This blog has moved

This blog is now located at http://health.garnetcoleman.com/.
You will be automatically redirected in 30 seconds, or you may click here.

For feed subscribers, please update your feed subscriptions to
http://health.garnetcoleman.com/feeds/posts/default.

Wrap-up of the Bipartisan Summit and Intro to Reconciliation

The President's bipartisan healthcare summit has just wrapped up. What we saw today was the President and Congressional Democrats clearly lay out their vision and arguments for why the legislation they've passed should become law, and how it will help the American people. Unfortunately, for the most part, we heard the same song and a different verse from Congressional Republicans that simply want the President and proponents of health reform to give up.

Senator Cornyn put out a statement attacking the bill because of its cost to Texas. What he didn't note was that for every dollar the state will spend for Medicaid expansion, we'll receive $9 from the federal government to match it. Texas is clearly a winner under the President's plan, and we've reached the point where Senator Cornyn and his Republican obstructionist allies need to either lead or get out of the way.

The Congressional reconciliation process has made headlines lately as a possible track for Democrats to pass health care reform. Reconciliation is not a new concept, and it's not a "nuclear option". It's been used to pass significant legislation 21 times since 1981, 16 times by Republicans. President Bush used the budget reconciliation process to pass his 2001 and 2003 tax cuts and his Medicare Part D plan. This process was also used to pass COBRA- which lets individuals who lose their jobs continue employer sponsored coverage for 18 months- to enact most major Medicaid reforms, to pass the 1996 welfare reform, and to create the State Children's Health Insurance Program (CHIP).

Below, I've included an article from NPR that details the reconciliation process and some of the many instances it has been used to pass legislation.

---

Health Care No Stranger To Reconciliation Process
by Julie Rovner
February 24, 2010

To reconcile or not to reconcile — when it comes to a health overhaul bill, that seems to be the biggest argument of the moment.

At issue is a process called budget reconciliation. By writing Obama's health care plan as a budget bill, Democrats can prevent a Republican filibuster in the Senate and advance the bill with a simple majority instead of the 60-vote supermajority they no longer have.

Not surprisingly, that has Republicans crying foul. Budget reconciliation, Sen. John Kyl (R-AZ) told reporters Tuesday, "was never designed for a large, comprehensive piece of legislation such as health care, as you all know. It's a budget exercise, and that's why some refer to it as the 'nuclear option.'"

"The use of expedited reconciliation process to push through more dramatic changes to a health care bill of such size, scope and magnitude is unprecedented," Sen. Orrin Hatch (R-UT) wrote in a letter to President Obama on Monday, urging him to renounce the possibility of trying to pass a bill using the procedure.

But health care and reconciliation actually have a lengthy history. "In fact, the way in which virtually all of health reform, with very, very limited exceptions, has happened over the past 30 years has been the reconciliation process," says Sara Rosenbaum, who chairs the Department of Health Policy at George Washington University.

For example, the law that lets people keep their employers' health insurance after they leave their jobs is called COBRA, not because it has anything to do with snakes, but because it was included as one fairly minor provision in a huge reconciliation bill, she says.

"The correct name is continuation benefits. And the only reason it's called COBRA is because it was contained in the Consolidated Omnibus Budget Reconciliation Act of 1985; and that is how we came up with the name COBRA," she says.

COBRA, which confusingly did not become law until 1986, was actually a much larger bill, including many nonhealth provisions and many other important health provisions as well (see chart). Among them was the so-called Emergency Medical Treatment and Active Labor Act (EMTALA), which requires hospitals that accept Medicare or Medicaid payments to at least screen patients who arrive for emergency treatment, regardless of their ability to pay.

Children's Health

But the budget reconciliation process has been used for more far-reaching health policy changes as well, says Rosenbaum. The expansion of health insurance coverage for low-income children is a prime example.

"In 1980, children who were living at less than half the poverty level in the United States could not get a Medicaid card in half the states if they had two parents at home," she says.

But via a series of budget reconciliation bills, beginning in 1984, Congress began expanding Medicaid coverage. In 1997, also in a budget reconciliation bill, it created the Children's Health Insurance Program, known as CHIP. Today, says Rosenbaum, who helped write many of the children's health provisions in those bills, Medicaid and CHIP together cover 1 in every 3 children in the United States.

"So literally we've changed everything about insurance coverage for children and families, and we've changed access to health care all across the United States all as a result of reconciliation," she says.

Medicare Changes

Budget reconciliation has also been an important tool for changing the Medicare program.

"Going back even close to 30 years, if you start say in 1982, the reconciliation bill that year added the hospice benefit, which is very important to people at the end of life," says Tricia Neuman, vice president and director of the Medicare Policy Project for the Kaiser Family Foundation.

Over the years, budget reconciliation bills added Medicare benefits for HMOs, for preventive care like cancer screenings; added protections for patients in nursing homes; and changed the way Medicare pays doctors and other health professionals.

Because the point of budget reconciliation was usually to cut the deficit, the huge Medicare program was nearly always on the chopping block. But there's another reason it became the bill of choice for other far-reaching changes.

"This happened primarily because it was the only train leaving the station, so if policymakers wanted to make a change in health policy, the only way to do it would be to amend a reconciliation bill, and that's really why it happened," says Neuman, a former congressional health policy staffer.

In fact, over the past three decades, the number of major health financing measures that were NOT passed via budget reconciliation can be counted on one hand. And one of those — the 1988 Medicare Catastrophic Coverage Act — was repealed the following year after a backlash by seniors who were asked to underwrite the measure themselves.

So using the process to try to pass a health overhaul bill might not be easy. But it won't be unprecedented.

