Intensive, behind-the-scenes lobbying by academic medical centers apparently paid off when Sen. Edward Kennedy (D-Mass.) unveiled a bill last week that would provide major new funding for teaching hospitals under healthcare reform.
Mr. Kennedy chairs the Senate Labor and Human Resources Committee. His legislation, which will be the starting point for the committee's reform deliberations scheduled to begin this week, closely resembles President Clinton's proposed health plan but includes some key alterations (see chart).
While the measure would retain an employer mandate for worker health coverage, for example, it would exempt all businesses with five or fewer workers, requiring them instead to pay a 2% payroll tax. In addition, the plan would eliminate mandatory purchasing groups in the president's plan, require all businesses with more than 1,000 workers to pay a 1% payroll tax and save $23 billion over five years, as opposed to adding to the deficit as the administration's plan would, according to Kennedy aides.
Additional taxes, including a higher cigarette levy and a broader payroll tax, and savings in other portions of the plan would finance the $183 billion in benefits above those in the Clinton plan.
The most crucial difference for providers was a provision that would direct an added $27 billion to academic health centers and medical education over five years. Under Mr. Clinton's plan, which would require all payers to contribute to teaching costs, teaching hospitals would get $9.6 billion from a pool designed to cover those costs. Currently, teaching hospitals get a total of $5.8 billion in additional Medicare payments to cover direct and indirect costs of their academic activities.
Teaching hospital representatives and executives had argued that funding in the Clinton plan wouldn't keep pace with inflation and, more importantly, would fail to account for the competitive disadvantage of high-cost academic medical centers in an increasingly price-sensitive delivery system, as well as the added cost of launching more training programs in ambulatory settings.
Responding to those concerns, Mr. Kennedy, whose state is home to some of the nation's premier academic medical centers, boosted the administration's proposed all-payer pool for teaching hospi-tals by a whopping $27 billion.
Richard Knapp, executive vice president of the Association of American Medical Colleges, acknowledged that the proposal could represent "the high-water mark" of generosity that teaching hospitals can expect in health reform legislation.
In addition, the measure would add $3 billion to the administration's funding for disproportionate-share hospitals that treat large numbers of poor people and $8 billion for medical research.
Mr. Kennedy said his plan represented an effort to "broaden the degree of support" for a reform measure that would meet the president's goals. But while Republicans on his panel were "sympathetic," none was ready to co-sponsor the plan, he said.
Meanwhile, the House Education and Labor labor-management relations subcommittee last week defeated moves by Republicans to eliminate insurance premium caps in the plan under consideration by the panel. In addition, the panel rejected a Republican initiative that would have allowed firms of all sizes to buy insurance outside of regional purchasing groups. The Clinton plan would require all businesses with fewer than 5,000 workers to join such groups. Subcommittee members pledged to revisit that issue.