Physician-Backed Reforms Vanish In Shutdown-of-the-Month Game

MANAGED CARE January 1996. ©1996 Stezzi Communications

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Lead Story

Let's recap the action so far. The brouhaha over vetoes, shutdowns and the rollback of the Great Society actually revolves around three related issues: agency appropriations, the debt-limit extension and the reconciliation bill controlling entitlements and taxes. Republicans, trying to link the three, hope to force the President to cut entitlements to the max and/or turn them over to the states in order to prevent federal fiscal disaster. They have already prevailed on him to agree to balance the budget in seven years.

The fight is tied to the appropriations package for many departments. Since the President initially wouldn't agree to balance the budget in seven years, the GOP decided to hold up the money for many government agencies. This stance resulted in the November government shutdown. In response, the President reluctantly agreed to the seven-year goal and sent another plan to the Hill, his third this year. It contained a smaller tax cut and shallower cuts in Medicare and Medicaid than the Republicans would like and the majority immediately proclaimed it inadequate, pushing things back to square one.

Obviously, the handling of health issues affects the prospects for balancing the budget. The President's seven-year plan calls for smaller premium increases for Medicare (to $77 per month by 2000, versus the Republicans' $88.90), resulting in cuts of $124 billion, less than half the Republicans' $270 billion cut. Under the President's proposed approach, hospitals would take a $50 billion hit instead of the $94 billion cut they would suffer under the GOP proposals. Physician reimbursement would be reduced by $20 billion less than under the GOP plan.

Incidentally, two highly touted pluses for physicians — exemption of physician-owned labs from the Clinical Laboratory Improvement Amendments (CLIA) rules and relaxation of antitrust regulations allowing doctors to form alliances — were removed from the reconciliation bill because the Senate could not muster the 60 votes necessary to include a nonbudget item in a budget bill. As for the proposed medical malpractice changes, the Senate had axed them earlier.

Also entering into the debate has been the little matter of how much money the government would even have to spend. The Republicans weren't interested in dating "Rosie Scenario." But the President was. He accepted a report from the Office of Management and Budget that gave him $475 billion more to play with over the next seven years than did the Congressional Budget Office, which advised the Republicans.

The Medicaid stalemate is not so much about money as it is about the President's insistence that the poor and disabled be guaranteed coverage instead of being put at the mercy of the states. The President says the GOP's block-grant plan is a budget deal-breaker.

Instead, the White House unveiled a per-capita caps plan for Medicaid that would set separate cutoffs for federal payments to the states for people with disabilities, people without disabilities and the elderly. Remarkably, this proposal was similar to one put forth by the Blue Dogs.

Yes, Blue Dogs. This group of conservatives led by two House members, Democrat L. F. Payne of Virginia and Republican Dan Schaefer of Colorado, proposes Medicare and Medicaid cuts somewhere between those championed by the President and those proposed by the Speaker of the House.

The upshot of all this is that the President vetoed the Republican Medicare/Medicaid bill and sent everything back to the table, causing the GOP to hold up the agency appropriations once again. A second government shutdown began in mid-December, although the White House and the Republicans were only 0.2 percent apart on the appropriations. Fewer workers were involved than in November because the GOP did manage to get seven of the 13 agency appropriations bills passed.

Could all of this dribble on indefinitely? Of course, except for three little words: the 1996 elections.

FTC Appraising Efficiency of Delivery Modes

Federal Trade Commission Deputy Director Mark D. Whitener says that over the next three months, the FTC will study the efficiency of various provider arrangements. The study will consider how well the needs of buyers such as self-funded employer plans are being met by existing networks. Even types of plans that might be perceived as violating present antitrust provisions will be studied. The relationship between efficiency and joint pricing, for example, is definitely a topic. Parties interested in providing information may call Whitener at (202) 326-2845.

Take As Needed...

The Health Care Financing Administration has issued its 1996 fee schedule updates for physicians, and no one is getting rich. The average increase is 0.8 percent, and primary care physicians can expect 2.3 percent less.... The House Commerce Oversight and Investigations Subcommittee again roasted Food and Drug Administration Commissioner David Kessler about the leisurely pace of drug and device approval. Among the issues was wider access to experimental drugs for AIDS patients than for cancer patients.... Ironically, at about the same time, the President was empowering Vice President Al Gore to parley with pharmaceutical companies about speeding development of AIDS therapies. And an industry survey reported that over 100 AIDS drugs are in development, more than ever before.... Perhaps some foreign-born health care workers will contribute to a cure. The Senate Judiciary Subcommittee on Immigration voted to require foreign health care workers other than physicians to authenticate their degrees and licenses and to prove minimal English proficiency. On the same subject, the Justice Department withdrew its proposal to prohibit use of the H-1B nonimmigrant classification for foreign medical school grads coming to the U.S. for their residencies. The provision, according to a record number of 325 vociferous respondents, would have crippled residency programs around the country.

Jean Lawrence