Medical Device Daily Washington Editor

WASHINGTON – The Senate Finance Committee held the second of three open forums on healthcare reform yesterday, and the session began with more enthusiasm than is typical of such gatherings. The fact that none of the witnesses called to testify were advocates of a single-payer system was not missed by the idea's supporters, who complained loudly and out of turn about the omission as the session commenced.

One of them stood up and proclaimed loudly, "you have 15 seats at the table and not one for single payer." Another interloper made the same observation and stole a line from the modern campaign rhetorical tool bag. "I'm Dr. Carol Paris and I approved this message," she said. Each of the objectors was escorted one after the other from the room by the Capitol Police.

After that, the talks centered on how a market for individual enrollment might work and how an alternate sponsored by the U.S. government might affect existing insurers. As might be predicted, the responses ran the gamut.

Sen. Max Baucus (D-Montana), chairman of the Senate Finance Committee, said in response to the disruptors, "I deeply respect the views of all members of the audience and all Americans." He said of the single-payer idea that it is "a view that many have and which I respect," adding that many of his constituents "have the same view."

However, the forum proceeded as planned, and Baucus cited numbers that suggest that every 1% increase in unemployment boosts eligibility for Medicaid and Children's Health Insurance Program by one million, adding that the shifting of costs from uninsured to insured constitutes 8% of premiums. "The cost of inaction is too high," Baucus averred.

Baucus's lack of serious interest in a single-payer system is a matter of public record, asserting that such a system "is not going to happen in America" in an address at the National Health Policy Conference earlier this year (Medical Device Daily, Feb. 5). Any healthcare bill the Senate Finance Committee produces will have to be reconciled with a parallel-track effort by the Senate Health, Education, Labor and Pensions Committee whose chairman, Sen. Ted Kennedy (D-Massachusetts), has expressed sympathy to a single-payer system in the past. Both committees have committed to proffering a plan by June.

Like Baucus, Sen. Chuck Grassley (R-Iowa), stayed on message with his opening remarks, stating that healthcare in the U.S. "is in desperate need of reform," but cautioning, "we need to make these reforms in a fiscally responsible way."

"If we're to succeed in making changes that benefit all Americans ... everyone needs to work together to find common ground," the Senate Finance Committee's ranking GOP member finished.

Baucus opened the discussion by asking the panelists about their views of the individual market for healthcare insurance. Speaking first was Gary Claxton of the Henry Kaiser Foundation (Washington), who said the current state of affairs in the individual market was undisciplined. He said that rates for individuals tend to migrate. Over time, he said, "people get higher rate increases, which is not disclosed" upon initial enrollment.

Claxton hinted at some structural problems in the individual insurance market, which he described as being "characterized by low actuarial value and high administrative costs," the latter of which is driven in part by high beneficiary turnover, and by payments of sales commissions. Lack of tax subsidies, such as those enjoyed by those who enroll in employment-based coverage, further blunts the interest of individuals in enrollment, Claxton said.

Karen Ignagni, president/CEO of America's Health Insurance Plans (AHIP; Washington), said the association has "recommended a full-scale reform and a complete overhaul of the rules in the individual market." She said that among the ideas presented by the AHIP proposal are a "guarantee issue that everyone gets insurance," and a feature to ensure that "nobody falls into the cracks due to pre-existing conditions." The AHIP proposal, she said includes the development of federal guidelines that are enforced state by state.

Len Nichols, director of the health policy program at the New America Foundation (Washington), started his response by asserting, "insurance ought to be about individual centeredness."

"What we want to do is bring the efficiencies of large-group purchasing to the individual purchase," Nichols said, adding "the key to making competition work is making sure the insurers have to satisfy the individual preference."

Nichols said small businesses "do often find they have a lack of choice" as the market currently stands, but sounded a guardedly optimistic tone. "I think a well-designed plan ... is about two things. It is about restoring the trust that the insurance industry has lost" with many people in the U.S., and also "about a benchmark" for price competitiveness for both public and private plans.

As for whether a public option would crowd out private payers, opinions were divided. Stuart Butler, PhD, VP for economic policy at the Heritage Foundation (Washington) said that the government's operation of both a federal health board and a public plan would mean that "the rules and regulations promulgated by Washington will favor the government-sponsored plan." Scott Serota, president/CEO of Blue Cross Blue Shield Association (Washington), said, "I can't conceive of a government program competing on a level playing field" because any such plan "would be a competitor, a regulator, and a financier."

Nichols said, "I understand Mr. Serota's concern," but remarked that the U.S. Postal Service "came under some competition" and nonetheless thrived without choking out private-sector entities. "We allowed competition to eventually flourish and we now in fact have robust competition between" the postal services and private carriers such as United Parcel Service (Sandy Springs, Georgia).