Washington Notes

February, 2007

Comprehensive Health Care Reform to be Proposed

Saying the time has come for more than incremental change, Senate Finance Committee Chairman Max Baucus (D-Mont.) put forward five principles for health care reform. The Senator said reform should be guided by the need for universal coverage for all Americans; a shared burden in which employers, the individual market, and new pooling arrangements provide coverage; rising health care costs are controlled; preventive services are given high priority; and by the need for individuals, employers, government and stakeholders to pay for expanding coverage.

Baucus said his committee would hold a series of hearings, roundtables, and member meetings this year to begin the process of crafting reform legislation. gave no timetable for completing legislation, but said growing numbers of uninsured Americans and rising health care costs will force lawmakers to undertake comprehensive reforms of the health care system sooner rather than later.

Immediate Changes to Health System Needed To Solve Looming Budget Crisis

The Center on Budget and Policy Priorities, a policy organization working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals, has released a report calling for fundamental changes to the entire U.S. health care system.

The main sources of the nation's current unsustainable budget path are rising costs throughout the health care system, and to a lesser degree, demographic shifts, according to the analysis, "The Long-Term Fiscal Outlook is Bleak: Restoring Fiscal Sustainability Will Require Major Changes to Programs, Revenues, and the Nation's Health Care System." Together, these two forces will cause the "big three" entitlement programs, Medicare, Medicaid, and Social Security, to grow considerably faster than the economy or federal revenues.

The report did not make specific recommendations for changes to the health care system. To view the report, visit http://www.cbpp.org/1-29-07bud.pdf

HHS Awards $103 Million to 27 States To Boost Technology Use, Efficiency

The Department of Health and Human Services awarded $103 million in Medicaid "transformation grants" to programs in 27 states to fund more widespread use of electronic health care records, as well other efforts to improve efficiency, economy, and quality of care.

A detailed list of the grants is at http://www.hhs.gov/news/press/2007pres/20070125.html.

U.S. Must Invest in Research, Training, IT to Boost Coverage, Quality

Testifying before the House Appropriations subcommittee Dr. Reed V. Tuckson, executive vice president and chief of medical affairs at the UnitedHealth Group said that in order to solve the nation's health care crisis, the United States must spend more on public health research, analyzing the effectiveness of various health treatments, health worker training, and health information technology, Despite skyrocketing health care costs, the health status of Americans is "suboptimal" and not reaching the limits of human potential. The poorer health outcomes are in part due to the nation's heavy historical use of tobacco products, rising obesity, and corresponding diabetes, he said.

Dr. James Marks, senior vice president at the Robert Wood Johnson Foundation, said the nation must begin to "foster a culture of health and prevention of disease." He pointed out that, while the average health care expenditure is $7,000 per year for every man, woman, and child in the United States, the nation is spending only $30 per person annually on public health research--less than the cost of an oil change for a car--at the Centers for Disease Control and Prevention. CDC funding for the study of chronic disease, school health, obesity prevention, food safety, tobacco control, and health promotion programs have been cut repeatedly over the last several years, and the president's proposed cuts for FY 2008, "make no sense," Marks said.

Value-Based Insurance Design Improves Health Outcomes, Saves Money, Study Says

Value-based insurance design (VBID), in which individuals are assessed varying copayments depending on the medical value and costs of clinical services, has the potential to improve health care outcomes and save money for plan sponsors, according a study by the journal Health Affairs. http://www.healthaffairs.org/

This approach involves a "clinically sensitive" benefit design that encourages use of cost-effective medical interventions by reducing or eliminating copayments, while raising cost-sharing requirements for inappropriate treatments that might otherwise be overused.

Final HIPAA Regulations Issued

The final HIPAA nondiscrimination and wellness program regulations were jointly issued by The Departments of Treasury, Labor and Health and Human Services in December.

The final regulations, effective on July 1, 2007, make clear that some, but not all, health promotion and disease prevention programs are subject to HIPAA's additional non-discrimination requirements.

The final regulations are similar to the proposed rules published in 2001, but have additional requirements for wellness programs to be permissible while also adding some helpful clarifications and modifications.