Perspective
A Bumpy Road for Reform
N Engl J Med 2009; 361:e7August 6, 2009
- Article
The legislative process is one of ebb and flow, particularly when politicians are confronted with issues that demand tough choices and divide the voters who elected them. Both currents were at work recently as one Senate committee and two House committees passed health care reform legislation supported by the administration while the Congressional Budget Office (CBO) estimated that the measures would not “bend the cost curve,” as President Barack Obama has insisted they must, but instead would accelerate the growth of health care spending. Adding to the challenges facing reform was the finding of a new survey that public approval of Obama's handling of the issue has dipped below 50% for the first time.1 Recognizing the growing list of concerns being registered — particularly by Democrats — Obama has plunged more actively into the pursuit of reform, emphasizing that Congress has already made “unprecedented progress” toward enacting reform and vowing, “We are going to get this done. We will reform health care. . . . I'm absolutely convinced of it.”
The new hurdles are hardly surprising, given that any effort to remake or even tinker with an enterprise that represents 17% of the country's economy is bound to upset some key stakeholders. But it is the wavering commitment to reform on the part of an increasing number of Democrats and governors of both parties that most worries the administration. The issues that concern conservative and moderate Democrats — including the high cost of reform, how to pay for it, and Obama's preference that bills clear both chambers before the congressional recess that begins in early August — present growing challenges for the administration. Virtually all Republicans are opposed to the reform bills passed by the House and Senate committees, and it is doubtful that many GOP members of the all-important Senate Finance Committee will support the measure that is taking shape in that panel.
On July 15, the Senate Committee on Health, Education, Labor, and Pensions (HELP) was the first of five panels to send a reform bill to the floor. The measure cleared the HELP committee on a straight party-line vote of 13 to 10. On July 17, the House Committee on Ways and Means passed its own reform measure on a vote of 23 to 18, with 3 Democrats voting no, and the House Committee on Education and Labor passed a very similar measure on a vote of 26 to 22, also with 3 Democrats voting no. The markup process under way in the third House panel — the Committee on Energy and Commerce — was slowed when its chair, Representative Henry Waxman (D-CA), postponed sessions for several days while he negotiated with 10 Democrats on the 59-member committee who said they would not vote for or had serious concerns about the proposal in its current form.
Representative Mike Ross of Arkansas, a committee member and a leader of the fiscally conservative Blue Dog Democrats, said his group favored a bill “more closely aligned with what the Senate Finance Committee is going to do.” The Finance Committee has been struggling to win bipartisan support for a reform measure that — to secure any Republican support — will have to address many of the Blue Dogs' concerns. Obama brought Ross and other Blue Dogs to the White House on July 21 to negotiate possible fixes.
The Senate HELP bill and the measure crafted by the three House committees would mandate that employers provide or that individuals carry health insurance (or pay penalties), would create a public insurance plan to compete against private carriers, would require insurers to enroll all applicants, and would provide federal subsidies to people who cannot afford coverage. To finance their bill, which carries a price tag of about $1 trillion over a period of 10 years, the House committees would tap two major revenue sources: Medicare and Medicaid spending cuts, which would save about $500 billion, and tax increases for high-income individuals and couples, which would raise an estimated $544 billion. Within days of the committee's action, House Democratic leaders signaled a willingness to scale back the proposed surtax on the wealthy as a nod to freshman legislators who worried about higher taxes. The House measure would eliminate a scheduled reduction of 21% in Medicare's physician fees; this step was instrumental in winning the endorsement of the American Medical Association, although some state medical societies and specialty organizations oppose the bill, particularly its call for a new public insurance plan.2
As some Democrats have grown more nervous about the call to extract hundreds of billions of dollars from spending cuts and tax increases, testimony delivered by CBO director Douglas Elmendorf — indicating that the reform measures would not control costs but would actually increase them — energized the party's moderate and conservative wings to demand legislative language designed to constrain spending. Through his blunt remarks, delivered before the Senate Committee on the Budget on July 16, Elmendorf essentially challenged the scope of the legislation, applied pressure on the White House to match Obama's calls for cost controls with explicit proposals for doing so, and accentuated the importance of the Senate Finance Committee and the quest of its chair, Senator Max Baucus (D-MT), to broker a compromise that could attract some Republican support.
