On Health Bill, G.O.P.’s Road Is a New Map/Bills Stalled, Hospitals Fear Rising Unpaid Care

On Health Bill, G.O.P.’s Road Is a New Map
By ROBERT PEAR and DAVID M. HERSZENHORN
Copyright by The New York Times
Published: February 8, 2010
http://www.nytimes.com/2010/02/09/health/policy/09health.html?th&emc=th


WASHINGTON — When Republicans take President Obama up on his invitation to hash out their differences over health care this month, they will carry with them a fairly well-developed set of ideas intended to make health insurance more widely available and affordable, by emphasizing tax incentives and state innovations, with no new federal mandates and only a modest expansion of the federal safety net.

Representative Paul D. Ryan also would encourage but not require states to set up health insurance exchanges where consumers could compare and by coverage.

It is not clear that Republicans and the White House are willing to negotiate seriously with each other, and Mr. Obama has rejected Republican demands that he start from scratch in developing health care legislation.

But Congressional Republicans have laid out principles and alternatives that provide a road map to what a Republican health care bill would look like if they had the power to decide the outcome.

The different approaches will be on display Feb. 25, when lawmakers from both parties are scheduled to go to Blair House, across the street from the White House, for a televised clash of health policy ideas.

The Republicans rely more on the market and less on government. They would not require employers to provide insurance. They oppose the Democrats’ call for a big expansion of Medicaid, which Republicans say would burden states with huge long-term liabilities.

While the Congressional Budget Office has not analyzed all the Republican proposals, it is clear that they would not provide coverage to anything like the number of people — more than 30 million — who would gain insurance under the Democrats’ proposals.

But Republicans say they can make incremental progress without the economic costs they contend the Democratic plans pose to the nation. As one way to encourage competition and drive down costs, Republican members of Congress want to make it easier for insurance companies to sell their policies across state lines, an idea included in a limited form in the Democratic bills.

Republicans would offer federal money as a reward to states that achieve specified reductions in premiums or in the number of people without insurance.

Republicans would provide federal money to states to establish and expand high-risk pools, for people with chronic illnesses who cannot find private insurance at an affordable price.

Republicans also contend that changes in state medical malpractice laws could lower costs and slow the growth of premiums. However, some of these proposals — like federal limits on damages for pain and suffering and punitive damages — are potentially in conflict with the Republicans’ emphasis on federalism and state autonomy.

In contrast to the bills passed by the House and the Senate, which would remake the health care system, Republican leaders favor a more modest approach.

Senator Lamar Alexander of Tennessee, the No. 3 Republican in the Senate, said he and his colleagues were skeptical of “grand legislative policy schemes” and favored “a step-by-step approach” focused on lowering health costs for families and businesses.

“It is arrogant to imagine that 100 senators are wise enough to reform comprehensively a health care system that constitutes 17 percent of the world’s largest economy and affects 300 million Americans of disparate backgrounds and circumstances,” Mr. Alexander said.

The Republican health care agenda can be inferred from bills they have offered in the last few years and from their criticism of Mr. Obama’s proposals and of Democratic bills passed by both houses of Congress last year.

Republicans want to expand the use of health savings accounts, to cover routine expenses for people who enroll in high-deductible health plans. Democrats denounce such accounts as a tax shelter for higher-income people.

Many Republicans want to expand the role of private insurance companies in Medicare. Insurers already manage Medicare’s prescription drug benefit, and Republicans see that as a model.

Republicans agree on the need to slow the explosive growth of Medicare, but say the savings should be used to shore up Medicare, not to help finance a new entitlement program.

Democrats said the Republican proposals would do little to solve the crisis in health care. The proposals are “as skimpy as a hospital gown,” said Representative Lloyd Doggett, Democrat of Texas.

Representative George Miller, Democrat of California, said, “If the Republicans’ health care plan was a plan for a fire department, they would rush into a burning building, and they would rush out and leave everybody behind.”

Like Democrats, Republicans are divided on some questions, including the taxation of employer-provided health benefits.

Some Republicans, like Senator Tom Coburn of Oklahoma and Representative Paul D. Ryan of Wisconsin, would replace the tax-free treatment of health benefits with a refundable tax credit for the purchase of insurance — an idea similar to one advanced in the 2008 presidential campaign by Senator John McCain, Republican of Arizona.