High Costs of Health Care Affect Us All

Staggering increases in insurance premiums over the past decade in Texas only further emphasize the need for comprehensive health care reform. Individuals who are insured are paying higher premiums, higher deductibles and out-of-pocket expenses while receiving fewer benefits. In the past nine years, Texas workers have seen their insurance premiums rise from $6,638 to $12,271- a 91.6 percent increase which far outpaces the 19.7 percent increase in wages. Furthermore, less than 50 percent of Texans receive health insurance from their employer. Texans who are insured are also footing the bill for the uninsured. According to the Baylor Health Care System in Dallas, insured patients are charged 150 percent of actual costs to cover costs for the uninsured.

To learn more about the effect of the uninsured on Texas families, read the Dallas Morning News article: Cost of Care: 'Vicious circle' of uninsured results in higher bills for health coverage, taxes in Dallas-Fort Worth.

Additionally, our current health care system rewards doctors and hospitals for the amount of procedures and tests they conduct instead of performance-based outcomes. This practice has caused health care spending to soar without yielding better results. According to the Commonwealth Fund, Texas ranks 46th in quality of care even though Medicare spending in the state is among the highest in the nation.

To learn more about increasing health care expenses, read the Dallas Morning News article: Dallas sees no relief in health care expenses as competition drives up costs.

Health reform will benefit all Texans and Americans. It will benefit the insured, uninsured and underinsured, along with local and state governments who often subsidize care for those without insurance. Health insurance reform will require personal responsibility, allow those without insurance to purchase quality, affordable care, and lower costs for all Texans.

In Washington, 564 amendments have been offered to the health care legislation introduced by Senator Max Baucus (D-Montana), Chairman of the Senate Finance Committee. You can read all the amendments here.

As this process moves relatively quickly, we will try to keep you up to date regularly. In an effort to keep informed, you may receive more emails from us than usual.

Harris County Will Benefit from Health Care Reform

The Texas congressional district with the highest insured population ranks 239th of 435 in the country. The highest ranking congressional district in Harris County ranks 244th of 435. Congressional districts in Houston have more residents without health insurance than any other metropolitan region in the country. Harris County alone has 1.3 million uninsured residents.

As the state with the largest uninsured population, we have the most to gain from federal health reform legislation. Individuals with health insurance will benefit from reform as well, since rising health care premiums are crushing family budgets. Texas families need access to quality, affordable health care now.

For your information, below I've included:

• An article from Saturday's Houston Chronicle that details Houston area congressional districts' health insurance standings as compared with the rest of the country,
• An article from Saturday's Houston Chronicle about a roundtable discussion in which I urge leaders of the Texas Medical Center to support health care reform.

To see a more detailed explanation from the U.S. Energy and Commerce Committee of how federal health reform legislation will benefit Harris County congressional districts, please click on the below links:

• John Culberson (TX-7)
• Kevin Brady (TX-8)
• Al Green (TX-9)
• Michael McCaul (TX-10)
• Sheila Jackson Lee (TX-18)
• Pete Olson (TX-22)
• Gene Green (TX-29)

I will keep you updated on this important policy matter as it continues to develop.

---

City, state lag nation in health insurance
Houston congressional districts among worst 10 in U.S.

By RICHARD S. DUNHAM
WASHINGTON BUREAU

Aug. 29, 2009, 7:48AM

WASHINGTON — The Houston congressional delegation holds an ignominious honor: More of its districts have more people without health insurance than any other metropolitan area in the country.

Texas, which has the nation's highest rate of uninsured, has four districts among the worst 10 in the country for constituents who lack coverage, including those represented by Houston Democrats Gene Green and Sheila Jackson Lee.
Thirteen of Texas' districts — including the four in the Houston area — are in the bottom 30.

"It's not something that I'm proud of," said Rep. Al Green, D-Houston, whose district ranks 28th from the bottom.

Not a single Texas congressional district, even the state's wealthiest, ranks in the nation's top half. The ratings are based on a Houston Chronicle analysis of Gallup Poll data compiled by National Journal.

Eight of the 10 Texas districts with the highest uninsured rates are dominated by minority residents. The two majority-white districts in the bottom 10 list are in East Texas.

About 6 million Texans are uninsured, including one in five children. Harris County has more uninsured residents than any other Texas county — 1.3 million people — and Rep. Al Green says 500,000 more are underinsured.

The uninsured data include illegal immigrants, which skews the results in some Texas districts. But it doesn't fully explain the Lone Star State's uniformly low standing. Indeed, the state's wealthiest districts, including some with very few undocumented residents, rank far behind comparable districts in other states.

Jackson Lee, whose constituency is about 40 percent African-American and 36 percent Hispanic, calls the disparities in health coverage between wealthy Texans and poor minorities "a link for disaster and call for serious attention."

Helping the hospitals

The state's high uninsured population has become an issue as Congress considers comprehensive health-care reform. Gene Green says local lawmakers are working with the Texas Medical Center and its member institutions to ensure that area hospitals are reimbursed for serving uninsured Texans under any overhauled health-care system.

"I don't want whatever new system we have to hurt the (hospitals)," he said. "I want them to get paid."

Among Texas' 32 congressional districts, eight of the 10 with the highest uninsured rates are represented by Democrats. At the bottom of the list — for Texas and the nation — is Ruben Hinojosa's Rio Grande Valley district, where 46.4 percent of residents have no health-care coverage.

Gene Green's majority-Latino Houston district, with its 36.4 percent uninsured rate, is second worst in Texas and fifth worst in the country. Jackson Lee's central Houston district has a 29.7 percent uninsured rate, sixth worst in Texas and 19th worst in the U.S. The fourth Houston-area lawmaker in the bottom 30 is Rep. Kevin Brady, R-The Woodlands.
"Without reform," argues Rep. Charles Gonzalez, D-San Antonio, "the problem will only get worse."

‘Greatest health-care ...'

The 10 districts with the most insured residents — three in the Houston area — have Republican members of Congress. All of those suburban lawmakers oppose President Barack Obama's health-reform initiative.

