Recent Developments

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Since Ropes & Gray launched Health Reform Matters with its first issue in February, Washington has shifted into high gear in pursuing passage of comprehensive health reform. With major health-related legislative victories under their belt and comprehensive reform measures in development, President Obama and the Congress have put their once-in-a-generation goal of remaking the U.S. health care system within reach in this calendar year.

Already much has been accomplished. Thanks to the American Recovery and Reinvestment Act signed in February, health care dollars have begun to flow for research initiatives, Medicaid programs, community health centers and various capital infrastructure projects. Billions more are in the pipeline for such high priority investments as health information technology. (Ropes & Gray has been tracking the allocation of these dollars, and has made available a chart to assist in assessing available funding opportunities.) The budget resolution that both houses of Congress passed in late April for fiscal year 2010 paves the way for health reform. At the same time, the Administration has made progress (albeit slow) in filling out its health reform team, with the appointments of Kathleen Sebelius as Secretary of Health and Human Services (HHS), Nancy-Ann DeParle as Director of the White House Office of Health Reform, Dr. Margaret Hamburg as Commissioner of the Food and Drug Administration, Dr. Thomas Frieden as Director of the Centers for Disease Control and Prevention, and Jeanne Lambrew as Director of the new HHS Office of Health Reform.

But the heavy lifting on health reform still lies ahead. Despite the bipartisan commitment to achieving health care reform announced at the White House summit in March, the usual divisions are beginning to surface. Among other disputes, the two parties are actively debating: (1) whether Congress will use a controversial budget reconciliation mechanism to adopt health reform (allowing legislation to pass the Senate with only 50 votes); and (2) whether reform legislation will create a “public plan.” Difficult decisions on how to pay for reform, just now coming to the fore, will surely fuel the political fires.

Despite the daunting task, the five congressional committees with jurisdiction over health reform (the Senate Committees on Finance and on Health, Education, Labor and Pensions (HELP), and the House Committees on Ways and Means, on Energy and Commerce, and on Education and Labor) have each begun work in earnest on reform legislation. They envision a schedule in which each committee will "mark up" (i.e., amend and approve) bills in June or July, followed by floor consideration of a consolidated bill in each house before the August recess. That would leave the fall to work out differences between the House and Senate versions, with an eye toward final passage before the 2009 session adjourns. The schedule is ambitious, but one that Congressional leadership believes is critical to ensure action before the pressures of another election take hold next year.

The most public of this work has been undertaken by the Senate Finance Committee, which has held a series of roundtable discussions and released a range of policy proposals in each of three major areas of reform: delivery system reform, coverage and financing. (Ropes & Gray’s analysis of each of these policy papers, as well as the papers themselves, are available in the Comprehensive Health Reform section within our Health Reform Resource Center.) Committee members met to discuss the proposals in closed-door sessions and plan to mark up a consolidated bill in early June. The HELP Committee recently released a 12-page briefing paper outlining its goals and broad approach to reform to guide Committee discussions. In an attempt to quell reports that Finance Committee Chairman Max Baucus (D-MT) and HELP Committee Chairman Ted Kennedy (D-MA) are working at cross purposes, the two key leaders issued a joint statement on May 30 reiterating their commitment to working together to find common ground on reform.

Fewer official details have been released on the House side, although an unofficial summary of the Energy and Commerce Committee's plan has been circulating. At this point, the work of the House has been largely confined to Democratic committee members. Republican members of both the House and Senate have released their own set of policy proposals that are more modest in scope than those under consideration by the committees.

Based on the options, summaries and papers that have been released to date, a clearer picture of the likely elements of a reform bill is starting to emerge. All of the committees appear to favor an individual mandate, coupled with tax subsidies for low income individuals and families and an expansion of Medicaid. There is broad bipartisan consensus on the need for a Massachusetts-style health insurance exchange to facilitate enrollment, set standards and spread risk. Insurance regulations would be tightened, and the delivery system reformed primarily through changes to Medicare payment policies to focus on paying for quality rather than quantity. The employer system would remain in place, although there remains debate over whether some form of an employer mandate or "pay or play" system would be adopted. New investments will likely be made in prevention and wellness and in the health care workforce. The elephant in the room, of course, is whether lawmakers will adopt a public plan option.