Showing posts with label Congressional Agenda. Show all posts
Showing posts with label Congressional Agenda. Show all posts

Wednesday, November 5, 2008

There is Now a Real Bipartisan Opportunity in Health Care

President-Elect Obama, and about every candidate for Congress, has said he wants to change the partisan tone in Washington. Obama, the Democratic Congressional leadership, and the Republicans have a terrific opportunity to do just that on health care when they all come to Washington early next year.

As I posted earlier, I do not believe there is any chance we can see the enactment of the comprehensive Obama health plan in the near term.

But there are a number of important steps that can be taken next year and each of them have enjoyed strong bipartisan support during the past year:
  1. Reauthorizing the State Children's Health Insurance Plan (SCHIP) and increasing the number of kids covered from six million to ten million. The Congress passed exactly that kind of reauthorization twice by strong bipartisan margins only to come a few votes short of being able to override two Bush vetoes of the bill. Those attempts met pay-as-you-go requirements by boosting the cigarette tax to pay for it.
  2. Rearranging Medicare spending by equalizing the payments private Medicare plans get with the payments the traditional Medicare plan receives for the same seniors. The Medicare physicians face a 21% fee cut on January 1, 2010 and there are other serious cost issues for Medicare. In July, the Congress took the first step toward payment equalization with a veto proof margin of 70-26 in the Senate and 383-41 in the House. The really hard part here is crafting a new Medicare physician payment system that is desperately needed but the first step, where to get the money, has strong bipartisan support.
  3. John McCain and Barack Obama had a number of similar and relatively non-controversial cost containment ideas in their health plans which would cost the federal government little or nothing. These similar proposals included the expansion of health information technology and a patient medical record; improving transparency about health care quality and costs including prices, errors, staffing ratios, infection rates, and disparities in care and costs; wellness initiatives including an emphasis on healthy lifestyles; development of best practice standards, requirements for disease management programs; requiring effectiveness reviews for procedures, devices, and drugs; and requiring providers to collect and report data to ensure standards for health quality are followed.
  4. There is bipartisan support for assisting small business in providing and paying for health insurance. In 1999, 56% of employers with 3-9 workers provided health insurance to their workers. By 2007, that had dropped to 45%. By contrast, employers with more than 200 workers provide health insurance 99% of the time. The one place employer-provided health insurance is melting away is in the small employer area. A modest bill to assist the small employer enjoys support among both Republicans and Democrats.
A big $100 billion comprehensive health care reform plan like the Obama health plan is not realistic in these times of financial crisis.

But, there is already bipartisan support for a children's health insurance (SCHIP) extension and the means to pay for it, reform of Medicare provider payments and the means to pay for that, a list of commonly agreed to cost containment initiatives that would cost the government little or nothing, and bipartisan support for help to the small employer to offer health insurance.

To be sure these steps would only make a dent in the number of those uninsured and these bipartisan cost containment items will only help our cost problem around the edges.

But all of these bipartisan steps would be progress, are doable, and are affordable.

President-Elect Obama and the Democratic leadership can do what the last two Presidents did--promise bipartisanship and then quickly employ the same old partisanship out of the mistaken belief they had the majorities in Congress that would enable them to steamroll the opposition. That mistake led to the 1994 Republican takeover of the Congress in the first case and two straight election defeats, in 2006 and 2008, in the second.

President-Elect Obama, the Democratic leadership, and the Republicans have the road map at hand to truly show a bipartisan commitment to health care change and progress. They could actually break the gridlock on health care and make some modest progress.

Will they take the road less traveled or just give us more of the same?

The Morning After: Obama and the Dems Win Big--What It Means For Health Care

258 House and 57 Senate Democrats make it almost certain that major health reform will be passed. Right?

Actually, that was the number of Democrats Bill Clinton started off with in 1993 and we know what happened to health care reform in that Congress.

With similar Democratic majorities, I do not expect a major health care reform bill like the one President-Elect Barack Obama called for during the campaign--in 2009 or 2010.

I do expect a number of important health bills including the renewal of the State Children's Health Insurance Plan (SCHIP) and a major Medicare bill.

Here are the reasons why we could have a big health care reform bill in 2009:
  1. Obama and the Democrats called for health reform during the campaign and many voters expect them to follow through.
  2. Senator Kennedy has already begun a significant bipartisan effort and many in the Congress want to see the Senator succeed in what could well be his last effort toward a career-long goal.
  3. The health care system continues at unsustainable cost levels--the average family cost of employer-provided health insurance reached $12,800 this year.
  4. There are 45 million uninsured.
Here are the reasons why, in spite of all of our health care problems, I don't believe we will have a big comprehensive health care reform bill in 2009 or 2010:
  1. There is no consensus in the Congress or the country on what a comprehensive health care bill would look like.
  2. Our people don't want health reform badly enough to force the Congress to stand up to the powerful stakeholders and make them do it.
  3. We don't have the money.
There is no consensus.
Barack Obama did win a big victory. He did promise health care reform. But he won with slightly more than 50% of the vote and John McCain's voters gave him close to 50% of the vote. The country remains split over the degree to which government should be involved in our health care system and that is reflected in the Congress--even after the Democratic victory yesterday.

In the House, the Democrats will enjoy a big majority. However, last session we had 49 "Blue Dog" Democrats and will have at least that many this time. Without "Blue Dog" support, the Democrats will not have a majority on any health care bill. No big health care reform can pass without the support of these fiscally conservative Democrats who are pledged to a pay-as-you-go policy--you can't spend the money unless you either raise taxes or cut spending someplace else.

In the Senate, it appears the Democrats should have 57 or 58 seats in January. But Republicans can stop a big Democratic health care bill with only 41 votes and they will likely have 42 or 43. Forty-three is exactly the number of seats Bob Dole had when he stopped the Clinton Health Plan in 1994.

Any big health care bill will have lots of reasons for any number of powerful special interests to try to stop it. Or, a big bill's authors could do what they did in Massachusetts--pay everyone off. The problem is if you give insurers, doctors, hospitals, drug companies, and all the others what they want to get them onside, you will create an enormously expensive bill and create opposition on that front alone. That's why the California effort crashed earlier this year when that bill's total costs became clear.

We are simply not at a place where any of us can outline a health care bill that clearly has consensus support and you don't do something this big unless you have a clear consensus.

