Transcript Crumbling Retiree Health Benefits: Political & Policy

2008 Health Care Forecast Conference
Prospects for Federal Health Legislation
Irvine, California
February 21, 2008
Dean A. Rosen
Mehlman Vogel Castagnetti, Inc.
Overview
 Health Care in the 110th Congress
– Progress report
– What will happen in 2008? What won’t?
 How will the 2008 elections influence the 110th
Congress?
 What do the debates in the current Congress
portend for 2009 and Beyond
110th Congress Health Care Scorecard
Completed






Prescription Drug User
Fee
Medical Device User
Fee
Pediatric exclusivity
Drug safety
Children’s Health
Medicare physician
payment
Potential/Pending
 Medicare physician  Health information





payment
Medicare Advantage
cuts and marketing
reforms
Medicare Part A & B
offsets and reforms
FMAP increase
Mental health parity
Genetic
nondiscrimination






technology
Patent reform
Prescription drug
importation
Follow-on biologics
Stem cell funding
Medicare Rx
negotiation
Oversight
FDA Amendments Act of 2007
 Reauthorizes, expands, and increases prescription Rx





user fees for 5 years
Reauthorizes and expands medical device user fees for 5
years, while reducing application fees
Expands FDA authority over advertising, post-market
surveillance, labeling
Increases FDA food safety authority
Reauthorizes Best Pharmaceuticals for Children and
Pediatric Research Equity Acts
Establishes Reagan-Udall Foundation to speed R&D and
improve safety
My Forecast:
What Will Happen During the
110th Congress’ Second Session?
Medicare Reform: Six-Month Mulligan
Questions
Predictions

Will Congress act?

Yes

Will Congress act by June 30?

Likely

Will the final result contain
policy changes?

Modest

Will SGR be fixed, or just
patched?

Patched, and threadbare

Will MA payments be cut?

