Democrats overplay their hand on health care policy

The newly elected Democratic majority that took charge of Congress last January promised an ambitious health care agenda: re-authorizing and expanding the State Children's Health Insurance Program (SCHIP), reducing overpayments to Medicare Advantage plans, improving the Medicare Part D drug benefit, increasing appropriations for health research, and reducing disparities in mental health benefits. Congressional leaders also promised to replace scheduled Medicare payment cuts with positive updates and create other policies that would lead to long-term reform of a broken Medicare physician payment system.

The boldness of the Democrats' agenda, though, ended up being out of synch with the realities of governance. They discovered, belatedly, that it was almost impossible to get anything passed without large numbers of Republican votes, especially in the Senate. Like a poker player who raises the stakes with a weak hand, the Democrats overplayed their mandate, and ended up cashing in at the end of the year without much to show.

Congress' record

Earlier in the year, the Democrats' agenda looked more promising. The House of Representatives passed the Children's Health and Medicare Protection (CHAMP) Act, which re-authorized and increased funding for SCHIP; reduced Medicare cost-sharing for mental health benefits; and replaced pending physician payment cuts with a positive update for the next two years—all paid for by reducing overpayments to Medicare Advantage plans and increasing taxes on tobacco. The legislation included ACP's proposal to expand a limited Medicare demonstration of the medical home and implement other payment reforms to improve Medicare payments' accuracy and fairness.

The Senate never accepted these provisions. Medicare was dropped from a compromise SCHIP bill that passed Congress but was vetoed by President Bush. The President held firm that he would not sign an SCHIP extension that included tobacco tax increases, cuts in payments to Medicare Advantage and more “government-run” health care—and enough Republicans agreed to sustain his veto.

The House and Senate made a last-ditch effort to take up both Medicare and SCHIP in late December, but could only agree on a “bare bones” bill to replace the 10.1% physician payment cut with a six-month reprieve. During the reprieve, physicians will receive a 0.5% increase, but will again face another round of Medicare payment cuts in July 2008 and January 2009. The bill, which the President has signed into law, extends SCHIP but at current program funding levels and with no tobacco tax increases or cuts in overpayments to Medicare Advantage. In an especially grating concession to Republicans, the program is re-authorized through March 2009, denying the Democrats' wish of forcing Republicans to vote against re-authorizing the popular program before the November 2008 election.

Also left out of the “bare bones” bill were reductions in Medicare cost-sharing for mental health benefits, expansion of the patient-centered medical home demonstration, changes to improve the accuracy and fairness of Medicare fee schedule payments to doctors, and major changes in the Medicare Part D drug benefit.

On appropriations, the Democrats folded to the President's overall budget limits, except for $11 billion in emergency funds for key priorities. The Democrats were able to provide more funding for favored programs, like the National Institutes of Health, but within the President's overall budget limits.

What to expect in 2008

The harsh political realities that stymied much of the Democrats' agenda are still in place in 2008. Their House majority cannot overcome presidential vetoes. Even if they succeed, bills must pass the Senate, where Democrats hold only a one-vote majority. Senate rules require a “super majority” of 60 votes to pass anything and 66 votes to overcome vetoes. And Democrats continue to face a hostile Bush administration that is aggressively vetoing large increases in federal spending or expansions of governmental programs.

But 2008 is an election year, and the tendency is for legislators to approve only a few “must pass” bills and then go home to campaign. The looming July 1 Medicare physician payment cut is likely to be one such “must pass” bill, since legislators will not want to face the wrath of voters—patients and physicians—if a double-digit cut takes effect. Paying for positive updates beyond June, though, will continue to be a budgetary and political challenge. The Democratic majority may take another stab at a longer-term extension of SCHIP with substantially higher funding levels, but Republicans will likely do everything possible to keep Congress from forcing another vote on the program.

The continued gridlock in Washington on health care will continue as long as neither the Democrats nor the Republicans can override vetoes or Senate filibusters and the White House and the Democrats have conflicting priorities. Whether the 2008 elections will create the governing mandate that Democrats thought they had—or that the Republicans had all but lost in 2006—is anyone's bet.