Medical Device Daily Washington Editor

WASHINGTON — Yesterday's hearing of the Senate Finance Committee served as the opening round in what will be an extended effort on the part of committee Chairman Max Baucus (D-Montana) to revamp U.S. healthcare.

He opened the hearing by saying that "America is the richest nation in the world, but to our shame," is the only industrialized Western nation without universal healthcare coverage.

Baucus posed the question of whether healthcare is a right or a privilege.

His answer: "I believe that healthcare should be a right." And he said that the country is "rich enough" to make it an affordable right.

Baucus said that under his chairmanship, the Senate Finance Committee will commence on "a journey toward universal coverage. It is a road we must travel." Baucus outlined this perspective in a speech at the 2007 edition of the National Health Policy Conference last month, when he described the five principals of modernizing healthcare in the U.S. (Medical Device Daily, Feb. 14).

About those five points, Baucus said that "universal coverage is essential if we're to address the other four," including "sharing the burden" of universal coverage between the federal and state governments and individuals. The remaining three points include cost controls and preventive care.

At the hearing, Baucus told the witnesses that it represented "sort of a 50,000-ft." overview and that "in subsequent hearings, we'll try to start putting some of the pieces together."

Sen. Charles Grassley (R-Iowa), ranking Republican on the committee, described the current healthcare situation in fairly conventional terms, calling it "untenable."

He gave the White House decent marks for its Affordable Choices program, which emphasizes providing tax cuts so that individuals can purchase private insurance, and he characterized Affordable Choices as "not perfect, but a good place to get started."

Grassley insisted that "real solutions for the uninsured will use many tools," noting that he favors incentives as a primary means of getting coverage to the uninsured.

The first witness at the hearing was James Mongan, MD, president/CEO of Partners Healthcare (Boston), who said that when it comes to passing healthcare bills, Congress is "divided ideologically" between proponents of market mechanisms and those who advocate a single-payer system. "We've been stuck for 25 years on this point," he said.

Feasible reform is not just a dream, Mongan said, and "[i]n Massachusetts, I saw a successful approach [that involved] shared responsibility" between governments, employers and individuals.

"Is the resulting package a perfect balance? — probably not," Mongan said, but the Massachusetts legislature "packed the bill with regulatory and market approaches."

Stuart Altman, MD, professor of national health policy at Brandeis University (Waltham, Massachusetts), said that when it comes to the notion of consensus on healthcare reform, "I have come to be a little pessimistic," because most advocacy groups want reforms to go their way or to retain the status quo.

He urged the committee to adopt the premise that "wherever possible, we should improve on our existing system" because while proposals to scrap the current system have some merit, "they ultimately fall down" under the weight of excess cost.

One of the recommendations Altman made was to "take the really high-cost cases, those between $50,000 and $100,000, and share them among all of us" via a government mechanism, saying this would drive down insurance premiums.

"We have created a hidden tax and it disproportionately falls on those who are insured," namely those who get their insurance through their employers.

Richard Frank, PhD, vice chair of the Citizen's Health Working Group (Boston), pointed out that universal coverage "means a lot of different things to different people," and he urged "immediate action to provide financial protection against high healthcare costs." He said this will help establish universal coverage.

Other elements of his discussion included the development of community healthcare networks that would improve the logistics of delivery and the development of core benefits, though acknowledging "the difficulty in light of financial restraints."

None of the panelists recommended wholesale scrapping of the current systems.

Mongan made the case that "[t]o get the uncovered covered, your chances of doing this are better working with pieces of the current system."

Committee members clearly are out of luck if they hope for a consensus on the question of whether Congress should allow the continued exemption of healthcare premiums from taxability.

Panelist John Shiels, VP of the Lewin Group (Falls Church, Virginia), made the case that "the problem [is] the tax code" and that Congress should "do away with the deduction." Frank differed. "I don't believe that getting rid of the deductibility would be appropriate," he said, though capping the deduction "might make things more efficient."

Sen. Ken Salazar (D-Colorado) asked how much a plan similar to that currently going into play in Massachusetts would cost if deployed across the U.S.

Mongan's reply was that "if you put all costs in . . . I believe you're back to that $70 [billion] to $100 billion dollar figure" per year until savings start showing up.

On the subject of administrative costs, Altman said they were formerly "very small," but "then we started asking companies to do a lot more."

He painted a picture in which enrollees would register once for access to a healthcare plan, and then would choose a plan in a separate function. A system that consists of "just giving people money" to purchase healthcare would result in "chaos."

In response to a question by Baucus on how to boost competition in the insurance marketplace, Altman said this would require the use of a broker, but that only about half of firms that offer coverage include an HMO in that set of offerings.

After the hearing ended, Baucus declined to address the possibility that the tax-exempt status of healthcare premiums could be withdrawn gradually rather than all at once.

With regard to the Centers for Medicare and Medicaid Services' provision of care far in excess of that which is allowed by other nation's systems, Wyden indicated that this was of little interest in the current environment.

"We should be looking at reimbursement issues," he told Medical Device Daily, but the current focus is strictly on larger systemic issues in the public and private sectors.