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HEALTHCARE REFORM

Recent AGS Healthcare Reform News Coverage

Congress Approves $3.5 T Spending Plan "Paving the Way" for President's Goals, But Many Hard Healthcare Reform Decisions Loom; CMS Announces Medicare Advantage Cuts; Beneficiaries Have Trouble Finding Physicians Accepting Medicare; Many Medicare Patients Are Rehospitalized Within Short Period, Study Finds
Voting along party lines, the House and Senate each approved a spending plan totaling roughly $3.5 trillion last week, "paving the way" for healthcare reform and other leading presidential goals, The Washington Post reports.

The nonbinding budget plans the House and Senate approved now go before a conference committee that must resolve differences between the two.

There are other differences that must also be resolved, the Post notes.

"There is no agreement, for example, on how to pay for an overhaul of the healthcare system expected to add more than $1 trillion to the budget over the next decade," the paper reports. That and other "issues will be decided in committees where lawmakers have begun the torturous work on the specifics of Obama's broad plans."

The chairmen of five key committees that will be involved in the process, all of them Democrats, have come to a consensus that reform must require all Americans to have health insurance and must require all employers to help pay for it, according to The New York Times. The committee chairs - Reps. George Miller and Henry Waxman of California, and Charles Rangel of New York, and Sens. Max Baucus of Montana and Edward Kennedy of Massachusetts - "also agree that the government should offer a public health insurance plan as an alternative to private insurance."

So do others who are likely to play a key role in reform. During her confirmation hearing last week, Department of Health and Human Services (DHHS) Secretary nominee Gov. Kathleen Sebelius of Kansas confirmed her support for a public insurance plan. More than 30 states, including Kansas, offer their employees a choice between private insurance and a state-funded public health plan. In these states, the system "operates very effectively" with "no destruction of the marketplace," Gov Sebelius noted.

Many Republicans, however, object vociferously to proposals for a public health plan. Such a plan, they argue, would ultimately drive private plans from the market. And a new report from policy analysts suggests this could be the case -- if the public plan were structured in a particular way. The study concludes that, if the public plan were open to all employers and individuals, and if it paid doctors and hospitals the same fees as Medicare, enrollment in the public plan would grow rapidly, while enrollment in private plans would "plummet."

According to the Associated Press, the government, by paying Medicare rates, "would be able to set premiums well below what private plans charge. Monthly premiums for family coverage would be $761 in the government plan, compared with an average of $970 in private plans (and employers) and individuals would flock to the public plan to cut costs."

While President Obama hasn't detailed exactly how a public plan might work, while on the campaign trail, he described a public plan that would be quite limited. The plan he described while a candidate would be open only to small employers, individuals and the self-employed. According to the new study, such a plan would enroll considerably fewer people than a more inclusive public plan, and have a significantly smaller impact on private insurers.

While Congressional leaders have established an ambitious timetable for health reform that calls for a vote on reform proposals by the end of July, differences over the advisability of creating a public plan and other contentious issues could "delay or derail" the reform processes, The New York Times reports.

There are also special interest groups to consider. Senate Democrats have been meeting regularly with consumer, healthcare, insurance and pharmaceutical groups since autumn. And there has been some significant progress. Two major insurers recently announced, for example, that they would stop charging some people with histories of health problems higher premiums-- if all Americans were required to have health coverage.

"But each point of agreement raises a host of questions," the Times notes. Among others, these include: If all Americans must have coverage, how should the government help cover the cost of insurance for those who need financial assistance? and, If the government provides such assistance, should it stipulate what services should be covered?

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The Centers for Medicare and Medicaid Services announced yesterday that reimbursement for private, comprehensive Medicare Advantage plans would be cut as much as 4.5% next year -- a year earlier than anticipated. The plans enroll more than 10 million Medicare beneficiaries.

"The agency said it would raise the baseline rate for the private plans by 0.81%, slightly more than the 0.5% it proposed in February, though significantly less than the roughly 4% insurers have seen in recent years," The Wall Street Journal reports. "But the payment rates also include a 3.41% reduction as a result of a change in how the government uses a reimbursement scale pegged to enrollees' health."

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A substantial number of Medicare beneficiaries continue to have trouble finding primary care physicians and specialists who accept Medicare, according to The New York Times. Physicians are opting out of the insurance system or declining to accept patients with Medicare coverage because "reimbursement rates are too low and paperwork too much of a hassle," the Times reports.

The paper cites a 2008 Medicare Payment Advisory Commission report finding that 29% of Medicare beneficiaries surveyed had trouble finding a primary care physician who would see them - up from 24% the year before.

AGS continues to advocate for more adequate, appropriate reimbursement for care provided to Medicare beneficiaries. Among other things, the Society has urged Congress to block cuts in Medicare payments to physicians that have been mandated, for each of the last several years, by Medicare's highly controversial Sustainable Growth Rate formula. Congress has responded by blocking the cuts. And AGS continues to urge Washington to find an alternative to the SGR and to make other changes in Medicare's payment structure to more appropriately value and compensate non-procedural care.

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The Obama administration, seeking ways to boost the cost-effectiveness of care, has identified hospital readmission rates as needing improvement. With good reason, a recent New England Journal of Medicine study co-authored by AGS member Eric A. Coleman, MD, suggests. According to the study, up to a fifth of all Medicare patients are readmitted to hospitals within a month of being discharged, and a third are rehospitalized within 90 days.

"The nation spends billions of dollars a year on patients' return visits to the hospital - many of which are readmissions that could be prevented with better follow-up care, the Times reports.

Some hospitals have been able to cut readmission rates by educating patients about what will happen in the hospital and what they should do after discharge; by alerting patients' physicians of hospital stays and sharing discharge plans with them; and by taking steps to ensure patients get follow-up care when they go back home or to a nursing facility. Working more closely with patients and their caregivers so they can better manage chronic conditions such as diabetes can also help, Dr. Coleman tells the Times.

Changes in Medicare payment policy are also needed. Under current policy, lowering the number of readmitted patients can "work against the financial interests of a hospital needing to fill empty beds," the Times notes.

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Congressional Budget Committees Approve Leaner Versions of President’s Spending Plan, Full Senate and House Votes Expected This Week; Two Major Insurers Offer to Drop Higher Rates for Some With Histories of Prior Illness; Adoption of HIT in Hospitals Lags Behind Expectations
Voting along party lines last week, the Senate and House budget committees approved trimmed-down versions of President Obama’s spending plan that “clear the way for lawmakers to pursue the president’s most ambitious and costly initiatives,” The Washington Post reports.

Both chambers “removed Obama’s detailed proposal for a 10-year, $634 billion health reserve plan from their budget plans and …approved plans that simply acknowledge the desire to have a health reserve fund that would not increase the deficit,” according to the Post. But Administration officials said that this would be sufficient to move healthcare reform forward, and that more specifics from the president’s healthcare proposals would “come back into play,” once Congress begins drafting more detailed legislation.

The Senate trimmed roughly $15 billion from the president’s original $3.6 trillion budget for non-defense spending and the House, $7 billion, prior to the committee votes. The two plans would create an estimated $1.2 trillion deficit in the coming fiscal year, but would “dramatically narrow the gap between spending and revenue as the economy recovers over the next five years,” according to the Post.

Republicans contend that the spared down plans would still drive up debt to an unacceptable degree, however. The full House and Senate will consider the plans this week.

A key issue on the Hill is whether lawmakers will ultimately opt to use a controversial procedural maneuver called “budget reconciliation" to push the president's healthcare and energy initiatives through without Republican votes. Budget reconciliation would allow the initiatives to be rolled into a bill that couldn't be filibustered, thereby enabling it to pass the Senate with 51 votes, rather than the usual 60. Democrats have 58 seats in the Senate. The version of the budget that the House committee approved last week includes language setting a mid-September deadline for enacting healthcare reform. “If lawmakers do not act by then, a bill could be attached to the final budget, which would require 51 votes in the Senate,” the Post reports.

Republicans have denounced the use of budget reconciliation, saying it would fly in the face of promised bipartisanship. Some leading Democrats oppose it as well, arguing that garnering bipartisan support for healthcare reform and other sweeping changes is essential.

Among other elements of healthcare reform, Democratic and Republican lawmakers are divided over whether to create a new public health insurance program that would compete with private insurers. While a candidate, Mr. Obama proposed such a program, but has said recently that he would consider a reform package that didn't create a public plan if it met other important criteria. Leading Republicans have argued that private plans won't be able to compete with a public plan and will be driven out of the market. The end result, they predict, will be a single-payer, government run healthcare system.

In an online Town Hall meeting last week, President Obama said that the best approach to providing universal healthcare would be to build on the current system, which relies in part on employer plans – plans that, he noted, have long met the needs of many Americans. During the meeting, Mr. Obama again noted that Medicare and Medicaid are leading contributors to the nation’s long-term deficit and said he is looking to Congress to propose a plan for an “optimal” healthcare system “now rather than waiting for decades.”

