And the State of Our Health Reform Is …

The run-up to last night’s State of the Union address was bracketed by the serious — like unresolved budget questions and the recent tragic shooting in Arizona — and the seriously frivolous, such as whether House Democratic Leader Nancy Pelosi (D-Calif.) would accept House Majority Leader Eric Cantor’s (R-Va.) invitation to sit together.

In short, the typical mix of imperatives and distractions. With the speech’s conclusion, the national conversation moved from deconstructing seating partners to debating the substance of President Obama’s remarks.

Yet two years into the nation’s debate on health reform, legislators remain bogged down in a mix of the fraught and frivolous. Tuesday marked the latest important chapter in the law’s saga — less for what happened on a prime-time stage, more for developments in congressional chambers. In word and deed, Republicans again demonstrated they seek an overhaul … of the overhaul.

About Last Night: Sputnik and Skutnicks

The president’s speech focused on the nation’s latest “Sputnik moment,” which he termed an opportunity for U.S. innovation to overcome a sluggish economy. However, Obama’s push to “win the future” meant he didn’t dwell on his past legislative accomplishments.

The president spent just 322 words — less than 5% of his prepared text — defending health care reform. That’s significantly down from last year’s address, when Obama spoke on health care for nearly twice as long and urged fellow Democrats not to “walk away” from the stalled health reform bill. The president’s remarks this year also contrasted with comments from Rep. Paul Ryan (R-Wis.), who delivered Republicans’ response to the State of the Union and spent more than 12% of his airtime on the GOP’s health law repeal effort.

Obama defended the law by abandoning economics for anecdotes: He invoked two so-called “Skutnicks” — the informal moniker for private citizens invited as guests to the speech — who personally benefited from the Affordable Care Act’s patient protections. Meanwhile, Ryan took a big picture view and argued that the overhaul is “accelerating our country toward bankruptcy” by creating a new, unfunded entitlement.

Going for Broke

While Obama suggested his willingness to seek input and “improve the law,” Ryan’s call for full repeal reflects Republicans’ firm conviction that the overhaul must be struck drown.

The GOP on Wednesday launches a full-scale attack on the health law, with members of Congress preparing a slew of legislation intended to overturn the individual mandate, defund provisions like the Independent Payment Advisory Board and even repeal the entire law. Meanwhile, Senate Minority Leader Mitch McConnell (R-Ky.) on Tuesday began the legislative process of bringing the House GOP’s health care repeal effort to a Senate vote.

This new political battle unfolds with legislators partly confounded by a Kaiser Family Foundation tracking poll that both demonstrates surging support for the reform but also shows that negative perception of the law has reached historic highs. Released on Tuesday, the poll found that the disapproval rating for the overhaul is up nine percentage points since December 2010 and is at the highest since April 2010, just weeks after the law’s enactment. The change — a “curious contrast” with other polls, Politico notes — is driven by a 16-point swing in independents’ perception of reform and may reflect Republicans’ high-profile push to strike down the law. At the same time, only one-third of respondents supported the idea of defunding the health law.

The Next Round in the Chamber

Some of Obama’s proposals match up with in-progress congressional efforts, which should tee up his calls to action.

Spending freeze: While Obama’s proposed five-year freeze on domestic spending was a major plank of last night’s address, many Democrats expressed concern and noted that a spending freeze coincides with the rollout of many provisions of the health law. However, a freeze may not be a barrier to implementation, according to former HHS official Neera Tanden. The relevant government agencies “have a lot of flexibility to move funds around,” Politico reports.

Overturning 1099: The president’s most popular proposal last night may have been the call to “correc[t] a flaw” in the health law that places “an unnecessary bookkeeping burden on small businesses.” Bipartisan legislation to overturn the health law’s 1099 tax-reporting provision and backed by Sens. Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.) needs just four senators to achieve filibuster-proof status. Senate Majority Leader Harry Reid (D-Nev.) and Sen. Max Baucus (D-Mont.) also have introduced their own effort to repeal the measure.

Medical malpractice reform:  Obama’s latest call for medical malpractice reform came one day after House Republicans introduced a bill (HR 5) that would limit punitive damages in lawsuits.  While the idea does enjoy some bipartisan support, Democrats tend to oppose fixed caps on malpractice damages and observers question whether the president truly is committed to tort reform. According to David Kendall, a senior fellow at centrist think tank Third Way, Obama must be “serious because [the issue is] sure to upset more than a few Democrats.” In contrast, Forbes‘ David Whelan points to several pieces of “circumstantial evidence” suggesting that Obama is just paying lip service to the idea of medical malpractice reform, after proposing similar changes in a high-profile 2009 speech to the American Medical Association.

Medical liability reforms also are perceived as a fringe issue in the larger health care debate; a Congressional Budget Office estimate suggests that current tort reform proposals could save up to $60 billion over a decade — roughly 0.5% of all national health care spending, Politico reports.

The road to reform clearly wends through Congress — again — and California Healthline will continue its close watch on efforts to revise the health law. Meanwhile, here’s a review of other health reform stories making news across the nation.

