Congress

COST: The Price is Right for Health Reform

Paul Testa — Thu, 19 Nov 2009 18:50:00 -0500

After weeks of anticipation and speculation, Senate Majority Leader Harry Reid has unveiled the legislation that will bring health reform to the Senate floor in the coming weeks.

While waiting for the details of the bill to come out Wednesday, we created a little office pool, called the Price is Right for Health Reform. In an office-wide email, we asked our peers to guess the CBO's estimates of the gross costs of the bill. Showcase Showdown rules (closest without going over) applied. We were intentionally vague in our question because estimating the true costs of the bill is inherently a difficult process.

The number we were looking for was $848 billion. The CBO's estimate of the gross cost of the bill is essentially the total cost of coverage provisions over the next 10-years. This is the number most frequently reported in the media as the "cost" of the various health reform bills being discussed. But is this really the best indicator of the true costs of health reform? Maybe not. First, timing matters: $848 billion over ten years is a lot different than a $787 stimulus bill where 90 percent of the money is spent within the first 3 years. So do deficits. How much does a bill cost if it's fully paid for and in fact reduces the deficit as is the case for both the House ($109 billion) and Senate ($130 billion) bills?

We received plenty of calls from our co-workers asking just these questions. We tried to stay quiet, because we were interested in what the educated, non-health policy wonks think about the cost of reform. True to our think tank's "post-partisan roots" we got a range of answers from "too little" to "$600 trillion, Obama lies." We got a couple of "$1" which we assume was a reference to the bill's deficit neutrality, and $90 billion which seems like a reasonable estimate of yearly costs. But the majority of the answers clustered within the $800-$900 billion range, surprisingly close to the final answer. Few people seemed willing to go above $900 billion, suggesting the power of the official price tag President Obama put on reform during his September address to a Joint Session of Congress. So who won? The answer after this non-commercial break:

Marc Goldwein, the Policy Director, Committee for a Responsible Federal Budget and Policy, took home the prize for his guess of $845 billion. Lisa Guernsey, the Director, Early Education Initiative, came agonizingly close with pick of $850 billion. New America's President Steve Coll, was the next closest with a prediction of $837 billion.

Marc's prize potentially includes a Dodge Neon from 1996, a natural wood-like dinette set from 1982, or more likely a beer and some wings from the re-opened Black Rooster Pub (take that Peace Corps!). We suspect he'll also want us to plug the excellent work he and his colleagues do on all things budget. Congratulations Marc. Help control the pet population. Have your pets spayed or neutered.

As a side bet, we also asked contestants to name which current Senator looks most like Bob Barker. What do you think?

HEALTH REFORM: Highlights from the Senate Bill

Elizabeth Carpenter — Thu, 19 Nov 2009 16:04:00 -0500

The latest version of Senate health care legislation (pdf available here) crafted by Majority Leader Harry Reid is making its rounds. There is a lot to review, but an initial read shows the bill is close to the legislation approved by the Senate Finance Committee in early October with a few notable changes: more generous subsidies, a higher threshold for the excise tax on insurers who offer high-cost plans, an increase in the Medicare payroll tax for Americans making over $250,000, and the addition of a long-term care insurance program for people with disabilities.

While this legislation also delays the implementation of insurance market reforms and subsidies (when compared to the Senate Finance legislation) there are a number of provisions that would start helping Americans immediately. In particular, the legislation:

Provides $5 billion to enact a temporary insurance program for those who have been uninsured for several months and have a pre-existing condition. Financial assistance would be available for the purchase of such coverage until the exchanges (or new insurance marketplaces) are established.
Prohibits insurers from selling insurance products that have lifetime or annual caps on benefits and from rescinding coverage except in the case of fraud or misrepresentation.
Requires health insurance companies to report publicly the percentage of total premium revenue spent on patient care and quality versus administrative costs. Health insurance companies will be required to refund enrollees if costs not related to patient care exceed a certain threshold.
Establishes small business tax credits to help small employers afford coverage for their workers starting in 2011.
Extends dependent coverage to require all insurers to allow young adults to remain on their parents' insurance until the age of 26.