Releasing a report outlining their preferred approach to healthcare reform last week, a coalition of physicians, insurers, hospitals, employers, pharmaceutical firms and consumers also called for building on existing employer-based health coverage. The group, Health Reform Dialogue, includes the American Medical Association, the National Federation of Independent Business, hospital groups, AARP and the consumer advocacy group Families USA. The group’s report calls for a mandate requiring every American to have some kind of health coverage, with those unable to afford insurance receiving subsidies or expanded government insurance such as Medicaid. The report, however, “is silent on whether employers have a responsibility to contribute to the cost of care, and it does not address the idea of creating a government sponsored-insurance program what would be available for anyone having difficulty buying coverage,” the Post reports.

Private insurers are threatened by the prospect of the creation of a public health insurance plan and are advocating for alternatives that don’t deviate so significantly from the status quo. Last week, two leading insurers offered – for the first time – to limit their controversial practice of charger higher premiums to people with histories of medical problems, the AP reports.

In a letter to leading Senators, America’s Health Insurance Plans and the Blue Cross and Blue Shield Association offered to halt the practice if all Americans were required to get coverage. The insurers, however, left themselves the option of charging higher premiums based on age and other factors. They also neglected to offer to stop charging higher premiums for people with histories of medical problems who are covered by small businesses. Instead, they promised to work on “separate proposals for that problem,” according to the AP. “Although the letter left open some loopholes, it was still seen as a major development,” the wire service noted.

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A Department of Health and Human Services report released Monday underscores the pressing need for comprehensive healthcare reform. According to the report -- a compilation of findings from dozens of studies -- healthcare spending in the U.S. doubled between 1996 and 2006, and is expected to rise from 16% of gross domestic product now, to 25% in 2025, and 49% by 2082 -- unless there are sweeping changes in the system.

Like overall spending, employer-sponsored health insurance premiums have doubled over the last decade, putting US businesses at significant competitive disadvantage, the report notes. According to former General Motors CEO Rick Wagoner, high healthcare costs mean the company spends $1,400 more on healthcare per vehicle than Toyota.

If that weren’t enough, increased healthcare spending isn’t translating into better quality care, the DHHS report confirms, citing several studies.

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The adoption of electronic health records in hospitals isn’t as widespread as estimated and is likely to be more expensive and problematic than expected, according to a recent The New England Journal of Medicine study coauthored by newly appointed national health information technology (HIT) coordinator Dr. David Blumenthal. President Obama’s stimulus package sets aside $19 billion to encourage the adoption of HIT.

“Many medical experts agree that eliminating paper records would help save lives and make health care more efficient and less costly (but the) survey of nearly 3,000 hospitals found only 1.5% have comprehensive electronic records in all units,” The Associated Press reports. “An additional 7.6% have a basic system in one unit that includes physicians' or nurses' notes.”

Previous estimates had put the share of hospitals adopting HIT at 5% to 59%. To be categorized as having “comprehensive” HIT in the study, hospitals had to have systems in their major clinical units that were capable of 24 functions, such as handling doctors' notes and diagnostic test images and providing computerized provider entry for medications.

"We are at a very early stage in adoption, a very low stage compared to other countries," Dr. Blumenthal told the AP. "The Congress and the administration showed enormous foresight and commitment to the goal of increasing adoption rates through the provisions of the stimulus bill. It's clear they want to see results in health care."

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The Obama Administration established new rules for private Medicare Advantage plans this week. Under the new rules, the comprehensive plans --which cover roughly 10 million beneficiaries -- will face greater scrutiny if they don’t cap beneficiaries’ annual out-of-pocket costs at $3,400, or if they charge more for dialysis, home health care and other services than traditional Medicare. In those cases, the plans will be asked to reduce their fees. In addition, the plans “won’t be allowed to charge sick, low-income patients more than … they would pay under traditional Medicare,” The Wall Street Journal reports.

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Policymakers Face Differences Over Healthcare Reform and How to Achieve It; President Confirms Commitment to Reform Despite Worse than Anticipated Budget Projections; Two Powerful Unions Join Forces to Push for Health Reform; Administration Officials Make Health Appointments
Senior members of the Obama administration are urging lawmakers to use a controversial legislative shortcut known as "budget reconciliation" to push the president's healthcare and energy initiatives through Congress without Republican votes, The Washington Post reports. Budget reconciliation would allow the president's healthcare reform and energy proposals to be rolled into a bill that couldn't be filibustered, thereby enabling it to pass the Senate with 51 votes, rather than the usual 60. Democrats have 58 seats in the Senate. Republicans have denounced the use of the shortcut, saying it flies in the face of promised bipartisanship.

Among other things, Democratic and Republican lawmakers are divided over whether to create a new public health insurance program that would compete with private insurers. Mr. Obama proposed such a program while campaigning, but said recently that he would consider a reform package that didn't create a public plan if it met other important criteria. Sen. Chuck Grassley (R-IA), a key player in health reform, and other Republicans argue that private plans won't be able to compete with a public plan. "I think it's a step toward single-payer, government-run healthcare for everyone," Sen. Grassley told the press last week, calling inclusion of such a plan a "deal breaker," for Republicans.

President Obama reiterated his commitment to healthcare reform on Friday, the day the CBO released its analysis of his budget and other spending proposals. The spending plan and other proposals - which would extend health coverage to all Americans and cut taxes for middle-class taxpayers, among other things - would result in "huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade - $2.3 million more" than the president estimated when he unveiled his budget last moth. Mr. Obama will address Senate Democrats tomorrow in an effort to build support for his spending plan. Centrist Democrats in both the House and Senate have expressed concerns about the president's spending plan and Sen. Kent Conrad (D-ND) has already floated a proposal that would cut spending across the board to reduce deficits to just under 3% of the economy, a level many economists consider sustainable. The White House might accept significant cuts "so long as the president's signature initiatives on healthcare, education and clean energy are preserved," The Post reports.

On another front, two of the nation's fastest-growing labor unions - the Service Employees International Union (SEIU) and the California Nurses Association - ended a long standing dispute this past week and vowed to work together to unionize hospital workers and push for universal health coverage, The New York Times reports.

The Department of Health and Human Services made several key healthcare- related appointments last week. It tapped Dr. David Blumenthal to head health information technology (HIT) efforts. Dr. Blumenthal will play a key role in deciding how to use the $19 billion in the economic stimulus plan allocated for encouraging the adoption of HIT. Most recently director for the Institute for Health Policy at the Massachusetts General Hospitals/ Partners Healthcare System, Dr. Blumenthal has done extensive research on HIT, the Associated Press reports.

DHHS also named a panel of 15 government experts who will advise the government on how to spend the $1.1 billion the stimulus plan allocates for comparative effectiveness research, according to Reuters.

"The council will offer advice and recommendations on research priorities and will not recommend clinical guidelines," said Dr. Carolyn Clancy, who directs the Agency for Healthcare Research and Quality and is among the 15. Other members include the directors of and representatives from the Centers for Disease Control and Prevention, the Centers for Medicare and Medicaid Services, the Food and Drug Administration, the Department of Defense and the Office of Management and Budget.

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Obama Names FDA Chief and Deputy; Omnibus Federal Spending Package Funding Health and Other Departments Gets Senate Approval and Presidential Signature; Rising US Healthcare Costs Put US at Competitive Disadvantage, New Study Finds; To Help Pay for Reform, Obama May Support Taxing Some Employee Health Benefits
President Obama nominated former New York City health chief Dr. Margaret A. Hamburg to be Food and Drug (FDA) Administration commissioner and named Baltimore health chief Dr. Joshua Sharfstein FDA deputy last week while calling for tighter oversight of food processing facilities. The President also signed a $410 billion omnibus spending plan for the current fiscal year that boosts spending on health and other programs.

Naming his new picks for the top FDA posts on Saturday, President Obama also announced the creation of a new Food Safety Working Group. The group, which will include the heads of the Department of Health and Human Services (DHHS) and Agriculture, will help ensure the safety of the nation's food supply. On the heels of several recent outbreaks of food-borne illnesses, including a salmonella outbreak traced to tainted peanuts that has led to nine deaths, Congress is also calling for tighter regulation and more frequent inspections of food processing facilities.

"Consumer groups, food-safety advocates, patients' organizations and others from across the political spectrum praised the choice of Hamburg and Sharfstein for the FDA, which has struggled to retain public confidence amid outbreaks of food-borne illnesses, poisoning scares and drug controversies," The Washington Post reports.

Dr. Hamburg, a physician and bioterrorism expert, was an assistant health secretary during the Clinton administration. According to the Post, she is credited with helping turn around the New York City health department and with lowering the incidence of drug-resistant tuberculosis. Her appointment must be confirmed by the Senate.

Dr. Sharfstein, a pediatrician, was a health policy aide to Rep. Henry Waxman (D-CA), the chair of the commerce committee. Dr. Sharfstein made headlines in 2007 when he petitioned the FDA to restrict the use of over-the-counter cough and cold medications for young children.