The Texas district with the highest coverage levels is represented by a doctor, Michael Burgess of Lewisville. But Burgess' Dallas-area district ranks only 239th of the nation's 435 House districts. Houston's best-insured district is John Culberson's westside district.

It ranks 244th of 435 in the country.

Culberson calls American medical care "the greatest health-care system that the world has ever known."

To increase the number of insured Texans, Culberson would permit citizens to buy health insurance across state lines, allow small businesses to band together to purchase health insurance without federal restrictions and to expand the use of Health Savings Accounts. He warns that Democratic health-reform proposals will result in "the obliteration of the private sector."

richard.dunham@chron.com

---

Lawmaker urges Med Center to back health overhaul

By Todd Ackerman

Aug. 28, 2009, 9:05PM

State Rep. Garnet Coleman called for Texas Medical Center leaders to support health-care reform efforts Friday, arguing that Congress needs to "get it done, not slow it down" and dismissing town hall opposition as orchestrated.

The Houston Democrat's appeal was a response to U.S. Sen. Kay Bailey Hutchison's July 27 news conference, where many medical center leaders urged Congress not to rush efforts to fix America's troubled health-care system. Coleman criticized the event at the time as an attempt to kill the effort.

"The time of leaving people without health insurance has gone on too long," said Coleman, a member of President Barack Obama's 32-person State Legislators for Health Reform. "Your being against the legislation is not going to kill it. People want change."

Coleman characterized as "planned and rolled out" the town hall meetings where opponents have fulminated against the House bill, pointing to Republican consultant Frank Luntz's "10 rules for stopping the Washington takeover of health care."

"This is not a spontaneous uprising," Coleman said, adding that the strategy was designed to affect polling, currently on a downward trajectory.

A lower profile

Coleman's news conference drew a lower profile group than Hutchison's event, which included many of the medical center's biggest names. There were only two big names at Coleman's event — University of Texas M.D. Anderson Cancer Center President Dr. John Mendelsohn and Harris County Hospital District President and Chief Executive Officer David Lopez.

Lopez was one of the most vocal advocates of slowing down the process — in July he said "the devil is in the details" and expressed concern to Hutchison that the House bill could have a negative effect on the district — but he said Friday he has now had a chance to study the bill and supports it.

Lopez was the only official to attend both news conferences. The other attendees Friday included representatives from Texas Children's Hospital, Shriners Hospital for Children, The Institute for Rehabilitation and Research, Prairie View A&M's College of Nursing and the Texas Medical Center, the corporation that manages the medical center.

At one point, Coleman asked how many had read the House bill, which is more than 1,000 pages long. Only a few raised a hand.

Coleman told those in attendance that the bill will be fine-tuned, noting that in his 18 years as a state legislator he's never seen a bill passed that was the same as originally written.

Coleman said the State Legislators for Health Reform, created in May, regularly brings back input to Obama about what people like and dislike about reform legislation.

todd.ackerman@chron.com

Opposition's Game Plan to Kill Federal Health Reform Legislation

Frank Luntz HealthCare Messaging: A Case Study

Background: Dr. Frank Luntz is a renowned pollster and messaging consultant for conservatives. In late May 2009, he released a set of ten rules for healthcare opponents, titling it "The Language of Healthcare 2009". The detailed rules in a 28 page memo are to be used to bring down healthcare reform. The rules and talking points have been used by Congressmen, political professionals, and other opponents of reform. The below press release is an example of Luntz' messaging.

Example is a recent press release from the Texas Medical Association (TMA). From TMA president William H. Fleming III, MD, regarding H.R. 3200, “America’s Affordable Health Care Choices Act of 2009,” Congressional legislation to reform America’s health care system. Analysis added in parenthesized bold, italics.

_________________________________________________________________

The physicians of the Texas Medical Association believe our health care system is broken and needs reform. (Acknowledge the crisis or suffer the consequences, Luntz Rule #2)

However, we have concerns about the current House proposal, H.R. 3200, ‘America’s Affordable Health Care Choices Act of 2009.’ While it addresses some of health care’s ailments, it leaves gaping wounds which do not serve Texas patients well. (Humanize approach by mentioning patients, Luntz Rule #1)

“As physicians, our primary goal is to improve the health of our patients. We believe that patients and their physicians must be free to make choices that best fit their individual health care needs. This legislation severely limits those choices. (Protection of personalized doctor-patient relationship, One-size-does-not-fit-all, Luntz Rule #7)

“Therefore, TMA cannot support a proposal to create another government-payer health plan while existing government-payer plans, such Medicare, Medicaid, and the military health care program, TRICARE, are failing patients. (Arguments against Democrats must center around government, Luntz Rule#4)

We are deeply troubled there is no fix to the flawed Medicare funding formula, which limits seniors’ ability to see a doctor when they need to; and the absence of medical liability reforms, which provide greater access to care to Texas patients. We remain extremely concerned that the ‘public option’ will soon become the controlling payer in all health care (One-size-does-not-fit-all, Luntz Rule #7), resulting in an unworkable government price-setting scheme (Government waste and abuse, Luntz Rule #8) like we now see in Medicare. TMA physicians also are concerned that this plan limits at which hospitals patients can receive care. (Stress healthcare denial from government run healthcare plans, Luntz Rule #5)

“TMA physicians will continue to review and analyze H.R. 3200, and pledge to work with Congressional leaders and the Obama administration in crafting legislation that truly would improve health care ― the patient-physician relationship ― in the United States and Texas. As physicians, it is our ethical duty to provide leadership on these public policy decisions. (Not enough to say you are against, say you are working for solution, Luntz Rule #10)

_________________________________________________________________

Delay, Delay, Delay - Common political strategy to 'kill bills without saying so'

