National health protection and the economy redefine the issues
National health protection and the economy redefine the issues
Although 2002 may be a watershed in the history U.S. health care delivery, to Americans, any initial changes will be subtle rather than revolutionary. Memories of the debacle surrounding the Clinton plan for wholesale restructuring of the nations health care system remain vivid. Still, conditions seem right for some shift toward a system less reliant on employer decisions, recognizing a bigger role for both the government and individual patients.
Prognostication always has its perils, but this year "its substantially harder to call," notes Donald Young, interim president of the Health Insurance Association of America. He adds, "When Congress returns, were going to be dealing with a very, very different environment than we have in the past five to six years."
The attacks of September 11 and the anthrax cases of the following month shifted the political agenda so radically that it is almost impossible to know which issues will actually get attention from policymakers. Theres no question that improving protections against bioterrorism will continue to be the front-and-center health concern. But that doesnt mean the underlying questions of how to provide health care to the uninsured and improve care for those with coverage are going away.
Specific proposals that appeared likely to pass in 2001establishing a national "patients bill of rights," with a method for settling disputes with health plans, adding a drug benefit to Medicare and deciding whether associations of small businesses could arrange coverage on the same terms as big businessare still on the agenda. But they will be addressed in a new context.
"National security trumps everything else; the economy trumps everything except national security," explains Kevin B. Piper, director of the National Health Care Purchasing Institute. Three realities shape the debate:
1) Overriding concerns about public health provide a new focus for debates even on old topics. Consider bioterrorism. To a large extent, a core defense against germ warfare is a population that is healthy. Therefore, argues Karen Davis, president of the Commonwealth Fund, "We really cant be a strong and secure country if people dont have access to health care."
Protection against bioterrorism thus provides a new argument for addressing a whole range of carry-over issues. For instance, it clarifies that the shortage of nurses, pharmacists and other auxiliary medical personnel "is such an important problem that it should be addressed at a national level" with relaxed immigration rules and more federal money for specialized education, says San Diego lawyer Jody Root, chairman of health practice at Foley & Lardner.
Kate Sullivan, director of health care policy at the U.S. Chamber of Commerce, advises, "There is an important role for public health. Thats an appropriate role for the government.What's not obvious is how to divide the responsibilities. "Thats going to be a major issuewho does what," predicts Karen Ignani, president of the American Association of Health Plans.
2) The rapidly worsening economy, accentuated by consumer fallout from the terrorist attacks, has similarly changed all health care debate. It has increased the number of people without coverage at a time when nose-diving tax revenues curtail opportunities for new government programs. That means "a lot of competition for the available money," observes Jack Ericksen, executive director of Congressional relations for the Blue Cross Blue Shield Association.
"The downturn in the economy will lead to greater attention to the problem of the uninsured," Davis predicts. Already Congress has addressed the issue for those whose unemployment can be tied directly to the September 11 attacks, agreeing to subsidize COBRA coverage for those laid-off workers. That model might be expanded to more of the unemployed, since 80 percent of them reject the offer of pay-your-own continuation health coverage, largely because it is too expensive. Davis emphasizes that "unemployment is a time of stress, and you need health care in a time of stress."
3) Despite the recession, health care expenditures continue to rise at double-digit rates, and new pressures will exacerbate the trend. For instance, getting ready to combat bioterrorism "could affect health care costs," warns Chip Kahn, president of the Federation of American Hospitals. He adds, "Some of this preparedness is something youre not going to be paid for immediatelyif you ever get paid for it."
The fear is there will be a spiraling number of uninsured as more employers decide they cannot afford to offer health care and more workers to whom it is offered decide they can not afford their share of the premium. "Congress is looking a lot more at the question of affordability of health care," notes Sullivan. "Its not going to be managed care. Its not going to be government regulation." The lawmakers see a need for a new approach.
Many businesses have come to the same conclusion. "A year ago we lived in a different world: The economy was booming and the labor market was tight," notes economist Paul B. Ginsburg, president of the Center for Studying Health System Change. "Large employers absorbed cost increases, but that cant be sustained for the long run," Ginsburg points out. "Its not a question of if workers are going to be asked to pay more, but when. And the slower the economy gets, the sooner that time will be."
Many companies have passed on to workers a chunk of 2002's higher outlays, but they realize that this is a stop-gap measure. Trying to squeeze more savings from tighter controls on workers access to care just plunges human resources departments deeper into disputes and counteracts the goodwill that a benefit program is supposed to engender.
The new mantra is to let the worker make the decisionsand pay for more expensive choices. Now, insists Humana Inc. CEO Michael B. McCallister, "Our vision is to help people facilitate their health care choicesnot to make choices for them." But businesses insist that such an approach won't work under current lawsand they are pressuring Congress hard to make changes. Piper says, "Congress has to provide employers with new tools to cover their workers." Its the top legislative priority for 2002 for the Washington Business Group on Health, according to group president Helen Darling.
Essentially, the new strategy divides health care costs into two components: the predictable and the unpredictable. Insurance would be confined to unpredictable costs, and workers would have a separate pool of money to tap for well-baby care, annual checkups, maintenance drugs and similar expenses that they know are coming. That not only returns medical insurance to its core concept, but also encourages employees to be smart buyers of health services. Furthermore, it isolates employers from coverage decisions. Two devices that mesh well with this approach are already now on the books: medical savings accounts (MSAs)and flexible spending accounts. Both offer tax breaks to employees who earmark some of each paycheck for medical expenses. But both have limitations that, benefits executives say, keep them from being widely used. The big question is how far lawmakers will be willing to go in loosening those limitations.
