Kaiser Daily Health Policy Report
Sen. Baucus Says Health Care Overhaul Will Cover About 95% of Citizens, Will Not Cover Undocumented Immigrants
Kaiser Daily Health Policy Report Examines Recent Health Reform Developments
Senate Approves Supplemental Spending Bill With Funds for Flu Pandemic
President Obama Reverses Bush Policy Preventing Consumers From Suing Product Makers in State Courts
GM Bankruptcy Plan Would Use Stock Worth 39% of Firm To Fund Half of VEBA Obligation
Reducing Medical Residents' Hours Would Cost $2.5B Annually, Study Says
Connecticut House Approves Two Health Insurance Pooling Bills
New Maryland Law Requires Insurers To Provide Incentives for EHR Adoption
Kaiser Daily Health Policy Report Feature Highlights Recent Blog Entries
Blue Cross and Blue Shield of North Carolina 'Double-Crossing' Obama With Attack Ads, Krugman Says
Special Notice
Kaiser Daily Reports Will Not Publish Monday, May 25
[May 22, 2009]
The Kaiser Daily Health Policy Report will not publish Monday, May 25, in observance of Memorial Day. The report will resume publication on Tuesday, May 26.
Capitol Hill Watch
Sen. Baucus Says Health Care Overhaul Will Cover About 95% of Citizens, Will Not Cover Undocumented Immigrants
[May 22, 2009]
Senate Finance Committee Chair Max Baucus (D-Mont.) on Thursday said that Congress' health care overhaul plan would cover 94% to 96% of the population but not undocumented immigrants, the AP/Las Vegas Sun reports (Alonso-Zaldivar, AP/Las Vegas Sun, 5/21). In remarks at a briefing sponsored by the Kaiser Family Foundation, Families USA and the National Federation of Independent Business, Baucus said, "There are always going to be some people ... you just can't find" to enroll, adding that "we're going to try to get as close as we can (to 100% coverage) and we're working hard to accomplish that."
He added, "[W]e're not going to cover undocumented workers. That's too politically explosive" (Reichard, CQ HealthBeat, 5/21). According to an analysis by the Center for Immigration Studies and the U.S. Census Bureau, undocumented immigrants make up between 15% and 22% of the estimated 47 million U.S. residents without health coverage. Baucus said, "I don't have a good answer yet to undocumented workers, illegal aliens," adding, "There will still be charity care " (Landers, Dallas Morning News, 5/22).
Baucus said that the bill his committee is working on and that he expects to mark up in mid-June will include "incentives" and possibly requirements for employers to pay for employee health insurance. Baucus mentioned the possibility of including an individual mandate and establishing a health insurance exchange (AP/Las Vegas Sun, 5/21). Baucus also noted that the plan most likely will include a public health insurance option in some form (Tumulty, "Swampland," Time Magazine, 5/21).
"Everything's on the table," Baucus said, warning that "because this is so big, so complex, there are going to be a lot of trade-offs. ... This is just so large" (CQ HealthBeat, 5/21). He said that he is very optimistic about the prospects of bipartisan support for the legislation, placing the odds at between 75% and 80% ("Swampland," Time Magazine, 5/21).
 A podcast and video of the press conference are available online at kff.org. Taxing Employer-Sponsored Health Benefits
Proposals to tax employer-sponsored health benefits to pay for a health care overhaul are gaining support among Democratic lawmakers working on health care reform legislation, the Washington Post reports. During a Senate Finance Committee closed-door session on Wednesday, the proposal "won a surprising degree of acceptance," according to the Post. The White House has expressed opposition to the proposal but also has said that all health reform funding options are still on the table. Republicans included the tax in the health reform plan they released this week (Montgomery, Washington Post, 5/22).
The Senate Finance Committee is considering a number of options on the tax exemption for employer health benefits, including:
- Capping the amount of health benefits that can qualify for an exemption;
- Taxing benefits for higher-income residents;
- A combination of the two previous options, in which tax-exempt benefits are capped only for higher-income residents; and
- Eliminating the exemption and creating a system based on deductions or tax credits (Kaiser Daily Health Policy Report, 5/19).
