When it became clear that the president and Congress would not agree on comprehensive reform, health care did not disappear from the political scene. Instead, the political battle in Congress over the size of Medicare savings needed to balance the budget attracted so much attention that it may well have created the defining issue of the 1996 presidential election campaign.
In addition, as Americans saw more changes and restrictions in their own health-care coverage, other congressional initiatives made household words out of such phrases as “drive-through deliveries,” “block grants,” “pre-existing conditions,” “job lock,” “portability” and “medical savings accounts.”
Feeling the pressure to do something, Democrats and Republicans worked together to quickly pass the Kassebaum-Kennedy bill (Health Insurance Portability and Accountability Act of 1996). That law is designed to make it easier for people with health problems to change jobs without interrupting their health-care coverage.
Yet, as analysts ponder the benefits of the law and the significance of recent slower growth in health-care costs, little legislative progress on health-care issues is likely in the near future.
That conclusion is based on a series of informal, semi-structured conversations with administration officials and senior congressional staff in Washington.
They included roughly equal numbers of individuals from both parties and both houses of Congress. Through those interviews in months preceding the November elections, I tried to find out what–if anything–the president and the Republican-controlled Congress will do to resolve some of the widely publicized health-care problems.
The discussions strongly suggest that the four bitter years of fighting that have raised awareness of health-care problems also have produced a political chemistry that is too rancorous to permit passage of significant legislation in the near future.
It seems clear that Medicare is where the legislative activity in the 105th Congress will be focused, with some additional attention to managed-care issues. Action in other areas, such as coverage of uninsured people and tax policy, might follow, but it is far less certain.
The value of what will be done with Medicare and managed care, however, is open to question.
While the prospects for congressional and White House activity surrounding the issue of Medicare solvency are extremely good, the action is likely to be mere window-dressing. The following comments from discussions concerning Medicare sum up the problem: “The 113th Congress will hate us” and “Just as the Congress and the public learned to live with budget deficits, maybe we can learn to live with Medicare trust fund insolvency so long as spending continues at popular levels.”‘
This view, that politically hazardous action might never be necessary if temporizing measures go on long enough, reinforces the widespread reluctance to take on serious problems until their effects generate overwhelming popular demand for action.
Republicans and Democrats perceive that two serious financial issues for Medicare should be at the top of the congressional agenda: spending levels and future insolvency.
The first, limiting short-term spending levels, seems well within reach, given the pressure to balance the federal budget. The second, the inevitable arrival early in the next century of the long-predicted and repeatedly deferred insolvency of the Part A Trust Fund, is widely accepted as being in need of serious action but is seen as highly unlikely to receive adequate attention.
Both sides agree that the 105th Congress is likely to enact reductions in Medicare growth on the order of $120 billion to $150 billion over six years. Such reductions would have two effects: They would forestall the Part A insolvency for several years and–to the extent that they actually amount to net reductions in federal spending–would help efforts to project an overall balanced federal budget.
How these reductions would be accomplished is not viewed as highly controversial. The president has proposed a transfer of home health-care coverage from the Part A Trust Fund to the Part B Trust Fund. Unlike the Part A Trust Fund, the assets of which are essentially limited to payroll taxes and interest and which can become insolvent when expenditures exceed revenues from those sources, the Part B Trust Fund is supported by a combination of general revenues and premiums paid by enrollees and thus does not face insolvency.
Such interfund transfers would help prolong the Part A fund’s solvency, but they would not reflect any net reduction in total federal spending.
Other savings would come from adjustments in the payments to hospitals and doctors and by reducing federal payments to HMOs in which Medicare beneficiaries enroll.
There seems to be remarkable consensus that short-term spending reductions could postpone insolvency from about the year 2001 until the year 2010 or so. Solutions to the long-term problem are widely regarded as nearly impossible.
The aging of the post-World War II Baby Boom and the persistence of relatively low fertility levels will reduce the ratio of workers to beneficiaries. Simultaneously, increasing life expectancies will continue to intensify the demand for Medicare services. Health-care costs most likely will grow faster than general inflation.
