The home health industry has learned a few things about Washington and politics over the years. One is that presidential candidates usually have little or nothing to say about the business; this year is no exception. Another is that most home-health policy is made in Congress and carried out by bureaucracies of the executive branch. Such detail work is well under the presidential radar.
“It's more important what Congress does and who wins in congressional elections than who wins for the presidency,” says Jim Walsh, president of VGM Management, Ltd., and general counsel of The VGM Group. Presidents do have definite, and sometimes detailed, ideas on health care, but they tend to focus on the big players. “People don't sit around and say, ‘Let's see what our health care policy for HME is,’” he says. “They think in terms of doctors and hospitals, not HME.”
But Walsh and other long-time observers know something else: Ideas have consequences, often unintended or unforeseen. And federal policy initiatives, in and beyond health care, can have an indirect but profound impact on small, little-noticed industries that depend heavily on the government for their economic well-being. HME fits that description, and it could well be affected by this year's presidential election no matter who wins.
Four years ago, for instance, then-candidate George W. Bush promised to push for a Medicare prescription drug benefit. He finally got a drug plan through Congress in 2003. But in the process, the HME industry suffered what many would call collateral damage. As part of the Medicare drug bill — and as a way to help defray the new program's high cost — Congress decided to push ahead with nationwide HME competitive bidding. The bill also has led to a sharp reduction in reimbursement for respiratory drugs already covered under Medicare, along with payment cuts on a number of other staple products.
Bush the candidate may not have had HME on his mind in 2000 or in 2003. But in an indirect way, he was making HME policy all the same.
This year, Bush and his challenger John Kerry have staked out health care policies with clear differences, both in detail and in basic philosophies about the role of government and markets. What's not clear, now as in campaigns past, is how home care will fare when Congress and the bureaucrats translate these presidential initiatives into laws and regulations.
Here is what the two men, based on their past statements and campaign documents, have in mind for health care in general, and what their plans might imply for home care.
- Extending coverage
As in past election years, the millions of Americans without health insurance (or with plans that cover too little of their costs) are a front-and-center campaign topic.
Bush says he has made progress closing the coverage gap with new health savings accounts (HSAs), the Medicare prescription drug benefit, health insurance tax credits and expanding eligibility in both the Medicaid program and SCHIP (State Children's Health Insurance Program). He now proposes widening HSA deductibility, providing a refundable tax credit to extend health insurance to about 4.5 million more Americans, and allowing small employers to join together in health plans to boost their bargaining power with insurers. His proposals would cost an estimated $70 billion to $90 billion over the next 10 years.
Kerry would go a good deal further, covering more people and running up a bigger tab. His plans include a larger tax credit (about twice the size of the one proposed by Bush), full federal coverage of children eligible for Medicaid, a reinsurance pool for employers to cover their highest-cost employee health cases and a wide offering of private health plans similar to the package available to federal workers. His goal is to extend coverage to as many as 27 million of the currently uninsured.
The price tag for all this is in dispute. Kenneth Thorpe, a health care economist formerly with the Clinton administration, has put the cost at $653 billion over 10 years, assuming that Kerry's money-saving ideas work as promised. The Bush campaign says $1 trillion or more will be needed.
Kerry plans to fund some, if not all, of his programs by rescinding the Bush tax cuts on high-income individuals. But he also has spending plans elsewhere — like a $200 billion education trust fund, expanded health care for veterans and salary hikes for teachers — that need to be financed. And he, like Bush, says he will cut the federal deficit in half over four years. So even if HME has no part to play in the health plans announced so far, it could be affected by a familiar phenomenon: the pressure to free up money for new programs by squeezing the old ones.
- Controlling costs
Bush and Kerry do have ideas for lowering the cost of health care without, as far as anyone can see, cutting reimbursements for HME. Both say they would go after medical liability costs, though Kerry opposes the Republican proposal to put caps on malpractice damage awards. Both would push the use of electronic health records and other information technology to cut health care overhead. Kerry also would rely on disease prevention and health promotion programs to reduce the care costs for obesity and chronic illnesses such as diabetes.
