By John Reichard, CQ HealthBeat Editor

JANUARY 12, 2009 -- The National Business Group of Health (NGBH), which represents many if not most of the nation's biggest companies, urged President-elect Obama and congressional leaders Monday to include investments in comparativeness effectiveness research and health information technology in the economic stimulus package now being drafted on Capitol Hill.

The organization, which represents 300 large employers including 63 of the Fortune 100 companies, also urged policy makers to include subsidies to help newly jobless workers pay premiums for health care coverage available under COBRA, a law that guarantees many workers who have lost their jobs continued access to their health coverage at group rates provided they pay the full cost themselves. While group rates are often lower than rates on the market for non-group insurance, they are nevertheless unaffordable for many people who have lost their jobs. COBRA subsidies would reduce premium costs to workers.

Congress should begin addressing health care quickly in the stimulus package rather than delay, NBGH President Helen Darling said in a letter Monday to congressional leaders. "We must tackle these extraordinarily complex issues now because the nation will not be able to pull out of this deep recession while health care costs continue to work against businesses' ability to grow jobs and compete globally," she said.

Big employers are a powerful force in health care policy, and helped derail President Clinton's health overhaul plan in 1994. NBGH, whose members cover some 55 million workers, describes itself as the only national organization representing large employers that focuses exclusively on health care issues.

Darling said at a mid-day press briefing that the inclusion of various health care provisions in the stimulus would not take the steam out of efforts later for a larger overhaul. "There'll be plenty of pressure for health care reform," she said. She described herself as "very optimistic" about the chances for a broader overhaul later, calling Obama's health appointments thus far first rate. "I've never seen such a good collective package" of such appointments, she said.

In a letter to congressional leaders, Darling specifically endorsed an increase in the stimulus in federal funding of comparativeness effectiveness research overseen by the Agency for Health Care Research and Quality. The research helps "determine the best course of treatment. It improves quality and reduces health care costs as less effective, unnecessary and duplicative health care services are eliminated," she said.

Darling said at the briefing that the absence of a broad set of "interoperability" standards to ensure that health IT systems are compatible should not be a reason to keep health IT funds out of the stimulus. A major hospital group also weighed in Monday in support of including health IT money in the stimulus.

"Health IT is an area where there are a lot of different ways to spend money and still be effective," she said. Funds could be spent on technology where standards do exist and the industry could be prodded to move quickly to adopt more standards, Darling said. "We can do things when somebody says we have to," she said, adding that "we are in a war. We are in a war for our recovery."

Darling said that COBRA subsidies would have to cover most of the costs of health coverage because the unemployed wouldn't be able to afford it otherwise. She said the subsides would be a very expensive part of the stimulus package but that workers need to be able to maintain access to health care services. She noted that under the COBRA law now, employees have to stick with their current health plan until the company's next open enrollment period. Congress should consider changing the law to let workers pick a cheaper health plan offered by their employer, she said.

By Alex Wayne, CQ Staff

JANUARY 15, 2009 -- House leaders plan to pump $157.5 billion into a wide variety of health care programs—including Medicaid and health insurance for people who lose their jobs—as part of a massive economic stimulus bill they announced Thursday.

According to a summary of the measure, the largest chunk of the money, $95.6 billion, would go to state governments to bolster Medicaid, the health insurance entitlement for the poor. Medicaid is jointly funded by the state and federal governments. Washington picks up the larger share of the cost, while states administer the program.

The House Democrats' plan would have the federal government pick up more of the program's costs in every state. It also would fund an expansion of Medicaid to cover low-income people who involuntarily lose their jobs through 2010.

Democrats intend to spend $30.3 billion to allow people who lose their jobs to keep their employer-provided health insurance under a program known as COBRA. Currently, COBRA coverage expires after 18 months. Under the Democratic plan, people 55 and older or those with 10 years or more tenure in their jobs could continue COBRA coverage until they find a new job or until they are old enough to enter Medicare. Democrats also propose covering 65 percent of the costs of COBRA coverage for the first year any worker is unemployed.

Under current law, newly jobless workers must pay both the employer and employee's shares of the insurance premiums—a burden too great for many households that have lost their breadwinners.

Democrats also plan to use the stimulus to break a policy logjam that has long confounded Congress: How to encourage more hospitals and physicians to use electronic medical records instead of paper records.

Congress has been debating since at least 2005 how to spread adoption of what is known as health information technology, or health IT. But lawmakers have been stymied over disagreements about who should pay the substantial costs of installing new computer systems and software, and the proper scope of privacy protections for patients' medical records.

