Perspective
Baucus's Bill and the Long Road to Reform
N Engl J Med 2009; 361:e27October 8, 2009
- Article
In an effort to attract Republican support, Senator Max Baucus (D-MT), chair of the Senate Finance Committee, stripped his health care reform proposal of some of its most contentious elements — the creation of a public insurance option, the imposition of an employer mandate, and the provision of physician payments for counseling Medicare beneficiaries about end-of-life care. But when Baucus unveiled his bill on September 16, he did so without any Republican support, in the face of wariness from some Democrats, and with more than 500 proposed amendments that his committee will consider when it begins to mark up the measure on September 22.
The Congressional Budget Office (CBO) has estimated the measure's net cost at $774 billion over 10 years and projected that it would provide health insurance to 94% of Americans by 2019, leaving about 25 million people — one third of them illegal immigrants — without coverage. Though early reactions were decidedly mixed, the measure reflects many of President Barack Obama's goals, including the requirement that the reform's cost not add to the federal deficit. Obama's spokesperson, Robert Gibbs, called the bill “an important building block [that] gets us closer to comprehensive health reform.”
Baucus's bill would mandate that most legal residents obtain health insurance, set up insurance exchanges through which eligible people without employer-based benefits could purchase subsidized coverage, substantially expand Medicaid, and — to partially pay for such reforms — reduce the growth of Medicare's payment rates for most services other than those provided by physicians. The bill would eliminate the 21% reduction in Medicare fees for physicians, scheduled to take effect on January 1, and substitute a 0.5% fee increase in 2010. The bill does not permanently replace the sustainable growth rate (SGR) formula that Medicare uses to calculate physicians' fees, but Baucus said that the “SGR will be addressed by the Senate. There's no doubt in my mind about that.”
Although Baucus's proposed increase in physicians' fees is meager, primary care clinicians would receive 10% bonuses for certain evaluation and management services if more than 60% of their practice consists of these services. The bonuses would be targeted at physicians practicing family, geriatric, internal, and pediatric medicine, as well as advanced practice nurses and physician assistants. The bill would also extend a 10% bonus to general surgeons who practice for 5 years in a medically underserved area.
In recent months, Baucus has been meeting with five other Finance Committee members — two other Democrats, Kent Conrad of North Dakota and Jeff Bingaman of New Mexico, and three Republicans, Charles Grassley of Iowa, Olympia Snowe of Maine, and Michael Enzi of Wyoming — in an effort to achieve bipartisan support for reform. Though these Republicans rebuffed him, the administration considers Baucus's bill the most promising vehicle for crafting a compromise, because it is less costly than the alternatives approved by four other congressional committees and is the most palatable to influential private stakeholders (large employers, health plans, and hospitals).1
Despite the initial absence of strong support for Baucus's offering, the reform effort is proceeding along the sort of winding path often followed by major legislative initiatives. Democrats — and particularly Obama — remain determined to enact a bill. Three House committees (Education and Labor, Energy and Commerce, and Ways and Means) have approved reform bills that will now be harmonized into one measure and brought to a House vote. Since Democrats hold a 256-to-178 majority in the House, the measure will be enacted as long as the party's leadership can hold most of its troops in line. The Senate Health, Education, Labor, and Pensions Committee, which was chaired by Senator Edward Kennedy (D-MA) until his recent death, has also approved a bill that figures into the mix. The weakest element of all the bills may well be their failure to propose more sweeping change in the organization and incentives that drive health care delivery and financing.2
According to a preliminary analysis by the CBO and the staff of the Joint Committee on Taxation, the Baucus bill would not add to the federal deficit because its costs would be covered through a tax on private “Cadillac” insurance plans, a slowing in the growth of Medicare and Medicaid payments to nonphysician providers and suppliers, and new fees imposed on clinical laboratories and medical-device manufacturers. Of the total cost, about $500 billion would be allocated for expanding coverage through insurance exchanges, Medicaid, the Children's Health Insurance Program, and tax credits for small employers. The analysis indicated that 94% of nonelderly legal residents of the United States would have coverage — up from 83% today.
