If the outcome of the 2000 presidential election confused and surprised Americans, just wait until they watch the federal government try to determine healthcare policy in 2001.
As President-elect George W. Bush prepares to take the oath of office in Washington later this week, healthcare providers are wondering what the priorities of the new administration will be and how it intends to achieve its policy goals.
Bush strikes positive chords with providers with his emphasis on reducing government regulation, enacting Medicare reforms and expanding health insurance coverage. Yet they wonder if some goals, such as a massive tax cut or a prescription drug benefit within Medicare, might be accomplished by taking money out of their pockets. As long as presidents propose budgets every year, cuts to Medicare, the biggest single healthcare payer, are always a threat.
Right now, the jury is out. But those questions come in the context of a president whose legitimacy has been marred by the battle over the Florida vote and his failure to win a majority of the popular vote.
That court battle slowed Bush's transition into the White House, and although he has quickly filled his Cabinet and some key administration positions, it may be some time before Bush can put his stamp on healthcare policy.
"It takes a new administration longer to get into the saddle than they anticipate or the media project," says Robert Reischauer, president of the Urban Institute, a think tank in Washington. "That will be particularly true in this case."
Meanwhile, Bush will have to contend with a Senate evenly divided between his Republicans and combative Democrats-with Vice President-elect Dick Cheney holding the tie-breaking vote-and a House in which Republicans hold as slim a majority as they did in the last session.
"This environment does not lend itself to bold change and radical reform," says Richard Pollack, executive vice president of the American Hospital Association.
If it remains unclear what, if anything, Bush and Congress will be able to agree to this year, the rules of engagement have become a little clearer in recent weeks.
Wisconsin Gov. Tommy Thompson's nomination as HHS secretary signals a strong role for the Cabinet-level department in healthcare policy development. That represents a change from the administration of President Clinton, in which healthcare was directed from the White House policy development office.
Provider group lobbyists say Thompson has had more hands-on experience with running healthcare programs than his predecessor, outgoing HHS Secretary Donna Shalala. In addition to his state's Medicaid program, Thompson as governor oversaw the creation of a statewide program to extend coverage to the low-income uninsured, which later became a model for the state Children's Health Insurance Programs (SCHIP) authorized under the Balanced Budget Act of 1997.
Meanwhile, who will be in charge of Congress has become a little clearer in recent weeks. House Republicans' selection of Rep. William Thomas (R-Calif.) as chairman of the Ways and Means Committee, with authority over Medicare, reinforces that panel's primacy on healthcare policy.
A forceful and often prickly legislator, Thomas has chaired the Ways and Means health subcommittee for six years. As such, he is often looked to as Congress' and the Republican Party's acknowledged expert on healthcare policy. In some instances, he has tried to play a role in aspects of healthcare policy over which other committees have jurisdiction, to the dismay of his colleagues.
If Bush is to have any hope of accomplishing his healthcare goals on Capitol Hill, he must woo Thomas. That will involve allowing Thomas to have some say over the policy details.
But the relationship between Bush and Thomas is likely to be a good one. Bush's campaign healthcare adviser-and likely presidential healthcare adviser-is Sally Canfield, a onetime aide to Rep. Jim McCrery (R-La.), who served on the Ways and Means health subcommittee with Thomas. Canfield and Thomas are on good terms, which may mean that the White House and Congress will get along on healthcare policy.
Shepherding legislation through the Senate may be trickier than ever. Senate leaders agreed to a unique power-sharing pact earlier this month under which Republicans and Democrats will have equal representation and staff support on every committee. The full Senate still will be able to vote on bills that get a tie vote in committee, but the rules of the game will almost ensure that only moderate legislation can pass.
"Anything that's not bipartisan isn't going to go anywhere," says Mary Nell Lehnhard, senior vice president of policy and representation at the Blue Cross and Blue Shield Association.
Power sharing may not have as much of an effect on hospital policy, however.
The Senate Finance Committee, which holds much jurisdiction over federal healthcare policy, has as its top Republican and likely chairman Sen. Charles Grassley (R-Iowa) and as its senior Democrat Max Baucus (D-Mont.).
Because both are from rural states and in the past have made the needs of rural providers a top priority on their personal agendas, provider groups believe rural healthcare will be at the top of the committee's agenda.
"The whole balance and the whole prism through which they view healthcare policy will have a rural look," says Thomas Scully, president and chief executive officer of the Federation of American Hospitals.
But as federal lawmakers meet, an ever-growing list of healthcare issues will confront them. How they address them may depend as much on the politics of the moment and lobbying groups' ability to develop new strategies as they look after their members' interests.
Medicare and Medicaid payment
The big question: Will hospitals and other healthcare providers pursue another round of payment increases for federal fiscal 2002?
The past two years have seen successful campaigns by the AHA, the federation and other provider groups to pump a projected total of $51 billion back into federal healthcare programs from 2000 to 2005.
Those laws enacted in late 1999 and late 2000 reversed payment-growth restraints imposed under the Balanced Budget Act of 1997, which aimed to reduce projected Medicare and Medicaid payments by $112 billion from 1998 to 2002 to an estimated $1.3 trillion.
