OMB Director Orszag Offers No Specifics on Administration’s Overhaul Plan at Hearing, Says Congress Should Decide How Money Is Spent

White House Office of Management and Budget Director Peter Orszag on Tuesday at a Senate Finance Committee hearing said he would not provide details of the Obama administration's plans for overhauling the U.S. health care system, the AP/Miami Herald reports. Orszag told "lawmakers that deciding how the money is spent is largely up to them," according to the AP/Herald. Orszag said, "Let me just note immediately, so that perhaps we can avoid the typical Washington game of gotcha, the administration has been very clear that we put a significant down payment on the table," referring to the $634 billion included in Obama's 10-year budget proposal. He added, "But on exactly what the administration does and does not favor on the benefits and coverage side, you should not expect and you will not be receiving definitive answers from me."

According to the Herald, Orszag's response "frustrated Republicans and a few Democrats" at the hearing. Committee Chair Max Baucus (D-Mont.) asked Orszag, "How do we coordinate this? Is there anything that's off the table?" adding, "We need some help. This is not easy." Orszag said that coordination would take a team approach, adding, "There are lots of different ways of getting there but it's clear we have to get there." The Herald reports that senators "peppered Orszag with questions that he wouldn't or couldn't answer." Sen. Jim Bunning (R-Ky.) asked how much money the administration would need under its health care overhaul plan. Orszag said that the amount would depend on the approach (Werner, Miami Herald, 3/10).

Orszag also said that a comprehensive health care bill would have to be budget neutral over five or 10 years. "You have to invest to get savings later, but again, given our medium-term fiscal trajectory, we think the best way to move forward is to invest in a deficit neutral budget," he said. Baucus, who along with advocacy groups has expressed concern over whether attempting to completely pay for the plan in the short term could jeopardize an overhaul, asked whether aiming to pay for such an overhaul in a six-year window would be a mistake. Baucus and the advocates note that the Congressional Budget Office's scoring rules limit the agency from realizing the full potential of many cost-cutting measures. Orszag said that the concern is valid and that changes could be made. "There's a group of scorekeepers that should get together to discuss the rules; that would be a good thing" (Edney, CongressDaily, 3/10). According to Orszag, "One of the frustrations is that [there] has not been enough research done on quantifying the things that we're talking about," including an expansion of electronic health records, emphasizing preventive medicine and comparative effectiveness research (CQ HealthBeat, 3/10).

Republicans Begin Voicing Concerns
CQ HealthBeat reports that Republicans have largely agreed with the need for an overhaul, even if they disagree regarding the methods for achieving it. Senate Finance Committee ranking member Chuck Grassley (R-Iowa) said, "I haven't had a single Republican senator say to me we shouldn't be doing anything with health care." However, Republicans have expressed opposition to proposed payment cuts for Medicare Advantage plans estimated at $175 billion over 10 years, comparative effectiveness research and the introduction of a public insurance option to compete with private insurers (Armstrong, CQ HealthBeat, 3/10).

Grassley expressed concern that Obama's proposal to cut payments to insurers offering MA plans to help fund an overhaul would negatively affect rural states. Grassley said, "I want to make sure that we -- if we have a national system of health care -- it's going to deliver the same thing in Iowa as it does in California, because, for 40 years, it didn't" (Lengell, Washington Times, 3/11). However, Grassley said, "We haven't had to make any difficult decisions yet," adding that the "true test of this bipartisan process will be how we handle these details," such as what means of cutting costs will be included in the final bill. Grassley said he would not support any proposal that makes major changes to coverage for beneficiaries.

In response, Orszag said, "I know many people believe capitalism is founded on private markets, and it is," but "[w]hat it is not founded on is excessively high subsidies," referring to statistics that MA plans receive higher payments on average than traditional Medicare plans. Baucus said of the MA program, "We'll see how we can modify it, compromise. ... Everything is on the table. We need give and take" (Armstrong, CQ HealthBeat, 3/10).

MA Plans
Orszag on Tuesday at the annual conference of America's Health Insurance Plans said that the government will end overpayments to private insurers participating in the MA program, the AP/Miami Herald reports. Obama's budget proposes a system in which companies would compete to offer services in different geographic regions, with payments in each region based on the average bids submitted. The change would save $177 billion over 10 years, according to the administration. According to the AP/Herald, the federal government currently spends about $1.30 per MA beneficiary for every dollar it spends on beneficiaries in traditional Medicare. Orszag said, "I believe in competition. I don't believe in paying $1.30 to get a dollar" (Perrone, AP/Miami Herald, 3/11).

Baucus' Timeline
Baucus at the Senate Finance Committee hearing repeated his pledge to have a health care overhaul bill out of the committee by June and to the president before the August congressional recess. Grassley called that goal "ambitious but achievable." Baucus said in late April that he will hold a series of informal "walkthroughs" where legislation will be previewed for interest and advocacy groups (Armstrong/Wayne, CQ Today, 3/10).

