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Washington forecast: Much talk. Any action?


Health care deregulation will come easy to the 107th Congress, while Medicare reform and other legislation remain elusive.


Washington forecast: Much talk. Any action?

Health care deregulation will come easily to the 107th Congress, while Medicare reform and other legislation remain elusive.

By Michael Pretzer
Washington Editor

Each spring, the air that whips around Capitol Hill and the White House is filled with unrealistic expectations. This year is no exception.

President Bush kicked off the season by creating a breeze that already has drifted to who-knows-where. Back in January, he proposed giving block grants to the states so they could subsidize prescription drugs for Medicare beneficiaries with low incomes. Immediate Helping Hand, as Dubya has dubbed his idea, isn't popular with the states; they fear they'll eventually have to cover its costs. More to the point, even Republicans on Capitol Hill aren't interested.

Bush isn't the only one in Washington proposing health care legislation that has little chance of passage. In what might be considered a triumph of hope over experience, lawmakers are trying to address wholesale Medicare reform, protections for Americans in managed care, access to health care for the poor and the uninsured, and collective bargaining rights for physicians. Good luck.

The more positive-minded argue that health care issues can be dealt with successfully in 2001. For one thing, they point out, Congress has the blessing of the American people. According to a Kaiser Family Foundation/Harvard School of Public Health survey conducted immediately after the election, the public supports legislation to reform Medicare, create a patients' bill of rights, and expand access to health care. For another, the political climate appears to be right for action. The GOP occupies the White House, holds the majority in the House of Representatives, and has the tie-breaking vote in the Senate. So far, Bush has been less polarizing than his predecessor. And today many Republicans and Democrats think—or at least say they think—that bipartisanship will carry the day.

But legislation usually gets passed in the fall, not the spring. In preseason training, every ballplayer thinks he'll take his team to the championship. When all is said and done, Washington won't be able to do much more in 2001 than it has in recent years.

Most everyone in Washington and across the country acknowledges that a prescription drug benefit for seniors is sorely needed. "Today, the likelihood of having drug coverage to supplement Medicare depends largely on where you worked and whether you have retiree benefits, where you live and whether managed care plans are available in your area, what your income is and whether you are eligible for Medicaid or can afford to purchase coverage, and how sick you are and whether plans are willing to enroll you if you have high drug costs," Diane Rowland, executive vice president of the Kaiser Family Foundation, recently told Congress. "This is neither a fair nor rational way to provide health insurance coverage to our nation's 40 million Medicare beneficiaries."

Moreover, the burden of prescription drug expenses is getting weightier. According to the Health Care Financing Administration, health care costs increased 5.6 percent from 1998 to 1999. Not too bad. But prescription drug costs rose almost 17 percent.

The argument isn't about need, of course. To borrow Rowland's words, it's about being "fair" and "rational."

To Republicans, a fair and rational drug benefit seems to be one that's available through state governments or the private sector—e.g., the insurance industry—and helps low-income seniors or those with extraordinary expenses. Bush's plan would bolster individual seniors who earn less than $11,600 a year, married couples with incomes up to $15,700, and seniors who have annual out-of-pocket drug bills of more than $6,000.

To Democrats, a fair and rational program tends to be one that's administered by the federal government and benefits all seniors. Sen. Paul Wellstone (D-MN), for instance, has drafted a bill that calls for the government to underwrite 80 percent of seniors' prescription drug costs in return for a small, yet-to-be-determined monthly premium.

The philosophical differences between Republicans and Democrats may by themselves be enough to stall a drug-benefit bill. Or the issue could become entangled in a larger and less-likely-to-be-resolved Medicare debate that Bush and some members of Congress are trying to instigate.

