Since graduating from Claremont McKenna College in May 2009 with degrees in economics and political science, I’ve covered the health care and financial reform debates of 2009-2010, the 2010 midterm elections and tax cut fight, and the many battles over spending, revenues and deficits in the 112th Congress.

I’ve also covered health policy in depth, including implementation of the Affordable Care Act, the intersection of industry lobbying and reform, the GOP Medicare plan, the push to repeal the physician payment formula, and the congressional fights over health savings in deficit reduction.

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Health care providers, already facing the prospect of billions of dollars in payment cuts from the debt limit law’s super committee, are reeling at the possibility of billions in additional cuts if the White House’s new jobs bill materializes. It’s unclear whether President Obama’s $447 billion jobs proposal unveiled Thursday (Sept. 9) will pass, but if some or all of it becomes law, the super committee would be tasked with finding additional savings to offset the cost, and the added debt-reduction burden would place greater pressure on the panel to cut health spending — or otherwise cause the committee to fall short of its already steep target and lead to some sequestration, health care insiders and experts say.

Edwin Park, a health policy expert at the Center on Budget and Policy Priorities, which supports the president’s jobs plan, said Medicare and Medicaid are “already expected to be large sources of savings,” and the need for further offsets will only place more pressure on them. Medicaid in particular, he said, could be squeezed because it “doesn’t have the political constituencies to protect it that Medicare does.”

Park said that the pressure on health entitlement spending is significant in the super committee because discretionary spending has already faced deep cuts. He posited that the proposals discussed during the debt limit debate — including incrementally raising the Medicare eligibility age and Part D rebates, each of which could produce savings in excess of $100 billion — are “all certainly big candidates” for the powerful 12-member panel.

But a well-connected health care lobbyist, who was already pessimistic about the super committee’s odds of achieving an agreement, said the passage of a new jobs bill could be the final nail in the coffin for that prospect. “In all candor, I think the odds are south of zero,” the lobbyist said. Multiple other health insiders said the jobs bill may increase the likelihood of the super committee passing a measure that saves less than its target, leading to a partial sequestration.

The health care lobbyist said hospitals, some of whom are his clients, are “saying [their] prayers” in hope that the super committee fails, because they believe they’d be better off with the trigger scenario’s 2 percent pay reductions than the slate of cuts the super committee may otherwise consider (see related story). Hospitals have faced payment decreases for multiple consecutive years, and argue that they’ve sacrificed enough in the health reform law.

The American Hospital Association is pushing to raise the Medicare eligibility age to 67 in order to save money, a $125 billion item that President Obama has indicated support for, and which may help protect hospitals and other providers from cuts.

Health industry lobbyist Julius Hobson, who formerly worked for the American Medical Association, said the jobs bill offset “could complicate things” for physicians on their top priority: fixing the sustainable growth rate (SGR) payment formula to prevent a 30 percent pay cut for Medicare doctors. Even a short-term patch, which is far more likely than a permanent fix, will require an offset regardless of what avenue Congress uses to pass it, under the current pay-as-you-go rules. And the higher the super committee’s target, the harder it will be to find additional money to offset the cost of an SGR patch, given that the timelines of the two coincide.

The jobs bill may further diminish the odds of replacing the SGR. “I don’t believe we can get to a full, permanent fix — unless, and this will take a miracle, there’s a grand deal” such as the $4 trillion package President Obama and Speaker John Boehner negotiated in July before it fell apart, Hobson said. “And I don’t know that that’s in the cards.”

The need for additional savings may also conceivably enhance pressure to enact medical malpractice reform, which the Senate has long resisted. Physicians’ top-priority tort reform provision, a $250,000 cap on awards for non-economic damages, remains unlikely to pass the Senate, Hobson predicted. “I don’t think you’ll have 51 votes for that,” he said. But the White House has signaled willingness to negotiate on tort reform, and other provisions — such as limiting the damages physicians can incur if they follow a set of best-practice guidelines — may have a better chance of passing, he posited.

After Obama’s speech, super committee co-chair Rep. Jeb Hensarling (TX) griped that offsetting the cost of the jobs bill, in additional to its existing debt reduction target, could be a crushing burden.

“By asking the Joint Select Committee to increase the $1.5 trillion target to cover the full cost of his plan, the president is essentially tasking a committee designed to reduce the deficit to pay for yet another round of stimulus,” Hensarling said. “This proposal would make the already-arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible, removing our options for deficit reduction for a plan that won’t reduce the deficit by one penny.”

