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Healthcare Reform Update: Inside Baseball Time

If you are a baseball fan, you’ll appreciate the correlation between a baseball game and the present course of healthcare reform.  A baseball game starts with anticipation and fanfare; speeches, the throwing out of the first pitch, the national anthem and the players taking the field.  The fans settle in and the game begins with cheers for the first hit, the first strikeout or the first double play.  As the game progresses, the typical fan loses a bit of interest and seemingly, little is happening across the middle innings.  People begin to mill around the stadium, seeking concessions or the restroom and the scoreboard becomes more of a video game/entertainment center, trying to keep fans engaged and entertained as the game appears to offer little excitement at the moment.  Nothing going on, right?

The course of healthcare reform has now entered the middle-innings.  The fanfare of the opening ceremonies and the introduction of various bills and propositions, the committee work and the initial passage of the “first-cut” of legislation has passed.  The news is now technical and policy oriented just like the stats laden reporting in the middle of the baseball game.  Polls show people have turned away; headed to the concession  stands or the restroom until the cheering erupts again.  Frankly, it is tough to watch as little substantive seems to be happening at the moment.  Who wants to hear about more stats and trivial poll data?  Does anyone really care about the current batter’s hitting streak over the past two weeks or the pitch count (or the fifth poll of the week comparing the last four polls of the weeks prior)?

So, if you like subtlety, drama, a bit of intrigue and the nuances of the game, you’ll appreciate this Inside Baseball view of healthcare reform.  Just like the middle innings of the baseball game, a lot is going on that will definitely shape the action in the latter innings; or, in this case, the actual votes on the respective floors.

  • This period of time is all about “vote counting” for the Democrats in the House and the Senate.  As of right now, there are not enough votes in favor of a bill containing a “public option” – at least not the fully loaded version.  Speaker Pelosi and Majority Leader Reid in the Senate will be posturing different options back and forth to gauge where the tolerance level is and in what form for any kind of a public option.  They also will be discussing a “trigger”; a clause in the legislation that will kick-in a public option in the event certain provisions are not met (such as number of insured, access to low-cost healthplans, etc.).
  • There is a budget buster monster that both the Senate and the House have to deal with and that concerns physician reimbursement under Medicare.  Right now, physician fee schedules are tied to GDP growth and the lack of GDP growth (actual shrinkage) in 2008-2009 would require a cut in physician fees under Medicare.  In order to provide for a modest increase in MD payments, Congress needs to infuse an additional $250 to $500 million into the fee schedule. This amount is in-addition to the cost associated with the various healthcare reform proposals.  The Senate version (the Baucus Bill) skirts the issue a bit by offering a one year fix with a higher level of taxation as an offset.  The House has tried to remove the issue and deal with it outside of the healthcare reform activity.  No matter how each side deals with the issue, the price tag is large and physicians are a powerful voice in the process.  Make the doctors unhappy and the prospects for major reform become dimmer by the day.
  • The financing of the legislation is still a major issue – in both the Senate and the House.  Two major components will bear the majority of the scrutiny; Medicare cuts and taxes.  Despite the rhetoric from the President regarding “savings” under Medicare, the reductions in Medicare spending in the healthcare reform bills are cuts in spending – not gains via reduced fraud or improvements in efficiency.  Medicare cuts and programmatic changes raise the ante for seniors and providers (including physicians).  Taxes, especially in the Senate version, are already being targeted by fiscal conservatives and anti-reform proponents as a breach of the President’s promise not “to raise taxes on the middle-class” and as a huge added cost to private insurance policies.
  • The issue of whether any final reform package can be truly deficit neutral will continue to be debated in the background and the foreground.  A great deal of pressure will be put on the CBO to use the most creative math possible in forecasting the costs associated with any final bill brought forward for a vote.  As of right now, neither major initiative as each stands is anywhere close to budget neutral – regardless of what is being said on the Hill.
  • Where does the President stand?  The President and the White House are oddly silent on their exact preferences and as a result, no one is quite sure when and if, Mr. Obama will attempt to push a particular package forward.  The reality is, the President is quietly maneuvering behind the scenes, watching and charting, hoping to make a move at the opportune moment.  To date, his moves including his speeches, have been less than effective in getting any piece of legislation closer to passage.
  • Polls, elections and timing are all being gauged carefully now.  Similar to vote counting, each legislator that faces an election battle in 2010 is carefully counting the days between a possible vote and the scheduled primary. Poll results that continue to show an anti-overhaul sentiment nationally or in a particular region will definitely influence a legislator as time ticks closer to election season.  In other words, the reform window will only be open so long for a number of legislators and therefore, forging a workable, viable plan is urgent business for the Senate and the House.
  • Finally, the economy is behaving like a two ton weight that each party is carrying at the moment – one uphill and the other down-hill.  The Democrats, as the party in power, must carry the weight uphill and cannot trip over healthcare reform as they go for fear that the overwhelming weight of both issues will send them crashing down, ultimately buried by the weight of both issues.  For Republicans, the weight is carried down-hill as they can use the deficit, the costs of healthcare reform, and other news of slow recovery to their political advantage.  The trick however in carrying a heavy weight down-hill is not to let gravity take over, pulling you down so fast that you lose control and tumble, risking the weight crashing down on you.