"There will be more (Medicare payment increases) because Congress, in its wisdom, asked for a lot of studies (of the financial impact of the budget law)," says Randy Fenninger, a lobbyist for urologists and other physician groups. "Those studies will be done in June, and there will be a lot of people who are interested in them."
Provider groups are now sending signals that the Medicare, Medicaid and SCHIP payment increases enacted under those two "giveback" laws are inadequate, although they may be framing the debate differently this year.
First, they are already pointing to the new spending required of hospitals and other providers under the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996.
The AHA estimates that the costs of compliance may be $22.5 billion in the next five years. The association told a congressional advisory panel that hospitals in 2002 may need an annual update to their Medicare inpatient payments of 2 to 5.2 percentage points above the hospital inflation rate to help them adjust to the new costs (Dec. 18-25, 2000, p. 8).
"It all folds together: meeting new technology and resource needs, and the need to fund those efforts," says Ed Goodman, vice president of public policy at the hospital alliance VHA. "So our push for funding is more targeted this year."
Second, hospitals may seek technical changes to Medicare laws that will be far less costly than a massive payment increase. For example, the federation's Scully says his members are concerned about the increasing threshold costly Medicare cases must cross to qualify for extra outlier payments, and may seek to have that changed.
Third, Medicare HMOs are making it clear that it will not be enough to get the $11 billion in increased payments they will receive from 2001 to 2005 under the terms of a Medicare payment law enacted last year.
Karen Ignagni, president and CEO of the American Association of Health Plans, says her group's focus for the year will be on urban counties that were given a 3% maximum update in their payment rates for 2001 alone and will revert to a 2% update in 2002.
But lawmakers' patience for another lobbying campaign may be growing short. "There's some indication that hospital margins are recovering and other providers are probably doing well," says the Urban Institute's Reischauer.
Medicare reform/prescription drugs
Adding outpatient prescription drugs to the list of benefits covered by Medicare was one topic on which Bush agreed with his Democratic rival, Vice President Al Gore.
As an immediate step, Bush has proposed a "helping hand" package to help low-income seniors buy prescription drugs. For four years, the federal government will spend $12 billion per year to fund state-based drug-assistance plans for low-income seniors.
But beyond that, Bush has proposed a prescription drug benefit under Medicare as part of a broader set of reforms to the program. Those reforms mirror a proposal developed but never formally approved by a bipartisan commission on Medicare's future in 1999. They included turning Medicare into a "premium support" system under which the government would pay most of seniors' premiums for joining private-sector healthcare plans.
To get those reforms passed, Bush will have allies on Capitol Hill. Thomas, the Ways and Means chairman, co-chaired that bipartisan commission. The other co-chair was Sen. John Breaux (D-La.), who was one of the first Democrats with whom Bush met after winning the election.
For hospitals, the chief concern is how lawmakers will pay for Medicare reform or prescription drugs. They don't want new payment growth restraints to help fund the drug benefit, as Clinton has proposed.
But don't expect the longer-term reforms to take the spotlight immediately. Bush administration officials probably will engage in lengthy talks with Congress over the shape of Medicare reform legislation. "A lot will go on behind the scenes," says Lehnhard.
The healthcare issue that has most polarized Congress may be headed for a bipartisan conclusion. Healthcare provider lobbyists say Bush and congressional Republicans may want to get the patients' bill of rights legislation passed and signed to remove it as a political weapon for congressional Democrats.
But it still remains up in the air how Democrats and some Republicans can reach a compromise with such GOP leaders as Sen. Don Nickles (R-Okla.), the Republican Senate whip.
The chief sticking point remains giving health plan enrollees the right to sue over injuries that result from the denial of covered benefits. Democrats and some Republicans such as Rep. Charlie Norwood (R-Ga.), a dentist, want it, while Senate Republicans oppose it.
Giving HMO-reform advocates some hope is that such a law took effect in Texas while Bush was governor, although Bush didn't back the bill, only allowing it to become law without his signature.
Health plan lobbyists, of course, fear any right-to-sue legislation. Instead of the patients' bill of rights, the AAHP's Ignagni wants to forge an alliance with provider groups that have pointed to the threat of greater malpractice exposure as reason to oppose legislation aimed at reducing medical errors in hospitals, clinics and physician offices.
As a potential trade-off, she advocates greater legal protection for providers that seek to improve quality in healthcare facilities.
One of the physician lobby's top two goals last year was to persuade Congress to revise existing antitrust law so that doctors could collectively bargain with health plans over fees and other contract terms. The American Medical Association, which led the charge, found an aggressive advocate in Rep. Thomas Campbell (R-Calif.), who sponsored such legislation.
The Campbell bill passed the House last year, but no one in the Senate took up the cause, and the bill died. Last November, physicians were dealt another blow when Campbell lost his bid to unseat Sen. Dianne Feinstein (D-Calif.), and lost his House seat in the process.
"I'm much less optimistic that you'll get a new administration and Congress to agree to a (physician antitrust) bill, especially since your biggest advocate isn't in Congress anymore," says Robert Doherty, senior vice president of governmental affairs at the American College of Physicians-American Society of Internal Medicine. "Reading the tea leaves now, I'd candidly have to say it doesn't look good."
But that won't stop physicians from trying.