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Following the House, the Senate approved and President Obama signed, a $410 billion omnibus spending package last week that will fund DHHS and all other federal departments except those related to defense and homeland security through the September 30 close of the 2009 fiscal year (FY). Defense and homeland security spending were approved last fall.

The $410 billion spending package allocates $66.3 billion for the Department of Health and Human Services. That total includes $30.3 billion for the National Institutes of Health, a $938 million increase over last year. The National Institute on Aging will receive $1.08 billion of that total. It also includes $222 million for all Title VII health professions programs, $48 million more than last year's spending plan. Title VII Geriatrics Health Professions training programs receive $31 million -- the same as in FY 2008. Title VIII Nursing Workforce Development programs receive $171 million - an increase of 9.6% over FY 2008 appropriations. Specifically, the comprehensive geriatric education program under Title VIII will receive $4.6 million - an increase of 37% over FY 2008 numbers. In addition, the plan allocates an extra $335 million for the FDA. The Agency for Healthcare Research and Quality gets $372 million, a $37.5 million boost from the previous year, and the National Health Service Corps receives $135 million, $11.5 million more than in FY 2008.

In addition, the omnibus spending plan boosts funding for mass transit, public housing, Head Start, and the WIC nutrition program for pregnant women, infants and children, among other initiatives.

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

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Underscoring the need for healthcare reform, a new report from the Business Roundtable confirms that high healthcare costs in the US are putting the country at a competitive disadvantage in the global economy. The Business Roundtable represents the CEOs of major companies.

Concern over the effect high U.S. healthcare costs have on competitiveness has been growing for many years. In calling for healthcare reforms that extend coverage and rein in costs, President Obama has repeatedly cited this effect. According to the Business Roundtable report, Americans spent $1,928 per capita on healthcare in 2006 -- at least two-and-a-half times more per person than any other advanced country.

Comparing information on costs, and statistics on life expectancy, death rates and other health measures such as cholesterol readings and blood pressures, the report calculates a score for the US and other nations on a 100-point "value" scale. On the scale, The United States is 23 points behind five leading economic competitors: Canada, Japan, Germany, the United Kingdom and France. All five provide all of their citizens with healthcare "and though their systems differ, in each country the government plays a much larger role than in the US," the AP reports. The cost-benefit disparity is even wider - 46 points - when the U.S. is compared with emerging competitors -- China, Brazil and India.

"Spending more would not be a problem if our health scores were proportionately higher," Dr. Arnold Milstein, one of the authors of the study, told the AP. "But what this study shows is that the US is not getting higher levels of health and quality of care."

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To help pay for an overhaul of the healthcare system that would both rein in costs and extend coverage to the 46 million uninsured in the country, President Obama may support taxing some employee health benefits, a move several influential lawmakers and many economists favor, The New York Times reports.

Such a move, however, would be "politically problematic" for the President, who, as a candidate, criticized a similar proposal, calling it "the largest middle-class tax increase in history." Most Americans get their health coverage through their employers, and health benefits "have long been tax-free, regardless of how generous they are or how much an employee earns," the Times notes.

"Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so," the paper reports.

Sen. Max Baucus (D-MT), who is expected to play a leading role in healthcare reform, called for taxing health benefits during a recent Finance Committee meeting. And the president's budget director, Peter Orszag, has said that the possibility of taxing the benefits should "remain on the table." Advocates of taxing health benefits argue, among other things, that their tax-free status encourages extremely generous "gold plated" policies.

In a blueprint for health reform that he released last November, however, Mr. Baucus said that eliminating the tax-exempt status of all health benefits would go "too far," and cited other options, like taxing benefits above a designated value, taxing only the benefits of high-income employees, or both.

Advocates of taxing health benefits face staunch opposition from labor unions and from businesses that consider health benefits a tool in recruitment and retention, the Times notes.

"If President Obama agrees to cut back the tax break for employee health benefits, he will risk repeating one of Mr. Clinton's errors by disrupting health insurance for people who have it and like it," Frank B. McArdle, a health policy expert with a major benefits consulting firm told the paper.

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Washington lawmakers called for stricter Medicare oversight last week, following publication of a Government Accountability Office (GAO) report finding that a 44% increase in spending on home health services between 2002 and 2006 was partly the result of fraud. The GAO reviewed home health services payments from 2002 to 2006, a period during which the number of Medicare enrollees using in-home services rose 17%.

Sen. Chuck Grassley (R-IA), who requested the GAO report, called for greater Medicare scrutiny following its release.

"Every home health care dollar that's lost to fraud or improper payments is a dollar that doesn't go to necessary care and a better quality of life for older Americans," he told USA Today. "There's no excuse for Medicare officials neglecting payment problems."

Among other things, the GAO report recommends that the Centers for Medicare & Medicaid Services (CMS) "consider criminal background checks on home health operators and draft new rules to remove problem providers more easily."

In October, CMS established new rules for home health care operators in seven states that a call for tighter background checks for equipment suppliers, unannounced visits to providers and closer scrutiny of bills submitted for reimbursement.

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With President Obama's economic stimulus plan allocating $17 billion to promote the use of health information technology, Wal-Mart is entering the electronic medical records market.

The company is teaming with Dell Inc. and others to launch an electronic health records package aimed at small medical practices, the Associated Press reports.

The product, offered through the company's Sam's Club discount-warehouse division, will hit the market this spring and will cost less than $25,000 for the first physician in a practice, and about $10,000 for each additional doctor. "After the installation and training, continuing annual costs for maintenance and support will be $4,000 to $6,500 a year, the company estimates," The Times reports.

Wal-Mart's 30 store-based health clinics are already using the technology

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Will the comparative effectiveness research for which President Obama's stimulus package allocates $1.1 billion promote more effective healthcare and save money, or will it lead to rationing, as some critics contend? That's a contentious question these days, The Washington Post reports.

Systematic comparative effectiveness reviews of drug and treatment options aren't new. "The idea of determining which treatment works best -- and steering patients toward it -- has been employed for years by state Medicaid programs, the Veterans Health Administration and many private health plans," thePost notes. And applying comparative effectiveness findings has saved money. It's helped Kaiser Permanente save hundreds of millions of dollars, and enabled Washington state to cut its Medicaid drug costs by $40 million a year.

Comparative effectiveness research has also proved an early warning system of sorts, identifying drugs with unexpected side effects and even before the Food and Drug Administration. Kaiser Permanente researchers, for example, noted early on that the pain reliever Vioxx appeared to boost risks of stomach bleeding and heart trouble and gave it a lower rating than cheaper drugs. That was four years before the drug was pulled from the market, the Post notes.

But comparative effectiveness research doesn't take into account all of the factors that determine whether a particular drug or treatment is the best bet for a particular individual, say critics.

"Our medicines very often work better on some people than on other people," W.J. Tauzin, president of the trade group Pharmaceutical Research and Manufacturers of America, told The Post. "Used incorrectly, (policy that relies on comparative effectiveness research to determine what's covered) allows government payers to literally ban and keep medicines from patients who need them."

But this isn't what the Obama administration has in mind, administration officials say.

"We're not saying, 'Do X or Y,' " Carolyn Clancy, head of the Agency for Healthcare Research and Quality, which will get $300 million in stimulus package funds for comparative effectiveness research, told the Post. "We're saying, 'Here are the facts, and you should have a conversation with your doctor.'"

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At "Healthcare Summit" Obama Promises Openness to Alternatives; House Extends Visa Waiver for Foreign MDs Working in Underserved Parts of US; President Lifts Stem Cell Ban
At a "healthcare summit" at the White House last week, President Obama warned "special interests" that they would not succeed in blocking needed reform as they had in the past. At the same time, the president indicated that he would be open to reform proposals that differed from those he set forth while a candidate.

"During the campaign, I put forward a plan for healthcare reform," he told those who convened for the half-day conference. "I thought it was an excellent plan. But I don't presume that it was a perfect plan or that it was the best possible plan."

The more than 150 participants in Thursday's healthcare summit included members of Congress, healthcare professionals, and leaders of business groups, insurance companies, hospitals, labor unions and consumer groups.

President Obama didn't offer further explanation of how he would extend coverage to the 46 million uninsured Americans or rein in healthcare spending, during the session. "Instead, he expressed hope that a 'transparent and inclusive' process would produce a bipartisan consensus and overcome the objections of those who had a financial stake in the status quo," according to The New York Times.

On the campaign trail, Mr. Obama proposed creating a public health insurance program that would compete with private programs. But he indicated Thursday that he would also be willing to support an alternative plan that didn't involve the creation of a public program if it ensured coverage for all and brought healthcare spending under control.

Several senior Republican senators attending the summit warned the president that many in their party would strongly oppose efforts to create a private plan. Such a plan, they and other critics contend, would drive private plans out of the market.

Others at the conference, however, voiced support for proposals that went beyond those Mr. Obama floated while a candidate. During his campaign, Mr. Obama proposed requiring that all children have health insurance, but stopped short of mandating health coverage for all.

