The home health industry has learned a few things about
Washington and politics over the years. One is that presidential
candidates usually have little or nothing to say about the
business; this year is no exception. Another is that most
home-health policy is made in Congress and carried out by
bureaucracies of the executive branch. Such detail work is well
under the presidential radar.
“It's more important what Congress does and who wins in
congressional elections than who wins for the presidency,”
says Jim Walsh, president of VGM Management, Ltd., and general
counsel of The VGM Group. Presidents do have definite, and
sometimes detailed, ideas on health care, but they tend to focus on
the big players. “People don't sit around and say,
‘Let's see what our health care policy for HME
is,’” he says. “They think in terms of doctors
and hospitals, not HME.”
But Walsh and other long-time observers know something else:
Ideas have consequences, often unintended or unforeseen. And
federal policy initiatives, in and beyond health care, can have an
indirect but profound impact on small, little-noticed industries
that depend heavily on the government for their economic
well-being. HME fits that description, and it could well be
affected by this year's presidential election no matter who
wins.
Four years ago, for instance, then-candidate George W. Bush
promised to push for a Medicare prescription drug benefit. He
finally got a drug plan through Congress in 2003. But in the
process, the HME industry suffered what many would call collateral
damage. As part of the Medicare drug bill — and as a way to
help defray the new program's high cost — Congress decided to
push ahead with nationwide HME competitive bidding. The bill also
has led to a sharp reduction in reimbursement for respiratory drugs
already covered under Medicare, along with payment cuts on a number
of other staple products.
Bush the candidate may not have had HME on his mind in 2000 or
in 2003. But in an indirect way, he was making HME policy all the
same.
This year, Bush and his challenger John Kerry have staked out
health care policies with clear differences, both in detail and in
basic philosophies about the role of government and markets. What's
not clear, now as in campaigns past, is how home care will fare
when Congress and the bureaucrats translate these presidential
initiatives into laws and regulations.
Here is what the two men, based on their past statements and
campaign documents, have in mind for health care in general, and
what their plans might imply for home care.
- Extending coverage
As in past election years, the millions of Americans without
health insurance (or with plans that cover too little of their
costs) are a front-and-center campaign topic.
Bush says he has made progress closing the coverage gap with new
health savings accounts (HSAs), the Medicare prescription drug
benefit, health insurance tax credits and expanding eligibility in
both the Medicaid program and SCHIP (State Children's Health
Insurance Program). He now proposes widening HSA deductibility,
providing a refundable tax credit to extend health insurance to
about 4.5 million more Americans, and allowing small employers to
join together in health plans to boost their bargaining power with
insurers. His proposals would cost an estimated $70 billion to $90
billion over the next 10 years.
Kerry would go a good deal further, covering more people and
running up a bigger tab. His plans include a larger tax credit
(about twice the size of the one proposed by Bush), full federal
coverage of children eligible for Medicaid, a reinsurance pool for
employers to cover their highest-cost employee health cases and a
wide offering of private health plans similar to the package
available to federal workers. His goal is to extend coverage to as
many as 27 million of the currently uninsured.
The price tag for all this is in dispute. Kenneth Thorpe, a
health care economist formerly with the Clinton administration, has
put the cost at $653 billion over 10 years, assuming that Kerry's
money-saving ideas work as promised. The Bush campaign says $1
trillion or more will be needed.
Kerry plans to fund some, if not all, of his programs by
rescinding the Bush tax cuts on high-income individuals. But he
also has spending plans elsewhere — like a $200 billion
education trust fund, expanded health care for veterans and salary
hikes for teachers — that need to be financed. And he, like
Bush, says he will cut the federal deficit in half over four years.
So even if HME has no part to play in the health plans announced so
far, it could be affected by a familiar phenomenon: the pressure to
free up money for new programs by squeezing the old ones.
Bush and Kerry do have ideas for lowering the cost of health
care without, as far as anyone can see, cutting reimbursements for
HME. Both say they would go after medical liability costs, though
Kerry opposes the Republican proposal to put caps on malpractice
damage awards. Both would push the use of electronic health records
and other information technology to cut health care overhead. Kerry
also would rely on disease prevention and health promotion programs
to reduce the care costs for obesity and chronic illnesses such as
diabetes.