Our people don't want it badly enough.
We really do have a democracy. For all the things you hear about the "special interests controlling Washington," the fact is that if there is a huge outcry from voters the Congress will respond. But there is no huge outcry from voters over health care.

The big issue in this election leading to Obama's big victory was the financial meltdown and the economy--not health care.

Support for health care reform among voters is soft. Health care had consistently been the number three issue (behind Iraq and the economy) in the Kaiser Family Foundation tracking poll until gas prices spiked this summer. It then fell to fourth behind the price at the pump. In August, 22% of those polled thought paying for health care was a serious problem for them--but 36% said paying for gas was a serious problem. After the financial meltdown, in October only 12% thought paying for health care was a serious problem.

Health care costs $12,800 a year for a good family plan and when gas went to $4, the cost of gas was more important!

Health care is a chronic issue for the voter but support for big change is not deep-seated.
It is not deep-seated because most people have very good health insurance that is largely paid for by someone else. Lake Research reports that 92% of those who voted last year had health insurance--82% had everyone covered in their household. For the vast majority, health insurance comes from the workplace where someone else pays for it.

For all the issues of the uninsured and health insurance costs, the vast majority of voters have really good health insurance and their employer still pays for the largest share of it. So, it's no surprise when $4 gas is a bigger issue than $12,800 health insurance. It should also be no surprise when next year voter pressure for the Congress to do anything big and controversial will be tepid.

As long as the employer community is willing to subsidize our incredibly high health care costs for those who vote don't look for anyone to be marching on Washington to fix our health care system.

We don't have the money.
Passing an Obama-like health care reform plan will easily cost $100 billion a year to implement.

Two years ago the budget deficit was $162 billion. Last year it was $455 billion. In this fiscal year, it will be at least $1 trillion! The deficit was going to be $550 billion before it became necessary to book $250 billion of the bailout this year. It is expected the economic deterioration will create an additional $100 billion in deficit, and the Congress is getting ready to pass another stimulus bill costing at least $100 billion. That totals $1 trillion. Add to that the cost of the Iraq war, a bigger stimulus bill, any more deterioration, and $1 trillion is going to look good.

Add to that Obama's preeminent campaign promise--he will cut taxes for all families making less than $200,000 a year. He can't avoid this one. He intends to raise taxes for those making over $250,000 but just keeping the Bush tax cuts (which expire in 2010) for those making less than $250,000 a year and then cutting taxes further for those under $200,000 will have a big cost. Keeping that promise at a time there are already huge deficits will trump other spending--like health care.

With 43 Senate Republicans and at least 49 "Blue Dog" fiscally conservative House Democrats and pay-as-you-go health care reform looks pretty unrealistic.

And watch Massachusetts. That health reform plan was passed by giving all the players what they wanted--hospitals, docs, insurers. It was passed with virtually no cost containment. Coming up on its third year this summer, just as any federal health care legislation would be on the table, those chickens are going to come home to roost.

What will happen in 2009?
I expect the new President and Congress to keep their health care promise by starting incrementally to insure more Americans. They can't afford, or would be able, to do it all so they will make a down payment.

There are a number of unavoidable health care issues for the next Congress:
  • The reauthorization of SCHIP, which must be done by April. Last year the Congress approved a $35 billion expansion that would have increased the number of kids covered from 6 million to 10 million. President Bush vetoed the bipartisan expansion twice. Obama will sign it and it could well involve a big cigarette tax to meet pay-as-you-go demands.
  • Physicians are scheduled to get an automatic 21% Medicare fee cut on January 1, 2010. The Congress has fixed this Sustainable Growth Rate problem seven times before. The last time was in July when they fixed it for just 18 months. While we desperately need physician payment reform, we won't likely have the votes to do more than another temporary fix because the doctors don't agree among themselves how to reform the payment system.
  • With pay-as-you-go so important an issue there is one place, other than a cigarette tax, where the Congress can find the money for health care--private Medicare. Pit the kids health program and the big Medicare fee cut against the cigarette companies and Medicare HMOs and, in the new Congress and White House, there is no competition--tobacco gets taxed more and the HMOs get cut.
  • But even the extra HMO payments and a cigarette tax aren't large enough to both expand SCHIP to 10 million kids, fix the doctor payment problem, and pay for Medicare as it is. There will have to be more Medicare cuts--hospitals, nursing homes, durable medical equipment...Look for a big provider food fight over who gets what.
There are also a number of things the Congress can do that won't cost the government much or any money--health information technology standards and requirements, transparency in provider pricing, health outcomes research, and others.

If there is any money left, there have been bipartisan efforts to help small business owners provide health insurance. This is the one area where we are seeing significant coverage erosion.

Expanding SCHIP, dealing with Medicare payments, adding on things like health information technology, and maybe doing something for small business would give the new President and the Democratic Congress bragging rights on health care if not comprehensive reform.

In the end, Obama and the Democrats can accomplish a fairly substantial health package without doing a big comprehensive Obama health plan and that is what I expect.

Thursday, May 1, 2008

There Won't Be Any Health Care Reform Without Physician Payment Reform and There Won't Be Any Physician Payment Reform Unless the Docs Lead The Way

Physicians are facing a 10% Medicare fee cut on July 1st, a total of 15% in cuts on January 1, 2009, a cumulative total of 20% on January 1, 2010, and more each year thereafter.

This spring the Senate Finance Committee is trying to solve the problem. In the short term, the idea is to reach out to future years, when they are betting the Congress would finally fundamentally reform the Medicare physician payment system, and pull those savings back to today in order to stave off the near term cuts. That idea has been referred to as "balloon financing."

In the wake of the subprime fiasco, how any U.S. Senators can come up with so thoroughly dumb an idea is beyond me. At the heart of my disbelief is their notion that the Congress is going to reform the Medicare physician fee schedule a year or two down the line. This problem has been accumulating for years and they have avoided facing it year after year--but don't worry they'll do it next year and be able to make this "balloon payment." And the Congress has refered to the "moral hazard" in subprime lending!

I am coming to the conclusion that it will have to be the docs that break the logjam in health care reform. Please don't misunderstand me, I do not mean to say it is the docs whose fault it is we can't agree on a way to fix the U.S health care system. But fixing physician fees problem may be necessary before any other reform can move forward.

The Medicare physician fee schedule problem has been festering for years. And, what Medicare pays is the basis for what physicians are paid in the private sector--what health plans pay physicians is commonly tied to a percentage of the Medicare fee schedule.