A number of speakers at the summit - including both Democratic and Republican lawmakers, business leaders, and the president of the Blue Cross and Blue Shield Association - spoke in favor of such a mandate.

"An enforceable mandate is the cornerstone to getting everyone covered," said Scott P. Serota, Blue Cross and Blue Shield Association President.

Some of the proposals Mr. Obama has put forth since taking office, including proposals to cover the cost of extending health coverage to the uninsured, have also come under fire. The President has proposed financing reforms by, among other things, limiting the deductions that the highest-income Americans can take for mortgage interest, charitable gifts, and state and local taxes.

Both Sen. Max Baucus (D-MT), chair of the Senate Finance Committee and one of the most influential lawmakers in the health policy arena, and Rep. Charles Rangel (D-NY), chair of the House Ways and Means Committee, have come out against the proposed limits on deductions.

Sen. Baucus, who is likely to play a major role in healthcare reform, said last week that he planned to introduce a bipartisan reform bill with Sen. Charles E. Grassley (R-IA) that would include both "public and private solutions" the Philadelphia Inquirer reports. While Sen. Baucus supports universal coverage, he does not advocate a single-payer health system.

"Enacting comprehensive health-care reform . . . is my top priority," he told reporters last week. He added that he wanted to "make sure it passes this year" and is phased in over the next two or three years.

Exactly how long it might take to pass and enact reform, is a hard call, especially "given the number of organizations gearing up for a fight over the ways in which health care delivery and payments would be altered," the New York Times notes.

Even within coalitions there are considerable differences. Just days after the summit, two major labor organizations pulled out of Healthcare Reform Dialogue, a coalition calling for an overhaul of the healthcare system. The coalition includes groups representing physicians and nurses, patients, consumers, insurers, drug companies, and businesses large and small. According to press reports, the rift stemmed from differences among coalition members over the advisability of establishing a public insurance plan, and for requiring employers help cover the cost of health coverage for employees.

"The action, by the American Federation of State, County and Municipal Employees and the Service Employees International Union, shows the seeds of discord behind the optimistic talk," at the summit, The New York Times noted.

Health reform is a very high stakes affair, as indicated, among other things, by the size of the campaign contributions special interest groups have made to lawmakers over the last four years. According to a study released today, special interest groups have made the contributions "with a special focus on leaders who will play major roles in shaping health-care legislation," The Times reports.

Shortly after Thursday's summit, the Obama administration announced that it planned to hold several public forums on healthcare reform in five states this month and next. People from around the country - "experts, healthcare professionals and providers as well as everyday citizens" will be invited to the sessions, which will be held in California, Iowa, Michigan, North Carolina and Vermont, according to The Times. The White House has also created a new healthcare Web site, www.healthreform.gov .

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In a voice vote Wednesday, the House approved legislation that would extend the J-1 visa waiver program, which allows foreign graduates of American medical schools to practice in medically underserved communities in the U.S. Rep. Zoe Lofgren (D-CA), who sponsored the legislation, said that the program, which was slated to expire two days later, was "too important to let expire," CQ Today reports.

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In a move expected to stimulate research that supporters say might lead to treatments for a wide range of serious medical problems, President Obama signed an executive directive lifting a ban on federal funding for stem cell research yesterday.

The ban limited the use of taxpayer money to research on a very small number of stem cell colonies or "lines." The Obama order reverses that, but it's up to Congress to address a separate legislative ban, that will otherwise continue to block the use of federal funds for the development of new stem cell lines.

"The order comes just in time for researchers to take advantage of money in Mr. Obama's economic recovery package and use it for stem cell studies," The Times reports. "But because of [the legislative ban, which is known as] the Dickey-Wicker amendment, federal researchers would still be unable to create their own stem cell lines. "

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While the stimulus bill includes $19 billion for health information technology (HIT), and calls for both incentives and penalties to spur physicians and hospitals to adopt HIT, the cost of doing so could exceed the incentives and cost of penalties for failing to comply, according to a new study.

The study, by information firm Avalere Health, estimates that as many as half of such doctors "might decide they are better off financially with the status quo," The Associated Press reports .

According to a Health and Human Services Department spokeswoman interviewed by AP, the incentive payments are intended " to help make new systems more affordable (but not to) wholly subsidize the adoption of this technology."

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Pay-for-performance is changing the way some healthcare providers practice, but hasn't yet significantly improved quality, according to a new RAND Corporation study in the journal Health Affairs.

RAND researchers studied a pay-for-performance program, launched 2003, that included seven major California health plans and 225 physician groups caring for 6.2 million patients. While the program appeared to be speeding adoption of HIT in the health plans, it hadn't yet resulted in significant quality gains, they report.

"Physician groups are responding to pay-for-performance programs by making practice changes and altering how they compensate physicians to reward quality, but health plans and purchasers say that those investments are not yet translating into substantial gains in quality," RAND researcher Cheryl Damberg told the Associated Press. "The true benefits of these programs may take more time to be realized and it is likely that investments in other quality efforts will be needed in addition to performance-based pay."

In a second study, researchers who interviewed physicians in California and Britain, where pay-for-performance is also gaining ground, report that a significant number were dissatisfied with elements of the approach. "In Britain, physicians said the emphasis on computer systems and data collection crowded out communication with patients," they report in the journal Annals of Family Medicine. "In the United States, physicians said they resented the structure of the audit and payment systems, which sometimes distorted the process of care."

According to the researchers, allowing healthcare providers more autonomy in implementing pay -for-performance in their practices might lessen dissatisfaction.

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President Proposes Budget Including $634 B To Cover Uninsured and, Among Other Things, to Avert Scheduled Medicare Physician Pay Cut; Nominates Health Secretary and Chief of White House Office for Health Reform; Prepares for This Week's "Healthcare Summit"
Moving healthcare to front and center, President Obama proposed a budget last week that would set aside $634 billion over the next ten years as a "down payment" on comprehensive healthcare reform, and, among other things, includes funds needed to avert mandated cuts in Medicare physician payments. The President also nominated Democratic Gov. Kathleen Sebelius of Kansas to be his new Health and Human Services Secretary, and tapped former Health Care Financing Administration (HCFA) chief Nancy-Ann DeParle to head the newly created White House Office for Health Reform. He plans to convene a White House "healthcare summit" later this week.

The $634 billion reserve fund Mr. Obama's budget would establish would cover roughly half of what it's expected to cost to accomplish the President's goals of ensuring all Americans coverage and improving quality and cost-effectiveness to rein in rising healthcare costs, The New York Times reports.

"By first identifying a large pot of money to underwrite healthcare reform -before laying out a proposal on who would be covered or how -Obama hopes to draw Congress to the bargaining table to tackle the details of a comprehensive plan," the Times notes. "The strategy is largely intended to avoid the mistakes of the Clinton administration, which created an extensive proposal in secret for many months before delivering the finished product to lawmakers, who quickly rejected it." Unveiling his budget Thursday, the President called on Congress to deliver a healthcare reform plan this year.

Though his budget isn't a detailed blueprint for healthcare reform, it does include assumptions and proposals that would shape and reshape healthcare. The spending plan assumes, for example, that Congress will block the 21% cut in Medicare payments to physicians that Medicare's Sustainable Growth Rate (SGR) formula mandates for next year. The SGR formula also mandates further cuts of about 5% each of the next several years. The AGS and numerous other organizations have long contended that the SGR formula is fatally flawed and that Medicare pay cuts will force physicians to stop seeing new Medicare patients. AGS and other groups have advocated, successfully, for Congressional action to block the cuts over the last several years, and have called for a long-term fix.

Some of the proposals are quite controversial. One would cut payments to home health agencies by $37 billion over the next 10 years. Critics argue that the proposal will force the majority of home health agencies into the red, significantly limiting frail older adults access to home healthcare services. In his budget, Mr. Obama also proposes cutting Medicare payments to hospitals that readmit a large proportion of their patients within 30 days of discharge.

Some of Mr. Obama's proposals for funding the healthcare reserve account are controversial as well. Roughly half of the funds would come from tax increases for Americans in the top tax bracket. Another third would come from eliminating subsidies to private, comprehensive Medicare Advantage plans, which serve roughly one in four beneficiaries. Additional proposals would require wealthier Medicare beneficiaries to pay higher premiums for drug coverage. and require drug companies to boost the rebate they offer on medications sold to Medicaid, from 15 to 21%.

Gov. Sebelius, who accepted President Obama's offer to become his nominee for health Secretary yesterday, must now go through the Congressional confirmation process. A former state insurance commissioner, she has experience in healthcare matters. As a second-term Democratic governor in a red state, she also has a reputation for crossing political lines. But not as much with healthcare issues as with others.

"Despite a record of working with Republicans in some areas, healthcare was one area where she often had trouble forging bipartisan agreement," The Times reports. Among other things, Republican legislators blocked her efforts to raise cigarette taxes to pay for healthcare for the poor. Her efforts to institute universal coverage also ran aground.

