Democratic Healthcare Reform is on the Forefront in Washington

By Bill Finerfrock and David Connolly

This January millions of Americans will watch as our country engages in one of the great miracles of political history—the peaceful changeover of government. When Barack Obama is sworn in as the 44th President of the United States, history will be made on many levels but perhaps the most important is this peaceful relinquishing of the presidency by one individual to another—a fine example of the “Miracle at Philadelphia.” (We don’t mean the recent Phillies World Series victory!)

By the time you read this article, the heated rhetoric and passion of the election campaign should be a fading memory. The inauguration of President Obama will be the topic of conversation and the work of the 111th Congress will soon begin in earnest.

Although President Obama will work with a Congress that has solid Democrat Party majorities in both Houses, he faces monumental and historic challenges. We know many of the House and Senate Democrats will have their own views and ideas on how best to change America and they will do their best to see their ideas and solutions are considered. Anyone who thinks the 111th Congress will be a rubber stamp for the policies and ideas of an Obama administration need only look at the experience of both the Clinton and Bush administrations to know Congress does not always go along with the President’s proposals—no matter how popular or unpopular that President is. Each, at various points in his term, had solid majorities from his own parties in both houses of Congress yet found it difficult to reach consensus on major policy initiatives advocated during their respective campaigns.

Congressional leaders have indicated that when the 111th Congress begins, the initial items on their agenda will be the on-going economic crisis, the wars in Iraq and Afghanistan, and a return to the normal legislative process of appropriating funds to operate the government. Although health care reform was often overshadowed by the economic crisis in the waning days of the presidential campaign, it remains one of the major issues advocated by Obama. Included in any discussion about health care reform will be how to address the problem of the uninsured, health information technology (health IT), Medicare, and electronic claims processing.

Agendas Change When the Well Runs Dry

Although much of the Obama administration’s early attention will focus on the economy, we expect health care reform will be in the forefront of legislative and presidential activity throughout the 111th Congress (2009 and 2010). What may become starkly apparent in the early months of the Obama administration is the reality that the money used to address the economic crisis leaves little at the federal level for creating new initiatives or continuing to fund some existing programs.

One issue sure to be on the agenda when the 111th Congress convenes in early January is the proposal to transition to the ICD-10 coding system.

As you may recall, in October the American Academy of Professional Coders (AAPC), along with dozens of other health care associations, submitted formal comments to the Department of Health and Human Services (HHS) on a rule that proposed mandatory ICD-10 coding system adoption by October 2011. All in all, more than 3,000 comments were submitted to HHS in response to this proposal and a solid majority opposed the proposed timetable.

Shortly after the November election, representatives of the Obama administration (formally called the “transition team”) were sent into each and every agency to meet with senior officials for a briefing on all pending or proposed rules. Historically, the outgoing administration puts a hold on all pending proposals to give the new president the opportunity to review the proposed policies of the outgoing president. This gives the president-elect time to see whether the proposals of the outgoing president are consistent with his or her own views, goals, and objectives.

Note: At press time, despite the full HHS transition team had not yet been announced and there was no word on an ICD-10 proposed rule. Regardless, transitioning to ICD-10 will be an issue for the 111th Congress to consider. The only question is when?

Health Care Reform Based on Three Beliefs

During the campaign, Senator Obama stated that under his health care reform plan, prevention and not just treatment will be emphasized; medical errors and malpractice claims will be reduced; and the practice of medicine will be rewarding again. According to published reports and conversations with Obama advisers, the plan relies on three beliefs: All Americans should have access to high-quality, affordable health care; waste in the system—such as medical bureaucracies, duplicative tests and procedures—should be eliminated; and a public health infrastructure concentrating on disease prevention and improving health should be created. These are lofty words and ideals that most Americans can endorse. Unfortunately, we have little information on how those goals will be achieved or the potential costs of those goals.

Obama isn’t the first politician to articulate a vision without outlining how it will be achieved or what the financial cost will be and he won’t be the last. The same thing could be and was said of the McCain campaign as well.

Obama’s goals can be put into action, the Congress is required to put a price tag on the policy proposals. In the end, a vote for or against a proposal may be determined by the financial implications of adopting that policy—not the lofty words that describe it.

Health Insurance Gets Pre-determined Premiums

Using an insurance-based model, the Obama plan will allow those individuals who are satisfied with their own insurance to keep it. If you have employer-sponsored health insurance, you can remain in that plan, but it must offer certain mandatory minimum benefits. If your employer does not offer insurance (or the plan does

not meet the minimum standards), employees will be enrolled in one of the public plans and the employer will be required to pay a pre-determined premium. A national health insurance exchange will be created to offer qualifying private insurance policies to citizens at comparable cost to those offered by large employers. Some have analogized the Obama proposal to the plan adopted in the state of Massachusetts referred to as “pay or play.”

Citizens not covered by an employer-sponsored plan will get help paying for their insurance coverage through new tax credits and all insurance companies will have to take all applicants regardless of their medical history. Unlike many commercial plans, which rely on so-called individual or small group rating, these plans would be community rated. This means individuals with a poor health history or pre-existing medical condition will be charged the same premium as those with a good health history or with no pre-existing medical conditions.

Congress will also revisit proposals to expand Medicaid and the State Children’s Health Insurance Program (SCHIP). Previous attempts to reauthorize and expand these programs in the 2008 were vetoed by President Bush, and Congress had to settle for a temporary current program extension with no improved benefits or coverage.

Implementation of the insurance exchange and the expansion of the federal employee health plan to the general public will likely result in opposition from the insurance industry and large employers who see this proposal as a threat to their leading roles in shaping insurance coverage and its costs. Opposition to this approach could also come from federal employees who fear that allowing non-federal employees into their program could dilute and ultimately endanger their health insurance.

Health IT Proposed to Solve Claims Errors

For the past few years, one of the mantras in Washington has been the need for the United States to utilize to the greatest extent possible health IT. Many policymakers believe that significant utilization of health IT will solve many of the nation’s health care system problems, such as medical errors and inefficient claims processing.

Embracing this viewpoint during his campaign, President-elect Obama pledged to spend $10 billion per year for five years in health IT so providers can convert their office systems to achieve the desired benefits. Once again the cost factor appears to loom large as surveys show that only about 15 percent of practices utilize health IT. At this present rate, the costs of the conversion will far exceed any government subsidy that may be available to providers to offset their financial outlays. As with the health insurance coverage issue, the availability of federal funding will be doubtful due to the downturn in the economy, the potential cost of the economic bailout, the cost of the foreign wars, and the ballooning federal budget deficit.

Time for Action

As the new Congress gets organized and the Obama administration sends formal proposals to Congress for consideration, the time for speeches has ended and the time for action is at hand. When it comes to health care reform, key questions confronting Congress and the Obama administration will be:

What do we need to do?

What can we afford to do?

What can we get through Congress?

This assessment is not intended to in any way detract from the goals of the Obama administration or question the need for reform.

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