"The Republican Party is trying to kill health care reform, and anyone in politics knows delay delay delay is one good way to do it"
-Garnet Coleman, Houston Chronicle, 7/30/2009

"The typical Washington bureaucratic game of, if you don't have a better alternative, just delay in the hope that that kills something, is partly what is playing out here…But there are those who are advocating delay just as a desperation move to try to kill this."
-White House budget director Peter Orszag, CNN 7/19/09

Republican, Conservative Groups Push Delay Effort

"The Republican National Committee will engage in every activity we can to slow down this mad rush while promoting sensible alternatives that address health care costs and preserve quality"
-RNC Internal Healthcare memo, 7/21/09 page 8

"Even voters who support a ‘public plan’ think Obama and Congress are moving too fast, with reckless speed, risking a huge part of our economy and our health care, when they don’t know what reform would really bring. If we slow this sausage-making process down, we can defeat it, and advance real reform that will actually help..”
-RNC Polling memo by Alex Castellanos 7/13/2009

"We can throw sand in the gears of the government-run health care scheme…Let's rededicate outselves by derailing the plan to give the federal government more power over our health care."
-Dick Armey, Freedomworks Healthcare Opposition Kit

"Throw the kitchen sink at the legislation now on the table, drive a stake through its heart, and kill it."
-Conservative Columnist William Kristol, 7/20/09

"Let's do it smart, not fast,"
-Former Bush Chief of Staff Andy Card, 7/21/2009

"[GOP Senators John McCain and Mitch] McConnell called for Congress "to step back, start over and think about incremental changes" to the health care system"
-GOP senators seek go-slow approach on health care, AP 9/1/2009

Health Care Leaders Echo the Message

"Believing that President Obama and Congress must slow down and get health system reform right, the Texas Medical Association has launched the "Me and My Doctor, We Know Best" patient-physician action campaign."
-Texas Medical Association front page website, www.texmed.org

"The priority should be, let's get it right, not let's get it done fast."
-Dan Wolterman, CEO, Memorial Hermann Health Care System, Houston Chron 7/29/09

"Texas Medical Center leaders Monday sent a message to Congress as it tries to reform America's troubled health care system: slow down…Two said the process ought to take years, perhaps involving a series of bills." -Texas Medical Center leaders, Houston Chron, 7/29/09

Summary of America's Affordable Health Choices Act

With all the misinformation floating around about federal health reform, it is important that we know the facts. Below, I've included a summary of federal health insurance reform legislation that was prepared by the three U.S. House Committees that have been working on health reform. To download this summary as a PDF document click here. You can also read a synopsis of the bill from the Kaiser Family Foundation, an independent third party, here.

Health care reform legislation must still make its way out of both chambers, to a conference committee to reach a compromise, and back to both chambers for a final vote. This is standard procedure for crafting legislation in Congress. As legislation progresses through these various stages, I will keep you informed of any new developments.

To view a playbook of the opposition's game plan to kill this legislation, click here.

For more information, you can also read the following publications by the Commonwealth Fund:

• Failure to Protect: Why the Individual Insurance Market Is Not a Viable Option for Most U.S. Families [The findings underscore the need for an expansion of affordable health insurance options, particularly during a time of mounting job losses.]
• Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes--State Health Insurance Premium Trends and the Potential of National Reform [The rapid rise in health insurance premiums has severely strained U.S. families and employers in recent years]
• How Health Care Reform Can Lower the Costs of Insurance Administration [The United States leads all industrialized countries in the share of national health care expenditures devoted to insurance administration.]

I will keep you updated on this important policy matter as it continues to develop.

---

America’s Affordable Health Choices Act provides quality affordable health care for all Americans and controls health care cost growth. Key provisions of the bill released today include:

• COVERAGE AND CHOICE
• AFFORDABILITY
• SHARED RESPONSIBILITY
• CONTROLLING COSTS
• PREVENTION AND WELLNESS
• WORKFORCE INVESTMENTS

I. COVERAGE AND CHOICE
The bill builds on what works in today’s health care system and fixes the parts that are broken. It protects current coverage – allowing individuals to keep the insurance they have if they like it – and preserves choice of doctors, hospitals, and health plans. It achieves these reforms through:

• A Health Insurance Exchange. The new Health Insurance Exchange creates a transparent and functional marketplace for individuals and small employers to comparison shop among private and public insurers. It works with state insurance departments to set and enforce insurance reforms and consumer protections, facilitates enrollment, and administers affordability credits to help low- and middle-income individuals and families purchase insurance. Over time, the Exchange will be opened to additional employers as another choice for covering their employees. States may opt to operate the Exchange in lieu of the national Exchange provided they follow the federal rules.
• A public health insurance option. One of the many choices of health insurance within the health insurance Exchange is a public health insurance option. It will be a new choice in many areas of our country dominated by just one or two private insurers today. The public option will operate on a level playing field. It will be subject to the same market reforms and consumer protections as other private plans in the Exchange and it will be self-sustaining – financed only by its premiums.
• Guaranteed coverage and insurance market reforms. Insurance companies will no longer be able to engage in discriminatory practices that enable them to refuse to sell or renew policies today due to an individual’s health status. In addition, they can no longer exclude coverage of treatments for pre-existing health conditions. The bill also protects consumers by prohibiting lifetime and annual limits on benefits. It also limits the ability of insurance companies to charge higher rates due to health status, gender, or other factors. Under the proposal, premiums can vary based only on age (no more than 2:1), geography and family size.
• Essential benefits. A new independent Advisory Committee with practicing providers and other health care experts, chaired by the Surgeon General, will recommend a benefit package based on standards set in the law. This new essential benefit package will serve as the basic benefit package for coverage in the Exchange and over time will become the minimum quality standard for employer plans. The basic package will include preventive services with no cost-sharing, mental health services, oral health and vision for children, and caps the amount of money a person or family spends on covered services in a year.