Senator Kent Conrad (D-ND), chair of the Budget Committee, said in his opening statement at the July 16 hearing, “Rising health care costs remain the biggest threat to the federal budget. . . . According to CBO's [long-term budget outlook] report, taken together, public and private health care spending will reach 38% of [the gross domestic product] by 2050. That's more than one in every three dollars in this economy just going for health care, and that is a completely unsustainable trajectory.”
Later, almost apologetically, Conrad said, “Dr. Elmendorf, I am going to really put you on the spot because we are in the middle of this health care debate, but it is critically important that we get this right. . . . Do you see a successful effort being mounted to bend the long-term cost curve?” Elmendorf responded that, on the contrary, the current legislation “significantly expands the federal responsibility for health care costs.” Asked what he thought was “the right way” to slow cost growth, Elmendorf noted that there is “widespread support among health analysts” for changing the preferential tax treatment of employer-sponsored health benefits, because doing so would give workers stronger incentives to seek lower-cost insurance. Elmendorf also recommended that Congress change the way Medicare pays providers, “to encourage a focus on cost-effectiveness and not encourage, as a fee-for-service system tends to, the delivery of additional services.” Provider organizations, meanwhile, say they are already losing vast amounts of money under the Medicare system; a recent op-ed by Mayo Clinic executives challenged Congress and the administration to focus more on rewarding value.3
Elmendorf's unvarnished view produced political waves similar to the storm provoked by one of his predecessors, Robert Reischauer, who testified in 1994 that the health care reform proposal of President Bill Clinton would cost far more than the White House had projected. The importance that the Obama White House attached to Elmendorf's testimony was reflected in the gathering of senior administration officials, on the evening it was delivered, to discuss its implications for the President's initiative. The next day, Peter Orszag, director of the Office of Management and Budget, sent a letter to House Speaker Nancy Pelosi (D-CA) outlining a draft bill that would establish an Independent Medicare Advisory Council. The council, which Obama has said would be composed “of doctors and medical experts,” would recommend annual Medicare payment rates, but these updates or broader reforms would not be allowed to increase net Medicare expenditures. By proposing such an advisory body, the administration seeks to insulate Medicare payment decisions from legislative politics, although Congress could intervene if it chose to — much as it does when it considers military-base closures that are recommended by the Department of Defense but often opposed by individual legislators with a base in their district or state. In a July 21 letter to Pelosi, 16 surgical societies, including the American College of Surgeons, said, “Should provisions to place the authority for Medicare payment policy in an unelected executive agency be included in any legislation at any point, the surgical community would vigorously oppose this legislation.”
The only prospect for winning much Republican support for reform lies in ongoing negotiations within the Senate Finance Committee. Emerging from a closed-door meeting on July 16, senior committee members said they thought Elmendorf's testimony strengthened their hand in negotiating tougher cost controls. However, one of them, Senator Orrin Hatch (R-UT), maintained that one of Elmendorf's recommendations — taxing health insurance benefits — was no longer under consideration by the committee because of opposition from House and Senate leaders, organized labor, and some segments of private business. Nevertheless, a variant of the idea — a tax levied on health insurers who offer high-cost benefit packages — remained “on the table,” according to Baucus. The panel has largely settled on extracting about $500 billion from the Medicare and Medicaid programs and is considering a variety of other tax increases.
As the debate continues, there seems little likelihood that both the House and Senate will approve reform proposals before their month-long recess. That may be construed as a setback for the administration, but the modern presidency's powers of persuasion and punishment, the ability of Democratic leaders to marshal their majorities in Congress, and the support — however reluctant — of private interests give the edge to those favoring action. Exactly what form that action will take, however, is still an open question.
This article (10.1056/NEJMp0906578) was published on July 22, 2009, at NEJM.org.
Source Information
Mr. Iglehart is a national correspondent for the Journal.
- References
References
1
Balz D, Cohen J. Poll shows Obama slipping on key issues. Washington Post. July 20, 2009:A1.
2
Coalition of State & Specialty Medical Societies. Letter to Representative Henry A. Waxman. July 21, 2009. (Accessed July 22, 2009, at http://www.scmanet.org/sphere/KNOWLEDGECENTER/PhysicianLinksResourses/CoalitionofStateSpecialtyMedicalSocieties/tabid/272/Default.aspx.)
3
Cortese D, Korsmo J. Bending the curve on health spending. Chicago Tribune. July 19, 2009. (Accessed July 21, 2009, at http://www.chicagotribune.com/news/opinion/chi-oped0719mayojul19,0,2771064.story.)
