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Anatomy of Healthcare Reform


Charles Boersig

More to Agenda than Comprehensive Bills

Comprehensive legislation has been the centerpiece of the healthcare debate, but substantial portions of the reform agenda were enacted months before President Obama began calling for a final vote. Implementation of healthcare legislation packaged in smaller bills, such as the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), or tied to larger measures like the American Recovery and Reinvestment Act of 2009 (ARRA), has expanded the federal government’s role in funding health insurance as well as in medical research and investments in health information technology (IT). Facing consistent public opposition to their handling of comprehensive legislation, lawmakers have sharpened their criticisms of health insurers while gathering the votes to pass a Senate bill that could be amended later through the reconciliation process.

Days after holding a healthcare  summit that included Republican and Democrat lawmakers, President Obama declared on March 3 that the reform debate is over. In a speech that criticized “the worst practices of insurance companies,” the president said, “every idea has been put on the table. Every argument has been made. Everything there is to say about healthcare has been said—and just about everybody has said it. So now is the time to make a decision about how to finally reform healthcare so that it works, not just for the insurance companies, but for America’s families and America’s businesses.”

Following the healthcare summit, poll results released by Rassmussen Reports on March 8 had 42% of respondents in favor of the legislative effort and 53% opposed, including 20% who strongly favor the plan and 41% who strongly oppose. Rassmussen noted that support was up to 44% immediately following the summit, but has otherwise remained between 38% and 42% since Thanksgiving. On March 5, Rassmussen reported that 55% of US voters would prefer to see Congress scrap the original plan and start all over again.

Rather than proposing a fresh start or the sort of incremental reforms that his opponents have suggested, Mr. Obama made the case for quickly enacting comprehensive new legislation including rate controls, individual mandates, and universal access. “So the fact is, health reform only works if you take care of all of these problems at once,” he said.

Rejecting calls to scrap current legislation and start the reform process from scratch, Mr. Obama pressed Congress for a vote within weeks. “The insurance companies aren’t starting over. They’re continuing to raise premiums and deny coverage as we speak…So, no matter which approach you favor, I believe the United States Congress owes the American people a final vote on healthcare reform.”

In response to Mr. Obama’s remarks, Karen Ignagni, president and CEO of America’s Health Insurance Plans (AHIP), defended the role of insurers. “Our community includes hundreds of thousands of dedicated, conscientious Americans from all walks of life who are working hard to provide health insurance coverage to more than 200 million Americans,” Ms. Ignagni said. “They do not deserve to be vilified for the work they do every day.”

Despite the president’s all-or-nothing characterization of the reform movement, more modest legislation enacted since he took office has significantly advanced healthcare reformers’ agenda. Stepwise reforms have included the reauthorization and expansion of the Children’s Health Insurance Program (CHIP) via CHIPRA as well as funding of research, infrastructure, and health benefits through ARRA. More recently, reformers have taken stopgap measures to forestall a physician pay cut mandated by Medicare’s Sustainable Growth Rate (SGR) formula.

Originally created in 1997, CHIP is a state and federal partnership that provides low-cost health insurance coverage for children in families who earn too much income to qualify for Medicaid but cannot afford to purchase private health insurance coverage. On February 4, 2009, President Obama signed CHIPRA, which provided funding to renew and expand CHIP coverage.

Enactment of CHIPRA preserved health coverage for millions of children already relying on CHIP and allocated resources for states to offer CHIP coverage to millions of additional children. CHIP served >7.3 million children in fiscal year 2008. The Congressional Budget Office estimates that by 2013 states will be providing health insurance coverage to an additional 4 million children.

In addition to placing more children in state-funded health plans, CHIPRA set aside funds for research that will further shape the future of children’s healthcare. In late February, Kathleen Sebelius, secretary of the US Department of Health and Human Services (HHS), announced grants of $100 million in federal funds awarded to 10 states as part of CHIPRA. The funds will be awarded over a 5-year period. The federal grants are designed to help establish a national quality system for children’s healthcare through Medicaid and CHIP.

At the signing ceremony for CHIPRA in February 2009, Mr. Obama characterized the bill as merely a first step and announced his intention to include additional measures in ARRA, also known as the Stimulus Bill. “Providing coverage to 11 million children through CHIP is a down payment on my commitment to cover every single American. And it is just one component of a much broader effort to finally bring our healthcare system into the twenty-first century,” he explained. “That’s where the economic recovery and reinvestment plan that is now before Congress comes in.”

Stimulus Bill
With funds provided through ARRA, national organizations are assuming a larger role in the healthcare system through establishment of a federal comparative effectiveness research (CER) program, funding and standardization of health IT, and prevention initiatives. The legislation also extended health insurance subsidies for unemployed workers under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

ARRA contains $1.1 billion for CER, which compares treatments and strategies to improve health. The bill created the Federal Coordinating Council for CER to coordinate efforts across the federal government. The council will specifically make recommendations for the $400 million allocated to the Office of the Secretary for CER. In addition, ARRA provides $300 million for the Agency for Healthcare Research and Quality, $400 million for the National Institutes of Health, and $400 million for the Office of the Secretary of HHS.

ARRA also established programs to provide incentive payments to eligible professionals and eligible hospitals participating in Medicare and Medicaid that adopt and make meaningful use of certified electronic health record (EHR) technology, as defined by the Centers for Medicare & Medicaid Services. Medicaid programs in about half of the states have qualified to receive federal matching funds to implement the EHR incentive program established by ARRA and to encourage development and implementation of health IT.

ARRA provides a 90% federal match for state planning activities to administer the incentive payments to Medicaid providers, to ensure their proper payments through audits, and to participate in statewide efforts to promote interoperability and meaningful use of EHRs. Incentive payments may begin as soon as October 2010 to eligible hospitals. Incentive payments to other eligible providers may begin in January 2011.

Another $650 million of funding provided through ARRA will go to a Prevention and Wellness Fund. Using these funds, HHS has developed a new initiative, called Communities Putting Prevention to Work, which is intended to reduce risk factors for chronic disease and promote wellness in both children and adults.

ARRA also provided for premium reductions for health benefits under COBRA. On March 10, the Senate approved a bill further extending these COBRA benefits. Under ARRA, eligible individuals pay  35% of their COBRA premiums and the remaining 65% of premiums is reimbursed to the insurance coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event, such as the involuntary termination of a covered employee’s employment.

Medicare Rate Cuts
Another piece of the reform puzzle is a permanent fix to the SGR formula that calls for annual reductions in physician reimbursement for treatment of Medicare patients. On March 10, the Senate passed a bill delaying a scheduled 21.2% rate cut Until October 1.

In a letter to the US Senate, J. James Rohack, MD, president of the American Medical Association, called on the senators to capitalize on the push for comprehensive legislation as an opportunity to permanently repeal the Medicare physician payment formula that Congress has tinkered with for years.

“It is time for Congress to finally stop this growing threat to Medicare and TRICARE and move immediately to repeal the SGR formula, replacing it with a system that ensures payments keep pace with the rising costs of the care Medicare beneficiaries and military families need and deserve,” Dr. Rohack said.

At press time Democrats were trying to secure enough votes to pass a comprehensive bill, and the president was hoping to sign it before Easter. In a March 8 appearance at Arcadia University in Glenside, Pennsylvania, the president asked lawmakers to hold a final vote on their comprehensive legislation. “The United States Congress owes the American people a final, up or down vote on healthcare,” he said. “It’s time to make a decision. The time for talk is over.”—Charles Boersig


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