Sen. John Kerry (D-Mass.) warned that taxing only wealthy families and individuals "doesn't make sense" because it would raise too little money, but "you've got to be very careful how far you go" down in the income threshold, noting that if "you come down too low, you're impacting workers and threatening the employer-based system" ( Washington Post, 5/22). House Ways and Means Committee Chair Charles Rangel (D-N.Y.), who previously has previously said he would not support changing the exemption for employer-sponsored health benefits, on Thursday indicated that his committee is evaluating taxing employer health benefits as a funding source (Edney, CongressDaily, 5/21). Rep. John Larson (D-Conn.), a member of the House Ways and Means Committee, said, "There's a strong sentiment that still exists in the House" against taxing employer-sponsored benefits, but "we understand how important it is to get a package through." An unnamed Ways and Means member said, "Everyone hates it. But where else do you go?" ( Washington Post, 5/22). Democratic Senators Call for Public Plan
Sen. Sherrod Brown (D-Ohio) and 27 Senate co-sponsors on Thursday introduced a resolution (S Res 156) calling for the inclusion of a public health insurance option in any health care reform legislation, Politico reports. The resolution does not mention how the public plan should operate or what form it should take, only that there should be a public option for U.S. residents. According to Politico, the resolution is "the latest effort by a bloc of Democratic senators to influence the closed-door negotiations of the Finance Committee, where the bulk of the bill is being written" (Budoff Brown [1], Politico, 5/21). Begala Issues Health Care Memo
Democratic strategist Paul Begala has issued a memo calling for Democrats to aggressively respond to Republicans' attacks on health reform, Politico reports. In the memo, Begala tells Democrats to "banish from your lexicon the oft-cited statistic that 48 million Americans lack health insurance," adding that while "it is true, it has two flaws: first, it lacks emotion; second it lacks resonance. Every single working American is suffering with the high cost of health care today." Begala states that if Republicans argue Democrats want government to control health care, Democrats should retort that health insurers currently hold that position and that health reform would require insurers "to charge reasonable prices and deliver quality services." The Begala memo comes in response to a recent Republican health strategy memo by GOP consultant Frank Luntz (Budoff Brown [2], Politico, 5/21).
Kaiser Daily Health Policy Report Examines Recent Health Reform Developments
[May 22, 2009]
Summaries of several developments related to health care reform appear below.
- Rising costs without reform: A failure to overhaul the U.S. health care system could result in 66 million U.S. residents being uninsured and individual and family spending on health care increasing by 68% by 2019, according to a recent study prepared by the Urban Institute, CQ HealthBeat reports. The study, funded by the Robert Wood Johnson Foundation, examined three different scenarios that could occur if the U.S. does not reform its health care system. The study assumed that 49 million U.S. residents currently are uninsured, based on 2007 figures adjusted for coverage losses from the recent rise in unemployment. Under the best-case scenario, 53.1 million people would be uninsured in 2019 and individual and family spending would increase by at least 46%. The 66 million uninsured U.S. residents and the 68% increase in health spending were estimates under the worst-case scenario. In addition, inaction on health care reform could nearly double government expenditures as more U.S. residents become eligible for programs such as Medicaid and CHIP, according to the study. According to RWJF, the total costs from uncompensated care also would increase, thus "putting a tremendous strain on health systems, hospitals, providers of clinical care and local municipalities" (Reichard, CQ HealthBeat, 5/21). The study is available online.
- AARP: AARP on Thursday called for health care reform legislation to include provisions to close Medicare Part D's so-called "doughnut hole" coverage gap, CQ HealthBeat reports. In addition, the group said that efforts to lower prescription drug costs should address increased spending on biologics, such as vaccines or blood serums, which often are difficult and costly to produce as generics. AARP said older U.S. residents particularly are affected by the increased spending on biologics because such treatments often are prescribed for conditions such as cancer, arthritis and multiple sclerosis. CQ HealthBeat reports that Congress is expected to take up a bill this year that would accelerate approval for generic biologics through the FDA (CQ HealthBeat, 5/21).
