The struggle over U.S. healthcare reform has consumed Congress for most of the year. It has dominated media coverage and fueled informal debates in all parts of the country. A resolution to the heated back-and-forth should arrive by Thanksgiving in the form of meaningful healthcare legislation, according to Vice President Joe Biden. Then again, Sen. Jim DeMint (R-S.C.) has pledged to cancel the Democrats’ planned festivities, preventing what he and other opponents have described as a “government takeover” of the healthcare system.
Amid the emotional tug-of-war and evolving bills, the nonpartisan Congressional Budget Office (CBO) has laid out the stakes. In a June letter to the Senate Budget Committee, CBO Director Douglas W. Elmendorf begins: “In the absence of significant changes in policy, rising costs for healthcare will cause federal spending to grow much faster than the economy, putting the federal budget on an unsustainable path.”
Most experts, analysts, and politicians agree that something must be done. It’s all a matter of what and how much it will cost. In the spirit of Thanksgiving, let’s talk turkey about the healthcare reform proposals that may or may not survive the holiday, and the key players who will determine whether this year’s reform effort stays alive—or gets stuffed.
Main Points of Disagreement
Beyond the sticky matter of how to pay for everything, businesses instinctively have opposed any requirement that employers offer health insurance to their employees. Then again, that opposition seems to be softening as more details of the plan are released.
In principle, widespread agreement exists on the notion that individuals should have guaranteed issue and renewability of their healthcare insurance, regardless of pre-existing conditions. Far less clear, however, is the matter of how much those individuals will have to pay for their policies.
Main Points of Agreement
Not everyone is on board, but any healthcare reform bill that emerges from Congress is likely to contain three main elements, according to Leighton Ku, director of the Center for Health Policy Research at George Washington University in Washington, D.C.
1. Expansion of Medicaid
2. Health Insurance Exchanges
Think of exchanges as the Travelocity or Orbitz for health-insurance plans, complete with coupons for the needy. Sliding-scale tax credits or vouchers could be used by low- to moderate-income people to buy insurance in publicly available, government-regulated marketplaces where such parameters as premiums and coverage could be compared. “The concept is that by setting up standards and having a place where it’s all together, it would create a competition,” Ku says.
In essence, more competition could lead to cost reductions.
3. An Individual Mandate
Hardship exemptions are likely, but people who can afford it will be expected to buy insurance or pay a penalty. Republican rumblings suggest that agreement on this point may not be as widespread as initially thought.
President Obama has made healthcare reform the centerpiece of his first-year agenda. If he is to succeed, organizations like AARP will be key in winning over skeptical seniors. But the real power lies with a handful of Congressional leaders who have the ability to make or break any legislation. A brief rundown:
The overhaul is less expensive and more moderate than the America’s Affordable Health Choices Act, introduced in the House of Representatives, and a partial bill passed earlier by Sen. Kennedy’s Health, Education, Labor and Pensions (HELP) Committee. Nevertheless, progressives and conservatives criticized the Baucus plan. Even so, Sen. Olympia Snowe (R-Maine) has become a major focus of Democrats’ efforts to find 60 votes and avoid a Republican filibuster, though the seating of a replacement for Sen. Kennedy would help Democrats regain a filibuster-proof majority. One key point: Analysts say bringing Sen. Snowe on board might not win other Republican votes, but she might offer cover for such conservative Democratic senators as Mary Landrieu (D-La.) and Ben Nelson (D-Neb.).
As a last resort, Democrats have raised the possibility of using reconciliation, an arcane process originally intended for budgetary items. Reconciliation requires only a 51-vote majority, but complicated rules and a promised Republican challenge could lead to chaos.
Paying For It All
Meaningful reform without breaking the bank is a common refrain in healthcare discussions. Despite heated disputes over taxes, fees, fines, and service cuts to help defray costs, two main mechanisms for savings have emerged, according to the Center for Health Policy Research’s Ku:
1. Curbing Medicare Advantage
One cost-cutting idea would be to restore a level playing field, Ku says, and pay managed care on par with Medicare and Medicaid. “This is one of the largest components of savings that people are anticipating,” he adds. A backlash by seniors, however, has led to a “grandfathering” clause that would protect the extra benefits in certain parts of the country, potentially reducing the overall savings.