Like Gov. Sebelius, Ms. DeParle, who is Mr. Obama's pick for chief of the White House Office for Health Reform, also has extensive experience in healthcare. She was commissioner of the Tennessee Department of Human Services. In the Clinton Administration, she headed the HCFA - as the Centers for Medicare and Medicaid Services were known at the time.

"Since then, she has gained extensive experience in the business world," serving as director and sitting on the boards of large healthcare companies The New York Times reports. "That experience, though seen as an asset by many, prompted questions from some of the people vetting personnel for Mr. Obama."

Ms. DeParle will not need Congressional confirmation to assume her new post.

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Following Approval of Stimulus Package, Obama Focuses More Attention on Healthcare Reform; Among Other Things, President Will Reportedly Include a "Fix" for Pending Medicare Physician Fee Cuts in Budget to be Released this Week

President Appoints Dr. Mary Wakefield HRSA Chief but Candidate for Health Secretary Has Yet to Be Nominated; Health IT and NIH Get Funding Boost in Stimulus Plan, and Industry and Other Groups Meet to Consider Possibility of Mandated Insurance Coverage
Having signed the $787 billion economic stimulus plan into law last week, President Obama began focusing more attention on healthcare this week. The President is expected to discuss his healthcare reform plan in an address to a joint session of Congress today, two days before he's slated to release his first budget. The budget will reportedly include funds needed to obviate a pending 21% cut in Medicare fees to physicians. During a "fiscal responsibility summit" yesterday, the President discussed his pledge to halve the federal budget deficit during his first term, and announced plans for a "healthcare summit" next week to address rising healthcare costs. Reining in healthcare spending will be key to controlling federal outlays, President Obama said. Just hours later, the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) issued projections indicating that, by 2018, healthcare spending will make up more than 20% of the economy, and the government will be footing nearly half of the bill.

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

Whether Mr. Obama will soon name a new nominee for Health and Human Services Secretary remained unclear, however. Kansas governor Kathleen Sebelius, a Democrat with a reputation for working across party lines, has emerged as a frontrunner since former Sen. Tom Daschle, Mr. Obama's original pick for the position, withdrew amid controversy surrounding his failure to pay back taxes. While Gov. Sebelius is considered a strong candidate for Secretary of DHHS, the Obama administration is vetting the candidate particularly carefully, following criticism that it failed to do so with Mr. Daschle. As Kansas' governor for the last six years, Ms. Sebelius has run the state's Medicaid program and has eight years of experience as Kansas' insurance commissioner.

"All signs indicate that she would be a terrific choice," Rep. Pete Stark (D-CA) Democrat of California and chairman of a leading health subcommittee, told the press. The head of America's Health Insurance Plans, an industry group, seconded that assessment. "She has a good intellect, a big heart and tremendous expertise, "Karen M. Ignagni told The Times.

The stimulus bill, which Republican lawmakers continued to decry as a waste of money, cleared Congress last week with just three GOP votes in the Senate, and not a single vote in the House. In a series of nationwide campaign-style appearances that continued well after the final vote, Mr. Obama emphasized initiatives in the plan designed to create jobs and aid the growing number of unemployed Americans and those struggling to pay their bills as the economic recession deepens. Though a new Washington Post-ABC News poll finds bipartisan support for the President's overall job performance flagging -- just 37% of Republicans say they approve of his performance -- large majorities of voters support his economic stimulus package and his $75 billion plan for stemming mortgage foreclosures.

The stimulus plan calls for both tax cuts and increased spending. It significantly boosts state aid, and outlays for education, infrastructure, energy conservation, and healthcare. Among other things, the package includes $19 billion to encourage, via incentive payments to providers through Medicare and Medicaid, the broader use of health information technology such as electronic medical records and electronic prescribing. It will also boost funding for the National Institutes of Health by 34 percent -- from $29 billion to $39 billion. Roughly $2 billion of the additional funds will go toward building and equipment at the NIH's Bethesda, Maryland campus, and at universities involved in NIH research. The lion's share of the funds will be awarded as 15,000 additional grants to scientists conducting research nationwide. The NIH currently funds "only about 40% of grants deemed meritorious, so advocates say that there is a huge backlog of beaker-ready projects," according to The New York Times.

The increase in NIH funding was largely the work of Sen. Arlen Specter (R-PA), one of the three Senate Republicans to vote for the stimulus plan. The Senator, who has survived two bouts with cancer, is the agency's "most ardent champion on Capitol Hill (and) has long insisted that research that results in medical cures is the best service that government can provide," the Times reports.

During yesterday's summit with lawmakers, economists and union officials, President Obama emphasized "that he's more of a fiscal conservative than critics charge," The Hill reports. Mr. Obama and aides noted that, ultimately, his stimulus package won't boost the deficit much because it's temporary and because he will trim healthcare and other spending.

According to the projections issued this morning by CMS' Office of the Actuary, government spending on healthcare will reach 50% in 2016 and top 51% in 2018 barring significant changes in policy. By 2018, healthcare spending will make up more than 20% of gross domestic product, the report concludes. "Medical expenditures have been growing at a faster rate than the economy for decades, and the government's share of that spending has also been increasing, but the current recession is accelerating those trends, according to the CMS actuaries," The Hill reports.

The actuarial estimate assumes that that the 21% cut in Medicare payments to doctors that current policy mandates will become a reality. The word in Washington, however, is that Mr. Obama will "factor in a fix" to the physician payment problem - estimated at $100 billion over 10 years -- in his budget, according to The Hill.

According to the Times, America's Health Insurance Plans, and organizations representing healthcare workers, consumers, hospitals, and drug companies have been meeting for the last several months in a Senate hearing room to discuss the possibility that healthcare reform may ultimately require that all Americans be insured.

"While not all industry groups are in complete agreement, there is enough of a consensus, according to people who have attended the meetings, that they have begun to tackle the next steps: how to enforce the requirement for everyone to have health insurance; how to make insurance affordable to the uninsured; and whether to require employers to help buy coverage for their employees," writes Times reporter Robert Pear.

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President Obama Signs SCHIP Expansion Legislation, Calling it a “First Step” Toward Covering All Americans, Urges Approval of Economic Stimulus Plan; Leading Senators Push for Comprehensive Healthcare Reform This Year; House Expected to Approve Three Measures to Combat Elder Abuse, Locate Missing Seniors
Signing legislation that extends health coverage to an additional four million uninsured children last week, President Obama called the measure a “first step” toward ensuring that “every single American” has coverage.

The bill boosts funding for the State Children’s Health Insurance Program (SCHIP) -- which now covers roughly 7 million children -- an additional $32.8 billion. Under the legislation, an increase in the federal tobacco tax will foot the bill.

The day after he signed the legislation President Obama limited restrictions, instituted by the Bush Administration, that had required states to enroll at least 95% of children eligible for SCHIP and Medicaid in those programs before extending health coverage to uninsured middle class children. That requirement, many governors and Democratic lawmakers, argued, had been nearly impossible to meet.

Congressional approval of legislation expanding SCHIP was a welcome victory for the new president during a week that saw his nominee for Health and Human Services Secretary, Tom Daschle, withdraw his candidacy amid controversy surrounding unpaid taxes. President Obama spent much of the week urging support for his economic stimulus plan, but also conceded that he'd erred in the way he handled Mr. Daschle's nomination.

“Since Mr. Dashle was the only person the president seriously considered for the health job, his advisors were left scrambling to find an alternative,” The New York Times reported last week. According to The Times, Washington insiders say the president is considering several governors, who run state Medicaid programs, for the post. Contenders include Democrats Kathleen Sebelius of Kansas, Edward Rendell of Pennsylvania , Jennifer Granholm of Michigan, and John Kitzhaber, former governor of Oregon. According to The Hill, three other Democrats, Howard Dean, a physician and former Vermont governor, and governors Phil Bredesen of Tennessee and Ron Wyden of Oregon are also in the running.

Mr. Daschel had been nominated for both Health and Human Services Secretary and director of the new White House Office of Health Reform, but the president is apparently considering assigning a second staffer to the health reform post. Jeanne Lambrew, who co-authored a recent book on healthcare reform with Mr. Daschel and is the office’s deputy director, is considered a front runner for the spot. “If the president elevated her, she could push forward with policy development even while a new nominee for health secretary is chosen, vetted and confirmed,” The Times noted.

Amid concerns that Mr. Daschle’s bowing out might delay healthcare reform, two powerful senators made it clear last week that they were ready to pass significant health reform legislation this year. In a letter they sent Mr. Obama on Thursday Sens. Max Baucus (D-MT) and Edward Kennedy (D-MA) argued that a swift overhaul of the nation’s healthcare system remained imperative.