MSAs can now be offered only by small employers, and payments into the accounts must be entirely from either the worker or the employer. Business hopes to open the accounts to companies of all sizes and allow both the employer and employee to contribute. The big stumbling block with flexible spending accounts is that employees lose whatever is left in the account at the end of each year. Therefore, "people tend to underfund them, because they dont like losing their balances," Sullivan has found. Darling wants the remaining balances to roll over from year to year, and for the accounts to be portable from employer to employer, allowing workers who are lucky and prudent with health care outlays to build up a pot of money that could then be used for retirement health care costs or long-term care insurance.
None of those desired changes is a shoo-in. Piper notes that a tax-sheltered individual account for health costs "is something the Republicans would turn to and not the Democrats. Inside the Beltway, MSAs are viewed as the Antichrist by many," providing the greatest advantage to those able to pay for their own health care without help," he says. At best, he adds, 2002 may bring "some tinkering around the edges," such as a modest expansion of the companies allowed to offer MSAs. Among the problems he spotlights in getting more done now is that "employers have not been as effective in influencing health policy as they could have been."
The health care debates, of course, will range well beyond paving the way for employers to offer more flexible benefit packages. Perhaps topping the list of other issues, patient rights "will continue to be negotiated, on both a federal and state level," Root advises Foley & Lardner clients.
Across the political spectrum, the issue is seen as one with strong voter appeal, but Democrats and Republicans remain deeply divided over what the appropriate enforcement mechanism should be. Democrats insist that patients should be able to take their gripes to court. Republicans adamantly oppose lowering barriers to litigation. AAHPs Ignani suggests that rising coverage costs will make lawmakers wary of adding any patient rights provisions that could push premiums up even more.
Congress will grapple, too, with finding a way to help seniors pay for drugs. What had seemed the leading proposalsimply adding a drug benefit to Medicarewould most impact employers, letting them slice the rapidly increasing drug outlays of their retiree coverage. But as Leighton Ku, senior fellow at the Center of Budget Policy, says, "Its hard to know what the budget resources are for this."
Jack Strayer, Washington-based VP of the National Center for Policy Analysis, warns, "Its just too big, too expensive," to pass Rx coverage as an add-on benefit. He thinks the debate can lead to a top-to-bottom redoing of the way Medicare services are paid for, including making the managed care option more attractive to insurers. "This new climate is the perfect time to talk about reforms," he says.
Other approaches to paying for prescriptions, including tying the benefit to retirees' income or legislatively authorizing Medicare to endorse private drug card discount plans, would have little impact on seniors getting comprehensive Medicare supplemental coverage from their former places of work.
But on both issues, with fall elections looming that could determine control of both houses of Congress, "the debate will flip back into a political mode," predicts HIAAs Young, unraveling any post 9/11 bipartisanship. Piper notes that both parties will constantly reassess the political calculus. They will debate whether their chances are improved by crowing to voters about having passed a patients' bill of rights or senior drug billor by complaining how gridlock kept such measures from passing and arguing that they need an overwhelming majority in the next Congress to get something done.
On the regulatory front, players across the whole health care system have been eyeing HHS attempt to get out proposed rules for implementing the Health Insurance Portability & Accountability Actand for revising the rules it has proposed so far. President Bush stepped in, at years end, and delayed the need to comply with HIPAAs transactions and code sets rules until October 16, 2003. But compliance with HIPAAs privacy rules remains due by April 14, 2003.
Meanwhile, HHS will rule on a backlog of state requests to waive normal Medicaid rules in order to try innovative approaches to providing health care to the indigent. For instance, a plan from San Diego would create a new entity both to run health care programs for the poor and a new insurance program that pools risks from small businesses in the market.
On January 8, the U.S. Supreme Court announced a major, unanimous decision in an Americans With Disabilities Act case involving Toyota, ruling that employees with disability claims must demonstrate that their disability not only affects their ability to do a job, but leaves them "unable to perform the variety of tasks central to most peoples daily lives."
But for corporate health benefit planners, the most-watched U.S. Supreme Court ruling due in 2002 will draw the line at how far states can go in imposing mandates on self-insured plans. In Rush Prudential HMO v. Moran, scheduled for oral arguments on January 16 and for a decision by midyear, the Justices are reviewing a ruling by the U.S. Court of Appeals in Chicago that said, despite the preemption provisions of the Employee Retirement Income Security Act, self-insured plans in Illinois had to comply with state laws laying out an independent appeals process for managed care companies denial of a claim. Most states have such laws, and 31 have come together to argue at the high court that the Illinois law is not trumped by ERISA.
Such independent review statutes "serve as a safety valve to correct mistakes or ill-advised decisions by HMOs. This is all part of the states traditional function of regulating health care and insurance," Texas Attorney general John Cornyn argued in a brief for the 31. Most large employers argue that their plans, generally exempt from state mandates, provide generous appeals routes, but that they need to offer a uniform process across all their sites rather than different plans that comply with different requirements in each state.
While changes made in 2002 may in the future be recognized as a key turning point, nothing done this year will be the last word on any health care delivery issue. As Strayer sums up: "Our health system is always going to be evolving. Theres never going to be a last day of health reform."
Daniel Moskowitz. Predicting Washington in 2002.
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