Outlook On Health Care Reform

By Bonnie Hogue Duffy and Allison H. Giles
October 30, 2008

For decades, Washington policymakers have focused on health care coverage, cost and quality issues. For most, the overarching goal has been to develop a first-rate health care system that improves health care quality and coverage while at the same time reducing cost. Because there are so many players in the health care system, making a change in one part of the health care landscape could have significant consequences for the others. As a result, efforts to enact comprehensive health care reform have failed, and have left in place a patchwork of laws and regulations that address health care in a piecemeal fashion.

In 2009, we are certain to see an effort to pass comprehensive reform legislation, and all of the players in the health care system will be affected. If Senator Obama is elected president, his plan will provide the starting point for Congress.

Obama’s Plan

Health care reform is a top priority for Barack Obama. In his campaign for president, Senator Obama has been clear that health care is a top priority, and has presented the broad outlines of his plan to focus reform efforts where the current system is not working. Obama has promised health reform that will increase coverage, improve quality of care, decrease costs, and promote prevention efforts.

• Coverage. Under Obama’s proposal, most individuals would continue to receive coverage through their employer. Individuals who are uninsured would have access to a new public plan—modeled on the current federal plan for federal workers (Federal Employees Health Benefits Plan or FEHBP) or to private coverage through a “National Health Insurance Exchange.” This Exchange would also reform the private insurance market, incorporating a ban on excluding coverage due to health status. The plan includes a “pay or play” mandate for employers to provide insurance or contribute a percentage of payroll toward the cost of the national plan. Small businesses would be exempt from this mandate and would receive tax benefits to help purchase coverage. Subsidies would be provided to low income persons. The plan includes a coverage mandate for all children, and Medicaid and SCHIP programs would be expanded.
• Quality and Cost. Senator Obama’s proposal includes an array of health system changes to improve quality, reduce waste and drive down health care costs. Proposed system changes include the use of comparative effectiveness research, disease management and care coordination, transparent quality and cost and reform of medical malpractice policies. Another series of proposals are aimed at reducing health care costs: investing in electronic health information technology; preventing Medicare waste and fraud; and increasing competition in the insurance and drug industry. Many elements of these reforms have support from Democrats and some Republicans. While all of these reforms have the potential to impact savings and coverage, some will likely require additional spending by the federal government.
• Prevention. Obama’s plan would expand and reward worksite prevention strategies. He has also proposed to increase funding targeted to train the workforce, expand community based prevention initiatives, and increase support for state and local government public health programs.

The Path to Reform

With the House and Senate in Democratic hands in 2009, Democrats will lead the way on health care reform. Democrats in Congress have said they are committed to making a comprehensive effort to reform our health care system, and work is underway now to lay the foundation for legislation next year. While Democratic members of Congress have refrained from public activity during the presidential campaign, many are working behind the scenes to craft or re-craft their own proposals, bills and principles. The unveiling of these proposals will be guided by the outcome of the election and the leadership shown by our next president.

Reaching Consensus. While Democrats are sure to rally around health care reform, maneuvering through the diverging views within the party will be challenging. For example, some Democrats have argued for an individual mandate, while others believe in capping the tax exclusion for health benefits as a way to finance reform. Neither of these issues has consensus among Democrats. Champions of reform will have to negotiate many complex policy and political issues, such as:

• Will states be allowed to continue their own reform efforts in the context of comprehensive reform at the federal level?
• Can the interests of small and large businesses be balanced to maintain the support these groups have voiced for reform?
• Will the Congressional Budget Office update its scoring model to credit savings found in private sector health plans (such as preventive benefits)?

By all accounts, Senator Obama’s experience in the Senate and ability to create a dialogue with all members of the Democratic caucus bodes well for a strong working relationship between a Democratic Congress and an Obama Administration. Senator Obama’s blueprint for reform threads the needle in a way that avoids certain pitfalls experienced in 1994:

• Small businesses are exempt from his “pay or play” mandate, and large businesses that provide coverage now could continue in much the same manner as today.
• Obama’s plan provides a clear view of reform, yet omits much of the second level detail. That will ensure Congress plays a significant role in shaping the plan.