As part of this coverage expansion, the measure would bar insurers from discriminating against people on the basis of their health status, denying coverage because of a preexisting condition, or imposing annual or lifetime limits on coverage. America's Health Insurance Plans, which represents the insurance industry, had volunteered to accept such strictures if most people had coverage. The organization sought to reduce Baucus's proposed cuts of $123 billion in payments to Medicare Advantage plans, which are operated by private insurers, but generally held its fire, seeing passage of a reform measure as important.
Baucus's proposal would require that as of 2013, all legal residents carry health insurance — or face an income-based financial penalty. Also beginning in 2013, small businesses and persons without access to employer-based coverage could purchase health benefits through new insurance exchanges, in which public subsidies would be provided to individuals and families with incomes between 133% and 400% of the federal poverty level. Instead of creating a public insurance option, the proposal would provide start-up funds to encourage the creation of nonprofit cooperative insurance plans that would be offered through the exchanges. This provision may not survive, however, because both Democratic and Republican members of the Finance Committee oppose it.
Starting in 2014, all parents, children, pregnant women, and childless adults earning less than 133% of the federal poverty level (i.e., earning less than $14,400 a year, for an individual, and less than $30,000, for a family of four) would become eligible for Medicaid, with the federal government paying 90% of the cost of this expanded coverage. Although the Baucus bill does not require employers to provide coverage, firms with more than 50 workers that do not do so would pay a penalty for any workers who obtained subsidized coverage through exchanges.
In a conciliatory gesture to Republicans during his health care reform address on September 9, Obama proposed that the Department of Health and Human Services award grants to states for testing various new approaches to adjudicating medical malpractice claims. A week later, the White House announced that $25 million would be made available for this purpose and that states could compete for grants of up to $3 million. From the moment Obama broached this idea, Republicans criticized it, although the GOP has failed to enact its own prescription — a federal cap on damages for pain and suffering.
Baucus did not incorporate Obama's proposal into his bill, opting instead to include nonbinding language encouraging state-based experiments. Nevertheless, Obama's interest in addressing malpractice energized Congress to pursue the matter more actively. In July, the House Energy and Commerce Committee approved language in its reform bill that would provide federal assistance to states for various initiatives designed to reduce the number of malpractice lawsuits.
Senate Finance Committee members have filed numerous amendments that could change Baucus's measure in a variety of ways. Grassley, a traditional Baucus ally who has declined to support the bill as introduced, readied amendments addressing concerns including reform's cost3 and the enactment of “tougher medical liability reform.” Snowe, considered the bill's most likely GOP cosponsor, has indicated that the proposed expansion of Medicaid is her major concern, since Maine and other states are still reeling from the recession; governors have protested that such an expansion would amount to an “unfunded mandate” for the states. Snowe is also likely to introduce an amendment that would trigger the creation of a public insurance option if private carriers fail to constrain spending growth and fail to maintain access to coverage services.
As the markup sessions began, Obama remained highly visible, imploring the public to back reform. He also invited several Democrats who had warned they would not support the Baucus bill to the White House to discuss their concerns. One of them, Senator John D. Rockefeller (D-WV), who was upset by the bill's lack of a public insurance option, tempered his criticism after meeting privately with Obama, indicating that he hoped to work out a compromise.4
The administration's immediate goal is to assist Democrats in winning passage of reform bills in the House and Senate. If they succeed, a House–Senate conference committee would be appointed to blend the measures — a step in which the administration will be heavily involved. If that task is accomplished, the bill will return to both chambers for floor votes. If approved, it will be sent to Obama for his signature. The reform effort could be derailed at any point along this treacherous path, and the future of Obama's presidency could hinge on the outcome.
This article (10.1056/NEJMp0908719) was published on September 23, 2009, at NEJM.org.
Source Information
Mr. Iglehart is a national correspondent for the Journal.
- References
References
1
Abelson R. Guarded optimism among insurers, but some health sectors remain skeptical. New York Times. September 17, 2009:A20.
2
Enthoven A. Please don't call it health reform. Kaiser Health News. September 10, 2009. (Accessed September 21, 2009, at http://www.kaiserhealthnews.org/Columns/2009/September/091009Enthoven.aspx.)
3
Adamy J. Proposal's cost savings seem to be elusive. Wall Street Journal. September 17, 2009:A4.
4
Connolly C. From finance chief, a bill that may weather the blows. Washington Post. September 17, 2009:A1.