Other Republicans say that eliminating the current tax break for employer-provided insurance would amount to a tax increase and should be opposed.

Some Republicans, like Mr. Coburn and Mr. Ryan, would encourage but not require states to set up health insurance exchanges, or marketplaces, where consumers could compare and buy coverage. The exchanges would require insurers to offer coverage to all applicants, regardless of their age or medical history. Insurers participating in the exchange would have to offer at least the same benefits made available to members of Congress.

While Republicans generally oppose any new entitlement or tax increase, they do have some areas of potential agreement with Democrats. They agree, for example, on the need to emphasize wellness and preventive health programs; to provide more transparency for price and quality data on doctors and hospitals; and to speed the approval of lower-cost generic versions of high-cost biotechnology medicines.

Many Republicans would also join Democrats in requiring insurers to let dependent children stay on their parents’ policies through age 25 or 26.

Democrats and Republicans share another goal: making it easier for small businesses to buy insurance. The House and Senate bills would offer tax credits for two years to businesses with 25 or fewer employees to help them buy coverage.

Republicans would help small businesses band together and buy insurance through trade associations and professional societies.

But Democratic lawmakers, like consumer advocates and many state officials, oppose Republican suggestions that such small-business health plans should be exempt from state regulation, including requirements for the coverage of specific services.

In a letter to the White House on Monday, the top two House Republicans, Representatives John A. Boehner of Ohio and Eric Cantor of Virginia, said members of their party would be “reluctant to participate” in the meeting with Mr. Obama if the bills passed by the House and the Senate were the starting point. The American people have “soundly rejected” those bills, they said.

Senator Judd Gregg of New Hampshire, the senior Republican on the Budget Committee, welcomed Mr. Obama’s invitation. But like many in his party, he expressed concern that the session would be used as “an arena for political theater.”






Bills Stalled, Hospitals Fear Rising Unpaid Care
By REED ABELSON
Copyright by The New York Times
Published: February 8, 2010
http://www.nytimes.com/2010/02/09/health/policy/09hospital.html?th&emc=th


President Obama says he aims to keep trying. But what happens if the health care legislation cannot be revived, and tens of millions of uninsured Americans continue without coverage?

Park Nicollet, a sprawling system, has had to cut back services because of uncompensated care.

For the nation’s hospitals, at least, the cost of doing nothing in Washington translates into tens of billions of dollars each year in medical bills that go unpaid by patients with little or no insurance.

Nationwide, the cost of unpaid care for hospitals, which includes charity care as well as money that could not be collected from patients, was around $36 billion in 2008. It is expected to spiral higher. The number of people without insurance in this country could increase to as high as 58 million by 2014, from about 49 million now, according to an estimate by the Urban Institute.

No wonder hospital systems like Park Nicollet Health Services near Minneapolis worry about their futures if the health care legislation remains stalled.

“Our business model will continue to falter,” said Dr. David Abelson, chief executive of Park Nicollet, a not-for-profit system that runs a 426-bed hospital and a chain of clinics.

Park Nicollet has had to cut back services and lay off hundreds of employees as its level of uncompensated care rose — to $43 million last year, up from $29 million in 2007.

And when the hospital provides care under state and federal programs like Medicaid and Medicare, it is already reimbursed below its costs, Dr. Abelson said. Park Nicollet, whose revenue was $1.2 billion last year, says it expects to lose $120 million on government programs in 2010.

Medicaid and Medicare are likely to see sharp budget cuts with or without the legislation — although the House and Senate bills have other provisions meant to help control medical costs over all.

For hospitals, unpaid bills can stem from uninsured patients like a man who recently showed up at Park Nicollet’s emergency room in withdrawal from alcohol. Besides needing emergency heart surgery, the patient was treated for respiratory failure and alcoholic hepatitis, which involved a five-day stay in the intensive care unit. His care ended up costing $85,000, which the hospital has little hope of recovering.

With the ranks of the uninsured growing, hospitals will most likely treat even more patients who cannot afford care. For one thing, hospitals are legally obliged to medically stabilize anyone who shows up in the emergency room. But they also choose to provide charity care for many people who clearly cannot afford to pay their bills.