Medicare will be a big part of this debate. Many Democrats believe coverage through a public program is part of the solution for the uninsured. Obama’s plan would create a public program (similar to what members of Congress have through the FEHBP for the uninsured) and many leading Democrats have sponsored legislation that would allow individuals to “buy-in” to Medicare. Congress could also turn to Medicare savings as a way to finance health reform. Senator Obama and many Democrats have called for reductions in payments for Medicare Advantage and for Medicare prescription drugs, among others. And certainly any of the proposals for Medicare savings debated by Congress in 2007 and 2008 could be on the table, including proposals supported in the past by President Bush, Senator McCain and other Republicans. Depending on Congress’ appetite for deficit reduction, some members could turn to Medicare savings as a means to reduce the deficit, leaving fewer resources for reform legislation. Regardless, with the expiration of the Medicare “physician fix” in September, Congress is likely to enact major Medicare policy changes in 2009.

Republicans will play a key role -- even with large margins for Democrats, history tells us that most large-scale policy changes need support from both parties. In general, Republicans share the goal of improving coverage and quality while reducing cost. Fundamental philosophical differences exist, however, between Republicans and Democrats on how best to achieve this. In the past, Republicans have resisted efforts to increase the federal government’s role in setting prices and making clinical decisions. They have been very cautious about enacting federal mandates that would dictate coverage decisions to states or to plans. Instead, Republicans have focused their attention on ways to enhance individual responsibility and patient-centered decision-making. Many Republicans are likely to oppose the Obama plan, believing employers would drop coverage, leading to a nationalized health care system. Concepts such as medical savings accounts have been advanced under the theory that individuals who are invested in the up-front costs of their own health care will make more informed decisions that will ultimately reduce health care spending and utilization.

By all accounts, Republicans will lose a significant number of Congressional seats in the November election. If the Democrats are able to secure 60 seats or near 60 in the Senate, they will then be able to limit Republican filibusters on debates. This will strengthen the hand of the Democratic majority in the Senate as well as the moderate Republican Senators.

The dwindling number of moderate-leaning Republicans in both chambers could have an impact on health reform efforts. While Republicans would be expected to play a less active role in the initial year of an Obama Administration, they could be looked to on important issues such as health care in the out years. Interestingly, many of the more moderate, now-retired Senators expressed support for the broad concept of universal coverage -- Senators such as John Chafee (RI), John Danforth (MO), Dave Durenberger (MN), Lincoln Chafee (RI), Bill Cohen (ME), Alan Simpson (WY) and John Warner (VA). Now, there are significantly fewer moderate Republican Senators such as Senators Olympia Snowe (ME), Susan Collins (ME), and Arlen Specter (PA). As a result, the Senate has become even more polarized; that could hinder attempts at bipartisan legislation on comprehensive health care reform. The House has seen similar declines in the number of moderate Republicans. Republican House members that have a moderate stance on health care are fewer in number. What remains in the House Republican Conference are, in general, conservative members who have more limited experience with health care reform legislation. Nearly all have been slow to embrace the concept of universal health coverage.

What Happens Next

With the expected gains in Democratic seats in both the House and Senate, combined with the likelihood of an Obama Administration, the time could be ripe for enacting significant changes to health care. Many small to mid-size businesses now believe health care costs are so high in the small group market that a more comprehensive solution would make them more competitive in the business world. Some large employers, faced with rising premiums, are also calling for reform. This dramatic shift in support could have significant consequences for passage of a comprehensive package in an Obama Administration.

Action on health care will start early. We will gain insight into our new President’s direction early in 2009. The State Children’s Health Insurance Program (SCHIP) is up for reauthorization in March 2009. Some Democratic lawmakers would like to see passage of an SCHIP bill that would be similar in scope to last year’s bill (vetoed by Bush), which would provide an early victory for an Obama administration. Others argue that delaying the popular SCHIP policy changes could help to drive a more comprehensive reform effort. Still others may want to seize the opportunity of a Democratic Administration and improve on the earlier SCHIP legislation. One thing is certain - Congress must act by March to continue the SCHIP program. This will give us some clues about what lies ahead. A September deadline for passage of legislation to prevent Medicare cuts to physicians could also provide a vehicle for reform.