- Insurance market: Liberal advocacy group Health Care for America Now on Wednesday released a report that found that few insurance companies dominate the market in several states and that the concentration of insurers has led to an increase in the cost of premiums, the Raleigh News & Observer reports. According to the report, premiums on average rose by 75% from 2000 to 2007, while personal income rose only by 14% during the same period. The report also profiled marketplace conditions in several states using 2007 data from the American Medical Association. According to the report, Blue Cross and Blue Shield of North Carolina and UnitedHealth Group control 73% of North Carolina's private insurance market (Avery, Raleigh News & Observer, 5/21). In Florida, Blue Cross and Blue Shield of Florida and Aetna control a 45% share, the report found (Quintero, Orlando Sentinel, 5/20). In addition, BCBS and UnitedHealthcare control 68% of Texas' insurance market. According to the Houston Chronicle, the report states that a government-sponsored public plan would not undermine the private insurance market (Ackerman, Houston Chronicle, 5/21). The report is available online.
- Reform forum: Four "political heavyweights" on Wednesday participated in a forum on health care reform at the Georgia World Congress Center as part of a biotechnology conference, the Atlanta Journal-Constitution reports. At the session, former Senate Majority Leader Bill Frist (R-Tenn.) said that a government-sponsored health insurance plan would hamper innovation and competition and lead to tax increases. Karl Rove, former chief adviser to former President George W. Bush, added, "A public plan is a government-run plan. And a government-run plan is bad." However, Howard Dean, former chair of the Democratic National Committee, said he supported a government-sponsored public insurance plan that would not eliminate the private sector. Dean said, "We need a public insurance option to give people a choice." Former Senate Majority Leader Tom Daschle (D-S.D.) said that a public plan would lower health care costs, adding that U.S. residents want Congress to "get something done" on health care and "are very concerned about the implications if we do nothing" (Schneider, Atlanta Journal-Constitution, 5/21).
- Faith-based campaign: Faith-based groups Faithful America and Cover All Families have launched a campaign on Christian radio stations advocating for health care reform, the Wall Street Journal's "Washington Wire" reports. The ads, titled "Abundant Life," feature a voice saying, "All Americans should be able to get the care they need for their families, when they need it. God desires abundant life for all people. It's time we step up, ask our politicians to move the debate forward, so we can get the reform we desperately need." The campaign also urges listeners to contact their congressional representatives about health care reform. The ads are running in seven states -- Arkansas, Colorado, Florida, Indiana, Louisiana, Missouri and Nebraska -- which have "representatives and senators who may well determine the fate of health reform," according to CAF (Mundy, "Washington Wire," Wall Street Journal, 5/21).
Senate Approves Supplemental Spending Bill With Funds for Flu Pandemic
[May 22, 2009]
The Senate on Thursday voted 86-3 to approve a $91.3 billion fiscal year 2009 supplemental war appropriations bill (HR 2346) that includes $1.5 billion for influenza pandemic preparedness, the AP/Detroit Free Press reports (Taylor, AP/Detroit Free Press, 5/21). The House already has approved a $96.7 billion version of the measure (H Res 434) (Sanchez, CongressDaily, 5/22). A conference committee to reconcile the two bills will not meet until after lawmakers return from the Memorial Day recess (Stanton/Dennis, Roll Call, 5/21). Senate Majority Leader Harry Reid (D-Nev.) said, "There are very few things that need to be worked out in conference" before the measure is passed (CongressDaily, 5/22).
Administration News
President Obama Reverses Bush Policy Preventing Consumers From Suing Product Makers in State Courts
[May 22, 2009]
President Obama on Wednesday ordered federal agencies to rescind regulations enacted by former President George W. Bush's administration that protect manufacturers of such products as medical devices from product-liability lawsuits in state court, the Wall Street Journal reports. The decision could affect a wide range of manufacturers and products because the Bush administration "aggressively" encouraged federal agencies to make rules that pre-empt and override state laws, which often meant protecting manufacturers of medical equipment from lawsuits, according to the Journal.