As for prescription drugs, Kerry would go beyond the current
plan in at least two controversial ways: He would allow the legal
importation of drugs from Canada and would allow Medicare to
negotiate discounts from drug companies (only private insurers can
do that now). The pharmaceutical industry is especially wary of the
latter proposal, fearing that Medicare may get near-total buying
power over many drugs and, in effect, would be able to impose price
controls.
Last year's Medicare Modernization Act left a big problem
unsolved: the health plan's shaky financial condition. Earlier this
year, the Medicare Board of Trustees said the Medicare trust fund
could go broke as early as 2019, seven years earlier than projected
in 2003. The prescription drug benefit added a new cost, estimated
by the trustees at $500 billion over 10 years, without the kind of
restructuring that would absorb this expense and get Medicare on a
sound financial footing. Additional Medicare reform looks certain
to be an issue in the next four years, whether or not the
candidates want to talk about it now.
If and when Bush or Kerry decides to tackle Medicare, their
records suggest that they would take sharply different tacks.
Bush's reform ideas have been based on the principle that the plan
would run better and more cheaply if private players —
especially insurers — had a greater role and market forces
were allowed to work. The 2003 Medicare bill, as passed, moved
modestly in that direction.
Bush had originally proposed a more sweeping reform that would
have rewarded retirees for shifting from the traditional government
fee-for-service program to private plans. This initiative didn't
last long in Congress; Republicans as well as Democrats were
skeptical. One of the skeptics was John Kerry, who criticized the
final bill (he missed voting on it, but later said he would have
opposed it) but praised fellow senators for rejecting what he
called “President Bush's efforts to force seniors into
private plans.” In the same remarks to the Senate in June
2003, he made a point of noting that Medicare “is a
government program.” He added, “Often the government
comes under great criticism. But the truth is that this program has
worked.” So if Kerry has a plan for Medicare reform,
privatization probably isn't part of it.
What does all this policy talk imply for HME? One possibility is
that, if Bush can get more traction for his reform ideas in a
second term, home health companies may eventually find themselves
working with a less monolithic Medicare. Under privatization, they
might be dealing with a number of insurers, HMOs, PPOs and other
private entities, along with CMS. That might complicate their
business, but it would also give them more choices among payers.
With Kerry, the industry might see Medicare reimbursement continue
as a major revenue source for the industry. Good relations with the
bureaucracy would be more crucial than ever.
Whoever wins in November, HME will have to keep trying to
convince both Congress and government regulators that home care is
a money-saving business that should be seen as part of the
solution, not part of the problem. “The industry really needs
to convince CMS that we are a partner in the health delivery
process,” says Don Clayback, vice president of The MED Group.
“We need to get a place at the table.”
THE PRESIDENTIAL HEALTH PLANS IN BRIEF
George W. Bush
President Bush has created new health savings accounts (HSAs), a
prescription drug benefit under Medicare, funded 1,200 new or
expanded community health centers and provided a health insurance
tax credit to help workers who lose their jobs due to international
trade. He now proposes:
Allowing individuals to deduct 100 percent of their health
savings accounts (HSAs) premium for catastrophic health care
coverage from their taxes
Support for private plans to manage more Medicare
beneficiaries
Control of medical liability costs by placing caps on
malpractice lawsuits
Offering a health insurance tax credit to extend insurance to an
estimated 4.5 million Americans
Supporting association health plan (AHP) legislation allowing
small employers to pool together for health insurance
Supporting health care information technology (he has called for
electronic medical records for most Americans in 10 years)
John Kerry
Sen. Kerry says his plan would stop spiraling costs, provide
coverage for 95 percent of Americans, cover all children and allow
Americans access to the same health care plan as members of
Congress. He proposes:
Providing a “premium rebate pool” to help pay for
certain high-cost health cases. To be eligible, employers would
have to provide health coverage to all workers and adopt disease
management and care coordination programs.
Disclosing incentives manufacturers give to pharmacy benefit
managers to help bring drug prices down
Ending loopholes in the patent law that delay introduction of
cheaper drugs
Allowing the legal importation of drugs from Canada
Allowing Medicare to negotiate discounts from drug companies
Striking a compact with states for the federal government to
pick up the full cost of 20 million children enrolled in Medicaid
if the states agree to certain conditions
Creating a pool for business and the uninsured to join the
Federal Employees Health Benefits Plan (FEHBP)
Supporting health care information technology, electronic
medical records