When the Congress created the Medicare Sustainable Growth Rate Formula it was their intention that physician Medicare costs would be controlled. The idea was simple: If doctor costs rise faster than an affordable level, we'll just cut their fees next year to compensate. The hope was that would create an incentive for docs to contain their costs and we wouldn't reward unaffordable Medicare cost trends. Any chance that idea would work, which wasn't much, went by the way when the Congress, year after year, said "never mind" and gave the powerful doctor lobby an increase anyway.

The problem now is that we're out of money. With the Democrats now requiring offsets to any new spending and Medicare about to welcome millions of baby boomers, something has to give in order to keep the docs happy.

About everyone agrees that the Medicare physician payment system is long overdue for an overhaul. So, Senate Finance Committee Chair Max Baucus (D-MT) is now saying we need to just fix the mess and stop dodging the issue--a couple of years from now.

One of the biggest problems in physician payment--first in Medicare and therefore de facto in the rest of the market-- is that the balance between primary and family care on the one end, and specialty care on the other, is out of balance. The primary care guys are hurting and we are on our way to a serious shortage there while the specialties are doing much better and all the new docs are heading for the better money.

The Congress is not going to impose a "solution" to the Medicare physician fee problem without the various medical specialties buying into it. The only thing all the docs can agree on right now is that none of them should get any kind of cut. Congress is afraid of the docs. The doctors have a great lobby--better than hospitals and insurers--and have a knack for manipulating the patient/voter lobby to their benefit.

The fix has to be bottom up--not top down. This physician fee problem is not going to be fixed until the docs--that is the various specialty groups--get together and figure it out. There isn't a lot of chance that will happen anytime soon either.

But until that happens, there will be no Congressional fix. The docs also know this. That is why it will be the docs that block the "balloon" idea. They know that is a slippery slide to an even bigger payment hole.

That is also why there will be big Medicare Advantage payment cuts in 2009. The docs truly need the money, they have the best lobby, the Congress is not going to fix the physician fee problem anytime soon and the "balloon" idea is full of hot air.

And, just as no Medicare physician fee fix is possible without physician payment reform, no big health reform plan can take place either. It isn't that it's the docs fault health care reform can't take place as much as it is they have to be the first of the tough hurdles we have to cross before it can happen. How can any budget scoring of a health reform plan take place without a sustainable physician fee structure?

So far the work between the medical specialties that has to occur hasn't even begun. The AMA itself is hamstrung by what amounts to a low intensity civil war within the ranks between the physician specialties over how to divide the loot.

It will take some key players from the various powerful physician specialties to see an imperative to settle this, and do it, before any real progress can be made.

The sooner the better.

Thursday, April 17, 2008

Provider Payment "Food Fight"

For some time I have been saying that we are about to have a "food fight" between health care providers over who will sustain Medicare payment cuts--HMOs, docs, hospitals, nursing homes, durable medical equipment, and others.

But even I was surprised by a recent email from the AMA that included this connection between provider payments and food:
“While it’s unusual to think of farmers and hospitals together, the farm bill conference report has thrown them together at the expense of America’s patients. Opponents of physician-owned specialty hospitals are trying to slip a provision to ban specialty hospitals into the farm bill conference report, well after the bill has been passed by both the House and Senate."
Get ready for more intramural fights between those who benefit from Medicare and Medicaid. State Medicaid budgets are under pressure as state revenue projections come up short while the Congress needs to find money in the Medicare budget to fix short term problems like the upcoming physician fee cut and longer-term Medicare solvency problems.

Coming up soon will be a big fight over whether Medicare Advantage payments should be cut to pay for a physician fee fix. Maybe even bigger will be the fight over just how the Medicare physician fee schedule will need to be permanently fixed. That fight will happen between the physician specialties--particularly over how primary care payments will get fixed and what role the better paid physician specialties play in that solution.

More on Medicare provider cuts:
Bush Budget Dead On Arrival But It Underscores the Trouble With Entitlements and The Choices That Must Be Made

Tuesday, February 5, 2008

Bush Budget Dead On Arrival But It Underscores the Trouble With Entitlements and The Choices That Must Be Made

President Bush is calling for $560 billion in cuts from Medicare over the next decade.

He would make these cuts by reducing the payments doctors and hospitals would have received.

What is amazing about the Bush budget numbers is that the administration is only trying to cut Medicare's annual growth rate from 7% to 5%. At one level, that ought to be easy. After all we aren't talking about reductions in existing payments--just limiting the increase to 5% instead of 7%.

What's a couple of points? In Medicare it is life and death to the bottom line.

Just that two point adjustment will create an incredible political fight in Washington, DC among the health care special interests.

Bush has made a choice here--cut the hospitals and the docs and leave the health insurance company payments for private Medicare programs worth $150 billion over ten years intact.

The Congressional Budget Office (CBO) has said that Medicare's payments to the private HMOs are 13% greater than the traditional government-run Medicare plan gets for the same seniors--the difference is 17% of the Private Fee-For-Service (PFFS) version of the program.

The hospitals and the doctors can be expected to argue that the guys getting the over payments (the insurers) are the ones that need to be on the chopping block. After all, they argue, if private Medicare plans are supposed to be the way to use the market to make Medicare more efficient, why do they need more money? Shouldn't they need less money?

Meantime, the Medicare physicians are already facing an automatic 10% fee cut on July 1 and another 5% cut on January 1. Hospitals regularly point to their Medicare payments as loss leaders needing to be offset by higher private insurance payments.

The Bush budget may be dead on arrival in his "lame duck" year but it does point out the challenges and the choices.

This President has said he will veto any cuts to the private Medicare programs and certainly proved he would in last December's budget battle.

But this President has less than a year to go. The Congress can just keep the budget debate going past inauguration day and look forward to a new President--Democrat or Republican--that they hope is more willing to deal.

The problem is we don't so much need another deal as we need a fundamental restructuring of Medicare if we are going to keep the program solvent in the coming years. The way the program pays providers--hospitals, doctors, insurers, and everyone else--it is not sustainable.

It is the sustainability of Medicare that policymakers need to focus on--not who wins the next battle at the trough.

Tuesday, January 29, 2008

What President Bush Said in His 2008 State Of The Union Address About Health Care

See the prior post reviewing his 2007 speech. You won't be able to tell the difference between this year and last.