Senator Kennedy, Chair of the Senate HELP Committee, has announced his intention to introduce comprehensive legislation early next year. His legislation is expected to follow the outlines of Senator Obama’s plan and reflect the experience of Massachusetts. In addition, his legislation is expected to include new policies on insurance market reforms, comparative effectiveness, health information technology, health disparities, transparency, disease management, medical home payment, and prevention. Senator Baucus, Chair of the Senate Finance Committee, is also working on a comprehensive health care reform proposal reported to increase coverage, contain health care costs, reform the delivery system and medical malpractice, implement comparative effectiveness policies and health information technology and make improvements to Medicare. Both committees have already begun conversations about a unified package in an attempt to avoid jurisdictional problems that could dampen any package from moving to the Senate floor.

Work is underway in the House of Representatives as well. Ways and Means Chair Rangel and Health Subcommittee Chair Stark will play key roles. Energy and Commerce Committee Chair Dingell and Health Subcommittee Chair Pallone will also be central to crafting health reform legislation. The House Education and Labor Committee, with jurisdiction over ERISA, will also be involved in these efforts.

Clearly, our nation’s financial situation will have an impact on the ultimate outcome of this debate. To date, Obama and other Democratic leaders have stated that our country cannot afford not to act on health care issues. For years, Democrats have argued that access to affordable health coverage is the key to a healthy population and a healthy economy. However, what could slow reform efforts is the economic reality that faces the United States. While many believe the recent financial rescue plan has prevented the U.S. economy from going into a depression, serious economic questions remain that will carry over to 2009 and certainly have an impact on federal efforts to reform health care.

Concerns about continued deficit spending and a focus on the broader economic picture may delay policymakers’ efforts to revamp our health care system. Moreover, the state of the economy becomes the easiest and most potent weapon against additional federal spending for those who oppose the Democratic plan. And, even before the current economic crisis, many policy-makers acknowledged that there is not an easy or obvious way to finance comprehensive health reform. To finance his plan, Senator Obama has proposed rolling back the Bush tax cuts for certain wealthy Americans and retaining the estate tax at its 2009 level. Capping the tax exclusion is another policy said to be under consideration.

Incremental Reform? At this point, the appetite for comprehensive reform remains. However we could see passage of incremental reforms that lay the groundwork and build the infrastructure for health system reform. Insurance market reforms, health information technology, transparency and comparative effectiveness policies are likely to be employed under this scenario. We will be watching closely during the transition for clues about which elements – in addition to SCHIP – Obama may choose as priority piecemeal victories, though at this stage those involved in the Obama transition are united in their belief that Obama must seize the moment and push for comprehensive reform during his first year or two in office.

Everyone in the health care sector will feel the impact. Whether or not Congress is able to move forward on a comprehensive solution, we still expect significant policy changes to many aspects of the U.S. health care system. For example, Congress is expected to conduct extensive oversight and examination of the health care industry as well as an examination of health care programs such as Medicare Part D and Medicare Advantage.

ABOUT QGA’S HEALTHCARE PRACTICE

QGA has built a significant healthcare practice, creating positioning strategies for clients and guiding them through complex regulatory and legislative challenges. The expertise of the healthcare practice has added a significant new dimension to the effective relationships we bring to bear inside Congress, the White House, the Office of Management & Budget, the Department of Health and Human Services, and the Centers for Medicare and Medicaid Service. QGA’s clients in this area have spanned the entire landscape of healthcare interests, including but not limited to large employers, hospital systems, long term care providers, insurers, and drug and biotech companies. Several examples of recent successes are described below.

