Obama budget of­fers pos­si­ble com­mon ground with GOP on health­care

Modern Healthcare - - NEWS - By Paul Demko and Jes­sica Zig­mond —With Jaimy Lee and Steven Ross John­son

Po­lit­i­cal and pol­icy ob­servers say Pres­i­dent Barack Obama’s 2015 budget blue­print for health­care is sig­nif­i­cant be­cause it lays out the ad­min­is­tra­tion’s leg­isla­tive pri­or­i­ties for the rest of the year and for what­ever con­gres­sional land­scape lies be­yond the Novem­ber elec­tions.

Even though it’s widely con­sid­ered dead on ar­rival with a po­lar­ized Congress, the pres­i­dent’s budget sug­gests ar­eas of po­ten­tial com­mon ground with Repub­li­cans as Congress searches for a way to pay for a per­ma­nent re­place­ment for Medi­care’s hated sus­tain­able growth-rate for­mula for physi­cian pay­ment. One ma­jor area Repub­li­cans may seize on is Obama’s pro­posal to in­crease means-test­ing of Medi­care ben­e­fits for higher-in­come ben­e­fi­cia­ries.

The ad­min­is­tra­tion’s 2015 budget calls for $73.7 bil­lion in dis­cre­tionary fund­ing for HHS in 2015—a 7.6% re­duc­tion from the cur­rent-year budget. But that fig­ure is pro­jected to in­crease by 8.7% the fol­low­ing year and by nearly a third over the next decade.

The budget also in­cludes more than $400 bil­lion in cuts to Medi­care over 10 years. Those re­duc­tions are heav­ily back-loaded, with only $3.5 bil­lion booked for fis­cal 2015. Hos­pi­tals were quick to crit­i­cize the fund­ing cuts, which they say would pile on to the bil­lions of cuts im­posed on hos­pi­tals since 2010 and could com­pro­mise their abil­ity to care for pa­tients.

Obama un­veiled his budget last week for law­mak­ers to con­sider when they be­gin work on federal ap­pro­pri­a­tions bills for next year. Many down­played its im­me­di­ate rel­e­vance given that Congress passed a two-year budget agree­ment in De­cem­ber. Se­nate Budget Com­mit­tee Chair­man Patty Mur­ray (D-Wash.) has said she won’t sub­mit a pro­posed 2015 budget, while House Budget Com­mit­tee Chair­man Paul Ryan (R-Wis.) plans to is­sue a budget pro­posal, which is likely to serve as a con­ser­va­tive pol­icy out­line.

“The pres­i­dent’s rec­om­men­da­tions for the ap­pro­pri­ated ac­counts are rel­e­vant be­cause the ap­pro­pri­a­tions com­mit­tees use that as a bench­mark,” said Paul Van de Wa­ter, a se­nior fel­low at the Cen­ter for Budget and Pol­icy Pri­or­i­ties, a left-of-cen­ter re­search group. “The ad­min­is­tra­tion has tried to iden­tify within the lim­its set by the Mur­rayRyan agree­ment where to add and where to take away, and that’s a lot of de­tail that is be­low people’s radar.”

Budget and pol­icy an­a­lysts em­pha­sized that many of the budget’s pro­pos­als for sav­ings were re­sus­ci­tated from prior-year Obama bud­gets. For in­stance, Van de Wa­ter noted that more than a quar­ter of the to­tal Medi­care sav­ings in the pres­i­dent’s 2015 budget—about $117 bil­lion over 10 years—would come from re­quir­ing drug­mak­ers to of­fer Medi­care re­bates on pre­scrip­tion drugs for low-in­come ben­e­fi­cia­ries. The pres­i­dent also pro­posed that last year.