2. Disproportionate Share Hospital (DSH) Cuts
Both Medicare and Medicaid pay extra to hospitals that serve a high proportion of needy patients. The savings mechanism here is less clear, but the expectation is that because the number of uninsured patients will drop dramatically with legislation, the DSH payments could be scaled back as well. The cuts, phased in over a decade, could amount to tens of billions of dollars in overall savings, though the House and Senate Finance bills differ in how deep the trims should be.
For More Information
- Kaiser Family Foundation
The foundation’s comprehensive “Health Reform” page offers a side-by-side comparison of 12 healthcare proposals, including both Democratic and Republican bills.
- Congressional Budget Office
The nonpartisan office has already weighed in on the economic effects of preliminary versions of the competing healthcare reform bills, and will likely do so again.
A project of The University of Pennsylvania’s Annenberg Public Policy Center, the site has debunked dozens of healthcare reform myths.
The Truth-O-Meter, a project of the St. Petersburg Times, has put recent healthcare assertions into categories ranging from “True” (substantiated assertions) to “Pants on Fire” (for absurd untruths).
SHM updates health reform progress and offers a monthly “Washington Update” outlining the society’s policy positions and activities.
Other Proposals to Keep an Eye On
- Addition of a hospital value-based purchasing (VBP) program to Medicare, which would tie incentive payments to performance on various quality measures;
- Expansion of the Physician’s Quality Reporting Initiative (PQRI), with a 1% payment penalty by 2012 for nonparticipants;
- Creation of a CMS payment innovation center to try out new payment structures, with the goal of improving quality and reducing Medicare costs; and
- Establishment of a Medicare pilot initiative called the Community Care Transitions Program, which would spend $500 million over 10 years on efforts to reduce preventable rehospitalizations; SHM’s Project BOOST (Better Outcomes for Older Adults through Safe Transitions) likely would qualify.
Four Proposals Hospitalists Should Know About
1. Fixes to Medicare’s Physician Fee Schedule
The House bill would provide $228.5 billion to repeal the sustainable growth rate (SGR) used to determine the annual physician fee schedule and eliminate accumulated SGR debt, preventing a potential 21.5% cut in 2010 reimbursement fees. The more cost-conscious Senate Finance bill, by contrast, provides a one-year patch, providing a 0.5% update instead of any cut, but it leaves the SGR in place. “We understand the budgetary constraints that Senator Baucus is working with, but we’re disappointed that the SGR is getting another patch,” says Eric Siegal, MD, FHM, chair of SHM’s Public Policy Committee. “If we’re going to talk about restructuring healthcare, then we also need a payment system that is stable and that is not subject to the yearly whims of Congress.”
2. Medical Liability Reform
The Senate Finance plan’s nonbinding “Sense of the Senate,” which encourages states to pursue alternatives to the current civil litigation system, is a “missed opportunity,” according to Dr. Siegal. “We think that the Senate Finance Committee should have gone further with this,” he says, noting that medical liability is a significant driver of unnecessary healthcare expenses. The House bill is more robust in pushing medical malpractice reform by offering states federal assistance, Dr. Siegal says, but still leaves room for improvement.
3. Primary-Care Bonus Payments
Conceptually, the Senate and the House bills offer similar proposals to improve reimbursements for primary care, something Dr. Siegal says SHM has consistently and strongly supported “as a way of preventing further erosion of the primary-care infrastructure.” Depending on how the Senate Finance plan defines “primary care,” hospitalists might benefit directly. “Even if you get past the issue of whether it hits our pocketbook favorably,” Dr. Siegal says, “it is in the strategic interest of our specialty to have a strong primary-care base.”
4. Bundled Payments
Proposals in both the Senate and House bills for a pilot program aimed at bundling payments around an episode of care have been greeted cautiously by hospitalists, as have other new payment proposals. Robust and meaningful demonstration projects, Dr. Siegal says, are necessary to get a better sense of what the consequences could be, intended or otherwise. “Any time you’re talking about changes to the fundamental architecture of how we pay people for what they do, you’d better spend some time looking into what the implications of that are,” he says. TH
Bryn Nelson is a freelance writer based in Seattle.
Image Sources: KASH76, DIADEMIMAGES, DAVID GUNN, TOMENG, ALEXEY KASHIN, JONATHAN LARSEN, JON HELGASON, STEFAN KLEIN, SX70, SDOMINICK/ISTOCKPHOTO.COM