What's on Tap for Reform Before Next Congress Takes Over

by Dan Diamond, California Healthline Contributing Editor

TOPIC ALERT:

Coming off the midterm elections, many prognosticators have focused on what Republicans will do with their new House majority and greater Senate influence. The party likely will push to defund the federal health reform law, if not try and strike the law down altogether. Rep. Eric Cantor (R-Va.), who is in line to become House Majority Leader in January, on Tuesday night said that he hopes to "put a repeal bill on the floor right away."

There's just one detail: This Congress isn't over yet.

Legislators return to Washington, D.C., on Nov. 15, and while Congress faces "post-election chaos" over a slew of unresolved economic issues -- which could complicate efforts to pass legislation this session -- Democrats will deal with several time-sensitive measures that are linked to the health reform law.

Crafting a spending bill for next year. Congress must consider an omnibus appropriations bill or a stop-gap funding measure to sustain government operations after Dec. 3. Legislators might be under pressure to scale back funding for health reform initiatives, which could prompt various stakeholders to re-evaluate their responses to reform.

For example, the National Association for Community Health Centers is warning members that Congress might include an across-the-board cut to federal spending as part of the omnibus, meaning that community health centers might not receive funding for fiscal year 2011 at 2010 levels, as Congress had been considering. That raises the question of whether a $1 billion allocation called for in the health reform law will serve as a funding increase for FY 2011 or offset a decrease. The NACHC says it will "continue to advocate for the full FY 2010 appropriation to ensure that our expansion continues as envisioned in health reform."

Dealing with a scheduled cut in Medicare reimbursement for physicians. Congress also must decide whether to block a 23% cut to physicians' Medicare reimbursement rates, which is scheduled to take effect in December. The decision seemingly happens every session, as the House and Senate repeatedly have disagreed on how Medicare should be paying physicians -- and only agree to keep pushing the payment cuts down the road.

The seeds for this particular fight were planted during the health reform debate, when legislators dropped language to permanently "fix" Medicare physician reimbursement in order to pass the final reform law, but later failed to pass a stand-alone measure that would delay cuts to 2013. The American Medical Association now is pushing for a 13-month reprieve from the planned cuts. While AMA's current lobbying is driven by the looming cuts, observers say that the group also is wary of working with the next Congress. The association's historic ties with Republicans were strained during the reform debate, after AMA backed the Democrats' health reform law.

Changes to Individual Mandate Could Be on Table

Democrats also may interpret Tuesday's election results as a referendum to make their own changes to the reform law, observers note. All five House Democrats who flipped from opposing to supporting the final health reform law lost their re-election campaigns, while the law's most prominent supporters -- like Sen. Russ Feingold (D-Wis.) and Rep. Earl Pomeroy (D-N.D.) -- suffered defeats. Following the election results, Senate Majority Leader Harry Reid (D-Nev.) on Wednesday said that he was "ready for some tweaking" to the reform law.

Meanwhile, voters in Arizona and Oklahoma passed ballot measures that allow state residents to "opt out" of the individual mandate in the reform law. The measures may be largely symbolic, because federal law supersedes state law and questions over the mandate's constitutionality appear destined for the Supreme Court. However, the initiatives' success reflects the law's most contentious element.  Federally mandating that U.S. residents obtain health coverage will continue to provoke resistance and lead to political challenges for Democrats, Alec Vachon, president of Hamilton PPB, tells California Healthline.

One option for lame-duck Democrats is to pass a measure that would transfer the burden of enforcing the individual mandate from the federal government to the states -- or abandon the mandate altogether, according to Vachon. He notes that Democrats could craft an alternative to the federal mandate that requires states to meet a near-universal coverage level. Under this model, Vachon says, Democrats also would establish a state mandate to purchase insurance or devise other means to guard against residents only purchasing insurance when necessary.

Former Vermont Gov. Howard Dean (D) also has argued that the individual mandate is not necessary, pointing to his state's success in lowering its uninsurance rate to 10% by relying on other tactics, such as restricting insurers' ability to vary prices and improving public access to care.

In the meantime, here's a look at what else is making news in health reform.

Responding to the Overhaul

  • Congressional Budget Office Director Doug Elmendorf recently predicted that the federal health reform law will cause a half-percentage point drop in labor supply, largely because some U.S. residents will choose to work less and employers could cut low-wage jobs. Elmendorf said the reduction in labor supply stems from the expansion of Medicaid and the new insurance exchange subsidies that are part of the reform law. CBO also noted that some employers will have to pay penalties for failing to provide coverage and likely will lower wages to offset those costs. Such employers also might hire fewer low-wage workers to get around the law's provisions (Reichard, CQ HealthBeat, 10/26).
  • Last week, the Federation of American Hospitals sent a letter to CMS and the Federal Trade Commission requesting information on how to achieve legal leeway under the accountable care organization provisions of the federal health reform law. FAH, which represents almost 1,000 for-profit hospitals, requested flexibility on pricing for all patient populations because it said many health care providers will not invest in creating ACOs strictly for Medicare beneficiaries (McCarthy, National Journal, 10/28).
  • America's Health Insurance Plans laid off approximately 10% of its 160-person staff and added two new senior staffers as part of a restructuring after the federal health reform law passed. AHIP spokesperson Robert Zirkelbach said the restructuring will help the group meet new advocacy and policy challenges, adding that they are working to lower costs and minimize disruptions that come with the overhaul. AHIP also plans to lobby members of Congress to halt a new tax on premiums that is scheduled to go into effect in 2014, allow more flexible age rating and scale back large Medicare Advantage cuts (Pecquet, "Healthwatch," The Hill, 10/31).

Reform Law Rollout

  • Flexible health spending accounts cannot be used to pay for breast pumps and other breastfeeding supplies, according to an Internal Revenue Service decision stating that breastfeeding does not provide enough health benefits to quality as a form of medical care. The federal health reform law includes several new rules for FSAs, which allow U.S. residents to set aside a portion of their pretax earnings to pay for certain medical expenses that are not covered by their health plans. The new rules will take effect in January. Breastfeeding supplies also were not eligible for FSA reimbursements under the previous regulations (Kocieniewski, New York Times, 10/26).
  • By Jan. 1, 2011, CMS will be required under the federal health reform law to launch a website that allows consumers to compare physicians based on factors such as quality, performance and patient experiences. The Physician Compare website is expected to be modeled after CMS' Hospital Compare website, which allows consumers to compare hospitals using similar criteria. According to CMS, the website initially will include information about physicians who participate in the Medicare program and those who participate in the agency's Physician Quality Reporting System (Mosquera, Government Health IT, 10/28).
  • Minnesota will participate in the federal health reform law's Early Retiree Reinsurance Program, despite Gov. Tim Pawlenty (R) in August issuing an executive order that the state would not voluntarily participate in overhaul programs. The ERR distributes $5 billion to help pay for insurance for retirees between ages 55 and 64. Pawlenty's executive order stated that Minnesota officials cannot seek further discretionary money for demonstration projects and grant funding under the overhaul, unless the governor first approves the request. The order also stated that Minnesota will not expand its Medicaid program before 2014 (Kliff, Politico, 10/29).

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