Sens. John Breaux (D-LA) and Bill Frist (R-TN), leaders in the bigger-is-better movement, would like the drug-benefit issue to be the tail that wags the dog—the dog being a significant restructuring of Medicare. "We can't manage what we have on the table, let alone add a new prescription-drug program," Breaux says of today's Medicare. "Without changes, it will not work." Bush agrees. "The biggest test of our foresight and courage will be in reforming Medicare and Social Security," he says. "Medicare's finances are strained and its coverage is outdated. Medicare must be modernized."

The senators have outlined two dramatic alternatives to Medicare as we know it—Breaux-Frist I and II, they're called. Under Breaux-Frist I, the more comprehensive plan, HCFA would continue to administer fee-for-service Medicare. But Medicare+Choice would be replaced by a new managed care Medicare program similar to the Federal Employees Health Benefit plan, which provides health care to government workers—including Congressmen—nationwide.

Breaux-Frist II would keep fee-for-service Medicare operating under HCFA but merely revamp Medicare+Choice under the auspices of a new agency. Under either plan, seniors in FFS and managed care Medicare would have the option of drug coverage.

This is the second consecutive year Breaux and Frist have tried to stir up interest in restructuring Medicare. In 2000, their ideas didn't get much of a hearing. But this year, Washington will talk a lot about Medicare. "We know we have to update Medicare to give older Americans access to the latest medical innovations," explains Sen. Chuck Grassley (R-IA), the influential chair of the Finance Committee. "We have to manage Medicare [more efficiently] so doctors don't get bogged down in unnecessary paperwork. We also have to make sure we squeeze each Medicare dollar for all of its worth. We have to put together a prescription drug benefit that's universal, affordable, and flexible. I'm forecasting a Medicare-heavy spring and summer in Congress."

Grassley reportedly wants the congressional discussion to be based on Breaux-Frist II. But not everyone agrees. In the House, Rep. Pete Stark (R-CA) has introduced Medicare legislation that provides a drug benefit and revives some of the Clinton administration's proposals. For example, uninsured Americans between 62 and 65 could purchase Medicare from the government under Stark's plan. Stark says he introduced his bill "to make very clear that the Breaux-Frist premium support proposal is not the only Medicare reform proposal in town."

Stark needn't worry. There'll be plenty of big ideas discussed during the "Medicare-heavy" season—but probably no real legislation.

This year, Congress ought to be able to pound out a patient protection act (PPA)—or patients' bill of rights, as it's sometimes called. According to the AMA, 90 percent of Americans are rooting for it. Plus, proponents and opponents have come to an understanding on several patient protections. Coverage for emergency room care, the designation of ob/gyns as primary care physicians, termination of gag clauses, and readily available information on health plans aren't controversial anymore.

There's only one sticking point. But it's a big one.

As it stands now, many Americans enrolled in employer-provided health care insurance have no legal means to disagree with their managed care plan over medical coverage and treatment decisions. A travesty, say PPA proponents, who think patients ought to be able to sue an HMO. Opponents, primarily from the business community and managed care plans, say HMOs make business decisions, not medical ones. You can't hold managed care medically liable.

Early in February, John McCain (R-AZ), Edward Kennedy (D-MA), and other senators rolled out their Bipartisan Patient Protection Act of 2001. (Iowa Republican Greg Ganske and Michigan Democrat John D. Dingell introduced companion legislation in the House.) It contains the usual consensus provisions: access to emergency care, specialty care, pediatricians and ob/gyns, nonformulary drugs, clinical trials, and health plan information.

Regarding the heated liability issue, the bill gives patients the right to take a health plan to federal court over administrative decisions that involve injury or death and to state court over "medically reviewable decisions." But patients aren't given carte blanche. They can't sue until they've exhausted the internal and external appeals offered by a health plan, and they can't sue their employer unless the employer is directly involved with the medical decisions. In addition, the bill puts limits on punitive damages.