II. AFFORDABILITY
To ensure that all Americans have affordable health coverage the bill:

• Provides sliding scale affordability credits. The affordability credits will be available to low- and moderate- income individuals and families. The credits are most generous for those who are just above the proposed new Medicaid eligibility levels; the credits decline with income (and so premium and cost-sharing support is more limited as your income increases) and are completely phased out when income reaches 400 percent of the federal poverty level ($43,000 for an individual or $88,000 for a family of four). The affordability credits will not only make insurance premiums affordable, they will also reduce cost-sharing to levels that ensure access to care. The Exchange administers the affordability credits with other federal and state entities, such as local Social Security offices and state Medicaid agencies.
• Caps annual out-of-pocket spending. All new policies will cap annual out-of-pocket spending to prevent bankruptcies from medical expenses.
• Increased competition: The creation of the Health Insurance Exchange and the inclusion of a public health insurance option will make health insurance more affordable by opening many market areas in our country to new competition, spurring efficiency and transparency.
• Expands Medicaid. Individuals and families with incomes at or below 133 percent of the federal poverty level will be eligible for an expanded and improved Medicaid program. Recognizing the budget challenges in many states, this expansion will be fully federally financed. To improve provider participation in this vital safety net – particularly for low-income children, individuals with disabilities and people with mental illnesses – reimbursement rates for primary care services will be increased with new federal funding.
• Improves Medicare. Senior citizens and people with disabilities will benefit from provisions that fill the donut hole over time in the Part D drug program, eliminate cost-sharing for preventive services, improve the low-income subsidy programs in Medicare, fix physician payments, and make other program improvements. The bill will also address future fiscal challenges by improving payment accuracy, encouraging delivery system reforms and extending solvency of the Medicare Trust Fund.

III. SHARED RESPONSIBILITY
The bill creates shared responsibility among individuals, employers and government to ensure that all Americans have affordable coverage of essential health benefits.

• Individual responsibility. Except in cases of hardship, once market reforms and affordability credits are in effect, individuals will be responsible for obtaining and maintaining health insurance coverage. Those who choose to not obtain coverage will pay a penalty of 2.5 percent of modified adjusted gross income above a specified level.
• Employer responsibility. The proposal builds on the employer-sponsored coverage that exists today. Employers will have the option of providing health insurance coverage for their workers or contributing funds on their behalf. Employers that choose to contribute will pay an amount based on eight percent of their payroll. Employers that choose to offer coverage must meet minimum benefit and contribution requirements specified in the proposal.
• Assistance for small employers. Recognizing the special needs of small businesses, the smallest businesses (payroll that does not exceed $250,000) are exempt from the employer responsibility requirement. The payroll penalty would then phase in starting at 2% for firms with annual payrolls over $250,000 rising to the full 8 percent penalty for firms with annual payrolls above $400,000. In addition, a new small business tax credit will be available for those firms who want to provide health coverage to their workers. In addition to the targeted assistance, the Exchange and market reforms provide a long-sought opportunity for small businesses to benefit from a more organized, efficient marketplace in which to purchase coverage.
• Government responsibility. The government is responsible for ensuring that every American can afford quality health insurance, through the new affordability credits, insurance reforms, consumer protections, and improvements to Medicare and Medicaid.

IV. PREVENTION AND WELLNESS
Prevention and wellness measures of the bill include:

• Expansion of Community Health Centers;
• Prohibition of cost-sharing for preventive services;
• Creation of community-based programs to deliver prevention and wellness services;
• A focus on community-based programs and new data collection efforts to better identify and address racial, ethnic, regional and other health disparities;
• Funds to strengthen state, local, tribal and territorial public health departments and programs.

V. WORKFORCE INVESTMENTS
The bill expands the health care workforce through:

• Increased funding for the National Health Service Corp;
• More training of primary care doctors and an expansion of the pipeline of individuals going into health professions, including primary care, nursing and public health;
• Greater support for workforce diversity;
• Expansion of scholarships and loans for individuals in needed professions and shortage areas;
• Encouragement of training of primary care physicians by taking steps to increase physician training outside the hospital, where most primary care is delivered, and redistributes unfilled graduate medical education residency slots for purposes of training more primary care physicians. The proposal also improves accountability for graduate medical education funding to ensure that physicians are trained with the skills needed to practice health care in the 21st century.

VI. CONTROLLING COSTS
The bill will reduce the growth in health care spending in a numerous ways. Investing in health care through stronger prevention and wellness measures, increasing access to primary care, health care delivery system reform, the Health Insurance Exchange and the public health insurance option, improvements in payment accuracy and reforms to Medicare and Medicaid will all help slow the growth of health care costs over time. These savings will accrue to families, employers, and taxpayers.

• Modernization and improvement of Medicare. The bill implements major delivery system reform in Medicare to reward efficient provision of health care, rolling out innovative concepts such as accountable care organizations, medical homes, and bundling of acute and post-acute provider payments. New payment incentives aim to decrease preventable hospital readmissions, expanding this policy over time to recognize that physicians and post-acute providers also play an important role in avoiding readmissions. The bill improves the Medicare Part D program by creating new consumer protections for Medicare Advantage Plans, eliminating the “donut hole” and improvinglow-income subsidy programs, so that Medicare is affordable for all seniors and other eligible individuals. A centerpiece of the proposal is a complete reform of the flawed physician payment mechanism in Medicare (the so-called sustainable growth rate or “SGR” formula), with an update that wipes away accumulated deficits, provides for a fresh start, and rewards primary care services, care coordination and efficiency.
• Innovation and delivery reform through the public health insurance option. The public health insurance option will be empowered to implement innovative delivery reform initiatives so that it is a nimble purchaser of health care and gets more value for each health care dollar. It will expand upon the experiments put forth in Medicare and be provided the flexibility to implement value-based purchasing, accountable care organizations, medical homes, and bundled payments. These features will ensure the public option is a leader in efficient delivery of quality care, spurring competition with private plans.
• Improving payment accuracy and eliminating overpayments. The bill eliminates overpayments to Medicare Advantage plans and improves payment accuracy for numerous other providers, following recommendations by the Medicare Payment Advisory Commission and the President. These steps will extend Medicare Trust Fund solvency, and put Medicare on stronger financial footing for the future.
• Preventing waste, fraud and abuse. New tools will be provided to combat waste, fraud and abuse within the entire health care system. Within Medicare, new authorities allow for pre-enrollment screening of providers and suppliers, permit designation of certain areas as being at elevated risk of fraud to implement enhanced oversight, and require compliance programs of providers and suppliers. The new public health insurance option and Health Insurance Exchange will build upon the safeguards and best practices gleaned from experience in other areas.
• Administrative simplification. The bill will simplify the paperwork burden that adds tremendous costs and hassles for patients, providers, and businesses today.

