The Obama administration, still less than 200 days old, is moving ahead with its ambitious proposal to succeed where the Carter and Clinton administrations failed and deliver meaningful health care reform.

Undoubtedly, some factors appear to favor the President. According to opinion polls, 72% of those questioned favor increasing the federal government’s influence on the country’s health care system in an attempt to lower costs and provide health care coverage to more Americans, with just 27% opposing such a move.¹

The global financial crisis has underscored the extent to which the burden of health care costs threatens the viability of American manufacturing and the challenge the burden of health care costs places on the American entrepreneurial spirit. According to GM, health care costs add $1525 to the price of every General Motors vehicle. The company spent $4.6 billion on health care in 2007, more than the cost of steel.²

Nationally, the United States spent around $2.2 trillion on health care in 2007, or $7421 per person. This comes to 16.2% of the GDP, nearly twice the average of other developed nations. Yet the United States lags behind other industrialized nations – ranked 47th in life expectancy and 43rd in child mortality.³

Politically, proponents of health care reform appear to have the muscle they need to push this through Congress. Democrats hold a commanding 256-178 majority in the House of Representatives. Perhaps more importantly, Senate Democrats outnumber Republicans 57 to 40, with two Independent senators (Joe Lieberman of Connecticut and Bernie Sanders of Vermont) caucusing with the Democrats. With the Minnesota Senate race between incumbent Republican Norm Coleman and comedian Al Franken not yet resolved, Congress could conceivably vote on health care reform with the Democrats holding a filibuster-proof 60-seat majority in the Senate.

However, the challenge of enacting meaningful health care reform remains an uphill struggle. Americans have historically resisted government intervention in the delivery of health care, and they are often suspicious of the “socialized” health care systems of the UK and Canada, which are associated with waiting lists and rationing of care.

In addition, the cost of implementing the proposal to reform health care is staggering. Kenneth Thorpe, a health care analyst in the Clinton administration and now a professor at Emory University, estimates the cost of expanded coverage at $1.3 trillion to $1.8 trillion over 10 years.⁴

Health care reform proponents will argue that the cost can be offset by increasing the system’s efficiency and avoiding waste and fraud. However, the potential cost of this effort, at a time of record deficits and massive public spending on “bailouts” and the economic stimulus, causes many Americans to remain skeptical of our ability to deliver and pay for the proposed reform measures.

Learning from Past Mistakes

It is clear that the Obama administration has learned from the mistakes that derailed previous efforts to reform health care. In contrast to the Clintons’ approach, which incurred the wrath of the well-organized health insurance industry that, in turn, helped turn public opinion against the reform proposal through its “Harry and Louise” television commercials, Obama went to great lengths to include key stakeholders (and likely opponents) throughout the process, such as America’s Health Insurance Plans (AHIP), Pharmaceutical Research and Manufacturers of America (PhRMA), American Hospital Association (AMA), and Service Employees International Union (SEIU).

Although some observers question how meaningful health care reform will actually be in the absence of a public plan option or mandates forcing Americans to purchase coverage, the Obama administration to date has been successful in avoiding direct confrontation over these controversial issues.

The White House and Capitol Hill

The Obama team made health care reform a central feature in the campaign and used the issue to successfully distinguish their candidate from rival presidential rival John McCain. Ultimately, however, the responsibility for developing and crafting legislation to reform our health care delivery system lies with Congress.

With friendly majorities in both the Senate and the House, prospects for the passage of this legislation look reasonably promising, but as with any issue so large and complex, there will be philosophical differences between the major power players.

Who Is in Charge?

There are several important health care policy leaders on Capitol Hill; however, in this case, the real action seems to be in the Senate, rather than the House. Within the Senate, the Health, Education, Labor and Pensions (HELP) Committee chaired by Senator Ted Kennedy (D-MA) and the Finance Committee chaired by Senator Max Baucus (D-MT) have so far been responsible for drafting legislation.

Both committees have issued detailed proposals outlining their vision for health care reform, and early copies of draft legislation have been circulating around the beltway.