Obama in a two-page memo wrote that federal agencies and departments could claim state law is pre-empted by federal law only when there is a well-defined legal basis. The memo stated that state laws are important because they supplement federal regulations. "State and local governments have frequently protected health, safety and environment more aggressively than has the national government," Obama wrote (Mundy/Kendall, Wall Street Journal, 5/21).
Obama ordered agencies to review regulations from the past decade and look for possible occasions in which the government improperly declared federal pre-emption (Yost, AP/Kansas City Star, 5/20). According to the Journal, business groups oppose the decision (Wall Street Journal, 5/21).
Health Care Marketplace
GM Bankruptcy Plan Would Use Stock Worth 39% of Firm To Fund Half of VEBA Obligation
[May 22, 2009]
General Motors and United Auto Workers on Thursday agreed to a tentative deal that would allow the automaker to use company stock to fund half of its obligation to a retiree health care fund, the Washington Post reports (Cho et al., Washington Post, 5/22). According to the terms of temporary loans granted by the government in 2008, GM must present a plan for restructuring its finances by June 1 or else enter bankruptcy protection (Krisher, AP/Philadelphia Inquirer, 5/22).
UAW in 2007 agreed to establish a voluntary employees' beneficiary association, totaling $35 billion, that would cover health care costs of retired GM workers and their spouses starting in 2010. GM so far has paid about $15 billion into the fund (Kaiser Daily Health Policy Report, 5/15). Under the potential deal, GM would fund its remaining $20 million obligation to the VEBA with $10 billion in cash paid over time. The rest would come in the form of company stock that would give UAW as much as a 39% stake in the restructured firm (Merx/Green, Bloomberg, 5/21). The deal is similar to one at Chrysler, in which UAW agreed to accept 55% of Chrysler's stock in exchange for about $6 billion of the $10.6 billion the automaker owed to the VEBA (AP/Philadelphia Inquirer, 5/22).
Under the GM deal, the union also would get a seat on the company's board (Stoll/Terlep, Wall Street Journal, 5/22). Retirees would lose coverage of dental care and some prescription drugs, according to people with knowledge of the talks (Bloomberg, 5/21).
UAW officials on Tuesday will meet in Detroit to discuss terms of the agreement and are expected to give their approval. The plan would then be presented to the union's 60,000 GM workers for ratification (Wall Street Journal, 5/22).
Coverage & Access
Reducing Medical Residents' Hours Would Cost $2.5B Annually, Study Says
[May 22, 2009]
Implementing proposed reductions in the number of hours medical residents work could cost as much as $2.5 billion annually, according to a recent study published in the New England Journal of Medicine, the Baltimore Sun reports. The study follows an Institute of Medicine report that proposed reducing the maximum hours that residents can work without sleep from 30 to 16, increasing the number of days they must take off and improving their supervision (Desmon, Baltimore Sun, 5/21).
In 2003, the Accreditation Council for Graduate Medical Education reduced the number of hours residents at teaching hospitals could work weekly from more than 100 hours to 80 hours. In the recent study, which was partially funded by IOM, researchers examined post-2003 literature on resident work hours and patient harm and evaluated it against additional labor costs. The authors concluded that the IOM recommendations "would be costly, and their effectiveness is unknown" (Shishkin, Wall Street Journal, 5/21).
Teryl Nuckols, the lead author of the study, said that teaching hospitals would most likely need to hire more residents and experienced physicians to take care of patients, which would likely cost each teaching hospital $3.2 million annually (Baltimore Sun, 5/21). The study was accompanied by an NEJM editorial in which the authors "strongly disagree" with the IOM recommendations, claiming that reducing resident work hours "leads to an increase in the number of handoffs in care, and this increase outweighs the potential benefits of reducing residents' fatigue." The accreditation council said that more research is needed before it decides whether to adopt the IOM recommendations. The council's decision will be announced in February 2010 (Wall Street Journal, 5/21).
 The study is available online. The editorial also is available online.
