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Baucus: Health Overhaul Must Be Part of Economic Recovery Package

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 19, 2008 -- As some health care analysts express concern that the nation's economic problems will hurt chances next year for passage of major health care legislation, Senate Finance Committee Chairman Max Baucus said Wednesday that any economic recovery package must include health care overhaul legislation.

"Comprehensive health reform legislation must be part of any successful economic recovery plan," the Montana Democrat said at a hearing to discuss the economics of health care overhaul. "Health care costs and the economy are linked: The key challenges of our health care system are high costs, low quality, and insufficient access," and those factors affect family budgets, businesses' ability to compete abroad, and also impact government spending, he said.

Separately Wednesday, two major health insurers announced they would support covering individuals' preexisting medical conditions if individuals were required to purchase health insurance, known as the "individual mandate." Both America's Health Insurance Plans (AHIP), a trade group representing health care insurers, as well as the Blue Cross and Blue Shield Association announced their support for the idea. Baucus also included an individual mandate in a health care overhaul proposal released Nov. 12.

While the weakening economy is placing additional pressure on state and federal budgets, adding more funding to an economic stimulus package Congress is expected to consider early next year may be difficult, said the Finance panel's ranking Republican, Sen. Charles E. Grassley of Iowa.

"We face difficult choices. We have an economy in distress. Increasing the record-breaking deficit is not a legitimate option. Ignoring the burden inefficient spending in health care places on our economy is also not an option," Grassley said.

Baucus said a major overhaul of the nation's health care system was "central to restoring America's economy." He met Wednesday with Senate Health, Education, Labor and Pensions Committee Chairman Edward M. Kennedy, D-Mass., to discuss the two panels' plans for action on health care legislation next year.

"Yes, reforming health care will cost money. But investments now will reap savings a decade from now," Baucus said. "And spending now will also provide needed stimulus for the economy as well."

Witnesses at the Finance session, the tenth hearing the panel has held so far this year to discuss various ways to overhaul the nation's health care system, told lawmakers that overhauling the nation's health care system must be top legislative priority next year. President-elect Barack Obama made health care a centerpiece of his campaign and is expected to make it a priority of his presidency as well.

In prepared testimony, Verizon Inc. CEO Ivan Seidenberg told the panel that it is "critical that we focus on ways to improve efficiencies to reduce costs just as much as we focus on expanding access to health insurance coverage. If we fail to do so, we risk being able to maintain current levels of health insurance coverage and we may find expanding coverage to be unattainable." He also asked the panel to preserve the current employer-based health care system and not scrap it as part of any sweeping overhaul.

Princeton University economist Uwe Reinhardt called the health care sector "the locomotive in the economy" and said that greater investment in health care could not only help provide more coverage to the uninsured but also could increase job growth. Baucus said that as of October, health care is one of just two sectors of the economy—mining is the other—that is adding jobs rather than losing them.

The insurers' support for covering preexisting medical conditions and an individual mandate builds upon proposals the groups have introduced to improve health care coverage. It also may signal that the industry, which helped defeat former President Clinton's ambitious health care overhaul plan, may be more willing now to support legislative changes to the nation's health care system.

"Coupling a requirement that insurers must offer coverage to everyone regardless of health status with an effective requirement that everyone have insurance would enable insurers to offer coverage to everyone regardless of their health status—without the unintended consequence of premium increases," Blue Cross and Blue Shield President and CEO Scott P. Serota said in a statement.

AHIP President and CEO Karen Ignagni said her group's board of directors was "offering a workable solution to ensure that no one is left out of the health care system because of their health, age, income, or employment status."

Families USA Executive Director Ron Pollack called the insurers' announcements "helpful and a good step in the right direction" and added that they show the level of access to health care that must exist to give more Americans health insurance coverage.

Pollack also agreed with Baucus' linking of health care overhaul with an economic stimulus package. "They have to come together as early priorities for the Congress and the administration," Pollack said.

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