President Bush's 2008 health care record will match his 2007 results--nothing was or will be accomplished.

It is not surprising that a President in his last year would not launch any new health care initiatives. He also barely mentioned the need to deal with our giant entitlement programs--including Medicare--in last night's State of the Union Address.

The President already has some big health care accomplishments to point to--albeit controversial ones. He dramatically expanded the old Medical Savings Accounts (MSAs) into today's Health Savings Accounts (HSAs), passed the Medicare Part D drug program that covers millions of seniors, and greatly expanded private Medicare plans.

And there are millions more uninsured than there were in January 2001. Health care costs have doubled since 2000. The President accomplished none of his proposals to deal with either in spite of having a Republican Congress for six of his years in office. Critics point to the Part D program adding $8 trillion to the long-term unfunded Medicare liability.

This year, the Congress still faces having to reauthorize the State Children's Health Insurance Program (SCHIP) before March 2009, when the current temporary extension expires, and again dealing with a broken Medicare physician fee system that will cut doc reimbursement by 10% this July and another 5% in January 2009. It is clear that this President is not going to engage in any serious way in working with the Congress to deal with these issues.

Democrats, and even some Republicans, would just as well put all the big decisions off until early 2009 when they hope a new Congress and a new President--Democrat or Republican--will be more interested in results.

Voters look for the next President and the next Congress to make a major effort to reform America's health care system.

Republicans may look back at those six years when they had the White House and both houses of Congress and wonder why they squandered an opportunity.

What President Bush Said in His 2007 State Of The Union Address About Health Care

Here is what President Bush had to say about health care in his January 2007 State of the Union Address:
A future of hope and opportunity requires that all our citizens have affordable and available health care. When it comes to health care, government has an obligation to care for the elderly, the disabled, and poor children. We will meet those responsibilities. For all other Americans, private health insurance is the best way to meet their needs. But many Americans cannot afford a health insurance policy.

Tonight, I propose two new initiatives to help more Americans afford their own insurance. First, I propose a standard tax deduction for health insurance that will be like the standard tax deduction for dependents. Families with health insurance will pay no income or payroll taxes on $15,000 of their income. Single Americans with health insurance will pay no income or payroll taxes on $7,500 of their income. With this reform, more than 100 million men, women, and children who are now covered by employer-provided insurance will benefit from lower tax bills.

At the same time, this reform will level the playing field for those who do not get health insurance through their job. For Americans who now purchase health insurance on their own, my proposal would mean a substantial tax savings — $4,500 for a family of four making $60,000 a year. And for the millions of other Americans who have no health insurance at all, this deduction would help put a basic private health insurance plan within their reach. Changing the tax code is a vital and necessary step to making health care affordable for more Americans.

My second proposal is to help the states that are coming up with innovative ways to cover the uninsured. States that make basic private health insurance available to all their citizens should receive federal funds to help them provide this coverage to the poor and the sick. I have asked the Secretary of health and Human Services to work with Congress to take existing federal funds and use them to create "Affordable Choices" grants. These grants would give our Nation's governors more money and more flexibility to get private health insurance to those most in need.

There are many other ways that Congress can help. We need to expand Health Savings Accounts — help small businesses through Association Health Plansreduce costs and medical errors with better information technology — encourage price transparency — and protect good doctors from junk lawsuits by passing medical liability reform. And in all we do, we must remember that the best health care decisions are made not by government and insurance companies, but by patients and their doctors.


The President accomplished none of his 2007 proposals in what turned out to be a very bitter and divided Congress.

However, the President's ideas to reform the tax code in order to help Americans pay for health care did find their way into a number of Republican presidential health care plans--albeit not always in exactly the same form.

The Democrats accomplished none of their 2007 health policy objectives as well. Democratic objectives included a $35 billion expansion of the State Children's Health Insurance Program (SCHIP), enabling the federal government to negotiate Medicare Part D drug prices, and cuts to Medicare HMOs in order the fix the 2008 10% Medicare physician fee cuts.

Friday, January 4, 2008

Medicare Advantage Cuts?

The highly profitable Medicare Advantage business is vulnerable to payment cuts to HMOs.

Any of you that read this blog know that I have been predicting big changes for the Medicare Advantage business ever since the Democrats took control of the Congress--particularly for the controversial Private Fee-For-Service (PFFS) part of the program.

But I have often felt alone in that opinion so a recent news story from TheStreet.com coming to much the same conclusion caught my eye. It pretty much reflects my thinking on the subject:
  • "Medicare Advantage players better count their blessings while they still can."
  • It's not whether there will be cuts but just how deep.
  • Private Fee-For-Service plans, and the few companies who emphasize them, are particularly vulnerable.
  • Medicare Advantage payments continue to be the plump target Congress needs to find a way to fix the Medicare physician fee problem that is on autopilot to cut doc payments 15% by January 1, 2009.
  • If Medicare Advantage companies saw their payments equalized with the traditional Medicare program, they would see their reimbursement fall by $65 billion over the next five years and $160 billion over the next ten.
  • "Clearly, then investors should weigh both a company's exposure to MA in general and to PFFS in particular before placing their bets next year [2008]."
The Medicare HMOs dodged a bullet last month when Congress decided not to cut the MA program to fix the Medicare physician fee problem. But the bad news is that they decided to fix the fee problem for just six months and cuts from 2007 and 2008 just got deferred until July 1. On top of that, there is another cut scheduled for January 1, 2009--a total of 15% in cuts.

The Medicare Advantage payment problem hasn't been solved, it has just been made more critical.

From the looks of Medicare Advantage-heavy HMOs' share prices, there's apparently lots of sand on Wall Street and a great many people have their heads buried in it.

Wednesday, January 2, 2008

The Budget Outcome--Everything Was Decided and Nothing Was Decided

The Budget agreement, SCHIP, the Medicare Physician Fee Cut, and Medicare Advantage HMO payments.

For months, I have been telling you four things:
  • The federal budget impasse would be resolved because Democrats and Republicans weren't going to go home without their earmarks. In predicting the budget outcome you might recall my telling you to follow the "pork."
  • SCHIP would not be allowed to expire and would be extended.
  • The 10% Medicare Physician Fee cut would be avoided just as it has been for a number of years in a row.
  • Democrats were adamant about cutting Medicare Advantage payments as a means to pay for the Medicare physician fee cut and seeing the program's payments ultimately equalized with the traditional Medicare program.
This was a great year for earmarks or "pork-barrel spending." When the day was done about 9,000 earmarks were inserted in the final bill in addition to about 3,000 more that were in the earlier defense appropriations bill--bringing the total to about 12,000!

