David Obey, D-Wis., asked Hacker and the other panelists to "amuse me" and inquired, "Is Medicare a public program?" He then asked the same about Medicaid and veterans' and children's health care and received answers of "yes" to all.

"Could you explain to me why there are so many people who are on those programs who seem to be highly concerned about the dangers of government programs?" asked Obey. "Could it be they have been misled by special interests with a lot of money?"

Hacker said many people are happy with Medicare yet still "may not fully believe the government can do things right, but it can."

Asked Ways and Means Committee Chairman Charles B. Rangel: "What can you do to overcome the fears, the unfounded fears, that people have on this issue?"

Karen Davis, president of the Commonwealth Fund, said that "change is always threatening," and lawmakers need to drive home the message that health costs can't continue on their current trajectory. Davis said health care consumes 17 percent of the nation's economy, up to 21 percent by 2020, and contributes to stagnating or declining incomes for workers and their families.

"We have 72 million people that can't pay their medical bills," she said "I think you have to educate the public, educate each other about where we're going."

Rangel, a New York Democrat, said protestors have "no idea of the extreme costs of doing nothing—that just doesn't make sense." There is an "emotional feeling out there that defies common sense," he said.

"Unless we get a handle on it," said Rangel, "I don't see how we can move further."

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Leading Health Analysts Implore Congress: Don't Walk Away This Time

By John Reichard, CQ HealthBeat Editor

September 17, 2009 -- You could almost hear them groaning, "No, not again!"

A group of leading analysts and health policy advisers, many of them veterans of the failed congressional overhaul debates of yore, implored lawmakers at a press briefing Thursday not to give up on revamping the system now that the going has gotten tough politically.

And from both the left and the right, their warning to the middle class was: While you may worry about the uncertainties about changing the system, the risks of taking refuge in the status quo are much greater now than they were at critical junctures of past overhaul debates when Congress simply walked away after controversy flared.

They also sent an "open letter" to Congress saying that the "current health care system is in crisis and is not sustainable in the future." Despite the controversy over existing proposals in Congress, "the bills under consideration contain provisions that will seriously address problems in health care and must be reconciled," they declared.

Some 400 people signed the letter. "We have taken care of patients, managed large and small health care organizations, taught young students medicine and public health and conducted research on the quality of health care and ways to improve the health care system for all Americans," they said.

The group expressed alarm that a "fringe element" has hijacked the debate, in the words of Clifton Gaus, a leading health services researcher who led the predecessor agency to the Agency for Healthcare Research and Quality in the Clinton administration.

"We are extremely concerned that a small but vocal minority of people in the current debate have misstated and distorted numerous facts in an effort to scare our citizens," the letter said. "This is unconscionable and you must not be distracted from the critical task at hand."

As examples of such distortions, they said current bills do not allow the government to ration health care, will not promote or allow euthanasia, will not allow the government to deny benefits to the disabled, will not break the budget, will not take away existing insurance coverage, will not cover illegal immigrants and may slow the rate of increase in some provider payments but will not diminish benefits or access to physicians.

From the left, Princeton economist Uwe Reinhardt said in a statement released at the briefing that there's a lot at stake for the middle class in the overhaul given rising costs and rates of uninsurance.

"Total spending on health care for a typical privately insured American family is now $16,700 . . . .it will double again by 2019. Wages and salaries on the other hand are rising at less than 3 percent a year."

While President Obama in his recent speech to Congress made a strong moral case for covering the uninsured, "the middle class also must ask itself whether it can weather the brewing financial storm on its own, without the benefit of health reform," Reinhardt said.

William L. Roper, who served in the Reagan and Bush administrations in key health posts including presidential adviser, head of the Centers for Disease Control and Prevention, and head of the Medicare and Medicaid programs, agreed with Reinhardt.

It is "so important" to listen to Reinhardt, he told reporters. "The way things are going is a recipe for disaster," said Roper, who is now the CEO of the UNC Health Care System at the University of North Carolina. Roper said that while leading health overhaul proposals will mean lower Medicare reimbursement at his system, the financial burden of caring for uninsured patients is so crushing that Congress must act "this year."

Brandeis University economist Stuart Altman recalled his three year stint advising President Nixon on health policy. The media at the time predicted a health overhaul was inevitable. "Everybody was for it"—but in the end Congress walked away. Then in the early 1990s, Congress "just punted" again.

The number of uninsured has risen from 14 million in the Nixon years to 50 million now and health spending has jumped from $70 billion then to over $2 trillion now. What scares him as he looks at the latest debate is that it would be so easy for lawmakers to walk away again, Altman said but the big loser would be the middle class.

"They think they're fine" if Congress bails, but "they're not fine," he warned.

Chip Kahn, a key health adviser to congressional Republicans in the 1980s and 1990s who helped defeat the Clinton plan as an insurance lobbyist, said he has a simple message. "Good intentions just won't do it." Congress has to be willing to come up with the money needed to move to universal coverage, he said. "It's just got to get done.

