Eye on Washington

Gail R. Wilensky

Just when most Washington observers had assumed that some version of the healthcare reform proposals passed by the Senate and House would be enacted into law, Massachusetts elected Scott Brown as its new senator, and the Senate Democrats lost their 60th vote and their filibuster-proof majority.

Congressional Democrats and the president have been spending the past few weeks discussing how to move forward with some version of healthcare reform. In public, both the president and congressional leaders have been adamant in their claims that they will be going forward with healthcare reform. Reports of private conversations suggest less certainty about both the strategy and the timing of next moves.

Whatever the political uncertainties, it is clear that the challenges that have been identified during the debates-15 percent of the population without health insurance, unsustainable spend growth rates, and unacceptable measures of clinical outcomes and patient safety measures-remain with us.

Short-Term Options

Congress has a limited number of options that seem viable for the short term. The most obvious is not passing any new legislation or, at most, passing only minor pieces of proposed health-related legislation, such as the repeal of the McCarran-Ferguson antitrust exemption, as has been mentioned by the Speaker of the House Nancy Pelosi (D-Calif.). Another possible option for congressional Democrats is to use the reconciliation process to pass a modified version of the Senate bill. And a third is for them to attempt to construct a new bill that can gain 60 votes in Senate and that the House can agree to support.

The use of the reconciliation process seems unlikely on several fronts. First, many aspects of healthcare reform are unrelated to the budget and thus "off limits" in reconciliation, which is restricted to budget-related issues. Moreover, the public, which is already incensed by what it regards as too many "back-room deals" in health care, is likely to be further angered by the use of a process that is widely perceived as circumventing regular congressional procedures.

Crafting a new bill that could be passed in the Senate and that is acceptable to the House would likely take some time. With reports circulating around Washington that the Democratic leadership wants to move away from a focus on health care by March or April, crafting a new bill seems impossible. That leaves "doing nothing" in terms of significant new legislation as the most likely scenario to come to pass.

"Staging" Healthcare Reform

After the failure to pass healthcare reform in 1994, many analysts-myself among them-concluded that healthcare reform needed to be passed incrementally, even though doing so is extremely complicated because so many of the pieces are interconnected. Some may claim the current House and Senate bills actually do represent only incremental change, on the grounds that the legislation was focused primarily on coverage expansion, doing little to address the other challenges in health care, and that even within this narrow focus, it was designed to unfold over time.  Nonetheless, the attempt to bring most of the disparate groups of the uninsured into coverage in a single piece of legislation appears to have involved more change-and more new spending-than the nation is comfortable contemplating, particularly after the major legislation passed in late 2008 and 2009.

The Obama administration can (and politically should) claim credit for having already passed the first piece of expanded coverage and putting in place elements of healthcare reform. The renewal and expansion of the Children's Health Insurance Program increased the number of previously uninsured children by some 2.6 million. The stimulus package also provided two types of increased support for Medicaid: across-the-board increases in Medicaid match rates and increased Medicaid funding for states that had high unemployment rates. The stimulus bill also provided substantial subsidies for people to use to purchase COBRA insurance-people who had been covered while being employed but who were at risk for losing their insurance while unemployed because of the high cost of COBRA, which amounted to 102 percent of the total cost of their health insurance plans.

In addition to expanded coverage, the stimulus bill also made available substantial funding to encourage the adoption of health IT by physicians and hospitals, and it provided significant funding to encourage new research on comparative effectiveness.

What Next?

Finding ways to continue to expand coverage in a piecemeal manner could be contemplated next. One such approach to expansion-although not necessarily the least expensive one-is to provide Medicaid coverage to everyone below the poverty line. These people make up about one-third of the uninsured population and include those who work but at low paying jobs, those who are in and out of the labor force, and those who have some level of assets, like a car, and who live in states with low levels of eligibility or tight asset restrictions.

Coverage expansion also should be accompanied by some attempts at cost containment. Among the many complaints about the current legislation is that it did little to contain costs or reform the delivery system. Cost containment measures were mainly limited to payment reductions in Medicare-a money-saver but not a reform of the delivery system. The delivery system reforms that were considered were mostly associated with pilot programs. These types of pilots should be included in whatever comes next. Some of the most interesting included:

  • Creation of accountable care organizations that would allow physicians and other providers to share cost-savings
  • Grants to test medical home models
  • A bundled payment pilot program incentives to coordinate care
  • Either a national strategy to improve healthcare service quality and outcomes or a center that would prioritize quality improvements and implement best practices through a grant program

Physician payment reform is also desperately needed because it is hard to imagine reforming the delivery system without changing how physicians are reimbursed. With the latest "patch" for physician payments under Medicare about to expire, it is especially important not to promise to "fix the problem" on a permanent basis without changing a billing system that has physicians billing for more than 8,000 discrete services. Pilot projects that change how physicians are reimbursed need to be started as soon as possible.

Health Care's "Inconvenient Truth"

Eventually, the United States will have to find ways to slow down the growth rate in healthcare spending. We can only hope that the nation will do so in ways that also improve the quality and clinical outcomes of the care provided. The apparent fate of the legislation that was proposed in the House and the Senate and the public's attitude toward anything that can be, rightfully or wrongly, characterized as a "take-away," suggest that's not likely to happen anytime soon.


Gail R. Wilensky, PhD, is a senior fellow at Project HOPE. She was previously the administrator of HCFA, now CMS, and chaired the Medicare Payment Advisory Commission.

Publication Date: Monday, March 01, 2010

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