The Democrats wanted $22 billion more in domestic money than President Bush wanted--about a 2% difference. The Democrats later offered to "split the difference" looking for $11 billion more--which Bush quickly rejected. In the end Bush got his cap--but they also agreed to about $11 billion more in "emergency funding" above the cap.

The Democrats also made Bush pay by cutting many of his favorite programs to get in under his cap. The alternative minimum tax (AMT) fix had no funding so will add $50 billion to the budget deficit. All told, funding for the war on terror, the AMT gap, and the rest of the spending will give us a whopping budget deficit of $240 billion next year.

If you are wondering just what got decided here, who really won, and what's different, you aren't the only one.

On the health issues:

SCHIP has been extended to March 2008. The Congress and the President have allocated enough money that children now covered will be able to stay in the program. There is some disagreement about whether new CMS rules might result in some cuts but CMS is showing no inclination to force any kids off the plan in an election year.

The bipartisan agreement to expand SCHIP from the current six million kids to ten million by spending another $35 billion ended up being shelved after the President vetoed that deal twice and the Democrats fell about 10 House votes short in their attempts to override him.

The docs did not get their January 10% Medicare fee cuts and instead got a half percent increase.

The bad new for the docs is that they only got a six month reprieve this time--until July 1, 2008. I see no reason to believe the Congress won't again find someplace to get the money it will need to defer the cuts to January 1, 2009.

But on January 1, 2009 the docs will face a whopping 15% cut--the 5% from last year that is funded only until July 1, this year's 5% cut that was also deferred only until July, and a new 5% cut the Sustainable Growth Rate Formula (SGR) will automatically create on January 1, 2009.

The Congress has fixed nothing for the docs, they have only pushed the pending cuts forward by six months--and most likely twelve months until January 1, 2009.

Just before the holiday recess, we thought we had a twelve month doc fix that would have been funded by taking the extra six months money from the "double dip" payments Medicare Advantage plans pay to teaching hospitals. But it wasn't the health plan lobby and conservative Republicans that KO'd that Medicare Advantage cut--it was a powerful Democrat looking to protect his local medical centers.

The big teaching hospitals have always had some of the most powerful allies in Congressional delegations from states like Massachusetts and New York where some of the nation's leading medical centers are based and some of the most powerful Democrats hail from. That was the case this time as the medical centers prevailed on the Chairman of the House Ways and Means Committee, and New York Congressman, Charlie Rangel, to kill that idea.

With the extra money cut by Rangel, and time running out, the only out was to use what money they had for just a six month fix and later try to find more funding by July of 2008.

As a result, the Medicare Advantage (MA) plans suffered no material cuts. It was clear that any real cuts would run into a Bush veto with the same fate as the two SCHIP bill votes. In the Senate, where 60-votes would have been necessary for any bill that contained MA changes, there had already been tacit agreement among Republicans to a one-year doc fix and some MA cuts. The big difference was an intransigent President who wasn't going to budge on this issue and later objections from Rangel.

Because of these agreements, payments to the MA plans should be safe until January 1, 2010 because CMS will have set the 2009 rates by the time the 2009 budget is dealt with later next year.

Does this mean that Medicare Advantage plans have won and will not have to worry about any big cuts?

Hardly. This was a draw.

Bush held the cuts off. Bush is a lame duck. The Democrats are more intent than ever on getting back on this one and cutting the Medicare Advantage "over payments."

George Bush may not have to sign the 2009 budget and therefore be a factor in next year's negotiations. It would be a simple matter for continuing resolutions keep the government going a month longer than they did this year--to inauguration day and a new President in late January.

Late in 2008, the docs will be facing a 15% Medicare fee cut on January 1, 2009, SCHIP will be out of money a few months later on March 1, 2008, the extra payments to Medicare Advantage plans will present the same plump target, and we will know who won the November elections.

I heard someone say recently that with every additional year of the extra Medicare Advantage payments there will be more seniors on the plans and it will be politically more difficult to cut them. That misses an important point--the docs are facing a 15% cut and if they don't get the money from the HMOs they will get it from other providers. AARP, the AMA, the hospitals, and about every other provider organization can agree on just one thing here--get the money from the Medicare HMOs. AARP can rally a lot more seniors than the insurance industry can.

The Medicare physicians held off some big fee cuts for likely another year, the Medicare Advantage HMOs held off any real cuts to their programs but are far from safe going into 2010, and the kids have their health plan until March.

No one won.

It's a "do over."

Monday, December 3, 2007

Pete Stark Regrets the Stark "Self-Referral" Laws!

David Whelan was kind to point out a great story he just did at Forbes.com on the Stark anti-kickback laws and the bans on provider "self-referral."

David writes, "Yet in an interview today the Congressman lamented that he ever made this legislative intrusion into medical practices."

Congressman Pete Stark (D-CA) went on to say the laws, "gave every shyster and promoter a loophole" and that he would now simplify things by relying on just the anti-kickback laws.

This article is a must read!


Great scoop, David!

Wednesday, November 28, 2007

One Heck Of A Budget Mess and Lots of Ugly Consequences--But Watch The Pork

With the Congress set to come back to attempt to break the budget impasse in the few weeks before the holidays, many in this town are ready to see the Congressional Democrats and President Bush agree to disagree and let the budget problems slide for a year under a series of lengthy continuing resolutions (CRs).

The problem with CRs is that they only allow the agencies and programs to continue at past spending levels. Inflation cuts into the value of those past budgets and there aren't any opportunities to modify priorities.