"Unless we make the effort to get there, I just don't think we're going to make progress on all these issues" including bending the cost curve, Kahn said. Coverage is needed to bring Americans into a system of coordinated care, he said. Kahn now heads the Federation of American Hospitals and has been a consistent advocate of wider insurance coverage throughout the current debate.

"We are pushing back to say that it is the status quo that we can't afford," said Judy Feder, a former adviser to President Clinton who is now a Georgetown University professor who has run unsuccessfully twice for the House as a Democrat.

Members of Congress may think the safe thing to do politically is to walk away again from an overhaul but Feder said, "I'm here to say it will cost them." She predicted they will lose their seat if they block an overhaul. "They won't be coming back," she said.

The analysts found fault with existing Democratic proposals but said they could be refined. Altman for example voiced concern about subsidy levels in the overhaul plan proposed by Senate Finance Committee Chairman Max Baucus, D-Mont. But he expressed cautious optimism that the plan would serve as the basis of successful overhaul legislation. Kahn said that the leadership of Baucus will become evident as he begins a markup next week of his legislation.

Khan predicted that Baucus will "pull off the miraculous and get a bill."

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Some Democrats Want to Reduce Effects of Tax on Insurers

By Richard Rubin, CQ Staff

September 17, 2009 -- Liberal Senate Democrats are trying to soften the effect of the largest revenue-raising provision in the Finance Committee's health care bill.

Committee members Debbie Stabenow of Michigan, Robert Menendez of New Jersey and John Kerry of Massachusetts said they want to make fewer health insurance plans subject to a 35 percent excise tax on high-cost plans. The issue is likely to be the subject of amendments during the Finance markup that starts Sept. 22.

Under the chairman's mark released Sept. 16 by Max Baucus, D-Mont., the 35 percent tax would take effect in 2013 for plans costing more than $8,000 for individual coverage and $21,000 for family coverage.

Kerry, who first floated the concept for the tax several months ago, suggested pushing the threshold to $24,000 for families. He said he originally wrote the provision to raise $140 billion, not the $214.9 billion in the chairman's mark.

"People with a lower level of income get dragged into potentially being affected in their current coverage," Kerry said. "I would rather have that be a pricier or expensive level plan than the one they have targeted."

Stabenow said she worried in particular about retirees who are not eligible yet for Medicare, who may have expensive plans because they are part of a pool of older workers. Employees in dangerous industries and members of labor unions who have negotiated generous benefit packages would be disproportionately affected.

"I think there's just miscalculations about this notion that every high-cost plan is because it has great benefits," Stabenow said.

The numbers in the chairman's mark are indexed to the Consumer Price Index. Because health care costs tend to grow faster than other expenses, over time the number of plans potentially subject to the tax would increase, if insurance companies and employers do not reduce plan costs.

The mark includes a transition rule designed to soften the effect in states with higher-than-average health costs. In the 17 most expensive states, the threshold for triggering the tax would be 20 percent higher in 2013, 10 percent higher in 2014 and 5 percent higher in 2015. Many of those states are in the Northeast, and the transition has been a major issue for Olympia J. Snowe of Maine, the Finance Committee Republican most likely to support the bill.

Finance members Kent Conrad, D-N.D., and Jeff Bingaman, D-N.M., who helped write the chairman's mark, also said they would be open to changes in the tax, but with important caveats.

The provision would raise $214.9 billion over 10 years, making it a vital piece in the effort to keep the overall bill deficit-neutral. Conrad said he would be willing to push the family threshold up to $25,000.

"I'm certainly open to that if it's paid for," Conrad said, adding that he thinks the excise tax as written would affect very few middle-income families.

Kerry said he had an offset in mind for an amendment next week, to make up for the revenue that would be lost by raising the threshold, but he did not detail it on Thursday.

Bingaman also said he would consider a higher threshold, but he said the tax needed to stay pegged to the Consumer Price Index (CPI), because that mechanism helps limit health care costs.

Retaining the CPI as the peg for indexing is crucial "unless you want to give up on controlling cost growth in the future or find some alternative way to control cost growth," he said. "I'm open to any and all ideas as long as there's a way to pay for them that is less objectionable. That's the difficulty."

Pondering the Details

After a closed-door bipartisan meeting of committee members Thursday, Baucus said senators were still learning how the proposed tax would work.

The biggest quirk is that much of the revenue generated by the provision, perhaps even a majority of it, does not come from the excise tax itself.

Instead, congressional scorekeepers assume that employers will pressure insurance companies to keep plan costs below the threshold. Many high-premium plans are expensive because they provide what is known as first-dollar coverage for many expenses, rather than rely on co-payments and deductibles. To keep plans from getting hit by the tax, insurance companies would lower premiums and require employees to pay more out of pocket.