Democratic co-chair Sen. Patty Murray (WA) had a different view, praising the presidents bill and declaring that creating jobs will help lower deficits. “I know that putting Americans back to work is not only the right thing to do, it’s essential to our job of improving the fiscal outlook of our nation,” she said. “That’s because job creation and deficit reduction go hand-in-hand.”

The White House is up for grabs in 2012, and a potential Republican victor who lacks congressional support to repeal the health reform law would still possess a variety of executive tools to delay or weaken its implementation, several experts tell Inside Health Policy. All of the Republican presidential candidates have voiced strong opposition to the Affordable Care Act. Experts argue that an administration hostile to the law could freely grant waivers, alter or drag its feet on exchange regulations, redirect important agency resources elsewhere, not appoint officials tasked with implementation and maybe even ask the Justice Department to reverse course and argue that the law is unconstitutional.

“The president cannot refuse to enforce the law. But in any large piece of legislation, especially one as complex as this, you necessarily delegate enormous discretion to executive branch bureaus when implementing the law,” said Kenneth Mayer, an expert on executive authority at the University of Wisconsin. “So you could affect the implementation of one piece and that could cause the whole system to blow up.”

If a Republican were to get elected to the White House, “you’re going to see a chipping away of [the health law] piece by piece, if not a repeal,” said Brian Darling, a senior fellow at the Heritage Foundation, which supports repeal of the law.

Mayer, Darling and Center on Budget and Policy Priorities health policy expert Edwin Park said waivers are one key executive tool a president could use to undermine the law. The president could generously grant waivers to employers and other entities from having to abide by some of its regulations or taxes (such as the tax on so-called cadillac health plans). The law provides “considerable flexibility” to grant waivers from aspects of the law, said Park, when they may arguably cause disruptions in the health care market. A GOP president could potentially issue waivers go beyond the intended scope of the statute, argued Park and Darling.

For example, the law permitted the administration to temporarily exempt certain plans from the provision prohibiting annual benefit limits if abiding by the mandate would disrupt the market. More than 1,500 waivers have already been granted to allow employers to continuing providing limited benefit or “mini-med” plans until 2014. While GOP members have complained about the waivers, a Republican administration could conceivably extend them and allow limited benefit plans to remain in the market. The Obama administration has also allowed several states to phase-in — or delay — the health law’s medical loss ratio requirements, also to mitigate potential disruptions, and a GOP administration could likewise extend those waivers.

The health law also allows states to receive “innovation waivers” from the law, beginning in 2017, if they set up their own health care systems that seek to achieve ACA coverage goals in a different way. A president who’s uninterested in observing the reform law’s intended aims may conceivably grant waivers to states even if they do not set up adequate alternate systems, Park said.

Further, the executive branch is tasked with making sure states set up and operate insurance exchanges for individuals and small businesses to pool risk — state legislatures can do this on their own, and if they refuse, the federal government would take over. A president could “drag their heels” on issuance of further exchange regulations — or alter or reverse existing ones — and move slowly with procedures to identify people who are uninsured to bring them into the exchanges, Mayer noted.

“There’s great discretion on the part of HHS in terms of what kind of exchanges comply with the law and which ones don’t,” Darling added.

States are also required to abide by the law’s Medicaid expansion, but altered regulations could create overly flexible conditions that may give states the opportunity to evade the aims of the statute, Park added.

With or without the individual mandate, “there’s still a complicated process of determining who has adequate health insurance,” Mayer said, “and there are all kinds of ways you could be inattentive to identifying people or imposing fines quickly. It’s going to take dozens if not hundreds of tax code regulations.”

A Republican president would be under pressure to nominate federal appointees who want to weaken the Affordable Care Act. “The administration could slow-walk the implementation by not hiring regulators tasked with implementation of the law,” Darling said. “And you could put somebody in charge of CMS who is hostile to [the health reform law]” and tries to roll back some of its provisions.

Among the future appointments are 15 officials to sit on the reform law’s Independent Payment Advisory Board, a powerful panel charged with finding Medicare cost-savings in payments to providers, which is set to take effect in 2014.

Another executive tool a Republican president might use, added Darling, would be to have its Justice Department “switch sides” and argue that the individual mandate and perhaps the law in its entirety is unconstitutional. He posited that doing so may increase the likelihood of the Supreme Court striking it down, assuming it had not already rendered a decision. He pointed to the Obama Justice Department’s reversal of stance on the Defense of Marriage Act as precedent for an administration arguing against the constitutionality of a federal statute.