Understanding Health Care Reform

With all the information floating around on health care reform, it may be difficult to understand exactly how national reform will affect you and your family.

Federal health care reform offers strong consumer protections. It is centered on preventive care and will lower costs for all Americans. The legislation will increase a patient's choice of doctor and will keep insurance companies from denying coverage for pre-existing conditions.

Much of the debate at the federal level has been focused on the most effective way to both insure millions of Americans while remaining fiscally responsible.

For your information, I have included two editorials on the above subjects:

• A New York Times editorial from last Sunday that explains the federal health care reform legislation in a manner that is easy to understand.
• A New York Times editorial from yesterday discussing the Obama administration's plan to slow the rate of growth in health care spending.

---

July 26, 2009
EDITORIAL

Health Care Reform and You

The health care reform bills moving through Congress look as though they would do a good job of providing coverage for millions of uninsured Americans. But what would they do for the far greater number of people who already have insurance? As President Obama noted in his news conference last week, many of them are wondering: "What's in this for me? How does my family stand to benefit from health insurance reform?"

Many crucial decisions on coverage and financing have yet to be made, but the general direction of the legislation is clear enough to make some educated guesses about the likely winners and losers.

WHAT ARE THE ELEMENTS OF REFORM? The House bill and a similar bill in the Senate would require virtually all Americans to carry health insurance with specified minimum benefits or pay a penalty. They would require all but the smallest businesses to provide and subsidize insurance that meets minimum standards for their workers or pay a fee for failing to do so.

The reforms would help the poorest of the uninsured by expanding Medicaid. Some middle-class Americans — earning up to three or four times the poverty level, or $66,000 to $88,000 for a family of four — would get subsidies to help them buy coverage through new health insurance exchanges, national or state, which would offer a menu of policies from different companies.

IS THERE HELP FOR THE INSURED? Many insured people need help almost as much as the uninsured. Premiums and out-of-pocket spending for health care have been rising far faster than wages. Millions of people are "underinsured" — their policies don't come close to covering their medical bills. Many postpone medical care or don't fill prescriptions because they can't afford to pay their share of the costs. And many declare personal bankruptcy because they are unable to pay big medical debts.

The reform effort should help ease the burdens of many of them, some more quickly than others. The legislation seems almost certain to include a new marketplace, the so-called health insurance exchange. Since there will be tens of millions of new subscribers, virtually all major insurers are expected to offer policies through an exchange. To participate, these companies would have to agree to provide a specified level of benefits, and they would set premiums at rates more comparable to group rates for big employers than to the exorbitant rates typically charged for individual coverage.

Under the House bill, the exchanges would start operating in 2013. They would be open initially to people who lack any insurance; to the 13 million people who have bought individual policies from insurance companies, which often charge them high rates for relatively skimpy coverage; and to employees of small businesses, who often pay high rates for their group policies, especially if a few of their co-workers have run up high medical bills. By the third year, larger businesses might be allowed to shift their workers to an exchange. All told, the Congressional Budget Office estimates that 36 million people would be covered by policies purchased on an exchange by 2019.

IS THERE MORE SECURITY FOR ALL? As part of health reform, all insurance companies would be more tightly regulated. For Americans who are never quite certain that their policies will come through for them when needed, that is very good news.

The House bill, for example, would require that all new policies sold on or off the exchanges must offer yet-to-be-determined "essential benefits." It would prohibit those policies from excluding or charging higher rates to people with pre-existing conditions and would bar the companies from rescinding policies after people come down with a serious illness. It would also prohibit insurers from setting annual or lifetime limits on what a policy would pay. All this would kick in immediately for all new policies. These rules would start in 2013 for policies purchased on the exchange, and, after a grace period, would apply to employer-provided plans as well.

WHO PAYS? Current estimates suggest that it would cost in the neighborhood of $1 trillion over 10 years to extend coverage to tens of millions of uninsured Americans. Under current plans, half or more of that would be covered by reducing payments to providers within the giant Medicare program, but the rest would require new taxes or revenue sources.

If President Obama and House Democratic leaders have their way, the entire tax burden would be dropped on families earning more than $250,000 or $350,000 or $1 million a year, depending on who's talking. There is strong opposition in the Senate, and it seems likely that at least some burden would fall on the less wealthy.

Many Americans reflexively reject the idea of any new taxes — especially to pay for others' health insurance. They should remember that if this reform effort fails, there is little hope of reining in the relentless rise of health care costs. That means their own premiums and out-of-pocket medical expenses will continue to soar faster than their wages. And they will end up paying higher taxes anyway, to cover a swelling federal deficit driven by escalating Medicare and Medicaid costs.

WHO WON'T BE HAPPY? Healthy young people who might prefer not to buy insurance at all will probably be forced to by a federal mandate. That is all to the good. When such people get into a bad accident or contract a serious illness, they often can't pay the cost of their care, and the rest of us bear their burden. Moreover, conscripting healthy people into the insured pool would help reduce the premiums for sicker people.

