Focus in health reform turns to financing options

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With a compromise that would allow some version of the so-called public plan option now appearing at least possible, the health reform debate is largely focused on exactly how lawmakers plan on paying for the expansion in coverage and how the proposals might impact the industries involved, sources in Washington told Pharmawire.

The debate over whether or not a public plan should be included in a proposed health insurance exchange – and how strong any public plan might be – has largely overshadowed many of the other details surrounding health reform. But several compromises on the issue have now been proposed, including one from Sen. Kent Conrad (D-ND) that would create a system of federally-chartered co-ops that would offer non-profit alternatives to the established insurance industry.

“It’s a question now of whether people have taken such strong stances on the pure approaches – either nothing or all – is it harder for people to back off these positions,” said Kathleen Stoll, director of health policy for Families USA, a consumer advocacy group. “I think the focus now is turning to pay-fors and what are the types of revenue generators and revenue savers that can be put on the table.”

The insurance industry strongly opposes the public plan option, according to a statement from America’s Health Insurance Plans, the insurance industry trade group.

On Wednesday it also appeared the Senate Finance Committee would postpone consideration of its bill until it can reevaluate associated costs, and likely not mark up its bill until after the 4 July recess, those interviewed said. The Congressional Budget Office (CBO) estimates that the Finance Committee plans would cost USD 1.6trn over 10 years while reducing the uninsured by about 40 million.

Sen. Max Baucus (D-MT) has said the cost of health reform would be offset by a combination of taxes and curbs in spending. A tax on health care benefits provided by employers and the creation of a pathway to allow follow-on biologics, which could lower drug costs, are among the options being considered, those interviewed said.

The delay is notable, Stoll said, because it would leave precious little time for the two committees to merge two bills into one that could be brought to the Senate floor by 31 July. “If we don’t go to the Senate floor before the August recess we’re looking at a very different timeline scenario,” she said.

Bonnie Washington, a vice president at Avalere Health, said while not unexpected, the CBO score reminded everyone of the costs associated with health reform and other issues have now taken a back seat to financing questions. “If the Finance Committee has indeed moved their mark up back, that makes it a very busy month of July,” Washington said.

Also on Wednesday the Senate Committee on Health, Education, Labor and Pensions (HELP) began to mark up its version of health reform – known as the Affordable Health Choices Act – and several sources said this week’s estimate from the CBO gives the bill a steep hill to climb.

Earlier this week the CBO said the Senate HELP bill would result in a net increase in federal budget deficits of USD 1trn over 10 years and cover just an additional 16 million people. A Democratic aide said the estimate was based on an incomplete bill – lacking an employer mandate, any expansion of Medicaid, or the creation of a public plan – and said it was standard practice to give agreed upon details to the CBO considering the time needed for the analysis.

Despite the softening from several interest groups on the potential for a public plan, including the American Medical Association indicating it was open to considering a potential compromise, the Conrad proposal may lose support from liberal Democrats, according to Mark Mansour, a partner in the food and drug practice group at Bryan Cave. “I think there is probably more room for compromise, but the devil is in the details,” he said.

Jayson Slotnik, an associate at Hogan & Hartson closely following the push for health reform, said that while the Conrad proposal, or one similar, may help forge a compromise on the issue of a public plan, the chances of some type of public plan emerging are no better than 50-50. Slotnik also said the tough economic decisions on how to pay for the overhaul lie ahead as well as navigating significant political minefields to achieve passage.

Meanwhile the House of Representatives is moving forward with three committees – Ways and Means, Energy and Commerce, and Education and Labor – working on the legislation. The three committees are working together on a single base from which to start, Washington said.

On Tuesday, eight Democrats on the Energy and Commerce Committee sent Rep. Henry Waxman (D-CA) a letter encouraging him to consider including follow-on biologics be considered with health reform and signaled their willingness to submit the proposal as an amendment to the committee draft legislation during mark up.

Draft legislation in the House is expected to be revealed as early as late this week, and House leaders hope committee votes will occur when lawmakers return from the 4 July break. The bills would be melded together into a single piece of legislation and brought to the House floor by the August recess, if all goes according to plan.

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