The ad­min­is­tra­tion’s ar­gu­ment is this: Be­fore the Medi­care Part D drug ben­e­fit pro­gram was cre­ated, low­in­come ben­e­fi­cia­ries who were du­ally el­i­gi­ble for both Medi­care and Med­i­caid got their drugs through Med­i­caid, which re­ceives re­bates from drug­mak­ers. But that changed when Congress cre­ated the Part D pro­gram in 2003. It was claimed those re­bates were not nec­es­sary be­cause com­pe­ti­tion in

drug plans would hold costs down. But now Medi­care is on aver­age pay­ing more for drugs than Med­i­caid is, Van de Wa­ter said. The pres­i­dent’s pro­posal would re­quire drug­mak­ers to pay the Medi­care pro­gram re­bates that they pay to Med­i­caid.

On the dis­cre­tionary spend­ing side, Obama calls for the Na­tional In­sti­tutes of Health to re­ceive $30.2 bil­lion in fund­ing, just 1% above the cur­rent budget and short of pre-se­ques­tra­tion fund­ing lev­els. Re­search ad­vo­cates were dis­ap­pointed with that pro­posal, point­ing out that NIH has lost nearly a quar­ter of its pur­chas­ing power since 2003. They had hoped for about $32 bil­lion as a stay-even level given in­fla­tion.

“Fun­da­men­tally, it does not bring us back to where we need to be,” said Jennifer Zeitzer, di­rec­tor of leg­isla­tive re­la­tions with the Fed­er­a­tion of Amer­i­can So­ci­eties for Ex­per­i­men­tal Bi­ol­ogy. “That’s a prob­lem in terms of con­tin­u­ing to grow the re­search en­ter­prise and take ad­van­tage of all the sci­en­tific op­por­tu­ni­ties we have.”

Con­sumer safety ad­vo­cates were sim­i­larly dis­ap­pointed with Obama’s call for $2.6 bil­lion in dis­cre­tionary fund­ing for the Food and Drug Ad­min­is­tra­tion, a 1% in­crease. That in­cludes $25 mil­lion more to over­see high-risk com­pound­ing phar­ma­cies, which have been im­pli­cated in pa­tient deaths and in­juries.

“Given that the FDA reg­u­lates about 25 cents of ev­ery dol­lar of the gross do­mes­tic prod­uct, it does not have enough money to ful­fill its pub­lic health mis­sion,” said Kasey Thomp­son, vice pres­i­dent of pol­icy, plan­ning and com­mu­ni­ca­tions for the Amer­i­can So­ci­ety of Health-Sys­tem Phar­ma­cists.

Among some of the other Obama pro­pos­als:

■ $14.6 bil­lion over 10 years for health­care train­ing ini­tia­tives. That in­cludes $5.2 bil­lion to sup­port 13,000 new res­i­den­cies for physi­cians and $3.9 bil­lion over six years to sup­port the Na­tional Health Ser­vice Corps. That would in­crease the num­ber of in­di­vid­u­als en­rolled in the pro­gram from 8,900 to 15,000.

■ More than $200 mil­lion in in­creased fund­ing in 2015 for men­tal health pro­grams for chil­dren. That in­cludes $130 mil­lion aimed at re­duc­ing the use of psy­chotropic drugs for chil­dren in fos­ter-care pro­grams.

■ $770 mil­lion in sav­ings by pro­hibit­ing phar­ma­ceu­ti­cal com­pa­nies from de­lay­ing the avail­abil­ity of generic drugs. A sim­i­lar plan was in­cluded in the ad­min­is­tra­tion’s 2014 budget plan but was not en­acted.

■ Ex­pand­ing “qual­ity in­cen­tives” for Medi­care pre­scrip­tion drug plans. This would likely be sim­i­lar to the star­rat­ing sys­tem used to de­ter­mine whether Medi­care Ad­van­tage plans qual­ify for bonus pay­ments. How­ever, the budget doesn’t pro­pose any ap­pro­pri­a­tions for the pro­gram.

■ $25 mil­lion in fund­ing over two years aimed at pre­vent­ing fraud in the state and federal in­sur­ance ex­changes.

