Bush's 2nd term health agenda pushes liability reform, HSAs

But experts worry that fiscal concerns could hinder progress on covering uninsured Americans.

By Joel B. Finkelstein — Posted Nov. 22, 2004

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Washington -- President Bush has promised a renewed focus on health care issues, including liability reform, implementation of the Medicare law and controlling insurance costs. But his promise to halve the deficit in five years could cut into efforts to improve access to coverage.

Medical liability reform played a high-profile role during the presidential campaign.

Bush highlighted the problems high liability insurance costs are causing in terms of access to certain specialists and the financial toll to the system from defensive medicine.

In his first press conference following his re-election, the president again promised to address the issue.

"We must confront the frivolous lawsuits that are driving up the cost of health care and hurting doctors and patients," he said.

The issue of liability reform is also a top priority for organized medicine, which will continue pushing hard for changes at the federal level.

"We need national medical liability reform to ensure that all America's patients have access to the physicians and health care they need," AMA President John C. Nelson, MD, MPH, said in a statement.

There is strong public support for liability reform. Among voters, 56% said the tort system encourages lawyers to file too many lawsuits, according to a poll conducted just after the election by Republican polling firm Ayres, McHenry & Associates in Alexandria, Va.

But the poll also showed that liability reform is still relatively low on people's list of priorities, ranking below other health care worries such as rising costs and the uninsured.

Medical liability reform can be expected to continue to meet stiff resistance in the Senate.

"Bush still lacks the votes, even with some additional votes in Congress, but we think that the states will continue to act on these efforts," Sandy Lutz, research director of the new Health Research Institute at the consulting firm PricewaterhouseCoopers, said at a news briefing on Bush's proposals.

Many states passed liability reform legislation this year, and several others approved ballot measures, Dr. Nelson said.

Health care in the balance

While liability reform has mainly political obstacles, other Bush proposals face significant economic hurdles, experts said.

Bush's promises to rein in the budget could embolden fiscal conservatives in Congress to push for an updated Balanced Budget Act, placing health care funding priorities in doubt, they said.

Because Medicare now consumes 20% of the federal budget, it will be an inevitable target for any budget-cutting efforts, Jack Rodgers, PhD, managing director of PricewaterhouseCoopers' Health Policy Economics Practice, said at the briefing.

Hospitals will bear the brunt of those cuts, but the lack of funding also could put at risk efforts to mend the physician reimbursement formula that was established in the original budget act. Physician spending has remained modest and relatively steady, meaning it could be easier to justify holding the line on reimbursement rates, Lutz said.

But under implementation of last year's Medicare reform law, the administration is shifting its focus toward consumer-driven health care approaches. Several Medicare demonstration projects along those lines already have resulted in reductions in utilization of physician services, she said.

"If [doctors] got, on top of that, a cut to reimbursement, that would be a double whammy for them," Lutz said.

Creating health savings accounts was another important component of that effort, and experts predict that Bush will try to expand on that idea in his second term.

The president already has proposed making the high-deductible health plans that are combined with HSAs tax-deductible as well, but now he is also seeking to establish a health insurance tax credit that could be applied toward these arrangements. These proposals are aimed at increasing health insurance access for uninsured Americans.

Such a plan, however, would cost an estimated $250 billion over 10 years and thus also could bump up against budget concerns, experts said.

The AMA is committed to working with Bush to expand coverage to the uninsured by building on the strengths of the current system, Dr. Nelson said.

"There is no question that we must find a solution to the problem of the uninsured in America," he said.

Consumer-directed health care strategies are expected to play an important role in Bush's second term as part of "creating an ownership society," a theme established during the re-election campaign.

Shifting decision-making to consumers

Surveys of voters conducted before and after the election showed that most Americans believe that choice is a good thing, and they support reforms that would give them access to more coverage options.

As more of the health care decision-making is put in the hands of individuals, physicians and others will need to provide more information on both the cost and quality of services so that patients can make educated choices, experts said.

"Adding transparency to the systems adds an entirely new dynamic, where people will be able to see performance on the part of doctors and hospitals, and be able to make judgments about where they want to seek care," said Karen Ignagni, president of America's Health Insurance Plans.

Health information technology is another area Bush has promised to address, and one that experts say could have a significant impact on both the cost and safety of health care.

It is also an area that could be undermined by the lack of federal funds, however. So far, the administration has dedicated about $100 million to a national effort on information technology. By comparison, Britain recently allocated $15 billion to establish a fully integrated computerized system for that country's National Health Service.

The shortage of funding in the United States has fueled a concern that federal efforts to expand dissemination of information technology could turn into another unfunded mandate for physicians.

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If it's broke ...

A survey of 1,000 voters conducted following the Nov. 2 national elections found that many Americans perceive problems with the health care system and wanted to hear specific solutions from the president and other elected officials about how they plan to fix them.

48% of voters said the U.S. health care system has parts that work well and broken parts that need significant change.

34% said the health care system is broken and needs a fundamental overhaul.

16% said the system works well and only needs a few changes.

2% said they didn't know or refused to answer.

Source: Ayres, McHenry & Associates Inc., Nov. 3-4

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