The stimulus bill would provide $20 billion for health providers to purchase electronic medical records systems, though it was not clear as of midday Thursday how that money would be distributed, whether it would be grants or loans, or how privacy issues would be addressed.

Other Provisions

The bill also contains many smaller health spending provisions:

• $3.5 billion for the National Institutes of Health, the nation's primary source of funding for biomedical research. Of that, $2 billion would go directly to NIH to fund new research grants and renovations at the agency's campuses, while $1.5 billion would be passed along to universities conducting NIH-sponsored research for renovation of their laboratories. Current funding for the NIH is about $29.4 billion a year.
• $3 billion to encourage preventive health and wellness programs. Many lawmakers complain that the nation's health policy—particularly in Medicare, the government's biggest health entitlement—emphasizes acute care for illnesses instead of preventive measures like regular check-ups, various screening and tests, and lifestyle changes. More preventive care, many health experts say, could reduce the need for more expensive acute care in hospitals.
• $1.5 billion for community health centers. Most of this money—$1 billion—would go toward renovations of existing centers, while $500 million would be for expansions or new centers. Community health centers provide basic health care to millions of mostly low-income people who typically have no health insurance or are under-insured. President Bush made the expansion of those centers a priority during his administration, but current funding for the centers is about $2 billion a year.
• $1.1 billion for studies comparing the effectiveness of different medical treatments. Many lawmakers say such "comparative effectiveness" research is essential to controlling the costs of health care; it is thought that unnecessary or ineffective tests and treatments are common. But it is not clear how the studies would be performed.
• $600 million to train primary care physicians and doctors who agree to enter the National Health Service Corps, which places health care workers in medically under-served areas such as rural communities or inner cities.
• $900 million for research into a vaccine for a hypothetical pandemic flu and into defenses against chemical and biological weapons.
• $462 million for construction and renovations at the campuses of the Centers for Disease Control and Prevention.

By Drew Armstrong, CQ Staff

JANUARY 14, 2009 -- The House sent the Senate a reauthorization of the State Children's Health Insurance Program on Wednesday, setting up what Democrats expect to be an early legislative victory for their party and President-elect Barack Obama.

"This is a day of triumph for America's children," said House Speaker Nancy Pelosi, D-Calif.

It was also a day of triumph for congressional Democrats. Reauthorizing and expanding the State Children's Health Insurance Program (SCHIP) has been one of their top goals since they took control of the House and Senate after the 2006 midterm elections.

Twice, the 110th Congress sent SCHIP legislation to President Bush, and twice it fell victim to his veto. This time, a far different reception awaits the legislation (HR 2), which the House passed by 289-139.

Obama has strongly supported the program's expansion and is eager to sign the reauthorization.

The bill would reauthorize SCHIP for four-and-a-half years and allow $34.3 billion in new spending over five years, according to a Congressional Budget Office analysis.

The bill would allow states to cover children and families with income up to 300 percent of the poverty level. Democrats say it will permit enrollment of 4 million additional children and adults in the program, growing SCHIP to cover 11 million people.

Other provisions in the bill, including a state option to cover legal immigrants who have been in the country for less than five years, boost the cost of the legislation to $39.4 billion. That total cost would be offset with $40.1 billion in revenue increases and savings over five years, mostly through a 61-cents-per-pack increase in the federal excise tax on cigarettes.

The Senate Finance Committee plans to mark up its own, slightly different version Thursday, with floor action likely as early as next week.

Familiar Arguments

Many of the House floor arguments had a decidedly familiar ring, reprising those offered in 2007.

House Majority Leader Steny H. Hoyer, D-Md., said Democrats were acting on the mandate voters gave them and Obama in November. "This bill is going to reflect their desire for and vote for change," Hoyer said.

"It is essentially the same bill that we passed in the last Congress. . . . The only thing that stood in the way was President Bush's veto," said Rep. Frank Pallone Jr., D-N.J.

Republicans argued that the program should focus on insuring the poorest children first, before expanding to cover youngsters in families with somewhat higher income levels.

"We must pass legislation that first reaches those who are the most in need of assistance, those whose family incomes are between 100 percent and 200 percent of the poverty level, the original intent of the bill," said Rep. Phil Gingrey, R-Ga.

The House rejected, 179-247, a GOP motion to recommit that would have amended the bill to require states to insure 90 percent of children under 200 percent of the poverty level before allowing coverage for families with higher income levels. The motion also sought stricter controls on coverage for immigrants.

