State of the Union Address: 5 Minutes on Health Care

In tonight's much anticipated State of the Union Address, the focus was on jobs and the economy. However, the President asked Congress to continue to focus on health care and he linked the debate on health reform as central to our economic challenges. The President urged Congress to "finish the job" on health care as more Americans lose health insurance each day. Specific health reform initiatives were not addressed and in fact the President spent only about 5 minutes on health reform in total.

So where does this leave the health reform debate? Its not clear but we all know there are health care related issues that still must be addressed this year such as critical Medicare and physician reimbursement issues. The fun here in Washington continues.

Health Reform Debate May Take a Break but Medicare Physician Reimbursement Issue Must be Fixed Now

While health care reform is in limbo, we do need some form of health care legislation to pass in order to prevent a looming cut to Medicare reimbursement for physicians at the end of February. We understand that Senate leadership and the chairmen of the Finance and Budget committees are working to try to include a fix to the Medicare physician payment formula as part of legislation being considered to increase the federal debt ceiling.

While details have not been confirmed, but the deal being discussed reportedly includes a 5-year exemption from the pay-as-you-go rules for a physician pay fix. The plan also includes creation of a deficit reduction commission, which would make recommendations to Congress on how to proceed with reducing the federal debt. The commission's recommendations would be put to congressional vote for approval. There is disagreement within Senate leadership on the creation and scope of the commission, and some leaders support creation of such a commission via executive order instead of legislation. The physician pay fix could have a modest increase to Medicare fees but all of the scenarios are very modest at this point. Without congressional action, a 21.2 percent cut to the fee schedule is scheduled to kick in at the end of February making this a critical health care issue that must be addressed regardless of other health care legislation.

Massachussetts GOP Win creates uncertainty for health reform

Since the GOP win in the Massachusetts Senate race Tuesday night, Healthcare reform is again back at the top of the news headlines and it remains unclear what the next step for health reform legislation will be. Here are some of the key headlines and insights from Washington insiders

• On ABC's Nightline last night, President Obama indicated that he did not want the Senate to push through legislation without Senator Brown. He also signaled that he might be willing to scale back his proposed health care overhaul to a version that could attract bipartisan support which is welcome news.
• Today many major industry players announced their continued support for some form of healthcare overall including PhRMA and even some larger insurers.
• We understand that Pelosi has indicated that she does not think the House could pass the Senate's health care bill and we believe democrats are now talking about paring down the healthcare reform package to so that they could get some kind of bill--albeit a smaller one--through Congress. Most party moderates believe some type of bipartisan support is needed.
• Despite the headlines, health reform can still pass this year. Although Democrats won't have 60 votes in the Senate any more, they will have 59, which is a wider majority than presidents like Ronald Reagan or George W. Bush needed to win significant legislative victories. The fun in Washington continues and health reform remains a central issue!

Hopefully, this game changer will create an opportunity to correct some serious gaps in the proposed health reforms with a more bipartisan approach. Regardless, there are several significant issues that must be addressed soon including the looming Medicare physician (SGR) 20% cut in reimbursement. Stay tuned....

President pushes to health reform negotiations

This week has included several unusual day-long negotiating sessions on health reform that included President Barack Obama and top Democratic congressional leaders. Progress appears to have been made on several issues and on Thursday the White House announced that a tentative agreement has been reached with union leaders to tax high-cost insurance plans. If the agreement holds, this would remove one of the major stumbling blocks in the way of a final compromise on comprehensive health care legislation.

The breakthrough on the insurance tax marked a victory for the White House, which has long sought a tax on high-cost plans as a way of curbing the rise in health care expenditures. Organized labor had opposed it, arguing the impact would fall heavily on workers whose bargaining contracts gave them more robust health care coverage and therefore limits on the amount of money that could be claimed as a tax deduction could increase income taxes for employees that opt for such plans.

Many key issues are still being debated including whether to establish a single national health insurance exchange, as supported by the House, or dozens of state exchanges, which has been proposed by the Senate. We are also closely following a proposed "Medicare Commission" board which could significantly reduce Medicare reimbursement process without a normal rule making process.

White House officials have told Democrats that they want an agreement as soon as possible, maybe in the next week to 10 days. It will then take time to receive a cost estimate from Congressional Budget Office before votes can be considered. If the goal remains to complete the legislation before the State of the Union, then they would need to be close to key compromises. The date of the State if the Union address has not yet been finalized but today we are hearing it could be February 9th.

Next week we expect to see how key Senators such as Nelson and Lieberman react to potential discussions as their support remains critical for health reform to pass.

Congress gets back to work but final pieces of health reform legislation not yet clear

The House of Representatives will resume legislative business on Tuesday, January 12, thus beginning the Second Session of the 111th Congress. The Senate will resume legislative business a week later on January 19.

Since both chambers of Congress have passed health care reform legislation, Democratic leadership is currently working to combine the two bills and reach consensus on the remaining contentious topics. Although Democrats are hoping to pass legislation before the State of the Union, this deadline is not set in stone and could be subject to further delay.
　
Last week, Democratic leadership from both the House and Senate met with President Obama and members of his Administration to discuss health care reform strategy and substance. Private discussions will continue next week and are likely to heat up as Congress returns to town. Before a final bill is ready for passage, Democratic leadership must reach agreement on several issues. It is currently projected that the Senate version of health reform will carry the key issues (such as no public option) but many other issues remain unclear.
　
President Obama has begun taking a more active role in the House/Senate negotiations. This week, Obama voiced support for taxing so called "Cadillac Health Care plans." He believes that this provision is key to curbing the rising cost of health care. As Congressional negotiations move forward, President Obama will continue to increase his involvement.
　
Earlier this week, the President met with Congressional Democratic leadership to discuss the future of health care reform. President Obama continues to urge Members to finish work on health care reform and send legislation to his desk as soon as possible.
　　

Happy New Year -- Health Reform Fun Continues!

Today, reports from Democratic leaders indicate that the House and Senate will not set up a formal conference process to work through the significant differences in the health reform bills that have passed in the Senate versus the House. This informal process of negotiations (often referred to as ping pong) has already begun between Senate Majority Leader Reid and House Speaker Pelosi. The informal process is the only way that Democrats can bypass procedural hurdles that would challenge the feasibility of passage of a final health reform bill. Senators are not in town this week, but House leaders and key committee chairmen plan to meet Tuesday to discuss melding the bills.

• The Senate bill that passed early in the morning on December 24th does not include a public option like the House bill which will bring this issue back into debate.
• The bills also differ in how they are funded. Reports are that the House may be prepared to accept a Cadillac tax as long as the threshold for premiums considered high cost is raised so union plans are exempt.
• The House bill imposes a 5.4 percent surtax on individuals earning at least $500,000 and families earning at least $1 million. The Senate bill imposes a 40 percent excise
  tax on the value of premiums that exceed $8,500 for individuals and
  $23,000 for families.
• There are also differences in how to fill the gap in Medicare Part D prescription drug coverage, known as the doughnut hole.
• Also important is a Senate-created commission meant to make
  cost-cutting decisions in Medicare.

The White House would like to see a bill on the president's desk by the State of the Union address which will likely be late January or early February which is a challenging timetable for such negotiations.

Thus the debate and discourse on these details continue....is it Groundhog Day yet?