Senate Finance Committee

The Senate Finance Committee released three reports outlining the committee’s proposal for health care reform. The reports focused on the delivery system itself, coverage issues, and questions about financing – how we plan to pay for the health care reform effort.

Report One: Report on Delivery System Policy Options

The first of the three reports acknowledges that the way health care is paid for in our system does not always encourage the right care, at the right time, for each patient and notes that our payment systems more often reward providers for the quantity of care delivered than the quality of care and that they discourage providers from working together to offer patients the best possible care.

The report proposes linking payment to quality outcomes and reorienting payment incentives toward services and activities that improve patient care in an effective and efficient manner.

Payment for Transitional Care Activities

Notably, the report highlights the need for payment for transitional care activities and calls for integrated, transitional care management for chronically ill patients who experience hospitalization by reimbursing providers for targeted interventions that have proven successful in the Medicare Coordinated Care Demonstration program, the Medical Home, and other care management models.

Long-Term Payment Reforms – Options to Foster Care Coordination and Provider Collaboration

The report also calls for the establishment of a Chronic Care Management Innovation Center (CMIC) for testing and disseminating payment innovations that foster patient-centered care coordination for high-cost, chronically ill Medicare beneficiaries. CMIC would be given permanent authority to broadly test care coordination models that show promise for improving the quality and cost-effectiveness of care delivered to chronically ill beneficiaries in fee-for-service Medicare.

Moving from Fee-for-Service to Payment for Accountable Care

Under existing law, there is no provision for directly addressing the ability of organizations or systems of integrated providers to share in the efficiency gains resulting from the joint responsibility and care of fee-for-service Medicare beneficiaries. The report calls for change in this policy to allow groups of providers who voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program.

Health Care Infrastructure Investments – Tools to Support Delivery System Reform

The report focuses on providing and expanding authorized Medicare and Medicaid incentive payments and penalties to encourage physicians and hospitals to adopt and use electronic health records. However, it also calls for analyzing whether additional health information technology incentives within Medicare are warranted to help support the care coordination and quality improvement goals and activities related to various proposals included in this document, such as the establishment of value-based purchasing programs, chronic care management models, and proposals to bundle acute and post-acute payments.

Quality Measurement and Development

The report would require the establishment of a multi-stakeholder group to provide guidance to the Secretary in developing national priorities and goals and identifying gaps in performance measurement for national priority areas.

Measures would be applicable to all age groups, where appropriate, and available to the public, with a focus, at minimum, on the following areas:

• patient outcomes and functional status
• coordination of care across episodes of care and care transitions
• meaningful use of health information technology
• efficiency and equity of health services and health disparities
• patient experience and satisfaction
• other areas deemed appropriate in support of other delivery system reforms

Comparative Effectiveness Research

The report calls for the Finance Committee to consider options to establish a long-term or permanent framework to set national priorities for comparative clinical effectiveness research and to provide for the conduct of such research.

Finding Out What Works in Health Care – Comparative clinical effectiveness research compares clinical outcomes of alternative therapies or strategies used to prevent, treat, diagnose, and manage the same condition. The purpose of this type of research is to assist patients and clinicians in making informed health care decisions. Better evidence on what works will lead to better health care choices – and thus, to improved quality of care and improved efficiency.

Proposal on Development of a National Workforce Strategy

The Department of Health and Human Services (HHS), together with external stakeholders, would develop and set forth a national workforce strategy to put the nation on a path toward recruiting, training, and retaining a health workforce that meets our nation’s current and future health care needs.

Report Two: Report on Coverage Reform Policy Options

The second report from the Senate Finance Committee focuses on expanding health care coverage and proposals to provide affordable coverage to all Americans. This report acknowledges the scale of the access issue in the United States – with 46 million uninsured and another 25 million underinsured – and notes that the cost of caring for the uninsured is largely borne by those with insurance; providers charge higher prices to patients with private coverage to make up for uncompensated care, and these costs are passed on to consumers in the form of increased premiums.