There are some clear-cut aspects of the law that the president would have limited or no authority to affect without congressional action. One key example is the provision of federal subsidies for uninsured Americans that take effect in 2014 — the ACA plainly defines who is eligible and who isn’t. “The formulas are fairly specific in the legislation,” Mayer said, adding that those who are unlawfully denied the subsidies could pursue legal action.

Short of repealing the law in its entirety, there are also steps it can take at the margins that may harm the law’s objectives. ACA efforts to improve efficiency and lower costs rely, in part, on CMS demonstrations that test various models of health care delivery, such as accountable care organizations (ACOs) and bundled payment programs. Some of these demos fall under the mandatory spending portion of the law, and are harder to roll back, but appropriators could limit or deny CMS financial resources under the discretionary part, said Park. “That would be very easy for a president to do,” Darling agreed.

Democratic and Republican insiders say it’s far too early to predict the outcome of next November’s presidential election. But the certitude Democrats once felt about holding the White House for a second term has slowly slipped in recent weeks, party sources say, as the debt limit debate and growing economic concerns have damaged the president’s approval ratings.

Ultimately, said Mayer, the Affordable Care Act “provides a number of different ways for executive branch officials to shape the way the law is implemented. And they could do it slowly and in ways that they think will minimize what they consider to be the harmful effects of the legislation.”

Key negotiators in the debt limit talks are mulling a proposal to raise the Medicare eligibility age from 65 to 67, a source familiar with the discussions says. Due to the volatility and sensitivity of the negotiations, Inside Health Policy could not confirm whether the White House and Republicans have agreed to include the provision in a final deal.

The idea was floated in a deficit reduction plan recently offered by Sens. Joe Lieberman (I-CT) and Tom Coburn (R-OK). The Congressional Budget Office found that raising the Medicare age to 67 would save $124.8 billion between 2014 and 2021.

Although House Democratic leaders say they’ll reject any Medicare benefit cuts, Republicans are eager to scale back the program and President Obama reportedly hasn’t taken any aspect of Medicare off the table.

House Republican Policy Committee Chairman Tom Price (GA) told Inside Health Policy that the GOP is looking to pay for a Medicare physician payment patch by cutting funds from the health reform law’s Center for Medicare and Medicaid Innovation and exchange subsidies program — and lawmakers are seeking a budget score on both, along with other possible payment offsets. “We’re pushing for various pay-fors,” Price told IHP Friday (Dec. 2) morning. “They run the whole gamut of items from fundamental reforms in Medicare and Medicaid to things like the innovation program and subsidy program in the president’s reform bill, and everything in between.”

CMMI has been a recent target of top Senate Finance Republicans, who have expressed concerns and asked for detailed information about how the center is spending its $10 billion in funds. Republicans have long wanted Congress to have more of a say in how the innovation center allocates its money, but drawing on CMMI funds has not previously been floated, at least publicly, as a Sustainable Growth Rate offset.

A Democratic congressional aide questioned the logic of cutting CMMI, which is projected to save money. “It doesn’t seem logical that you’d cut something that’s aimed at slowing the growth of spending in the health care system solely for political purposes,” the aide said. “I think it is, as with any demonstration project, going to take time for results to come,” the staffer added, expressing confidence the innovation center would ultimately bend health costs downward.

Republicans also want to recapture funding from the reform law’s exchange subsidies by asking recipients to return part of the funds if their income rises, Price said, echoing IHP’s report Thursday (Dec. 1) that the idea came up in a meeting between House GOP doctors and leadership where different pay patch options were discussed. Rep. Michael Burgess (R-TX), who attended the meeting along with Price, told IHP Monday that the exchange subsidy recoupment is the “major” doc fix offset that Republicans are considering.

Last December Congress raised the cap on the amount that can be recaptured to offset SGR, but sources say it is uncertain if Democrats will embrace the idea of using exchange subsidies to offset SGR this year.

“This was also used for the 1099 pay-for,” Price noted. “I think this is one of those areas that does indeed have some bipartisan support… The question there is how much money is left, and I don’t know the answer to that.”

A source says that some Republicans favor eliminating the cap, but when asked about that, Price said: “I don’t know about lifting it entirely.”