The fiscal picture of the legislation should also give moderates a lot to cheer about. CBO not only says the legislation would reduce the deficit by $130 billion over the next decade, but it also expects that:

Medicare spending under the bill would increase at an average annual rate of roughly 6 percent during the next two decades -- well below the roughly 8 percent annual growth rate of the past two decades...Adjusting for inflation, Medicare spending per beneficiary under the bill would increase at an average annual rate of roughly 2 percent during the next two decades -- much less than the roughly 4 percent annual growth rate of the past two decades.

In other words...curve benders rejoice!

HEALTH REFORM: Monday Morning Quarterback

Paul Testa — Mon, 16 Nov 2009 15:44:00 -0500

It's Monday, the day after Sunday, which in America means a surprisingly large number of Americans are talking trash about their fantasy football teams. (Good hustle Ben, but the Cleveland Steamers are on a roll.) So forgive us for the gridiron gab, as we reset the play clock on health reform.

As you know, the passage of H.R. 3962 in the House two Saturdays ago pushed health reform into the red zone and brought us closer to the goal line than we've ever been before. The problem, as the Senate prepares to take the field, is that the goal posts keep getting pushed back. A slow handoff between Senate Majority Leader Harry Reid (D-NV) and the CBO has delayed the bill's release, but Reid seems determined to keep the ball moving. Roll Call's Emily Pierce lays out the potential Democratic gameplan going forward:

The key vote, which Reid plans to call after he receives the CBO score, would be on a motion to limit debate -- or invoke cloture -- on a motion to proceed to the bill. The leadership aide said Reid is working under the presumption that he will have a CBO score "sooner rather than later" this week and that the Senate will be in a position to kick off debate before Members go home for Thanksgiving.

Reid wants to get the cloture vote on the motion to proceed over with before the holiday because he would like to spend all three weeks before Christmas amending and debating the health care bill. If he has to wait until after Thanksgiving to take the vote, the time-consuming procedural hoops he has to jump through could delay the start of the amendment process until the second week of December.

It's an ambitious schedule, one that will require the Nevada-native to channel another Rocky Mountain icon to engineer the final drive on health reform (a drive we're confident the people of Cleveland will actually like). Even without a shortened clock, these kind of things are never easy.

The Reid-option for a state opt-out on the public health insurance plan has some moderates worried, and the Democrats will have trouble keeping all of their members onside when tackling issues of abortion and immigration. Finally, Senate Minority Leader Mitch McConnell (R-KY) has been calling for a delay of game.

Like most armchair announcers, we're not a big fan of this kind of prevent defense, because the only thing it's intended to do is prevent Democrats from winning. But this game is about more than politics, and health reform is one issue our leaders can no longer afford to punt on. There may be a lot of close downs in the coming weeks, but we stand by our predictions: come Super Bowl XLIV, the Chamber of Commerce will have to look for something else to spend its money on.

HEALTH POLITICS: Tying it All Together

Paul Testa — Wed, 11 Nov 2009 18:56:00 -0500

First, thank you to all our veterans for their service and sacrifice.

This Veteran's day we're a bit caught up in the upkeep of grant reports, so he's a quick run down of the news and issues that caught our attention:

Tuesdays with Harry: Politico reports that Senate Majority Leader Harry Reid took procedural steps yesterday that would allow him to open debate on a bill Tuesday next week. Of course there a lot that needs to happen before then, including the release of bill with CBO scores, but still, it's a good sign that things are moving in the Senate.

My Life, Your Work: Former President Bill Clinton spoke to Senate Democrats at their weekly meeting Tuesday. His message? Git'er Done. "The worst thing to do is nothing," Clinton told reporters.

An Option You Can't Refuse? The New York Time's Kevin Sack looks at the likelihood that states would actually opt-out from a public health insurance plan. Aside from the politics, Sack argues the critical factors affecting a state's decision are its uninsured population and the amount of competition in its insurance market. Health Affairs and RWJF have put out a helpful brief explaining how a public health insurance plan would actually work.

How much for that horse of yours? Politico's Jonathan Allen and Patrick O'Connor have an excellent story on the political horsetrading that went down to secure the final passage of the House bill Saturday. Meanwhile House Whip James Clyburn (D-SC) told MSNBC that the controversial Stupak amendment on abortion netted the bill about 10 votes -- enough to push the legislation over the 218-vote threshold, but less than previous suggestions of a 40-vote swing.