The first section of this report deals primarily with insurance regulation in the nongroup and small group markets. The report also calls for the creation of a Health Insurance Exchange, a concept in some ways similar to the Massachusetts Connector, which offers a government-subsidized plan at three benefit levels from a handful of health insurers to individuals at up to 300% of the federal poverty level who are not otherwise eligible for traditional Medicaid or other coverage and an unsubsidized selection of four benefit tiers from six insurers to individuals and small groups.

Making Coverage Affordable

The report would also require all health insurance plans in the nongroup and small group markets to provide a broad range of medical benefits including, but not limited to, preventive and primary care; emergency services; hospitalization; physician services; outpatient services; day surgery and related anesthesia; diagnostic imaging and screenings, including x-rays; maternity and newborn care; medical/surgical care; prescription drugs; radiation and chemotherapy; and mental health and substance abuse services, which must at least meet minimum standards set by federal and state laws. In addition, these plans cannot include lifetime limits on coverage or annual limits on any benefits and cannot charge cost-sharing (e.g., deductibles, copayments) for preventive care services.

Small Business Tax Credits

The report would provide a tax credit to certain small employers for the purchase of employer-provided health insurance.

Public Health Insurance Option

The report also calls for consideration of a public health insurance plan option and offers three broad design considerations:

• Medicare-like plan (operated by HHS)
• Third-party administrator (administered by multiple regional third-party administrators
• State-run public option (could be either mandatory or optional for states, but the details of its administration would be left to the states)

Mandatory Coverage for Prescription Drugs

This option would make prescription drugs a mandatory benefit for the categorically and medically needy. Currently, prescription drug coverage is one of the few optional Medicaid services provided by all states.

Changes to Medicaid Payment for Prescription Drugs

Under this proposal, Medicaid law would be changed to increase the federal upper payment limits percentage from 250% to 300% of the weighted average (determined on the basis of utilization) of the most recent average manufacturer prices (AMPs) for pharmaceutically and therapeutically equivalent multiple-source drugs available nationally through commercial pharmacies. This proposal also would clarify which discounts and other price adjustments are included in the definition of AMPs.

Office of Coordination for Dually Eligible Beneficiaries

Medicare/Medicaid dual eligibles (referred to as duals) represent small percentages of Medicare and Medicaid beneficiaries, yet they are one of the most important beneficiary subgroups because, relative to their numbers, duals account for disproportionately large percentages of Medicare and Medicaid expenditures. To ensure that coordination for duals occurs, this proposal would establish a new office within CMS, the Office of Coordination for Dually Eligible Beneficiaries (OCDEB). The OCDEB would be responsible for identifying and leading agency efforts to align Medicare and Medicaid financing, administration, oversight rules, and policies for dual eligibles.

Shared Responsibility – Personal Responsibility Coverage Requirement

Under this proposal, every individual would have a personal responsibility requirement to obtain health insurance coverage. To ensure compliance, taxpayers would be required to report the months for which they have the required minimum coverage for themselves and family members on their federal income tax returns. The consequence for not being insured would be an excise tax equal to a percentage of the premium for the lowest cost option available through the Health Insurance Exchange for the area where the individual resides.

Employer Requirement

Currently, there is no federal requirement for employers to offer health insurance coverage to employees or their families. The report calls for the examination of various options that would make health insurance coverage mandatory for certain employers.

Promotion of Prevention and Wellness in Medicare

This option would authorize a personalized prevention plan for all enrolled beneficiaries once every 5 years unless deemed inappropriate. Beneficiaries would first receive a comprehensive health risk assessment including at least a complete medical and family history and age-, gender-, and risk-appropriate measurements (including height, weight, body mass index, and blood pressure if not already part of the patient’s record). The assessment would also identify chronic diseases, modifiable risk factors, and emergency or urgent health needs.

Options to Prevent Chronic Disease and Encourage Healthy Lifestyles: “RightChoices” Grants

The option contemplates annual, capped grants to states for 3 or 5 years that would provide access to certain evidence-based primary preventive services such as tobacco use screening, influenza immunization, counseling on daily aspirin use, hypertension screening, or obesity screening for uninsured adults and children.