State Watch
Connecticut House Approves Two Health Insurance Pooling Bills
[May 22, 2009]
The Connecticut House on Wednesday approved two separate measures to expand health insurance pooling in the state, the Hartford Courant reports. The first measure would create a public health insurance pool open to all residents. The pool, intended to compete with rather than replace private insurance, would be based on the existing pool for state workers (Keating, Hartford Courant, 5/21). The bill will create a nine-member board of directors to investigate and recommend a plan to guarantee every resident health insurance. The bill also creates four committees that will work with the board and provide advice on electronic health records, medical homes, clinical care guidelines and preventive care. In addition, three task forces will examine obesity, tobacco use and care provider shortages (Stuart, CT News Junkie, 5/20).
The cost of plan, known as SustiNet, could be a "sticking point" given the state's $8.7 billion budget deficit over the next two years, the Courant reports The state Senate and Gov. Jodi Rell (R) will consider the plan next.
The second measure would allow local governments, small businesses and not-for-profit groups join the state employee insurance plan. The bill would increase the current pool's membership from 200,000 to an estimated 300,000.
Juan Figueroa, a former state legislator and president of the Universal Health Care Foundation of Connecticut, said, "Both of these plans reduce costs and increase choice. The partnership (pooling) bill has features that SustiNet can build on. The two bills fit hand in glove." Democrats said the second bill would utilize economies of scale to lower costs. Steve Fontana (D), co-chair of the State House Insurance and Real Estate Committee, said, "The larger the pool you have, ... you reduce the volatility and the risk associated with that pool."
Opponents say the pooling measure would affect only those who already have coverage. According to House Republican Leader Larry Cafero, "This bill does not solve that problem. If you don't have it now, you're not going to have it because of this" (Keating, Hartford Courant, 5/21).
New Maryland Law Requires Insurers To Provide Incentives for EHR Adoption
[May 22, 2009]
Maryland Gov. Martin O'Malley (D) on Tuesday signed a bill making the state the first to require private insurance companies to offer physicians financial incentives for adopting electronic health records, the Baltimore Sun reports. Starting in 2011, insurers will have to provide physicians who adopt EHRs with increased reimbursements, a single sum payment or in-kind services that have monetary value. According to the Sun, physicians who do not adopt EHR systems by 2015 could face penalties. The bill also requires Maryland to establish a health information exchange that eventually will link all the state's physicians, hospitals, medical laboratories and pharmacies.
Last summer, the Maryland Health Care Commission asked two state physician groups to develop and launch pilot health information exchange programs in an effort to see how a state system should work. Groups wanting to design the statewide system have until June 12 to submit applications to the commission, which will award the contract in August. The seed money for the system will come in part from stimulus funds and from hospitals fees. According to state Health Secretary John Colmers, the network is likely to be gradually phased in with the first elements coming online as early as fall.
Colmers said that he expects "fairly rapid adoption" of the information exchange system, adding that "with the incentives in the stimulus package and in this bill beginning to go into effect in 2011, it will be important for it to be certainly ramped up and ready to operate by then."
O'Malley said, "This is where government and private health care providers can come together to really improve not only the quality of care but also, hopefully, create some cost savings as well." Colmers said, "The goal here in Maryland was to assure that all of the payers pull their oars in the same direction," adding that the promise of EHRs "comes when it's done in a coordinated fashion, across all payers" (Brown/Brewington, Baltimore Sun, 5/19).
Blog Watch
Kaiser Daily Health Policy Report Feature Highlights Recent Blog Entries
[May 22, 2009]
"Blog Watch" offers readers a roundup of health policy-related blog posts.
The blogosphere is buzzing about the GOP "alternative" health reform proposal from Sens. Richard Burr (N.C.), Lamar Alexander (Tenn.) and Tom Coburn (Okla.), and Reps. Devin Nunes (Calif.) and Paul Ryan (Wis.). Known as the Patients' Choice Act (.pdf), it would create state-based private health insurance exchanges and provide U.S. residents tax credits to subsidize coverage premiums.
