Year of Reform Year of Risk

Business on Capitol Hill has a way of slowing down in presidential election years. As partisan feeling rises, the big issues tend to get put on hold. Neither party is in a mood for compromising nor cutting deals. Everyone is waiting to see who will be in charge the next year in Congress and, of course, the White House.

Now the waiting is over. It's a far different kind of year.

There's a new Congress in 2005, along with a second-term president who now can claim the prize that eluded him before — a clear victory at the polls. George W. Bush has ambitious plans to reform Social Security, the tax code and health care, and he is in a hurry to get his agenda accomplished.

Members of Congress know, whether or not they admit it publicly, that huge federal programs are unsustainable without serious structural reform. Social Security, Medicare and Medicaid together account for about $1 trillion in outlays. All are operating beyond their means. Bush wants action on Social Security this year, but Medicare and Medicaid (especially the latter) are closer to fiscal crisis. Something has to be done about them soon, with or without a push from the White House.

These factors could add up to an eventful year for the home health care industry, which has a major stake in federal and state health care spending. The risks are familiar: Congress might do what it has done before and squeeze DME and home care to fix fiscal imbalances and free up money to please more powerful interest groups. But home care may also have a better chance than ever to make its case as a cost-cutter, and even to win an expanded role.

This is shaping up to be a year of reform, risk and, perhaps, opportunity.

Home care businesses will need to keep an eye on several programs and reform drives, including those not directly connected to health or medicine. The need for action is most obvious with Medicaid, the state-federal program of health care for the poor. The Bush administration wants to pare back federal Medicaid funding, while on their side, state governors are already starting to make cuts, some deep and potentially damaging to home care.

As for Medicare, the White House is not planning surgery on the program this year. It would prefer to see Medicare left alone while it rolls out the prescription drug benefit and other provisions of the 2003 Medicare Modernization Act. Bush has even pledged to veto any bill that would reduce the new drug benefit.