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Obama Open to a MedPAC With Teeth, DeParle Says

By John Reichard, CQ HealthBeat Editor

June 3, 2009 -- White House Office of Reform Director Nancy-Ann DeParle said Wednesday that President Obama is open to making recommendations of the Medicare Payment Advisory Commission mandatory unless opposed by a joint resolution of Congress.

DeParle, a former member of MedPAC herself, said "this idea is similar to a process that's been used effectively by a commission charged with realigning military bases and it could be a valuable tool to help achieve health care reform in a fiscally responsible way." Her remarks came in a speech delivered to a conference sponsored by CQ HealthBeat.

MedPAC often issues payment reductions far tougher than Medicare payment levels ultimately agreed to by Congress. In its recent report to Congress, the commission called for freezes on payments next year to home care and skilled nursing facilities, for example. It also urges the elimination of the differential in payment levels between managed care plans and providers in the traditional Medicare fee-for-service program. Making payment levels equal would save over $150 billion over 10 years, according to a recent Congressional Budget Office (CBO) estimate.

DeParle's remarks came in an address that forcefully made the argument that spending money on a health overhaul is the fiscally responsible thing to do in an era of rising deficits, rather than the reverse. Whether enough members of Congress will buy that assertion is key to the administration's success or failure in engineering an overhaul, and the White House shows no signs of backing away from it while some on the right ridicule it as upside-down, inside-the-Beltway logic.

DeParle noted that according to a CBO estimate, if health costs continue to grow rapidly, by 2018 one-fifth of the nation's economic output will be in the health care field. "That will limit the other investments and priorities that we need to make as a nation," she said. Investing money now in a health overhaul will save money in the years ahead and hold down a deficit that otherwise will become untenable because of the uncontrolled rising of health spending, she said. "The long-term cost of doing nothing far outweighs the cost of doing reform."

Obama will insist that an overhaul is "fully paid for," DeParle said. In his meeting with Senate Democrats Tuesday, the president "was very clear that health care reform in an era of rising government debt can only be accomplished if it doesn't add to our deficits," DeParle said. "That's why health reform must be deficit-neutral, and that's why we must attack the root causes of these skyrocketing health care costs," DeParle said.

Earlier in the day, health care lobbyist Dan Boston told the conference that the 10-year cost of an overhaul estimated to be well in excess of $1 trillion would make full offsets out of the question—unless lawmakers directed the Congressional Budget Office to score savings for changes it does not now recognize as reducing health care spending. In a speech Tuesday, Senate Finance Committee Republican John Cornyn of Texas noted with amusement "the typical Washington proposal that really what we need to do is to spend more money in order to save money. Only in Washington, D.C., do people actually believe that, where 17 percent of the gross domestic product is not enough" spending on health care, he said. "I want to see the evidence that would justify that kind of blind faith in cost savings based on tremendous increases in taxes," Cornyn said.

President Obama in a letter Wednesday moved closer to positions he avoided in his presidential campaign, such as the idea of requiring individuals to carry health insurance and "appropriate proposals to generate additional revenues," a reference that apparently could include the idea of capping the amount of employer-paid health care premiums that are tax-free. He also said he is committed to offsetting the cost of an overhaul by trimming Medicare and Medicaid spending by $200 billion to $300 billion over ten years.

That's where the MedPAC idea could come into play. Sen. John D. Rockefeller IV, D-W.Va., has introduced legislation that would make the commission an independent agency to keep its recommendations from being watered down by health care lobbies.

There's ample reason to think those lobbies will strongly resist a move to make MedPAC recommendations mandatory absent congressional intervention, although they responded politely to the idea Wednesday.

American Hospital Association spokeswoman Elizabeth Lietz said "an independent commission to help Congress make difficult choices on health policy has merit, but its role must be carefully defined and limited. For example, we would be concerned about Congress ceding its important responsibilities for determining Medicare and Medicaid payment rates. MedPAC makes a lot of recommendations that Congress sometimes accepts and sometimes they don't. Lumping the recommendations together into one up-or-down vote would be problematic because it doesn't take into account the unique health care needs of each community."

The Federation of American Hospitals offered no immediate comment.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans (AHIP), said that "we're still taking a look at that." He noted that AHIP has called for the creation of a public-private advisory group to address rising health costs but whether MedPAC should be that entity remains to be determined, he said. AHIP's view is that an advisory group must have broad "stakeholder participation," Zirkelbach said. He added that the association hasn't gone so far as to say that the recommendations of the advisory group should be mandatory.

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