The Democratic aide wasn’t sure Democrats would back either idea. “I think the odds are fairly slim on both,” said one Democratic aide. “[Cutting] the exchange subsidies have been pretty much a nonstarter for Democrats, but I don’t know exactly where we are on [raising recoupments].”

Price said Republicans are pushing for a score on capturing funds from CMMI and the exchange subsidies. “I think that’s happening as we speak.” But the amount of savings needed depends on the payment fix that is ultimately chosen. The Congressional Budget Office this week provided lawmakers a score, obtained by IHP, for various short-term payment patches, as well 10-year approaches. The cost of fixing Medicare’s Sustainable Growth Rate formula for two years would be $38.6 billion, up from an estimated $26.5 billion this summer, CBO told lawmakers. A 10-year SGR replacement with a 0 percent update patch through 2021 would cost $289.7 billion, CBO concludes. CBO also calculates the cost of one, two and three-year options that assume both a 1 percent update and a Medicare Economic Index (MEI) update. A 10-year SGR replacement with an MEI update through 2021 would cost $352.7 billion, CBO finds.

When asked whether a preferred option emerged from Thursday’s meeting, Price said: “Leadership and doctors caucus members want to make sure the length of time of this patch is as long as possible. Many of us wanted a five-year patch.” He added, “The question is what can gain support.”

The GOP leadership push is not a lone effort — House Energy & Commerce, House Ways & Means and Senate Finance all have jurisdiction. “All of this is being done in concert with the committees with jurisdiction,” Price said.

Physicians face a 27.4 percent pay cut on Jan. 1 if Congress fails to address the issue.

House Energy and Commerce Democrats on Friday (Dec. 9) evening came out against the House GOP’s proposal to recapture health reform subsidies, cut back the reform law’s prevention fund and impose Medicare income-relating requirements to offset a two-year “doc fix,” even though all three ideas have been accepted by President Obama in some form in the past. E&C Democrats and House Minority Leader Nancy Pelosi (D-CA) said the GOP bill’s Medicare income relating provision — identical to what the White House proposed in its $3 trillion deficit package September — could only be acceptable within the context of a grand bargain.

The GOP bill aims to save $13.4 billion by recapturing more health reform exchange subsidy funds from recipients whose incomes later rise above the eligibility threshold, and an additional $8 billion by cutting the law’s prevention fund in half. It would also increase Medicare Parts B and D premiums on an additional 15 percent of high-income seniors, which the GOP expects will save $31 billion (see related story).

Pelosi tempered her Thursday (Dec. 8) willingness to consider asking seniors to pay more for Medicare Parts B and D services and suggested that such an idea may only be acceptable in the context of a larger deficit-reduction deal.

“To take something like that independently outside of the context of the big, bold and balanced initiative to reduce the deficit, to create jobs, to grow our economy, it’s hard to answer the question,” Pelosi told reporters Friday (Dec. 9), when asked about the GOP bill’s Medicare changes. “Some things might be acceptable in terms of a big, bold and balanced plan, are unacceptable if we’re not only not going to the place where President Obama wants to go on the payroll tax cut, have a more modest proposal, and on top of that have consumers of Medicare pay the price.”

The White House, during deficit reduction discussions this fall, had offered to cut back the prevention fund by $3.5 billion and to impose Medicare income-relating requirements as part of a “grand bargain,” which ultimately was rejected. Democrats also agreed to recapture some exchange subsidies last year to help pay for a short-term physician payment patch and as an offset for an unrelated bill.

But the White House on Friday indicated objection to the GOP’s health reform offsets. “Instead of working together to find a balanced approach that will actually pass, Republican leaders in Congress are instead choosing to re-fight old political battles over health care,” spokesman Jay Carney told reporters, adding that the bill “shouldn’t be about scoring political points against the President.”

House Speaker John Boehner’s (R-OH) office shot back, sending an email to reporters noting that the income relating policy is the same one that Obama backed in September and that Obama has twice signed into law measures that recoup more exchange subsidy funds.

E&C Democratic staff on Friday pointedly rejected the GOP’s proposed offsets. “Unfortunately, the provisions used to pay for these provisions will do damage to our healthcare system,” they said in a statement. “Undermining the tax credits and subsidies available under the Affordable Care Act to help make insurance affordable will result in 170,000 additional people becoming uninsured. Reducing our commitment to public health and prevention activities undermines efforts to combat conditions like diabetes, heart disease, cancer, and obesity in the most effective way…by preventing them in the first place.”