Modest to miniscule, perhaps
IME and some private FFS
deeming
Pay-Go May Be Most Significant 110th Congress
Reform Affecting Health Policy
Saturday, January 6, 2007
House Adopts Pay-as-You-Go Rules
Changes Aim to Curb Deficit Spending, Shed Light on Earmarks
By Lori Montgomery, Washington Post Staff Writer
On its second day under Democratic management, the House yesterday
overwhelmingly approved new rules aimed at reining in deficit spending and shedding
more light on the murky world of special-interest projects known as earmarks.
Under the new provisions, the House will for the first time in years be required to pay
for any proposal to cut taxes or increase spending on the most expensive federal
programs by raising taxes or cutting spending elsewhere. And lawmakers will be
required to disclose the sponsors of earmarks, which are attached in virtual secrecy to
legislation to direct money to favored interests or home-district projects.
Bush Administration Budget Priorities
Bush Administration FY2009 Budget Proposals
Inpatient hospital update
$64.0b
36.0%
Outpatient hospital update
$6.1b
3.4%
Hospital bad debt
$8.5b
4.8%
Inpatient rehab update
$4.8b
2.7%
Home health update
$11.0b
6.2%
SNF update & base payment
$18.7b
10.5%
Eliminate Part B indexing
$2.6b
1.5%
Establish Part D income-relating
$3.2b
1.8%
Democrats’ Have Different View
Five Year Spending/Savings (billions)
Medicare Winners and Losers in House CHAMP Act
30
Parts B & D
Beneficiary
Improvements
Physician
Payment
Increase
20
10
$15.9
44%
$20.1
56%
0
-10
-20
-$50.2
84%
-30
-40
-50
-60
MVC Analysis of CBO Data
Medicare
Advantage
Reductions
-$5.7
10%
Part A
Reductions
-$1.0
2%
-$2.7
4%
Other
Part B
Reductions
Other
Parts A & B
Reductions
Quality Improvement: A Mixed Outlook
Expand Medicare pay-for-performance/reporting
– House and Senate leaders have different views
– Small Medicare package = limited reforms
Comparative effectiveness
– Growing support but cost and lack of viable
legislative vehicle could be barriers
Health information technology
– Senate bill awaits floor action
– House will begin moving through committee
– Privacy concerns and physician opposition to
Medicare claims data release pose stumbling blocks
in election year
Health Care Access and Coverage:
As SCHIP Shows, Prospects Dim in 2008
Tax reform
– Repeal employment-based exclusion
– Standard deduction and/or credit
SCHIP expansion, Medicare buy-in, other
government program expansions
Community health centers reauthorization
Health Insurance Regulation/Beneficiary Protections:
Industry & Business Support Could Pave Way to Passage
Mental health parity
– Closer to passage than anytime in decade
– But House will have to right-size
Genetic nondiscrimination
– Looks likely in 2008
Medicare marketing restrictions
– Likely if Medicare bill
Long-term care insurance marketing
– More scrutiny likely, but issue not yet ripe
Prescription Drugs: Some Threats Remain
Medicare Rx negotiation
– Can’t pass Senate
Prescription drug importation
– Could be attached to any number of
appropriations bills, but faces veto threat
Transparency/Physician disclosure
– Could be part of Medicare SGR package
Patent reform
– Final bill will be more to Rx industry’s liking
Follow-on biologics
– Waxman and others holding out for better deal?
Health plans and
Rx/biotech industry
continue to make inviting
targets
Oversight & Investigations:
No Legislation Necessary!
2008 Elections’ Influence on Congress
Public Opinion
Economy Now Most Important Issue in Choosing
President… But Health Care Remains in Top Three
Economy
Iraq
Health Care
Source: January 14, 2008 ABC Washington Post Poll
Voters See Health Care As Leading Economic Issue
Source: January 14, 2008 ABC Washington Post Poll
Health Care Much More Important to Democratic Voters
Percent saying health care most or second-most important issue
All
Democrats
Independents
GOP
0%
10%
Washington Post/ABC News Poll, November 1, 2007
20%
30%
40%
Democrats More Focused on Coverage, GOP Focused on Cost
But Voters Understand They Go Hand in Hand
Which ONE of the following health care issues would you
most like to hear the Presidential candidates talk about?
Total
Republican
Democrat
Independent
Total
Republican
Democrat
Independent
Total
Republican
Democrat
Independent
Kaiser Family Foundation, October 2007
The Candidates’ Proposals
Health Reform Plan Comparisons
Candidate
Coverage Subsidies
Hillary
Clinton
Universal
coverage
via
individual
mandate
Refundable tax
credits for low
and middle
income people
(income level
undefined).
Small business
tax credit.
Retiree health
tax credit.
Insurance Market
Structure
Individuals could keep
current coverage or
choose menu of
private options,
including one
Medicare-style plan.
Insurers cannot deny
coverage based on
preex, health status,
race and other factors.
Insurers must cover
preventive benefits.
Government
Employer Impact Quality
Savings/Offsets
Costs
Programs
Expands Medicare Requires large Expand chronic care. Repeal Bush tax cuts for $110
to offer coverage employers to
$300 million grants upper income. Improves billion a
option in new
provide coverage for nurse training and government program
year.
insurance pool.
or contribute to retention.
quality.
Expands Medicaid cost.
$3 billion health IT
Cap employer tax
and SCHIP
Small business grants.
exclusion for workers
eligibility.
tax credit.
Federal “best
with incomes over $250k.
Reduces payments Retiree health practices institute to Expand Rx generics and
to Medicare
tax credit.
compare treatments. allows follow-on biologics.
Advantage plans.
Federal quality
Limit DTC and regulate
payments.
ties between physicians
Consumer education and manufacturers.
funding.
Allow Medicare Rx
negotiation.
Reduce Medicare
Advantage payments.
Health Reform Plan Comparisons
Candidate
Barack
Obama
Coverage
Subsidies
Insurance Market
Structure
Universal by Federal
National health insurance
2012, with subsidies for
pool for employers and
mandate for low income
individuals, modeled on
parents to people to buy FEHBP.
buy
private
Insurers cannot deny
children’s insurance or
coverage based on preex
coverage
public program or health status.
coverage
Benefit package similar to
FEHBP, with prevention,
maternity, mental health
and other coverage
mandated.
Government
Programs
Expands
Medicaid and
SCHIP
eligibility.
Employer Impact
Quality
Savings/Offsets
Costs
Requires employers
to provide coverage,
contribute to private
coverage, or
contribute a
percentage of payroll
toward public plan.
Some small business
exempted.
Federal government
would reimburse
employers or
catastrophic costs.
Require provider Allow Bush tax cuts to $50-60
reporting on costs, expire for those earning billion a
quality, errors,
over $250k.
year.
disparities.
Limit malpractice
Require disease insurance premiums
management.
charged to doctors.
Pay for
Allow Rx importation.
performance and Expand generic Rx.
dissemination of Allow Medicare Rx
best practices.
negotiation.
$10 billion per
Reduce Medicare
year for health IT. Advantage payments.
Independent
comparative
effectiveness
institute.
Health Reform Plan Comparisons
Candidate
John McCain
Coverage
Subsidies
Insurance Market
Structure
Tax incentives Replace
Allow people to buy
for individuals employer tax
insurance licensed
to buy
exclusion with
out-of-state.
coverage
$2,500 tax credit Expand HSAs.
for individuals
Allow individuals to
and $5,000 for get insurance through
couples to buy associations and other
private
organizations.
insurance.
Replace existing
employer
exclusion.
Government
Employer
Programs
Impact
Veterans can use No mandates.
VA funds to get care Eliminates
from private
employer tax
providers.
exclusion.
Change
Allows small
government
business and
program
self-employed
reimbursement to to get
reward
association
performance,
coverage.
coordination,
prevention, and
quality.
Quality
Savings/Offsets
Costs
National health
IT standards.
Government
programs
would
reimburse on
outcomes,
coordinated
care, and
prevention.
Require
providers to
make public
information on
outcomes,
quality, and
costs.
Expand
innovative
delivery
models.
End frivolous malpractice
lawsuits and excessive
damages.
Protect doctors who
follow clinical guidelines
and safety protocols
from lawsuits.
Government program
reimbursement based on
quality and prevention.
Expand generic Rx.
Allow Rx importation.
No estimate.
Implies no
new net
spending.
Key Takeaways
Democrats
Republicans