“We are writing to affirm our continuing commitment to enacting comprehensive healthcare reform this year,” they wrote. “As you have emphasized, we must act now. We have a moral duty to ensure that every American can get quality healthcare… With your continued leadership and commitment, we will remain certain that our goal of enacting comprehensive healthcare reform can be accomplished this year. “

Among other things, President Obama has promised to address serious financing challenges facing Medicare and other entitlement programs. On the campaign trail, he also promised to eliminate the Medicare drug plan’s “donut hole” coverage gap. According to two new reports, Medicare beneficiaries’ out-of-pocket healthcare spending has increased significantly over the last several years and, in 2006, accounted for 14.1 percent of all household expenditures. That was less than spending for housing, but roughly equal to spending for food. At the same time, a new study of more than 11,000 Medicare prescription drug plan enrollees finds that many cut back on medications after falling into the notorious “donut hole.” “One can assume not only that the lack of coverage in the doughnut hole had adverse health consequences but also that it could have increased costs for hospital and physicians’ services,” the authors of the Health Affairs study report.

As this issue of AGS News Week in Review went to press February 10, the House was expected to consider and approve three bills aimed at combating elder abuse,neglect and exploitation, and at finding missing seniors. The first, proposed by Rep. Joe Sestak (D-PA), would allocate a total of $14 million per year for the next six years to finance special positions in local prosecutors’ offices and courts, a new national organization to provide backup support for prosecutors and courts in cases involving elder abuse and neglect, and grants to state and local law enforcement for related training and support. The legislation would also require the Attorney General and the Secretary of Health and Human Services to review state law concerning elder abuse and exploitation and report back to Congress. A second bill, proposed by Rep. Lloyd Doggett (D-TX) would establish a nationwide “Silver Alert” network to help find missing seniors, analogous to the “Amber Alert” network for missing children. The bill would allocate $20 million over the next four years to help states develop the network, and authorize $4 million per year from 2010 through 2020 for grants to public and nonprofit private organizations to develop and maintain a national database of missing adults. The third measure, proposed by Rep. Maxine Waters (D-CA) would reauthorize an alert program for missing adults with Alzheimer’s disease, allocating $30 million between 2010 and 2016 for grants to nonprofit groups.

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House Approves Stimulus Plan That, Among Other Things, Would Expand Healthcare Coverage for the Unemployed And Senate Approves SCHIP Expansion, While Some View Both Moves As Step Toward Replacing Private With Public Insurance; Policy Makers Consider Medicare Changes that Could Include "Bundled" Payments for Physicians, and Medicare Drug Company Overpayments and Cancer Drug Policies Make Headlines
President Obama is "confident" that his two-year economic stimulus plan, which passed the House without the backing of a single Republican last week, will clear the Senate this week, The New York Times reports.

The House version of the combination of new spending and tax cuts totals $819 billion, while the Senate version carries a price tag estimated at $890 billion. Republicans have argued both that the costs are too high and that there should be less emphasis on spending and greater emphasis on tax cuts.

"Obama is now on a quest to reshape the legislation in a way that will bring Senate Republicans, and perhaps eventually some House members as well, on board," The Times reported Monday. The Democrats' goal is to have the measure approved and on Mr. Obama's desk for a signature before Congress' Presidents' Day break.

"I hope that we can continue to strengthen this plan before it gets to my desk," the President said Sunday. "But what we can't do is drag our feet or allow the same partisan differences to get in our way. We must move swiftly and boldly to put Americans back to work, and that is exactly what this plan begins to do."

Among other things, the stimulus plan would create a new program under which those qualifying for unemployment would also qualify for Medicaid coverage, regardless of their financial means. As an alternative, the plan would also offer the newly unemployed subsidies to help them hold on to the private health coverage they had while employed, and enable those 55 or older to either retain their coverage under the Cobra program until they become eligible for Medicare, or get coverage through a new job.

Though most of this aid would be temporary, "Republicans fear that states would get hooked on it," and it would ultimately become permanent, The Times reports. The day after the House vote on the stimulus plan, the Senate voted 66 to 32 in favor of legislation expanding the State Children' Health Insurance Program (SCHIP).

The House passed nearly identical legislation two weeks ago in a 289 to 139 vote, with 40 Republicans joining virtually all Democrats in supporting the measure. The legislation will enable states to cover four million more uninsured children by 2010 and continue coverage for 7 million others, and will boost tobacco taxes to cover the cost, which is estimated at more than $32 billion over four and a half years. Only nine Republican Senators supported the SCHIP proposal, which some "said they worried … was part of a long-term effort to replace private health insurance with government programs," according to the Times.

According to The Hill, however, the Democrats who will lead health reform efforts in Congress have "broadly adopted Obama's platform, which the president says would preserve the private healthcare system while providing federal assistance for the uninsured to obtain coverage through private or public plans."

Further healthcare reform legislation is on its way, House Energy and Commerce Committee Chair Henry Waxman (D-CA) and other Democratic leaders announced last week, promising a major bill this year. As they look for ways to expand coverage while holding down costs, lawmakers are considering, among other things, changes in healthcare payment, including Medicare payments to physicians, The Wall Street Journal reports.

"Critics of the current system, under which most doctors are paid for each procedure they perform, say it creates a financial incentive for unnecessary treatments," the Journal notes. And in response, policy makers, and some private insurers, are now considering making "blanket" or "bundled" payments, similar to the lump sum payments made to hospitals." According to the Journal, Medicare recently launched a pilot program offering bundled payments for a few procedures, including hip and knee replacement and bypass surgery.

"But for all the enthusiasm about bundled payments, bringing them into widespread use in the fragmented-healthcare world would be tricky," The Journal notes. "Doctors could be forced to give control over a large portion of their incomes to hospitals, which in some cases would be responsible for coordinating distribution of bundled payments."

Concerns about Medicare prescription drug plan costs, and oversight, also surfaced this past week, when the Department of Health and Human Services' inspector general reported that insurance companies participating in the Medicare prescription drug plan overcharged plan beneficiaries and taxpayers by several billion dollars.

The precise total was unknown last week because Medicare hasn't "begun most of the financial audits needed to determine that," The Miami Herald reported. Sen. Clarie McCaskill (D-MO) has asked the Centers of Medicare and Medicaid Services (CMS) to explain why many of the required audits that should have been completed over the last two years have yet to occur and how CMS plans to recover the excess payments, the Herald writes. In a related development, The New York Times reported last week that Medicare has, "with little public debate ... expanded its coverage of drugs for cancer treatments not approved by the Food and Drug Administration." While many oncologists have urged the changes, clinical evidence of the drugs' efficacy is lacking in many cases, according to the daily.

In other healthcare policy news, at least six leading Democratic senators came out in support of Tom Daschle's nomination for Secretary of the Department of Health and Human Services last week, following disclosure that he failed to pay $128,000 in taxes. The former Senator, who has since paid the back taxes with interest, owed the sum for the use of a car and driver provided by a private equity firm. The Senate Finance Committee, charged with holding a confirmation hearing on the nomination, was slated to meet in a closed session to discuss the matter yesterday.

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Days After Taking Oath of Office, President Obama Offers More Information About $825 B Stimulus Plan, Republicans Call for Changes
Just days after his historic Inauguration President Barack Obama released more information about the $825 billion stimulus plan he and House Democrats are backing, the New York Times reported Saturday.

The package of tax breaks and spending is essential not only to turning the economy around but also to rebuilding the nation, President Obama argued.

"This is not just a short-term program to boost employment," he said in his first weekly video address to the nation. "It's one that will invest in our most important priorities, like energy and education, healthcare and a new infrastructure that are necessary to keep us strong and competitive in the 21st century."

The White House hopes to secure approval for the plan by mid February, and Vice President Joseph Biden and chief economic adviser, Lawrence Summers both appeared on Sunday network news programs to promote it. Mr. Obama, who met with Congressional leaders from both parties last week, will visit the Capitol this week to talk further with Republican legislators. Republican leaders have already criticized the plan, promising to vote against it unless, among other things, it puts greater emphasis on tax breaks.

"We need to make tax cuts permanent, and we need to make a commitment that there'll be no new taxes," Sen. John McCain (R - AZ) told the press this weekend. "We need to cut payroll taxes. We need to cut business taxes."

In his Inaugural Address last Tuesday, President Obama noted the many challenges before the nation -- including the challenges posed by the current healthcare system -- and acknowledged that addressing these challenges would be difficult and would take time, but sounded a hopeful note.

"We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together," Mr. OBama said. "We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories."

How President Obama's words will translate into action remains to be seen, and pundits were offering up their interpretations within hours of his address. Mr. Obama's " promise to "wield technology's wonders to raise health care's quality and lower its costs" probably refers to the hopes that electronic medical records will somehow transform health care for the better, a hope expressed repeatedly by Bush administration officials but which many observers say may be overblown," The New York Times reported the next day.

The $825 billion stimulus package sets aside $157.5 billion for healthcare programs, according to the Times and The Washington Post. It would allocate $87 billion to temporarily boost aid to states to help cover rising Medicaid expenditures, and provide additional funds for health coverage for the newly unemployed. In addition, the stimulus package would allocate $20 billion for electronic medical records and healthcare information technology; $1.1 billion for comparative effectiveness research; $3 billion to promote preventive care and wellness programs; $600 million to address shortages by training primary care providers and helping pay medical school expenses for students who agree to practice in under-served communities. It would also invest $2 billion for renovations at National Institutes of Health facilities and for new agency research and grants, and $1.5 billion for renovations at university laboratories that conduct NIH-sponsored research, as well as $950 million for repairs and renovations of VA healthcare facilities.