As for prescription drugs, Kerry would go beyond the current plan in at least two controversial ways: He would allow the legal importation of drugs from Canada and would allow Medicare to negotiate discounts from drug companies (only private insurers can do that now). The pharmaceutical industry is especially wary of the latter proposal, fearing that Medicare may get near-total buying power over many drugs and, in effect, would be able to impose price controls.
- Medicare reform
Last year's Medicare Modernization Act left a big problem unsolved: the health plan's shaky financial condition. Earlier this year, the Medicare Board of Trustees said the Medicare trust fund could go broke as early as 2019, seven years earlier than projected in 2003. The prescription drug benefit added a new cost, estimated by the trustees at $500 billion over 10 years, without the kind of restructuring that would absorb this expense and get Medicare on a sound financial footing. Additional Medicare reform looks certain to be an issue in the next four years, whether or not the candidates want to talk about it now.
If and when Bush or Kerry decides to tackle Medicare, their records suggest that they would take sharply different tacks. Bush's reform ideas have been based on the principle that the plan would run better and more cheaply if private players — especially insurers — had a greater role and market forces were allowed to work. The 2003 Medicare bill, as passed, moved modestly in that direction.
Bush had originally proposed a more sweeping reform that would have rewarded retirees for shifting from the traditional government fee-for-service program to private plans. This initiative didn't last long in Congress; Republicans as well as Democrats were skeptical. One of the skeptics was John Kerry, who criticized the final bill (he missed voting on it, but later said he would have opposed it) but praised fellow senators for rejecting what he called “President Bush's efforts to force seniors into private plans.” In the same remarks to the Senate in June 2003, he made a point of noting that Medicare “is a government program.” He added, “Often the government comes under great criticism. But the truth is that this program has worked.” So if Kerry has a plan for Medicare reform, privatization probably isn't part of it.
What does all this policy talk imply for HME? One possibility is that, if Bush can get more traction for his reform ideas in a second term, home health companies may eventually find themselves working with a less monolithic Medicare. Under privatization, they might be dealing with a number of insurers, HMOs, PPOs and other private entities, along with CMS. That might complicate their business, but it would also give them more choices among payers. With Kerry, the industry might see Medicare reimbursement continue as a major revenue source for the industry. Good relations with the bureaucracy would be more crucial than ever.
Whoever wins in November, HME will have to keep trying to convince both Congress and government regulators that home care is a money-saving business that should be seen as part of the solution, not part of the problem. “The industry really needs to convince CMS that we are a partner in the health delivery process,” says Don Clayback, vice president of The MED Group. “We need to get a place at the table.”
THE PRESIDENTIAL HEALTH PLANS IN BRIEF
George W. Bush
President Bush has created new health savings accounts (HSAs), a prescription drug benefit under Medicare, funded 1,200 new or expanded community health centers and provided a health insurance tax credit to help workers who lose their jobs due to international trade. He now proposes:
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Allowing individuals to deduct 100 percent of their health savings accounts (HSAs) premium for catastrophic health care coverage from their taxes
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Support for private plans to manage more Medicare beneficiaries
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Control of medical liability costs by placing caps on malpractice lawsuits
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Offering a health insurance tax credit to extend insurance to an estimated 4.5 million Americans
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Supporting association health plan (AHP) legislation allowing small employers to pool together for health insurance
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Supporting health care information technology (he has called for electronic medical records for most Americans in 10 years)
John Kerry
Sen. Kerry says his plan would stop spiraling costs, provide coverage for 95 percent of Americans, cover all children and allow Americans access to the same health care plan as members of Congress. He proposes:
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Providing a “premium rebate pool” to help pay for certain high-cost health cases. To be eligible, employers would have to provide health coverage to all workers and adopt disease management and care coordination programs.
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Disclosing incentives manufacturers give to pharmacy benefit managers to help bring drug prices down
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Ending loopholes in the patent law that delay introduction of cheaper drugs
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Allowing the legal importation of drugs from Canada
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Allowing Medicare to negotiate discounts from drug companies
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Striking a compact with states for the federal government to pick up the full cost of 20 million children enrolled in Medicaid if the states agree to certain conditions
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Creating a pool for business and the uninsured to join the Federal Employees Health Benefits Plan (FEHBP)
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Supporting health care information technology, electronic medical records
