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Can the Finance Committee Fix Health Care?

By John Reichard, CQ HealthBeat Editor

March 14, 2007 – If, as many analysts say, a pragmatic and bipartisan approach is essential to rebuilding the U.S. health system, what better place to begin the project than the Senate Finance Committee?

Committee Chairman Max Baucus, D-Mont., and ranking member Charles E. Grassley, R-Iowa, have a history of working well together, whether by tilting right on legislation creating tax cuts to tilting left with legislation expanding the Medicare program by adding prescription drug benefits.

But overhaul health care as a whole? When Sen. Ron Wyden, D-Ore., earnestly predicted at a hearing Wednesday that the team of Baucus and Grassley could get the mammoth job done, the improbable notion had other committee members grinning, either because they thought it was cockeyed, that it might just eventually happen despite the odds, or both.

Baucus clarified at the outset of the hearing that he intends to try. "Today we begin down a long and arduous road," Baucus declared solemnly in opening the first of a series of hearings on overhauling health care. "Today we begin again the journey toward universal coverage. It is a road that we must travel."

Grassley struck the same note of urgency. "This situation is untenable," he agreed. "Mr. Chairman, moving major legislation during a presidential election cycle is extraordinarily difficult but not impossible."

What that legislation might look like is unclear, but witnesses at the hearing agreed on some broad outlines. One was that universal coverage would cost $70 billion to $100 billion a year and couldn't be achieved simply by redirecting some of the $2 trillion already in the system to cover the nation's 47 million uninsured.

Another was that it probably is more practical to work with pieces of the existing system rather than try for a more radical overhaul that would be defeated by entrenched interests. "2.2 trillion dollars develops a lot of very strong advocates for their piece of the pie," said Brandeis University professor Stuart Altman. "I've watched some very good ideas go down in flames," he added.

Altman also suggested that it would make more sense to first cover the uninsured and then tackle rising health costs. Doing both at the same time would create too much political opposition to allow change to occur, he said. While some steps can be taken to tackle costs in the relatively near future, "fundamentally changing the cost curve" would require more than "marginal" changes, he said. If Congress tries that, "I do believe we will run into a buzzsaw."

Other witnesses joined Altman in suggesting that it would be unwise to try to expand coverage of uninsured Americans other than uninsured children through legislation reauthorizing the State Children's Health Insurance Program. Better to make sure that program is reauthorized than risk seeing it bog down as part of a more expansive measure, they said.

At least one witness tried to get the committee to think in terms of raising taxes. In a $2 trillion health care economy, adding $70 billion to $100 billion a year to cover the uninsured "would not seem insurmountable," James J. Mongan, president of the Boston-based health system, Partners HealthCare, told the committee. He added that "in terms of federal taxation levels this revenue could be raised and still leave taxes at or below levels of the 1990s, tax levels which underpinned one of our most productive economic eras."

But Grassley clarified in his remarks that he doesn't want to tilt too far left. "I support ideas that incentivize greater private coverage," he said. "Covering everyone with government-run health care is not the right direction for America," he said.

Wyden, who has relentlessly buttonholed the press and other lawmakers with attempts to build a bipartisan solution to covering the uninsured, differed with Mongan on the tax issue. "I disagree strongly" that taxes will have to be raised, he said, noting that the U.S. spends much more per capita on health care than other industrialized nations that cover all their citizens. "I think the money is there, we're not spending it in the right places."

"We should be able to get by with $2.2 trillion," agreed John F. Sheils, vice president of the Lewin Group, a consulting firm. Legislation introduced by Wyden to cover the uninsured (s334) would fund subsidies to buy coverage by ending the tax break employers get for providing coverage and increasing competition by insurers, but achieving universal coverage without new taxes will not be easy, Sheils said.

"I do believe there is enough money in the system," Altman said. But "I don't believe we can get it," he added.

Senators voiced some interest in national adoption of the Massachusetts law that aims to create nearly universal coverage in that state in part by requiring the uninsured to buy coverage, with subsidies to help them buy it if their incomes are low enough. Mongan pegged the annual cost of national adoption at $70 billion to $100 billion, but Sheils opined that the Massachusetts approach would not cover all uninsured Americans.

A proposed tax change by President Bush that would require reporting of some employer premium contributions as taxable income by individuals drew some support. Richard G. Frank, vice chair of the Citizens' Health Care Working Group, told the committee that capping the deductibility of employer premiums "would make things fairer and more efficient." But Sheils and Altman said the president's approach to using funds raised by capping the deduction would not effectively cover the uninsured.

Baucus plans to hold hearings on four other overhaul "principles" to move the debate forward: "pooling arrangements" to increase access to affordable coverage that isn't tied to a particular job; cost control; preventive care; and "shared responsibility" for costs.

While the plans for legislation by Baucus and Grassley are unclear, Grassley expressed optimism Wednesday about the prospects for action. "I'm encouraged by the fact that it seems there are more people in Congress talking about the issue than any time in the last decade," he said.

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