To close with some baseball lingo, don’t be surprised to see a squeeze play, a double-switch, a hit and run, and possibly even a steal or two go on over the next few weeks.  Remember, this is the middle of the game and a rhythm and tempo has been set.  Each party is charting the course of the game and has sufficient data now to begin to try to out-maneuver the other party.  Most of the moves will be subtle and may bear no relationship to what appears to be happening at the moment but rest assured, this is the time where the game is truly, most often, won or lost.

October 26, 2009 Posted by | Policy and Politics - Federal | , , , , , , | Leave a comment

Baucus Bill Survives Committee: What Next

The Senate Finance Committee this afternoon, on a vote of 14-9, approved the Baucus Bill out of committee, sending it theoretically to a floor vote. Sen. Olympia Snowe, a Republican from Maine, was the lone Republican vote in support.  The Bill, a center of recent controversy in terms of its lack of reported details, incomplete CBO scoring, and the target of a report released by the insurance industry via Price Waterhouse and Coopers, now faces an arduous re-write process as Senate Democrats, specifically Senate Majority Leader Harry Reid, will try to meld the Baucus version with the Dodd version (Health, Education, Labor and Pensions Committee), producing a single piece of legislation for a vote.

While this step is considered historic by many (the first piece of health reform legislation ever to be voted on by any aspect of the House or Senate), the Bill faces certain wholesale reconstruction over the next days.  Enormous questions and uncertainties remain over significant aspects of the legislation, none the least is what its actual cost will be.  In testimony today before the Finance Committee, representatives from the CBO admitted that a lack of time and detail prevented accurate estimates to be completed.  As I have noted before, the CBO has been historically inaccurate (low) on estimating the cost of major legislative initiatives.  Other major “questions” that need to be addressed are as follows;

  • The lack of requirement for private citizens to purchase insurance or companies to provide insurance.  The insurance industry is stating that without such a requirement, healthy individuals will opt to pay the very modest tax penalty and remain uninsured knowing that as soon as an illness of significance strikes, they can purchase insurance with no penalty – the bill prohibits insurers from barring coverage due to pre-existing conditions.  The insurance industry believes that only “ill” or “sick” people will be insured thereby creating adverse selection, higher costs and too small of a risk pool to spread the risk.
  • The issue of future private costs of insurance is a significant area of contention.  The legislation, without a mandate for all individuals to be insured, potentially raises significantly, the cost of private insurance.  With private insurers taking on a group with pre-existing health conditions and substantial cuts forthcoming (the Bill requires these) to Medicare and Medicaid spending levels, there is justifiable concern that private insurers will bear the brunt of cost-shifting among providers as well as the costs of an abnormally unhealthy cohort group.  While the Bill contains subsidies for private insurance companies, the levels are unlikely high enough to avoid or abate, rising private insurance premium levels.  Some estimates, such as those contained in the Price Waterhouse Coopers report suggest the increases could double the current average cost of insurance within ten years.
  • Considering the point above, smaller employers are now somewhat concerned that the Bill, containing no public option aside from the unknown and undefined co-op program, may bear significantly higher costs of insurance if they continue to offer health insurance.  Employers that choose to drop their programs altogether are concerned that they may become non-competitive in the labor market.  Employers also, if they choose to drop their health programs, face a penalty for every employee that sought insurance with a government subsidy.
  • The Bill includes a significant expansion of Medicaid as a means of covering low income individuals.  Medicaid is already considered by providers (doctors, hospitals, etc.) as the poorest payer (amount) of all sources of reimbursement.  Without a reform on the payment side to assure more payment adequacy under Medicaid or alternatively, rules mandating providers to treat Medicaid patients, access issues (already a problem in many urban areas) could be made considerably worse.
  • The Bill doesn’t address a number of issues that are significant to both parties – Republicans and Democrats.  On the Republican side, issues of tort reform, taxation, and funding are still an issue.  On the Democratic side, the issue of a public option, coverage mandates, and Medicaid access will need to be addressed.  Both parties will need to wrestle with the impact of Medicare and Medicaid spending reductions in the Bill as provider groups are already at arms over issues of reimbursement reductions, especially physician fees which only receive a one-year protection under the Baucus legislation.

Historic?  Yes but more history is yet to be made.  This first step is almost insignificant in terms of where the health reform movement will ultimately end.  This step if anything is purely symbolic and framing; a jumping off point for a journey that still must wander through the Senate, arise in the House, navigate through Conference, and then back to each floor for possible final approval.  In the world of politics and public policy, this is a lifetime with its requisite fits and starts, ups and downs, successes and failures.

October 13, 2009 Posted by | Policy and Politics - Federal | , , , , | Leave a comment