McCain-Kennedy hasn't become the compromise bill that sails through Congress, however. It's garnered the support of key Democrats, such as Sen. Minority Leader Tom Daschle (D-SD) and House Minority Leader Richard Gephardt (D-MO), but failed to impress Bush and many congressional Republicans. The bill has been endorsed by the AMA. ("It protects patients from managed care abuses, protects employers from frivolous lawsuits, and protects state laws," says AMA board chairman D. Ted Lewers.) And it's been condemned by the American Association of Health Plans. It "may help trial lawyers add to their business, but it won't help consumers get their health care when they need it," says Karen Ignagni, AAHP president and CEO.

A group of lawmakers have set out to find a compromise that's palatable to all players. But right now, the prospects of a PPA don't seem to have improved much from last year.

Clinton's failed attempt in 1993-94 to reinvent the medical delivery system cast a pall over the drive for universal health care coverage. Incremental became the watchword.

Since then, a few legislators and advocacy groups have tried to develop new policies—incremental ones, of course—to shrink the ranks of the uninsured, who today number about 43 million. Republicans typically advocate tax credits; Democrats, the expansion of government programs. "In the past, every group interested in extending coverage to the uninsured held out for its favorite approach, and its second choice always was the status quo," says Chip Kahn, president of the Health Insurance Association of America.

HIAA, along with Families USA and the American Hospital Association, drew a lot of attention at the end of last year when they laid out a plan that's part Republican, part Democrat. They would boost the role of federal and state programs and give a tax credit to employers that offer health insurance as an employee benefit. Other organizations, notably the American College of Physicians-American Society of Internal Medicine, advocate similar hybrid plans. "Political gridlock should no longer be an option," says Ron Pollack, executive director of Families USA.

Pollack expects too much if he thinks Congress is going to move with all deliberate speed. In Washington's attempt to downsize the uninsured, it's one consideration at a time. This year the consideration looks to be a tax credit that helps Americans buy health insurance. Bush wants it. Republicans in Congress want it. Even Rep. Jim McDermott (D-WA), a psychiatrist and staunch proponent of the single-payer system, wants it. He's working with Rep. Jim McCrery (R-LA), who wouldn't vote for the single-payer system if his life depended on it, to establish a refundable tax credit—meaning, you get money from the government if your credit is more than the amount of your income tax.

Some senators are also developing tax-credit legislation. The dynamo duo of Frist and Breaux, along with Sens. Jim Jeffords (R-VT) and Blanche Lincoln (D-AR), have introduced the Relief, Equity, Access, and Coverage for Health Act. REACH, as it's called, authorizes a $1,000 credit for an individual or $2,500 for a family that purchases health insurance; $400 for an individual and $1,000 for a family that buys insurance through an employer.

The advantage of the tax credit is that it's "a simple, straightforward tool. [It doesn't] require changing the health care regulatory structure, negotiating with providers, reorganizing the delivery system, or altering the philosophy of medical treatment," write Mark Pauly, a professor at the University of Pennsylvania's Wharton School, and Bradley Herring of Yale University's Institution for Social and Policy Studies. The disadvantages, according to Pauly and Herring, are that a tax credit "doesn't necessarily reduce waste, lower administrative costs, improve doctor-patient relationships, or cure dread diseases." Yet a straightforward tool can become bent out of shape by the legislative process. McDermott, for example, admits that drafting a McDermott-McCrery bill is proving difficult; the job may not be complete until the end of the year.

While Medicare reform, patient protections, and universal coverage will probably elude Congress this year because they're large issues, another matter will be overlooked because it's small, in comparison. Physicians' right to collective bargaining gets the AMA and lots of doctors fired up. "[We'll] work to address the tremendous imbalance in the health care marketplace created by a few large insurance companies controlling our health care system," promises Thomas Reardon, the AMA's immediate past president. "We'll seek antitrust legislation to empower physicians to jointly negotiate with health plans."

But the AMA has few members of Congress to work with. Tom Campbell, a representative from California who introduced antitrust legislation in 1999, lost his bid for the Senate and no longer has a job on Capitol Hill. Rep. Bob Barr (R-GA) may take over Campbell's role in the House. In the Senate, where support has never been strong, the sentiment for a new antitrust bill ranges from apathy to hostility.

