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September 30, 2009

Health Care Reform: Senate Finance Committee Rejects Public Option

After hours of debate, the Senate Finance Committee “rejected amendments Tuesday that would add a government-run health-insurance plan to the committee's health-care legislation,” according to the Wall Street Journal. The amendment offered by Senator Rockefeller (D-WV), which would have created a public health-insurance option, was rejected by a 15-8 vote. The Finance Committee’s bill is now the only version of health-care legislation in the House or Senate this year that omits the public health-insurance option.

All Republicans on the panel voted against Mr. Rockefeller's amendment, in addition to five Democrats: Senate Finance Chairman Max Baucus (D-MT), Bill Nelson (D-FL), Kent Conrad (D-ND), Blanche Lincoln (D-AR) and Thomas Carper (D-DE).

Mr. Rockefeller's legislation would create a public option that “would inherit Medicare's network of doctors and hospitals and pay them based on Medicare payment rates for its first two years.”

In response, Senator Schumer (D-NY) offered to create a public plan “that would pay doctors and hospitals at negotiated rates rather than Medicare rates.” This attempt also failed by a 13-10 vote.

Advocates of the public option such as Mr. Rockefeller believe that a public option is necessary “to hold costs down and provide ample competition for private insurers.” The problem with these theories however, is that numerous reports have shown (e.g. CBO on preventive care) that health care reform as large as the public option will cost Americans too much, and will not solve our problems. It will bring a whole new set of problems (e.g. reimbursement rates getting lower), and it will tremendously exaggerate problems that already exist such as shortage of providers, gaps in coverage, and especially fraud, waste and abuse.

While Democrats continue to urge the need for a public option to lower prices by creating competition, Republicans are asserting that such a plan would “expand the federal government's reach and eliminate private insurers.”

Opponents of a public plan note that such an option would "crowd out private insurers with artificially low prices, eventually forcing private insurers to absorb unpaid costs within the U.S. health system and charge their policyholders higher premiums.” Many, like Senator Grassley (R-IA), believe a public option will only lead toward a government-controlled, single-payer health care." It will also force private insurers out of business, which will result in tremendous job loss and economic stress for thousands of families. As of today, the only assurance Democrats or President Obama have offered about a public plan is that it would “compete fairly because it would have to follow the same rules as private insurers.”

The problem with this assertion, as Senator Grassley put it, is that “the federal government will not only be running the plan, it will also be running the market in which it competes with the private plans.” So how exactly does that mean competition would be on a level playing field?

Even the America's Health Insurance trade group noted that “a public health-insurance option would dismantle employer coverage, bankrupt hospitals, and add to the federal deficit," according to spokesman Robert Zirkelbach.

While many advocates hope to see a public option in the bill with bipartisan support, even Chairman Baucus noted such a bill would not gain the 60 votes needed. Instead, he suggested that imposing new regulations on insurers will make up for the difference, such as barring insurers from excluding potential policyholders if they have a pre-existing health condition.

In eliminating the public option, the Senate Finance Bill will increase competition, by devoting “$6 billion to help start up health-insurance co-operatives, which would be non-government entities operating within states.” Although these non-profit cooperatives could provide strong not for profit competition to the private insurers, the Congressional Budget Office has questioned whether the cooperatives would really have much effect.

As the debate today continued, Senator Schumer pressed Senator Grassley about his views on Medicare. In response to questions about his support, Mr. Grassley noted that “Medicare did not pose a threat to the private insurance industry … because it’s not easy to undo … without also hurting a lot of private initiatives that are coupled with it.”

There is the possibility of including a public option when the Senate and House meet for conference proceedings.  

With the debate still to continue, today’s showdown is a mirror of what will take place on the full Senate floor, especially with the New York Times that even Senate Majority Leader Harry Reid “will not include a provision for the public option when he combines the measures coming out of the finance and health committees.”

All of this opposition to a public plan is telling of how inefficient government run health care already is. Since your health-care providers do not want more government run health care programs like Medicare because they already “pay too little for procedures, physician and hospital visits, and equipment,” then ask yourself if you want such an option for your doctor.

FDA Hires IOM to Review Medical Device Approval System

The Food and Drug Administration (FDA) recently issued a press release announcing the commissioning of the Institute of Medicine (IOM) to study the premarket clearance process for medical devices in the U.S.

According to the release, the IOM study will examine the premarket notification program, also called the 510(k) process, for medical devices, and the FDA’s Center for Devices and Radiological Health (CDRH) will convene its own internal working group to evaluate and improve the consistency of FDA decision making in the 510(k) process.

The goals of these evaluations according to Jeffrey Shuren, M.D., acting director of CDRH, is to help “determine how the 510(k) process can be improved to better support FDA’s mission to protect and promote the public health.”

The 510(k) process was established under the Medical Device Amendments of 1976 with two goals:

  • Make safe and effective devices available to consumers
  • Promote innovation in the medical device industry.

The release calls for review of the 510(k) process because “technology and the medical device industry have changed dramatically.” The IOM commission will specifically try to answer two principal questions:

  • Does the current 510(k) process optimally protect patients and promote innovation in support of public health?
  • If not, what legislative, regulatory, or administrative changes are recommended to achieve the goals of the 510(k) process?

The $1.3 million IOM review is slated for completion in 2011. Part of the review will include two public workshops during the next nine months, as well a final report that will be published in March 2011. Dr. Shuren also noted that in addition to this review he has outlined six priorities for CDRH including:

  • Creating an internal task force on the use of science in regulatory decision-making
  • Developing an effective compliance strategy
  • Optimally integrating premarket and postmarket information
  • Increasing transparency in decision-making
  • Establishing clear procedures to resolve differences of opinion.

While it is certainly important for the FDA and CDRH to monitor such changes, it is equally important not to hinder such breakthroughs—often led by collaboration with industry and academia—through burdensome evaluations that scare away scientists and researchers. The criteria IOM should focus on is ensuring that the technological breakthroughs from the medical device and drug industries are kept intact, so that we can keep treating patients and saving lives.   Simply setting up further delays in approvals does not constitute a solution.

For more information about the FDA premarket approval of devices read the GAO report on FDA system for device approval.


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