Prevention and Wellness Innovation Grants – Promotion of Team-Based Care

States would create locally integrated delivery systems including the establishment of multidisciplinary care teams. Multidisciplinary community health teams would be required to provide (1) comprehensive care management and patient and family support in conjunction with primary care providers; (2) care coordination and health promotion activities, including access to the range of services needed to maintain and improve health such as behavioral services and nutritional counseling, and coordination with local public health offices; (3) social and economic support to facilitate patient and family assistance with social support services and referral to and coordination with community-based programs; and (4) comprehensive transitional care from inpatient to institutional care settings, or care provided in community settings, as well as the assurance of appropriate follow-up.

Report Three: Report on Financing Reform Policy Options

Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options

The third and final section of the Finance Committee report focuses on the issue of rising costs in health care, noting that between 1999 and 2008, premiums for employer-sponsored health benefits increased 117% for families and individuals and 119% for employers. Annual health spending growth is expected to outpace average annual growth in the overall economy by 2.1 percentage points in each of the next 10 years. The report also notes that rising health care costs have a significant impact on federal and state health care programs.

Health Care Tax Subsidies

Tax subsidies and incentives for health care account for 17% of all tax expenditures.

Delivery system reform, reductions in health spending, and changes in the current tax treatment of health care alone may not pay for all of health care reform. Moreover, many proposals expected to reduce health spending in the long run may not produce sufficient savings in the short run to finance reform. The report calls for the consideration of other options to produce savings and generate revenues, including taxes that affect lifestyle choices and taxes that generally target loopholes.

Adjusting Reimbursement for High-Growth, Overvalued Physician Services

The committee will explore options that would make payments to Part B providers more rational through reforms that appropriately value services, such as the MedPAC recommendation to increase the utilization rate for calculating the payment for advanced diagnostic imaging services. Another option the committee could consider is the establishment of an expert panel to assist CMS in evaluating and adjusting payment for potentially misvalued physician services.

Increase the Medicaid Brand-name and Generic Drug Rebate Amounts

One option the committee could consider is increasing Medicaid’s flat rebate from 15.1% to as much as 23.1%. Under this option, the Medicaid “best-price” provision would remain unchanged. Another option to consider is an increase in the basic Medicaid rebate for noninnovator, multisource drugs from 11% to 13% of the AMP.

Means Testing Part D Premiums

The committee could consider requiring beneficiaries whose incomes exceed certain thresholds to pay higher premiums for Part D drug coverage. Higher premiums could apply only to basic coverage. The income thresholds could be set at the same levels and adjusted in the same manner as under Part B.

Options to Modify the Exclusion for Employer-Provided Health Coverage

Several options could be considered that would limit the value of employer-provided health coverage that is excludible from gross income. The limit could be based on the value of the plan or the income of the insured, or the limit could be a combination of both. Alternatively, the limit could be tied to a percentage of the value of the employer-provided health coverage.

Another option would be to apply the limit only to taxpayers whose incomes exceed a threshold income level. A third option would be to limit the exclusion based on both the value of employer-provided health insurance and the income of the taxpayer.

Modify Health Savings Accounts

Health savings account (HSA) contributions could be limited to the lesser of the individual’s deductible under the high-deductible health plan or the dollar amount of the maximum allowable aggregate HSA contributions. The additional tax on distributions from an HSA that is not used for qualified medical expenses would be increased to 20%. Distributions from an HSA would only be excludible from gross income as an amount used for qualified medical expenses if the employer or an independent third party substantiated the expenses. If a limit were placed on the current exclusion for employer-provided health coverage, HSA contributions could be counted against the limit.

Impose a Uniform Alcohol Excise Tax

This policy option contemplates imposing a uniform tax based on the alcohol content contained in the product. The excise tax under the proposal is imposed at a rate of $16 per proof gallon on all alcoholic beverages.

