The Association of U S West Retirees



Health care debate to heat up in 2007
By Julie Appleby
Tuesday, December 19, 2006

WASHINGTON Sen. Ron Wyden, getting a jump on his fellow lawmakers, outlined an ambitious plan last week that he says will guarantee all Americans health insurance similar to what Congress now gets, and save money at the same time.  The Oregon Democrat's plan, the most wide-reaching health reform proposal since President Clinton's in the early 1990s, comes as Democrats are poised to take control of Congress amid speculation about what that means for health care.

"There will be a gazillion flowers blooming because of the pent-up desire to do something for the uninsured," says Bridgett Taylor, Democratic staff member of the House Energy and Commerce Committee, speaking last week at a press briefing.

Many observers, such as Drew Altman of the Kaiser Family Foundation, expect Congress to focus on Medicare, prescription drug costs and safety, as well as efforts to cover the uninsured.  All debate will play out against the background of the 2008 presidential election, with both parties working to lay claim to what they expect will be popular issues with voters.

Wyden's proposal may test whether the idea of broad health reform can win centrist support after years in which such proposals have been largely absent and considered too politically risky.  Many political observers expect Congress to continue to shy away from big efforts.

"The health measures that Congress and the administration will fight over in 2007 will be modest and will be as much about positioning for 2008 as solving the nation's health care problems," says Altman at the Kaiser foundation, a non-profit research group.

Wyden's plan would rely on private insurers to offer coverage that is at least as comprehensive as one of the standard plans now offered federal employees, require all Americans to buy it and tax employers to help pay for it.

His plan is one of many areas of health policy expected for debate starting in January.  Others include:


Some Democrats, including incoming speaker Nancy Pelosi, D-Calif., are expected to push to require the government to negotiate drug prices for members of the new drug program.  But there is disagreement on how it would be done and whether it would result in lower prices than the current method of having private insurers negotiate the prices.

Other items to watch:

  Congress is expected to look at the amounts paid to private insurers that provide alternatives to traditional Medicare, such as HMOs.  Some Democrats, including Rep. Pete Stark, D-Calif., are concerned that those alternatives, called Medicare Advantage plans, are paid about 11% more than it would cost to provide care under the traditional program, according to government oversight reports.  But efforts to reduce those payments are likely to hit opposition from lawmakers who see Medicare Advantage plans as important private sector options for beneficiaries.

"The majority of Republicans and some Democrats are supportive of Medicare Advantage overall, so it's not clear they can go after them as much as Stark might like," says Andy Bressler, who follows health policy issues for Bank of America.

  Another issue is financing for the program.  Medicare's hospital trust fund is quickly heading for financial trouble as baby boomers age and health costs rise faster than inflation.  In the closing hours of Congress last week, lawmakers eliminated a contentious, planned 5% payment cut for physicians who serve Medicare patients.  While that gives the new Congress more time to figure out what to do about the overall program, it also creates a bigger deficit, says Joe Antos of the American Enterprise Institute.

  Many Democrats have pledged to do something about the so-called doughnut hole in the Medicare drug benefit, in which beneficiaries pay the full amount of their drugs before government coverage kicks back in.  But the Democrats have also pledged not to pass legislation that costs money unless they have a way to pay for it.  Eliminating the doughnut hole would cost millions, and it's not clear where that money would come from.


Democrats and some Republicans, notably Sen. Charles Grassley, R-Iowa, have strongly criticized the Food and Drug Administration and the pharmaceutical industry, expressing concerns about whether drugs are given adequate safety reviews before approval and why many drugmakers fail to do required safety studies after their drugs hit the market.

"FDA will get a charge to deal with that more aggressively," says Antos.

The uninsured

Funding for a children's health program through the joint state/federal Medicaid program is up for renewal and is expected to pass.  Observers including Antos and Bressler say they expect Democrats will not only renew the program, but also put more money into it so it can cover more children.

Congress may also consider funding pilot projects in the states to experiment with new ways to cover the uninsured.

Wyden says his proposal to insure all Americans, which he plans to introduce in January, would not cost any more than is currently spent on the health care system, according to an economic analysis done by The Lewin Group.  It will slow the rate of health care inflation, he says, saving $1.4 trillion over a decade, and ensure that no one will lose health coverage.

"This will give people security so they don't have to worry that their (health insurance) coverage will not be there the next day," Wyden said last week.

But few expect that broad federal efforts to cover more uninsured will pass.  Lawmakers are still skittish over the resounding defeat of the Clinton health system overhaul proposal in 1994.

"Politicians are still wary of repeating those mistakes," says Mark Hayes, health policy director for the Republican staff of the Senate Finance Committee.

In the coming year, federal efforts will run into two constraints, says Uwe Reinhardt, an economist at Princeton.  "One is the president's veto pen and the other is the federal deficit," he says.  "The most Congress can get is small incremental changes that don't cost a lot of money."