Committee Democrats also criticized the income relating offset. “Finally, increases and other changes made to the premium structure of Medicare raise fundamental and difficult issues for the program and certainly should never be considered in the context of addressing short term issues.”

AARP also wrote members of Congress in opposition to the GOP’s proposed Medicare and ACA changes. In a lengthy argument against higher Parts B and D premiums for wealthier seniors, AARP CEO Barry Rand argued that additional income relating could encourage seniors to leave Medicare and worsen the risk pool, raising costs for the rest.

“Finally, raising premiums does nothing to address the fundamental problem of rising health costs,” Rand continued. Rather than simply shift more costs to beneficiaries, we should be adopting measures to help improve health care delivery and lower health costs throughout the health care system.”

In reference to the GOP bill’s health reform changes, Rand added: “We believe that efforts to change percentage limits or decrease the subsidy levels will erode the affordability protection of the credits, and will mean that over time more people will find insurance unaffordable.”

The Medicare Rights Center piled on the criticism of income relating as well, calling the policy “misguided” and taking a shot at Republicans.

“It is ironic that many of the same lawmakers who refuse to increase revenues by raising taxes on millionaires and billionaires are supporting a measure that would, in effect, increase taxes on older Americans and people with disabilities with relatively modest incomes,” said MRC president Joe Baker in a prepared statement.

House Budget Chair Paul Ryan (R-WI) is resurrecting an idea he proposed in 2009 to eliminate the tax exemption for employer-sponsored health insurance and replace it with a fixed credit for businesses and employees. A spokesperson told Inside Health Policy that the aim is to eliminate perverse incentives for high income earners and level the playing field for self-employed individuals who do not have access to the exclusion.

Ryan excluded the provision from his House-passed budget plan, but he made a case for it in a speech Tuesday (Sept. 27), calling the current employer-based exemption “additional fuel for runaway health care inflation.”

“This tilts the compensation scale toward benefits, which are tax-free, and away from higher wages, which are taxable,” Ryan said at Stanford University. “It also provides ways for high-income earners to artificially reduce their tax-able income by purchasing high-cost health coverage — which in turn can fuel the overuse of health services.”

Ryan’s proposal — introduced in the “Patients’ Choice Act” in May 2009 alongside Rep. Nunes (R-CA), Sen. Tom Coburn (R-OK) and Sen. Richard Burr (R-NC) — would end the employer-based insurance exemption in lieu of a tax credit of $2,300 per individual or $5,700 per family.

“It’s been falsely framed as a tax increase,” a Ryan spokesperson told Inside Health Policy, referring to Ryan’s proposal. “But it’s simply replacing an exclusion with a credit. And it no longer discriminates against self-employed people.”

Proposals to remove tax exemptions have been derided by some conservatives as tax hikes, and Ryan insists that’s not the case with this plan. “It’s done on a revenue-neutral basis,” the spokesperson said, adding that the new “fixed-cap tax” would mean “higher end plans are not going to enjoy the same degree of tax breaks.”

“It’s a bipartisan idea,” the spokesperson adds.

In his speech Tuesday, Ryan also attacked the Affordable Care Act and defended his House-passed plan that would convert Medicare into a subsidies program to help seniors buy private insurance, as well as block-grant Medicaid.

Arguing that Medicare’s fee-for-service system is widely seen as unsustainable, he argued that an improved system would eliminate the existing “open-ended, well-intentioned, but ultimately empty promises” with defined contributions that would cap growth but remain adjustable for the poor and sick.

He argued that the path to Medicare’s solvency is a choice between the concept in his plan and the health reform law’s Independent Payment Advisory Board. Ryan’s proposal comes amid growing industry backing for a fundamentally altered Medicare program, which President Obama and Democrats reject.

A coalition of powerful health industry groups this month embraced the premium support model, but said Ryan’s subsidies, which are pegged to inflation, are not generous enough, instead pushing for a blueprint that grows them by per-capita GDP plus 1 percent.

“The three reforms I’ve just outlined — premium support for Medicare, block grants for Medicaid, and tax reform to correct the inefficient tax treatment of health insurance — must be present in our ‘replace’ agenda,” Ryan said Tuesday, referring to a GOP health reform replacement plan.