General proposals
Primary goal reducing cost

Rely on increased competition
in individual insurance market
Insurance deregulation
Price and quality transparency





Relatively specific plans
Primary goal increasing
coverage
Rely on government programs
and employers
Increase insurance regulation
Pharma, device, insurance
industry scrutiny
No real tort reform
Keen attention to interest
groups (e.g., nurses, unions,
business)




– But McCain agrees with Ds on
importation and generics
Tort reform
Attention to ideology
A Look Ahead:
Lessons Learned from the 110th Congress
SCHIP and Medicare Debates Highlight
Political Fault Lines, Competing Policy Visions
 Political parties polarized on coverage
– SCHIP debate proxy war for looming larger battles
– Significant differences on role of private and public sector
 More consensus on quality, cost
– Health IT, prevention, chronic care, aligning payment incentives
in public programs, etc.
 Pay-go poses significant challenges for would-be
reformers
– There is no free lunch
– Lack of consensus on where to cut
– Even more controversy over whether to raise taxes
 Health reform debate in the 111th Congress will also be

about taxes, spending and entitlements
Makeup of Congress matters
Federal Health Program Expenditures Are
Growing Piece of Entitlement Spending Pie
Other
$366
22%
Medicaid & SCHIP
$231
14%
Health Care
Total
$642
39%
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to 2018, January 2008
Social Security
$646
39%
Medicare
$411
25%
Beginning 2008, President Must Submit
Proposal to Reduce Medicare Spending
Expenditures (billions)
$1,000
2008
President must submit
first proposal to reduce
Medicare general revenue
funding
$800
$600
$400
2006 and 2007
Medicare Trustees
Issue Funding
Warning
$408
$438
2010
Tax Cuts
Expire
$799
$741
$640
$553
$476
$863
$594
$513
$200
$0
Fiscal Year
2007 Medicare Trustees Report; expenditures are not net of premiums
$688
Republicans Defending 22 Seats (with 6 Retirements)
While Democrats Defending 12
Barrasso
Lott
House of Representatives Retirements
•
•
•
•
•
•
•
Tom Allen, ME
Darlene Hooley, OR
Mike McNulty, NY
Marty Meehan, MA
Mark Udall, CO
Tom Udall, CO
Albert Wynn, MD
7
* As of February 19, 2008
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Richard Baker, LA
Barbara Cubin, WY
Tom Davis, VA
John Doolittle, CA
Terry Everett, AL
Mike Ferguson, NJ
Wayne Gilchrest, MD
Dennis Hastert, IL
Dave Hobson, OH
Kenny Hulshof, MO
Duncan Hunter, CA
Bobby Jindal, LA
Ray LaHood, IL
Ron Lewis, IL
Jim McCrery, LA
Steve Pearce, NM
John Peterson, PA
Chip Pickering, MS
Deborah Pryce, OH
Jim Ramstad, MN
Ralph Regula, OH
Rick Renzi, AZ
Jim Saxton, NJ
John Shadegg, AZ
Tom Tancredo, CO
James Walsh, NY
Dave Weldon, FL
Jerry Weller, IL
Roger Wicker, MS
Heather Wilson, NM
30