Enact a Sugar-Sweetened Beverage Excise Tax

The proposal would impose a federal excise tax per 12 ounces of sugar-sweetened beverage. Sugar-sweetened beverages under the proposal would include a variety of carbonated and uncarbonated beverages, such as nondiet soft drinks, fruit and vegetable drinks, functional drinks such as energy and sports drinks, iced teas and iced coffees, and flavored milk and dairy drinks.

The tax would apply to beverages sweetened with sugar, high-fructose corn syrup, or other, similar sweeteners. The tax would not apply to beverages sweetened with noncaloric sweeteners. Sugar-sweetened fountain-drink syrup would be taxed at a higher rate per ounce such that the rate per ounce of fountain drink would be roughly equivalent to the tax rate on ready-to-drink soft drinks.

Senate Committee on Health, Education, Labor and Pensions—A New Vision for American Health Care: Strengthening What Works and Fixing What Doesn’t

• Ensuring Reliable, High-Quality, and Affordable Health Insurance for All Americans
• Keeping in place what works today: Those who are satisfied with their coverage will be able to keep it, even as we work to expand access, improve quality, and lower the rate of health spending growth for everyone.
• Making health insurance work for all Americans: Our health insurance system needs to work for everyone, not just the healthy and affluent; health insurance should be there for all Americans when we need it most.
• Addressing the health coverage needs of those left out and those in danger of being left out: We will reform our system so that everyone can get affordable and quality health insurance coverage, including almost 50 million uninsured Americans and those whose health insurance policies leave them medically and financially vulnerable.
• Creating America’s Health Benefit Exchange: We want to create a new state-based resource to make sure all Americans can easily obtain high-quality and affordable coverage.
• Defining personal responsibility: To make this new structure work for everyone, everyone needs to participate and obtain health insurance.

Improving Value by Creating a Higher-Quality, More Efficient Delivery System

A national strategy to improve health care quality is necessary to generate solutions to the biggest problems – medical errors, preventable hospital readmissions, and the failure to manage chronic diseases – which have a severe impact on people, their lives, their checkbooks, and national health care costs.

These are the key goals identified by the HELP Committee for quality and delivery system improvement we seek to achieve through comprehensive health care reform:

• preventing medical errors by using innovative tools and methods
• improving efficiencies in the delivery system by maximizing the use of health technology and simplifying administrative procedures
• preventing hospital readmissions by mandating discharge planning

Mandating hospital discharge plans that feature a discharge advocate working together with a pharmacist and others to coordinate hospital discharge, patient education, and medication reconciliation will reduce follow-up emergency visits and re-hospitalizations. Medication consultation, counseling, and education will assist patients in adhering to their medication plans. Establishing a system that allows hospitals to report readmission rates confidentially and providing them with a technical assistance program will help reduce their readmission rates. In addition,

• managing chronic conditions through better coordination and integration of care made possible by medical homes and community health teams
• strengthening the health workforce by increasing the number of practitioners and providing training and quality initiatives for existing practitioners
• reducing health disparities by ensuring they are considered in workforce programs and quality measures

Building a New Framework to Enhance Prevention and Wellness

These are the key goals in the Prevention and Public Health provisions of comprehensive health reform:

• reimbursing for essential preventive services
• removing barriers to preventive services
• promoting community wellness and strengthening our public health system
• changing medical school and residency curricula
• promoting the benefits of wellness and prevention
• encouraging workplace wellness programs
• creating a federal-level Prevention and Public Health Council

Financing Long-Term Services and Supports

Health care reform must ensure that vulnerable populations have access to coverage that meets their needs. For individuals with disabilities and seniors with chronic illnesses, long-term services and support are their primary unmet health care needs. These are critical to promoting health, preventing illness, and helping people function independently instead of in institutions. Ten million Americans need long-term services – personal care, assistive technology, and other supportive services – a number that will increase to 26 million by 2050. More than 200 million adult Americans lack protection for the costs of long-term services and supports. The nation lacks a coordinated, national, public-private system to deliver quality long-term services and supports. Nearly half of all funding for these services is now provided through Medicaid, which is a burden on states requiring individuals to become and remain poor to receive help.