In health care, which is especially hard hit by higher inflation, it would be an especially problematic period:
  • The Medicare physicians are going to get a 10% fee cut on January 1st if the Congress can't pass a budget bill with a fix in it for them. Undoubtedly, a big fee cut would mean lots of cost shifting to the rest of the health care system by the docs as new provider contracts are negotiated. The proposed solution for the docs is to cut private Medicare HMO payments to come up with the money.
  • The State Children's Health Insurance Program (SCHIP) has been operating on a CR since September 30th. But freezing the program at current levels causes some big problems.
  • California will have to decide what to do with as many as 600,000 kids who could lose SCHIP coverage--56,000 on January 1st.
  • Georgia is already making up for federal shortfalls in its SCHIP program. Administrators are reportedly wondering if they should hold off on starting kids on six-week chemo treatment plans if they only have four weeks of coverage left because of the budget shortfall in SCHIP.
  • The National Institutes of Health (NIH) budget hasn't been increased since 2003. This year it was supposed to get a $2 billion increase in its $30 billion budget but that is in limbo as Congress and the President fight the big budget battle.
You will now see a number of new Congressional attempts to move these budget items including the possibility that a modest SCHIP extension, the doc fix, and Medicare HMO cuts will all get lumped into one very hard to vote against or veto bill to save the kids' health insurance coverage.

But here is the biggest reason the Congress just might find a way to come up with the votes to get the budget unstuck: pork.

No spending bills--no pork and Republicans love pork every bit as much as Democrats. Don't forget, the "bridge to nowhere" was purely a Republican item.

The next few weeks will be full of drama, brinksmanship, and deals.

Will we get a budget deal when the day is done?

Watch the pork.

Tuesday, October 30, 2007

A Good Idea and Bad Leadership--A Way Out of the Entitlement Crisis Meets Partisan Politics

I call your attention to a column this morning by the Washington Post's David Broder.

He tells us that there will be an important Senate hearing tomorrow on the issue of Social Security and Medicare entitlement costs.

It seems that two Senators, one a Republican and one a Democrat, are trying to create a bipartisan task force that would have the power to fast track a solution to this huge emerging problem that is not going to go away.

"It would have 16 members, equally balanced between Republicans and Democrats. Fourteen would be members of Congress, chosen by the leadership and presumably representing the major economic policy committees. Two would be from the administration, with one of them, the secretary of Treasury, serving as chairman.

"It would take 12 of the 16 votes to submit a report -- guaranteeing each party a voice in the outcome. And the report would be translated into bill form and given a fast track to a final vote in both the House and Senate, with a requirement of 60 percent support for it to go to the president -- again, protection for the minority."
Senators Gregg and Conrad have the attention and support of many in Congress and even the White House for their idea in great part because Treasury Secretary Paulson is behind it.

It sure sounds like something that makes a lot of sense.

But guess what? Vice President Chaney and House Speaker Pelosi are against it--Chaney because the bipartisan group just might come up with tax increases if they were allowed to think for themselves and Pelosi because she doesn't trust the White House and wants to save the Social Security issue to beat the Republicans up over in the coming election.

You know, when good ideas out in the light of day can't trump partisan shortsightedness we have a real problem.

Bush Ups the Budget Pressure--Shows No Sign of Compromising on SCHIP

President Bush just made a statement on the SCHIP bill and the upcoming 2008 budget votes. Standing in front of the White House with the Republican leaders behind him, he blasted the Democratic Congress, the recent SCHIP bill passed by the House, and rumored efforts on the part of Democratic leaders to couple defense and Iraq spending bills with domestic budget bills.

The bottom line is that the SCHIP and 2008 budget efforts look to be more contentious then ever.

The Democrats really screwed up the SCHIP vote in the House last week. Rather then reach-out to fence-sitting Republicans before the latest House SCHIP vote, the Dems overplayed their hand and tried to ram a purely Democratic new version of the SCHIP bill down the Republicans' throats. That all backfired and the result was a vote well short of what they will need to override the coming Bush veto.

Dems are now trying a do-over on that mistake as they now reach-out to Republicans in both the House and Senate, as they should have done last week, in an attempt to get an improved SCHIP bill. Most of these discussions are around fine-tuning the 300% of poverty limit on who can be eligible for benefits.

But this morning Bush took as hard a line as he could.

It is possible that the Democrats can get enough votes behind another version of SCHIP.

But it also looks like we are headed for one heck of a budget mess.

Thursday, October 25, 2007

Discussions Regarding Scheduled Physician Fee Cuts and Possible Reductions in Medicare Advantage Payments Getting Serious

As the year winds down, the Congress must deal with the scheduled January 2008 9.9% Medicare physicians fee cut. Both Democrats and Republicans want to fix it.

To fix the physician fee cut, proposed cuts to Medicare Advantage have been on the table.

Senate Finance Chair Max Baucus (D-MT) has been working on a package that would cost $25 to $30 billion and fix the physician fee problem not only for 2008 but for 2009 as well. His plan would also spend more money on rural and low-income seniors.

Baucus would cut the Medicare Advantage payments by $8 to $12 billion to help pay for the package.

Meantime, the ranking Republican member on the committee, Chuck Grassley (R-IA), is working on a smaller bill that would only fix the physician fee problem for one year.

It seems that Republican members of the committee don't want any significant cuts to Medicare Advantage.

With the committee apparently split on party lines over big cuts to Medicare Advantage one could conclude that Baucus is going to have to back-off on his plans in order to workout a compromise.

He will not have to.

This issue will be part of the year-end omnibus budget bill where the committee chairs for the majority party will have enormous say on what is in the final bill. Elements of the final bill don't even have to clear a committee or either the Senate or House floor--they can be dropped in at the last minute. In fact, this is how the Republicans dealt with the Medicare physician fee problem late last year.

Also, a budget bill is not subject to the 60-vote rule in the Senate--a simple majority gets the job done. That final budget bill is very hard for a president to veto because it contains so many different matters that all sides will want approved.

Then there is what the House will want to do with the doc fees and Medicare Advantage. They will likely be even more aggressive than Baucus and it is those Democrats that Baucus will have to compromise with.

Sunday, September 16, 2007

SCHIP Negotiations Not Going Well--Medicare Physician Fee Cuts and Medicare Advantage Payments Hang in the Balance

Negotiations between the House and Senate over how to extend the State Children's Health Insurance Program (SCHIP) before its September 30 deadline are not making much progress.

The Senate passed a bipartisan extension of the plan that included $35 billion in new spending and paid for it with a hefty 61 cent per pack tobacco tax.

The House passed a solely Democratic bill that would spend $60 billion on the SCHIP extension as well as fix the upcoming January 2008 10% Medicare physician fee cuts. The House would pay for its bill with a smaller tobacco tax and a phase-out of "extra" private Medicare payments beginning in 2009.