The pres­i­dent’s budget also says Medi­care will con­tinue its trans­for­ma­tion “from a pas­sive payer to an ef­fec­tive pur­chaser of high-qual­ity, ef­fi­cient care.” It high­lights the ACA’s val­ue­based pur­chas­ing pro­gram for hos­pi­tals and its re­quire­ment of the CMS to de­velop plans to im­ple­ment value-based pur­chas­ing pro­grams for skilled-nurs­ing fa­cil­i­ties, home health agencies and am­bu­la­tory surgery cen­ters.

De­spite crit­i­cisms, pol­icy an­a­lysts sug­gest the pres­i­dent’s budget might prove use­ful as con­gres­sional com­mit­tees search for ways to pay the pro­jected $138 bil­lion,

10-year cost of pro­posed leg­is­la­tion to re­peal and re­place the Medi­care SGR physi­cian pay­ment for­mula.

Robert Mof­fit, se­nior fel­low at the con­ser­va­tive Her­itage Foun­da­tion, ar­gues one such area of agree­ment with Repub­li­cans is the ad­min­is­tra­tion’s pro­posal to save about $53 bil­lion by in­creas­ing in­come-re­lated pre­mi­ums for Medi­care ben­e­fi­cia­ries. Con­ser­va­tives long have sup­ported ex­pand­ing means test­ing to strengthen the long-term fi­nan­cial sol­vency of the pro­gram. “That would take some se­ri­ous con­ver­sa­tions,” Mof­fit said. “You’re re­ally work­ing in the weeds on this, but it can be done.”

Van de Wa­ter also said the presi- dent’s pro­pos­als could be used in the SGR talks. The fact that the pres­i­dent has en­dorsed cer­tain ideas in­creases the chances that they’ll be adopted. Like Mof­fit, Van de Wa­ter cited the ex­pan­sion of in­come-re­lated pre­mi­ums in Medi­care as one pos­si­bil­ity.

Whether or not Obama’s budget draws se­ri­ous con­sid­er­a­tion on Capi­tol Hill, it’s ex­pected to help frame the di­a­logue for 2014 con­gres­sional elec­tions. Repub­li­cans need to cap­ture six seats to con­trol the Se­nate. If that hap­pens, it could im­pede the ad­min­is­tra­tion’s ef­forts to im­ple­ment the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

“This is an elec­tion year and bud­gets are po­lit­i­cal documents,” said G. Wil­liam Hoagland, se­nior vice pres­i­dent at the Bi­par­ti­san Pol­icy Cen­ter who served as a budget ad­viser to for­mer Repub­li­can Se­nate Ma­jor­ity Leader Dr. Bill Frist. “There are pro­pos­als in here that clearly lean to­ward his base as well as what he be­lieves is nec­es­sary to im­prove Demo­cratic chances on Capi­tol Hill.”

Since the ACA passed in 2010, the main elec­tion cam­paign strat­egy for Repub­li­cans has been to call for re­peal­ing the health­care re­form law. But in re­cent months, they’ve floated more de­tailed plans to re­place the law. Most no­tably, GOP Sens. Richard Burr of North Carolina, Tom Coburn of Ok­la­homa and Or­rin Hatch of Utah have in­tro­duced their own com­pre­hen­sive health­care over­haul bill.

But Chris Jen­nings, who stepped down in Jan­uary as a se­nior White House aide on health­care re­form is­sues, points out that any se­ri­ous pro­posal will present com­pli­ca­tions for Repub­li­cans. “If it’s not to­tal re­peal, what is it?” Jen­nings said. “There is no sig­nif­i­cant con­sen­sus there. Some of the very poli­cies that they’re ad­vo­cat­ing would cre­ate far more dis­rup­tion than any­thing re­lated to the cur­rent law.”

Fur­ther­more, Larry Ja­cobs, a Univer­sity of Min­nesota po­lit­i­cal sci­ence pro­fes­sor, ques­tions whether health­care will even be an is­sue of sig­nif­i­cant im­por­tance to vot­ers this year, un­like it 2010 when Repub­li­cans took over the House. He ar­gues that Oba­macare is now an an­i­mat­ing is­sue only for the GOP’s hard-right base. “For the vot­ers who are up for grabs and un­de­cided at this point, health re­form is not a big is­sue for them,” he said.


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