No one knows whether President Obama and Congressional Democrats will eventually regain the momentum they lost after the upset victory by Scott Brown, a Republican, in the Senate race in Massachusetts ended the Democratic caucus’s filibuster-proof majority. The House speaker, Nancy Pelosi, continues to vow that health legislation will pass this year. And in a CBS interview Sunday afternoon, the president said he planned to convene a bipartisan health care session at the White House to try breaking the political impasse.

Hospital executives hope Ms. Pelosi’s and the president’s perseverance pays off.

“If nothing happens, it’s more of the same, and it will continue to be harder and harder in terms of financial viability,” said Nickolas A. Vitale, the senior vice president for financial operations for Beaumont Hospitals, a hospital system based in Royal Oak, Mich., whose uncompensated care has increased by 20 percent a year since 2005.

There is still plenty of debate, to be sure, over how effective the legislation would actually be in expanding coverage for the uninsured. Many of the legislation’s most significant aspects would not take place for years — like the insurance industry overhaul aimed at making it easier for more Americans to find affordable coverage and the federal subsidies meant to bring the cost of a policy within reach of more people.

Given the weak economy, moreover, hospitals would probably face a challenging environment over the next few years even if the president signed a health care bill tomorrow.

But hospital executives and analysts say that without the legislation, many hospitals will struggle under the burden of caring for greater numbers of people who cannot pay.

In the short term, “it’s almost no harm, no foul,” said Sheryl Skolnick, a health care analyst at CRT Capital in Stamford, Conn.

“But over the longer term, there is plenty of foul,” Ms. Skolnick added. “Hospitals should not be the insurers of last resort.”

Even for many patients who do have coverage under Medicaid or Medicare, some experts say, severe state and federal budget constraints mean hospitals will probably get squeezed by significant government payment cuts, whether or not the overhaul legislation moves forward.

Under the proposed legislation, hospitals had already agreed to significant cuts under the Medicare program as part of their deal with the White House to come up with $155 billion of savings over 10 years to help pay for the coverage expansion.

Many hospital executives worry that Congress will enact those cuts even in the absence of more comprehensive legislation meant to help ease the burden of caring for so many people who cannot pay. “If it’s just cuts, that’s not reform,” said Richard J. Umbdenstock, the president and chief executive of the American Hospital Association, the industry’s main trade group.

There could also be greater resistance by the private insurance industry. Under the current system, private insurers pay hospitals more than the government does — meaning that private insurers and their customers help make up for low payments by government programs. But few expect the private insurers to continue footing the bill for the shortfall.

“If the public payers continue to ratchet down the reimbursement enough,” hospitals will not be able to charge the private insurers enough to make up the difference, said Michael J. Dowling, the chief executive of North Shore-Long Island Jewish Health System, a large New York hospital system. “The private sector won’t be able to carry it.”

The private insurers are likely to take an increasingly harder line against hospitals, as they try to contain the underlying medical costs that have helped fuel the steady rise in the premiums they charge.

A recent standoff between United Healthcare, one of the nation’s largest health plans, and Continuum Health Partners, a group of five New York hospitals, may foreshadow more widespread disputes to come.

Meanwhile, the gulf may widen between large, well-capitalized hospital systems and smaller institutions that are clearly struggling, said Lisa Martin, a senior vice president at Moody’s Investors Service. Moody’s recently released a report on nonprofit hospitals predicting that the next year and a half could be “one of the toughest environments in decades.”

“The smaller to medium-size single-site hospitals are the ones who are going to be most at risk,” said Ms. Martin, who predicts that some of those hospitals will end up being purchased or absorbed by larger systems.

Regardless of what happens in Washington, some hospital executives say the industry should already be working on ways to improve care, like reducing the number of times a patient is readmitted to the hospital, said Mr. Dowling at North Shore-Long Island Jewish. “Reform at the national level is not the panacea everyone thought it was,” he said.

But executives like Dr. Abelson at Park Nicollet say they are still disappointed that some aspects of the health care legislation may not materialize if the effort dies. He cited proposed experiments aimed at moving the system away from simply paying more for more care to instead rewarding hospitals and doctors for better care.

“The various bills contained some pilots in the right direction,” he said, and Park Nicollet had been interested in participating. “We were positioning ourselves for reform.”