With confidence, I can tell you the following:
  1. The negotiations aren't over. Just like the typical high school student, Congress tends to leave things to the very last minute. It is still possible a deal can be struck before September 30th.
  2. If a deal isn't done, SCHIP will get a temporary funding resolution past the September 30th deadline to keep the program going at current levels--it isn't going to abruptly end.
  3. The docs aren't going to get anything like the upcoming 10% fee cut they are facing on January 1--the doctor lobby is way too powerful to let that happen.
  4. Medicare Advantage cuts will fund at least the resolution to the doctor fee problem.
How much of this happens in September and how much of this gets booted to the year-end final budget clean-up where Democratic committee chairmen are almost entirely in control, remains to be seen.

I have always thought the doc cut and Medicare Advantage funding issues would be decided at year-end.

The only hope the health plans have to avoid a Medicare Advantage payment cut is that there is a budget train wreck with Democrats putting up a budget at year-end which Bush vetoes and nothing gets done. A budget train wreck could well leave SCHIP in limbo and the docs with a 10% Medicare physician fee cut and a political mess across the board. It isn't something either Democrats or Republicans want to see going into an election year.

For those of you who have been reading my regular updates on this issue, nothing is going on that is a surprise.

Stay tuned!

The history: SCHIP Reauthorization and High Stakes Politics

A budget train wreck? Why Is President Bush So Willing to Veto Spending Bills All of a Sudden?

Thursday, August 2, 2007

Why Is President Bush So Willing to Veto Spending Bills All of a Sudden?

This President didn’t veto a single spending bill during the first six years of his presidency when the Republicans were in control. You might recall John McCain’s characterization of the Republican Congress when he said they spent money “like drunken sailors” all with the concurrence of President Bush.

Now, with the Democrats in control, the President seems more than ready to confront Congressional spending—he's threatened to veto about every Democratic domestic spending bill now under consideration in the Congress.

He's even threatened a veto of the bipartisan Senate SCHIP reauthorization bill when lots of Republicans are onside with the Democrats pleading with him to approve the S-CHIP deal and when there is no chance the Congress will seriously consider his alternatives like his health care income tax proposal.

What’s going on here?

A little history might be helpful.

You might remember the first news conference Bill Clinton had in the wake of the 1994 election in which the Republicans took control of the Congress. One statement Clinton made in response to questions about the big Republican victory and their bold plans to change the national agenda has lived on, “I am not irrelevant.”

President Bush now faces many of the same questions in the wake of last fall’s Democratic victory, particularly as Republican support for his Iraq policy is melting on Capitol Hill.

The National Review, a bastion of conservatism founded by William F. Buckley, Jr., and filled with articles written by leading conservatives, represents Bush’s political “base” if anything does.

That’s why a recent article in the opinion section of the Washington Post by Byron York, National Review’s White House correspondent and the author of “The Vast Left Wing Conspiracy,” is all the more notable.

The title of the article tells all, “Base to Bush: It’s Over.”

This from the article:

“So now the president has 18 months left in office, and they won’t be quiet ones. Absent the committed backing of his party, he will be forced to exercise power based not on his political clout but rather on the authority the Constitution gives the office of the president: He is commander in chief. He can veto bills. He can issue pardons. And that’s about it.”

I’d say that about sums it up for why Bush is now so veto happy—even when it’s Republicans he’s publicly arguing with.

The statement he’s making, particularly to Republicans in Congress, like Chuck Grassley and Orin Hatch who did the SCHIP deal with Democrats and all of those House members who voted with the Democrats on the Labor-HHS-Education bill is, “Wait a minute with all of your deals with this Democratic Congress, I’m still relevant!”

This is where it gets interesting.

Is Bush about to do what Clinton did to restore his presidency—willingly face off with a Congress recently taken over by the other party in a winner-take-all budget battle that included a government-shutdown?

With his support in the polls, from Republicans in Congress, and from his base in the country, at such low levels this President is standing almost alone on everything from Iraq to SCHIP and looks more intent than ever on pursuing a course he strongly believes in and has the Constitutional prerogatives to carry out.

Earlier Post: SCHIP Reauthorization and High Stakes Politics

SCHIP Reauthorization and High Stakes Politics

Everyone agrees that the State Children’s Health Insurance Program (SCHIP) needs to be reauthorized.

But Washington couldn’t have made such a simple idea any more complicated or controversial.

So far:
  • The Senate has come to a bipartisan agreement, supported by lots of Republicans, that would increase spending by $35 billion, add another three million kids to the six million already covered, pay for it with a 61 cent tobacco tax, and streamline the program more along its original lines.
  • The House is struggling to approve a much larger $60 billion expansion and pay for it with both a tobacco tax and cuts to private Medicare plans that would equalize them with traditional Medicare over a three year phase-in beginning in 2009. The House bill also deals with other health care issues like the upcoming physician fee cuts.
  • President Bush has said both proposals go too far toward creating government-run health care and he has promised to veto both.
  • Republicans are working with Democrats in the Senate in an attempt to have the votes to override a presidential veto. They might have the votes in the Senate and are less likely to have the needed two-thirds in the House.

The Congress is set to leave town at the end of this week and not come back until after Labor Day.

Where is this going to come out?

First, SCHIP will be reauthorized. Most likely, Bush and the Congress, led by Republican Senators who include Grassley and Hatch, will work out a deal by the end of September that will likely expand the current SCHIP program in the $15 - $20 billion range and pay for it with a smaller tobacco tax—and not Medicare Advantage cuts.

The House bill is just an exercise that goes way beyond anything that is possible in the Senate.

Failing that, the program will be continued at present levels using a “continuing resolution.” No one will let it die when it sunsets on September 30th. In this scenario, SCHIP would get punted to the year-end omnibus reconciliation that the Democrats will have far more control over.

The Congress is ready to cut private Medicare payments. Congress needs the Medicare Advantage money to forestall the upcoming 10% physician fee cuts.

The House SCHIP bill is valuable in that it shows the health plan industry the worst case scenario for private Medicare cuts—no sooner than 2009 and a three-year phase-out of payments above traditional Medicare.

But we won’t get to the physician fee cuts and private Medicare payments until the year-end omnibus budget bill where the Democratic committee chairmen will have total control of the Congressional budget process.

The most likely outcome is that the Senate will drive a less dramatic cut to Medicare Advantage than the House wants—looks to me like a four to five year phase-out with the possibility that Private Fee For Service rates in urban areas would be frozen—all starting no sooner than 2009.

