Health Care and the New Congress

The Nov. 7 elections were not a referendum on health care, but the issue nonetheless is likely to take center stage in the new Democrat-controlled Congress with new leaders, different issues, and a new playbook.

New people:

Committee chairmen have a huge impact in deciding what issues to showcase, who to feature at committee hearings, and what legislation goes to the floor.

o Newly re-elected Ted Kennedy will chair the Senate Health, Education, Labor, and Pensions (HELP) Committee with jurisdiction over a broad range of health care issues. Expect a bigger role for government all around.

o And the distinctly anti-market Rep. Pete Stark will chair the Health Subcommittee of the House Ways and Means Committee. Mr. Stark said last month that his priority will be to stop what he called "the Republican drive to privatize Medicare." He also will have Health Savings Accounts in his sights.

o And Rep. John Dingell, who The Wall Street Journal says "has long had a reputation as a partisan investigative bulldog," will chair the House Energy and Commerce Committee, with jurisdiction over many health care issues, including Medicaid.

Different issues:

o Health Insurance: The State Children's Health Insurance Program expires in 2007 and must be reauthorized. Conversations already had begun among our colleagues to use this as an opportunity to expand private insurance, including giving parents more help in adding their children to job-based policies.

Expect, instead, more efforts from the new leadership to put children into Medicaid and to further expand Medicaid to all uninsured adults with incomes up to 100% of poverty.

o Drug prices: One campaign theme of the Democrats was to have the federal government "use its negotiating power" to get lower drug prices from pharmaceutical companies. The 2003 Medicare law explicitly prohibits federal interference in private price negotiations.

Likely House Speaker Nancy Pelosi has pledged that, within the first 100 hours after the House convenes, legislation will be introduced to repeal that ban.

Private insurers are negotiating drug discounts for Medicare beneficiaries and have driven prices of the drug benefit down 40% below the government's estimates, but Democrats believe the government could get a better deal.

"I don't know that we could undo all the private plans," Mr. Stark said earlier. "But at least we could offer a government-administered drug benefit." Look for more sticks than carrots to make this happen.

Legislation to beef up the drug importation legislation that passed the last Congress also is very likely, and there will be a fight over reauthorizing legislation to allow the pharmaceutical industry to fund speedier FDA drug approval.

o Democrats also will make a big push to allow federal funding for embryonic stem cell research, to require doctors and hospitals to follow government-dictated "evidence-based" practice standards, and to get government more involved in what health coverage employers provide their workers.

A new playbook:

All around, there will be a big push for more government involvement in the health sector, which is the source of many of the problems in the health sector today.

There also will continue to be aggressive moves in the states to reform their health care systems, with many looking to Massachusetts as a model. States should begin instead by undoing the damage they have caused to their health insurance markets through over-regulation and excessive mandates.

Will Republicans try to get a few things done in their very brief lame duck session next week? Lobbyists will still be trying to get fixes into the continuing resolution they must pass to keep the government running, but meaningful changes are unlikely after the drubbing Republicans took at the polls.

The stock market rallied after the elections, with investors happy that Washington would be in gridlock for at least the next two years. But health stocks took a hit, with expectations that companies in this sector will be targeted in the new Congress.

True, President Bush does have veto power, but Congress has huge potential to shape the debate and will try to make it very hard for the president to stand his ground against the further encroachment of government into the health sector.

In spite of all of this, there still is a great deal of energy in the private sector to boost consumerism, with thousands of new companies investing in ideas and technologies to make the delivery of health care faster, better, and cheaper. It will be important for these companies not to be daunted by what certainly will be a flood of testimonies and studies showing that markets have no role in the health sector and that consumerism is a deeply flawed idea.

On the bright side, the momentum toward consumerism and markets in the health sector is on our side and will prevail.

*****

Grace-Marie Turner is president of the Galen Institute, a research organization based in Alexandria, VA, that specializes in free-market ideas for health reform. She can be reached at galen@galen.org

 

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