During his first week in office, Mr. OBama signed formal nomination papers for his Cabinet, and the Senate quickly confirmed several nominees including Veterans' Affairs Secretary Eric K. Shinseki, who was sworn in Wednesday.

Mr. Shinseki takes the helm of a department now reeling from an audit, released last week, concluding that the VA continued "low balling budget estimates to Congress to keep its spending down" even after earlier budgeting improprieties came to light two years ago. The report, by the Government Accountability Office, found the VA's long-term budget for the rehabilitation of veterans in nursing homes, hospices and community centers was "flawed, failing to account for tens of thousands of patients and understating costs by millions of dollars," the Associated Press reported. "In a strategic plan covering 2007 to 2013, the VA inflated the number of veterans it would treat at hospices and community centers based on a questionably low budget, the investigators concluded. At the same time, they said, the VA didn't account for roughly 25,000, or nearly three-quarters , of its patients who receive treatment at nursing homes operated by the VA and state governments each year." According to the GAO report, the VA is now putting together an updated plan and has promised "credible and adequate budget requests."

Demand for VA long-term rehabilitation services is expected to rise dramatically in coming years. About 40 percent of veterans are 65 or older.

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House Approves SCHIP Expansion -- with Key Senate Committee Following Suit -- And Unveils $825B Economic Stimulus Plan Including More than $157B for Healthcare
Expansion of the State Children's Health Insurance Program (SCHIP) may be the first of President-elect Barack Obama's "down payments" on promises for sweeping healthcare reform. With strong support from the president-elect, the House voted January 15 to expand SCHIP. The House bill allocates $32.3 billion over four and a half years to continue coverage for the seven million children currently enrolled in SCHIP and extend coverage to another 4 million children. The Senate Finance Committee approved a similar measure the following day.

After the House vote, Rep. Frank Pallone (D-NY) described the legislation as "a down payment on Mr. Obama's promise to make health insurance available to all Americans," The New York Times reported. According to the Times, growing economic concerns may prompt the incoming president to take a more piecemeal approach to making good on some campaign promises, offering "what aides call 'down payments' on his promises' for healthcare and other reforms."

The same day that the SCHIP expansion plan won Senate Finance Committee approval, House Democrats unveiled a two-year, $825 billion economic stimulus package that calls for tax cuts, boosts spending on education, funds "a vast array of public works projects to create jobs," and includes more than $157.5 billion for healthcare programs, according to the Times and The Washington Post. The stimulus plan would allocate $87 billion to temporarily boost aid to states to help cover rising Medicaid expenditures, and provide additional funds for health coverage for the newly unemployed.

In addition, the stimulus package would allocate $20 billion for healthcare information technology (HIT); $1.1 billion for comparative effectiveness research; $3 billion to promote preventive care and wellness programs; $600 million to address shortages by training primary care providers including doctors, dentists, and nurses as well as helping pay medical school expenses for students who agree to practice in under-served communities through the National Health Service Corps. Among other things, the package calls for investing $950 million for repairs and renovations of VA healthcare facilities; $2 billion for renovations at National Institutes of Health facilities and for new agency research, grants as well as $1.5 billion for renovations at university laboratories that conduct NIH-sponsored research.

House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) told the press that their goal was to finish work on the economic stimulus package before the Presidents' Day recess. The Senate, which plans to consider the package the first week in February, reportedly has a "stimulus wish list" that includes additional provisions and could raise the total cost as high as $900 billion.

The House package drew fire from House Minority Leader John Boehner (R-OH) and other House Republicans. The package seems "to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity," Rep. Boehner told The Wall Street Journal. "This legislation appears to blanket government programs in spending with little thought toward real economic results, job creation or respect for the taxpayer," added House Appropriations Committee ranking member Jerry Lewis (R-CA).

Americans also appear divided over financing, at least when it comes to healthcare reform. In a recent nationwide Kaiser Family Foundation/Harvard School of Public Health survey of more than 1,600 Americans, 43% of respondents agreed that healthcare reform should be Washington's first priority. Healthcare reform ranked third, behind "improving the economy" which 73% of respondents identified as their top priority, and "fighting terrorism," which 48% said should be priority #1.

More than 60% of those participating in the survey agreed that, given current economic troubles, "it is more important than ever to take on health reform now."

Almost eight in ten respondents favored requiring health insurance companies to cover all applicants, even those with pre-existing conditions. Ninety percent favored allowing the federal government to negotiate lower prescription drug prices with pharmaceutical companies, and nearly 80% favored eliminating the "donut hole" coverage gap in Medicare prescription drug coverage. Nearly 65% supported additional spending on medical care for veterans. Even so, respondents were split over financing. About half, 49%, said they were not willing to pay higher premiums or taxes, for example, while 47% said they were.

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Obama says Overhaul of Medicare, Social Security Will Be Central to Cost Containment; Daschle Highlights Need for Healthcare Reform During Confirmation Hearing But How Soon and How Extensive Changes Will Be Is Unclear
Overhauling Medicare and Social Security will be a "central" part of his administration's efforts to contain spending, President-elect Barack Obama said last Wednesday. While Mr. Obama didn't offer any details, he promised to have more to say about the matter when he unveils his budget plan next month, according to the New York Times.

That same day, Department of Health and Human Services Department Secretary-designee Tom Daschle got a "friendly welcome" from Senators in both parties as his confirmation hearing got underway. While the former Senate Majority leader is expected to win confirmation, he still faces "another hearing, before the Finance Committee, where he is likely to face tougher questions about Medicare, Medicaid and other entitlement programs," the Times reported.

As a growing number of Americans lose their jobs, and with these, their health insurance, the need for healthcare reform becomes more pressing, Mr. Daschle told his former Senate colleagues during the hearing. He didn't, however, "indicate how far and how fast Mr. Obama would go in efforts to remake the healthcare system," the Times noted.

On the campaign trail, the president-elect promised widespread healthcare reform, including efforts to insure the 45 million Americans who lack health coverage. Disputing those who've argued that the nation can't afford the kind of large scale spending needed to expand health coverage, Mr. Obama has contended that healthcare reform will help stimulate the economy.

But growing economic concerns may prompt the incoming president to delay some promised reforms and lead to a more "piecemeal," gradual, approach to delivering on his promises, including those to expand coverage, the Times reported Sunday. The Congressional Budget Office is projecting a record $1.2 trillion budget deficit for the current fiscal year, even without the estimated $800 billion economic stimulus package the House and Senate are assembling. Mr. Obama is at work on a stimulus proposal of his own, that would reportedly total as much as $775 billion over two years.

Not surprisingly, healthcare reform topped the list of priorities for the 111th Congress that the AARP unveiled last week. AARP and its "Divided We Fail" coalition - which includes the American Geriatrics Society, the Business Roundtable, the Service Employees Union (SEIU), National Federation of Independent Business (NFIB), and a wide range of other organizations - are influential advocates for healthcare reform. Such reform, AARP and the coalition argue, is central to reining in healthcare spending and addressing fiscal problems facing Medicare.

AARP is also pressing legislators to include in their stimulus proposals funds for programs that would benefit Americans of all ages, such as assistance with mortgages, more spending on schools, highways and other infrastructure, and extended unemployment benefits, The Hill reported last week.

Addressing job losses and the ramifications of growing unemployment tops the list of many involved in designing stimulus plans. "Our No. 1 goal: jobs," incoming White House chief of staff Rahm Emanuel told The Times this past week. "Our No. 2 goal: jobs. Our No. 3 goal: jobs." While House Republican Leader John A. Boehner (R-OH) and other lawmakers have raised concerns about the stimulus package's effects on an already burgeoning deficit, others are calling for even more investment than the incoming president has reportedly included in his stimulus proposal, particularly in jobs creation.

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At Healthcare Reform “House Parties,” Americans Offer Obama Administration Suggestions for Change
At the urging of President-elect Barack Obama, Americans organized more than 4,200 community discussions focused on healthcare reform during the latter half of December, The New York Times reports. The president-elect is not only encouraging Americans to organize such healthcare "house parties" but also to email reports on the meetings to his transition Web site. According to the site, Mr. Obama's transition team will take comments and suggestions from participants into account when drafting healthcare reform recommendations for the incoming president.

"Even before taking office or introducing concrete policy proposals, the administration-in-waiting is moving to build public support around the broad notion that the U.S. health system needs an overhaul," The Washington Post notes in a recent story about the discussion sessions. "To Washington veterans, the approach may seem backward, or even naive, but Obama is betting that the energetic, technology-savvy supporters who fueled his candidacy will act as a potent counterbalance to the traditionally powerful special interests that have defeated similar reform efforts."