If you like it then you shoulda put a cost control on it? Our colleagues have written about the existing cost control measures in the bill and the potential improvements that could be made. The New York Times' David Leonhardt weighs in with a detailed list of recommendations and one of the best explanations for why this matters:

It is not simply about bending the curve, or slowing the growth, of Medicare's projected spending. It's also about preventing thousands of needless deaths from hospital infections. It's about making sure you get the best cancer treatment, even when that treatment is not the most profitable one. It's about keeping health costs from denying most families a decent pay increase, as has happened in recent years.

Making the medical system more efficient is, in short, about saving lives and giving Americans a long overdue raise. It is arguably the single most important step that the federal government could take to improve people's lives.

Do you know where the majority of our nation's toothpicks come from? Maine, which Gardner Harris calls the Charlie Brown of Health Care:

The state's legislators have tried for decades to fix its system, but their efforts have always fallen short: health insurance premiums are still among the least affordable in the nation, health care spending per person is among the highest and hospital emergency rooms are among the most crowded. Indeed, many overhauls to the system have done little more than squeeze a balloon -- solving one problem while worsening another.

But like the Peanuts character, the state keeps trying.

We hope that includes the state's senior Senator.

HEALTH REFORM: How to Control Rising Health Care Costs

Len Nichols — Wed, 11 Nov 2009 15:14:00 -0500

In its Room for Debate section, The New York Times asks a group of health experts what one or two provisions could be added to health reform legislation to help contain health care costs going forward. Below is my contribution to the discussion. For more on the issue, you can read my colleague's post on the real versus the ideal options for slowing the growth of health care costs.

The Medicare payment reforms in both the House and the Senate bills will help to slow the growth of costs by rewarding value over volume, as will the proposed Medicare commission and the tax on insurers who offer high-cost health plans, which are in the Senate Finance Committee bill. And both House and Senate legislation also includes “innovation centers” which will allow us to test different payment models and health care processes.

Even with these steps, the reform bills could be strengthened. Specifically:

The Medicare commission in the Senate Finance Committee legislation should be allowed to recommend changes that will reduce system-wide cost growth, not just in Medicare. The scope of the commission should be broadened to include both the private and public sectors.
Administrative costs are the fastest growing expense for most providers. Administrative simplification provisions should require private insurers to use common claims forms and adjudication approaches or adopt Medicare’s processes.
The current duplicative regulation system costs providers time and money. Evidence-based medicine should be rewarded with a regulation structure that streamlines existing oversight to form three regulatory bodies focused on quality, financial integrity, and workforce.
The current legal environment presents barriers to high-quality coordinated care. A task force chaired by the Health and Human Services Secretary and the Attorney General should lower these barriers by addressing current antitrust, self-referral, profit-sharing and medical malpractice laws.

HEALTH POLITICS: Making History Happen in the Senate... and Cincinnati

Paul Testa — Tue, 10 Nov 2009 18:42:00 -0500

The baton has been passed from the House to the Senate and the latest reports suggest legislation may come to the floor as early as Monday next week. The Hill's J. Taylor Rushing lays out how things could play out in the Senate:

Senior aides and senators say Democrats plan to pivot quickly and file the first procedural vote as early as Monday. A "motion to proceed" vote, which brings the bill to the floor, would require 60 votes -- a first, critical test of the caucus's unity on procedural votes.

Senators don't expect any momentum from Saturday's successful 220-215 House vote, however. They say the most realistic scenario is for a Senate vote by Christmas followed by final passage in mid-January.

That would allow sufficient time for House-Senate conference talks and final House-Senate votes during January's first weeks. Such a scenario would also put final passage around the time of President Barack Obama's State of the Union address.

Roll Call's Emily Pierce has more on the logistics and politics of this move:

By aiming to bring up the bill next week, Reid appears to be calculating that the public relations dangers of suspending debate for the weeklong Thanksgiving recess do not outweigh the need to get debate rolling, given the time-consuming roadblocks Republicans are expected to throw up.