Challenges to the Reform Law

• Last week, the House voted 253-175 to pass a resolution (H Res 9) that directs four committees to develop smaller revisions and alternative legislation to the federal health reform law, one day after the chamber approved a bill (HR 2) to repeal the overhaul. Fourteen Democrats joined Republicans in approving the directive (Haberkorn, Politico, 1/20). House Rules Committee Chair David Dreier (R-Calif.), who sponsored the resolution, said, “We are now moving on to the far more challenging task of crafting real solutions for the American people to ensure that we can drive down the cost of health insurance and health care” (Weyl, CQ Today, 1/20).
• Also last week, more than 60 House GOP members sponsored a bill that would allow sales of health insurance across state lines. The measure also seeks to reduce premiums by avoiding many states’ coverage regulations, such as requirements to cover maternity care, cancer screenings and mastectomies. In addition, a group of House GOP members presented a fiscal plan that would prohibit any spending in 2011 intended for the implementation of the reform law. The plan also would block the U.S. Department of Justice from defending the law against court challenges and halt federal Medicaid aid to states (Levey/Mascaro, Los Angeles Times, 1/21).
• House Energy and Commerce Committee Chair Fred Upton (R-Mich.) and Subcommittee on Oversight and Investigations Chair Cliff Stearns (R-Fla.) recently sent a letter to HHS seeking more information about the Obama administration’s efforts to implement the health reform law. Upton and Stearns requested a complete list of groups that were granted waivers for certain requirements of the reform law and the reasons for providing the waivers. They also requested that HHS explain why it moved the Center for Consumer Information and Insurance Oversight — which formerly was known as the Office of Consumer Information and Insurance Oversight — from the agency’s purview to that of CMS (Millman, “Healthwatch,” The Hill, 1/20).
• Last week, Florida Attorney General Pam Bondi (R) announced that she has filed a motion in federal court to add six more states to the list of plaintiffs in the multistate lawsuit against the federal health reform law. The six states are Iowa, Kansas, Maine, Ohio, Wisconsin and Wyoming. Bondi said the addition of states would not delay U.S. District Court Judge Roger Vinson‘s decision in the lawsuit, which is expected before the end of this month (Haberkorn, Politico, 1/18).

Defending the Overhaul

• Last Friday, Senate Majority Leader Harry Reid (D-Nev.), House Minority Leader Nancy Pelosi (D-Calif.), and various hospital associations, health advocacy groups and economists submitted amicus briefs in support of the federal government in a Michigan lawsuit challenging the constitutionality of the federal health reform law (Norman, CQ Today, 1/21). Twenty-one other Democratic lawmakers joined Reid and Pelosi’s brief. The brief countered arguments that the individual mandate could set a precedent in which the federal government could force citizens to do things other than purchase insurance (Haberkorn, Politico, 1/21).
• On Monday, HHS Secretary Kathleen Sebelius announced that federal agents have recovered $2.5 billion from health care fraud cases in the budget year that ended in September 2010, the largest recovery of federal funds in the history of the U.S. Department of Justice. Sebelius also is discussed how provisions in the federal health reform law will further prevent fraud and abuse in 2011. A CMS actuary has estimated that the overhaul’s measures to combat fraud will save an additional $4.9 billion over the next decade, which will be put back into the program to help it remain solvent until at least 2027 (Kennedy, USA Today, 1/24).
• Health insurers’ fourth-quarter financial reports could be an early indicator of how much the federal health reform law will affect the industry. Several reform law provisions took effect in September 2010, meaning that the fourth quarter was the first in which the overhaul affected insurers’ finances. Researchers from Goldman Sachs estimate that the top four publicly traded health insurers will report on average a 21% increase in earnings over the same period one year earlier (Johnson, Wall Street Journal, 1/20).

In Public Opinion

• Republican arguments against the reform law are resonating with the public, according to a recent poll by Washington Post and ABC News. The poll found that GOP claims regarding the law’s effect on the economy and the deficit are persuading certain residents, but that few who oppose the law agree on a strategy for addressing it. The Post/ABC News poll also found that GOP lawmakers are tied with Obama on the question of whom the public trusts to manage the U.S. health care system (Cohen, Washington Post, 1/18).
• About two-thirds of physicians said they are afraid that the reform law will reduce the quality of health care for U.S. residents and hurt their incomes, according to a survey by Thomson Reuters. The survey questioned 2,958 U.S. physicians and found that 65% said they think care quality will deteriorate over the next five years, while 18% said it will improve and 17% said it will not change. Meanwhile, 74% said they believe changes triggered by the overhaul will hurt their reimbursements (Fox, Reuters, 1/18).

Eye on Job-Based Coverage

• Nearly half of U.S. workers said they expect their out-of-pocket health care costs to increase under the federal health reform law, while 40% of employers surveyed said they are likely to pass insurance premium cost increases on to their employees, according to a recent survey. The survey — which was conducted by the Employee Benefit Research Institute and the Society for Human Resource Management — also found that if health care costs decline, just 30% of the employers surveyed said they would consider reducing premiums and copayments for their employees (Hamilton, “Money & Company,” Los Angeles Times, 1/24).
• Meanwhile, a new report released by the Robert Wood Johnson Foundation and the Urban Institute suggests that the federal health reform law will not significantly affect employer spending on health coverage. The report estimates that total employer spending will decline by 0.6% and spending by small firms will decrease by 8.7% under the reform law, primarily as a result of new health insurance exchanges that are scheduled to be implemented in 2014. The report also estimates that spending by medium-sized firms could increase by 11.8% under the overhaul, while spending by large employers likely would be unaffected (Vesely, Modern Healthcare, 1/24).