To make things even more interesting, Bush has also threatened to veto about all the Democratic spending bills.

Just how far President Bush is willing to go in this budget showdown with the Congress will become evident in how the SCHIP negotiations between the White House and Republican Senators turn out. If they can’t get a SCHIP deal done, we will be headed toward a big budget showdown between the President and the Congress. That is something that Republicans are really worried about—they have to face reelection even if Bush doesn’t.

If cooler heads prevail we will have lots of compromises that will include the necessary Medicare Advantage cuts to pay for other provider needs—particularly the docs.

If cooler heads don’t prevail, we will have one hell of a budget mess.

SCHIP will tell us if Bush is in the mood to deal or not.

Earlier Post on the Senate SCHIP compromise: Bush Reaffirms Veto Threat Over SCHIP Despite Strong Republican Support for Bipartisan Compromise—What’s Really Going On Here?

Friday, July 20, 2007

Bush Reaffirms Veto Threat Over SCHIP Despite Strong Republican Support for Bipartisan Compromise—What’s Really Going On Here?

The most exasperated person in Washington has to be Senator Chuck Grassley (R-IA). The Ranking Republican on the Senate Finance Committee has worked out a bipartisan compromise with his good friend Senator Max Baucus (D-MT) to continue the State Children’s Health Insurance Program (SCHIP) past its September 30 expiration date.

The plan currently covers 6.6 million low income kids and would cover another 3.3 million under the plan that would increase spending by $35 billion over five years and pay for it with a new 61 cent per pack tobacco tax.

But President Bush says he will veto the deal because he worries that it is a dangerous expansion of government-run health care.

Not only is Grassley exasperated over that comment but so is about everyone else in Washington. This is a truly bipartisan deal with the Senate Finance Committee overwhelmingly approving it with plenty of Republican support.

What makes this so puzzling is that Bush’s stance is out of synch with the facts and his own health care track record:
  1. The President has called for expansion of health insurance since he took office through assistance for the poor to buy health insurance in the private market. SCHIP is largely provided through private insurance companies—public funding of private coverage albeit without a choice of different plans by the consumer. Private insurance companies support the deal because setting up Part D-like multiple choices for kids is not practical.
  2. A centerpiece of the Bush administration is the Medicare Part D drug plan for seniors—government financed and provided through private insurers.
  3. The Bush administration has approved one state waiver after another allowing states to expand the program beyond its original intent. The Bush administration just approved such a big expansion in Wisconsin. The Senate deal would go a long way toward eliminating the "over expansion" Bush has been complaining about.
The Part D drug benefit was the biggest expansion of a government health care program since Medicare was passed in 1965—and Bush sees it as a big victory. SCHIP is maybe a tenth the size of Part D and largely delivered through private insurers who have to competitively bid the contract and Bush says it’s opening “an avenue for people to switch from private insurance to government.” Never mind that there is no "switch" involved here because they are almost always uninsured to begin with.

The President also says he wants to have a discussion over his proposal to change the way health benefits are taxed with an eye toward giving consumers more individual control over their health care. OK. But that general idea has been around for 15 years and he never made that proposal in the six years he had a Republican Congress who would have been a great deal more supportive of the idea then the current Democratic Congress.

What’s really going on here?

My sense is that this President has decided he needs a whopper of a political fight with the Democrats to recharge his flagging presidency and he’s decided to take them on over his view that Democrats would like to “socialize health care" in the U.S. Apparently, his political advisers are telling him the “socialized health care” line is still a good one with mainstream voters.

Never mind the fact that many Republicans—including Grassley and Orin Hatch (R-UT) who are key authors of the compromise and plenty of other Senate Republicans--are onside.

In an earlier post I said that it looks to me like we have a desperate President with nothing to lose as he tries to get his administration back on track in its last year.

I also made the point that it looks to me like Bush is willing to finally veto lots of spending bills—he didn’t veto any Republican spending bills during his first six years.

Is this just the opening round in a bigger fight from a President willing to have a government shutdown battle with the Congress to reassert his presidency?

In 1995, the roles were reversed. Democrat Clinton was looking to reassert his flagging presidency just as just as Republican Gingrich was looking to make a new Congressional majority dominant. Is Bush taking a page from Bill Clinton's game book?

Is Bush trying to make himself "relevant" again?

Monday, July 16, 2007

President Bush is Not Backing Down on His SCHIP Veto Threat

The President is sticking to his guns over his threatened veto of the Senate Finance Committee bipartisan deal to reauthorize and expand the State Children's Health Insurance Plan (SCHIP) at a cost of $35 billion. The deal would expand S-CHIP and pay for it with a big 61 cent cigarette tax--taking the federal per pack tax to $1.

A White House spokesman said on Saturday that his advisers "will certainly recommend a veto of this proposal. And there is no question that the president would veto it."

The White House seemed to also be offering a way out: "Congress needs to deliver a bill the president can sign or they need to send him an extension so that people don't worry about losing their current coverage."

That last comment about an extension looks like the President is willing to extend the existing plan. There was no mention of where the money to pay for it should come from.

The President is holding firm on limiting S-CHIP because he believes the program has already gone well beyond its original intent of covering only poor children (under 200% of poverty in this case) and the new Senate Finance deal would take it even further.

The President sees the existing S-CHIP program, and the new and larger version pending in Senate Finance, as encroaching on the private health insurance market.

The President is worried that this is an expansion of government-provided health insurance to the detriment of his proposed private market policies.

However, Republican Senators like Grassley and Hatch don't agree with him. Grassley said in response to the President's veto threat, the Senate Finance deal "refocuses S-CHIP on low-income children cost effectively, using appropriate targeting policies." He went on, the plan "straightens out the mess created by all the waivers that have spent program resources on adults and higher-income kids."

A show-down between the Congress--including prominent Republicans--and the President over S-CHIP is upon us.

Unless a deal is struck, the Congress may have no alternative but to pass a continuing S-CHIP resolution and bury the final outcome in the year-end budget process that will include dozens of things not the least of which is a solution to the upcoming Medicare physician fee cuts and likely cuts in Medicare Advantage payments to HMOs.

Bush looks to me like he is in the mood to veto lots of spending bills and that could really give us a year-end donnybrook!

Earlier post:
Key Republican Senators Call on President Bush Not to Veto S-CHIP Reauthorization--A President Acting Like He Has Nothing to Lose
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