“Ordinary” Americans aren’t the only participants in the sessions, however. Health and Human Services Secretary-designate Tom Daschle attended a discussion in Dublin, Indiana in late December, spending more than an hour listening to the concerns and suggestions of local “residents, firefighters, emergency medical technicians and physicians,” the transition Web site reports. According to the site, Mr Daschle plans to attend several more house parties throughout the country.

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Obama Team Hopes to Have Draft of Recovery Act Allocating Substantial Funds for Healthcare Ready by Christmas, But Timing of Health Reforms Remains Unclear
President-elect Obama’s transition team hopes to complete a preliminary draft of a nearly $1 trillion, two-year economic recovery plan by Christmas, so Congressional staff can prepare legislation by the new year, The New York Times reported Friday.

According to the Times, the recovery package offers tax cuts and includes substantial funds for healthcare, energy-saving programs, public works projects, school construction and renovation, and expanded benefits for the unemployed and poor. Roughly 20% of the total goes for healthcare, with about $100 billion of that to help states cover growing Medicaid caseloads. In addition, the package includes funds to help healthcare providers adopt health information technology (health IT).

According to a Congressional Budget Office ( CBO) report issued Friday, requiring doctors and hospitals participating in Medicare to adopt health IT-- a measure Mr. Obama supports -- would result in a savings of $22 billion over 10 years. "An advantage of this option is that the expanded use of health IT would be likely to improve both the quality of health care services and health outcomes, perhaps markedly so," the report concluded.

The CBO report, which examined the financial ramifications of 115 healthcare proposals, found that while some would save funds, others would boost expenditures. Another reform President-elect Obama favors – eliminating the Medicare drug plan’s “donut hole” coverage gap -- would cost more than $130 billion over 10 years, according to Reuters. Requiring pharmaceutical companies to offer Medicare a 15% discount on brand name drugs covered by the drug plan, however, would save $110 billion over the same period. Averting a mandated 21% cut in Medicare fees to physicians that is slated to take effect in 2010, and mandated cuts of roughly 5 % in subsequent years, would be quite costly, the CBO reports. The tab would come to roughly $318 billion over the next decade, The New York Times reports.

How quickly healthcare reform will actually progress remains to be seen. President-elect Obama has repeatedly said that the current economic crisis will not preclude timely healthcare reform, and has argued that healthcare reform will, in fact, help speed economic recovery. Likeminded legislators, including Max Baucus (D-MT) and Edward Kennedy (D-MA) are already drafting reform legislation. Even so, “Obama, Baucus and Kennedy have not called for a vote on a final package in the early days of 2009,” The Hill reported. In a conference call with reporters last week, Rep. Pete Stark (D-CA), chair of the powerful House Ways and Means Committee’s health subcommittee, said that comprehensive health reform “might have to wait until early 2010,” according to The Hill.

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President-Elect Obama Signals That Healthcare Reform Will Be A Top Priority and Nominates Chief Health Policy Staff In A Week That Sees Reform Move to Center Stage
Arguing that healthcare is "not something we can put off because we are in an emergency (but rather) part of the emergency,” President-elect Barack Obama made it clear last week that healthcare reform would be a top priority in his Administration. The same week, the president-elect also officially nominated Tom Daschle for both Secretary of the Department of Health and Human Services and chief of what will be a newly created White House Office of Health Reform. Mr. Obama nominated Eric Shinseki -- former Army Chief of Staff and an outspoken advocate for veterans -- as Secretary of the Department of Veterans Affairs as well.

Joining Mr. Obama at the Thursday press conference during which his nomination was announced, DHHS Secretary-designate Daschle urged Americans to participate in healthcare reform by joining Health Care Community Discussions, community groups that will share their thoughts about reform with the Office of the President-Elect. The Obama transition team Web site, www.change.gov, includes information about setting up the groups.

"The President-elect and I are committed to an open and inclusive process for health reform that goes from the grassroots up," the former Senate Majority leader and author of a recent book on the healthcare crisis, said Thursday.

Among other things, soon-to-be President Obama “plans significant changes in the way Medicare, Medicaid and the State Children’s Health Insurance Program (SCHIP) are run,” The Los Angeles Times reported last week. Who Mr. Obama will name as new administrator of the Centers for Medicare and Medicaid Services (CMS) is still a matter of speculation.

Congressional leaders showed continued interest in reform this past week as well. In Congress, Sen. Herb Kohl (D-WI) introduced the "Retooling the Healthcare Workforce for An Aging America Act of 2008" in the Senate. The proposed legislation would significantly expand education and training programs to help address the nationwide shortage of geriatrics healthcare professionals, and better prepare the growing number of direct care and family caregivers who also care for older Americans.

At the same time, Sen. Edward Kennedy (D-MA) announced that he would step down from his powerful Senate Judiciary Committee post to concentrate on healthcare. The 76-year-old Senator, who was diagnosed this summer with an aggressive brain tumor, said he planned to work for passage of legislation providing universal healthcare coverage, The Boston Globe reported.

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Healthcare Reform Continues to Gain Momentum, But Many Questions, and Obstacles, Remain
Healthcare reform continued to make headlines this past week -- with a leading health insurers trade group releasing its own proposal for universal coverage; the insurance industry and business groups joining unions and nonprofits in discussions about fundamental changes in the healthcare system; and members of the incoming Obama Administration reaching out to constituents advocating reform.

While some in Washington continued to caution that the current economic contraction is likely to rule out major spending initiatives -- such as those to expand health coverage -- others countered that healthcare reforms will drive economic recovery, and continued to press for fundamental change. Adding to the sense of urgency among advocates for change, federal health officials announced this past week that the ailing economy will likely speed depletion of the Medicare trust fund that covers hospital and nursing home care, resulting in its insolvency as early as 2016.

Just days after America's Health Insurance Plans (AHIP) and the Blue Cross and the Blue Shield Association, the nation's leading insurance trade groups, announced that they would support guaranteed coverage, despite preconditions, if universal coverage were mandated, AHIP unveiled its own universal healthcare plan. AHIP's proposal calls on Congress to slow growth in healthcare expenditures 30% in five years, and use the savings to cover the uninsured and lower costs for others with insurance. To effect change, the group urged Congress to create a public-private advisory group that would recommend ways to cut waste, overhaul payments to physicians and hospitals, and lower administrative costs. The AHIP plan also calls for creation of a new national health plan, and a mandate requiring Medicaid to cover all households at or below poverty level, The Wall Street Journal reported.

On the campaign trail, President-elect Obama also proposed creating a new national health insurance plan to expand coverage, and extending the reach of both Medicaid and the State Children's Health Insurance Program, but opposed mandating coverage for adults. In contrast, Senate Finance Committee Chair Max Baucus (D-MT) released a plan last month that would expand coverage via a new national plan and other mechanisms and require all Americans to have health coverage. The AGS applauds many elements of Sen. Baucus' plan. Other legislators are urging alternative approaches to reform. Sen. Edward Kennedy (D-MA) plans to release his own healthcare proposal next month.

Since the summer, aides for Sen. Kennedy have been meeting with industry and advocacy groups and aides to President-elect Obama and other lawmakers to discuss healthcare reform, The Journal reported. Members of the incoming Obama Administration have also been involved in "talks" with constituents. According to The Washington Post, the president-elect's likely nominee for Department of Health and Human Services Secretary, Thomas Daschle, discussed healthcare reform last week in a conference call with 1,000 Americans. The group had been selected from 10,000 who'd reported their interest in healthcare issues by logging onto the Obama transition team Web site. "It is the first attempt by the Obama team to harness its vast and sophisticated grass-roots network to shape public policy," the Post reported.

"It will be a lot easier to get the American public to adopt any new healthcare system if they were a part of the process of crafting it," Andrew Rasiej, co-founder of the nonpartisan Personal Democracy Forum Web site, noted.

Former senator Daschle has already met with numerous individuals and organizations with an interest in healthcare reform, including union leaders, executives with AARP, hospital groups, and corporate organizations. In stark contrast to their opposition to healthcare reform during the Clinton Administration, both health insurance lobbying groups and business interests are now urging significant changes in the nation's healthcare system, according to the Boston Globe. Among other things, businesses are struggling to foot the bill for increasingly costly employee health insurance.

"What's striking this time is the extent to which they're engaging in a constructive way, at least so far, and I think that's very promising," John Rother, director of legislation and public policy for AARP, told the Globe.

But coming to consensus as to how, exactly, to structure reform, and how to finance it, won't be easy. Differing scenarios will benefit, or penalize, different groups. "The insurance industry…could gain or lose depending on which reforms are adopted: Offering tax credits or subsidies to help pay for private coverage for the uninsured could bring insurers millions of new customers; but if a reform law also lets people choose a public Medicare-style plan (as the Baucus plan would), private insurers could lose business," the Globe notes.

In an effort to ensure that industry's interests are balanced by others', and that reforms result in a more inclusive and efficient system, Health Care for America Now, coalition of mostly progressive groups, including MoveON.org, is now preparing a multimillion dollar campaign to push for systemic reforms.

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