"We outlined our principles for reauthorization. The principles are nothing new," said House Minority Leader John A. Boehner, R-Ohio.

Republicans called the cigarette tax regressive, saying it amounted to a tax on the poor. They also warned that the higher tobacco taxes would eventually undermine the program's funding.

"The percentage of Americans who smoke has been dropping for decades," said Rep. Dave Camp of Michigan, the ranking Republican on the House Ways and Means Committee. "Less smoking will lead to less taxes being collected. Less taxes being collected will lead to less and less money ... to pay for an expansion of SCHIP."

Florida Republican Rep. Lincoln Diaz-Balart said he would vote for the bill now that it contains provisions to allow legal immigrants who have been in the country less than five years to enroll in SCHIP. His Miami district has a large population of immigrants, many from Latin America, and services for noncitizens is a major local issue. Diaz-Balart twice voted against SCHIP bills in the 110th Congress.

But Diaz-Balart said he was upset that Democrats did not allow amendments under the closed rule for debate. "That's unfortunate, unnecessary," he said. The House adopted the rule by 244-178.

Other Republicans were upset about what they called loose citizenship verification requirements. "It takes away the ability of us to verify the citizenship of people who are eligible for SCHIP," said Rep. Steve Scalise, R-La. "We need to put that verification process back in place," he said.

While the bill bars the use of SCHIP funds for illegal immigrants, it does not require SCHIP applicants to present legal citizenship documentation. Instead, they have to give their name, Social Security number, and declare their legal residency. States are then required to verify their eligibility.

The documentation changes are expected to boost enrollment, as well as costs. According to the CBO analysis of the bill, the changes to the verification section will increase spending by $2.4 billion over five years.

Senate Outlook

The Senate bill is a less sweeping $31.5 billion, four-and-a-half year reauthorization that does not include the provision allowing legal immigrants to enroll in SCHIP less than five years after they arrive in the United States.

Once the Finance Committee completes its markup, the full Senate is expected take up its SCHIP bill after is finishes consideration of a public lands bill (S 22) and a measure to facilitate wage discrimination lawsuits (HR 11, S 181)

The provision to extend services to legal immigrants is likely to be the primary sticking point in negotiations between the two chambers. But Democrats hope to have the legislation ready for Obama soon after he takes office Jan. 20.

By Alex Wayne, CQ Staff

JANUARY 16, 2009 -- Economic stimulus legislation proposed by House Democrats would shower hospitals with millions of dollars in extra funding from the government's health entitlements if they adopt electronic medical records systems, while individual doctors would be paid up to $65,000 for using electronic records in their practices.

All told, Democrats propose to spend $20 billion to encourage the adoption of what is known as health information technology. House leaders released details of the health IT plan on Friday afternoon.

Other health-related provisions include plans to subsidize health insurance or expand Medicaid for people who have lost their jobs since September. Democrats want the government to pay 65 percent of the premiums for up to a year for people who lose their jobs and elect to continue their private health insurance. They would also allow states to temporarily expand Medicaid to cover people who lose their jobs; the federal government would pick up all of the cost.

The provisions were part of a broad Ways and Means Committee proposal (HR 598) that will be added to the broader economic stimulus bill.

Congress has been debating since at least 2005 how to speed the adoption of electronic medical records, which many health experts agree could increase the efficiency of care and cut down on medical errors. Hospitals and physicians have been slow to adopt the technology on their own because of its cost, and privacy advocates have opposed the creation of electronic medical records without allowing patients a great deal of control over their dissemination. Both issues have stymied passage of legislation.

With the stimulus bill, considered must-pass legislation, House Democrats hope to finally end the debate and establish a national policy on the technology.

To satisfy health providers who say electronic medical records are too expensive, Democrats want to dump money on them.

Hospitals would be eligible for additional payments from Medicare and Medicaid of at least $2 million if they adopt electronic medical records before fiscal 2013. Their maximum payments could be much higher—greater than $4 million—depending on a complicated formula that considers their size and the amount of their Medicare payments.

The maximum a hospital could be paid is $11.6 million, according to the Ways and Means Committee, but only if it was a large hospital that accepted just Medicare, Medicaid and charity patients. Almost all hospitals would be paid some fraction of that amount.<?p>

Beginning in fiscal 2016, health providers and hospitals that do not adopt electronic medical records would be penalized with reductions in their Medicare and Medicaid payments.

Physicians who work outside of hospitals would be eligible for their own payments in exchange for adopting electronic medical records, and would also be subject to penalties if they fail to go electronic before fiscal 2016.