Less clear is what financial burden middle-income Americans would bear when forced to buy coverage. There are concerns that the subsidies ultimately approved by Congress might not be generous enough.

WHAT IF I HAVE GOOD GROUP COVERAGE? The main gain for these people is greater security. If they got laid off or chose to leave their jobs, they would no longer be faced with the exorbitant costs of individually bought insurance but could buy new policies through the insurance exchanges at affordable rates.

President Obama has also pledged that if you like your current insurance you can keep it.
Right now employers are free to change or even drop your coverage at any time. Under likely reforms, they would remain free to do so, provided they paid a penalty to help offset the cost for their workers who would then buy coverage through an exchange. Under the House reform bill, all employers would eventually be allowed to enroll their workers in insurance exchanges that would offer an array of policies to choose from, including a public plan whose premiums would almost certainly be lower than those of competing private plans.

Some employers might well conclude that it is a better deal — for them or for you — to subsidize your coverage on the exchange rather than in your current plan. If so, you might end up with better or cheaper coverage. You would probably also have a wider choice of plans, since most employers offer only one or two options.

WILL I PAY LESS? Two factors could help drive down the premiums for those who are insured. In the short-term, if reform manages to cover most of the uninsured, that should greatly reduce the amount of charity care delivered by hospitals and eliminate the need for the hospitals to shift such costs to patients who have private insurance. One oft-cited study estimates that cost-shifting to cover care for the uninsured adds about $1,000 to a family's annual insurance premiums; other experts think it may be a few hundred dollars. In theory, eliminating most charity care should help hold down or even reduce the premiums charged for private insurance. When, if ever, that might happen is unclear.

In the long run, if reform efforts slow the growth of health care costs, then the increase in insurance costs should ease as well. And if the new health insurance exchanges — and possibly a new public plan — inject more competition into markets that are often dominated by one or two big private insurance companies, that, too, could help bring down premiums.
But these are big question marks, and the effects seem distant.

WILL MY CARE SUFFER? Critics have raised the specter that health care will be "rationed" to save money. The truth is that health care is already rationed. No insurance, public or private, covers everything at any cost. That will not change any time soon.

It is true that the long-term goal of health reform is to get rid of the fee-for-service system in which patients often get very expensive care but not necessarily the best care. Virtually all experts blame the system for runaway health care costs because it pays doctors and hospitals for each service they perform, thus providing a financial incentive to order excessive tests or treatments, some of which harm the patients.

An earlier wave of managed care plans concentrated on reining in costs and aroused a backlash among angry beneficiaries who were denied the care they wanted. The most expensive treatment is not always the best treatment. The reform bills call for research and pilot programs to find ways to both control costs and improve patients' care.

The bills would alter payment incentives in Medicare to reduce needless readmissions to hospitals. They would promote comparative effectiveness research to determine which treatments are best but would not force doctors to use them. And they call for pilot programs in Medicare to test the best ways for doctors to manage and coordinate a patient's total care.

Any changes in the organization of care would take time to percolate from Medicare throughout the health care system. They are unlikely to affect most people in the immediate future.

WHAT DOES IT MEAN FOR OLDER AMERICANS? People over 65 are already covered by Medicare and would seem to have little to gain. But many of the chronically ill elderly who use lots of drugs could save significant money. The drug industry has already agreed to provide 50 percent discounts on brand-name drugs to Medicare beneficiaries who have reached the so-called "doughnut hole" where they must pay the full cost of their medicines. The House reform bill would gradually phase out the doughnut hole entirely, thus making it less likely that beneficiaries will stop taking their drugs once they have to pay the whole cost.

Not everyone in Medicare will be happy. The prospective losers are likely to include many people enrolled in the private plans that participate in Medicare, known as Medicare Advantage plans. They are heavily subsidized, and to pay for reform, Congress is likely to reduce or do away with those subsidies. If so, many of these plans are apt to charge their clients more for their current policies or offer them fewer benefits. The subsidies are hard to justify when the care could be delivered more cheaply in traditional Medicare, and the subsidies force up the premiums for the beneficiaries in traditional Medicare to cover their cost.

Reformers are planning to finance universal coverage in large part by saving money in the traditional Medicare program, raising the question of whether all beneficiaries will face a reduction in benefits. President Obama insisted that benefits won't be reduced, they'll simply be delivered in more efficient ways, like better coordination of care, elimination of duplicate tests and reliance on treatments known to work best.

The AARP, the main lobby for older Americans, has praised the emerging bills and thrown its weight behind the cause. All of this suggests to us that the great majority of Americans — those with insurance and those without — would benefit from health care reform.

---

August 2, 2009
Editorial

Curbing Runaway Health Inflation

This year's effort to reform health care revolves around two powerful, conflicting imperatives. One is to cover tens of millions of uninsured Americans. The other is to absorb the enormous cost of that plan — which could reach $1 trillion over 10 years — without increasing the budget deficit in the next decade or setting the nation on a course that will drive up deficits later.

It is easier to see how to accomplish the first task than the second. But Congress should not slow the push for near-universal coverage while it looks for ways to apply the brakes to the growth in costs. We can be virtually certain that the reforms enacted will be deficit-neutral over the first 10 years. President Obama and Democratic leaders will find cuts in Medicare and raise sufficient taxes to offset the initial cost of insurance expansion.

It is much harder to find ways to slow inflation in health care costs. Peter Orszag, Mr. Obama's budget director, has been searching for what he calls "game changers" that can "bend down the cost curve" in coming years. The question is how well he and Congressional champions of health care reform have succeeded.