These are key goals we hope to achieve through long-term services and supports:

• supporting America’s workers with a new financing alternative for long-term services and supports
• promoting individual choice and independence through self-determination
• ensuring fiscally responsible and affordable premiums
• strengthening Medicaid for those who need it by reducing dependence on Medicaid for long-term services and supports
• retaining the role of private insurance in providing long-term services and supports

Rooting Out Fraud and Abuse

The National Healthcare Anti-Fraud Association estimates that at least 3% of all health care spending – or $72 billion in 2008 – is lost to health care fraud. Other estimates are as high as 10%. Fraud committed by providers, medical equipment suppliers, drug companies, and corrupt plan operators and brokers increases costs for everyone, puts the security and health of families at risk, and undermines public trust. The HELP Committee identified the following goals to advance the removal of fraud and abuse in the private sector and to link better private and public sector efforts:

• Establish a Healthcare Program Integrity Coordinating Council.
• Create senior-level positions at the Departments of Health and Human Services and Justice to coordinate health care antifraud activities.
• Address unauthorized and sham health insurance plans.

Establishing Shared Responsibility and Paying Appropriately and Fairly for Reform

Fixing America’s health care system will provide real benefits for every individual and every part of our society – patients and consumers, businesses, hospitals, physicians and nurses, community health centers and other providers, health plans, business and labor, and government at all levels. Fixing this system will carry a cost – and the only way to make it work is to embrace the principle of shared responsibility. Everyone must take some responsibility to fix the system. This means that

• Individuals take personal responsibility to obtain quality health insurance affordable to them.
• Employers take responsibility for supporting the health coverage needs of their workers.
• Health insurers assume a different business model focused on meeting the health coverage needs of all Americans.
• Medical providers meet the challenge of reinventing medical care to improve care and to better use our health care dollars.
• Government at all levels is part of the solution.

Conclusion

The scope and scale of the discussion laid out in these reports is indicative of the challenges the Obama administration and Congress face as they attempt to pass and implement comprehensive health care reform.

Despite the hours of work and reams of paper already dedicated to this effort, the materials that have been officially released are still very broad, often discussing concepts and ideas rather than specifics.

Published details on the issue of pharmacists’ clinical services are limited at best. Nevertheless, the materials clearly show a growing recognition of the need for an integrated, team-based approach to the delivery of care, an acknowledgment of the need to address and manage medication use, a renewed focus on prevention and wellness, a commitment to quality and outcomes in care, and a value-based approach to payment. The stalemate over the most controversial issues – such as a public plan option, mandates that require Americans to purchase coverage, and changes to the tax treatment of employer-based coverage – could yet derail this delicate process.

The Obama administration has been applauded for its efforts to reach out to key stakeholders and congressional leaders on both sides of the aisle and has so far avoided some of the mistakes made during the Clinton-era reform effort.

However, it remains to be seen whether the President can deliver on his promise that “healthcare reform must not add to our deficits over the next 10 years – it must be at least deficit neutral and put America on a path to reducing its deficit over time”⁵ and, at the same time, deliver the health care reform he has promised.

References

1. CNN Poll. Poll: Do Americans want government healthcare reform? Available at http://politicalticker.blogs.cnn.com/2009/03/05/poll-do-americans-want-government-health-care-reform/. Accessed June 6, 2009.
2. Report: The costs of inaction. Available at http://www.healthreform.gov/reports/inaction/inactionreportprintmarch2009.pdf. Accessed June 6, 2009.
3. The Washington Post. U.S. healthcare lags despite highest spending. Available at http://voices.washingtonpost.com/fact-checker/2008/08/us_health_care_lags_despite_hi.html. Accessed June 6, 2009.
4. USA Today. Hurdles remain in Obama’s push to re-vamp healthcare. Available at http://www.usatoday.com/news/health/2009-05-31-hurdles_N.htm. Accessed: June 6, 2009.
5. Washington Post Editorial: President Obama’s first foray into the details of health-care reform. Accessed: 6/8/09. Available: at http://www.washingtonpost.com/wp-dyn/content/article/2009/06/07/AR2009060702019.html. Accessed June 8, 2009.