Kennedy’s Health Could have Key Role in Healthcare Reform Passage.

During yesterday’s trip to Capitol Hill with ECFC, I had the chance to meet with staffers representing one Democratic and two Republican lawmakers. We also heard from Sen. Ted Kennedy’s chief healthcare policy advisor, former CMS director, Tom Scully, and former Sen. Bob Dole, among others. They all agreed on one thing: the current healthcare system is not working and needs to be fixed. They also agreed that this is the best chance Washington has had in years to reform the healthcare system. And, they all expressed the desire to preserve the existing employer-based system, and for the legislative process to be inclusive and bi-partisan. Furthermore, there was agreement about the problems that are afflicting the system, namely, access, affordability and quality were themes that echoed throughout the day. I also sensed a universal desire to get it right, and to make healthcare an economically sustainable proposition for the government, employers, and individuals. The steaks are huge.

There was also a great deal of agreement about who the players will be. President Obama, of course, has a major role in what will unfold. The very afternoon that we were attending meetings on The Hill, the president was conducting a White House summit on health care to underscore importance of this issue and to call for dialogue and participation from all the stakeholders.

Key players in the Senate include Chuck Grassley (R-IA) for his role as a member of the Senate Finance Committee, Max Baucus (D-MT), Chairman of the Finance Committee and the author of  a white paper on healthcare reform, “Call to Action: Health Reform 2009“, and of course, Ted Kennedy (D-MA) , a long-time advocate for healthcare reform. It has been widely acknowledged that Kennedy’s team has been meeting with various healthcare stakeholders for the last seven months in an attempt to build consensus on a program to achieve healthcare reform. John McDonaugh, Kennedy’s chief healthcare policy advisor told us that he expected there would be committee mark-ups on Kennedy’s bill during May and June and that the bill would be on the floor of the Senate prior to the July 4th recess.

The House has been a little slower to get out of the gate with regard to health care reform.  In this chamber, the experts we heard from expect a “top down” approach to writing legislation. That means the House will catch up very quickly with the Senate and will soon introduce its own health reform legislation. Heading this effort will be Pete Stark, (D-CA), a senior member of the powerful Ways and Means Committee, and currently the Chairman of its Health Subcommittee. Joining him will be Henry Waxman (D-CA), Chairman of the Committee on Oversight and Government Reform, the principal investigative committee in the House. And also, from California, and also a Democrat, House Speaker Nancy Pelosi.

Kennedy staffer, John McDonough, spent some time with us laying out the basic issues that the Kennedy team has identified as being key to reform. They are:

  • Coverage – McDonough said that there needs to be a systematic change to the way that individual healthcare insurance is marketed. He talked about eliminating individual underwriting, marketing policies through “connectors” like those being used in Massachusetts, and an individual mandate requiring everyone to be covered in some way.
  • Delivery System Reform – This area deals with how healthcare providers are paid, ramping up primary care, the management of chronic care, Health IT, price transparency, and comparative effectiveness.
  • Prevention/wellness and finance fill out the basic issues being discussed.

McDonough also said that his team wants to achieve tax equity for individuals who buy their own insurance and that they preferred one individual insurance market as opposed to high risk pools for people with serious medical issues. Furthermore, he noted that there would be no “fundamental surgery” done to ERISA in the Kennedy plan, but did say that the existing employer tax exclusion for the cost of providing health insurance is “on the table.”

Republicans we spoke with also agreed about the need for reform. Andy Chasin, Health Policy Counsel for the Senate Republican Policy Committee said that republicans acknowledged that the healthcare system is not working and needs to be fixed. He pointed to the stress being placed on families to pay for health care as well as the burden on state and federal budgets. Chasin noted that 32% of state budgets now go to paying for Medicare, and that this is the single most important way to control the federal budget for the long term.

Having agreed that healthcare reform is needed, Chasin laid out, from the republican perspective, the key principles they would like included in any new proposals.

  • Private competition – Not government-run, like a proposed government program that will competed with employer plans and ultimately drive people from employer plans.
  • Affordable options – Baseline programs need to be reasonable and include lower cost options like HSAs.
  • Paid for and Sustainable
  • No new taxes on small businesses
  • No expansion of unsustainable entitlement programs

Now that both sides have agreed for the need to reform healthcare and have laid out their basic issues and principles it is time to get down to the details. Staffers, especially those working for the republican lawmakers, asked us detailed questions about employer tax exclusion and how it might be capped to free up funding to allow for the tax code to be equalized for individual insurance buyers. By the questions we were asked it seems like they were searching for places where compromises can be made as program is negotiated.

There is no doubt that this kind of political give-and-take will continue over the next couple of months as each party attempts to achieve their interests in the reform legislation. Likewise various interest groups ranging from healthcare providers to health insurers, to unions, to employers, to pharmaceutical companies will all be looking for a plan that will preserve their vested interests in the system.

Tom Scully, who served as the head of CMS in the recent Bush administration, is a veteran of political fights having guided much healthcare legislation over the past two decades including the legislation that became Medicare Advantage. Now, in private life, Scully is free to speak more frankly about the political process without fear of upsetting the opposition.

In remarks that he made to our group at the close of our meetings on Capitol Hill, Scully talked about how it was a mistake that the Clinton’s did not introduce their reform plan during the first year of Mr. Clinton’s first term. By the second year of the term when the legislation was finally delivered in the form of a fully developed plan, the honeymoon was over and mid-term elections were fast approaching.

Scully was also candid in saying that Sen. Kennedy’s health could play a pivotal role in enacting proposed legislation. He noted that the mental health parity legislation had stagnated in Congress for years, but was quickly passed last year to honor long-time advocate of such reform, Pete Domenici.

With Kennedy’s precarious health condition, Scully suggested that healthcare legislation bearing his name could be quickly enacted this year. I would not be surprised if this prediction came true.

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