The bill includes provisions that will please some privacy advocates. It would require people to be notified in the event of an unauthorized disclosure of their records, and allows patients to request an audit trail showing where their records have been sent.

Health providers would have to obtain consent from patients to use their records for marketing or fundraising purposes. The bill would increase penalties for violating health privacy laws.

And the bill would forbid the data-mining and sale of medical records; many pharmacies currently sell their patient records to companies that in turn collate and re-sell the data to pharmaceutical manufacturers. The practice has long been criticized by privacy advocates.

It is not clear how the health IT language in the bill will be received by lawmakers who have led past efforts to try to pass legislation on the issue or by advocates of strong privacy protections, particularly in the Senate. One Senate GOP aide with an interest in the issue was still reviewing the bill Friday evening but said that it "looked promising."

Democrats said in a summary of the bill that the Congressional Budget Office has estimated that 90 percent of doctors and 70 percent of hospitals would adopt electronic medical records if the measure becomes law.

By Joseph J. Schatz, CQ Staff

JANUARY 16, 2009 -- As President-elect Barack Obama urges Congress to advance an economic stimulus plan that will win Republican votes, Democratic leaders writing the legislation face a question: How bipartisan is bipartisan enough?

House Democrats have the votes to pass a stimulus package of their liking in their chamber and could ignore Republicans. In the Senate, Democrats now have 58 in their caucus, meaning they need to pick off a few Republicans to get their way.

But the Obama team is talking about a plan that could win as many as 80 votes in the Senate. That would require bringing on board a significant number of Republicans—an effort that Obama began last week by making it clear that he wants about 40 percent of the stimulus plan's cost devoted to providing tax breaks for individuals and businesses.

Winning GOP support—by adding tax breaks and keeping the total stimulus price tag near Obama's $775 billion target—could mean sacrificing some Democratic priorities.

"I think what makes it hard is that everything that is additive in terms of getting political support among Republicans is probably dilutive in terms of getting Democrats," said Sen. John Thune of South Dakota, a Republican who resides at the intersection that could make the difference between a 60-vote victory and an 80-vote landslide. "And I just think that 80 in the Senate is a very ambitious goal, knowing that you have to get to a significant amount of tax relief to do that. . . . That's the really tough needle he's got to thread."

But Sen. Lindsey Graham, R-S.C., laid the odds with Obama. "The package of tax cuts is probably the most important thing he did in terms of getting Republican support," Graham said. "I think he could get 80 votes."

'A Balancing Act'

Whether Democratic leaders, tax writers and appropriators pursue large numbers of GOP votes, or simply push through a package that can pass in both chambers with minimal minority support, will soon become apparent. Committees in both chambers are moving toward markups next week.<?p>

The Obama team has publicly cast the stimulus effort in non-ideological terms and argues it is not doing anything for the sole purpose of attracting Republican votes. But Republican and Democratic members of Congress have different ideas about spending and taxes and how to stimulate the economy. It remains possible that few Republicans will vote "yes," even if Democrats grant them significant concessions.

Some liberals, including Rep. Patrick Kennedy, D-R.I., say Democratic leaders have already done too much to placate Republicans. "I think we ought to aim much, much higher," Kennedy said Thursday after seeing House Democratic leaders' $825 billion stimulus proposal, including $550 billion in spending and $275 billion in tax cuts. "We're being a little too politically sensitive to the conservative right and their harping on deficits. Coming to the middle on a political spectrum does not make it right."

While Obama's economic advisers have already dropped one piece of their plan—a tax credit for companies that hire or avoid laying off workers—they say other proposed business tax breaks would create jobs more quickly in the near-term than infrastructure projects.

"This is a balancing act," said Rep. Elijah Cummings, D-Md., arguing that Obama is trying to set a precedent that will win him GOP cooperation if, as expected, Democrats try to overhaul the health care system and advance other contentious measures later in the session. "What the president-elect is trying to do is set a tone not only for this legislation but for legislation in the future."

Republicans Regroup

The dynamic is in plain view as Democrats strive to put their imprint on Obama's emerging stimulus proposal, and as the smaller, post-election Republican caucus struggles with how to respond to the popular president-elect.

Some conservative Republicans have blasted the emerging proposal's hundreds of billions of dollars for infrastructure spending. An alternative proposal from the conservative House Republican Study Committee consists entirely of tax cuts.

Others, including GOP leaders, have reacted more cautiously, supporting the tax cuts but questioning the details and warning against adding large amounts of spending. But it's clear they are relying on Obama to bring them into the negotiation—not congressional Democrats.