Policymakers agree that this combination of factors will make it impossible to maintain Medicare spending growth at historical levels.
Many Republicans feel that their efforts toward a long-term solution were grossly misrepresented and led to the loss of any opportunity to win the White House. Many Democrats believe that the Republican agenda really is to undermine federal entitlement programs and pay for tax cuts by enacting large spending reductions and privatizing the Medicare program.
As a result, no one anticipates that the 105th Congress–or, perhaps, any Congress to be seated during the next decade–will bring about a resolution to the long-term funding imbalance.
In addition to the stalemate caused by political hostilities, neither Republicans nor Democrats seem willing to share the political consequences of enacting the Draconian measures that currently are viewed as necessary: means-testing to get more from wealthy retirees; delaying Medicare eligibility to age 67 or even age 70; increasing the payroll tax; reducing benefits that Medicare will pay; or forcing beneficiaries to enroll in comparatively low-paid HMOs.
Perhaps new proposals that have some positive political appeal might provoke more timely action, whether from a national commission or elsewhere.
A hopeful note may emerge from the outcome of the election. Having both parties in power makes them vested in Medicare reform, rather than simply being backbenchers. Republicans in control of the Congress and Democrats in control of the White House ultimately cannot avoid being held accountable if a popular and important social program falls into ruin.
One can only hope that the victors will take advantage of the remaining years before insolvency to craft real solutions for the 21st Century.
Managed care is the other area that has drawn much attention as Congress focuses on emerging concerns about the quality of care and doubts over the long-term cost savings.
While past debate was viewed by Congress as a battle between organized medicine and the HMO industry, the new concerns are seen as grass roots.
Congress is responding with piecemeal legislation, and the motivation is reinforced by political concerns about job reductions from managed care cost-cutting.
Such proposals enacted in the 104th Congress include a provision requiring 48-hour maternity stays and another to ensure mental health benefits are on par with other benefits. The feeling now is that passage of these first two could encouraged an anti-managed care feeding frenzy.
A ban on physician gag rules nearly passed, and even the announcement by Humana that it would eliminate such clauses from its doctor contracts seems unlikely to inhibit passage of such a bill in the new Congress. Another likely candidate for consideration is a guarantee of access to emergency services.
Restrictions on doctor financial incentives and some type of “any willing provider” requirement also may have a serious chance of enactment.
Those interviewed widely agreed that such nickel-and-dime bills are symptoms of a growing concern on the part of consumers and legislators over the quality in some managed-care arrangements.
There also seemed to be significant interest in pursuing quality and access standards for Medicaid and Medicare managed-care plans. President Clinton soon will appoint a quality commission to address the topic broadly. The presence of such a commission, however, might moderate or delay anti-managed care legislation until its report has been prepared.
The probability of other change seems low.
Health-care coverage initiatives to benefit children and unemployed people are likely to be proposed but have little chance of enactment. Children are seen as well provided for under current Medicaid law, and the strong economy lowers concern for unemployment-related issues.
Besides, the effort required to pass the Kassebaum-Kennedy legislation needs time to settle. Whether the new law produces substantial increases in coverage–and most officials thought that its effects would be quite limited–any further efforts in the same area would run the risk of violating numerous compromises and agreements that were made to assure its passage.
Other tax proposals, such as medical savings accounts and amendments to the Employees Retirement Income Security Act, lack a constituency. Medical savings accounts combine health insurance with very high deductibles and tax-free savings accounts. ERISA is the little known but powerful federal law that gives private companies that self-insure their employees immunity from most state laws that would require them to offer particular benefits.
Medicaid is far less an issue than in the previous Congress, because spending has fallen unexpectedly, the bitter fight over block grants makes them unlikely to be revisited, and the administration is likely to enhance state flexibility through waivers.
The first month of the new Congress and the president’s second term has been filled with expressions of interest in working together to solve some of this nation’s problems.
My sense, however, is that the likelihood of bipartisanship actually producing significant health-care legislation is very low. We will know the answer in less than two years; I, for one, hope that my pessimistic predictions are entirely wrong.