Yuval Levin of conservative stalwart The Corner calls the plan "the best comprehensive health care proposal Republicans have produced to date, and shows that at least some in the party understand the need to engage the issue with a grasp of the differences between underlying problems (like cost control) and symptoms of those problems (like access to coverage), and with an actual appreciation for economic incentives and pressures." Marguerite Higgins of the Heritage Foundation's The Foundry says the plan "features several important conservative principles for health care reform that would allow free-market solutions to take root in the broken U.S. health care system, and give patients more decision-making power with their health care dollars."
But Michael Cannon of the libertarian Cato@Liberty blog says he is "troubled" by aspects of the plan that are "self-contradictory." He writes, "On the one hand, it lists 'No Tax Increases' as a core concept. Do its authors not know that imposing price controls on health insurance premiums imposes a tax on healthier-than-average consumers? And where do they think the money for 'risk-adjustment' payments will come from? Heaven?"
The New Republic's Jonathan Cohn seems to agree, saying, "The details are pretty unappealing, except where there are none; and the whole thing is presented as the antithesis of big government when, in fact, it too would require at least some government intervention." Overall Cohn thinks the plan indicates good news for Democrats, concluding, "Passage of a bill seems ever more likely, to the point where potential opponents feel they must offer alternatives that embrace some of the same concepts."
The Washington Post's Ezra Klein examines the structure of the plan, calling it "the bastard child of the Massachusetts health reforms and the McCain campaign proposal." He also seems to think it's positive news for reformers, adding, "But it's still a step forward for the Republican Party. It's an admission that individuals can't go it alone. That the state has a large and important regulatory role to play. The business model of insurers is not simply broken but actively cruel. A Republican Party that accepts the principles of this plan is a Republican Party that is much likelier to accept the principles of Obama's eventual plan." He notes that GOP leadership was not involved in the proposal.
Interesting elsewhere:
- Peter Orszag, director of the White House Office of Management and Budget, announced Data.gov, a new Web site that will make "economic, health care, environmental and other government information available on a single Web site." Currently the data are spread among several different sites and formats;
- Health Populi's Jane Sarasohn-Kahn reports that Milliman Medical Index is estimating that health costs for a family of four averages $16,771 in 2009;
- Harold Luft on the Health Affairs Blog offers a proposal to work around the shortcomings he sees in public plan options and a national insurance exchange. Health Affairs also posted an interview with Harvard health economist (and Obama adviser) David Cutler on health care costs and the recent agreement by industry groups to try to rein them in;
- The Center for American Progress Action Fund has a new paper that cites the CBO calculations to say that without health reform, premiums could rise 70% (after inflation) in the next nine years;
- As part of a series meant to highlight "excluded voices" on health reform, Columbia Journalism Review's Trudy Lieberman interviews professor Jonathan Oberlander about health information technology;
- John R. Graham of the State Policy Network Blog asks, "Do small businesses need a health insurance exchange" and answers it by saying it "wouldn't hurt," but wouldn't resolve the problem of small businesses getting hit with big premium increases; and
- Bob Laszewski says labor unions' ads targeting Sen. Ron Wyden's (D-Ore.) proposal to tax employer health benefits are the first "Harry and Louise" ads of this reform cycle and are akin to "a dead horse head in his bed with the clear message he won't be the last if he and his colleagues don't tow the line."
Opinion
Blue Cross and Blue Shield of North Carolina 'Double-Crossing' Obama With Attack Ads, Krugman Says
[May 22, 2009]
"Less than two weeks" after health industry interest groups pledged to work with President Obama on health reform, "the double-crossing is already well under way" as Blue Cross and Blue Shield of North Carolina prepares a series of ads criticizing a public plan option that might be included in health reform legislation, New York Times columnist Paul Krugman writes. Krugman says, "The medical-industrial complex has called the president's bluff," adding, "It polished its image by showing up ... and promising cooperation, then promptly went back to doing all it can to block real change." According to Krugman, "The insurers and the drug companies are, in effect, betting that Obama will be afraid to call them out on their duplicity." He concludes, "It's up to Obama to prove them wrong" (Krugman, New York Times, 5/22).
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