Health care providers, already facing the prospect of billions of dollars in payment cuts from the debt limit law’s super committee, are reeling at the possibility of billions in additional cuts if the White House’s new jobs bill materializes. It’s unclear whether President Obama’s $447 billion jobs proposal unveiled Thursday (Sept. 9) will pass, but if some or all of it becomes law, the super committee would be tasked with finding additional savings to offset the cost, and the added debt-reduction burden would place greater pressure on the panel to cut health spending — or otherwise cause the committee to fall short of its already steep target and lead to some sequestration, health care insiders and experts say.

Edwin Park, a health policy expert at the Center on Budget and Policy Priorities, which supports the president’s jobs plan, said Medicare and Medicaid are “already expected to be large sources of savings,” and the need for further offsets will only place more pressure on them. Medicaid in particular, he said, could be squeezed because it “doesn’t have the political constituencies to protect it that Medicare does.”

Park said that the pressure on health entitlement spending is significant in the super committee because discretionary spending has already faced deep cuts. He posited that the proposals discussed during the debt limit debate — including incrementally raising the Medicare eligibility age and Part D rebates, each of which could produce savings in excess of $100 billion — are “all certainly big candidates” for the powerful 12-member panel.

But a well-connected health care lobbyist, who was already pessimistic about the super committee’s odds of achieving an agreement, said the passage of a new jobs bill could be the final nail in the coffin for that prospect. “In all candor, I think the odds are south of zero,” the lobbyist said. Multiple other health insiders said the jobs bill may increase the likelihood of the super committee passing a measure that saves less than its target, leading to a partial sequestration.

The health care lobbyist said hospitals, some of whom are his clients, are “saying [their] prayers” in hope that the super committee fails, because they believe they’d be better off with the trigger scenario’s 2 percent pay reductions than the slate of cuts the super committee may otherwise consider (see related story) http://insidehealthpolicy.com/201108032371873/Health-Daily-News/Daily-News/health-sectors-face-vastly-different-scenarios-under-debt-limit-deal/menu-id-212.html. Hospitals have faced payment decreases for multiple consecutive years, and argue that they’ve sacrificed enough in the health reform law.

The American Hospital Association is pushing to raise the Medicare eligibility age to 67 in order to save money, a $125 billion item that President Obama has indicated support for, and which may help protect hospitals and other providers from cuts.

Health industry lobbyist Julius Hobson, who formerly worked for the American Medical Association, said the jobs bill offset “could complicate things” for physicians on their top priority: fixing the sustainable growth rate (SGR) payment formula to prevent a 30 percent pay cut for Medicare doctors. Even a short-term patch, which is far more likely than a permanent fix, will require an offset regardless of what avenue Congress uses to pass it, under the current pay-as-you-go rules. And the higher the super committee’s target, the harder it will be to find additional money to offset the cost of an SGR patch, given that the timelines of the two coincide.

The jobs bill may further diminish the odds of replacing the SGR. “I don’t believe we can get to a full, permanent fix — unless, and this will take a miracle, there’s a grand deal” such as the $4 trillion package President Obama and Speaker John Boehner negotiated in July before it fell apart, Hobson said. “And I don’t know that that’s in the cards.”

The need for additional savings may also conceivably enhance pressure to enact medical malpractice reform, which the Senate has long resisted. Physicians’ top-priority tort reform provision, a $250,000 cap on awards for non-economic damages, remains unlikely to pass the Senate, Hobson predicted. “I don’t think you’ll have 51 votes for that,” he said. But the White House has signaled willingness to negotiate on tort reform, and other provisions — such as limiting the damages physicians can incur if they follow a set of best-practice guidelines — may have a better chance of passing, he posited.

After Obama’s speech, super committee co-chair Rep. Jeb Hensarling (TX) griped that offsetting the cost of the jobs bill, in additional to its existing debt reduction target, could be a crushing burden.

“By asking the Joint Select Committee to increase the $1.5 trillion target to cover the full cost of his plan, the president is essentially tasking a committee designed to reduce the deficit to pay for yet another round of stimulus,” Hensarling said. “This proposal would make the already-arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible, removing our options for deficit reduction for a plan that won’t reduce the deficit by one penny.”

Democratic co-chair Sen. Patty Murray (WA) had a different view, praising the presidents bill and declaring that creating jobs will help lower deficits. “I know that putting Americans back to work is not only the right thing to do, it’s essential to our job of improving the fiscal outlook of our nation,” she said. “That’s because job creation and deficit reduction go hand-in-hand.”