"The president-elect has reached out to us as far as advocating putting more money into the pockets of those who spend and invest it, create incentives for long-term investment and job creation. That is music to the ears of House Republicans," Minority Whip Eric Cantor, R-Va., said.

But Cantor said he does not know if House Democratic leaders share that sentiment. "As far as our colleagues on the Hill, we'll have to see how they respond and exactly what is in the package," Cantor said.

Democrats on Board

While many Senate Democrats have questioned the job-creation value of Obama's business tax proposals, and the size of the tax cut component compared to the spending package, the stimulus plans remain on track. But the complaints demonstrate the difficulty of Obama's goal, said Sen. Claire McCaskill, a Democrat from Missouri. "There's been some pushback from the Democratic Caucus on how willing he is to embrace some of the ideas put forth by Republicans on tax cuts," McCaskill said. "I hope he continues to stand his ground."

Barney Frank, D-Mass., chairman of the House Financial Services Committee, warns that policy—not vote totals—should drive the process. "I wouldn't sacrifice anything to get 80 votes in the Senate," he said. "I would disagree with that goal."

Still, congressional Democrats may also have an interest in making the stimulus a bipartisan affair—particularly if it fails to improve the economy. "This is something you want multiple ownership of," Graham noted.

Richard Rubin and Edward Epstein contributed to this story.

By Drew Armstrong, CQ Staff

JANUARY 15, 2009 -- Legislation to reauthorize and expand the State Children's Health Insurance Program is headed to the Senate floor, after a Senate panel on Thursday approved a draft bill that includes a provision to relax eligibility standards for legal immigrants and new citizens.

The Senate's draft legislation, written by Finance Committee Chairman Max Baucus, hewed closely to SCHIP bills passed in the 110th Congress. It was approved by the panel 12-7, after several amendments.

As originally written, Baucus's draft bill would expand the SCHIP program by $31.5 billion, reauthorizing it for four and a half years. It would give health insurance coverage to about 4 million previously uninsured children and adults.

The House passed its own very similar SCHIP bill (HR 2) on Wednesday.

An amendment by Sen. John D. Rockefeller IV, D-W.Va., to allow legal immigrants and new citizens into the program without the standard five-year waiting program will likely boost the cost of the bill by several billion dollars. A similar provision exists in the House bill, and its absence in the Senate draft was the only major point of disagreement between the two.<?p>

The nearly five-hour markup turned contentious at points, with Republicans, including ranking member Charles E. Grassley of Iowa, claiming that Democrats had shut them out of the process and betrayed compromises worked out on similar bills in the 110th Congress.

"It makes me damned disgusted," Grassley told the panel. "We had all sorts of cooperation.... Now it's kind of feeling like you're thrown overboard."

Grassley and other Republicans were upset about the immigrant and new citizen waiting period provision, looser citizenship and residency documentation requirements, changes to how the bill deals with people transferring from private insurance to SCHIP—a phenomenon known as "crowd out"—and also the bill's slightly loosened provisions on income limits.

Doing a full SCHIP reauthorization would make health care overhaul only more complicated later in the year, Grassley argued. "In a lot of ways it makes more sense to do a simple extension of SCHIP for two years so we can work through how to fold SCHIP into a program that covers everyone," he said.

That lack of comity was a preview of the debate triggered by Rockefeller's amendment. His proposal's adoption, 12-7, set off a lengthy immigration discussion and a slew of Republican amendments.

Republicans argued that the eliminated waiting period would encourage illegal immigration.

Sen. John Ensign, R-Nev., also argued that if Congress eventually tackled immigration reform, it would suddenly add millions to the SCHIP program as once-illegal immigrant children suddenly became legal and eligible. "If we cross the line here... we will be taking on a huge number of additional kids," Ensign predicted.

Republicans offered several motions to require more stringent documentation of legal residency or citizenship. All failed, with the exception of an amendment by Grassley. Grassley's amendment would require states, when they re-check the income levels of SCHIP enrollees, to also review their citizenship or legal residency status. In that way, SCHIP enrollees who lost their legal residency while still in the program would be disenrolled. The amendment was adopted by voice vote.

The committee also adopted an amendment by Sen. Olympia J. Snowe, R-Maine, to allow states the option to offer dental insurance to children who are privately insured but do not have dental coverage.

The bill now goes to the Senate floor. Senate leaders are planning to amend Baucus's draft language into the House bill, then send it to conference to resolve the differences.