• Hospitals. QGA was successful in its efforts to extend financial relief to certain hospitals affected by the Medicare imputed rural floor wage index formula. This extension of policy, through CMS regulation, will now allow these hospitals to plan and compete for patients and employees more effectively with hospitals in neighboring states.
• Medical Equipment. QGA was successful in its efforts to pass legislation achieving statutory exemption for certain customized medical equipment that was scheduled to be part of a new Medicare competitive bidding demonstration program. QGA mobilized affected groups, including patient and provider groups to argue against the adverse effects of restricting access for people with severe disabilities who need individualized, custom-fit power wheelchairs and rehab devices.
• Fortune 100 Employer. QGA developed aggressive and proactive legislative and political strategies to advance a dialogue on comprehensive health care reform initiatives. Assisted with the formation and management of large coalition of employers to advocate private, comprehensive market-based reforms.
• Long-term care insurance company. QGA developed and implemented a successful strategy to handle Congressional oversight hearings. Helped to raise the company’s profile with key decision makers at the Department of Health and Human Services, within the presidential campaigns and in Congress.
• Health Reform Coalition. QGA helped conceive and launch a prominent health care reform coalition, a group of employers and business leaders committed to moving healthcare reform forward at the state and federal levels. Faced with a crowded marketplace of healthcare initiatives, QGA was able to help this coalition differentiate itself and its agenda from others. The coalition’s Washington, D.C. launch event in May 2007 resulted in a front page photo in Roll Call, an editorial in the Los Angeles Times and articles in numerous publications including the Wall Street Journal and New York Times.

QGA’s clients in the healthcare sector have included:

The QGA Difference

Quinn Gillespie & Associates was founded in 2000 by Jack Quinn, former White House Counsel to President Bill Clinton and Chief of Staff to Vice President Al Gore, Ed Gillespie, former Republican National Committee Chairman, and Jeff Connaughton, former Clinton White House lawyer and previously on the staff of Senator Joe Biden during his chairmanship of the Senate Judiciary Committee. The firm provides public affairs counsel to leading corporations, coalitions, trade associations and public entities. One of the only Washington D.C. firms to thoroughly integrate government relations and communications services, QGA’s team of 30 professionals brings a bipartisan, multi-disciplinary approach to helping clients successfully manage public affairs challenges.

• QGA’s team of senior professionals has deep experience in the legislative, regulatory, political and communications arenas; our perspective affords a “360 degree view” of the business challenges our clients face.
• QGA’s political orientation and campaign approach make the firm particularly adept at devising and deploying fully integrated public affairs campaigns, including legislative and communications strategies, message development, third-party organization and outreach, grass tops and grassroots programs, advertising, media and global issues management.
• QGA is part of the WPP international network with a global presence in 106 countries.

QGA Team

QGA’s team of seasoned professionals represent diverse backgrounds including experience in media relations, crisis management, corporate communications, community relations, public relations, policy, foreign relations, political campaigns, the White House and Congress.

Bonnie Hogue Duffy
Bonnie co-manages the QGA Healthcare practice. She joined QGA in 2007 after having served as Director of Federal Policy at the Alzheimer’s Association. In this position, she developed and implemented the Association’s policy positions on federal issues. Bonnie’s 10 years of experience working in the United States Senate included serving as a professional staff member on the Senate Special Committee on Aging, working for Chairman David Pryor on Medicare, long-term care and health care reform. She also worked as a legislative assistant to Senator Jack Reed and as Senior Health Policy Advisor to the Senate Democratic Policy Committee. Bonnie previously worked as Director of Health Policy at the American Association of Health Plans (now America’s Health Insurance Plans).

Allison H. Giles
Allison co-manages the Healthcare practice at QGA. She brings more than a decade of both legislative and executive experience to the firm. Allison joined the firm in January 2007 after serving as Chief of Staff to the House Ways and Means Committee under Chairman Bill Thomas (R-CA). During her six years of service in this position, she advised the Chairman and Committee Members on policies within the Committee’s jurisdiction including legislation affecting Medicare and health care, taxes, trade, welfare and Social Security policies. Prior to this, she spent an additional six years working on the Committee as Professional Staff on health care issues and as a Legislative Assistant for Representative Thomas. Before working on Capitol Hill, Allison served for two years as the Assistant Chief Counsel for Health Policy at the U.S. Small Business Administration. Allison also worked as a Registered Nurse for nearly ten years at several major teaching hospitals. She specialized in the area of medical oncology, specifically gynecological oncology and Bone Marrow Transplantation.