Then, economists argue, because of this effective new limit on tax-free compensation in the form of health insurance, companies would increase wages. Employees would presumably use some of that money for the additional co-payments and deductibles under their newly cheaper plans.

Also, Finance Committee aides said, they would pay more in income taxes, and that is what generates a significant amount of the revenue from the provision.

But Republican Charles E. Grassley of Iowa said he was concerned that insurance companies would pass the tax along to consumers.

"The whole goal here is to reduce costs to the policy holders, not to increase costs," he said. "And that's going to increase costs.

Grassley said the structure of the tax was one of the remaining issues he wanted to resolve with Baucus before their bipartisan negotiations broke up earlier this week.

Drew Armstrong contributed to this story.

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Will Docs Tune in to Comparative Effectiveness Studies?

By John Reichard, CQ HealthBeat Editor

September 18, 2009 -- With Congress poised to spend possibly billions of dollars in coming years on research to help doctors identify the most worthwhile medical treatments for various conditions, how doctors respond to that research is key to the hopes of policy makers that it will "bend the curve" in health spending growth. An analysis released Friday at a meeting of the Medicare Payment Advisory Commission (MedPAC) made clear that while doctors are receptive to the studies, how they are carried out, written, and distributed will determine how much impact they have.

The research will only be useful if doctors know about it and find it "accessible" and credible, said MedPAC staffer Joan Sokolovsky. The staff findings were based on six focus groups MedPAC staff conducted with doctors in Baltimore, Chicago and Seattle in July and included a mix of primary care and specialty physicians.

"In general, the current initiatives are not well understood by practicing physicians," she noted. Perhaps the most surprising finding from the groups was that some doctors do not want any information comparing medical treatments for the same condition, Sokolovsky said.

Those who were opposed to the research said they got all the information they needed from journals, conferences, and drug sales representatives and expressed worry that the research would lead to "cookie cutter" medicine not properly adapted to the needs of individual patients, the staffer said. These physicians worried that the studies would lead to mandatory guidelines from the government and private insurers about how they should practice medicine. And they said personal experience was sufficient to make treatment decisions.

But Sokolovsky said those doctors were in the minority. The majority welcomed more comparative effectiveness research, or "CER," saying they lacked data to help them pick which of the varying approaches to treating the same medical condition works the best.

They wanted data comparing drugs, devices and medical procedures and said treatments now considered as "best practices" were not always based on medical evidence. But they said comparative studies needed to take into account the fact that subpopulations might respond differently to the same treatment.

They also expressed concern about the costs of the studies and what impact they might have on medical innovation, though one point of view was that the studies would spur rather than lessen innovation because they would result in fewer "me-too" products not shown to have distinctive value.

Doctors wanted the study descriptions to be concise and easy to read, with the ability to dig deeper if they wanted more data. And results should be written in a way that they can be read via e-mail using Blackberries and similar devices.

Trusted sources of comparative effectiveness research included not just specialty societies but also the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention. But the general view of doctors in the focus groups was that all research has biases—that "even the government could be biased toward less expensive treatments," Sokolovsky said. "Transparency" is key; doctors said researchers must report conflicts of interest, and details on research design, study methods and all results from a study.

The analysis found, too, that doctors wanted the studies to focus on high-priced, new technologies before they are widely diffused in clinical practice.

While doctors in the groups wanted more data from head-to-head comparisons of treatments, the emerging federal research agenda as recommended by the Institute of Medicine is lighter on those studies than some analysts expected.

Staff noted that a list of the 100 highest-priority research topics released by the Institute of Medicine in June was light on head-to-head comparisons of treatments. Half of the topics evaluate some aspect of the of the health care delivery system, a third address racial and ethnic disparities and a fifth address patients' functional limitations and disabilities, the analysis found.

MedPAC Executive Director Mark Miller said "we expected to see a lot more drug-drug, device-device, medical-treatment-versus-surgical" treatment comparisons in the IOM topics. Miller expressed curiosity about commissioner reactions to the topics.

"I had exactly the same response to the IOM list," replied commissioner Thomas M. Dean, a South Dakota family practice physician. "I was really surprised at how vague or kind of non-focused that some of the recommendations were and I certainly expected. . .much more specifics and at least from a clinical point of view that's what we would need," he said.

"We can't make good decisions if we don't get good data," he said.

MedPAC Vice Chairman Francis J. Crosson, an executive with the Kaiser Permanente Medical Group, observed that the studies have greater impact in Kaiser medical groups if they come from close peers. "Physicians tend to trust the judgments of individuals in their own specialty who have strong reputations," he said. Kaiser has tried to use those types of individuals not just to promulgate findings but to develop them he said.

It would be useful to have expert panels "standing behind" the recommendations from the research, Crosson counseled. Often physicians "turn right to the back page and say, 'Okay, whose recommendation is this?' and they look for a name they can trust."

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