View from Washington: A Wink and a Nod

The Capitol Hill maneuvering of when politics become policy

Assuming health reform passes and is signed into law, what comes next? Given results of the recent special election in Massachusetts and the destruction of the filibuster-proof majority in the Senate, President Obama’s health reform bill does not have the momentum it had prior to Christmas.

Congress has produced a piece of legislation that, according to the Congressional Budget Office (CBO), will raise the insured part of the U.S. population from 83 to 94 percent. This would be a major policy advancement in and of itself. However, at what cost does this expansion come? A real problem exists as to how this will be paid for in the years ahead.

The numbers game
At a time of unprecedented U.S. federal debt, our government is seemingly ready to spend $1 trillion over the next decade for not even 100 percent coverage. The White House says that one of its criteria for the President to sign the legislation into law is that it must be “fully paid for.” But where does the bulk of the required financing come from?

Over $500 billion of the $1 trillion used to finance health reform over the next decade comes from reductions in Medicare provider payments. This when many hospitals are currently struggling with under-payments from Medicare and doctors are leaving the program in unprecedented numbers. There are other “off-the-books” initiatives currently under Congressional discussion, such as how to fix the $200 billion Medicare sustainable growth rate (SGR) problem for physicians. Just because Congress does not add the cost of this fix to health reform does not make the spending to address the SGR problem any less real in terms of the American pocketbook.

There is a game being played regarding financing of the pending health reform initiatives. On a tree top level, it goes something like this. The healthcare provider community, to gain a seat at the negotiating table with a Democratic White House and Congress, agrees to a certain level of Medicare reductions. The quid pro quo of this acquiescence is the currently uninsured would be covered by the new health reform measure. Thus, as an example in reasoning, fewer uninsured will show up on the doorsteps of doctors’ offices and hospital emergencies rooms. The Democrats say thank you and take these healthcare provider trade groups off the political chess board. The Democrats turn their attention elsewhere and proceed to try and win the support of other key interest groups. Congress comes up with $500 billion in cost reductions over 10 years to fund the expansion of coverage. The providers are still on board but become increasingly concerned as the cuts for their sector get incrementally larger with each iteration of the reform bill.

The last part of the game is revealed as the law is fully implemented in a few years. Although not said outright, it is highly probable that Congress will come under pressure to set aside large portions of these scheduled provider cuts. There will be a great deal of discussion about “now,” which will make the current health reform deals become “then.” Provider interest groups have every intention of fighting these cuts once health reform legislation is signed into law. A competent crystal ball would observe that if the law is enacted in 2010, then 2010 is the get-go to begin to set aside the painful provider cuts.

The health reform legislation reported out of the House and Senate is justifiably criticized as being light on cost controls. But the legislation does do other important things. Poor childless couples would be able to get affordable healthcare insurance. The near-poor would get federal help to buy insurance. Insurance companies would no longer be able to deny coverage to those most at risk of getting sick (i.e. pre-existing conditions). All great stuff! All stuff, Democrats and Republicans know, the electorate wants.

A fair reading of the latest available version of the legislation does reveal the seeds of healthcare cost reform in some of the provisions. There are numerous pilot projects and experimentation designed to enhance efficiency, wellness and prevention programs. It provides for research on comparative effectiveness. Further, it contains a tax on some of the higher cost health insurance plans which may be helpful in restraining costs. But will these initiatives really bend the curve of healthcare cost escalation? Over the short-term, the best bet is likely not. Over the long-term – maybe. Nevertheless, it is the provider cuts that will do the heavy lifting of financing health reform. While the cuts will be real, the likelihood of Congress not permitting the full scale of the cuts in the future is also a very good bet – at least right now.

Predicting the fallout
What comes after the White House signing ceremony – assuming there is one? Envision a staged picture which speaks of cooperation from all quarters including provider groups. Now envision after the signing ceremony as the interest groups sprint back to their offices to assure their memberships they will move heaven and earth to be sure the included cuts do not fall on them. Maybe this is just how sausage is made in Washington. Maybe this is what is required to jump start reform of a system that is uniformly believed to be broken. However, there is a trap with this scenario that is indeed troubling.

Congress might undo some of the cuts enacted with the health reform legislation. Given the onslaught of the baby boomers on the Medicare program, a more likely scenario is that Congress will expand entitlements and enhance benefits. National polling reveals that the American public is in a souring mood about many things to do with Washington right now, especially the growing size of the federal deficit. One thing certainly seems likely – the fiscal picture for the deficit will darken substantially in the same years that providers are counting on the “wink and a nod” they got from the current administration and the Democratic leadership about cuts for their sector. However, the reality is Congress will have to say no to these entreaties from providers simply because they will have no other choice. Tough deficit control steps will be taken in the future by Congress – with or without the benefits and or burdens of the current health reform measures.

As the saying goes “It is what it is!” A bet has been made by the healthcare national interest groups. However, providers should manage their expectations. Also, they should be fully aware of the coming reality for the elected officials they will be dealing with.

About the Author

Robert Betz Ph.D.
Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit
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