Update: Where We Stand on Health Care Reform

October 22, 2009

A stand-alone bill to permanently repeal Medicare’s “flawed” Sustainable Growth Rate (SGR) formula failed to garner enough support in the Senate yesterday to surmount procedural barriers.

A stand-alone bill to permanently repeal Medicare’s “flawed” Sustainable Growth Rate (SGR) formula failed to garner enough support in the Senate yesterday to surmount procedural barriers.

The SGR was created in 1997 as a target rate of growth in Medicare Part B spending for physicians, nurses, physician assistants, and other services. It was intended to prevent Medicare costs from rising faster than planned by imposing payment cuts. Each year for the last 7 years, Congress has passed a “patch” to prevent the cuts from taking effect.

On October 13, Senator Debbie Stabenow (D-Mich) introduced the Medicare Physician Fairness Act of 2009 (S. 1776) to permanently address the SGR problem.

The American Psychiatric Association (APA), along with the American Medical Association (AMA), other provider organizations, and the American Association of Retired Persons (AARP), launched a massive effort to support the bill that included television ads, press conferences, and contacting senators

Senate Democratic leaders had hoped for a quick vote on the proposal this week, but only 47 senators (46 Democrats and one independent) voted in favor of bringing the measure up for debate-significantly short of the 60 votes needed to advance the bill. A breakdown of who voted for and against cloture is posted at: http://politics.nytimes.com/congress/votes/111/senate/1/325.

Republicans and some Democrats wanted the bill to include provisions to offset its $247 billion price tag. Another argument was that the change in physician’s Medicare reimbursements should be part of the broader health care reform legislation.

“It is unfortunate that Republicans have again chosen to put politics before the needs of the American people,” said Senate Majority Leader Harry Reid (D-Nev). “The Medicare Physician Fairness Act would help ensure that seniors and military families get the care they need by fairly compensating Medicare and TRICARE doctors.

Despite the outcome of the cloture vote, Reid said, “I am determined to continue working to address the current flawed payment system. I remain hopeful we can pass a multi-year fix after health insurance reform. Our seniors and military families and their doctors deserve no less.”

AMA president J. James Rohack, MD, in a prepared statement yesterday (http://www.ama-assn.org/ama/pub/health-system-reform/senate-blocks-s1776.shtml), disappointment at the cloture vote and emphasized the importance of eliminating the SGR.

“As we work to improve the health system, permanent repeal of the payment formula is essential to ensuring the security and stability of Medicare. On January 1st, Medicare physician payments are scheduled to be cut by 21%, with more cuts in years to come. Nearly 90% of people age 50 and older are concerned that the current Medicare physician payment formula threatens their access to care.”

While short-term fixes [yearly postponements of the cuts] have temporarily averted access problem, he said, “they have also grown the size of the problem-and the cost of reform. . . Permanent repeal of the Medicare physician payment formula is essential to comprehensive health system reform.”

In a recent “Action Alert,” APA’s governmental affairs staff noted, “The Senate Finance Committee’s health reform bill includes another 1-year postponement of the cut. This is welcome, but Congress needs to get rid of the SGR formula causing these huge cuts permanently.”

The 1-year postponement was part of the Senate Finance Committee’s $829 billion care reform bill approved on October 13 in a 14-9 vote. One Republican committee member, Sen. Olympia Snow of Maine, voted for the Finance bill.

Progress report

President Barack Obama has set a year-end deadline for passing comprehensive health care reform, according to Reuters. Accordingly, leaders in both chambers are busy melding legislation.

In the Senate, Reid is merging the Senate Health, Education, Labor and Pensions Committee’s reform bill (S.1679) approved earlier this summer with the Senate Finance Committee’s America’s Healthy Future Act (S. 1796). Sen. Max Baucus (D-Mont), chair of the Senate Finance Committee, and Sen. Christopher Dodd (D-Conn), who helped shepherd the HELP panel’s bill through committee, are working with Reid.

The recent bill approved by the Senate Finance Committee, according to Baucus, reduces the deficit by $81 billion over 10 years, raises the share of Americans with insurance coverage from about 83% to 94%. It also delivers coverage to 23 million Americans through new insurance exchanges and to 14 million more new enrollees through Medicaid.

Still, Reid and the Democratic leadership will face several difficult issues when merging the 2 bills. Such issues include:

• A government-run public plan option. The HELP committee’s bill includes a public option, while the Finance Committee’s bill does not.

• An employer mandate to provide insurance to their workers (HELP version);

There is also disagreement over how much insurers should be permitted to charge older customers.

Reid said on October 20 that he would submit a merged health care bill to the Congressional Budget Office for review “soon,” but he stopped short of promising to do so this week. Some senators have requested that he delay floor consideration until after the CBO analyzes the legislative language of the final Senate version, comes up with cost estimates and posts the language online for 72 hours, according to Congressional Quarterly Today, .

In the House, 3 different committees with jurisdiction over health care have passed health care reform legislation, and House Democratic leaders are working to merge 3 separate bills into 1 for floor debate

Public option

House Speaker Nancy Pelosi (D-Calif) has insisted the resulting House bill will include a public option. She believes such an option would keep the insurance companies honest and provide more coverage alternatives to the middle class.

CBO provided the House with cost estimates for 2 variations of the public option: one would base reimbursement at Medicare rates plus 5%. Another would rely on reimbursement rates negotiated with providers.

In the Senate, Reuters reported that Sen. Chris Dodd had acknowledged substantial opposition to the so-called public option from Republicans as well as fiscally conservative Democrats. But he told NBC’s Meet the Press Sunday, October 18, that “I haven’t given up.”

“My hope,” he said, “is that when we bring these 2 bills together over the next number of days, we will present to the Senate an option that includes that strong public option.”

Another option on the table is the “Trigger” plan proposed by Sen. Snowe, which would establish a government-run plan in states where at least 5% of the residents did not have access to affordable health insurance.

Health insurance plans report

On Sunday, October 11, America’s Health Insurance Plans released a report prepared by PriceWaterhouse Coopers that pointed to 4 provisions in the Finance Committee bill as potentially increasing private insurance costs.

• Insurance market reforms coupled with a weak coverage requirement

• A new tax on high-cost health care plans

• Cost-shifting as a result of cuts to Medicare, and

• New taxes on several health care sectors.

If the provisions are implemented, the report predicted that the cost of private health insurance would increase by 111% between 2009 and 2019. The full report, Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage, is available at http://americanhealthsolution.org/assets/Reform-Resources/AHIP-Reform-Resources/PWC-Report-on-Costs-Final.pdf.

To bolster its position, the health insurance industry also launched an advertising campaign in multiple states attacking Democratic health reform proposals as bad for seniors.

President Barack Obama angrily responded to the industry’s actions in his October 17 weekly address (http://www.whitehouse.gov/weekly_address/).

“The insurance industry is rolling out the big guns and breaking open their massive war chest-to marshal their forces for one last fight to save the status quo,” he said. “They’re filling the airwaves with deceptive and dishonest ads. They’re flooding Capitol Hill with lobbyists and campaign contributions. And they’re funding studies designed to mislead the American people.”

He warned that a Congressional review of the insurance industry’s exemption from federal antitrust laws was likely. The Associated Press reported yesterday that the House Judiciary Committee voted 20 to 9 to repeal a 1940s law that exempted the health insurance industry from federal controls over certain antitrust violations including price-fixing. In the Senate, Majority leader Reid has announced plans to repeal the antitrust exemption as part of its health care legislation.

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Photo: iStockphoto.com/Steve Cole