The U.S. Supreme Court will consider the severability of health reform provisions, including the law’s Medicaid expansion, with a planned ruling by next summer, but could potentially punt its decision to after 2014 if it determines the individual mandate cannot be challenged until it goes into effect. The high court announced Monday (Nov. 14) that it has agreed to hear the lawsuit filed by 26 states and the National Federal of Independent Business, and will rule on whether the mandate satisfies constitutional requirements (most notably the Commerce Clause), and if not what other provisions of the reform law, such as the insurance market reforms and its Medicaid expansion, need to be struck along with it.

Ron Pollack, executive director of Families USA, said the consumer group is “surprised and troubled that the Court has decided to review the states’ objections to the Affordable Care Act’s expansion of Medicaid.” He called the plaintiffs’ argument “disingenuous,” retorting that it’s reasonable for the federal government, which pays most of the program’s expenses, to set the ground rules for its operation.

Matt Salo, executive director of the National Association of Medicaid Directors (NAMD), said he was intrigued to hear the court would be considering Medicaid, and wasn’t sure how it would play out.

The states believe that the Medicaid expansion is not severable from the mandate, according to a Supreme Court docket. States also argue that the expansion is, by itself, an excessive federal intrusion on state sovereignty as it forces states to either comply or lose their federal Medicaid funding entirely.

Ipsita Smolinski, senior health policy analyst for Capitol Street, said it’s “more likely than not” that the community rating and guaranteed issue provisions would also be struck down if the high court finds the mandate unconstitutional. But she predicted that it’s “unlikely” the justices would ax the Medicaid expansion regardless of their verdict on the mandate, positing that the court wants to look at all challenges to the law in a balanced way.

A senior Justice Department official recently said that regardless of the court’s verdict on the mandate, the administration will support and continue to implement the laws against insurer discrimination based on pre-existing conditions. But, speaking on a conference call with reporters, the official did say the minimum coverage aspect made possible by the mandate is an important component of the law.

The insurance industry hasn’t taken a position on the mandate’s constitutionality but welcomed the court’s decision to consider the severability of the rest of the law. “There was widespread agreement throughout the health care reform discussions that the insurance market reforms in the ACA could only work if all Americans have health care coverage,” said America’s Health Insurance Plans spokesman Robert Zirkelbach. “We look forward to the Supreme Court resolving this issue.”

In an amicus brief filed weeks ago, AHIP made the case for eliminating the health care law’s insurance market reforms in the event that the mandate is declared unconstitutional, arguing that the restrictions on insurer activity would be highly problematic without the minimum coverage requirement. During the reform debate, economists supporting the Affordable Care Act said the two components are closely linked.

“Severability analysis must take into account the background against which Congress legislated, which included substantial experiential evidence that decoupling the individual mandate from market reforms could destabilize the individual insurance market,” AHIP wrote. “As Congress was aware, each of the eight States that had enacted market reforms without a mandate experienced severe market disruptions in the form of higher premiums, lower enrollment, and a general failure to achieve the goals articulated by the state legislatures.”

A ruling next summer would come in the heat of a presidential campaign, but the Supreme Court gave itself the option to punt its ruling on the constitutionality of the mandate, if it deems the penalty for those who do not purchase insurance a “tax.” The court asked to be briefed on how the case relates to the Anti-Injunction Act, which holds that court challenges against a tax cannot come forward until the tax is actually collected. The Fourth Circuit Court of Appeals dismissed a lawsuit against the mandate on this basis.

A person familiar with the matter said the Justice Department debated whether to invoke the Anti-Injunction Act in order to delay a ruling, but the administration ultimately decided not to as it wanted a quick decision on the merits.

Eventual Supreme Court consideration of the law was all but guaranteed, experts said, after split appellate court rulings on the constitutionality of the mandate. Appeals courts in the 6th and D.C. circuits upheld the mandate, while the 11th Circuit struck it down but said the rest of the law stands without it.

The Supreme Court specifically announced Monday that it has combined three cases pertinent to the lawsuit — NFIB v. Sebelius, Florida et al v. HHS and Dept. of HHS v. Florida – allowing for a record 5.5 hours of oral arguments total over two days divided evenly between the opposing sides. It will look at the whole slate of challenges brought forward by the 26 GOP-led states and NFIB.

“We are pleased the Court has agreed to hear this case,” said White House spokesman Dan Pfeiffer. “We know the Affordable Care Act is constitutional and are confident the Supreme Court will agree.” Leading Democratic and Republican lawmakers issued statements expressing confidence that their side will prevail.