Meanwhile, the AP reports that Bill Clinton was the guest of Senate Democrats during their weekly policy lunch Tuesday. We imagine the former president will convey the importance of action and pitfalls of failure on health reform. This is important because while Clinton may have seen this all before in 1993-94, many of his Democratic colleagues in the Senate have not. Of the 60 Senators who caucus with the Democratic Party:

A majority of today's Senators were not in office during Clinton reform efforts of 1993-94 and 26 were not in Congress.
Of the 23 senators in office, five (Feinstein, Feingold, Dorgan, Boxer, and Murray) had just been elected and three more were serving their first term (Lieberman, Kohl, and Akaka).
Eleven current Senators were Representatives in the House during 1993-94. Five were newly elected, and of these freshman, four currently serve on the Senate Finance Committee (Lincoln, Cantwell, Schumer, Menendez) and one (Brown) is on the Senate HELP Committee. (We put these lists together ourselves very painstakingly this morning, let us know if you catch any mistakes.)

One of the big differences between the Clinton years and today, however, has been the role of industry players and advocacy groups. In the past, their opposition helped write the obituary for reform with iconic ads like Harry and Louise pounding the final nails into the coffin. Today these groups are working to influence reform, and this decision is evident in the airwaves. The Washington Post reports:

The battle of the airwaves has already seen more than $150 million spent this year on television ads related to the health-care debate, according to the Campaign Media Analysis Group. As of Friday, about $63 million had been spent on ads favoring Democrats' reform plans and $52 million on ads opposed, according to the analysis group.

Those figures will only go up in the coming weeks. But while we may still be doing this in January, hopefully by the time Carson Palmer and Cincinnati beat Brett Favre and Minnesota in Super Bowl XLIV (a historic first championship for the once-beleagued Bengals), we can all go back to watching ads about talking frogs and herding cats.

HEALTH REFORM: Passing the Baton

Paul Testa — Mon, 09 Nov 2009 19:39:00 -0500

The House's historic vote on Saturday feels almost like ancient history. By Monday, all eyes turned back to the Senate and the progress of the merged legislation being shepherded by Majority Leader Harry Reid.

H.R. 3962 passed by a margin of 220-215 with 39 Democrats voting against the bill and one Republican representative crossing party lines. (The New York Times has a great graphic illustrating the politics of this vote.) Speaking from the White House Rose Garden on Sunday, President Obama thanked lawmakers for their "courageous vote," and called on the Senate "to take the baton and bring this effort to the finish line on behalf of the American people."

The relay is being held up, however, as Reid waits for the CBO to return scores of the various proposals and options he submitted. Estimates are expected to be released by the end of this week, and merged legislation could be released soon after. Still the Senate is not expected to begin debating the legislation until after Thanksgiving, giving Congress essentially four weeks to try and meet President Obama's goal of signing health reform legislation into law before year's end.

It will be a sprint to say the least. You know our stance on the issue, and the White House, too, is stepping up its pressure to not let this slip into 2010.

At the very minimum, it currently seems Reid will try to pass legislation through the Senate before Christmas.That leaves open the option for conferees to work on merging the House and Senate Bills over the holiday recess and clear the way for a vote on final passage early in January.

In addition to the simple logistics of moving historic legislation through the historically slow moving Senate, Kaiser Health News, Slate, and the Wall Street Journal all give a good lay of the land, and here's our quick overview of some of the biggest issues going forward:

Affordability and Costs: The House is more generous in it's subsidies than the Senate Finance Bill. Splitting the difference requires tough tradeoffs between expanding affordable coverage to all Americans and keeping the total costs of the bill in line. Both bills subsidize coverage up to 400 percent of poverty, but the Senate Finance bill does so at a less generous rate. According to the CBO estimates, the House bill comes in just over a $1 trillion dollars over 10 years while the Senate finance bill weighs in at $821 billion.
Coverage: The House bill will decrease the number of uninsured by 36 million over ten years -- compared to the 29 million in the Senate Finance legislation. The House bill accomplishes this with more generous subsidies, a higher Medicaid eligibility rate, and stronger individual and employer mandates -- meaning there will be plenty of details to be worked out in conference.
The Public Plan: Speaker of the House Nancy Pelosi (D-CA) couldn't get the votes to pass a robust public plan with rates tied to Medicare and settled for a public health insurance option that would negotiate rates directly with providers. Reid faces trouble getting moderate Senate Democrats to pass a similar plan, even with the proposal to allow state opt-outs.
Financing: Pay-fors are never pretty. The House added a tax on bio fuels in the Managers Amendment after one of the bill's funding mechanisms was used by the Senate in legislation to extend unemployment insurance. One of the biggest challenges going forward will be melding the financing mechanisms of the House and Senate legislation: the House raises some $461 billion through a 5.4 percent surtax on individuals earning more than $500,000 and couples earning more than $1 million. The Senate is no fan of this revenue source -- particularly because it's not indexed to inflation. The House is equally unhappy with the Senate Finance Committee's proposed 40 percent excise tax on high value plans -- which they worry will hit organized labor. Despite the divisions, there's probably room for compromise -- maybe by raising the thresholds on each, and indexing the surtax to inflation and/or lowering the rate.
Politics: If pay-fors aren't pretty, politics are even uglier. The abortion debate may not be as intense in the Senate, but it is far from over and will likely come back in conference if not earlier. Other potential wild cards that could derail the debate include immigration and the questions surrounding a certain independent Senator from a small northeastern state. (Not Bernie Sanders)