CBO Director Questions Savings
CBO Director Douglas Elmendorf on Tuesday at a House Energy and Commerce Health Subcommittee hearing said that Obama's health care proposal may not result in large-scale savings desired by most advocates. He said that over the first 10 years, any major overhaul "might not yield substantial budgetary savings or reductions in national spending on health care." He added that some provisions might even result in higher costs. According to Elmendorf, "expanding use of disease management" likely would improve health and could be cost-effective, but the effort might not lead to reductions in spending because the number of people receiving such services is typically much greater than those who would avoid costly procedures as a result of the efforts (CongressDaily [1], 3/10).

Elmendorf also warned that seeking to cut costs in health care will be difficult because many people and companies benefit from these costs and because payment systems do not include incentives to encourage care providers to reduce spending. He said, "The available evidence suggests that a substantial share of spending on health care contributes little if anything to the overall health of the nation, but finding ways to reduce such spending without also affecting services that improve health will be difficult" (Armstrong/Wayne, CQ Today, 3/10). Elmendorf's testimony is available online.

States
States that did not support Obama in the November 2008 election likely will benefit the most from his proposal to expand health coverage to all U.S. residents, while states in which Obama won are "likely to take a financial hit," The Politico reports. "Red states across the south," which typically offer limited benefits to low-income residents, would receive billions of dollars to cover their large uninsured populations, while Democratic-leaning states, which typically provide more comprehensive benefits to these residents and have more high-income residents, would pay more in taxes under Obama's plan, The Politico reports.

Obama last week at the White House fiscal responsibility summit said, "Some of the issues surrounding health care -- the way it cuts isn't even going to be Democratic/Republican," adding, "There may be regional differences. There may be a whole host of other differences." However, Obama's supporters hope that if an overhaul is implemented and millions of uninsured people obtain coverage, it would "represent the kind of game-changing outcome that helps cement a permanent Democratic majority, turning red states blue," according to The Politico.

A Democratic official said, "A system of health care that promises basic coverage to everyone could be close to Social Security in terms of its transformative nature. It will be good for the country, and it may well have political benefits." The White House has planned meetings with several Republican governors to help promote its overhaul plans, seeking to gain their support (Gerstein, The Politico, 3/11).

Waxman
House Energy and Commerce Committee Chair Henry Waxman (D-Calif.) on Tuesday
at the American Medical Association's annual advocacy conference said that he supported changing the Medicare physician payment system as part of a larger overhaul effort and that he did not wish to eliminate private insurance from the U.S. health care system. He said, "We want to reward quality care and we have to have a dependable payments system."

Waxman also said implementing a single-payer health care system "is definitely not something I want to do." However, he said that he did support Obama's proposal to create a public insurance option to provide coverage for uninsured U.S. residents but that he did not want to create a plan that would force out private insurers. He also reiterated his intentions to have a health care overhaul bill out of his committee before the August congressional recess (CongressDaily [2], 3/10).

Opinion Piece
Although some have suggested otherwise, the "reality is that if we want to fix the economy, we can't afford not to tackle health care," Nancy-Ann DeParle, director of the White House Office for Health Reform, writes in a Boston Globe opinion piece. She notes that Obama has "acknowledged that his predecessors ... had tried unsuccessfully to tackle this issue" but "also offered his belief that this time it will be different." DeParle adds, "As a participant in the 1993-94 health reform effort, I can say that this time, it feels different already." Attendees at the recent White House health care summit included people "who worked to pass health care reform a decade ago" and "those who worked to defeat it," she writes.

While those participants "certainly didn't all agree on every aspect of how to fix the system, they all agreed that the one thing we cannot do is continue on the current course," DeParle writes. This is a change from the health care debate in the 1990s, when "many felt that if they couldn't have exactly the change they wanted, their second choice was no change at all," she says. She concludes, "With a focus on cutting costs, expanding coverage, and improving the quality of health care, and with the new sense of urgency across the spectrum, as Senator [Edward] Kennedy (D-Mass.) said on Thursday, 'this time we will not fail'" (DeParle, Boston Globe, 3/11).

Broadcast Coverage
CNN's "American Morning" on Tuesday examined how the Massachusetts health insurance law could be a model for a nationwide universal health care system. The segment includes comments from Kennedy and Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector Authority, which administers the Massachusetts law (Gupta, "American Morning," CNN, 3/10). A transcript of the segment is available online.

MSNBC's "1600 Pennsylvania Avenue" on Tuesday examined whether health care is vital to the economy. The segment includes comments from John Podesta, president and CEO of the Center for American Progress and head of Obama's transition team (Schultz [1], "1600 Pennsylvania Avenue," MSNBC, 3/10). In addition, MSNBC's "1600 Pennsylvania Avenue" on Tuesday included an interview with Senate Majority Leader Harry Reid (D-Nev.) during which he responded to opponents of health care reform (Schultz [2], "1600 Pennsylvania Avenue," MSNBC, 3/10).

MSNBC's "Countdown with Keith Olbermann" on Tuesday included an interview with former Democratic National Committee Chair Howard Dean about the political consequences that will likely face anyone who challenges Obama's health care agenda (Shuster, "Countdown with Keith Olbermann," MSNBC, 3/10).