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As a nation we are engaged in the most significant and wide-ranging discussion of healthcare public policy and potential reform in at least 15 years, dating back to the Clinton administration's 1993 proposal for universal healthcare insurance coverage.

While the Clinton plan drew heavy opposition from many different industry sectors, leading to litigation and ultimately failure, it was driven by many of the same underlying challenges that motivate the current healthcare reform debate. These challenges have grown over the last 15 years and are even more relevant today than they were then.

Healthcare analysts are largely in agreement that major steps to reform the system are needed. This recognition of the need for change is based on several factors: the threat of healthcare costs increasing at a rate significantly greater than the overall rate of inflation; increasing utilization issues, including the numbers of baby boomers that are set to reach retirement age in the next eight to 10 years; and concern over the number of at-risk individuals that are uninsured.

These issues are now familiar to the public at large due to widely publicized projections that Medicare Part A will be bankrupt within the next 10 years if the system does not undergo a major overhaul. Millions of Medicare participants rely on Part A to provide coverage for inpatient hospitalizations and skilled nursing care. The fact that this healthcare reform discussion is taking place even in the midst of profound economic difficulties complicates the search for an affordable solution, but it also demonstrates the urgency of the healthcare debate.

One of the major aspects of President Obama's campaign platform was the promise of healthcare coverage for all Americans, and healthcare has been a major focus of the early days of his administration. For example, shortly after assuming office, President Obama promoted legislation reauthorizing the State Children's Health Insurance Program ("SCHIP"), which had been allowed to lapse under the Bush administration.

President Obama is not approaching healthcare reform in the same way as the Clinton administration. Rather than developing and presenting a detailed program to Congress for approval, he has instead presented an agenda with a list of broader goals, inviting Congress to work with the administration to fill in many of the details. This has led to criticism from several commentators who question whether this method will open the door for conflicting interests to gridlock reform with endless debate over the details.

President Obama's healthcare reform agenda retains the employer-based health insurance coverage program that currently exists but augments this system to provide for increased coverage. The president's proposal would employ a mixture of private sector insurance options along with a new public health insurance option based on the current Federal Employee Benefit Plan. This new public plan would be federally subsidized to increase affordability for low income families and individuals.

The president's reform agenda calls for creation of a Healthcare Insurance Exchange that would assist individuals in finding affordable healthcare coverage that would be fully portable and would not be lost even if the individual became unemployed. The Exchange would also serve a regulatory function for participating private insurance companies. Larger employers would be subject to a "play or pay": provision, which would require employers who do not provide health insurance to their employees to either make a meaningful contribution to employee healthcare costs or be required to contribute to the national healthcare plan.

In addition to provisions intended to increase access to care, the president's plan includes a number of measures intended to decrease healthcare costs, including an increased focus on reimbursement based on outcome instead of utilization (so-called "pay for performance" or "P4P"), increased federal resources for implementation of health information technology ("HIT") and standardized protocols to maximize cost savings from HIT. The president's program also proposes to make private Medicare third party payors subject to competitive bidding.

President Obama's reform package includes measures intended to reduce the costs of prescription drugs and would reduce current patent protections to increase access to generic alternatives. It also would allow Americans to purchase drugs from other developed nations, if the drugs were deemed safe and were cheaper than inside the United States.

As noted above, at this point the president's healthcare reform strategy has been to present a broad agenda and to work with Congress, stakeholders and industry experts to fill in the details to make the agenda a reality. There are competing healthcare reform plans, most notably the Healthy Americans Act (S.391) sponsored by Senators Ron Wyden (D-OR) and Robert Bennett (R-UT), and the reform plan proposed by Senator Max. Baucus (D-MT) laid out in his white paper A Call to Action. Although the details of these alternative Congressional proposals are outside the scope of this article, they are both significant alternatives and will play an important role in the debate.

Healthcare providers and stakeholders in the federal system should be keenly interested in the current healthcare debate. All of the major reform proposals currently being considered would bring about lasting changes in the way healthcare is reimbursed in this country and will have a large impact on healthcare delivery systems. The provider who stays informed about these potential sweeping changes will be in a better position to change their processes to adapt to changing federal incentives. In addition, many of the changes proposed in the president's healthcare agenda will require significant changes to current Medicare regulations, which could have a drastic impact on current provider agreements and organizations.


Bryant C. Witt, Member, Miller & Martin PLLC focuses his practice in the area of healthcare including representing physicians, hospitals and other healthcare organizations with compliance issues and regulatory review and analysis. www.millermartin.com
Phone: 615-744-8524
Fax: 615-256-8197
bcwitt@millermartin.com
Nashville Office
Suite 1200,
One Nashville Place
150 Fourth Avenue North
Nashville, TN 37219

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