COST: Can Health Reform Heal the Federal Budget

Paul Testa — Fri, 06 Nov 2009 16:58:00 -0500

Can health reform heal our federal budget? Yes, but whatever passes now is just the beginning, and there will always be room for improvement.

That's our takeaway from an excellent event we tweeted this morning hosted by the US Budget Watch, a joint project between the Committee for a Responsible Federal Budget and The Pew Charitable Trusts.

There was a lot of ground covered by a panel of experts moderated by the Washington Post's Ceci Connolly and featuring New America's director of health policy Len Nichols. They tackled everything from raising Medicaid eligibility rates to fixing the Sustainable Growth Rate formula in a fiscally responsible way. But for now, we'll just give you the highlights of the discussion.

What impressed us the most was how little question there was about whether health reform will be paid for. Sure, James Capretta of the Ethics and Public Policy Center questioned the accounting of the bills and Donald Marron from the Georgetown School of Public Policy wondered if we're using some pay-fors for health reform that should be used elsewhere. For example, the savings from Medicare Advantage could be used to permanently fix the SGR. But all of the panelists agreed that if passed, health reform one way or another will be paid for and that, as Paul Van de Water of the Center for Budget Policies and Priorities says, is a big accomplishment.

The real discussion focused on whether health reform will actually bend the cost curve. Van de Water was quick to list many provisions such as the excise tax, accountable care organizations, medical homes, and bundled payments that have the potential to revolutionize care. Still, Marron and Capretta were skeptical of the real impact of these provisions -- whether cuts would be made and savings realized. During the Q&A, one questioner asked a similar question about how scalable these reforms were and whether best practices could really be universalized using Medicare as a leader. Len replied that past changes in Medicare such as prospective payment and DRGs had dramatic effects -- for example, reducing inpatient stays by two days without lowering the quality of care. The challenge, of course, was taking these principles (which are sort of a form of bundled payments within hospitals) and applying them across the system to promote better and more coordinated care.

Finally, on the question of predictions, AARP's John Rother believes that there will be a signing ceremony in the Rose Garden -- he just doesn't know when and what they'll be signing. He noted that in talking about a federal budget, it is important not to lose sight of costs in the context of households and the system as a whole. The key, Len said, is that the legislation must make a credible commitment to changing business as usual and moving us toward a system that rewards high-value care. He noted that when President Obama pledged to be the last president to take on health care, what he really meant was that he would be the last to discuss "whether." There will still be plenty left to do after reform passes, which Ceci Connolly noted, enhances the prospects for full employment for wonks like us.

HEALTH POLITICS: Let's Talk Endorsements

Paul Testa — Thu, 05 Nov 2009 14:29:00 -0500

The AP reports that the AARP is ready to announce it's support for the Democratic health reform legislation in the House. The endorsment from the influential retiree's lobby should provide a big boost as House Democrats are expected to vote on H.R. 3962 Saturday evening. Streaming video of the AARP announcement, set to begin at 11:30 a.m., is available below.

Meanwhile, the American Medical Association will announce it's position on the House bill's at 12 p.m. More on that after we get off the call.

HEALTH POLITICS: Crazy like a Foxx

Paul Testa — Tue, 03 Nov 2009 16:32:00 -0500

In a floor speech Monday, Rep. Virginia Foxx (R-NC) argued the prospect of passing health reform gave us more to fear than "any terrorist right now in any country."

Foxx has previously suggested that there "are no Americans who don't have health care," and that health reform would cause seniors to be "put to death by their government."

We guess there's not much else to say about Foxx and health care, except, well, bless her heart.