The American Hospital Association is urging the debt law’s super committee to embrace “real” comparative effectiveness research that includes cost analysis as it searches for health care deficit cutters, an AHA official told Inside Health Policy, breaking with physicians and drug and device makers who are dead set against the idea. The group argues that the inclusion of cost-effectiveness can improve health care quality and efficiency and encourage technological innovations.

AHA described the idea as “real” CER in a list of proposals it put together for the super committee in October. “When we talk about ‘real’ comparative effectiveness research, we really support including cost-effectiveness of different treatment options,” the AHA official said. “We know that others don’t. But we think that information is one other component to determine what might be best for the needs of patients.”

The hospital group has not fleshed out a legislative proposal, the official said, nor is it trying to change the law that prohibits CMS from using research from the Patient-Centered Outcomes Research Institute (PCORI) for reimbursement purposes. Rather, AHA simply backs in principle CER studies that include cost-effectiveness.

Critics fear that CER that includes cost analysis would be a slippery slope to restricting Medicare treatments, but AHA believes it can be done in a way that upholds patient and physician choice. “We’re not talking about limiting what Medicare should cover,” the official said. “We’re not saying which one you should use — that’s in the hands of doctors and patients, not the government.” If somebody gets diagnosed with cancer, for example, the AHA official said, “they should examine the cost associated with each of those options” before making their final decision.

The PCORI head recently pledged that the institute will not do “cost-effectiveness analyses,” but also cautioned that the term “cost analysis” is undefined and said it will be up to patients to determine whether PCORI funnels federal money to research that considers costs in some manner, such as the effect of cost sharing on health outcomes. The institute has received nearly 600 comments on its working definition of PCOR, with drug companies and providers raising strong concerns that its use of the word “value” in the institute’s draft definition of PCOR signals cost analyses will be part of future PCORI studies.

In September, the American Medical Association and several dozen medical specialty organizations wrote to PCORI demanding that the board tighten its research parameters to explicitly forbid cost considerations. Probing whether the board’s planned range of research possibilities “includes cost analysis,” the groups declared: “If that is the case, we do not believe that it is consistent with the PCORI’s enabling statute and the language should be excised.”

In comment letters discussing PCORI’s working definition, numerous groups such as the Pharmaceutical Research and Manufacturers of America (PhRMA), National Pharmaceutical Council and the Partnership To Improve Patient Care likewise asked the institute to revise its draft definition of PCOR to make sure cost analysis stays out of its work.

The issue was the subject of heated discussion during the health reform debate, when Republicans succeeded in largely omitting cost-effectiveness from CER initiatives in the Affordable Care Act. They argued that costs must not be the basis for determining what Medicare covers. While backers of cost-effectiveness studies believe they can produce innovation and save lots of money, critics warn that such research could discourage costly treatments even when they may be necessary and could lead to “rationing” of care.

Although AHA’s advocacy efforts on the issue have not been public, the hospitals it represents are “very supportive” of CER on cost issues, the official said. “The goal of comparative effectiveness research is to provide information to improve quality, patient safety and clinical outcomes. As you’re doing the research, we believe cost-effectiveness should also be made available to patients, clinicians and hospitals.”

“We see it as much broader” than comparing devices, drugs and technology,” the AHA official continued, invoking the Institute of Medicine, which has championed the inclusion of cost considerations in CER efforts. “We align ourselves with IOM studies on comparative effectiveness research.”

AHA’s board-approved blueprint dated Nov. 19, 2009 detailed the group’s position on CER and cost.

“CER should examine the cost-effectiveness of different treatment options,” the AHA’s document reads. “Information on the cost-effectiveness of a technology or treatment is necessary to achieve greater value in our health care system and to better address the problem of rising health care costs. But data on cost effectiveness is often only available to manufacturers or insurers. It is critical that patients, clinicians, hospitals, and others have this information so they may make informed health care decisions.”

The chief executive of the British health system’s National Institute for Health and Clinical Excellence (NICE) on Monday (Nov. 7) told Inside Health Policy that comparative effectiveness research that lacks cost analysis could still have a positive impact on health care. “You can have a big impact just by better informing judgment about incremental clinical benefits that can be achieved over current standard practice,” said Sir Andrew Dillon during a Capitol Hill briefing, in response to a question from Inside Health Policy.