Jack Quinn
Mr. Quinn is the founder and co-Chairman of QGA. Before founding the firm, Mr. Quinn was a partner in the law firm of Arnold & Porter for twenty years where his practice was focused on public policy. He has been a long-time advisor to Democratic leaders and has served as counsel to numerous Democratic campaigns. In addition, he served as White House Counsel for President Bill Clinton, and as Chief-of-Staff and Counselor for Vice President Al Gore.

Jeff Connaughton
Mr. Connaughton is a founding principal of QGA and Vice Chairman of the firm. Mr. Connaughton previously served in the Clinton White House and as staff to Senator Joseph Biden when he chaired the Senate Judiciary Committee. Mr. Connaughton provides strategic and governmental and public affairs advice to a wide range of clients. He also has served as a political commentator on a variety of television news shows, including NBC’s ‘Meet the Press,’ CNN’s ‘Crossfire’ and as a frequent commentator on FOX News.

David Hoppe
As president of QGA, Dave is one of the firm’s most seasoned Capitol Hill veterans. Dave brings more than 30 years of experience working for senior Republican members, including six years as Chief of Staff to then-Senate Majority Leader Trent Lott. Dave maintains extensive contacts in the House, Senate, federal agencies and Bush Administration. He provides clients with a unified base of Republican members, working with the Republican leadership in the House and in the Senate to find the most effective champions to influence the debate. Dave brings this critical piece of strategic planning to each client he represents and has counseled them on how to benefit from a low-key but efficient “whip” operation, a subtly he learned from his years on Capitol Hill.

Kevin Kayes
Kevin joined QGA after having served as Chief Counsel to Senate Majority Leader Harry Reid (D-NV) and helped manage policy matters for the Leader within the jurisdiction of the Senate Commerce, Banking, HELP, Judiciary, Finance and Government Affairs Committees. Prior to that, Kevin served as Staff Director and Chief Counsel on the Senate Commerce, Science and Transportation Committee for Senator Ernest F. Hollings during his tenure as both Chairman and Ranking Minority Member from 1999 – 2004. In his early Hill career, Kevin served as Assistant Floor Parliamentarian from 1987 until 1999 under both Republican and Democratic Leaders in the United States Senate and began his career in Congress as a Legislative Assistant to Congressman Adam Benjamin, Jr. (D-IND) a member of the House Appropriations Committee and Chairman of the Transportation Appropriations Subcommittee.

Sue Garman Kranias
Sue is one of QGA’s senior communications strategists, bringing nearly 20 years of experience in public affairs and public relations to her work on behalf of QGA clients. She is an expert at crisis and issues management and specializes in corporate strategy and development of broad-based public education programs. She also has significant experience working on energy, environmental, healthcare, high-tech and biotech issues. During the course of her career, Sue has been involved in issues as varied as crisis management surrounding the introduction of new reformulated gasolines; public education on electricity deregulation; communications for major corporate mergers and proxy campaigns; and issues management around new product introductions. Prior to joining QGA in 2001, Sue was a Managing Director and member of the public affairs leadership team at Burson-Marsteller, a global public relations agency.

Christopher McCannell
As Chief of Staff to Congressman Joseph Crowley who chaired the U.S.-India Caucus in the U.S. House, Chris worked closely with bi-partisan Congressional Members, the Bush Administration, U.S. Department of State and Indian American stakeholders to pass the landmark U.S.-India civilian nuclear agreement. Chris also worked to promote a balanced energy policy for House Democrats specifically focusing on Entergy's Indian Point nuclear power plant and a proposed LNG terminal in Long Island Sound, both projects to help relieve New York City's growing energy needs. In addition, he has visited nuclear recycling facilities and worked with Congressman Crowley to build Democrat support of President Bush's Global Nuclear Energy Program (GNEP), and other steps to promote clean energy. At QGA, Chris is currently monitoring legislation and intelligence for a major international-based hedge fund client including: Iran's nuclear enrichment program, US-UN-EU policy in regards to Iran and legislation and policy by Congress and the Administration to limit proliferation by Iran.