Healthcare Reform Moves to Center Stage

Healthcare Reform Moves to Center Stage

Healthcare reform took center stage in Washington last month, with President Obama convening a White House “healthcare summit” and proposing a budget that would set aside $634 billion over ten years as a “down payment” on comprehensive reform that covers the uninsured and reins in healthcare spending.

The previous month, the President signed into law both a $787 billion economic stimulus proposal that included significant funding for healthcare, and legislation expanding the State Children’s Health Insurance Program (SCHIP). The legislation provides an additional $32.8 billion for SCHIP, funded through an increase in the federal tobacco tax, that will enable the program to boost the number of children it covers from 7 to 11 million.

President Obama also nominated a new Secretary of the Department of Health and Human Services (DHHS) and named a “health reform czar” and chief of the Health Resources and Services Administration (HRSA).

Opening the March healthcare summit, President Obama warned “special interests” that they wouldn’t succeed in blocking needed reform as they had in the past. He also indicated that he would be flexible and open to reform proposals that differed from those he set forth while a candidate.

“During the campaign, I put forward a plan for healthcare reform,” he told those gathered for the conference. “I thought it was an excellent plan. But I don't presume that it was a perfect plan or that it was the best possible plan.”

The more than 150 participants in the half-day healthcare summit included members of Congress, healthcare professionals, and leaders of business groups, insurance companies, hospitals, labor unions, and consumer organizations, with a wide variety of viewpoints.

Several senior Republican senators attending the summit warned the President that many in their party would strongly oppose any effort to cover the uninsured by creating a public health insurance program that would compete with private programs. A public plan, they and other critics argue, would drive private plans out of the market. Though Mr. Obama proposed creating a public health insurance plan while campaigning, he indicated during the summit that he would consider alternative strategies that didn’t include a public plan.

While campaigning, Mr. Obama also proposed mandating coverage for children, but he stopped short of calling for mandated coverage for adults as well. A number of speakers at the summit—including both Democratic and Republican lawmakers, business leaders, and the president of the Blue Cross and Blue Shield Association—called for mandated coverage for all.

Neither during the summit nor while proposing his budget did President Obama lay out a detailed reform plan indicating who would be covered and how. Instead, he called on Congress to deliver a healthcare reform plan—this year.

A number of lawmakers, including Sen. Max Baucus (D-MT), are at work on healthcare reform proposals. Sen. Baucus told reporters in mid-March, when this issue of Annals of Long-Term Care went to press, that he planned to introduce a bipartisan reform bill with Sen. Charles E. Grassley (R-IA) that would include both “public and private solutions.” While Sen. Baucus supports universal coverage, he does not advocate a single-payer health system.

“Enacting comprehensive healthcare reform…is my top priority,” Sen. Baucus said, adding that he wanted to “make sure it passes this year” and is phased in over the next two or three years.

The $634 billion reserve fund that Mr. Obama's budget would establish would cover roughly half of what it's expected to cost to accomplish the President's goals of ensuring that all Americans have healthcare coverage and improving care quality and cost-effectiveness.

While President Obama’s budget plan doesn’t spell out how to accomplish healthcare reform, it does include assumptions and proposals that would shape and reshape care. The spending plan assumes, for example, that Congress will block the 21% cut in Medicare payments to physicians that Medicare's flawed Sustainable Growth Rate (SGR) formula mandates for next year. The SGR formula also mandates further cuts of about 5% each of the next several years. AGS and other groups have advocated successfully for Congressional action to block the cuts over the last several years and have called for a long-term fix.

Some of the proposals in the President’s budget plan are quite controversial. One would cut payments to home health agencies by $37 billion over the next ten years. Critics argue that the proposal will force the majority of home health agencies into the red, significantly limiting frail older adults’ access to home healthcare services. In his budget, Mr. Obama also proposes cutting Medicare payments to hospitals that readmit a large proportion of their patients within 30 days of discharge.

Roughly half of the funds for the budget’s $634 billion reserve fund would come from tax increases for Americans in the top tax bracket. Another third would come from eliminating subsidies to private, comprehensive Medicare Advantage plans, which serve roughly one in four beneficiaries. Additional proposals would require wealthier Medicare beneficiaries to pay higher premiums for drug coverage, and for drug companies to boost the rebate they offer on medications sold to Medicaid from 15% to 21%.

The President’s stimulus plan calls for both increased spending and tax cuts. It significantly boosts state aid and outlays for education, infrastructure, energy conservation, and healthcare. Among other things, the package includes $19 billion to encourage the broader use of health information technology such as electronic medical records and electronic prescribing. It will also boost funding for the National Institutes of Health by 34%, from $29 billion to $39 billion.

Kansas Democrat Gov. Kathleen Sebelius, Mr. Obama’s nominee for DHHS Secretary, was preparing for the Congressional confirmation process in mid-March. A former state insurance commissioner, she has considerable experience in healthcare matters. As a second-term Democratic governor in a “red” state, she also has a reputation for crossing political lines—but not as successfully with healthcare issues as with others. Republicans in the state legislature blocked her efforts to raise cigarette taxes to fund healthcare for the poor. Her efforts to introduce universal health coverage in Kansas also ran aground.

Nancy-Ann DeParle, Mr. Obama's pick for chief of the White House Office for Health Reform, also has extensive experience in healthcare. She was commissioner of the Tennessee Department of Human Services. In the Clinton Administration, she headed the Health Care Financing Administration, as the Centers for Medicare & Medicaid Services were known at the time. In addition, she has experience working with and sitting on the boards of large healthcare companies, which some Washington insiders view as an asset, and others question.

The President appointed Dr. Mary Wakefield to be Administrator of the HRSA in late February. A nurse who most recently directed the Center for Rural Health at the University of North Dakota School of Medicine and Health Sciences, Dr. Wakefield has expertise in rural healthcare, quality and patient safety, Medicare payment policy, and workforce issues. HRSA-administered Title VII Geriatrics Health Professions and Title VIII Nursing Workforce Development programs are integral to efforts to address growing shortages of healthcare professionals trained to meet older patients' unique healthcare needs.

In other healthcare news:
Congress approved and President Obama signed a $410 billion spending package in mid-March that will fund the DHHS and all other federal departments and agencies except those related to defense and homeland security through the September 30 close of the fiscal year. Defense and homeland security spending was approved last fall.

The spending package increases funding for healthcare. It allocates $938 million more for the National Institutes of Health, for a total of $30.3 billion, and nearly $335 million more for the Food and Drug Administration. The plan also boosts funding for mass transit, public housing, Head Start, and the WIC nutrition program for pregnant women, infants and children, among others.

Congressional approval of the spending package was six months overdue, having run afoul of partisan divisions at the end of George W. Bush’s presidency and stiff opposition from most Republican and some Democratic lawmakers opposed, among other things, to the many “earmarks” in the plan. The plan includes thousands of controversial “earmarks” or “pork” inserted by members of both parties.

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President Obama signed an executive directive lifting a ban on federal funding for stem cell research in early March. The ban limited the use of taxpayer money to research on a very small number of stem cell lines. The Obama directive reverses that, but only Congress can lift a separate legislative ban that will otherwise continue to block the use of federal funds for the development of new stem cell lines.