One thing Republicans are good at is deregulation. As a result, physicians who are feeling stifled by the federal bureaucracy may find themselves breathing easier after this year.

Bush hardly had his bags unpacked when he ordered the effective date of many last-minute Clinton regulations to be postponed pending more review. Immediately, medicine sighed with relief. "We are gratified that one of the president's first steps was to place a 60-day stay on the mountain of regulations issued in the final weeks of the Clinton administration," says E. Ratcliffe Anderson, the AMA's executive vice president and CEO. "Several would have added significantly to Medicare's mushrooming bureaucratic complexity and to the unfunded mandates imposed on physicians and other health care professionals and providers."

Not to be outdone, in early March the Republicans in Congress rescinded the workplace ergonomics regulations that the Clinton administration had issued only months before. "Enough is enough," one GOP congressman reportedly said as he celebrated his party's victory.

New regulations concerning the privacy of medical records may still be among those getting another look—but not this year. George W. Bush surprised just about everyone in Washington when he announced that the regs would go into effect as planned two years hence. "We're disappointed that the administration didn't delay the effective date," says William F. Jessee, president and CEO of the Medical Group Management Association. "It would have been prudent in light of the more than 20,000 comments HHS received and the significant concerns raised by various parties."

The AMA and the rules' numerous other critics still have reason to think the regs will be revised. HHS's Thompson hasn't said HHS will make big changes, but he's promised "modifications" and "guidelines to clarify some of the confusion." "Patient care will be delivered in a timely and efficient manner and not unduly hampered by the requirements surrounding consent forms," says Thompson.

Deprived (for now) of the chance to blunt the effects of these new regulations, some members of Congress are thinking about reorganizing—and perhaps scaling back—HCFA. The House Ways and Means Committee and the House Energy and Commerce Committee will examine the agency—said to be demoralized and stressed out, understaffed and overworked. In the Senate, some lawmakers have already found HCFA incapable of overseeing parts of Medicare. "One of the reasons managed care has not worked for seniors," says Breaux, "is because a lot of people within HCFA don't really want it to work." They're more favorably disposed to government controls than to market-driven forces, he asserts.

The agency, which takes its licks from doctors as well as from Congress, has its defenders, too. "Congress has long criticized HCFA's ability to manage a competitive-pricing system," contend Bryan Dowd and Roger Feldman, professors at the University of Minnesota, and Robert Coulam, a principal associate at Abt Associates in Cambridge, MA. "Over the history of the Medicare program, Congress repeatedly has prevented HCFA from implementing efficient purchasing practices."

Seizing on the GOP's antiregulatory tendencies, groups such as the AMA and ACP-ASIM are pushing Congress to lighten physicians' load. Reps. Shelley Berkley (D-NV) and Pat Toomey (R-PA) and Sens. Frank Murkowski (R-AK) and John Kerry (D-MA) have responded to medicine's plea by introducing the Medicare Education and Regulatory Fairness Act (MERFA). According to the bill's authors, MERFA will give physicians due-process rights during HCFA audits, fund provider education on Medicare billing practices, halt HCFA's use of extrapolation in the estimation of billing mistakes, add new procedures to appeal HCFA rulings, and eliminate requirements that force providers to repay Medicare before a billing case is decided. "Providers often have trouble wading through the more than 132,000 pages of confusing and sometimes contradictory Medicare regulations," says Murkowski. "Under this legislation, Medicare regulations will be clarified to ensure that health care providers understand their regulatory responsibilities and receive fair treatment from HCFA."

This spring, when the air whips around Capitol Hill, it may whisk away some pesky regulations. That's an expectation that's real.


Michael Pretzer. Washington forecast: Much talk. Any action?. Medical Economics 2001;10:38.

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