Health Care After the Election

Posted by Bill Pierce

There is no period of grace quite like that time between being hired for a new job and starting that job.  Expectations are high with nothing but promise ahead.  Winning the Presidency is no different.  Unfortunately, in this modern day and age, the grace period is short.   Promises were made, groups feel they are owed and so the pressure is on.
One of the biggest promises made was health care reform.  Then candidate, now President-elect Barack Obama positioned health care reform as an important issue, and one he intended to address if elected. However, with the economic and financial crisis continuing to unfold, questions have been raised about whether the new President will be able to address the crisis in our health care system, and if so what exactly will he be able to do.

Here is a reminder of some of the major promises he made and a reading of the tea leaves that may help in determining what he will actually do.

As part of his reform plan, President-elect Obama focused on two major areas for change:  coverage and cost.  The central ideas he proposed to increase coverage include creating a new Medicare like government offering that people could buy similar to the program offered to federal employees.  He also proposed creating a “National Health Insurance Exchange” where approved private health insurance companies and the new federal program would offer health insurance plans to those without coverage.    To participate, plans would have to meet several coverage mandates.  In both cases the federal government would provide subsidies based on a sliding income based scale.  As part of his plan to help provide coverage for the uninsured he also proposed a mandate for children, but he did not propose or support a mandate for adults as his former rival Senator Clinton has done. 

Other ideas to improve coverage include tax credits for families and small business and requiring large employers to contribute a percentage of payroll toward the cost of the national plan if they do not offer meaningful coverage to their employees; and expanding Medicaid and SCHIP. 

Cost saving ideas include allowing for drug importation from Canada (though recently his campaign said they are “rethinking” that position based on safety concerns raised by the tainted Heparin out of China); allowing Medicare to negotiate drug prices (these two issues could be stand alone bills that move as soon as early February along with FDA pre-emption repeal); comparative effectiveness review and research; cutting the reimbursement rates for Medicare Advantage plans; limiting insurance company reserves in non-competitive markets (force insurers to pay-out “excessive” reserves);  increasing the use of generic drugs including taking measures to speed generics coming to market; and improving access to prevention and disease management programs including improved coordination of care in the workplace, communities and schools as well as support such efforts in government and private health plans.

This is an expansive and aggressive health care reform agenda and to do it will cost a great deal of money.  The two key questions are will the government have the resources necessary to fulfill it, and how will they approach their health care agenda legislatively.  Will they do it all at once or do it piece-meal over time.  An important note — many people point to Massachusetts as a model for what the federal government could do to provide greater coverage.  While Massachusetts has seen major gains in providing coverage, there is also one other lesson learned, the Massachusetts program proved to be more costly than expected, and this is just one state.

President-elect Obama won’t have to wait long to demonstrate his commitment and in what direction he may be moving when it comes to reform.

There are two key health care issues that will come up early in 2009:  Physician reimbursement in Medicare and reauthorization of the State Children’s Health Insurance Program (SCHIP).  If Congress, with the backing of the new Administration, tries to actually pass a long-term fix to the physician reimbursement formula rather than simply push it forward to next year that may send a signal they are getting ready to take on the whole reform agenda.  The reason is that fixing the formula is costly.  The other bellwether is the SCHIP program.  In the last Congress, Democrats tried hard to expand the program, but were defeated by Republicans and the Administration.   Any expansion of the program will be expensive so if the new Obama Administration is willing to take this step it may be yet another sign it is willing and intends to take on the larger reform issues.  If they go beyond a simple reauthorization, they may also use the reauthorization to make some of their proposed reforms including mandating health care for children and an expansion of Medicaid among others.

A final sign in how seriously they are considering pushing their health care agenda is who they pick for HHS Secretary.  If it’s Tom Daschle that would be a sign they intend to be aggressive and push reform as it is hard to imagine Daschle coming on board unless he has the chance for major reform.  If the HHS Secretary is someone with a low profile it may signal that health care reform is not a top tier issue.