WHY IT'S IMPORTANT The skyrocketing cost of health care is driving up federal deficits, threatening to bankrupt Medicare, forcing employers to cut or drop benefits, and leaving workers and their families with unaffordable bills. Even a relatively small reduction in the average annual growth rate over the next decade — from, say, 6.2 percent to 4.7 percent — could save more than $2 trillion for the health care system and hundreds or thousands of dollars for the average family. There is an enormous amount of money in the health care system, much of it spent on tests and procedures that do not improve health. It should be possible to wring out some of that spending.

HOW CAN WE JUDGE SUCCESS? Douglas Elmendorf, director of the Congressional Budget Office, testified in mid-July that he saw no fundamental changes offered by the bills then emerging that would reduce the trajectory of federal health spending significantly. The implication was that the pending bills could actually make deficits bigger after the initial break-even decade. That's because covering the uninsured would increase federal spending and a high rate of medical inflation applied to that larger base would make future deficits worse. However, Mr. Elmendorf was looking only at bills that had cleared committees, which did not include one still being fashioned by the pivotal Senate Finance Committee.

Senator Max Baucus, the Democrat who heads that committee, revealed last week that the C.B.O. had evaluated a draft of his bill and concluded that it would cover 95 percent of all Americans, for a cost below $900 billion, and would actually start reducing the deficit in 2019. That is better than the administration's goal of being deficit-neutral in that final year, but we will not know for sure until the C.B.O. issues a verdict on a final bill.

The budget office provides vitally important guidance to Congress, but focuses primarily on how new legislation might affect federal spending and federal deficits. The office gives only a cursory glance at how reforms might cut costs for the overall system and yield savings for employers, families and state and local governments, the issue that concerns most people.

Moreover, the office makes middle-of-the road estimates of cost and more pessimistic estimates of savings. That makes sense (lawmakers and government agencies routinely exaggerate the virtues of their proposals), but it makes it harder to evaluate proposed innovations.

Respected analysts who are not bound by the C.B.O.'s conservatism have projected significant savings from reforms that the C.B.O. scores poorly. The Commonwealth Fund, a research organization, and David Cutler, a Harvard health economist, separately estimate that an array of reforms could save the government hundreds of billions of dollars in the first decade and the health care system even more. These estimates, coming from advocates of reform, may be too rosy, but underscore the point that the C.B.O. may undervalue savings.

POTENTIAL GAME CHANGERS It seems hard to believe that over the long haul the introduction of electronic medical records will not save substantial money. It would help eliminate the costly repetition of tests, and prevent medication errors that harm patients and lead to costly hospitalization. But it takes money to get started (Mr. Obama's stimulus package calls for $50 billion over five years) and time to overcome physicians' reluctance. Savings in the first decade, if any, are likely to be small.

So, too, it seems likely that a stimulus investment of $1.1 billion in comparative effectiveness research to gauge which medicines and procedures work best is likely to pay off in future decades.

The approach has been wrongly portrayed as an effort by government bureaucrats to dictate "cookbook" medicine that will prevent doctors from doing what's best for their patients and lead to rationing of care. More than 60 physicians' groups have urged Congress to make comparative effectiveness research an important component of reform. They believe the information would help doctors and patients understand which treatments work best. In some cases, the better treatments might be more expensive, in others less. Either way, patients benefit.

And so it goes, through such ideas as changing Medicare's payment incentives to encourage better care not just more care, and to encourage new arrangements of doctors and hospitals that might control costs and provide more coordinated care than the fee-for-service system does. All will take time to bear fruit.

TAXES One way to keep deficits in check would be to impose taxes within the health care system instead of more broadly, which should ensure that revenues increase at the rate of health care inflation. A tax on the value of an employer's contribution to insurance could lead beneficiaries to choose cheaper policies and think twice before undergoing costly tests. We have been leery of recommending a tax that would affect many workers, but a tax on very expensive plans might make sense.

OTHER IDEAS The administration seems to have scoured the health policy literature for ideas, and its proposals reflect the thinking of the nation's leading experts. Most of these ideas would first be tried on a small scale in Medicare — to see if they reduced costs while improving or at least maintaining the quality of care — before being adopted on a wide scale in government programs. Ideas that work for Medicare would presumably migrate out to the private sector.

We believe that some of the reforms in pending legislation could be strengthened. Both public and private insurance plans, for example, should be allowed — not forbidden — to base reimbursement policies on comparative effectiveness findings. But for the most part, the nation is embarking on a long-term experiment to see what works, so small-scale tests and pilot programs seem appropriate.

THE OVERSEER With so much uncertainty, it seems imperative to ensure that the government can change course rapidly to drop approaches that do not work and expand approaches that do. Proposals have been made to create an independent commission of experts, responsible to either the president or Congress, to perform this function at a step removed from the distorting influences of political lobbying.

It is a good idea, if the commission has sufficient power and resources to do an effective job. The panel should be directed to pursue both cost reduction and quality improvement. It should be given cost reduction targets to meet and a mandate to impose across-the-board cuts in Medicare if it falls short. It should have sufficient resources to evaluate and sponsor studies, a membership beholden to no special interest, and be insulated from political pressure by requiring Congress to approve or reject recommendations as a package, without fighting over individual items of interest to lobbyists.

WRONG-HEADED CRITICISM The Republican Party has started a campaign charging that President Obama is conducting a dangerous and reckless experiment in health care reform that will damage the economy, kill jobs, drive up health care costs, and harm patients. That is a bit hard to take after the Bush administration's reckless squandering of government surpluses with tax cuts for wealthy Americans that cost $1.7 trillion over 10 years and an expensive Medicare drug benefit that is projected to cost almost $1 trillion over the next 10 years, without making provisions to cover their costs.

The Obama administration is paying meticulous attention to the need for offsets and new revenues. Most important, it seems headed in the right direction to finally slow the rate of growth in health care spending — a beast that has defied past efforts to tame it.